Canadian transfer payments

Transfer payments are a collection of fiscal equalization processes used in Canada. Chief among these are the Canada Social Transfer, the Canada Health Transfer and equalization payments. The last of these can be spent however the receiving provinces see fit, while the first two must be spent on social and health services respectively.

The health transfer is the largest of the three, with a combined cash and tax point value of $36.5 billion in the 2008-2009 budget. The social transfer has a cash and tax point value of $19.1 billion while the general equalization payments distributed $13.6 billion to 6 "have-not" provinces. The Territorial Formula Financing program gives $2.3 billion to the three territories in the same year.

While the territories do not participate in the equalization payment program (the Territorial Formula Financing program taking its place), they do participate in the health and social transfers.

The Canadian federal government budgeted in 2009-10 nearly $60 billion to transfer to the provinces and territories through major transfers (Canada Health Transfer, Canada Social Transfer, Equalization and Territorial Formula Financing), direct targeted support and trust funds – an increase of $6.7 billion from the previous year.

In 2009-10, the Canada Health Transfer (CHT), at $22.6 billion in 2008–09, will continue to grow by 6-per-cent a year, providing an increase of $1.4 billion for a total of $24 billion in 2009–10. The Canada Social Transfer (CST), at $10.6 billion in 2008–09, will grow by 3-per-cent a year for a total of $10.9 billion in 2009–10. Equalization will be $14.2 billion in 2009–10. Territorial Formula Financing (TFF) will be $2.5 billion in 2009–10, an increase of $185 million over 2008–09.

In 2008-09, provinces and territories received about $49.1 billion in major transfers – an increase of $7.7 billion since 2005-06. These transfers were estimated to account for about 17% of provincial and territorial revenues in 2008-09.

Unlike Equalization payments, which can be spent however the receiving provinces sees fit, the funds received as part of the Canada Health Transfer must be used by provinces and territories for the purposes of "maintaining the national criteria" for publicly provided health care in Canada as set out in the Canada Health Act.

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