Municipal-federal deals to face provincial oversight under proposed Alberta law

Any agreement between the federal government and an Alberta town, school board, university or other provincial entity will need to be vetted by the provincial government, should the legislature pass a new bill.

The Provincial Priorities Act was tabled in the legislature Wednesday by Premier Danielle Smith. It is framed as a step to prevent federal interference with the Alberta government's priorities.

"We need to change the relationship with the federal government because they are doing an end run around us," Smith said at an embargoed news conference Wednesday.

Just how many agreements could be affected, how long it would take the province to review each agreement, and what kind of agreements would be exempted, provincial officials said they have not yet decided. They said the law is not intended to block minor agreements, such as a grant for festival fireworks, or leasing a tiny parcel of land for a Canada Post mailbox.

Smith said government officials have tallied about 14,000 existing agreements between the federal government and provincial entities. Around 800 of those were "flagged as problematic."

The Act, modelled after a similar law in Quebec, would mean the Alberta government be involved any time a provincial entity wants to create, amend, extend or renew an agreement with the feds.

School boards, post-secondary institutions, health authorities, municipalities, Crown corporations, and provincial management bodies would all have to follow a new provincial approval process, and failure to do that would make any agreement with the federal government void, the bill says.

Once the law is passed, the province would consult with these entities to decide the best way to organize the review process and set exemptions for funding agreements that would not require the province's approval. The government has ballparked early 2025 for the law to take effect.

Smith said agreements between the federal government and post-secondary institutions require provincial oversight in Alberta because Ottawa is making political decisions about which research projects to fund.

"That they fund in a certain way, based on a certain ideology, and that's what we're going to be able to determine once that becomes a lot more transparent," Smith said.

The premier said she is most concerned with the federal government clashing with provincial priorities by imposing green standards on new housing construction, a 2035 goal for a net-zero electricity grid and the provision of a safe supply of opioids for people with profound addictions.

In a background briefing, Alberta officials said they have no consequences in mind for entities that would thwart such a provincial law, but hope that a law would deter the federal government from proposing agreements without provincial involvement.

Smith and Municipal Affairs Minister Ric McIver said if passed, the law would help the province's municipalities get a "fair share" of federal funding by participating in negotiations, and distributing money equitably across Alberta.

Smith pointed to federal housing funding agreements she alleges are being disproportionately spent across Canada. She said the federal government is politically meddling with communities by requiring them to change zoning bylaws as a condition for the provincial government to receive new federal infrastructure funding.

Smith also took aim at federal dental care and pharmacare programs, saying they were launched without checking what programs the provinces already offered.

Edmonton mayor worries bill could hinder partnerships

Edmonton MP and federal Employment Minister Randy Boissonnault said in Ottawa Wednesday that Quebec's provincial involvement law slows down agreements, adds bureaucracy and keeps money out of communities.

"Roadblocks and obstacles getting in the way of that funding is only going to hurt Albertans," Boissonnault said.

He said the federal government won't wait for provincial governments to tackle pressing issues Canadians want addressed.

Commenting hours before the bill was tabled, Edmonton Mayor Amarjeet Sohi said such legislation could hinder federal-civic partnerships like a rapid housing initiative that enabled the construction of nearly 600 supportive housing units in the city.

Sohi said he is baffled by laws that treat cities as the province's children that "need to be controlled or managed," when big cities have become critical to economic development and vibrancy.

Critics say bill is politics, not advocacy for Albertans

NDP Leader Rachel Notley said the bill, if passed, would wrap municipalities, health authorities and post-secondary institutions in "a spool of red tape" as they seek federal grants to make up for shortfalls in provincial funding.

"This is really nothing more than a partisan, petulant temper tantrum on the part of this premier," Notley said, pointing to the looming spectre of a federal election.

"It will not secure any change to funding arrangements or how they're done."

Notley said the United Conservative Party government's record of reaching deals that benefit Alberta is abysmal because Smith refuses to advocate and negotiate. The legislation will hurt Albertans when they pay more municipal taxes to make up federal funding snared by this new bureaucratic wrangling, she said.

Eric Adams, a University of Alberta constitutional law professor, said the federal government is under increasing political pressure to address Canadians' affordability challenges, and making funding deals with cities has become an easier way to do it.

"Right now we've got provinces that aren't interested in helping the Trudeau Liberals get any more political victories," Adams said.

The legislation could give rise to a new legal challenge about whether provinces have the right to stand in the way of funding agreements between federal and municipal governments, Adams said.

Lisa Young, a political science professor at the University of Calgary, says the bill goes further than the government was suggesting, by including entities beyond municipalities.

She says there is "bluster" in the province's claim it can drive harder bargains with the federal government than a university or a city government.

It's an "open question" whether Quebec is perceived to get better federal deals because of its funding involvement law, or because of the province's political importance to federal governments, she said.

Smith's suggestion of the province potentially meddling in peer-reviewed research grant decisions from federal agencies will greatly concern Alberta academics and granting agencies, Young said.

"If it did get actively involved in determining what could or could not be funded, it would be a devastating blow to the research institutions in the province," Young said.