Public Finance


The datasets used to produce interprovincial comparisons of federal transfers are taken from Statistics Canada’s Financial Management System. These transfers provide a reliable picture of the capacity of each province to provide services autonomously, particularly when payments are expressed in dollars per capita. Thus, the provinces that receive the higher levels of federal transfers relative to their population depend more on the federal government than those that receive lower levels.

In Canada, the federal government contributes funding in certain fields of jurisdiction that come primarily under the authority of provincial and territorial territories. This contribution consists primarily in four types of federal transfers to provinces and territories: the Canada Health Transfer (CHT), the Canada Social Transfer (CST), Equalization, and Territorial Formula Financing (TFF). In addition, the federal government has entered into particular arrangements with certain provinces – Nova Scotia and Newfoundland and Labrador, in particular – under which offset payments are made to the governments of these provinces for the development of offshore oil and gas reserves.

Federal Transfers per capita, 2007 to 2009 (dollars)

Source: Statistics Canada, E-STAT, Tables 385-0001 (updated July 6, 2010) and 051-0001 (updated July 5, 2010).
* Including payments made to the territories.

As is clear from the two charts above, federal transfers in current dollars per capita increased in Canada between 2007 and 2009. During this period, the average for all of Canada rose from $1,692 per capita to $1,929, making for an increase of 14.0%. Only British Columbia experienced a decrease, with their payments declining from $1,528 per capita to $1,485 (-2,8%). Thus, the increase in the Canadian average is due to increases in the transfers made to the nine other provinces. The highest increases during this period occurred in Newfoundland and Labrador (+ 107.1%), Quebec (+ 20.9%), Alberta (+ 20.3%) and Saskatchewan (+ 19.8%).

The two charts also provide evidence of significant disparity between the various provinces respecting the amounts of federal transfers relative to the population, particularly on account of the equalization program but, also, on Offshore Accords, especially in the case of Newfoundland and Labrador.

Concerning the equalization program, it is on the basis of this disparity that the less prosperous provinces receive additional federal monies in order that they may provide their citizens with services equivalent to those offered in the better-off provinces. Thus, the less well-off provinces – namely, the Atlantic provinces (Newfoundland and Labrador – which did not received equalization payments in 2008-2009 and 2009-2010 -, Prince Edward Island, Nova Scotia and New Brunswick) but also Manitoba and Quebec – receive major sums within the framework of this program. For example, both Newfoundland and Labrador and Nova Scotia received, respectively, $477M and $1.465B in equalization payments in fiscal year 2007-08 alone. For Newfoundland and Labrador, this sum works out to $941.78 per capita and for Nova Scotia to $1,564.77. Concerning Manitoba, transfers made under the equalization program were $1.826B in 2007-08 – or, $1,521.76 per habitant. Quebec is the province that receives – and by far – the most federal money in the form of equalization payments ($7.160B in 2007-08 and $8,028B in 2008-09). However, as this province comes in just under the fiscal standard used to calculate equalization payments and is much more populated, these amounts work out to no more than $927.43 per capita in FY 2007-08 and $1,030.40 in FY 2008-09.

In the area of arrangements governing the development of offshore natural resources, the impact on federal transfer payments was particularly noticeable in Newfoundland and Labrador. For year, 2008-09, the province received $557 million the terms of such arrangements – which works out to a transfer of $1,097.14 per inhabitant. At the same time, Nova Scotia, the only other province to benefit from transfers under such arrangements, received a sum of $106 million – i.e., only $113.08 par inhabitant.


Federal Transfers to Provincial and Local Administrations (as % of total revenues)

Source: Statistics Canada, E-STAT, Table 385-0001 (updated July 6, 2010).

The disparity between provinces is also obvious concerning the contribution of federal transfers to the total revenues of provincial governments. Between 2007 and 2009, federal transfers accounted for a sizeable share of the total revenues of the Atlantic provinces and Manitoba. Where these five provinces are concerned, the percentage of federal transfers in relation to total revenues was considerably higher than the Canadian average, which stood at 14.6% in 2007, 15.5% in 2008 and 15.9% in 2009. For the same period, only Quebec posted results that were relatively similar to the Canadian average, whereas in Ontario, Saskatchewan and British Columbia, the percentage of federal transfers in relation to total revenues was slightly below the Canadian average. On the other hand, Alberta is by far the Canadian province for whom federal transfers constitute the smallest portion of total revenues (8.5% en 2009). It can thus be concluded that the Atlantic provinces and Manitoba depend strongly on the federal government to discharge their responsibilities, in contrast with the other provinces, and with Alberta in particular. When taken with the specific arrangements between the federal government and the provincial governments of Nova Scotia and Newfoundland and Labrador, the equalization program to a very great extent accounts for how the Atlantic provinces and Manitoba depend more on federal transfers than the other Canadian provinces do.