FINA meeting 38 · 2026-05-07 — Committee Evidence — LegisWatch

Summary

The House of Commons Finance Committee met on May 7, 2026, to study the federal spending power, hearing from four academic witnesses and two Department of Finance officials. The witnesses were Daniel Béland, William Robson, Robert Laplante, Galen Countryman, and Thomas Larouche.

Daniel Béland, Director of the McGill Institute for the Study of Canada, focused on equalization, describing it as a necessary but controversial program that must be reviewed regularly due to changing economic conditions. He recommended establishing a new expert panel to assess the current formula, consider provincial spending needs, and potentially create a permanent independent commission to advise the federal government on equalization matters.

William Robson, President Emeritus of the C.D. Howe Institute, provided historical context on intergovernmental transfers, noting that their size and structure are products of particular circumstances rather than economic theory. He argued that the current equalization program is not fit for purpose, due for a revamp, and that the federal government should better align its revenue-raising and spending powers with those of the provinces, warning against expanding the federal balance sheet through initiatives like the sovereign wealth fund.

Robert Laplante, Director of the Institut de recherche en économie contemporaine, argued that the vertical fiscal imbalance between federal and provincial revenues is a real institutional problem that fuels centralization and ongoing disputes. He stated that crises have consistently encouraged centralization and that the federal government acts increasingly unilaterally, imposing conditions on provincial jurisdictions without proper dialogue, creating a democratic deficit.

Galen Countryman, Director General of Federal-Provincial Relations and Social Policy at the Department of Finance, outlined the four major transfer programs—Canada Health Transfer, Canada Social Transfer, equalization, and territorial formula financing—totaling $108.3 billion in 2026-27. He explained that equalization is unconditional and funded from the consolidated revenue fund, and that the current formula dates to 2006, with no work underway on potential changes to address demographic differences or other factors.

Thomas Larouche, Director General of Budget and Government Operations at the Department of Finance, provided costing details for the Canada Strong sovereign wealth fund, stating the transition office will cost $6 million over six years but could not provide the total cost of the fund itself, including debt and infrastructure, promising to follow up in writing.

During questioning, Béland and Robson disagreed on the need for a new expert panel, with Robson supporting the idea but emphasizing simplification, while Béland stressed a broad mandate. Robson also disagreed with the government's approach to the sovereign wealth fund, warning it adds risk and opacity to public finances. The committee later granted unanimous consent to move a motion to study Bill C-30, with an amendment removing the invitation to the Governor of the Bank of Canada, which was accepted.

AI-generated summary — may contain errors; verify against the official evidence.

Witnesses · 5

Daniel Béland

Director, McGill Institute for the Study of Canada, As an Individual

Opening remarks

Thank you very much for your invitation. Good morning. Thank you for giving me the opportunity to share my views on the federal spending power. The federal government's spending power is not explicitly enshrined in the Constitution, and efforts to establish a framework for it under the Meech Lake and Charlottetown accords were never implemented due to the failure of those agreements. In this context, Parliament—including your committee—is responsible for working on a framework for this power. Today I want to focus on equalization, a large-scale use of the federal spending power that, as the late Tom Kent once remarked, is now featured in our written Constitution. As stated in subsection 36(2) of the Constitution Act, 1982: Parliament and the government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation. Despite this constitutional embeddedness of the general principle of equalization, the concrete federal equalization program and the formula used to calculate payments received by provinces…

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William Robson

President Emeritus, C.D. Howe Institute

Opening remarks

Thank you, everyone, for being here. I hope my remarks and answers to your questions will help your work. I do look forward to the questions and will do my best to answer any related to specific federal programs and recent developments. For an opening, I hope it will help to provide an overview that focuses on intergovernmental transfers over time and a bit of context for thinking about their appropriate size and structure in the future. If you do find my remarks helpful, please give credit to my C.D. Howe Institute colleague Alexandre Laurin. He and I wrote a report on intergovernmental fiscal arrangements for the institute in 2015. We got invited to update that paper for The Handbook of Canadian Public Administration in 2018 and for the OECD in 2020. In the field of fiscal federalism, that's a “greatest hits” album. That paper surveys the history of federal spending that was directly or indirectly funding activity in areas of provincial jurisdiction. I’ll summarize it in four points. First, amounts spent and raised by different levels of government in Canada have never coincided. The federal government has always raised more, and provincial, territorial and local…

Galen Countryman

Director General, Federal-Provincial Relations and Social Policy Branch, Department of Finance

Opening remarks

Good morning. My name is Galen Countryman. I'm the director general of the federal-provincial relations division at Finance Canada. I am joined today by my colleagues Thomas Larouche, director general, budget and government operations; Nelson Paterson, director general, economic studies and policy analysis; and Suzanne Kennedy, senior director, equalization and territorial formula financing policy. The branch is responsible for the administration and oversight of Canada's four major transfer programs: the Canada health transfer, the Canada social transfer, the equalization program and the territorial formula financing. In 2026-27, these major transfers will total $108.3 billion. Together, the major transfers represent one of the largest expenditure envelopes in the federal budget. They are designed to provide predictable, stable and equitable funding across jurisdictions. Major transfers are largely unconditional. I will specify the potential conditions for each of them individually. Provinces and territories are accountable to their electorates regarding how they decide to use the funds. The Federal-Provincial Fiscal Arrangements Act and its regulations set out the specific…

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Finance

Summary

Witnesses · 5

Bills mentioned