Federal Fiscal Transfers

The federal government transfers over $60 billion to provincial and territorial governments to meet national, provincial and local priorities. A significant part of this money is distributed from more prosperous to less prosperous regions in order to ensure that all Canadians have access to good quality social programs and have the right to enjoy the full benefits of Canadian citizenship.

However, many of these transfers lack transparency and need to be modernized. Billions of dollars are transferred from some parts of Canada to other parts without principles governing these transfers or without any assessment of whether these transfers are in fact achieving their purpose. For example, Equalization is a $14 billion program, with the constitutional objective of ensuring that all Canadian provinces can deliver reasonably comparable programs at reasonably comparable levels of taxation. But despite its significant size and importance to the federation, the program has never been subjected to an empirical assessment of whether it is achieving its constitutional objective.

At the Mowat Centre, we will engage honestly in these crucial issues because ensuring that more prosperous regions continue to support less prosperous ones, while also ensuring that less prosperous regions have incentives for economic growth, will be crucial to Canada’s ability to succeed, and to our sense of shared Canadian citizenship.