Federal Government Proposes $7 Billion Spending Transfers for Healthcare and Infrastructure

Deputy Prime Minister Chrystia Freeland said today the federal government plans to provide a one-time payment of $7 billion to provinces, territories, cities and First Nations communities to help them cover the cost of health services, COVID-19 vaccination campaigns and infrastructure projects.

The proposed cash injection was detailed in a new bill called C-25, which Deputy Prime Minister Freeland presented in the House of Commons this morning.

If passed, it would provide a $4 billion one-time increase to the Canada Health Transfer — the federal government’s primary contribution toward the cost of delivering health services in the provinces and territories. Another $1 billion would fund COVID-19 immunization campaigns across the country.

The remaining $2.2 billion would go to the Gas Tax Fund — a twice-yearly payment to provinces and territories which, in turn, transfer funds to municipalities to support local infrastructure priorities.

The announcement comes just less than a month before the Liberal government unveils its first budget in over two years.

The budget is expected to provide a full accounting of all government spending through the pandemic, which has sent the deficit for the fiscal year to almost $400 billion.

Infrastructure Minister Catherine McKenna said the increase to the Gas Tax Fund doubles the federal government’s yearly contribution and will help fund the construction or expansion of broadband internet access, public transit networks and recreation centres.

However, the $4 billion increase in federal health transfers falls short compared with the $28 billion boost premiers have been pushing for.

Currently, the provinces spend about $188 billion on health care and the federal government covers $42 billion — roughly 22 per cent of total costs. Premiers have asked for a permanent increase in the federal share to 35 per cent, which works out to an additional $28 billion and would bring the total federal share to $70 billion.

Prime Minister Justin Trudeau has said the federal government will keep its spending focus on emergency aid for the time being and won’t talk about long-term health care funding until after the pandemic is over.

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