What Kind of Canada? CCSD calls for a national debate on the Canada Social Transfer

April 8, 2004

(See also: Letter to Prime Minister Stephen Harper, April 2007)

What Kind of Canada?
A Call for a National Debate on the Canada Social Transfer

If you asked most Canadians what happened on April 1, 2004 that could potentially change the course of the country's future, you would probably get a lot of puzzled looks. If you told them that the event in question involved the creation of a new federal social transfer fund, their eyes would probably glaze over.

So why is the Canadian Council on Social Development (CCSD) urging citizens, communities and leaders across the country to pay attention? Because creation of the Canada Social Transfer is one of those historic opportunities that come along from time to time and challenge us to step back and consider what kind of Canada we want to live in.

This is not a question that should be passed over without meaningful public consultation and national debate. The new Canada Social Transfer offers an opportunity to renew Canada's "social union" for the 21st century, and to do it in a way that helps to renew our democracy by involving people across the country in the discussion.

We have had, and continue to have, a long and lively dialogue on the future of our health care system. The future of Canada's social programs has not received the same kind of thoughtful scrutiny by Canadians. And it should. The CCSD is issuing a call for a national debate on the Canada Social Transfer and has drafted a four-point agenda to get the ball rolling. But before presenting our agenda, let us look at how and why we came to this point.

An Important Shift

The last time the federal government changed the structure of these transfers to provincial and territorial governments was in 1995, when the Canada Assistance Plan (CAP) and Established Programs Financing (EFP) were eliminated and the new Canada Health and Social Transfer (CHST) was created. The CHST was a block fund for health care, post-secondary education, and social transfers, which included social assistance and other social services, such as child welfare.

In 1995, the creation of the CHST was accompanied by a $7 billion reduction in federal funding. The cut in transfers was part of the battle against the federal deficit, and it came at a high social cost. In the aftermath, provincial and territorial governments significantly scaled back their social programs across the country. Those most in need have suffered most.

The major reduction in funding was not the only factor that created holes in the social safety net. The structure of the CHST also contributed in two important ways. First, it lumped health care, social programs and post-secondary education together. Warnings that health spending would dominate the fund proved valid. The proportion of CHST funding nominally directed to social programs shrunk as a proportion of the total funding envelope.

Second, the CHST did not preserve the conditions for income security program funding that were in CAP, with one exception. Only the right to claim welfare whatever one's province of origin was retained. The right to an adequate income, the right to assistance when in need, and without forced participation in work or training programs, and the right to appeal welfare decisions were eliminated with CAP. In some provinces, the response was to reduce or freeze social assistance rates, restrict eligibility and the grounds for appeal, and introduce work-for-welfare. The most drastic move was the decision in British Columbia to limit social assistance to two years.

In the new fiscal year that started April 1, 2004, the CHST has been replaced by two new funds: the Canada Health Transfer and the Canada Social Transfer. A separate Canada Health Transfer was recommended by the Romanow Commission. The Canada Social Transfer, which combines post-secondary education and social transfers, was created by default from what was left over after creation of the health fund.

This year, under the Canada Social Transfer, some $15 billion in cash and tax points will flow to the provinces. Yet, unlike the new Canada Health Transfer, there has been little public discussion or policy development devoted to this important shift in how social funding is dispensed from Ottawa to provincial capitals.

Our Systems Are Failing Us

There is no question that the public health care system is a touchstone for Canadians. And it is clearly important to keep working on ways to improve it. But there are other urgent social policy issues that must not be pushed off the table by the ongoing debate over health care. The fact that Canadians care the most about their health care system does not mean they could care less about everything else that affects the kind of country we live in.

While we should be focusing on waiting lists for surgery and lineups at emergency wards, we should also be focusing on waiting lists for social housing and lineups at food banks.

Some of the most compelling arguments for concentrating on the social domain come from the health care field. Research shows that income inequality and poverty affect health. Investing in programs that affect the social determinants of health has the real potential to reduce health care expenditures over time.

In Canada, however, we are standing by as income inequality grows. Despite the strong economic growth of recent years, the gap is spreading between those at the top of the scale, whose incomes are booming, and those at the bottom who can barely scrape by. The lowest 10 per cent of Canadians saw their average incomes grow by a meagre $81 over a decade. Incomes of earners in the moderate-to-middle range are virtually standing still or slipping downward .

While there have been some recent improvements in poverty, Canada still has one of the highest rates in the OECD. The same is true for its child poverty rate. Despite an all-party Parliamentary resolution in 1989 to eliminate child poverty, there are still approximately one million children – one child in six – living in poverty in this country.

Canada used to be known for its ability to integrate newcomers from around the world, but the latest wave of immigrants, most of whom are visible minorities, is losing ground. After 10 years in Canada, their incomes are still behind other Canadians and behind where previous generations of immigrants were after a decade living here. Low income rates among immigrants rose from 17.0% in 1980 to 20.2% in 2000. Among immigrants who had been in Canada less than five years, 24.6% were living on low incomes in 1980, compared to 35.8% in 2000.

Is this the kind of Canada we want? Or do we want a society that provides more effective ways to support and assist those left behind? If the ultimate goal of social investment through the Canada Social Transfer and social programs is to protect and improve the quality of life of all Canadians, it seems clear that our current systems are failing us. Canada must confront today's social realities.

Canadians have a right and an obligation to engage in a national debate about directions for the future. The new Canada Social Transfer creates the opening to have that debate. How should the federal government use its fiscal leverage to pursue national social objectives? What should be the scope of social programs funded under the CST? How can we protect and encourage the local and provincial flexibility for innovative solutions? What values should govern expenditures? How can Canadians be assured that investments are producing the desired results?

A Four-Point Agenda to Renew the Canada Social Transfer

The CCSD is aware that the Canada Social Transfer, in and of itself, will not resolve all Canada's social challenges. But it can, and should, be a key instrument in our collective hands to help us address at least some of these challenges. It is a useful starting point to get a healthy debate going. A four-point agenda to renew the Canada Social Transfer is proposed:

1. The Canada Social Transfer should be split into two parts: one for social programs and the other for post-secondary education.

2. Funding for the Canada Social Transfer should be restored to 1994-95 levels, and predictability and stability of funding should be guaranteed.

3. Common principles and objectives for the social transfer should be agreed to by all parties through a broad engagement with Canadians.

4. A pan-Canadian body should be established to measure outcomes, share innovation and foster citizen involvement.

The rationale for each of these points is discussed briefly.

Splitting the CST

The Canada Social Transfer, as it is currently configured, perpetuates the same problem, albeit on a smaller scale, as the now-defunct CHST. It lumps social programs and post-secondary education together in a block fund. There is a relationship between social programs and education, but blurring transfers does not build links across sectors. It simply obscures how much funding is going where.

The Romanow Commission recommended a separate Health Transfer both to ensure predictability and stability of funding for health care and to increase accountability and transparency for expenditures. We would argue for the same good reasons that social programs should have their own transfer fund.

A separate transfer for social programs will still encompass a wide range of activities, including social assistance, related training, child welfare, civil legal aid, early childhood development programs and child care. But splitting these social programs from post-secondary education is at least some progress towards recognizing the distinct character of each policy area, their unique approaches to the assessment of need, and potential conditions for the transfer of funds.

Predictable and Stable Federal Funding

Social services and post-secondary education are receiving approximately $2.8 billion less this year than a decade ago. The increase in federal transfers since 1995 was largely targeted to health care. The $7 billion in cuts to transfers that were built into the CHST in 1995 have undermined social programs across the country.

Funding for the Canada Social Transfer should be restored to 1994-95 levels. This restoration of federal social investment should be feasible, given the financial health of the federal government which has been in a surplus situation since 1997 and is expected to be in a surplus situation in the coming years.

Once funds have been restored, the next goal must be to ensure that the provinces have a predictable and stable funding environment. This means that the federal government should no longer be able to unilaterally reduce funding as was done in 1995. Predictability and stability of funding are crucial to allow provinces to serve Canadians effectively, whether we are talking about health care or social programs.

In its recommendation regarding long-term stability and predictability in a new separate Health Transfer, the Romanow report proposed that there be an escalator set in advance for five-year periods. Discussions are taking place on this front for health care. Similar measures must be adopted for the Canada Social Transfer.

A debate about federal funding will not just be about "more". Canada's investments must be maximized. They must yield the best possible results for Canadians. To reach our goal as a country we need a debate on social innovation and national objectives. We need plans to measure outcomes and increase accountability.

Common Principles and Objectives

Social policy and social programs fall under a divided jurisdiction in Canada. With the abolition of most of the principles that protected people in need of assistance under the Canada Assistance Plan (CAP), the federal government adopted close to a laissez-faire approach to social transfers, which contrasts with its approach to health care. The Canada Health Act guarantees the principles of a nation-wide public health care system. Those principles are generally supported by Canadians as foundations of a system that is crucial to our way of life.

The Canada Social Transfer provides an opportune time to engage Canadians in a debate about common principles and objectives for investing in social programs that are also crucial to our way of life. In this regard, we need not start from zero. A set of common principles was developed through the Social Union Framework Agreement (SUFA), which was signed by the federal and provincial governments (except Québec) in 1999. Common objectives included the following:

  • ensure access to all Canadians wherever they live or move in Canada to essential social programs and services of reasonably comparable quality;
  • provide assistance to those in need;
  • ensure adequate, affordable, stable and sustainable funding for social programs.

SUFA has serious shortcomings, most notably the fact that Québec has not signed on and no mechanism for engaging Canadians has been established, but some of its principles would resonate with the values of Canadians. Unfortunately, the SUFA has gone largely unnoticed by Canadians, while governments have remained generally passive.

There are complexities to this task. The provinces must have the freedom and flexibility to develop their own programs and services to respond to their own distinct realities. A set of common principles and objectives should not be an obstacle to this. By the same token, while services and programs may take on different forms, Canadians must be able to expect reasonably comparable supports and services from one end of the country to the other.

There must be a minimum but generous floor that no province can go below. For social transfers to work for all Canadians, adequate safeguards must be put in place to prevent a race to the bottom. This is a matter of basic human rights. Social assistance has traditionally been the income support program of last resort. That this program has been gutted or withheld from those in need in some provinces testifies to the unraveling of the national social safety net.

While we should prevent a race to the bottom, we should also be mindful of not standing in the way of positive progress. For example, the anti-poverty strategy recently announced by the Québec government, which ensures a minimum annual guaranteed income and cash incentives instead of coercion to encourage the transition from welfare to work, has been identified as a demonstration of innovation to be watched by other provinces and the federal government.

If a province wishes to innovate and to go further on social programs than the federal government or other provinces, they should be supported and indeed encouraged. Social innovation in one part of the country should motivate progress elsewhere in Canada. This should be seen as a key strength of a healthy federal system.

Measuring Outcomes, Sharing Innovation and Engaging Canadians

We propose that a pan-Canadian body of stakeholders be established to measure social investments and outcomes, proactively share innovation across jurisdictions, and engage Canadians around policies and priorities for social programs. This body should not take the form of a closed-door intergovernmental council. It should be an independent organization that would bring together governments, communities and citizens.

It should foster and stimulate citizen involvement and be responsible to Canadians for collecting and disseminating information, providing advice to governments, reporting back publicly on efforts and measures to improve quality, access and outcomes. It should also have a mandate to effectively share information and best practices.

The intent to foster greater efficacy, accountability and transparency in the delivery of social policy and programs across jurisdictions, to strengthen social innovation, and to stimulate citizen involvement is in keeping with the spirit and intentions of SUFA.

Under this agreement, both levels of government agreed to "enhance transparency and accountability" and to monitor and measure outcomes of social programs; report regularly on performance; share information and best practices; and work together to develop comparable indicators to measure progress. Governments also set the shared objective of "working in partnership with individuals, communities, voluntary organizations, business and labour" and ensuring appropriate opportunities for Canadians to have meaningful input into social policies and programs.

SUFA's good intentions have not come to pass, however. If anything, the social policy process and federal/provincial discussions and negotiations around social programs have become more opaque, more complex, and more invisible than ever in the past. The pervading silence on the future of our national social union is positively deafening.

Let the Debate Begin

We must seize the opportunity created by the Canada Social Transfer to debate our social policy. We must engage Canadians in examining our record on basic social rights, clarify the roles of partners, discuss accountability and transparency.

In the social arena, there has been much time spent by our governments on efforts to address jurisdictional issues and conflicts. Little effort has gone towards dealing with social issues that have a real impact on the lives of Canadians. Even less has been done to learn about and incorporate the wisdom, experience and knowledge that have been developed at the grassroots community level across the country.

A broad and inclusive dialogue on the future of our social programs should include citizens and communities, the voluntary sector, labour and industry and Aboriginal peoples, as well as all levels of government. There should be debates in town halls and in the media, on the floor of provincial Legislatures, and in Parliamentary committee rooms.

In the coming months, the CCSD will work with partners from across the country to promote this awareness Our four-point agenda will be a catalyst for a debate on the Canada Social Transfer. It is work that will build a foundation upon which Canadians can build the kind of Canada we want for the 21st century.


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