Shortly
put,
the
position
of
the
appellants
is
that
Canada,
by
the
powers
of
its
purse,
has
unconstitutionally
coerced
the
provinces
to
participate
in
certain
programs
proposed
by
Canada,
with
standards
and
criteria
established
by
Canada,
although
such
programs
lie
exclusively
within
the
jurisdiction
of
the
provinces.
For
the
reasons
set
out
hereunder,
I
agree
with
the
conclusions
of
the
trial
judge
that
the
impugned
legislation
is
intra
vires
the
Parliament
of
Canada.
The
issues
in
the
action
are
set
out
in
the
agreed
statement
of
facts
as
follows:
I.
BACKGROUND
1.
The
Plaintiff
corporation
is
incorporated
under
the
laws
of
Alberta
and
is
liable
to
pay
taxes
under
the
Income
Tax
Act
of
Canada.
2.
The
Plaintiff
has
instituted
these
proceedings
before
this
Honourable
Court
seeking
a
declaration
that
the
Income
Tax
Act
is
ultra
vires
the
Parliament
of
Canada
as
it
constitutes
direct
taxation
within
a
province
to
raise
revenue
for
provincial
purposes,
a
matter
which
the
Plaintiff
says
is
within
the
exclusive
legislative
jurisdiction
of
the
provinces
by
reason
of
Head
2
of
Section
92
of
the
Constitution
Act,
1867.
3.
The
Plaintiff
says
that
the
direct
taxation
revenues
or
a
portion
thereof
raised
under
the
Income
Tax
Act
fund
programs
established
and
administered
under
the
folowing
statutes:
(i)
Federal-Provincial
Fiscal
Arrangements
and
Post-Secondary
Education
and
Health
Contributions
Act,
1977,
as
amended
(“EPF
Act").
(ii)
Canada
Assistance
Plan
Act;
(iii)
Canada
Health
Act;
(iv)
Medical
Care
Act;
(v)
Hospital
Insurance-Diagnostic
Services
Act;
(vi)
Blind
Persons
Act;
(vii)
Disabled
Persons
Act
which
revenues
the
Plaintiff
says
are
revenues
raised
for
provincial
purposes
within
the
meaning
of
Head
2
of
Section
92
of
the
Constitution
Act,
1867.
4.
The
Plaintiff
further
seeks
a
declaration
that
the
Canada
Health
Act,
the
EPF
Act
and
the
Canada
Assistance
Plan
Act
are
ultra
vires
the
Parliament
of
Canada.
5.
In
support
of
its
claim,
the
Plaintiff
says:
(a)
Head
2
of
Section
92
of
the
Constitution
Act,
1867
gives
provincial
legislatures
exclusive
jurisdiction
to
raise
revenues
within
a
province
for
provincial
purposes
by
means
of
direct
taxation.
Consequently,
the
Parliament
of
Canada
cannot
use
direct
taxation
within
a
province
as
a
means
of
raising
revenues
for
provincial
purposes.
(b)
The
Income
Tax
Act,
constitutes
direct
taxation
within
a
province.
(c)
The
phrase
“provincial
purposes"
in
Head
2
of
Section
92
of
the
Constitution
Act,
1867
includes
any
matters
within
provincial
legislative
competence.
(d)
The
programs
funded
under
the
federal
statutes
referred
to
in
paragraph
6
of
the
Amended
Statement
of
Claim
fall
within
areas
of
provincial
legislative
competence
under
Section
92
of
the
Constitution
Act,
1867.
(e)
The
said
programs
have
historically
been,
and
continue
to
be,
funded
at
least
in
part
by
direct
taxation
revenues
raised
by
the
Parliament
of
Canada
through
the
Income
Tax
Act
and
by
giving
up
tax
points
to
the
province
which
were
otherwise
allocated
to
the
Parliament
of
Canada
under
the
Act.
(f)
The
Parliament
of
Canada,
by
using
the
Income
Tax
Act
in
conjunction
with
the
conditional
spending
authorization
contained
in
the
statutes
referred
to
in
paragraph
6
of
the
Amended
Statement
of
Claim
has
established
a
scheme
to
regulate
and
thereby
indirectly
legislate
within
areas
of
provincial
jurisdiction.
Consequently,
those
statutes
and
the
Income
Tax
Act
are
ultra
vires
the
Parliament
of
Canada.
6.
The
Defendant's
answer
to
the
Plaintiff's
claim
may
be
summarized
as
follows:
(a)
that
the
power
conferred
upon
the
Parliament
of
Canada
by
Head
3
of
Section
91
of
the
Constitution
Act,
1867
for
the
raising
of
a
revenue
by
any
mode
or
system
of
taxation
is
a
plenary
power,
the
exercise
of
which
is
subject
only
to
the
provisions
of
Section
125
of
that
Act;
(b)
that
the
Income
Tax
Act
is
valid
legislation
of
the
Parliament
of
Canada
enacted
pursuant
to
Head
3
of
Section
91
of
the
Constitution
Act,
1867
and
is
not
legislation
directed
to
any
Head
of
power
enumerated
in
Section
92
of
that
Act;
(c)
that
under
Section
102
of
the
Constitution
Act,
1867
all
duties
and
revenues
of
Canada,
including
taxes
imposed
and
collected
under
the
Income
Tax
Act,
form
one
Consolidated
Revenue
Fund,
from
which
monies
are
appropriated
by
Parliament
for
the
public
service
of
Canada,
including
such
objects
as
may
be
within
its
legislative
authority;
(d)
that
the
impugned
legislation
is
valid
legislation
of
the
Parliament
of
Canada
and
that
appropriations
therein
provided
constitute
valid
statutory
authority
for
the
expenditure
of
funds
out
of
the
Consolidated
Revenue
Fund
for
the
purposes
described
in
those
statutes.
7.
In
addition,
the
Defendant
says:
(a)
that
the
Amended
Statement
of
Claim
does
not
advance,
nor
is
there
any
connection
at
law
between
the
alleged
invalidity
of
the
Income
Tax
Act
on
the
basis
of
Section
92
of
the
Constitution
Act,
1867
and
the
legislative
authority
granted
Parliament
by
Section
91
thereof
pursuant
to
which
expenditures
are
made,
and
that
no
action
lies
in
the
circumstances
of
this
case
for
the
declarations
sought;
(b)
Parliament's
authority
to
impose
taxation
stands
in
no
direct
relation
to
the
other
powers
conferred
on
it
by
Section
91
of
the
Constitution
Act,
1867
in
that
the
Income
Tax
Act
may
not
be
impugned
on
the
basis
of
the
alleged
invalidity
of
federal
statutes
under
which
expenditures
are
made;
(c)
that
the
gravamen
of
the
claim
being
as
to
the
expenditure
of
monies
from
the
Consolidated
Revenue
Fund,
to
which
the
authority
for
taxation
stands
in
no
direct
relation,
the
action
cannot
succeed;
(d)
that
this
Honourable
Court
should
not
exercise
its
discretion
in
favour
of
taking
jurisdiction
in
relation
to
the
administration
of
the
Income
Tax
Act
in
circumstances
where,
as
in
this
case,
Parliament
has
provided
a
specific
method
for
the
challenging
of
liability
and
authority
to
levy
taxes
under
that
Act.
8.
The
Defendant,
the
Attorney
General
of
Canada
also
says
that,
insofar
as
the
Plaintiff
challenges
the
vires
of
the
Canada
Assistance
Plan,
the
Canada
Health
Act,
and
the
EPF
Act
it
has
no
status
or
standing
to
impugn
the
said
statutes
or
to
seek
the
relief
sought
in
relation
to
them.
9.
In
further
answer
to
the
allegations
set
forth
in
the
Amended
Statement
of
Claim
the
Defendant
says;
(a)
that
the
impugned
statutes
constitute
legislation
within
the
exclusive
competence
of
the
Parliament
of
Canada
pursuant
to
the
plenary
authority
conferred
on
Parliament
by
Section
91
of
the
Constitution
Act,
1867;
(b)
that
the
monies
in
the
Consolidated
Revenue
Fund
established
by
Section
102
of
the
Constitution
Act,
1867
are,
insofar
as
they
represent
the
fruits
of
income
tax,
properly
levied
for
the
fund
under
the
authority
of
Head
3
of
Section
91
of
the
Constitution
Act,
1867
and
constitute
public
property
of
Canada
within
the
meaning
of
Head
1A
of
Section
91
of
that
Act
which
monies,
upon
appropriation
by
Parliament
under
Section
106
of
the
Act,
may
be
expended
for
the
purposes
for
which
they
are
voted;
and,
(c)
that
the
appropriations
made
in
the
impugned
statutes
provide
valid
statutory
authority
for
the
expenditure
of
monies
from
the
Consolidated
Revenue
Fund
for
the
purposes
of
those
statutes.
II.
ESTABLISHED
PROGRAMS
FINANCING
(a)
Generally
10.
The
Parliament
of
Canada
has
made
provision
for
the
payment
to
the
provinces
of
contributions
in
respect
of
provincial
health
and
post-secondary
education
programs
as
well
as
for
welfare
programs.
These
latter
are
made
under
the
Canada
Assistance
Plan
which
is
described
separately
below
(paragraphs
28-36).
The
history
of
health
and
post-secondary
education
contributions
and
the
education
contributions
and
the
current
legislation
for
payment
of
such
monies
follows.
11.
Since
1977,
the
applicable
contributions
statute
has
been
the
EPF
Act,
which
is
administered
by
the
Department
of
Finance.
(b)
Health
Care
12.
The
Hospital
Insurance
and
Diagnostic
Services
Act,
S.C.
1957,
c.
28
provided
for
federal
contributions
in
respect
of
insured
provincial
hospital
services.
Insured
services
as
defined
in
Section
2(g)
ofthe
Act
included
in-patient
and
out-patient
services
to
which
residents
of
a
province
were
entitled
under
provincial
law
such
as
accommodation
and
meals
at
public
ward
level,
nursing,
diagnostic
procedures,
drugs
and
like
services
provided
in
and
by
the
hospital.
Pursuant
to
Section
5
of
the
Act,
the
contributions
were
conditional
inter
alia
upon
the
availability
of
the
services
on
a
uniform
basis
for
all
residents
within
the
province.
13.
Under
the
Hospital
Insurance
and
Diagnostic
Services
Act,
in
a
given
year,
the
federal
government
made
a
contribution
to
the
province
of
an
amount
equal
to
25%
of
the
cost
of
the
insured
services
in
the
province,
plus
25%
of
the
national
average
per
capita
cost
of
these
services
multiplied
by
the
population
of
the
province.
This
meant
that
federal
contributions
to
those
provinces
in
which
the
per
capita
cost
of
hospital
care
was
lower
than
the
national
average
represented
a
higher
proportion
of
total
hospital
care
costs
than
in
other
provinces.
14.
The
Medical
Care
Act,
S.C.
1966-67,
c.
64,
established
a
mechanism
for
federal
contributions
towards
the
cost
of
required
medical
services
rendered
by
medical
practitioners
undre
provincial
medical
care
insurance
plans.
The
basic
conditions
for
eligibility
for
contributions
as
set
out
in
Section
4(1),
were
that
provincial
plans
provide
for:
(a)
the
existence
of
a
public
authority
to
administer
the
provincial
plan
provided
for;
(b)
non-profit
plan
administration;
(c)
the
furnishing
of
medical
services
on
uniform
terms
and
conditions
within
the
province;
(d)
the
number
of
insurable
residents
must
not
be
less
than
90%
of
the
total
number
of
residents
of
a
province;
and
(e)
no
minium
period
of
residence
in
a
province.
Under
this
scheme,
in
a
given
year,
the
federal
government
made
a
contribution
to
the
provinces
of
an
amount
equal
to
50%
of
the
national
average
per
capita
costs
of
insured
services,
multiplied
by
the
population
of
the
province
in
that
year.
15.
The
Canada
Health
Act,
S.C.
1983-84,
c.
6
repealed
the
Hospital
Insurance
and
Diagnostic
Services
Act
and
the
Medical
Care
Act.
The
purpose
of
the
Act
is
to
establish
the
criteria
and
conditions
that
must
be
met
before
full
payment
may
be
made
under
the
EPF
Act
for
insured
health
care
services
provided
under
provincial
law.
It
defines
"insured
health
services"
to
include
hospital
services,
physician
services
and
eligible
surgical-dental
services
provided
to
insured
persons.
The
criteria
established
by
Sections
7
through
12
of
the
Canada
Health
Act
to
qualify
for
contributions
are
that
provincial
plans
provide
for
public
administration,
comprehensive
coverage,
universality,
portability
and
accessibility.
Under
Section
13
of
the
Canada
Health
Act
a
condition
for
receipt
of
contributions
is
the
supply
of
information
as
may
be
requested
by
the
Minister
of
National
Health
and
Welfare
relative
to
the
carrying
out
of
Canada’s
international
obligations,
to
the
planning
and
achieving
of
national
standards
and
to
the
exchanging
of
mutually
useful
information
on
health
care.
Sections
18-21
of
the
Canada
Health
Act
deal
with
extra
billing
and
user
charges.
16.
Pursuant
to
Section
27(8)
of
the
EPF
Act,
additional
federal
contributions
are
made
in
respect
of
extended
health
care
services
which
consist
of
intermediate
nursing
home
care,
adult
residential
care,
home
care
and
ambulatory
health
care
services.
These
services
are
described
in
paragraph
27,
post.
(c)
Post-Secondary
Education
17.
The
federal
government
began
making
direct
payments
to
the
provinces
for
post-secondary
education
in
1967
pursuant
to
the
Federal-Provincial
Fiscal
Arrangements
Act,
S.C.
1967-68,
c.
89.
This
Act
authorized
the
Secretary
of
State
to
make
payments
equal
to
50%
of
the
eligible
operating
expenditures
of
postsecondary
educational
institutions
based
on
audited
statements
of
the
institutions
or,
at
the
option
of
the
province,
$15
per
capita
of
provincial
population.
The
$15
per
capita
grant
was
escalated
annually
by
the
growth
in
the
eligible
operating
expenditures
of
all
institutions.
(d)
Program
Financing
18.
Before
1977
federal
contributions
to
provincial
schemes
for
hospital
insurance,
medical
care
and
post-secondary
education
were
made
under
the
Hospital
Insurance
and
Diagnostic
Services
Act,
the
Medical
Care
Act
and
the
Federal-Provincial
Fiscal
Arrangements
Act.
The
provisions
for
contributions
for
health
care
and
postsecondary
education
are
now
brought
together
in
the
EPF
Act.
Before
1977,
the
contribution
was
dependent
upon
provincial
expenditure.
The
EPF
Act
changed
the
calculation
of
the
contributions
to
the
programs
from
a
cost-shared
basis
to
a
base
year
amount
with
annual
escalation,
which
system
is
referred
to
as
“block
funding”.
Under
this
system
the
contributions
are
not
tied
to
the
costs
of
these
programs
to
the
provinces.
The
EPF
Act
arrangements
also
provide
for
equal
per
capita
contributions
to
the
provinces.
19.
The
EPF
Act
came
into
effect
on
April
1,
1977
and
was
amended
on
April
7,
1982
and
on
June
7,
1984.
The
Act
provides
for
transfers
to
provinces
based
on
a
block
funding
formula.
The
total
federal
contribution
to
a
province
under
the
block
funding
formula
for
a
given
year
is
the
product
of
the
national
average
per
capita
federal
contribution
towards
program
costs
in
a
base
year
(1975-76)
escalated
each
subsequent
year
by
a
moving
average
of
the
rate
of
growth
of
the
Canadian
economy
per
capita
and
multiplied
by
the
provincial
population.
20.
By
virtue
of
the
amendments
to
the
EPF
Act
in
June
1984,
the
federal
postsecondary
education
contribution
for
the
fiscal
years
1984
and
1985
was
made
subject
to
specific
growth
rates
of
6
and
5%.
21.
Federal
EPF
Act
contributions
to
the
provinces
for
health
care
and
postsecondary
education
consist
of
tax
transfers
and
cash
payments.
Tax
transfers
involve
a
reduction
in
the
rate
of
federal
income
tax
so
that
a
province
can
raise
its
taxes
a
corresponding
amount
without
changing
the
total
tax
burden
of
its
residents.
This
making
available
of
tax
room
is
considered
a
federal
contribution
to
a
province
(See
Schedule
"A").
22.
One
tax
point
is
1%
of
Basic
Federal
Income
Tax
(personal
income
tax)
or
1%
of
Federal
Corporate
Taxable
Income
under
the
Income
Tax
Act
as
the
case
may
be.
The
federal
tax
point
transfer
for
the
“established”
programs
of
hospital
insurance,
medical
care
and
post-secondary
education
is
13.5
personal
income
tax
points
and
1
corporate
tax
point,
plus
the
associated
equalization,
and
an
additional
8.5%
personal
income
tax
abatement
for
Quebec
taxpayers.
The
values
of
the
tax
points
together
with
the
associated
equalization
is
estimated
and
deducted
from
the
total
EPF
entitlements.
The
difference
is
paid
in
the
form
of
cash
out
of
the
Consolidated
Revenue
Fund.
23.
The
13.5
personal
income
tax
points
transferred
in
1977
was
comprised
of
4.357
points
that
had
previously
been
transferred
under
Post-Secondary
Education
arrangements
and
the
additional
transfer
of
9.143
points
implemented
by
the
EPF
Act.
The
9.143
point
tax
transfer
was
in
respect
of
hospital
insurance,
medical
care
and
post-secondary
education.
Since
1983,
the
value
of
the
total
transfer
has
been
explicitly
allocated
by
legislation
between
health
(now
insured
health
services)
and
post-secondary
education
with
approximately
67.9%
being
allocated
to
the
former
and
approximately
32.1%
being
allocated
to
the
latter.
24.
Cash
payments
made
to
the
provinces
in
support
of
the
programs
to
which
contributions
are
made
under
the
EPF
legislation
are
equal
to
the
difference
between
the
total
entitlement
of
the
provinces
under
the
applicable
legislation
and
the
value
of
federal
revenue
foregone
as
represented
by
the
transfers
of
tax
points.
The
payments
are
effected
by
cheques
made
out
in
the
name
of
governments
or
officers
and
are
paid
into
provincial
accounts.
Schedule
“B”
sets
out
a
list
of
the
payees
of
the
cheques
issued
by
the
Federal
Government
under
the
EPF
Act
and
the
disposition
of
the
amounts.
25.
In
the
case
of
Quebec
the
cash
payment,
as
a
proportion
of
the
total
contribution
is
less
than
in
the
case
of
the
other
provinces
for
historical
reasons.
A
federal
offer
in
the
mid-1960's
to
the
provinces
to
permit
the
“contracting
out"
of
certain
shared
cost
programs
in
exchange
for
tax
room
or
cash
payments
was
accepted
by
Quebec
alone.
The
result
of
this
“contracting
out"
was
that
more
room
was
allowed
for
provincial
taxation.
Quebec's
entitlement
to
funding
for
the
various
programs
continued
to
be
calculated
in
the
same
way
as
the
other
provinces
so
that
Quebec
neither
gained
nor
lost
financially
as
a
result
of
the
“contracting
out”
arrangements.
26.
This
contracting
out
was
effected
by
way
of
an
abatement
or
reduction
of
the
federal
income
tax
payable
by
residents
of
Quebec.
This
abatement,
which
was
authorized
by
the
Income
Tax
Act,
now
consists
of
16.5
tax
points,
comprised
as
follows;
8.5
points
for
established
programs
financing,
5
points
for
special
welfare
and
3
points
for
youth
allowance
programs.
The
EPF
Act,
Part
VII
provides
for
adjustments
and
recoveries
of
the
abatements.
27.
In
addition
to
federal
contributions
in
respect
of
the
“established”
programs,
the
EPF
Act
arrangements
also
provide
for
an
equal
per
capita
cash
grant
of
$20
(1977-78)
to
the
provinces
for
Extended
Health
Care
Services
programs.
This
cash
grant
is
increased
annually
by
the
EPF
Act
escalator
for
insured
health
services.
The
basis
of
the
established
programs
now
funded
under
the
EPF
Act
bears
no
relation
to
current
provincial
expenditures.
(In
1984-85,
total
federal
expenditures
under
EPF
to
all
provinces
totalled
14,699.3
(in
millions
of
dollars).)
The
various
provincial
and
federal
expenditures
are
set
out
in
Schedules
“C”
and
"J".
III.
CANADA
ASSISTANCE
PLAN
(a)
Generally
28.
The
Canada
Assistance
Plan,
R.S.C.
1970,
c.
C-1
was
enacted
in
1966
as
a
comprehensive
measure
for
providing
a
50%
federal
cash
contribution
to
the
provincial,
municipal
and
territorial
costs
of
providing
social
assistance
and
wel-
fare
services.
Save
in
the
case
of
Quebec,
where
as
described
above
part
of
the
contribution
takes
the
form
of
a
tax
abatement,
the
contribution
is
made
by
way
of
a
cash
payment.
The
objectives
of
the
Canada
Assistance
Plan,
as
expressed
in
the
preamble
of
the
Act,
are
to
support
the
provision
of
adequate
assistance
to
persons
in
need
and
to
encourage
the
development
and
extension
of
welfare
services
designed
to
help
prevent
and
remove
the
causes
of
poverty,
child
neglect
and
dependence
on
public
assistance.
29.
Section
4
of
the
Canada
Assistance
Plan
contemplates
agreements
whereby
payments
are
made
in
circumstances
where
the
statutory
conditions
are
met.
All
provinces
and
territories
have
signed
agreements
under
Part
I
of
the
Plan
which
provides
for
cost-sharing
in
two
separate
categories;
assistance
and
welfare
services.
Attached
as
Schedule
"D"
to
this
Agreed
Statement
of
Facts
is
a
copy
of
the
agreement
between
the
Government
of
Canada
and
the
Government
of
Alberta
entered
into
under
the
Canada
Assistance
Plan
in
1967,
and
all
amendments
to
that
agreement
executed
since
1974.
(b)
Assistance
30.
The
Canada
Assistance
Plan
is
not
tied
to
a
base
year
contribution
as
provided
under
the
EPF
Act
but
pays
50%
of
the
eligible
costs
incurred
by
provinces
and
territories
in
providing
assistance
to
persons
who
are
in
need,
regardless
of
the
cause
of
need.
31.
The
assistance
provisions
give
rise
to
the
bulk
of
the
federal
contribution
under
the
Canada
Assistance
Plan.
The
assistance
provisions
include
general
assistance,
care
in
homes
for
special
care,
certain
health
care
costs
and
most
child
welfare
expenditures.
The
general
assistance
contribution
is
paid
in
respect
of
provincial
payments
for
food,
shelter,
clothing,
fuel
and
other
basic
requirements,
prescribed
welfare
services
and
items
of
special
need,
such
as
tools
or
equipment
essential
to
obtaining
employment,
and
essential
repairs
or
alterations
to
property.
(c)
Welfare
Services
32.
The
remaining
contributions
under
Part
I
of
the
Canada
Assistance
Plan
are
in
respect
of
certain
provincial
and
territorial
costs
of
providing
welfare
services
and
are
at
the
rate
of
50%
of
the
eligible
costs.
Eligible
welfare
services
include
daycare,
homemakers,
counselling,
rehabilitation
(assessment,
referral,
counselling
and
job
placement),
community
development
services,
research,
consultation
and
evaluation,
and
administration
costs
relating
to
the
delivery
of
assistance
and
welfare
services
programs.
Welfare
services
are
those
provided
by
provincial
social
services
departments
or
other
provincially
approved
non-profit
agencies
and
made
available
to
persons
who
are
in
need
or
likely
to
become
in
need.
Persons
who
benefit
from
welfare
services
include
children
who
are
in
danger
of
abuse
or
neglect,
or
both,
battered
women,
families
and
individuals
in
crisis,
the
aged
and
the
mentally
and
physically
disabled.
(d)
Work
Activity
33.
Under
Part
III
of
the
Canada
Assistance
Plan,
the
federal
government
contributes
to
the
province
50%
of
the
costs
incurred
for
work
activity
projects
designed
to
assist
people
who
experience
unusual
difficulty
in
obtaining
or
holding
employment.
Agreements
under
Part
III
have
been
signed
by
all
provinces.
(e)
Blind
and
Disabled
Persons
Assistance
34.
Payments
in
respect
of
contributions
under
the
Blind
Persons
Act,
R.S.C.
1970,
c.
B-7
and
the
Disabled
Persons
Act,
R.S.C.
1970,
c.
D-6
are
now
provided
under
the
Canada
Assistance
Plan.
Those
statutes,
which
established
conditional
payment
schemes
under
federal-provincial
agreements,
the
conditions
being
specified
in
section
7
of
each
Act,
were
repealed
by
the
Miscellaneous
Statutes
Repeal
Act,
S.C.
1980-81-82-83,
c.
159,
which
was
proclaimed
December
1,
1983:
Canada
Gazette,
Part
III,
Vol.
118,
p.
389.
(f)
Canada
Assistance
Plan
Payments
35.
On
a
national
basis,
$2,844
billion
was
paid
to
the
provinces
and
territories
under
the
authority
of
the
Canada
Assistance
Plan
in
1982-83
and
$3,288
billion
was
expended
in
1983-84.
In
1983-84,
$326.0
million
was
paid
to
the
Province
of
Alberta.
Attached
as
Schedule
"E"
to
this
Agreed
Statement
of
Facts
is
a
summary
of
payments
made
to
the
provinces
under
the
authority
of
the
Canada
Assistance
Plan
in
the
period
1977-84.
36.
The
Agreements
under
the
Canada
Assistance
Plan
are
identical
for
all
provinces
and
territories.
The
schedules
to
these
Agreements,
which
list
the
institutions,
provincially
approved
agencies
and
the
provincial
legislation
which
authorizes
the
programs
vary
from
province
to
province.
IV.
DESCRIPTION
OF
THE
ALBERTA
HEALTH
AND
SOCIAL
SERVICES
CARE
SYSTEM
37.
The
health
care
and
social
services
system
in
Alberta
is
comprised
of
a
number
of
health
and
social
service
programs
which
are
provided
by
federal,
provincial
and
municipal
authorities
as
well
as
voluntary
organizations.
The
majority
of
services
fall
under
the
jurisdiction
of
the
provincial
government's
Departments
of
Social
Services
and
Community
Health,
and
Hospitals
and
Medical
Care.
The
legislation
governing
the
provisions
of
services
is
set
forth
in
Schedule
F.
The
provincial
government
also
has
a
number
of
acts
and
regulations
in
place
to
administer
and
monitor
all
aspects
of
health
care
delivery.
Professional
associations
or
licensing
bodies
exist
for
all
health-related
professions
which
provide
their
members
with
guidelines
regarding
their
responsibility
and
expected
conduct
in
the
system.
38.
The
Department
of
Social
Services
and
Community
Health
provides
financial
assistance
to
those
in
need,
rehabilitation
and
support
services,
child
welfare
and
community
health
programs.
The
Department
is
divided
into
the
Health
Services
Division
and
the
Social
Services
Division.
The
Health
Services
Division
monitors
the
state
of
public
health
in
the
province
and
develops
and
supports
programs
and
services
which
help
achieve,
maintain
and
restore
good
health
and
well-being
to
the
people
of
the
province.
The
activities
of
the
Division
include
communicable
disease
control,
maternal
and
child
health,
health
inspection,
dental
services
for
children,
nutrition,
family
planning
and
family
life
education,
speech
therapy
and
audiology,
and
home
care.
Community
mental
health
services
are
provided
by
ten
regional
clinics
which
offer
free
assessment,
treatment
and
referral
to
individuals
and
families
experiencing
emotional
or
mental
problems.
39.
The
Social
Services
Division
provides
programs
which
develop
maintain
and
promote
the
independence,
of
disabled
and
disadvantaged
Albertans.
Financial
assistance
programs
provide
for,
among
other
things,
health
care
for
people
in
need
(the
aged,
those
physically
and
mentally
handicapped),
child
welfare
programs
and
offer
services
to
handicapped
children.
Residential,
child
development
and
vocational
programs
for
handicapped
persons
are
provided
by
private
agencies
with
provincial
funds.
40.
The
Department
of
Hospitals
and
Medical
Care
administers
the
Alberta
Health
Care
Insurance
Plan
and
the
Alberta
Hospitalization
Benefits
Plan
pays
for
all
medically
required
services
of
medical
practitioners
and
certain
surgical-dental
procedures
undertaken
by
dental
surgeons
in
hospitals.
In
addition,
Alberta's
basic
health
services
include
services
provided
by
dental
surgeons
in
the
field
of
oral
surgery,
optometric
services,
chiropractic
services,
pediatric
services
and
appliances
and
physiotherapy
services.
41.
The
Alberta
Hospitalization
Benefits
Plan
provides
insured
hospital
benefits
to
eligible
residents
of
Alberta
(those
covered
by
trhe
Alberta
Health
Care
Insurance
Plan
and
not
eligible
under
any
statute
of
Canada,
province
or
territory
in
Canada
or
Workers'
Compensation
Board).
42.
All
ordinary
residents
of
Alberta
as
defined
in
the
Alberta
Health
Care
Insurance
Act
are
required
to
register
with
the
Health
Care
Insurance
plan
and
once
registered
are
entitled
to
coverage
for
basic
health
services
and
hospital
benefits.
Unless
exempted,
all
residents
are
required
to
pay
premiums,
(current
rates:
Single
$14.00;
Family
2
or
more
$28.00).
However,
non-payment
of
premiums
does
not
render
the
resident
and
dependents
ineligible
for
benefits.
Health
identification
cards,
which
provide
bona
fide
residents
access
to
insured
services
are
issued
even
if
there
are
premium
arrears
and/or
a
refusal
to
pay
on
the
part
of
the
resident.
43.
Residents
are
permitted
to
elect
to
be
outside
the
Health
Care
Insurance
Plan
and
the
Hospitalization
Benefits
Plan
as
long
as
they
and
their
dependents
are
registered
under
the
Health
Insurance
Premiums
Act,
and
they
are
not
liable
to
the
Minister
of
Health
for
Alberta
for
any
premiums.
Dependents
may
choose
to
remain
in
the
plan.
The
practitioner
may
bill
the
provincial
plan,
the
patient
or
both.
The
normal
procedure
is
that
the
patient
presents
his/her
health
insurance
card
at
the
time
of
treatment
and
the
practitioner
will
then
submit
a
claim
to
the
Alberta
Health
Care
Insurance
Plan
for
payment
of
services
rendered.
The
physician
receives
payment
directly
from
the
plan.
If
the
patient
pays
the
practitioner
directly,
the
practitioner
either
submits
a
claim
on
the
patient's
behalf
or
provides
the
patient
with
sufficient
information
to
submit
a
claim
to
the
Plan
themselves.
Payment
by
the
Plan
is
made
directly
to
the
patient.
44.
Registered
residents
are
eligible
for
benefits
while
temporarily
absent
from
Alberta.
For
vacations,
visits
or
business
engagements,
if
a
resident
intends
to
resume
full-time
residence
in
Alberta,
eligibility
for
coverage
continues
up
to
a
maximum
of
12
months.
Full-time
students
at
accredited
educational
institutes,
outside
of
the
province,
intending
to
return
and
resume
full-time
residence
on
completion
of
their
studies
are
eligible
for
coverage.
Also,
those
undergoing
education
or
sabbatical
leave,
or
certain
missionary
work,
are
eligible
up
to
a
maximum
of
24
consecutive
months.
45.
The
Plan
pays
medical
claims,
within
and
outside
the
country,
up
to
the
Alberta
rate.
Hospital
in-patient
and
out-patient
services
received
in
another
province
are
insured
at
the
rate
approved
by
the
Plan
in
the
province
where
the
service
is
rendered
unless
the
Minister
has
made
another
arrangement.
Out-of-
Canada
in-patient
and
out-patient
hospital
claims
are
paid
at
the
lesser
of
the
rates
prescribed
by
the
Minister
and
the
rates
charged
by
the
hospital
or
facility.
46.
Residents
who
leave
Alberta
permanently
for
another
province
are
entitled
to
continuous
coverage
from
the
day
they
cease
to
be
residents
of
Alberta
to
the
last
day
of
the
second
month
following
the
month
of
arrival
in
new
province
(one
month
extension
for
travelling
up
to
twelve
months
coverage
if
hospitalized
en
route).
Those
leaving
Canada
permanently
may
be
allowed
to
continue
coverage,
upon
Ministerial
determination,
for
a
period
beginning
the
day
of
departure
until
the
end
of
the
first,
second
or
third
month.
All
premium
arrears
plus
premiums
for
the
period
of
continuing
coverage
must
be
paid.
47.
Persons
moving
permanently
to
Alberta
from
another
province
are
covered
effective
the
first
day
of
the
third
month
after
the
date
they
became
residents
in
Alberta
(must
register
before
first
day
of
fourth
month
following
date
of
becoming
resident).
48.
Persons
from
outside
Canada,
who
became
residents
of
Alberta,
are
covered
effective
the
date
they
became
a
resident
of
Alberta
as
long
as
registration
occurs
no
later
than
three
months
after
the
date
they
became
a
resident.
As
well,
first-day
coverage
is
afforded
to
newborns,
Canadian
citizens
establishing
residency
in
Canada
for
the
first
time,
and
landed
immigrants.
The
following
persons
and
their
dependents,
whose
ordinary
place
of
residence
is
outside
Canada,
are
deemed
to
be
residents
of
Alberta;
those
under
a
work
assignment,
contract
or
arrangement,
and
who
are
registered
with
the
Plan;
full-time
students
at
accredited
educational
institutes
in
Alberta.
49.
Alberta's
medical
practitioners
are
not
required
to
opt-in
or
out
of
the
Plan.
If
the
practitioner
intends
to
charge
an
extra
amount
that
exceeds
the
Plan
benefit,
he/she
must
have
an
agreement
with
the
patient
to
that
effect
before
the
services
are
rendered.
The
amount
of
extra-billing
must
be
reported
to
the
Plan.
Physicians
cannot
ask
a
patient
for
an
extra
fee
once
they
are
admitted
to
hospital.
50.
In
general
hospitals
an
admission
fee
of
$10.00
is
charged
to
residents
(extensive
list
of
exclusions).
In
auxiliary
hospitals
an
accommodation
charge
for
chronic
care
of
$8/day
is
charged
after
120
days.
(The
latter
charge
has
been
ruled
exempt
from
deductions
under
Section
19(2)
of
the
Canada
Health
Act.
Therefore,
the
federal
deductions
for
user
charges
in
Alberta
refer
only
to
the
admission
tee—
$1,827,000
July
1,
1984
to
March
31,
1985).
Although
effective
January
1,
1985
general
hospitals
were
given
the
authority
to
charge
for
in-patient,
out-patient
and
emergency
services,
the
Alberta
Hospital
Association
voted
against
the
scheme
and
no
charges
have
been
implemented.
51.
Hospital
budgets
are
submitted
to
the
Minister
who
determines
the
approved
amount
of
operating
costs
applicable
to
a
given
hospital
for
a
given
fiscal
period.
Monthly
operating
payments
are
established
by
the
Minister
on
the
basis
of
the
approved
operating
costs.
Regulatory
provisions
allow
the
Minister
to
increase
or
decrease
the
monthly
payments
as
required
and
also
to
make
special
payments
to
a
hospital
or
a
group
of
hospitals
to
cover
extra-ordinary
costs
related
to
the
operation
of
an
approved
program.
Discretionary
revenue
derived
from
authorized
charges,
user
charges
and
preferred
accommodation
is
retained
by
hospitals
and
must
be
applied
against
hospital
operating
costs
specified
in
the
regulations.
V.
COLLECTION
OF
REVENUE
AND
DISBURSEMENTS
FROM
THE
CONSOLIDATED
REVENUE
FUND
(a)
Generally
52.
The
mechanisms
by
which
the
Government
of
Canada
receives,
disburses
and
accounts
for
monies
under
its
control
are
provided
for
in
the
Financial
Administration
Act
R.S.C.
1970,
c.
F-27,
as
amended.
In
order
to
understand
how
payments
are
made
to
provinces
a
review
of
the
relevant
mechanisms
is
made
below.
53.
The
Consolidated
Revenue
Fund
(CRF)
is
defined
by
section
2
of
the
Financial
Administration
Act,
as:
.
.
.
the
aggregate
of
all
public
monies
that
are
on
deposit
at
the
credit
of
the
Receiver
General.
54.
“Public
money"
is
also
defined
in
section
2
of
the
Financial
Administration
Act
as:
.
.
.
all
money
belonging
to
Canada
received
or
collected
by
the
Receiver
General
of
any
other
public
officer
in
his
official
capacity
or
any
other
person
authorized
to
receive
or
collect
such
money,
and
includes;
(a)
duties
and
revenues
of
Canada,
(b)
money
borrowed
by
Canada
or
received
through
the
issue
or
sale
of
securities,
(c)
money
received
or
collected
for
or
on
behalf
of
Canada,
and
(d)
money
paid
to
Canada
for
a
special
purpose.
55.
Section
15(1)
of
the
Financial
Administration
Act
provides
that:
Money
received
by
or
on
behalf
of
Her
Majesty
for
a
special
purpose
and
paid
into
the
Consolidated
Revenue
Fund
may
be
paid
out
of
the
Consolidated
Revenue
Fund
for
that
purpose,
subject
to
any
statute
applicable
thereto.
56.
The
Consolidated
Revenue
Fund
is
comprised
essentially
of
budgetary
(taxes)
and
non-budgetary
(proceeds
of
loans)
items
together
with
other
specific
items
such
as
special
purpose
monies.
During
the
fiscal
years
1973-74
to
1982-83
receipts
accruing
under
the
Income
Tax
Act
comprised
approximately
61%
of
all
budgetary
revenues.
Attached
as
schedule
"G"
hereto
is
a
breakdown
of
budgetary
revenues
in
the
fiscal
years
1979-80
to
1983-84.
57.
As
well
there
are
collected
and
held
in
the
CRF
sums
on
account
of
tax
payable
under
the
provincial
income
tax
legislation
such
as
the
Alberta
Income
Tax
Act.
Amounts
on
account
of
such
tax
are
paid
out
of
the
CRF
regularly
to
the
provinces
subject
to
a
year
end
adjustment
in
respect
of
actual
provincial
income
tax
assessments.
Schedule
"H"
contains
a
copy
of
the
tax
collection
agreement
with
Alberta
and
Schedule
"I"
shows
the
payments
to
the
provinces
under
the
tax
collection
agreements.
(b)
Appropriations
and
Payments
58.
No
payments
may
be
made
out
of
the
CRF
without
the
authority
of
Parliament:
Financial
Administration
Act,
s.
19.
Such
authority
is
given
by
way
of
an
appropriation,
an
annual
or
statutory
authorization
by
Parliament
to
the
Crown
to
spend
specified
or
sometimes
unspecified
sums
for
particular
purposes
from
the
CRF.
59.
Before
incurring
a
financial
obligation
on
behalf
of
Her
Majesty
the
administrator
of
the
service
involved
must
certify
that
a
sufficient
unencumbered
balance
is
available
out
of
the
relevant
appropriation
to
discharge
the
obligation
(s.
25
of
the
Financial
Administration
Act).
60.
In
addition
to
the
requirement
of
a
certificate,
no
payment
may
be
made
until
it
has
been
certified
that
the
work
was
performed
or
the
goods
or
services
were
supplied
and
that
the
cost
thereof
is
as
stipulated
in
the
contract
or
is
reasonable
where
no
cost
was
stipulated
(s.
27
of
the
Financial
Administration
Act).
(c)
Government
Accounting
61.
Under
Part
VI
of
the
Financial
Administration
Act
(s.
54
and
55)
Parliament
has
made
provision
for
recording
receipts
and
expenditures
in
the
Accounts
of
Canada
and
disclosing
those
receipts
and
expenditures
in
the
Public
Accounts.
They
have
been
placed
under
the
control
of
the
Receive
General
who
is
responsible
inter
alia,
to
cause
the
accounts
to
be
kept
in
such
manner
as
to
show:
(a)
the
expenditures
made
under
each
appropriation;
(b)
the
revenues
of
Canada;
and
(c)
the
other
payments
into
and
out
of
the
Consolidated
Revenue
Fund.
62.
The
CRF
is
the
aggregate
of
all
public
monies
on
deposit
to
the
credit
of
the
Receiver
General
which
are
maintained
in
numerous
bank
accounts
throughout
the
world.
63.
The
Accounts
of
Canada,
are,
in
essence,
the
general
ledger
or
books
of
account
of
the
Government
of
Canada.
Within
the
accounts,
various
receipts
and
other
credits,
charges
and
payments
are
entered
in
accordance
with
instructions
from
parliament
or
in
accordance
with
the
government's
accounting
policies.
There
are
separate
accounts
for
each
appropriation
authorized
by
Parliament.
However,
while
there
are
usually
approximately
500
appropriations
authorized
by
Parliament
in
each
fiscal
year,
there
are
in
practice
over
4,000
accounts
in
the
Accounts
of
Canada
which
serve
to
support
the
proper
administration
of
the
government's
financial
affairs.
64.
As
well,
there
are
accounts
for
special
purpose
monies
(section
15
of
the
Financial
Administration
Act)
referred
to
above
and
special
accounts
which
Parliament
has,
from
time
to
time
directed
be
established.
65.
Money
payable
to
the
Crown
is
paid
to
the
Receiver
General
and
placed
in
the
CRF.
Apart
from
special
accounting
measures
in
specific
areas,
it
is
indistinguishable
from
other
money
held
by
the
Receiver
General.
66.
Money
paid
out
by
the
Crown
is
in
effect
drawn
on
the
CRF
by
the
Receiver
General.
The
financial
institution
which
has
honored
the
cheque
on
behalf
of
the
Crown
then
presents
it
to
the
Bank
of
Canada
which
acts
for
the
Receiver
General
in
the
cheque
clearing
system.
The
Bank
of
Canada
pays
the
institution
which
has
presented
the
cheque
and
the
Receiver
General
(them
simultaneously)
issues
a
cheque
to
the
Bank
of
Canada
drawn
on
the
funds
held
at
the
Bank
of
Canada
to
reimburse
the
Bank
of
Canada
for
the
sums
it
has
distributed
to
redeem
the
Receiver
General
payments.
It
is
at
this
point
that
the
Consolidated
Revenue
Fund
is
reduced
by
the
amount
of
that
payment.
67.
Since
payments
made
under
the
EPF
Act
are
approved
by
Parliament,
the
funds
need
not
be
voted
annually
by
Parliament.
Likewise,
under
the
Canada
Assistance
Plan,
upon
the
authority
of
the
Minister
of
National
Health
and
Welfare,
contributions
or
advances
on
account
thereof
may
be
paid
out
of
the
CRF
to
the
Provincial
Treasurer,
without
the
requirement
of
any
further
annual
appropriation
by
Parliament.
68.
Payments
made
from
the
CRF
to
all
of
the
provinces
in
respect
of
the
major
programs
under
the
EPF
Act-insured
health
services,
post-secondary
education,
extended
health
care—together
with
the
payments
made
under
the
Canada
Assistance
Plan
may
vary
from
year
to
year.
In
the
current
fiscal
year
it
is
estimated
that
such
payments
will
total
approximately
12%
of
the
total
budgetary
expenditures
from
the
CRF.
Attached
as
Schedule
"J"
to
this
Agreed
Statement
of
Facts
are
graphic
representations
of
the
amounts
spent
on
other
major
programs.
69.
The
parties
are
agreed
that
the
issues
raised
by
the
pleadings
can
be
properly
and
expeditiously
resolved
by
reference
to
an
Agreed
Statement
of
Facts
supplemented
by
viva-voce
evidence.
The
parties
hereby,
by
their
respective
solicitors,
admit
the
facts
set
out
in
this
Agreed
Statement
of
Facts
and
the
Schedules
affixed
hereto
and
consent
to
the
disposition
of
these
proceedings
as
if
those
facts
had
been
established
in
evidence,
subject
to
their
relevance
to
the
issues
herein
and
their
weight
being
determined
by
the
Court.
The
respondent
Attorney
General
of
Canada
submitted
that
the
appellant's
interest
in
the
issues
in
this
litigation
affects
the
appellant
only
in
its
capacity
as
a
taxpayer,
so
that
the
issue
on
the
appellants'
liability
to
pay
income
tax
ought
not
to
be
heard
in
Alberta
courts
which
are
not
a
convenient
forum
for
that
issue.
The
respondent
urges
that
the
question
should
be
raised
in
proceedings
relating
to
assessment
of
the
appellant's
taxes.
On
the
issue
of
the
appropriate
forum,
I
agree
with
and
adopt
the
reasoning
of
the
trial
judge:
Furthermore,
the
respondent
objects
that
the
appellant
lacks
any
status
to
contest
the
constitutionality
of
the
spending
statutes
which
do
not
affect
the
appellant
as
a
taxpayer.
Does
the
appellant,
as
a
taxpayer,
have
any
capacity
or
interest
to
attack
the
constitutionality
of
the
spending
statutes
here
in
issue.
On
this
point
the
trial
judge
concluded:
The
issue
of
status
has
been
recently
reviewed
by
the
Supreme
Court
of
Canada
in
Minister
of
Finance
et
al.
v.
Finlay,
[1986]
2
S.C.R.
607,
where
Finlay
sought
a
declaration
that
certain
payments
by
Canada
to
the
Province
of
Manitoba
in
respect
of
social
allowance
were
illegal
under
the
enabling
legislation
because
he
contended
that
the
Province
breached
conditions
and
undertakings
under
which
it
received
the
payments
from
Canada.
However,
the
issue
involved
was
the
legality
of
payments
by
Canada
to
Manitoba,
and
not
the
constitutionality
of
legislation.
After
referring
to
the
statement
of
Martland,
J.
in
Minister
of
Justice
v.
Borowski
(quoted
above)
Le
Dain,
J.
commented
upon
the
distinctions:
In
the
case
before
us,
the
constitutionality
of
the
various
federal
statutes
are
attacked.
In
these
circumstances,
I
agree
with
the
trial
judge
that
the
policy
of
the
law
permits
the
appellant
the
required
status
to
test
the
constitutionality
of
the
statutes
which
are
in
issue,
and
I
see
no
grounds
for
interfering
with
his
decision
to
accord
that
status
and
determine
the
matter
on
its
merits.
The
appellant
urges
that
the
imposition
of
tax
upon
it
under
the
Income
Tax
Act,
supra,
is
unconstitutional
because
it
is
in
violation
with
subsection
92(2)
of
the
Constitution
Act,
1867
as
being
in
part
“Direct
Taxation
within
the
Province
in
Order
to
the
Raising
of
a
Revenue
for
Provincial
Purposes",
rather
than
federal
taxation
authorized
under
section
91.
The
agreed
statement
of
facts
demonstrates
that
moneys
raised
by
Canada
pursuant
to
the
Income
Tax
Act
represent
approximately
61
per
cent
of
the
expenditures
of
Canada
(paragraph
56).
Moneys
raised
pursuant
to
the
Income
Tax
Act
are
paid
into
the
Consolidated
Revenue
Fund,
and
the
various
expenditures
made
by
Canada
are
drawn
from
that
Fund.
I
agree
with
the
conclusion
of
the
learned
trial
judge
on
this
point
where
he
states:
The
appellant
argues
that
Parliament
cannot
raise
moneys
which
may
be
used
for
purposes
which
fall
within
the
legislative
jurisdiction
of
the
provinces,
citing
Bank
of
Toronto
v.
Lambe
(1887),
12
App.
Cas.
575
at
585
(P.C.)
and
Caron
v.
The
King,
[1924]
A.C.
999
(P.C.).
This
argument
equates
Parliament's
spending
power
with
its
legislative
power.
I
would
not
read
the
Constitution
Act
so
restrictively.
We
must
remember
the
advice
in
Reference
Re
Waters
and
Waterpowers,
[1929]
S.C.R.
200
at
216
(cited
by
the
appellant),
that
we
must
give
effect
to
"Act
as
a
whole”.
As
Driedger
points
out
in
"The
Spending
Power”
(1981),
7
Queens'
L.].
124,
Canadian
governments
(of
all
levels)
have
never
restricted
spending
to
matters
within
their
respective
legislative
competence
—
certainly
not
in
areas
in
which
there
may
be
a
double
aspect.
Moreover,
as
then
Professor
La
Forest
notes
in
"The
Allocation
of
Taxing
Powers
Under
the
Federal
Constitution”
(2d,
1981),
at
50-51,
payments
to
the
provinces
for
provincial
purposes
are
contemplated
by
the
Constitution
Act.
Such
payments
are
also
contemplated
by
subsection
36(1)
of
the
Charter,
which
I
later
quote.
Whether
a
particular
expenditure
is
ultra
vires
as
being
beyond
the
legislative
competence
of
Parliament
is
the
second
question
to
which
I
now
turn.
The
gist
of
the
appellant's
argument
on
this
aspect
is
that
Canada,
through
the
power
of
the
purse,
can
invade
areas
of
jurisdiction
reserved
to
the
provinces
and
coerce
the
provinces
to
adopt
schemes
and
programs
devised
by
Canada.
The
appellant
argues
that
in
consequence,
Canada
through
its
funding,
effectually
usurps
jurisdiction
reserved
exclusively
to
the
provinces
by
section
92
of
the
Constitution
Act,
1867.
The
programs
under
the
spending
statutes
at
issue
in
this
case
involve
payments
and
contributions
made
by
Canada
to
provinces
in
respect
of
health
care
pursuant
to
the
Canada
Health
Act,
payments
and
contributions
by
Canada
to
Alta.
C.A.
provinces
in
respect
of
welfare
services
under
the
Canada
Assistance
Plan,
supra,
and
payments
and
contributions
by
Canada
to
the
provinces
in
respect
of
post-secondary
education
pursuant
to
the
Federal
Provincial
Fiscal
Arrangement
and
Federal
Post-Secondary
Evaluation
and
Health
Contributions
Act,
supra.
Payments
by
Canada
to
the
provinces
for
these
programs
totalled
nearly
$16
billion
for
the
1985-86
fiscal
year.
No
citizen
would
doubt
that
Canada,
over
many
years,
has
established
a
robust
posture
in
negotiating
with
the
provinces
toward
establishing
these
shared-cost
programs
which
are
intended
to
provide
all
Canadians
with
common
national
standards
of
services.
The
appellant
says
that
these
statutes
are,
in
pith
and
substance,
legislation
in
relation
to
matters
exclusively
wihin
the
legislative
competence
of
the
provinces.
The
respondent
replies
that
while
the
statutes
may
ultimately
have
an
effect
on
matters
within
exclusive
provincial
competence
they
are
not
legislation
in
relation
to
it.
They
are
statutes
authorizing
the
allocation
of
federal
funds
to
assist
the
provinces
in
providing
services.
I
acknowledge
that
the
consequence
is
to
impose
considerable
pressure
on
the
provinces
to
pass
complementary
legislation
or
otherwise
comply
with
the
conditions
of
the
allocation,
but
questions
of
constitutional
validity
under
sections
91
and
92
are
not
resolved
by
looking
at
the
ultimate
probable
effect.
The
Act,
as
a
whole,
contemplates
Canada
providing
financial
assistance
to
the
prov-
inces.
The
argument
is,
essentially,
that
Parliament
cannot
attach
“strings”
to
that
assistance
in
the
form
of
national
standards
A
province
could,
presumably,
take
federal
assistance
and
use
it
unwisely,
arbitrarily,
irrationally,
so
long
as
it
was
used
for
a
provincial
purpose.
To
hold
that
conditions
cannot
be
imposed
would
be
an
invitation
to
discontinue
federal
assistance
to
any
region
or
province,
destroying
an
important
feature
of
Canadian
federalism.
In
sum,
the
appellant's
argument
is
that
Parliament
is
indirectly
legislating
in
respect
of
matters
within
provincial
jurisdictions.
It
argues
that
Parliament
cannot
directly
prohibit
extra-billing
(over
and
above
health
care
P
y™
"
)
by
doctors,
so
it
cannot
achieve
the
same
end
by
the
conditions
attached
to
funding.
The
conclusion
does
not
follow.
Parliament
has
not
by
legislative
force
achieved
the
result.
The
constitution
does
not
proscribe
those
incentives
or
economic
pressure.
If,
for
example,
all
or
a
substantial
number
of
provinces
decided
not
to
accept
the
conditions,
there
would
be
no
effect
on
matters
within
provincial
jurisdiction.
Legislation
prohibiting
direct
billing
would
be,
in
pith
and
substance,
legislation
in
relation
to
a
section
92
head.
The
judge
did
not
so
characterize
this
legislation,
nor
would
I.
-
The
question
then
becomes
whether
the
conditions
attached
to
this
spending
legislation
are
colourable,
as
distinct
from
setting
legitimate
national
standards.
The
pattern
established
over
many
years
whereby
Canada
and
the
provinces
have
developed
such
shared-cost
programs
within
areas
within
provincial
legislative
jurisdiction,
was
recognized
in
the
Constitution
Act,
1867,
which
provides:
This
practice
of
development
of
such
shared-cost
programs
is
further
reflected
in
the
proposed
1987
Constitutional
Accord
(commonly
referred
to
as
the
"Meech
Lake
Agreement")
which
proposes
that
the
Constitution
Act,
1867
be
amended
by
adding:
With
the
background
of
a
long-standing
convention
whereby
Canada
and
the
provinces
have
negotiated
for
the
establishment
of
national
shared-cost
projects,
can
it
be
suggested
that
the
“spending
statutes"
here
in
issue
are
ultra
vires?
In
my
view,
such
an
argument
cannot
be
sustained.
I
agree
with
the
reasoning
of
the
trial
judge:
The
appeal
accordingly
fails
and
must
be
dismissed.
The
Court
is
indebted
to
counsel
for
the
helpful
argument
which
has
been
of
great
assistance.
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