OTTAWA—Changes to the way federal transfers to provinces are calculated since the Harper government took power appear to have made Ontario a big loser under equalization programs and Alberta the big winner, says Canada's budget watchdog.

The parliamentary budget officer says total payments this year will see Ontario obtain $19.2 billion from Ottawa for everything from equalization to health and social transfers, but that is 3.2 per cent less than the $19.8 billion it received last year.

While the province gains under some transfers, it will lose $1.2 billion under the equalization program designed to give so-called “have not” provinces the fiscal capacity to provide residents services roughly comparable to those in other provinces.

Until this year, Ontario would have received about $640 million from Ottawa under a program that protected provinces from seeing transfers drop in any one year — but that option was scrapped by then finance minister Jim Flaherty in December.

Meanwhile, Alberta — Canada's richest province — will see its total rise to $5.2 billion this year from $4.1 billion in 2013-14, a 26.8 per cent increase mostly due to Ottawa moving to a per-capita funding under the Canada Health Transfer program.

The only other province that comes close to Alberta's windfall is Quebec, which will see its total intake from Ottawa rise to $19.6 billion, or 9.9 per cent.

The Liberal government of Ontario has been one of the staunchest critics of the changes, complaining that it is being short-changed on equalization. But the federal government responded it is only applying the formula as adopted.

Both are right, says Mostafa Askari, the assistant PBO, although the federal government is responsible for setting the rules.

“The bottom line is the equalization program has moved away from being an equalization program to being another transfer program, because the way it is designed now it does not equalize to any national standard,” said Askari.

For have-not provinces, “their entitlement will be less, so obviously the larger have-not provinces (like Ontario) will be hit by a larger amount because of their size.”

The PBO looked into the controversial program after a request from Liberal MP Judy Sgro.

Askari said there was little point in examining the bottom line numbers since they are published in the budget each year. Total transfers this year will rise to $62.6 billion from $60.5 billion last year.

But what will surprise many Canadians is how changes introduced by Ottawa has diminished the “progressivity” of the equalization system.

For instance, the equalization program was intended to do just that: give have-not provinces the capacity to offer services more or less available to residents of richer provinces. But several changes, including putting a cap on growth of the transfers, has diminished the program's capacity.

The move to a straight per-capita funding on health transfers this fiscal year, for instance, has had a major impact on Alberta. That province will see transfers under that program rise by 33.1 per cent. The Northwest Territories will see a 45.5 per cent increase.

Most other provinces also will get more—about 2.5 per cent—and Newfoundland will get slightly less.

Askari says the per capita funding change will be especially difficult for Ontario and Quebec, which tend to have older populations and are likely to experience higher per capita health costs.

Ontario was also incensed that Flaherty unilaterally dropped the transfer protection program in December, complaining that it would lose more than $600 million as a result. The PBO report notes that Ontario was the only province that would have benefited from the program this year as all others saw a net increase in total transfers.

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In responding to a question Wednesday before the PBO report was release, Finance Minister Joe Oliver said total transfers to the provinces had risen annually and will continue to rise.

“We're not cutting back . . . we are not going to get to our (budget) surplus on the backs of the provinces,” he said.

Overall, the percentage change in total transfers for fiscal year 2014-15 are: Newfoundland and Labrador (+0.5); Prince Edward Island (+4.7); Nova Scotia (+1.2); New Brunswick (+5.0); Quebec (+9.9); Ontario (-3.2); Manitoba (+0.2); Saskatchewan (+4.2); Alberta (+26.8); British Columbia (+1.0); Yukon (+4.3); Northwest Territories (+5.9); and Nunavut (+4.2).

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