PRIME MINISTER ANNOUNCES NEW EQUALIZATION AND TERRITORIAL FUNDING FORMULA FRAMEWORK
Prime Minister Paul Martin today announced a new framework that, subject to approval by Parliament, will increase the support provided to provinces and territories under the Equalization and Territorial Financing Formula (TFF) programs by $33 billion over ten years.
October 26, 2004
Ottawa, Ontario
Prime Minister Paul Martin today announced a new framework that, subject to approval by Parliament, will increase the support provided to provinces and territories under the Equalization and Territorial Financing Formula (TFF) programs by $33 billion over ten years.
The increased funding will assist Canada’s less prosperous provinces and the three territories in meeting their commitments under the Ten-Year Plan to Strengthen Health Care as well as their other priorities.
“This framework reflects the most significant improvement in these programs’ history,” said Prime Minister Martin. “By providing predictability, stability and increased funding, the framework will play an essential role in ensuring that all Canadians, no matter where they live, will have access to comparable public services.”
The Prime Minister’s announcement comes after a meeting of First Ministers to review the details of the Government of Canada’s new approach to Equalization and TFF, which was first presented to premiers and territorial leaders at the September 2004 First Ministers’ meeting.
Guaranteed growth track
The approach includes five elements: a new minimum funding floor of $10 billion for Equalization and of $1.9 billion for TFF for 2004-05, complete protection for provinces and territories against overall and individual declines in payments in 2004-05, a level of $10.9 billion for Equalization and $2 billion for TFF in 2005-06, a growth rate of 3.5% until 2009-10 and an independent panel to advise on the allocation among provinces and territories.
Over the next 10 years, and subject to a review in 2009-10, the new framework will provide $33 billion more in Equalization and TFF payments to provinces and territories. This is compared with the annual entitlements for both Equalization and TFF estimated in the February 2004 budget. Equalization payments will increase from $8.9 billion in 2004-05 (according to the official October 2004 estimates) to $12.5 billion in 2009-10, a 42-per-cent increase.
Starting in 2005, the Government of Canada will establish a legislated financial framework for Equalization and TFF with fixed overall payment levels that provide predictable and growing funding. In 2005-06, funding levels will be set at $10.9 billion for Equalization and $2 billion for TFF, the highest levels ever reached by these programs. Both amounts will grow at 3.5% a year starting in 2006-07.
Independent expert review
The Government of Canada will also launch a review by an independent panel of experts on how the legislated Equalization and TFF levels should be allocated among provinces and territories in 2006-07 and after. Provinces and territories have been invited to appoint two members to the Panel. This review will, among other things,