What is the federal spending power?

The federal spending power is the federal government's authority to spend money on programmes that fall within provincial jurisdiction under section 92 of the Constitution Act, 1867, attaching conditions to ensure that the spending advances federal policy objectives. The federal spending power is the principal way the federal government has historically built national programmes in areas of provincial jurisdiction (healthcare, education, social services).

The federal spending power is not explicitly set out in the Constitution Act, 1867 but has been recognised by the courts as flowing from the federal taxation power under section 91(3), the federal authority to dispose of public property under section 91(1A), and the federal general power to make laws for peace, order, and good government. The Supreme Court of Canada implicitly recognised the federal spending power in YMHA v. Brown (1989) and Reference re Canada Assistance Plan (1991).

The federal spending power has produced major national programmes in areas of provincial jurisdiction. The Canada Health Act of 1984 (and the underlying Hospital Insurance and Diagnostic Services Act of 1957 and Medical Care Act of 1966) used the federal spending power to establish national healthcare standards through conditions attached to the Canada Health Transfer (provinces must operate publicly administered, comprehensive, universal, portable, and accessible healthcare systems to receive full federal funding). The Canada Student Loans Program (1964), the Canada Assistance Plan (1966 to 1996), and the federal Canadian Dental Care Plan (2023) all use the federal spending power.

Quebec has long objected to the federal spending power as a federal intrusion into provincial jurisdiction. The 1987 Meech Lake Accord and the 1992 Charlottetown Accord both proposed limiting the federal spending power, requiring federal compensation for provinces opting out of national programmes. Both accords failed. The federal Social Union Framework Agreement (SUFA) of February 4, 1999 (which Quebec did not sign) committed the federal government to consulting provinces before launching new shared-cost national programmes and to allowing provinces to opt out (with full compensation) from new shared-cost programmes if the province operated a comparable programme. The federal spending power continues to be a subject of ongoing federal-provincial debate, particularly in Quebec.