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CHST 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 services. • 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 rights. 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 spiral. 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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