Federal–Provincial Fiscal Arrangements and Established Programs Financing Act

The 1977 Established Programs Financing Act replaced previous federal–provincial cost-sharing arrangements, which were conditional grants, with a formula that increased federal contributions to provincial programs according to increases in gross national product. Established programs were hospital insurance, medicare and post-secondary education, so-named because they would continue regardless of federal support. Formerly, federal funding formulas set up the funding of shared-cost programs based on increases in costs and provincial conformity to federal program requirements. But during the 1970s, federal funding arrangements with the provinces became an increasing source of conflict as the provinces pushed for greater autonomy and the right to opt out of federal programs without losing additional federal revenue. Re-arranging federal–provincial funding of established programs according to the terms of the 1977 Established Programs Financing Act satisfied both provincial and federal administrators by allowing provinces greater freedom in setting their own policies and allowing the federal government to control its share of the costs.