Canada Assistance Plan

The Canada Assistance Plan (CAP) was a financing program created in 1966 by the Pearson government. The CAP consisted of a cost-sharing arrangement between the federal government and provinces, territories and municipalities whereby the federal government would partially fund eligible social programs.[1][2]

Transfer payments
in Canada
Current arrangements
Repealed arrangements

The 1995 Canadian federal budget announced that both the Canada Assistance Plan and the Established Programs Financing would be combined into a new block-fund fiscal arrangement called the Canada Health and Social Transfer starting in 1996-97 fiscal year.[1] Payments with respect to fiscal years ending on March 31, 1996 or before could be made until March 31, 2000. The Canada Assistance Plan therefore officially remained under existence until March 31, 2000.[3]

Structure

As of the early 1990s, the Canada Assistance Plan consisted of 3 parts (of which only 2 have ever been enacted)[2]:

  • Part I (General Assistance and Welfare Services) under which the federal government would cover 50% of eligible costs for social programs (notably financial assistance programs, homes for special care, some health care costs not already covered under the Canada Health Act or other fiscal arrangements and child welfare);
  • Part II (Indian Welfare) was never enacted as no agreement had been signed between the federal government and the provinces;
  • Part III (Work Activity Projects) under which the federal government would cover 50% of eligible costs for improvement of employability of unemployed people.

Debates

From its inception the Canada Assistance Plan was under scrutiny from the federal government. As the arrangement was a cost-sharing program and open-ended in nature, the federal government was concerned about an escalation of costs it could not control.[4]

The 1990 Canadian federal budget capped the growth of the Canada Assistance Plan at 5% for provinces who did not receive equalization payments (at the time Ontario, Alberta and British Columbia) for 1990-91 and 1991-92 fiscal years. That decision was incorporated into the Government Expenditure Restraint Act (C-69) that was passed in February 1991.[4] The 1991 Canadian federal budget extended the measure through 1994–95.[5]

The government of British Columbia challenged that provision in courts and the Supreme Court of Canada, in the landmark Reference Re Canada Assistance Plan (BC) decision, ruled on August 15, 1991 that the capping was indeed constitutional.[4]

Further restrictions were applied when the 1994 Canadian federal budget[6] froze CAP payments to their 1994-95 levels for the 1995-96 fiscal year. Unlike the 1990 freeze it applied to all the Canadian provinces, including those who received equalization payments.[4][5]

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References
  1. Department of Finance (15 December 2014). "History of Health and Social Transfers". Retrieved 9 January 2020.
  2. Canada Assistance Plan : Annual report 1992-93. Human Resources Development Canada. 1994. ISBN 0-662-61178-0.
  3. Budget Implementation Act of 1995 (S.C. 1995, c. 17, s. 31)
  4. Canada Assistance Plan : Final annual report 1994-1995, 1995-1996. Human Resources Development Canada. 2001.
  5. Department of Finance (April 1994). Federal transfers to provinces (PDF). Ottawa. p. 23. Retrieved 9 January 2020.
  6. Enacted through the Budget Implementation Act of 1994 (S.C. 1994, c.18, s. 10)
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