Intergovernmental Transfers
Canada’s system of fiscal federalism requires transfers between various
levels of government. Some of these transfers are purely administrative,
such as when the federal government collects provincial income taxes on
behalf of the provinces (except Quebec) and then remits the funds back
to the provinces. Other transfers, however, are federal funds given to the
provinces to help them finance particular programs in their jurisdictions,
such as healthcare and education. Still other transfers of federal funds are
made to provinces that are less prosperous than the average, and these
funds are unrestricted in their use.
Canada Health and Social Transfers
The federal government makes two block grants to each provincial and
territorial government every year—one for expenditures on health-care
and the other for expenditures on post-secondary education, social
assistance, and early learning and childcare. Though the Canada Health
Transfer (CHT) and the Canada Social Transfer (CST) are each described
as being directed at these specific categories of expenditure, there is no
practical way to prevent provincial governments from spending this
money on whatever they deem to be appropriate. These block grants are
financial support with “no strings attached.”
The CHT and CST are allocated to provinces on an equal per capita basis.
The total CST payment is scheduled to grow annually at the rate of 3
percent, and in 2018–2019 the total amount to all provinces was $14.2
billion. The total CHT payment is scheduled to grow more quickly to