The Canadian federal government has announced a substantial increase in financial support to provinces and territories, with major transfers set to rise by 4.4% to $103.8 billion in the 2025-26 fiscal year.
This funding boost underscores the government’s commitment to strengthening public services across the nation.
Canada Health Transfer
The Canada Health Transfer (CHT) is slated to increase by $2.6 billion, reaching $54.7 billion in 2025-26. This includes a $713 million top-up, ensuring a 5% annual growth as part of the 10-year health care package initiated in February 2023.
These funds are allocated equally per capita to support provincial and territorial health care services.
Canada Social Transfer
The Canada Social Transfer (CST) funds post-secondary education, social assistance, early childhood development, and child care.
While specific figures for 2025-26 have not been detailed, the CST remains a vital component of federal support to provinces and territories.
Equalization Payments
Equalization payments aim to ensure that all provincial governments can offer comparable public services at similar taxation levels.
These payments are unconditional, allowing provinces the flexibility to allocate funds according to their unique needs.
Territorial Formula Financing
Territorial Formula Financing (TFF) assists the three territorial governments in funding essential public services, acknowledging the higher costs associated with delivering services in the North.
This funding is crucial for maintaining quality public services in these regions.
| Transfer Type | 2024-25 Amount | 2025-26 Amount | Increase ($) | Increase (%) |
|---|---|---|---|---|
| Canada Health Transfer | $52.1 billion | $54.7 billion | $2.6 billion | 5% |
| Canada Social Transfer | N/A | N/A | N/A | N/A |
| Equalization Payments | N/A | N/A | N/A | N/A |
| Territorial Formula Financing | N/A | N/A | N/A | N/A |
In addition to these major transfers, the federal government is investing $11 billion over 10 years to improve access to home and community care, mental health, and addiction services.
Furthermore, $27 billion over five years is allocated for a Canada-wide system of affordable early learning and child care.
These substantial financial commitments reflect the federal government’s dedication to supporting provincial and territorial governments in delivering essential services to Canadians, thereby contributing to a stronger and healthier nation.
FAQs
What is the purpose of the Canada Health Transfer?
The Canada Health Transfer provides long-term, predictable funding for health care, supporting the principles of the Canada Health Act. It is allocated equally per capita to provinces and territories.
How are Equalization Payments determined?
Equalization payments are calculated based on a province’s fiscal capacity, ensuring that all provinces can provide comparable public services at similar taxation levels. These payments are unconditional, allowing provinces to use the funds as needed.
What is Territorial Formula Financing?
Territorial Formula Financing helps the three territorial governments fund essential public services, recognizing the higher costs of delivering services in the North. This funding is crucial for maintaining quality public services in these regions.
How does the federal government support early learning and child care?
The federal government has committed $27 billion over five years to establish a Canada-wide system of affordable early learning and child care, aiming to provide accessible and high-quality child care options for families.
What additional support is provided for mental health services?
An investment of $11 billion over 10 years has been allocated to improve access to home and community care, mental health, and addiction services across the country.
