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CAUT Bulletin Archives

May 1997

The Future of Federal Transers - What the Parties Say

In the past, federal/provincial cooperation has been essential to the funding of higher education. Through the Canada Health and Social Transfer (CHST), the federal government currently transfers $25.1 billion to the provinces for health, post-secondary education and social assistance. Are such transfers effective.

  1. Does your party favour the continuation of the CHST?
  2. Does your party favour changes in the CHST? If so, what would these changes entail?
  3. The concept of national standards in education has received considerable attention in recent years. What would your party propose in the area of post-secondary education? If your party favours the creation of national standards, how would they be developed? How would they be enforced?
  4. Should the federal government require the free mobility of post-secondary students as a condition of continuing CHST payments to provinces? "Free mobility" would mean that provincial loans and grants would be fully transferable and out of province students would not be subject to higher tuition and fees.


Federal support for post-secondary education begins with the Canada Health and Social Transfer (CHST), a block fund transfer to the provinces and territories. Part of this support is paid through the transfer of tax points to the provinces and the rest through a cash payment. The CHST provides stable multi-year funding to the provinces through the year 2002-03. In 1997-98, it provides $12.6 billion in tax points and $12.5 billion in cash transfers, for a total transfer of $25.1 billion to the provinces.

An important element of the CHST was the establishment of an $11 billion floor below which cash payments to the provinces could not fall. This protected the provinces against reductions in cash payments resulting from higher than anticipated growth in the tax component of the CHST. A new Liberal government will enhance this protection and increase the resources transferred to the provinces for post-secondary education and other social programs by raising the cash floor of the CHST from $11 billion to $12.5 billion. This will increase cash payments to the provinces by $700 million in 1998-99, $1.4 billion in 1999-00 and 2000-01, $1.3 billion in 2001-02, and $1.2 billion in 2002-03.

New Democrats

1. & 2. Canada’s NDP is opposed to the new federal-provincial arrangements under the CHST and to the dramatic cuts in social, health, and education transfers that have been imposed since the CHST was brought in. Canada needs new fiscal arrangements that include real national standards for social programs, standards that have virtually disappeared under the CHST. Canada also needs a federal government that is willing the make the financial transfers to the provinces to maintain an effective federal presence in these areas.

3. Canada’s NDP stands for making accessibility a new national standard in higher education, an enforceable standard to be negotiated with the provinces. Such national standards are only possible if the federal government is willing to provide adequate transfers to the provinces, something that has not been happening since the Liberals introduced the CHST.

4. Canada's NDP does not believe that there should be higher fees levied on out-of-province students. Under the national standard on accessibility we have put forward, a standard supported by adequate federal transfers to all provinces, there would be no occasion for out-of-province fee differentials.

Progressive Conservatives

1 & 2. A major part of the new Canadian Covenant will be a more fair and efficient way of funding our vital social services. Right now, taxpayers fund health care, education and training by paying taxes to as many as four different levels of government — municipal, regional, provincial and federal.

The federal government transfers its share of the money back to the provinces/territories, based on complex formulas. This means that provinces/territories, who actually deliver these services, are at the mercy of the federal government for funding. This provides little certainty and thus makes long range planning very difficult. This must change.

A Jean Charest government will streamline the process and assure the provinces/territories and the public of fair and efficient funding by transferring equalized tax points. Transferring tax points simply means that the federal government will give up its ability to collect a portion of federal taxes to the provinces and territories. The total amount of tax Canadians pay doesn't change as a result.

This is a better system for several reasons. It gives the provinces and territories financial independence in providing social programs. Never again will a federal government be able to unilaterally slash health care spending by billions of dollars or to download its troubles onto the provinces and territories. This will mean greater accountability to the taxpayers who ultimately foot the bill, and greater input for Canadians.

Finally, transferring tax points will increase the availability of funding to provinces and territories for these services. That's because the value of these equalized tax points will increase over time as the economy and population grow.

Recognizing that tax points grow in value differently for certain provinces, a Jean Charest government will guarantee, either through direct funding or an increase in the equalization fund, that these payments continue to assist all regions in a comparable manner.

3. Whether students are headed for post-secondary education or directly into the labour force, they need fundamental learning skills and basic knowledge. These are essential if they are to keep on learning, advance in their careers and achieve their personal goals. In short, the future of our youth and of our economy depends on whether today's students are being given a sound background in their primary and secondary schools.

A Jean Charest government will help ensure that all Canadian youth receive the basic knowledge and skills they need for their futures by establishing a Canadian Education Excellence Fund. The 'CEEF' will provide matching funds to provinces and territories that participate in establishing interprovincial standards for Common Curricula based on the model currently being undertaken by the Western Provinces and the work of the Canadian Council of Ministers of Education (CCME).

The Fund will also establish a National Testing Institute in cooperation with the provinces and territories academia and the private sector. The Institute will administer testing of students in grades 3, 8 and 12 across Canada.

In those provinces that choose to participate, the Fund will match dollar for dollar the cost of testing through the Institute. In provinces that choose not to participate the Institute will conduct voluntary random testing. All test results will be published and made available to parents in the case of individuals and the public in the case of school performance averages.

Our goal is to bring the federal leadership and coordination necessary to ensure that Canadian students have the highest quality education, benchmarked against our best educated competitors. The initial investment in this fund would be $50 million.

4. Although education is primarily a provincial responsibility, the interests of Canada's young people are Canada-wide interests. The federal and provincial governments must work together to ensure that young people are receiving the best education in the world. To make this happen, the federal government and all sectors of Canadian society must work to achieve this common objective. Jean Charest will take a leadership role in making this happen.

Reform Party

1 & 2. A Reform government would make a significant change to the CHST. The CHST will be internally divided into two separate transfer programs, covering health care and post-secondary education, and we will increase this total transfer by $4 billion per annum. As well, we will wind down the welfare portion of the transfer and completely return welfare funding to the provincial governments.

3. Decent standards of service in any area, be it education, health or anything else, cannot be achieved without adequate financial resources. We believe it is hypocritical of the Liberals to present themselves as the defenders of "National Standards" while at the same time cutting $7.5 billion out of the CHST which the provinces rely upon to provide services at the level Canadians expect.

The Reform Party will commit an additional $4 billion a year to the provinces in health and education funding, which we believe will help to make up for the damage caused by Liberal cuts.

We support the federal government assisting in the creation and maintenance of national standards, (for example, through cooperative inter-provincial agreements on a "national matriculation standard," or by issuing a "national report card" on the status of education in each province). We believe such programs could be implemented without infringing on the provinces and would place pressure on provincial governments to develop competitive education systems.

4. Free mobility of students would be a reasonable condition of provincial access to the additional post-secondary education funding proposed by Reform.