; CHST A Brief History—from the Dept. of Finance's Perspective
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CHST A Brief History—from the Dept. of Finance's Perspective


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A Brief History—from the Dept.
   of Finance’s Perspective
 Current statistics from Finance
                  What is the CHST?
• Dept of Finance Canada
•   The Canada Health and Social Transfer (CHST) is the largest federal transfer to
    provinces and territories, providing them with cash payments and tax transfers in
    support of health care, post-secondary education, and social assistance and social
•        A tax transfer provides the same support as a cash transfer. The tax transfer
    component of the CHST occurred in 1977 when the federal government agreed with
    provincial and territorial governments to reduce its personal and corporate income tax
    rates, thus allowing them to raise their tax rates by the same amount. As a result,
    revenue that would have flowed to the federal government began to flow directly to
    provincial and territorial governments.
•       The CHST gives provinces and territories the flexibility to allocate payments among
    social programs according to their priorities, while upholding the principles of the
    Canada Health Act and the condition that there be no period of minimum residency
    with respect to social assistance.
•       The CHST was extended for five years by legislation in 1999. The 1999 Budget
    introduced measures to eliminate disparities among provinces in per capita CHST
    entitlements (cash transfer plus tax transfer). By 2001-02 all provinces and territories
    will receive the same amount on a per capita basis. In 2000-01, the federal government
    will transfer
•       $30.8 billion to provinces and territories under the CHST. Of this total CHST
    entitlement, $15.3 billion will be in the form of a tax transfer and $15.5 billion in the
    form of a cash transfer.
     “A Threat to the Health, Development and Future
      Productivity of Canada's Children and Youth”
     Paul D. Steinhauer, M.D. Professor of Psychiatry,
                   University of Toronto
      Chair, Steering Committee, Voices for Children

• “The change to the CHST will significantly
  decrease cash transfers to the provinces; reduce
  the federal government's ability to
  enforce national standards in the only area where
  standards currently exist (i.e., medicare) - there
  are no national standards for welfare or social
  services; and disproportionately cut provincial
  spending on welfare and social services.”
Problems with the social safety net were identified as a result of
the Canada Health and Social Transfer (CHST), which reduced
national standards and accountability for social programs. …
Canadian NGOs that were in Geneva are now discussing a
follow-up strategy to build on the momentum and awareness
generated in November-December, 1998. The main theme of
this follow-up is holding governments accountable for
international commitments to economic, social and cultural

       Ontario Social Development Council
From 1995 to 1998, about $6 Billion is said to have been cut
     from annual CHST cash transfers, of which $2.5 B is
allocated tohealth care60. According to federal figures, when
  tax point transfers are included, the drop in federal CHST
 funding is smaller (see below). The 1999 budget states that
       the increase in CHST is sufficient to restore health
expenditures to their mid-1990s levels, although this does not
   compensate for population growth, inflation or increased
        average need. Furthermore, an examination of the
 government’s own figures shows that total spending in the
          CHST areas is still below the 1993-96 levels.
Implications of the Federal Cutbacks for CHA
These cuts in CHST cash transfers have sharply reduced the
leverage that the federal government has to enforce the
principles of the CHA (it is more difficult to enforce rules when
the carrot offered becomes smaller and smaller).
The cuts also make it more difficult for the provinces to meet
their obligations under the CHA, which further undermines
commitment to the Act. This is a straight cash flow problem.
As a consequence, this promotes privatization of health care, as
the private sector steps in to fill the void left by the public
funding cuts
As people increasingly rely on the private sector, political
support for public funding erodes,which promotes a downward
More INFO: The Registered Nurses Association of Ontario
Privatization represents a huge opportunity in
the very large health industry, which is eyeing
         Canada as ripe for expansion.
 Currently, health care spending exceeds $80
billion per year in Canada. If the private share
      merely rose from 30% to 50%, this
    alone would add $16 billion per year in
              increased business.

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