by John E. Osborne
Special Adviser on Policy
Development National Health and Welfare


NOTE: The Appendix to the Nielsen Task Force report on the Canada Assistance Plan is reproduced below. It's an insider's perspective on the birth of CAP and the program's first 20 years, and it's one of the more comprehensive chronicles I've seen. The text was scanned from the hard copy, but I didn't correct some of the errors (mainly hyphenated words and page numbers). 
Gilles Seguin 
Canadian Social Research Links

I. Antecedents of CAP

Caring for the poor in Canada has traditionally been the responsibility of either the Church or the community. In Quebec the Church until about 30 years ago was considered to be responsible for social welfare, whereas in the Maritimes, the application of Elizabethan Poor Law gave the responsibility to the local authorities. Upper Canada rejected the Poor Law approach and instead relied upon voluntary agencies like Children's Aid Societies, fraternal orders, and hospital boards to care for the poor, the sick and the helpless. As collective self-help was essential to survival in sparsely settled pioneer communities, the Western provinces relied on public programs run by municipalities for health care and aid to the poor. Mothers' allowance programs in Manitoba and British Columbia towards the end of World War I were the first provincial measures to aid the poor.

The Federal Government did not recognize that it had any responsibility towards the poor until 1927 when the Old Age Pension Act was passed providing for a 50 percent federal contribution to provincial plans offering pensions to residents over 70 with limited means. This set the pattern for later shared-cost programs through which the federal government strove to achieve national objectives in fields under provincial jurisdiction. During the Great Depression of the 1930's local communities and even some provinces found they could no longer cope with the cost of relief needed in the hardest hit communities. Voluntary aid from more fortunate areas was not enough to fill the gap, and so in each year from 1930 to 1939 a federal Relief Act or Unemployment Relief Assistance Act was passed to allow the Federal Government to make payments to provinces to help them provide relief for the unemployed. The Rowell-Sirois Commission later concluded that such conditional grant programs were the cause of much federal-provincial disharmony because of their administrative headaches. It recommended the establishment of a federal Unemployment Insurance Act which was introduced in 1940 after a Constitutional amendment which avoided the jurisdictional pitfalls of the Employment and Social Insurance Act of 1935, later found "ultra vires".

Between 1935 and 1950 five provinces introduced health care programs for their welfare recipients, and the Federal Government introduced Unemployment Insurance and Family Allowances. Leonard Marsh's "Report on Social Security for Canada" and Dr. Heagerty's "Health Insurance Report" were both released on 16 March 1943. The former provided a blueprint for a Canadian social security system and the latter for a health insurance system. The Whitton Report and the Cassidy Report, also published in 1943, both put greater emphasis on the need to build up a public assistance system (as Australia has done), than on social insurance. In 1945 the Federal Government in its Green Book proposals to the Conference on Reconstruction offered, conditional upon acceptance of its tax rental proposals, to assume full responsibility for pensions at 70, to share the cost of assistance for the needy at 65, to assume financial responsibility for assistance to unemployed employables, and to share the costs of health insurance. Specifically, it proposed a federal unemployment assistance program to care for those who had exhausted their unemployment insurance benefits at 85 percent of the latter rates. This offer was rejected along with the tax rental proposals.

In the period 1951 to 1954 three "categorical" welfare programs were introduced - Old Age Assistance, Blind Persons' Allowances and Disabled Persons' Allowances - whereby the Federal Government offered to share at least 50 percent (seventy-five percent for blind persons) of provincial expenditures on allowances for residents who fell into the appropriate category (aged 65 to 69, legally blind, or totally and permanently disabled) and who passed the means test. The eligibility conditions for these three programs were tight and inflexi- ble and were intended to assure the public that only "legitimately" needy and "deserving" poor people qualified, but they also meant that many equally needy poor were denied benefits, and they made for complicated administration. The fixed rates set for these allowances took no account of varying family needs, and the dollar-for-dollar reduction of the means test left no incentive for recipients to try to augment their incomes.

With the rise in unemployment in the mid-fifties, pressure mounted on the Federal Government to provide relief for those who had exhausted their unemployment insurance benefits. A more orderly and effective way of helping the provinces cope with poverty than the former Relief Acts was called for, and so in 1956 the Unemployment Assistance Act was passed, retroactive to 1955, whereby provinces with agreements were reimbursed for half their expenditures on assistance to needy unemployed people, with no ceiling on individual benefits or federal expenditures. Until January 1958 payments for the first 0.45 percent of the provincial population were not shared as they were considered non- employable this feature was removed under pressure from Ontario, Alberta, and Nova Scotia. Until April 1966, payments for Mothers' Allowance recipients were not shared. Expenditures for health care or for provincial administration were not shared. Needy unemployed persons in "homes for special care" were eligible for assistance. One more categorical" program was thus added to the welfare system.

Two important innovations of this program are worth noting. The means test (of income and assets) was replaced by a needs test which assessed the applicant's budgetary needs as well as income and assets, and gave assistance to fill the gap between needs and resources. The onus was on the province to assess needs realistically so that benefits would be adequate. The concept of residence was altered to mean residence in Canada. Provinces would no longer require a year of residence in the province for needy persons to become eligible, as long as they had lived in some province during the previous year. This was intended to eliminate the practice of transporting people out of the province rather than paying them assistance. This program was more comprehensive than any previous program; it was flexible and open-ended and gave provinces the incentive to be more generous. To be able to participate in this plan, Quebec for the first time introduced an assistance program for needy persons who were not in hospital. All provinces had signed agreements by 1959.

During this same period the Hospital Insurance and Diagnostic Services Act was passed in 1957, removing one of the major causes of poverty that had previously to be contended with - the burden of indebtedness incurred by hospital patients.

II. Preparatory Consultations

Even before all the provincial agreements under Unemployment Assistance were signed, the Canadian Welfare Council in its 1958 policy statement "Social Security for Canada", called for improvements in three areas of income maintenance - old age security, public assistance, and unemployment insurance. This statement was largely the work of Fred MacKinnon and Norm Cragg, the former a provincial Deputy Minister of Welfare and the latter a CWC staff member who later became the first Director of the Canada Assistance Plan.

The seventh recommendation in this statement reads as follows:

"There should be a federal Public Assistance Act which would be, in effect, an extension of the Unemployment Assistance Act and which would enable the Dominion government to share the aggregate costs to a province, and to the municipalities in a province, of providing financial assistance to all persons who are in need. The Old Age Assistance Act, the Blind Persons' Allowances Act and the Disabled Persons' Allowances Act should be incorporated as specific sections of this general Public Assistance Act. The proposed Act should, under these sections, provide the provinces with the option of continuing old age assistance, blind persons' allowances and disabled persons' allowances as separate programs, or of incorporating these categories in a generalized public assistance program with the same provisions respecting the sharing of costs as in the Unemployment Assistance Act.

The Act should also stipulate that:

a. Length of residence shall not be a condition for the receipt of assistance.

b. The proportion of cost carried by the Dominion government shall progressively increase as the total number of persons on public assistance in a province mounts beyond predetermined percentages of its population.

In effect, this recommendation became the blueprint for future federal-provincial discussions of the federal role in the assistance field.

From the time it was first created in 1962*, the National Council of Welfare - consisting of the 10 provincial Deputy- Ministers of Welfare and 10 representatives of welfare agencies or schools of social work, chaired by the federal Deputy Minister, and charged with advising the federal Minister on matters of national welfare concern - focused attention on the deficiencies of the Unemployment Assistance plan, and urged that its scope be expanded. Similar concerns were expressed by the Welfare Grants Review Committee, a small group of social work academics and professionals who met periodically to advise the Department on the thrust of the National Welfare Grants program created in 1962. Quebec's Study Committee on Public Assistance, set up in December 1961 under the chairmanship of J. Emile Boucher, voiced many of the same concerns in interviews it held with federal officials in Ottawa in the spring of 1962.

It was clear from these consultations that most provinces wanted the restrictions and limitations of the Unemployment Assistance program removed. It did not cover needy persons eligible for mothers' allowance (i.e. single-parent families), children in need of assistance who were not in their own families, or fully employed people in need of income supplements. The costs of health care, child welfare, and other welfare services, could not be included in the calculation of the family's "expenditure needs". And it left support for the aged, blind and disabled to the categorical means-test programs with their fixed rates, income and asset ceilings and strict eligibility rules. In effect, what the provinces wanted was a stronger federal fiscal commitment to social welfare.

In June 1963 the Boucher Report recommended a General Social Assistance Act for Quebec, based on the principle that any individual in need is entitled to state assistance, regard- less of the cause of need. Under it, financial assistance at home would be based on the budget method (i.e. needs test) and not on fixed rates. In addition welfare services should be provided to persons and families threatened with social dependency. These thrusts reflected the consultations the Committee had had with federal and other provin- cial officials. In addition, Boucher recommended the withdrawal of the Federal Government from joint social assistance programs, and the compensation of increased Quebec expenses through extension of the taxation fields. This proposal was given effect in 1965 in the adoption of the Established Programs (Interim Arrangements) Act. Under this Act a province could agree to assume full responsibility for the administration and financing of specified shared-cost programs in exchange for a tax abatement of a specified percentage of federal provincial income tax on provincial residents, an equalization payment, and an operating cost adjustment.

In July 1963 at a Federal-Provincial First Ministers' Conference where the proposed Canada Pension Plan was first discussed, several provincial premiers noted the importance of joint Federal-Provincial action on behalf of all needy persons in Canada, in addition to the retired persons for whom the CPP was designed. At a September 1963 Conference of Ministers responsible for pensions, the categorical programs and the possibility of broadening the application of the needs-test approach were discussed and a joint re-examination of the whole field of social assistance was called for by all ministers, in the hope of developing one general assistance program based on need, as a "safety net" for those inadequately protected by the other social security programs

When the Premiers again met in November to discuss the CPP, they set up a Federal-Provincial Working Group to review the operations and terms of priority of all joint welfare programs and to report back on ways of improving them. This group of Deputy Ministers met in February 1964 to explore views as to the overemphasis on detail and the inflexibility of the existing cost-sharing agreements for welfare programs.

The Problem

The Working Group identified a number of concerns they had with the existing "categorical" programs:

1. The failure to share in mothers' allowance costs was inequitable since all but two provinces had merged this program with their assistance plans; different formulas had to be developed for each province to exclude the mothers' allowance category from the general program and these had not worked fairly. Several provinces urged the merger of all programs into one assistance cost-sharing plan, and all supported 50 percent sharing on mothers' allowances.

2. The criterion of "unemployment" should be removed from the assistance plan so that partially or fully employed people with heavy family responsibilities could receive supplements; an incentive to return to low-paid work from the welfare rolls was needed.

3. The inequitable treatment of the costs of child care should be corrected. Children who were eligible for and receiving public assistance in their own right were excluded from the Unemployment Assistance program because they were not "unemployed". If they were in their own family homes they could be covered as part of the needy family, but if they were in foster homes or living with relatives who became needy because of their presence they were not eligible. The Group concluded that all child welfare costs should be covered under a broadened assistance program.

4. Medical Services and medications should be recognized as shareable expenditures of needy families until such time as health insurance relieved families of such costs. Non-insured health care costs were a legitimate item in a family's expenditure budget.

5. Income maintenance payments should not be over- emphasized to the exclusion of rehabilitation and preventive services, which had the potential for reducing the welfare caseload. Assessment services, vocational rehabilitation, training, placement, and transportation, room and board associated with these should all be eligible for cost-sharing as they could lead to savings in future assistance costs.

Provinces urged that administration costs be shareable in order to make the new program effective, and to encourage provinces to initiate programs involving good welfare policy. Training and developing staff, extending coverage to a broader population, introducing innovations to the welfare field as well as counselling and determining eligibility of applicants were all essential parts of a soundly administered program in which the federal government would have a large stake. Quebec warned that any attempt to associate shared administration costs with qualitative standards would meet provincial resistance.

7. Concepts of community development were considered, and pilot projects were recommended, particularly in areas where employment opportunities were scarce, such as the Newfoundland outports and among the Indian population.

In discussing "work for relief" a distinction was made between punitive programs designed to punish those who wouldn't do menial work in exchange for assistance, or municipal efforts to get greater provincial sharing for municipal projects at low wages, and specialized work projects where unemployed persons worked on projects that helped themselves and their communities under direction and supervision that improved their skills and their motivation while awaiting other employment. Ontario, Quebec and Nova Scotia all spoke favourably about supporting such work activity Projects.

The Working Group concluded that provinces should be given an option. Those who wished to encompasss all their cate- gorical programs in one large assistance plan for all needy persons should be allowed to do so under a broad general assistance act. Other provinces would have the option to carry on their categorical programs and eliminate them as experience allowed. (As it happened, a few provinces continued to operate these programs until well into the '70' s)

The Solution

These proposals were reviewed at Ministerial Conferences in May 1964, April 1965, and January 1966. The Federal Cabinet agreed in February 1965 to proceed with new legislation encompassing these features, and accepted Judy LaMarsh's proposed title for it, "the Canada Assistance Plan", to complement the Canada Pension Plan then at third reading. In the same month Cabinet agreed to proceed with the Medical Care Insurance Plan.

The bill enacting the Canada Assistance Plan was assented to in July 1966, retroactive to 1 April 1966, and all ten provinces had signed agreements under Part I of this Act by August 1967. Mothers' allowance cases and child welfare cases were no longer excluded from eligibility, and welfare services that would prevent people from becoming needy and non-insured health services became shareable items of a family's expenditure budget. The costs of extending provin- cial welfare administration beyond the level available in the base year became shareable. The provisions in the Unemployment Assistance Act for meeting a family's budgetary requirements (needs-testing), for supporting needy persons in homes for special care, and for prohibiting a provincial residence requirement were repeated in this Act. Among the innovations of this Act were the requirement that an effective appeals mechanism against decisions by program adminis- trators on applications for assistance be provided within a year, and the provision that assistance could be used to supplement the incomes of fully-employed people (the working poor) and people already in receipt of benefits like old age pensioners. Other innovations were the extension of welfare services to people "likely to become" poor and the offer to share in provincial administration costs.

Welfare services: Services whose object is the lessening, removal, or prevention of the causes and effects of poverty, child neglect, or dependence on public assistance - like day care, homemaker services, rehabilitation, counselling, community development, adoptions, referrals, etc.

The provisions of the Established Programs (Interim Arrangements) Act were extended to cover this Act, and Quebec was granted further federal income tax abatement to cover most of its annual entitlement to contributions under CAP. The establishment of actual rates of assistance and of eligibility conditions other than residence was once again left to provincial administrations.

Part II of the Act made special provision for sharing in the costs of assistance and welfare services provided by provinces or municipalities to Indians with reserve status. Part III made provision for sharing in the costs of work activity programs - sheltered work programs designed to increase a person's capacity to take advantage of employment-oriented programs, or to provide socially useful work for unemployable persons.

The Original Objectives  (See Hansard, House of Commons Debates, April 1966, pp. 6407-6410, 6922-6925, 7198).

In his 1969 confidential report on Social Security Programs, Dr. Joe Willard, the Deputy Minister of National Welfare, summarized the original objectives of the Canada Assistance Plan as follows:

1. To support the provision of adequate amounts of assistance to persons in need.

2. To encourage the development and extension of welfare services (protective, preventive, rehabilitative and developmental) to help prevent and remove the causes of poverty and dependence.

3. To encourage the development of integrated, comprehensive, general assistance programs so that one program could meet the varying requirements of different groups of people.

4. To ensure access to assistance without provincial residence requirements

5. To provide a framework for federal-provincial collaboration in developing more effective assistance and welfare programs across Canada.

6. To encourage the extension of provincial assistance and welfare services to Indians on the same basis as to the general population.

7. To support the efforts of provinces to prepare and motivate assistance recipients to take advantage of vocational rehabilitation, training and placement services designed to get them into full employment.

In view of the appeal provisions of the Act, he might have added another objective whose importance was soon recognized - to promote recognition and protection of the rights of socially and economically disadvantaged Canadians.

The Context

It is useful to put the development of CAP into its proper context. It was one of five pieces of major federal social legislation enacted in the period 1964 to 1966. Youth Allowances in 1964 extended children's benefits to those aged 16 and 17 who were still at school. The Canada Pension Plan in 1965 provided workers and self-employed people with a contributory, earnings-related social insurance plan offering retirement, disability and survivor's benefits. The Guaranteed Income Supplement in 1966 provided a 40 percent supplement to old age pensioners with little or no other income. The Medical Care Insurance Plan of 1966 extended federal sharing to provincial health insurance plans covering physicians' services.

Those measures in turn formed part of the Federal Governments' "program for the full utilization of human resources and the elimination of poverty" popularly dubbed the War on Poverty, which included items like ARDA, ADA, FRED, the CYC, and Occupational Training Allowances as well as the social programs. (See page 39 of Hansard, April 6, 1965.) The United States had launched its own War on Poverty, and so had several European nations, sparked by the PariBoverty Conference sponsored by UNESCO in February 1964. The Civil Rights riots in U.S. cities like Watts, Detroit and Rochester brought widespread public attention to the problem of poverty and precipitated demands for action to eliminate poverty. In major Canadian cities welfare rights organizations of welfare recipients with names like the Just Society, Humans on Welfare, Unemployed Citizens' Welfare Improvement Council, Welfare Rights Movement, Community Action Group and No Other Way were created and demanded improvements in the welfare system. The National Film Board series "Challenge for Change" with such films as "Up Against the System" focused attention on defects in our anti-poverty programs. The Economic Council of Canada in its Fifth Annual Review in 1968 "The Challenge of Growth and Change", included a chapter on poverty which questioned why poverty was so widespread when billions of dollars were being spent on social security. It noted that about 25 percent of the population of Canada in 1961 had family income below the DBS "low-income cut-off" or poverty level, and that by 1965, following vigorous economic expansion, this figure had fallen to 20 percent.

The Canada Assistance Plan was launched in this atmosphere as one more shared-cost conditional grant program. However, there was considerable controversy over the place of shared- cost programs in a federal system. Some have maintained that federal leadership in promoting the health, welfare and social security of the people of Canada entitles the Federal Government to use its spending powers to persuade provinces to adopt programs in areas that are strictly under provin- cial jurisdiction. New programs for joint-federal action would be proposed, and those provinces that agreed to accept the conditions would get financial support, by channelling federal revenues into certain types of program, provincial disparities might be overcome.

Others have said that conditional grant programs are unacceptable in a federal state, since they imply that the Federal Cabinet knows better than any Provincial Cabinet what is right for the people in these fields that are under provincial jurisdiction. For the Federal Government to offer financial support to those provinces that agree with it, and deny it to those who do not, means that all Canadians are taxed to provide services that are available only in some parts of the country.

Because of this controversy, the government of the day decided that the CAP would be the last shared-cost program it would offer. The Medical Care Insurance plan was presented as a no-agreement, unconditional grant program to provinces that had programs designed in accordance with four or five broad principles. The Established Programs (Interim Arrangements) Act of 1965 went part way to removing some of the irritants of the conditional grant approach, by permit- ting provinces to obtain equivalent funds through transfer of tax points. And when the Social Services Act was presented in 1977 as a new shared-cost program to replace part of CAP, it was designed so that a province would get financial support whether or not it signed an agreement. It is therefore a strong indication of the provincial support for CAP that, despite the opposition of some to shared-cost programs, all provinces had signed agreements within 13 months of its proclamation. - 12 -

III. Period of Re-examination 1966-72

No sooner had CAP been launched than the Minister of Finance proposed, in September 1966, that it be terminated. In a statement to the Tax Structure Committee, he offered to terminate it as of March 31, 1970, and to replace it with a combination of tax abatement, equalization payments and adjustment grants unrelated to program costs. It would be agreed that federal-provincial discussions on maintaining and improving program standards would be continued and federal consultative services would be available, and provinces experiencing net in-migration in any year would receive portability grants if they agreed to allow access to assistance and services without reference to residence. Quebec was the only province to indicate acceptability of this offer.

In August, 1968, one month before the Economic Council published its Fifth Annual review, which called for a re-examination of social programs for their effectiveness as anti-poverty programs, and suggested that the Senate might establish a committee to examine the problem of poverty, the federal Deputy Minister of Welfare, submitted his confiden- tial report to Cabinet entitled "Assessment of Federal Social Development Programs" which had been commissioned in March 1968. It contained a frank analysis of the defi- ciencies of CAP.

These may be summarized as follows:

- provincial progress was slow in the development of welfare services to help prevent and remove the causes of poverty and dependence; at the same time both British Columbia and Alberta complained that their community-wide preventive services were not shareable under CAP, which required a needs test.

- the assistance program did not provide the protection Parliament had intended, because the provinces had not been persuaded to set rates at adequate levels although no upper limit had been placed on assistance rates for sharing purposes; the Federal Government was passive on the need for improved provincial rates as it would seem inconsistent to urge higher rates while proposing federal withdrawal from the Plan.

- the cost sharing formula did not relate contributions to regional needs, nor recognize the additional burdens of dependency that exist in lower income areas. The Atlantic Provinces argued that CAP should provide a differential rate of federal contribution to compen8ate those provinces with special problems of depen- dency; they wanted contributions related to some index of provincial need, based on per capita personal income, labour force partici- pation rates, and the relative level of unemployment. They noted that equalization payments were designed to equalize provincial revenues, but not expenditures. British Columbia wanted special portability grants to cover net in-migration of transients during their first year of residence.

- more effort was needed to avoid duplication between work activity projects and Manpower training and employment projects, or overlapping with FRED income maintenance payments, and with community development projects under other Regional Development programs.

- no agreements on Indian Welfare had been signed under Part II; efforts should be made to resolve the jurisdictional questions raised by the provinces about responsibility for Indian Health and Welfare.

- continuing difficulties were experienced in agreeing on a dividing line between mental patients in mental hospitals and ex-mental patients in homes for special care, and between institutions and clinics for mentally retarded children.

- similar problems were encountered in distin- guishing between child welfare services and correctional services for children, especially since some provinces cared for problem children in welfare institutions and others in correc- tional homes. The problem of defining "a child in care has been a continuing one for CAP which specifically excludes sharing in the costs of health, education and correctional institutions. Consistent and equitable treat- ment of children in care is difficult when provinces have different philosophies as to the nature of the services they are providing. In

Quebec children in need of protection were placed in child protection schools, or church orphanages; if these were educational institu- tions their costs were not shareable.

- greater efficiency and reduced costs rnight be achieved by the extension of welfare organiza- tion and management consultant services to provincial administration; new administration costs were made shareable to help strengthen provincial administration.

The complex nature of the CAP program was also noted in this Assessment. Not only was it designed to support basic income maintenance for persons in need who were not covered by other programs, but it was also intended to supplement benefits provided under other programs (like CPP and OAS) that failed to meet a person's budgetary needs. By support- ing welfare, rehabilitative and preventive services it was intended to increase the effectiveness or availability of other programs: e.g. homemaker and mobile meal services would benefit older persons receiving the Guaranteed Income Supplement, day care would facilitate entry into the Labour Force. The need for CAP assistance was expected to decline as increased unemployment insurance benefits and new CPP survivors' and disability benefits became payable. Simi- larly, when Medicare came in, the focus of CAP health expenditures shifted to non-insured services like drugs and dental and nursing care. On the other hand, CAP was used in place of VRDP (Vocational Rehabilitation of Disabled Persons Act, 1961) in some provinces, and job counselling and place- ment services for assistance recipients were given in others to compensate a deficiency in manpower services. Reliance on CAP supported services was also built into a number of the Regional Development agreements. In a short period of time, CAP had become an essential and interlocking feature of the whole social security structure of Canada.

At a Conference of Welfare Ministers in January 1969, it was agreed to set up three federal-provincial task forces which would explore ways of improving and simplifying assistance programs, trends in the costs of various services and the factors affectin9 costs, and the extent of alienation among welfare recipients and the possibilities of improving their participation in the administration of welfare. These three task forces presented interim reports at the October 1969 Conference of Welfare Ministers and final reports at the January 1971 Conference. The group studying costs presented a trend analysis of past expenditures and an extensive proposal for a general statistical reporting system to overcome the lack of data it had encountered. The second group suggested several ways in which provincial administration could be streamlined, most notably the abandonment of the needs-test approach for a more impersonal income-test approach to determining eligibility. The group studying alienation surveyed 2100 welfare recipients (see "The World of the Welfare Recipient", January 1971) and 10 welfare rights organizations, conducted laboratory experiments on the interaction between recipients and welfare workers, and ten other studies, and made 15 recommendations - including reaffirmation and publicization of the right to assistance, separation of the payment and counselling functions, provision of work incentives, and creation of opportunities for welfare rights organizations to be involved in the process. The survey of recipients (family heads and individuals) revealed that in the summer of 1970, 41 percent were on welfare because of permanent disability or illness, 26 percent because of the absence of husband, 13 percent because of unemployment, 9 percent because of old age and 8 percent because of temporary disability. As of March 1970 there were about 1.25 million people (5.8 percent of the population) receiving social assistance in Canada, including about 500 000 family heads or single adults.

It should be noted that most of the recommendations of these three groups related to provincial, not federal, activities since the administration of assistance is a provincial responsibility. However, the proposal to permit an income- test in place of the needs test to simplify administration required a change in or reinterpretation of the Canada Assistance Plan.

The reform of Unemployment Insurance in 1970 had a signifi- cant impact on CAP by keeping people off assistance rolls and offering benefits at levels not requiring supplemen- tation. (However, many of these reforms have since been reversed, causing upward pressures on CAP spending.) In November 1970 the Federal Government published a White Paper on Income Security proposing to convert family allowances to an income-tested program, to raise the Guaranteed Income Supplement, and to improve the CPP. It rejected the Guaranteed Annual Income as a replacement for income security programs, and proposed experiments in Canada like those in the U.S. that were evaluating the guaranteed income approach. It proposed discussions with the provinces on the future of CAP with particular reference to:

1. The right of access to assistance.

2. Income exemptions as work incentives.

3. The adequacy of assistance levels in covering basic requirements.

4. Improved appeals machinery.

5. More effective communication with recipients and

support for welfare rights groups. 6. Simplified administration and minimizinq invasions o~ privacy.

7. A review of cost-sharing arrangements and the dividing lines between different kinds of institutional care and services.

8. Greater participation in work activity projects.

9. Use of an income test for day care and homemaker services, and improved accommodation, health and counselling for youth.

10. Greater coordination of welfare and manpower services, with priority for services to get people into employment.

The reference to guaranteed income experiments was followed up by an offer to share with provinces the cost of such studies. These would be patterned on the experiments in New Jersey, Gary, Iowa, and Seattle-Denver, and would explore the effects of a guaranteed income program on work incentives. Though several provinces expressed interest, in the end only Manitoba carried out such an experiment, concurrently with the social security review.

In discussing the nature of poverty, the White Paper noted that between 1965 and 1967 the percentage of families below the DBS low-income cut-off levels had fallen from 21.2 to 18.6 percent. In subsequent years this percentage fell further to 17.4 in 1969, to 15.9 in 1971 and to 12.0 in 1973. This was a period of improvement in Unemployment Insurance benefits and OAS and GIS payments, as well as provincial social assistance rates. Nonetheless, Federal CAP expenditures rose from ~45O million in 1969-70 to ~727 million in 1971-72 and to ~825 million in 1973-74.

The White Paper focused on the needs of the "working poor", those families and individuals with insufficient earnings from work to meet their minimum requirements. This was reflected in the proposed income-tested program for families with children and the suggestion to build better work incen- tives into CAP to make it a more effective income supplement program for low-income workers.

During this same period (1969-71) much emphasis was placed on constitutional reform, culminating in the Constitutional Conference of First Ministers ~n Victoria in June 1971. Many studies were launched on the distribution of powers between federal and provincial governments, including "Income Security and Social Services" a working paper published in 1969. It proposed (page 106) that provincial legislatures have exclusive jurisdiction over social services, that Parliament have paramount powers in respect of retirement insurance, and that Parliament and the provin- cial legislatures have equal powers to make general income support payments to persons and concurrent powers in respect of public income insurance measures.

The Report of Quebec's Commission of Inquiry on Health and Social Welfare published in January 1971 proposed a provin- cial General Social Allowances Program to replace social assistance, with two levels of income-tested benefits for people who could work and those who could not, to be shared under the terms of the CAP. The role of family allowances as an integral part of the provincial system was a hotly debated issue through most of 1971 as Quebec's proposals and the federal FISP proposals were not at first compatible. Through negotiation they became so. But Quebec's unrequited demands for paramountcy over all social security measures in June 1971 led to the rejection of the Victoria Charter for repatriation of the Constitution. On the federal side it was argued that members of Parliament would have little interest in voting funds for programs over which they had no control.

Meanwhile from mid-March to mid-May the federal Minister worked with his colleagues for approval of amendments to CAP which would (a) provide a basis for supporting either needs, means or income-tested social allowances programs, (b) provide additional support for provinces with high unemployment rates, and (c) build in a control factor to limit federal contributions, especially for income-tested programs. The last item was later dropped as it was considered impossible to put a ceiling on the amount of poverty the Federal Government was willing to help alle- viate. He discussed this proposal bilaterally with provincial Ministers and together at the June 1971 Welfare Ministers Conference, making it clear to them that if there was a successful resolution of the constitutional issues concerned with social policy at the Victoria Conference, CAP would be amended to provide compensation for programs that employ an income test. Provinces could set up guaranteed income plans and provide benefits to low-income workers and receive cost-sharing. With the failure of the Victoria Conference to reach agreement, there were no more federal- provincial welfare conferences until January 1973.

In 1971 the Senate Committee on Poverty published its report "Poverty in Canada", which among other things recommended a federal Guaranteed Annual Income program for all Canadians who needed it, replacing all existing federal income- maintenance laws except CPP, Unemployment Insurance, veteran's Allowances, and benefits for native peoples. It recommended also that the CAP be retained and updated "to serve as a vehicle for federal-provincial cooperation and cost-sharing in the delivery of social services", and to cover those not initially covered by the GAl on a "needs basis

Although a successful solution to the FISP problem had been negotiated with Quebec in late 1971, the revised FISP failed to receive Parliamentary approval in July 1972, and died when an election was called in August. In the absence of a federal-provincial forum for welfare ministers to discuss their concerns, the Quebec and New Brunswick ministers persuaded their provincial colleagues to convene in Victoria late in November 1972 at the first of many Interprovincial Welfare Ministers' Conferences. The two issues emphasized at this meeting were the integral importance of a strong family allowance program to any provincial social welfare system, and the pressing need for a joint federal-provincial review of the whole social security system in Canada.

IV. Joint Federal-provincial Social Security Review 1973-78

In April 1973 the federal Minister issued a "Working Paper on Socia1 Security in Canada" and called a federal- provincial conference of Welfare Ministers to discuss his proposals. It presented five strate9ies and 14 propositions for joint consideration. Three task forces of federal and provincial officials were set up to deal with these questions. The Working Paper focused on "those who can work" and the need for built-in work incentives in an income supplement program for them. For those who cannot work it proposed income support. Its sixth proposition was that:

"The incomes of those who are working but whose incomes are inadequate by reason of family size or by reason of the nature of their employment (low-paying self-employment or intermittent or partial employment) should be supplemented under a single, general income supplementation plan, with built-in work incentives."

Its seventh proposition was that:

"A Guaranteed Income should be available to people whose incomes are insufficient because they are unable or are not expected to work, namely the retired or disabled, single parent families, and people who are not presently employable by reason of a combination of factors such as age, lack of skills, or length of time out of the labour market."

Its ninth proposition was that:

"While income supplementation along the lines provided for in propositions 6 and 7 would remove the great majority of people from social assistance at it now stands, a supplemen- tary or "last resort" programme would be required to meet special situations as they arose (as is now provided for under the Canada Assistance Plan)."

This last proposition reflected the initial view of the authors of the paper that the Canada Assistance Plan was a necessary evil, to be tolerated until it could be replaced. They believed that it gave the provinces a "blank cheque", and that a ceiling on the federal commitment was needed. This would be achieved by reducing the CAP to a residual support or "last resort" plan, and replacing its main assis- tance thrust with a new guaranteed income or income support plan yet to be designed. The social services provided by CAP were dealt with in the Social and Employment Services Strategy (itself an afterthought when the absence of any reference to social services was noted) under propositions 10 and 11, which proposed that:

"The broad spectrum of social and unemployment services required to make the employment and income supplementation strategies fully effective and efficient should be extended and improved - training, counselling, placement, rehabili- tation, special work situations, homemaker and child care services."

"The costs of special services including nursing home and child care, which cannot be met by the individual out of his/her income, including income supplementation, should be covered through special measures under the general social security system."

The Task Force on Income Maintenance focused for months on the proper design of the Income Supplement and Guaranteed Income (Income Support) programs; many meetings and interim reports dealt with work incentives, and definitions of incomes, of family, of accounting periods, in order to get more "rationality" into the assistance programs. To iden- tify the target population, it developed also extensive statistics on the characteristiccs of those classed as "the working poor . But there was a lack of consensus as to whether the federal or provincial government would operate all or part of the program. A cost-sharing offer was made by the Federal Government in June 1976 for a two-tiered income support and supplementation plan. It was not enthu- siastically received by the provinces, and was withdrawn in August 1977. Federal Task Force members then directed their efforts to salvage the principles and design features it contained by developing the federal Refundable Child Tax Credit which was legislated in 1978, for Family Allowance recipients with below average income, and by suggesting ways of improving CAP. These included the addition of work incentives, and the development of better guidelines to replace the Interim Guidelines adopted in 1975 to clarify the boundaries for cost-sharing, and to ensure consistency with the income support and supplementation proposals.

The Task Force on Social Services sought to achieve parity with the way in which health services are provided - some made available on a universal basis, some with user charges geared to income, some only on the recommendation of a professional counsellor. It emphasized the need to separate the provision of financial support from the provision of welfare services. It explored the nature of and the need for protective, rehabilitative, preventive, developmental and residential services, and recommended a new Social Services Act to finance welfare services provided by CAP and rehabilitative services provided by VRDP. Later, after a federal-provincial working group had spent a year developing an acceptable approach to the provision of residential services, they were removed and placed under the Established Programs Financing Act (EPF) of 1977, in response to the provinces request for a consistent approach to the treat- ment of institutional care, from acute hospitals through to homes for the aged. The provinces generally agreed to the social services proposals in June 1975 and so the Social Services Act was developed. It received first reading in June 1977, but by then the EPF Act had caught provincial imagination. Some provinces began pressing for a similar block-financing approach for social services. Despite this, when the federal Minister announced in September 1977 his intention of adopting such an approach, the Conference of Provincial Ministers at their meeting in Edmonton that same month was "united in their rejection of the tactics used ... in making a unilateral proposal ... without consultation with the provinces". After the March 1978 federal- provincial Conference of Welfare Ministers approved the concept in principle, in May 1978 the Social Services Financing Act was given first reading. However, the economic climate drastically changed during 1978, and in November of that year the Minister of Finance withdrew the offer to cost-share social services when no agreement could be reached on revising the terms of the EPF Act.

Early in the course of the review two issues of concern were raised by the provinces, one dealing with nursing homes, the other with day care. Manitoba and Ontario were both inter- ested in developing universal programs for nursing home care as part of their hospital insurance system, yet they feared they would lose the 50 percent cost-sharing currently provided under CAP for needy persons in nursing homes. The provinces argued that the requirements of the CAP were forcing them to deviate from the kinds of social priorities they wished to pursue for their own people - that it was "distorting" provincial priorities. They were assured that no province would be worse off financially by introducing such universal programs. Eventually the Nursing Home Care Benefits Regulations were adopted whereby provinces could be reimbursed for the costs of nursing home care for patients who could pass the provincial assistance plan needs test if they had been required to do so - a sort of "shadow" needs test. As of January 1, 1974, agreements with Ontario, Manitoba and Alberta guaranteed payments to replace CAP revenues lost due to the operation of universal nursing home care programs.

British Columbia and Manitoba were moving toward universal day care programs for children of working mothers regardless of their need for assistance, and wanted CAP sharing to continue for such programs. CAP was sharing in the day care costs for low-income families, i.e. those "likely to become in need" if the service were not provided. But the defini- tion of this concept was contentious, and several provinces argued that the income thresholds being used by the CAP administration to determine eligibility for subsidized day care were ridiculously low. At the end of 1973 new Day Care Interim Guidelines were worked out and agreed to by the provinces, to be followed until such time as the future nature of income supplementation and social services avail- able as a result of the Review had been determined. At that stage CAP was regarded as a program soon to be replaced by something much better. It was expected that under the Social Services Act, day care services would be available to all, with user fees set on a sliding-scale according to income.

Another contentious area was the question of young offenders; should they qualify as "children in care"? The Solicitor General was developing a Young Offenders Act, and many provinces were concerned that they would lose CAP sharing for children in correctional services operated by welfare authorities. On the other hand, Ontario and New Brunswick argued that they had children in care who were under the jurisdiction of correctional authorities and were unjustifiably being denied cost-sharing because of their philosophy of child care for young offenders. So in April 1974 payments to these two provinces were authorized to share in the cost of such services for young offenders under the Young Offenders Agreements. (It was not until July 1982 that the Solicitor General was successful in having the Juvenile Delinquents Act replaced by the Young Offenders Act, effective 2 April 1984. Youth transferred to provin- cial corrections jurisdiction are no longer covered by CAP. Those not yet transferred and still under the Juvenile Delinquents Act may be covered still under CAP for a year, when their situation must be reviewed. Youth under provin- cial child welfare authority are still covered under CAP.)

These three issues illustrate the nature of the "interface" problem that CAP has confronted since its inception. If health, educational, and correctional institution costs are not to be shared, where are the lines to be drawn? What part of a building is a health institution, and what part is welfare? when is a school for handicapped children educa- tional, and when is it welfare? Disputes about where such lines should be drawn led to the downfall of the Social Services Act in 1977, and generally made for a contentious atmosphere in federal-provincial relations as the Social Security Review came to a close amid the economic con- straints of 1978. Provinces welcomed EPF in 1977 because it meant no more federal "nit-picking" over the eligibility for sharing of specific provincial expenditures. But they found that, when nursing homes and homes for special care were transferred from CAP to EPF, there still remained the need to draw lines between these types of accommodation and other specialized kinds of shelter for transients, assault victims, and so on. Although the nature of the lines had shifted, they still had to be drawn in new locations to delimit CAP's sharing responsibilities.

CAP's interface problems with EPF were found to be numerous:

1. Residential services for adults were no longer share- able, but children's residential services in adult residential care facilities were.

2. Are nurses in mental health programs to be regarded as providing services that are part of Extended Health Care (covered under EPF) or part of the rehabilitation service shareable under CAP?

3. The nature of the professional services involved determined whether the services being provided by a Rehabilitation Centre were social or medical.

4. CAP cost-sharing was available for adult day care services provided only to non-residents by institutions for adults.

5. Home care services are covered under EPF Extended Health Care, but meal services are shareable under CAP as long as they are provided to non-residents, residents temporarily out of an institution are not eligible.

6. Respite services (short-term admissions to relieve families caring for infirm relatives) are not shareable under CAP.

7. Community preventive services must be differentiated from home care and ambulatory services provided by community health and social service centres to deter- mine what is shareable under CAP. 8. Family planning services when rendered by a physician

or in a hospital are ineligible for CAP sharing.

Determining what is shareable is still CAP's major problem.

V. Period of Restraint 1978-1984

The problem of settling boundary questions for CAP sharing has generated a great deal of the federal-provincial friction that has been associated with this program. In its early years there seemed to be a high level of social content in joint discussions around CAP; until about 1976 there was a sense of utilizing government policy initiatives to solve the many problems of poverty faced by Canadians. In the last decade discussions have seemed to have a much lower level of social content: they have centred on negotiating additional expenditures to be shared for borderline provincial programs. There has been a federal suspicion that provinces were working on schemes designed to get more federal cost-sharing rather than to solve social problems. Concurrently, the federal treasury was pressing for stricter controls on CAP spending. As a result, provincial dissat- isfaction with CAP and its administration mounted, as provincial treasuries also suffered from fiscal constraints. As new provincial programs were developed, and old ones evolved, the federal cost-sharing rules seemed to the provinces unclear and ambiguous, and federal discretion seemed to be employed to thwart their plans for expansion.

During the period 1978 to the present, three major themes have dominated developments in the social assistance field. With the tremendous upsurge in unemployment rates, many more "unemployed employables" appeared on the welfare rolls, leading to renewed efforts to build work incentives into the assistance programs and to help recipients back into employment. The fiscal restraint announced in August 1978 reduced the federal funds available for social welfare items. And the acrimonious nature of federal-provincial negotiations on EPF amendments, the Canada Health Act, and the Charter of Rights in a repatriated Constitution created a very difficult atmosphere in which to conduct federal-provincial consultations on welfare issues.

The Social Security Review had emphasized the need to build work incentives into the design of income supplementation plans in order to ensure that low-income workers would not be worse off than those on assistance, and that assistance recipients could improve their incomes by working, even part time. When the Income Support and Supplementation offer was withdrawn in August 1977, efforts were increased to improve social assistance plans by building better work incentives into them. This could be done by modifying the benefit reduction rates for income from earnings, or by increasing the band of exempt earnings before benefits start to be reduced. At the November 1978 federal-provincial Welfare Ministers' Conference, the federal Minister agreed to find ways to improve CAP work incentives and to update other CAP guidelines. After much discussion and considerable provincial pressure, in July 1980 the federal authorities increased by 50 percent the ceiling on earnings exemptions. The amounts allowed for work-related expenses and the liquid asset exemption levels were also substantially increased. The flat-rate exemption for aged and disabled beneficiaries has been regularly increased to keep pace with OAS/GIS levels. These guidelines had been introduced in May 1975 as temporary measures during the Review.

The needs test with its required examination of a family's budget and basic needs, as well as assets, income, and other resources, was another source of contention for some provinces. It was said to be demeaning for the applicant, and it made for higher costs of administration. Several provinces preferred a simple test of income and standard budgets for various family sizes. The CAP administration accepted the concept of a "pre-added" budget with rates for most items fixed in advance, but insisted that at least one item, shelter costs, be kept as a variable to be determined for each family. where provincial programs shifted to a straight income test, the Federal authorities insisted that the province either "carve out" those who did not qualify under the needs test, or apply a "shadow" needs test to identify those recipients who could qualify as "persons in need". The latter was used for nursing home care, and the former for family benefits for single mothers, guaranteed income for the disabled, and supplementary benefits for aged persons. "Carving out" meant that a needs test was applied first and if qualified, the applicant received shareable assistance payments; an income test was then applied and the applicant might receive a supplement to assistance, or the full benefit if no assistance was payable. Not all prov- inces were prepared to accept this position. Ontario and Quebec were both strong advocates of the income test approach which they believed was more efficient and less demeaning. Although the Federal Cabinet had approved this in 1971 as a "carrot" for constitutional reform, successive Cabinets have since withstood pressure to amend CAP to include the income test approach as an option to the budget review approach, probably fearing the fiscal consequences.

During the Social Security Review much emphasis was placed on "work activity" projects (Part III of CAP) as part of the Employment Strategy. Some provinces developed model "community employment" projects in 1973 and '74 to show how welfare recipients could be gainfully employed. Several provincial welfare departments developed their own placement services to find jobs for their clients. With the continued upsurge in unemployment in the 1980's, some provinces have re-examined the Work Activity concept in order to get cost-sharing for their job-readiness projects. The federal
- 26 -
Department had certain reservations about these projects. Even though they were clearly designed to help people back into employment, it was feared that CAP was overlapping into CEIC's area of jurisdiction - job creation and placement. Early in 1984 Quebec proposed certain pilot projects to run from April 1984 to August 1986 which would be added to the list of shareable programs under their CAP agreement, and this the Federal Government accepted.

Concerned with the phenomenal increase in the number of assistance recipients in 1982 and '83, Quebec gave top priority to resolving the unemployment problem, but with little success. Its pilot project has promising possibili- ties, with its focus on those under 30 who cannot find or keep jobs. It is a five-pronged project, of which three prongs are potentially shareable under CAP - the completion of secondary education, work experience, and community service. (The other two prongs deal with wage subsidies and wage supplements.) Over the next two years it is to cost CAP $59 million. About 9000 recipients are expected to participate in the "rattrapage scolaire" program to obtain a secondary school diploma in preparation for future employ- ment. Perhaps 30 000 recipients would participate in the year-long work experience project - alternating study and work sessions to develop basic knowledge and skills, subsidized by training allowances paid by employers. The community service project, also for one year, would focus on the development of volunteers in local promotional and service organizations, and might involve about 10 000 recipients. Out of a total caseload of 400 000 recipients, 260 000 (65 percent) of whom are employable, Quebec esti- mates there are 85 000 single persons under 30 without dependents. Close to 50 000 of these would be participating in the pilot project. Quebec's caseload is estimated to be about 42 percent of the national caseload of 950 000. If the Quebec project is a success it may demonstrate to other provinces how they can help reduce their own welfare case- load by helping people to find employment.

The second theme of the period has been fiscal restraint. Following Tax Reform in 1971 and the Established Programs Financing Act of 1977, the federal share of tax revenues had been steadily declining, while provincial tax revenue~ w~r~ increasing. The implications of this trend for shared-cost programs must be obvious, especially where the receiving government has all the control over the amounts that are to be shared. The relative fiscal positions of the federal and provincial governments in 1985 are considerably different from those of 1965 when CAP was being developed. The fiscal imbalance of the 1980's has been a source of concern to the Federal Government and has given rise to successive attempts to cut back on federal CAP commitments. - 27 -

Fiscal restraint was being felt as early as 1977 and no doubt contributed to the withdrawal that year of the offer to share in Income Support and Supplement plans. But it was formally announced in August 1978 and led immediately to program reductions and layoffs in the federal public service, including the abolition of 800 positions in Health and Welfare. The proposed Social Service Financing Act was an early victim of restraint, sacrificed when provinces would not agree to any cutbacks in the EPF arrangements. At the same time there were suggestions that a ceiling should be imposed on federal expenditures under CAP, which was expected to face increasing demands from the provinces for sharing in the costs of social services. At the end of 1978, it was being predicted that the social service component of CAP would continue to grow at the rate of 20 percent, its average over the previous 6 years: Quebec was forecasting a 13 percent growth rate, Alberta a 24 percent rate, and Ontario was expected to have much expanded claims for child maintenance costs. The fear that provinces would increasingly use CAP as a fiscal instrument to improve their own incomes without improving their social programs led to consideraton of terminating the CAP agree- ments and negotiating new arrangements that would ensure federal control over future federal expenditures on assistance.

In September 1978 three options were examined: vacating the field entirely and yielding the corresponding tax points to the provinces, block financing which would involve payment to each province of the same national per capita average regardless of its own assistance expenditures, or reducing below 50 percent the percentage of provincial expenditures to be shared. In each case it would be the low-income provinces that were hardest hit. Any saving to the Federal Treasury would be realized at the expense of the poor, the disabled, the aged, single mothers with small children, and the long-term unemployed - since the poorer provinces would have to reduce rates of assistance or caseloads, and tighten eligibility rules in order to cut their spending. But the problems of backing out of a long-term federal commitment to social welfare seemed to outweigh the apparent advantages of capping federal expenditures on the relief of poverty. In any ca~e, this approach was set aside after the 1979 election.

when the Social Services Financing Act was abandoned on 9 November 1978, the federal department had been asked to explore ways of limiting the increases in federal CAP contributions. This limitation was presumed to apply only to social services, not assistance, and it was proposed to the provinces that they limit growth in these areas to 11 percent in 1979. The provincial reaction to this proposal was largely negative. By July 1980, provincial expenditures on social services had not increased nearly as much as had been anticipated. Nonetheless it was proposed that two central agencies (MSSD and Finance) review both EPF and CAP, and a Task Force was set up in September to develop a strategy for renegotiating CAP and identifying the appropriate division of social policy responsibilities between the federal and provincial governments. They were concerned by the growing fiscal imbalance, and by the lack of federal leverage in setting standards and in controlling costs. Federal transfer payments to provincial governments were seen as an area of significant potential savings; if they could be reduced, a better fiscal balance would be achieved, and federal efforts could be concentrated in areas of federal concern. Any changes, however, should not undermine the federal commitment to basic social programs. At the same time constitutional discussions were underway, and there were many doubts expressed about the appropriateness of the federal role in contributing to social services or assistance.

In preparing its contribution to the work of this Task Force, the Department made the assumptions that the Federal Government would continue to share responsibility for solving major social problems, but that it sought a more effective use of resources - perhaps by reallocating among target groups or types of services. If effective targetting were to continue, the federal authorities must maintain the principles that all people in need are entitled to assistance, with no requirement for prior residence, and that effective appeals machinery must be maintained. Some thought was given to cost-sharing percentages that varied among provinces, related to some measure of provincial needs and costs, such as the provincial personal income tax base, or relative per capita wage, unemployment and labour force participation rates. It was clear however, that unless more federal money could be allocated to the field, some provinces would get less, and their social programs would decline.

Early in 1981 a set of guiding principles had been developed by the Task Force for transfer payments in the social policy area - including the extent of federal constitutional responsibility for reducing poverty and improving the quality of life.

These principles are as follows:

1. Federal financial involvement by means of transfer payments to provinces for social programs that are under the general constitutional authority of the provinces, is based on a commitment by the federal government to ensure that Canadians share in the benefits and obliga- tions of common nationhood, have access to basic social services and through these programs strengthen their identification with Canada as a nation.

2. Federal financial support to the provinces for major social programs is to ensure the development and main- tenance of fundamental national standards in these programs.

3. The federal government is committed to ensuring that the costs of provincial basic social programs which have major benefits outside the province are fully shared by all Canadians.

4. Federal involvement in the financing of provincial social programs brings a responsibility for a coopera- tive federal-provincial partnership in the development of policy.

5. Social programs supported by federal transfers should provide full portability of benefits and equality of access to all Canadians.

6. Funding agreements with the provinces should ensure the provision of adequate information for Parliament to evaluate the expenditure of federal funds.

7. Federal-provincial transfer payments arrangements must provide for full visibility of the federal role in the support of these programs.

The third theme that dominated this period was the acrimo- nious nature of federal-provincial relations. The proposals to repatriate the Constitution with a new Charter of Rights and Freedoms, to amend the EPF Act which expired in 1982, and to replace Hospital and Medical Care Insurance with the new Canada Health Act, created a very difficult atmosphere in which to discuss anything with the provinces, especially CAP changes that might reduce the contributions they would receive. Nonetheless discussions were held. At the time the Social Services Financing Act was withdrawn, two issues were left with the federal authorities to resolve - how to improve work incentives and update assistance guidelies (which was discussed previously), and how to simplify CAP's administration. In June 1980 the Chairman of the - 30 -

Interprovincial Conference of Welfare Ministers proposed that a co-chaired federal-provincial task force be set up to review administrative procedures and program guidelines for CAP. At issue was the potential sharing of new provincial assistance programs like the Saskatchewan Family Income Plan, and the Quebec Work Income Supplementation Plan, neither needs-tested. The provinces wanted the law changed, or the guidelines abolished. They wanted a completely pre- added budget (i.e. income-tested); they wanted various restrictions removed, like the "carving out" provision to identify those costs eligible for sharing, the provision that there be no prior residence requirement, and the provision that there be prior federal review and approval of each work activity project; and they wanted a simplified audit. In the federal view some of these issues could best be dealt with on a bilateral basis, while for others a multilateral review was appropriate - such as the inter- pretation of "likely to be in need", the "auspices" under which welfare services may be provided (e.g, health? corrections? education?), the use of sampling to determine shareable expenditure, and further exploration of work incentives.

Such a task force was set up in the fall of 1980 by the Federal-Provincial Ministers' Conference - the Task Force to Review CAP and VRDP. Its report in May 1981 identified those changes that the provinces wanted to permit them more flexibility in designing and operating their programs, including streamlined reporting systems, a revised audit process to eliminate duplication, reduced delays in final- izing claims, a more flexible evaluation system for work activity projects, better measures to maintain disabled persons in employment, relaxation of earnings exemption guidelines, and sharing in income-tested benefits for selected target groups.

Following this a Continuing Committee of Officials was set up in the fall of 1981 to explore these issues further. They met and considered joint audits, methods to alter the existing exemption guidelines, and the "likelihood of need" concept with more generous thresholds for income-testing cost-shared welfare services.

The Task Force also noted the implications for CAP of the Report of the Special Parliamentary Committee on the Disabled and the Handicapped ("Obstacles") published in February 1981, which had recommended a number of improvements in the provision of services for disabled persons.

The following year the Parliamentary Task Force on Federal- Provincial Fiscal Arrangements reported on CAP and EPF. The terms of reference of this Task Force called on it to examine CAP and the expenditures made under the EPF Act with a view to recommending a reduction in payments to the provinces. However, the Task Force recommended:

- the continuation of cost-sharing for social assistance (all members in favour) and social services (a majority in favour);

- increased spending on several program changes, including variable cost-sharing to recognize varying levels of need for social assistance payments in different provinces;

- no overall reduction in the fiscal commitment for programs now cost-shared under CAP;

- a review of the extent to which provinces are meeting program conditions and consultation with the provinces on more precise definitions;

- strengthened requirements for statistical and financial information to improve understanding of the programs cost- shared under the Plan.

The Parliamentary Task Force made several observations, among which was the need to reduce interprovincial varia- tions in per capita spending, and to encourage the development of national standards in social assistance (all members in favour) and services (a majority in favour).

Since CAP's creation in 1966 it has had a substantial effect on the level of provincial spending on social programs, especially on social services. No doubt the decision to share in the costs of increased provincial administration contributed to the growth of provincial and municipal welfare infrastructures as well.

The following tables have been presented in order to indicate the growth in assistance caseloads and expenditures in recent years. From these tables it may be noted that the number of beneficiaries, including dependents, has increased by 50 percent between March 1974 and March 1983 - from 1 208 600 to 1 832 900 persons - with an increase of 22 percent between 1982 and 1983. Since 1973 British Columbia's beneficiaries increased by 120 percent; since 1974 the increase in Quebec was 70 percent and in Alberta 62 percent. However, part of this is due to a change in definition. - 32 -

Between 1967-68 and 1982-83, social assistance expenditures rose from $450 million to $4 billion with close to a ten- fold increase in Quebec and eight-fold increase in Ontario, reaching $1.5 billion and $1 billion respectively. British Columbia and New Brunswick expenditures increased to fifteen and seventeen times their spending in 1967-68. Overall expenditures increased by 15 percent in '81-'82 and by 28 percent in '82-'83. These amounts are for assistance only. In addition, another $2,2l6 million was spent on social services under CAP in 1982-83, and $l,980 million in 1981-82, compared with $737 million in 1974-75. Half these sums are reimbursed from the Federal Treasury under the Canada Assistance Plan.

By 1983-84 total expenditures on social assistance had risen to $4,940 million and on social services to $2,344 million.

Now in its twentieth year, the Canada Assistance Plan has clearly had a tremendous impact on the quality of life and well-being of millions of Canadians, in a period when wide- spread unemployment and rapid inflation were taking their toll in human misery and deprivation, thwarting the career plans of our youth and the contingeny savings plans of older people. It has not achieved all that the provinces would like it to have done, but it has put billions of dollars of tax revenues into the hands of those whose need is greatest, and has helped finance services for disadvantaged children, disabled persons, and elderly people who have lost their independence. It has become part of the fabric of life in Canada.

Service to the Public - Canada Assistance Plan
Government of Canada

Note: In the hard copy version of this report, the last two pages are tables showing the number of welfare cases and related costs.

Social Security Statistics: Canada and the Provinces, 1978-79 to 2002-03
Table 361 - Number of Beneficiaries of General Assistance (including dependants), as of March 31
Table 362 - Total Federal-Provincial Cost-Shared Expenditures for General Assistance

The most recent version of Social Security Statistics is:
Social Security Statistics, Canada and Provinces, 1978-79 to 2002-03


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