OTTAWA – As early as November, prairie farmland owners could be receiving as much as $1 billion in the first Crow buy-out payment, a senior government official said last week.
Howard Migie, head of the Western Grain Transportation Act planning group at Agriculture Canada, told the Commons finance committee April 5 that the government will make the $1.6 billion payout in two parts.
If all goes according to plan, the first payment will be sent out between November and January, “the earlier the better.”
Outside the committee, he said the first payment will total between half and two-thirds of the total payout – between $800 million and $1.2 billion.
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The remainder will be sent out by June 1996, after any appeals on the first payout have been cleared up.
Migie told MPs that because the payment will be directed to landowners, the Farm Credit Corporation will receive close to $15 million. The crown corporation has promised to pass the benefit on to its renters.
He said banks and credit unions still have not made a commitment to do the same. “We do expect the lease rates will be lower, however.”
During the meeting, government MPs and officials found themselves in the unaccustomed position of arguing that the Crow buyout is not worth as much as some of its critics are suggesting.
The debate over the real value of the payment has been under way since budget night.
The government insisted that because the $1.6 billion will be treated as capital not as income and not subject to income tax, it really is the equivalent of a $2.2 billion payout.
Then, because it is being paid quickly, it will be worth more to farmers than if payments were dragged out over years.
Adding in the $300 million, five-year transition program, agriculture minister Ralph Goodale concluded it is really worth close to $3 billion for prairie landowners.
Bloc estimate
Meanwhile, the opposition Bloc QuŽbecois weighed in last week with another estimate – close to $4 billion.
BQ finance spokesperson Yvan Loubier said the tax-free status makes the $1.6 billion worth close to $3 billion.
Then, there is the $300 million transition fund, plus the budget announcement of government loan guarantees up to $1 billion on food exports to private foreign buyers.
“That comes out to $4 billion over three years,” he said.
The BQ has been waging a battle over the budget’s agricultural cuts, claiming that western grain farmers were treated more generously than Quebec dairy farmers who will lose 30 percent of their subsidy with no compensation.
Migie disputed Loubier’s math.
“For most people, it is seen as a lot less than $4 billion,” he said.
And for western landowners, the $1.6 billion will be less than the expected drop in land prices, he said.
Liberal MP Lyle Vanclief said it is unfair to include the loan guarantees in the calculation of western benefits because it is available across Canada and because the real cost of a loan guarantee is not known.
