Canada Health and Social Transfer

Introduced in the 1995 federal budget by Finance Minister Paul Martin to replace the existing 1977 Established Programs Financing Act and the Canada Assistance Plan of 1966, the Canada Health and Social Transfer (CHST) was a block fund transfer from the federal government to the provinces to support national standards in social programs. Jean Chrétien’s government implemented the CHST in 1996 as part of its deficit reduction policy because federal transfers to the provinces amounted to one-quarter of total federal spending. As with Established Programs Financing, the amount of CHST was determined by a combination of tax-point transfers and cash payments, but it let the provinces determine how to allocate the funds among health care and other social programs. Critics charged that the combination of a reduction in federal transfer payments and the lack specific allocations of funds under the CHST hurt medicare by not requiring provinces to maximize the efficiency of their health care programs or adequately fund them. The federal government defended the CHST by arguing that the provisions of the Canada Health Act maintained national standards by enabling the federal government to withhold cash transfers under the CHST from any province violating the provisions of the act. But in the 2003 budget, in response to provincial concerns, the federal government split the CHST into the Canada Health Transfer and the Canada Social Transfer which were implemented in 2004 to increase transparency and accountability.