Endless spending increases will not fix Canada’s health-care system

Canada’s health-care system ranked as the most expensive (as a share of the economy) among 30 universal health-care countries. And despite these relatively high levels of spending, Canada continues to lag behind its peers on key indicators of performance.

In February 2023, the federal government announced the money they send to the provinces for health care would increase, yet again. Despite being billed as a fix for health care, these spending increases will not actually provide any relief for Canadian patients.

The Canada Health Transfer (CHT), the main federal financial tool for funding provincial health care, has increased from $34.0 billion in 2015/16 to $52.1 billion this year (2024/25), a 53.1 per cent increase in about a decade. Moreover, the federal government has committed to increases in the transfer at a guaranteed 5 per cent until 2027/28.

This latest increase in the CHT, however, is only one part of the $46.2 billion in new money being doled out over the next 10 years. More than half (roughly $25 billion) is currently being given to provinces who’ve signed up to work towards a number of “shared priorities” with Ottawa, such as mental health and substance abuse.

Clearly, the federal government has decided to substantially increase health-care spending in more than one way. But will it produce results?

These periodic “fixes” occasionally championed by Ottawa every few years are nothing new. And unfortunately, the data show that longstanding problems, including long waits for medical care and doctor shortages, will persist even though Canada is certainly no slouch when compared to its peers on health-care spending.

A recent study found that, when adjusted for differences in age (because older populations tend to spend more on health care), Canada’s health-care system ranked as the most expensive (as a share of the economy) among 30 universal health-care countries. And despite these relatively high levels of spending, Canada continues to lag behind its peers on key indicators of performance.

For example, Canada had some of the fewest physicians (ranked 28th of 30 countries), hospital beds (ranked 23rd of 29) and diagnostic technology such as MRIs (ranking 25th of 29 countries) and CT scanners (ranking 26th out of 30 countries) compared to other high-income countries with universal health care.

It also ranked at or near the bottom on measures such as same-day medical appointments, how easy it is to find afterhours care, and the timeliness of specialist appointments and surgical care.

And wait times have been getting worse. Just last year Canada recorded the longest ever delay for non-emergency care at 27.7 weeks, a 198 per cent increase from the 9.3 week wait experienced in 1993 (the first year national estimates were published).

But it’s not just the health-care system that’s in shambles, despite our high spending. Our federal finances are, too. Years of substantial increases in federal spending have strained the country’s finances. The Trudeau government’s latest budget projects a deficit of $39.8 billion this year, with more spent on debt interest ($54.1 billion) than on what the federal government gives to the provinces for health care.

Again, these periodic injections of federal funds to the provinces to supposedly fix health care are nothing new. Ottawa has relied on this strategy in the past and wait times have grown longer over the last three decades. Endless increases in spending will not fix our health-care system.

Authors:

Mackenzie Moir and Jake Fuss

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Prairie provinces and Newfoundland and Labrador see largest increases in size of government

Published on July 3, 2025

Todayville

From the Fraser Institute

By Jake Fuss and Grady Munro

A recent study found that Canada has experienced one of the largest increases in the size of government of any advanced country over the last decade. But within Canada, which provinces have led the way?

The size of government refers to the extent to which resources within the economy are controlled and directed by the government, and has important implications for economic growth, living standards, and economic freedom—the degree to which people are allowed to make their own economic choices.

Too much of anything can be harmful, and this is certainly true regarding the size of government. When government grows too large it begins to take on roles and resources that are better left to the private sector. For example, rather than focusing on core functions like maintaining the rule of law or national defence, a government that has grown too large might begin subsidizing certain businesses and industries over others (i.e. corporate welfare) in order to pick winners and losers in the market. As a result, economic growth slows and living standards are lower than they otherwise would be.

One way to measure the size of government is by calculating total general government spending as a share of the economy (GDP). General government spending refers to spending by governments at all levels (federal, provincial, and municipal), and by measuring this as a share of gross domestic product (GDP) we can compare across jurisdictions of different sizes.

A recent study compared the size of government in Canada as a whole with that of 39 other advanced economies worldwide, and found that Canada experienced the second-largest increase in the size of government (as a share of the economy) from 2014 to 2024. In other words, since 2014, governments in Canada have expanded their role within the economy faster than governments in virtually every other advanced country worldwide—including all other countries within the Group of Seven (France, Germany, Italy, Japan, the United Kingdom, and the United States). Moreover, the study showed that Canada as a whole has exceeded the optimal size of government (estimated to fall between 24 and 32 per cent of GDP) at which a country can maximize their economic growth. Beyond that point, growth slows and is lower than it otherwise would be.

However, Canada is a decentralized country and provinces vary as to the extent to which governments direct overall economic activity. Using data from Statistics Canada, the following charts illustrate which provinces in Canada have the largest size of government and which have seen the largest increases since 2014.

The chart above shows total general government spending as a share of GDP for all ten provinces in 2023 (the latest year of available provincial data). The size of government in the provinces varies considerably, ranging from a high of 61.4 per cent in Nova Scotia to a low of 30.0 per cent in Alberta. There are geographical differences, as three Atlantic provinces (Nova Scotia, Prince Edward Island, and New Brunswick) have the largest governments while the three western-most provinces (Alberta, Saskatchewan, and British Columbia) have the smallest governments. However, as of 2023, all provinces except Alberta exceeded the optimal size of government—which again, is between 24 and 32 per cent of the economy.

To show which provinces have experienced the greatest increase in the size of government in recent years, the second chart shows the percentage point increase in total general government spending as a share of GDP from 2014 to 2023. It should be noted that this is measuring the expansion of the federal government’s role in the economy—which has been substantial nationwide—as well as growth in the respective provincial and municipal governments.

The increases in the size of government since 2014 are largest in four provinces: Newfoundland and Labrador (10.82 percentage points), Alberta (7.94 percentage points), Saskatchewan (7.31 percentage points), and Manitoba (7.17 percentage points). These are all dramatic increases—for perspective, in the study referenced above, Estonia’s 6.66 percentage point increase in its size of government was the largest out of 40 advanced countries.

The remaining six provinces experienced far lower increases in the size of government, ranging from a 2.74 percentage point increase in B.C. to a 0.44 percentage point increase in Quebec. However, since 2014, every province in Canada has seen government expand its role within the economy.

Over the last decade, Canada has experienced a substantial increase in the size of total government. Within the country, Newfoundland and Labrador and the three Prairie provinces have led the way in growing their respective governments.

Alberta

Alberta government records $8.3 billion surplus—but the good times may soon end

Published on July 3, 2025

Todayville

From the Fraser Institute

By Tegan Hill

According to last week’s fiscal update, the Smith government recorded a $8.3 billion surplus in 2024/25—$8 billion more than what the government projected in its original 2024 budget. But the good times won’t last forever.

Due largely to population growth, personal income tax revenue exceeded budget projections by $500 million. Business tax revenue exceeded budget expectations by $1.1 billion. And critically, thanks to relatively strong oil prices, resource revenue (e.g. oil and gas royalties) saw a $4.7 billion jump.

The large budget surplus is good news, particularly as it will be used to pay down government debt (which taxpayers must ultimately finance) and to invest for the future. But again, the good times could soon be over.

Recall, the Alberta government incurred a $17.0 billion budget deficit just a few years ago in 2020/21. And it wasn’t only due to COVID—until the recent string of surpluses, the government ran deficits almost every year since 2008/09, racking up significant amounts of debt, which still largely persists today. As a result, provincial government debt interest payments cost each Albertan $658 in 2024/25. Moreover, in February’s budget, the Smith government projected more deficits over the next three years.

Generally, Alberta’s fiscal fortunes follow the price of oil. Over the past decade, for example, resource revenue has been as low as $2.8 billion in 2015/16, while oil prices slumped to $US45.00 per barrel, and as high as $25.2 billion in 2022/23, when oil prices jumped to $US89.69 per barrel.

Put simply, resource revenue volatility fuels Alberta’s boom-and-bust cycle. In 2025/26, the West Texas Intermediate oil price will be a projected $US68.00 per barrel with projected resource revenue falling by $4.9 billion year-over-year.

But oil prices don’t need to dictate Alberta’s fiscal fortune. Indeed, if the Smith government restrains its spending, it can avoid deficits even when resource revenues fall.

There are plenty of ways to rein in spending. For instance, the government spends billions of dollars in subsidies (a.k.a. corporate welfare) to select industries and businesses in Alberta every year despite a significant body of research that shows these subsidies fail to generate widespread economic benefit. Eliminating these subsidies is a clear first step to deliver significant savings.

The budget surplus is undoubtedly positive for Albertans, but the good times could soon come to an end. To avoid deficits and debt accumulation moving forward, the Smith government should rein in spending.