Good morning. My name is Galen Countryman. I'm the director general of the federal-provincial relations division at Finance Canada.
I am joined today by my colleagues Thomas Larouche, director general, budget and government operations; Nelson Paterson, director general, economic studies and policy analysis; and Suzanne Kennedy, senior director, equalization and territorial formula financing policy.
The branch is responsible for the administration and oversight of Canada's four major transfer programs: the Canada health transfer, the Canada social transfer, the equalization program and the territorial formula financing.
In 2026-27, these major transfers will total $108.3 billion. Together, the major transfers represent one of the largest expenditure envelopes in the federal budget.
They are designed to provide predictable, stable and equitable funding across jurisdictions.
Major transfers are largely unconditional. I will specify the potential conditions for each of them individually.
Provinces and territories are accountable to their electorates regarding how they decide to use the funds. The Federal-Provincial Fiscal Arrangements Act and its regulations set out the specific methodologies, formulas and data requirements for calculating the various payments under the major transfer programs.
The Canada health transfer, or CHT, provides predictable long-term funding for health care and supports the principles of the Canada Health Act.
In 2026‑27, CHT payments will total $57.4 billion. CHT payments are allocated on an equal per capita basis. The CHT has a growth guarantee of at least 5% annually until 2027‑28. Starting in 2028‑29, CHT growth will return to a three-year moving average of nominal gross domestic product growth, with funding guaranteed to increase by at least 3% per year.
The Canada social transfer, or CST, aims to support three broad areas of social programs: post-secondary education, social assistance and social services, as well as early childhood development and early learning and child care.
The CST is provided to provinces and territories on a largely unconditional basis, with the exception of a minimum residency requirement for the provision of social assistance.
In 2026-27, the CST will total $17.9 billion. Like the CHT, the CST is allocated on an equal per capita basis, and CST funding is legislated to grow by 3% annually.
The federal government's equalization program deals with fiscal disparities between provinces. The principle behind equalization payments is to provide provincial governments with sufficient revenues to provide reasonably comparable levels of public services and taxation.
In 2026‑27, equalization payments will total $27.2 billion. Equalization payments are unconditional. Recipient provinces can use them at their discretion according to their own priorities.
The current formula is largely based on recommendations from the 2006 report of the Expert Panel on Equalization and Territorial Formula Financing. Payments for the entire program increase every year based on the three-year moving average of nominal gross domestic product growth.
Territorial formula financing, or TFF, is an unconditional transfer from the Government of Canada to the three territorial governments to enable them to provide their residents with a range of public services comparable to those offered by provincial governments at comparable levels of taxation. In 2026-27, TFF will total $5.8 billion. The current formula is largely based on recommendations from the 2006 report from the expert panel on equalization and territorial formula financing.
In addition to the major transfers, the division also manages the fiscal stabilization program and statutory subsidies. The fiscal stabilization program provides financial assistance to provinces that are facing significant year-over-year declines in their revenues resulting from extraordinary economic downturns. Statutory subsidies are provided as a result of how Canada developed as a federation. Most were legislated at the time of Confederation or when a province joined Canada. In 2026-27, they will total $45 million.
As well, the federal government provides a range of transfers to provinces and territories to address specific issues.
Transfers can come with conditions and reporting requirements designed, administered and overseen by the appropriate department. Some examples include early learning and child care, labour market transfers administered by Employment and Social Development Canada, targeted funding administered by Health Canada—