The Honourable Chrystia Freeland, Deputy Prime Minister and Minister of Finance, announced the Government of Canada will provide a record $94.6 billion in major transfer funding to provinces and territories in 2023-24. This represents an increase of $7 billion from 2022-23. All provinces and territories will receive a year-over-year increase in major transfer amounts.
The Canada Health Transfer (CHT) continues to account for more than half of major transfer payments. The CHT grows in line with the Canadian economy and, as a result of Canada’s strong recovery from the COVID-19 pandemic recession, will increase by 9.3 per cent to $49.4 billion. This funding, allocated equally per capita, supports provinces and territories in providing Canadians with the health services they need.
Major federal transfers to provinces and territories also include the Canada Social Transfer, Equalization, and Territorial Formula Financing.
In addition to these major transfer programs, federal support to provincial and territorial governments includes $11 billion over 10 years, which began in 2017-18, to improve access to mental health and addiction services; $27 billion over five years for a national system of early learning and child care; and $2.4 billion in 2023-24 (indexed at 2 per cent every year) for municipalities through the Canada Community-Building Fund.
During the pandemic, the federal government also provided significant support to Canadians and businesses. Approximately eight out of every ten dollars committed to fight COVID-19 and support Canadians was provided by the federal government, which contributed to the budgetary surpluses that many provinces and territories maintain today.
- In 2023-24, every province and territory will benefit from higher transfers from the federal government.
- Major transfers include the Canada Health Transfer, the Canada Social Transfer, Equalization, and Territorial Formula Financing.
- The Canada Health Transfer provides long-term predictable funding for health care and supports the principles of the Canada Health Act. The transfer, made on an equal per capita cash basis, grows in line with a three-year moving average of nominal gross domestic product, with a minimum increase of three per cent per year.
- The Canada Social Transfer is a transfer in support of post-secondary education, social assistance and social services, early childhood development, and early learning and child care. It is legislated to increase by three per cent annually.
- The purpose of Equalization is to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation. Total Equalization funding grows in line with a three-year moving average of nominal gross domestic product, and is allocated amongst provinces based on a formula set out in legislation. In 2023-24, the program will provide support to Manitoba, New Brunswick, Nova Scotia, Ontario, Prince Edward Island, and Quebec.
- Territorial Formula Financing helps the three territorial governments fund essential public services, recognizing the high cost of providing those in the North.
- The Canada Community-Building Fund is a permanent source of funding provided up front, twice-a-year, to provinces and territories, who in turn flow this funding to their municipalities to support local infrastructure priorities. Municipalities can pool, bank and borrow against this funding, providing significant financial flexibility.