Fraser Institute News Release: Provinces risk their finances by relying on federal transfers for programs in areas of provincial jurisdiction
Retrieved on:
Tuesday, June 6, 2023
“When the federal government makes spending commitments in areas of provincial jurisdiction, there is always the risk that when the federal government changes, or federal government priorities change, the provinces will be on the hook to finance those programs and their increasing costs,” said Tegan Hill, a senior economist with the Fraser Institute and co-author of Repeating the Past: Provinces Accept Federal Money at Their Peril.
Key Points:
- “When the federal government makes spending commitments in areas of provincial jurisdiction, there is always the risk that when the federal government changes, or federal government priorities change, the provinces will be on the hook to finance those programs and their increasing costs,” said Tegan Hill, a senior economist with the Fraser Institute and co-author of Repeating the Past: Provinces Accept Federal Money at Their Peril.
- The study draws on the experience of Canada’s recent past—specifically the 1990s—when the federal government reformed and reduced transfers to the provinces to tackle the federal deficit and mounting debt.
- Any change in federal priorities or the finances of the federal government could result in marked financial pressure being imposed on the provinces.
- “Provincial policymakers should be aware of the risk to their own fiscal positions when entering into funding agreements with the federal government for provincial programs, and the current federal deficit and debt problem only heightens this risk.”