Alberta could receive billions from tobacco companies in massive deal

The Alberta government could receive billions of dollars in health-care cost recovery from the tobacco industry in a massive proposed deal.

The potential settlement may see JTI-Macdonald Corp., Imperial Tobacco Canada Ltd. and Rothmans, Benson & Hedges pay out billions of dollars to financially compensate provinces and territories as well as some smokers and their families across Canada.

A proposed plan of arrangement was filed in an Ontario court Thursday after the tobacco companies spent more than five years in negotiations with their creditors. 

The proposal must still go through several steps before it can be put into action, including a vote by creditors and approval by the court.

It's unclear exactly how much Alberta would receive in the proposed payout. However, court documents suggest the province is entitled to about 12 per cent of the nearly $25-billion sum designated for provinces and territories, which amounts to more than $3 billion.

In a statement to CBC News, a spokesperson for Health Minister Adriana LaGrange's office said tobacco use has had a significant impact on the quality of life of Albertans, and places a considerable burden on the province's health-care system.

"While we are pleased to see progress is being made, it is too early to speak to the content of the proposed settlement," the health minister's office said.

Lorian Hardcastle, an associate professor in the faculty of law and the Cumming School of Medicine at the University of Calgary, told CBC News that tobacco companies have managed to delay this type of outcome for decades.

She said the billions of dollars that provinces would get under the proposed deal appears to be a large sum at first glance.

"But when you look at the number of Canadians who smoked, the injuries to them, their health-care costs, it probably is quite modest when you account for all of that," she said.

According to Hardcastle, it's not clear that the money, if it's paid out to provincial governments, will actually be used to address smoking problems or whether it will just go into general provincial coffers.

"I would hope that the province would turn around and use that money on public health-related matters — smoking cessation or even public health more broadly," she said.

In the United States — the only other place where there have been significant settlements — governments that received settlement money didn't always use it to address health-care problems created by smoking, Hardcastle said. 

"Provinces won't be obliged to spend the money in a particular way, but it would be nice to see them actually use it to address the issue that the funds were directed towards," she said.