Canadian Social Research Links

Federal Cuts in Social Spending,

Sites de recherche sociale au Canada

Les coupures dans les dépenses fédérales
(domaine social)
1972 à 1995

Updated October 24, 2010
Page révisée le 24 octobre 2010

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The list below of caps and cuts to federal social spending between 1972 and 1995 is copied from Appendix I of:
National Standards and Social Programs:
What the Federal Government can do
September 1997

Political and Social Affairs Division
Parliamentary Library


Responding to the combined impact of fiscal, intergovernmental and other pressures, the federal government has, since at least the mid-seventies, been engaged in what has been widely portrayed as a retreat from the social policy role established during the immediate post-war period. Major milestones in this development are:

* Federal post-secondary education (PSE) contribution capped at 15% - 1972

* CAP "replacement funds," negotiated to compensate provinces which had lost cost-sharing by making certain extended services universal - 1974

* Federal Medicare payments for 1976-77 capped at 13% growth over 1975-76 - 1975

* Established Programs Funding* (EPF) program created - 1977, replacing 50/50 conditional grants for Hospital Insurance, Medicare and Post-Secondary Education with a combination of a block grant, indexed to population and GNP growth, and a transfer of tax points. This arrangement initially increased the federal share of aggregate program costs, but from 1978-9 it began to decline.

[ * CORRECTION: EPF stands for Established Programs Financing - see ]

* Equalization formula modified to preclude payments to any province where per capita personal income exceeds the national average (thereby precluding payments to Ontario, which would otherwise have qualified) - 1981

* EPF renewed, minus the revenue guarantee cash grant -1982

* Equalization program renewed, replacing the "national average" formula with a five-province standard which eliminated the growth in entitlements resulting from the impact of Alberta oil revenues under the earlier formula - 1982
Other features:
* a three-year transitional payment provision, under which entitlements resulting from the new standard were topped-up to the level which the previous standard would have established; and
* a ceiling on grant increases based on GNP growth, and floors precluding drops of more than 5%, 10% or 15% depending on the fiscal strength of an individual province.

* Post-secondary Education component of EPF capped at 6% growth ("Six and Five" restraint program) - 1983

* Post-secondary Education component capped at 5% growth - 1984

* Federal-Provincial Agreement on the Enhancement of Employment Opportunities for Social Assistance Recipients, 1985: for purpose of encouraging training and other employability enhancement measures for welfare recipients. (Q: cost impact?) - 1985

* Federal transfers under EPF partially de-indexed (from adjustment reflecting increase in GNP to adjustment proportional to GNP increase minus 2%) - 1986

* Federal EPF transfers frozen at their 1989-90 level for years 1990-91 and 1991-92, then indexed to GNP growth minus 3% - 1990

* Cap on CAP: welfare and social services cost-sharing transfers to the three wealthiest provinces (Ontario, Alberta and B.C.) limited to maximum increase of 5% per year for 1990-91 and 1991-92 - 1990

* Freeze on federal EPF transfers extended for three years, through 1994-95, after which indexation to GNP growth minus 3% to take effect - 1991

* Cap on CAP (maximum 5% annual growth in transfers to Ontario, Alberta and B.C.) extended for three years, through 1994-95 - 1991

* Equalization program renewed for a five-year period with a modified funding formula expected to increase grant growth rates from around 3% to 5% -1994

* Cap on CAP (maximum 5% annual growth in transfers to Ontario, Alberta and B.C.) extended for an additional year (through 1995-1996), along with a general freeze on payments for the Post-Secondary Education component of EPF - 1994

* Canada Health and Social Transfer (CHST) established 1995, combining the EPF and CAP transfers in a single block transfer which reduced federal funding by some $2.5 billion for 1996-97, and an additional $2 billion for 1997-1998, compared with funding levels projected under previous transfers.

* CHST further elaborated - 1996.
Main points:
** long-term funding established, frozen at 1997-98 levels of $25.1 billion for 1998-99 and 1999-2000, then indexed to GNP growth rate minus 2% for 2000-01, GNP growth minus 1.5% for 2001-02 and GNP growth minus 1% for 2002-03;
** cash transfers do not fall below $11 billion, and begin to grow after 2000-2001; and
** allocation among provinces will, in stages, reduce distortions created by the cap on CAP
by coming to reflect two factors:
*** current CHST share, adjusted for interprovincial population shifts, and
*** provincial share of the Canadian population."

National Standards and Social Programs:
What the Federal Government can do
September 1997

Political and Social Affairs Division
Parliamentary Library

Canadian Social Research Links pages:

- Go to the Canada Assistance Plan / Canada Health and Social Transfer / Canada Social Transfer Resources page:
- Go to the Welfare and Welfare Reforms in Canada page:


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