Federal/provincial financial arrangements: the poverty of economic advice.

Abstract

The Canada Health and Social Transfer was finally given shape in the 1996 federal budget. Like most contemporary fiscal policy, the budget's measures are designed to control federal spending on social programs, including healthcare, with an eye toward controlling the federal deficit. Yet cutbacks like these may be misguided. Research suggests that real healthcare expenditures have not increased unduly; rather it is the faltering Canadian economy and the resulting drop in tax revenues which contribute most of the deficit. Promoting a stronger economy by fostering the growth of jobs would reduce the demand for social programs while providing greater tax revenue with which to fund such programs. Surely this is a sounder course of action for Canada.