Fiscal Imbalance In Canada
The Fiscal Imbalance
In 1867, the foundations of Canadian federalism was established with colonies agreeing to be “federally united”("Intergovernmental Affairs - Intergovernmental Affairs") As a result of the agreement, Canadian federal system is divided into two levels of government, federal and provincial, with corresponding divisions in legislative responsibilities and powers (Leach 1984) The federal level of government has control over matters related to national defence, foreign policy, banking, criminal law, as well as Aboriginal affairs ("The Division of Powers") In contrast, the provincial and territorial governments oversee property and civil rights, hospitals, prisons, education, and direct taxation (“The Division of Powers). Since …show more content…
Fiscal imbalances can be categorized in a number of ways. For example, an imbalance can occur when a lower level of government depends on a provincial or federal government to provide or substantially fund a service, but fails to meet the actual costs of providing the service (Boutan et al 2008) Despite the fact that provincial health care system receive federal funding and that provincial health care spending has increased, between 1965 and 2008, spending has exceeded growth in GDP, federal transfers, provincial revenue (Di Matteo 2010) More troubling health care spending is likely to continue to increase throughout Canada (Di Matteo 2010) indicating that the overall monetary imbalance, at least at the provincial level, may worsen without any significant …show more content…
The “Council of Federation” established in 2003 and led by provincial and territorial Premiers have engaged the federal government in acknowledging the monetary imbalance and making a conscious effort to regulate the imbalance (Doody 2007). Within this context, in 2006 the federal government proposed five principles to improve the fiscal imbalance. These principles respectively promote accountability by clarifying roles and responsibilities for different levels of government; fiscal responsibility and budgetary transparency; predictable long-term fiscal arrangements; a competitive and efficient economic union, and, effective collaborative management of federation (Flaherty 2007). Collectively, these principles not only represent a clear intention to rectify the widespread financial imbalances, but also willingness to actively involve the provinces and territories in the
In 1867, the foundations of Canadian federalism was established with colonies agreeing to be “federally united”("Intergovernmental Affairs - Intergovernmental Affairs") As a result of the agreement, Canadian federal system is divided into two levels of government, federal and provincial, with corresponding divisions in legislative responsibilities and powers (Leach 1984) The federal level of government has control over matters related to national defence, foreign policy, banking, criminal law, as well as Aboriginal affairs ("The Division of Powers") In contrast, the provincial and territorial governments oversee property and civil rights, hospitals, prisons, education, and direct taxation (“The Division of Powers). Since …show more content…
Fiscal imbalances can be categorized in a number of ways. For example, an imbalance can occur when a lower level of government depends on a provincial or federal government to provide or substantially fund a service, but fails to meet the actual costs of providing the service (Boutan et al 2008) Despite the fact that provincial health care system receive federal funding and that provincial health care spending has increased, between 1965 and 2008, spending has exceeded growth in GDP, federal transfers, provincial revenue (Di Matteo 2010) More troubling health care spending is likely to continue to increase throughout Canada (Di Matteo 2010) indicating that the overall monetary imbalance, at least at the provincial level, may worsen without any significant …show more content…
The “Council of Federation” established in 2003 and led by provincial and territorial Premiers have engaged the federal government in acknowledging the monetary imbalance and making a conscious effort to regulate the imbalance (Doody 2007). Within this context, in 2006 the federal government proposed five principles to improve the fiscal imbalance. These principles respectively promote accountability by clarifying roles and responsibilities for different levels of government; fiscal responsibility and budgetary transparency; predictable long-term fiscal arrangements; a competitive and efficient economic union, and, effective collaborative management of federation (Flaherty 2007). Collectively, these principles not only represent a clear intention to rectify the widespread financial imbalances, but also willingness to actively involve the provinces and territories in the