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Rapid Recap: Federal Budget 2023


Today, Federal Finance Minister Chrystia Freeland tabled the 2023-24 Budget titled A Made-in-Canada Plan: Strong Middle Class, Affordable Economy, Healthy Future. Against the backdrop of a looming recession and increased inflation, Minister Freeland announced nearly $70 billion in new spending between now and 2027-28 — with $59.5 billion rolling out over the next five years — and a $40.1 billion deficit this fiscal year. There were few surprises in the budget, as the Finance Minister previously indicated affordability and necessary investments to maintain the Liberal/NDP confidence deal would be a focus. Dental care continued to take priority over pharmacare in this budget, as previously seen in the Supply and Confidence agreement.

On health, the government recommitted the $49 billion in new funding announced for health over the next ten years that will be distributed through new Canada Health Transfer measures, tailored bilateral agreements, personal support worker wage support, long-term care, complementary federal support and a Territorial Health Investment Fund. The budget also confirmed additional support beyond the federal offer presented to Provinces and Territories. A detailed breakdown of the budget’s health care commitments are included at the end of this memo.

Key Takeaways

Deficit pledge abandoned and a shallow recession anticipated: With significant spending items in health care driving the charge, the government’s deficit reduction pledge has been abandoned and government revenues will contract as the big banks anticipate a shallow recession to impact the Canadian economy. The federal deficit is projected to be $40.1 billion in 2023-24, nearly $10 billion more than was forecasted in the Fall Economic Statement. It is not uncommon for governments to invest heavily in health care when facing economic headwinds, though it’s not clear that is the rationale in this case.

Dental care spending leaves a cavity in the budget at the expense of pharmacare: With $13 billion over the next five years going towards dental care, a necessary investment to maintain the NDP’s support, both the NDP and governing Liberals clearly chose dental care as a priority over pharmacare. There was no mention of drug policies in the budget, leading to further questions regarding the government’s ambiguous commitment to pass pharmacare legislation by the end of 2023 – a commitment that needs no funding in 2023-24.

A health financing budget, but not a health policy budget: With billions of dollars confirmed to provinces and territories (PTs) in early February, apart from dental care, there isn’t any substantial new funding announced in this budget. Furthermore, there are no particularly new or surprising commitments from a health policy standpoint. Progress on health priorities outlined in the bilateral agreements will wait until PTs’ release action plans and common indicators.

What is missing? With no new information related to the Canada Drug Agency, palliative care, long-term care or health research, and little mention of the recent rare drugs announcement (though spending is included in the fiscal plan), PTs will be pressured by health stakeholders to solve all that ails the system with the spending agreement they currently have in hand.

Commitment to mental health?: Additionally absent from the budget, and possibly from the government’s agenda, is any further commitment to a Canada Mental Health Transfer (CMHT). Improving access to quality mental health and substance abuse services was one of the four priorities outlined in the recent bilateral agreements on health. The omission of the CMHT, which received significant support from mental health stakeholders across the country, will be perceived as backtracking on a significant campaign promise.

Investments in pan-Canadian Health Organizations (PCHOs) may spur future health policy development: There is a significant increase in the Federal Government’s use of the PCHOs to enhance data collection and reporting, including the development and tracking of health indicators. PT collaboration on data sharing is key to execute the government’s vision of increased evidence-based policy decisions.

Holding the middle ground: It is clear that the governing Liberals are hoping to appease the full political spectrum to protect the vote-rich middle ground. With a health spending deal akin to the Martin Liberals and supported by the Poilievre Conservatives, billions more in the social safety net to satisfy the NDP and affordability measures on groceries and alcohol, this budget has something for everyone. Whether it is enough to satisfy Canadians remains to be seen.

Looking Ahead

PT health care funding agreements: With agreements in principle in place (with the exception of Quebec, though we understand it’s all but done), PTs and the Federal Government will embark on individual bilateral agreements in the coming weeks.

PT health spending plans: PTs are expected to publicly produce action plans on their priority areas of focus and detail investments and outcomes associated with their priorities every three years.

Canada Health Transfer: Previously, the CHT increased by 3% or nominal GDP – whichever was greater. Moving forward, the base increase will be 5%, a significant win for PTs. For context, the CHT increased by 6% each year between 2004 and 2014.

Follow the money: There are a number of new funding programs currently not defined. Over the coming weeks and months, it will be important to determine delegated authorities and ownership over particular pots of funding to either shape or access new federal dollars.

Will there be an election? With a significant investment in dental care, it is unlikely the NDP would trigger an election over this spending plan.

Budget Summary

Canada Health Transfer (CHT)

The Canada Health Transfer grows in line with gross domestic product (GDP), and will increase by 9.3% in 2023-24. Including the previously announced immediate and unconditional $2 billion top-up to address immediate pressures on the health care systems, for 2023-24, the CHT totals $49.4 billion.

Dental Care

The government proposes to provide $13 billion over five years, starting in 2023-24, and $4.4 billion ongoing to Health Canada to implement the Canadian Dental Care Plan. The plan will be administered by Health Canada, with support from a third-party benefits administrator. Details on eligible coverage will be released later this year.

  • The government also commits $250 million over three years, starting in 2025-26, and $75 million ongoing to Health Canada to establish an Oral Health Access Fund. The fund will complement the Canadian Dental Care Plan by investing in targeted measures to address oral health gaps among vulnerable populations and reduce barriers to accessing care, including in rural and remote communities.
  • The government proposes $23.1 million over two years, starting in 2023-24, to Statistics Canada to collect data on oral health and access to dental care in Canada, which will inform the rollout of the Canadian Dental Care Plan.

Mental Health and Addictions

  • The government commits $158.4 million over three years, starting in 2023-24, to the Public Health Agency of Canada to support the implementation and operation of 988 Suicide Prevention Line.
  • Budget 2023 commits to the acceleration of construction of the Shepody Healing Centre in Dorchester, New Brunswick, to increase access to mental health resources.
  • The government proposes $45.9 million over three years, starting in 2023-24, to the Treasury Board of Canada Secretariat to create a Mental Health Fund for Black public servants and establish dedicated career development programs, including to prepare Black public service leaders for executive positions.
  • Budget 2023 proposes to provide a total of $359.2 million over five years, starting in 2023-24, with $5.7 million ongoing and $1.3 million in remaining amortization, to support a renewed Canadian Drugs and Substances Strategy, which would guide the government’s work to save lives and protect the health and safety of Canadians. This includes:
    • $144 million over five years, starting in 2023-24, to Health Canada for the Substance Use and Addictions Program to fund community-based supports, including safer supply, supervised consumption sites, and other evidence-based health interventions.
    • $20.2 million over five years, starting in 2023-24, to the Public Health Agency of Canada for a new community-based program to prevent substance use among young people.
    • $73.9 million over five years, starting in 2023-24, with $4.6 million ongoing, to Health Canada to streamline authorizations for supervised consumption sites and drug checking services, scale-up access to safer supply, and evaluate innovative approaches.
    • $50.8 million over five years, starting in 2023-24, with $1.1 million ongoing and $1.3 million in remaining amortization, to Health Canada and $16 million over five years, starting in 2023-24, to the Public Health Agency of Canada to support vital data collection on substance-related harms and lab-based analysis of the illegal drug supply.
    • $4.6 million over five years, starting in 2023-24, to Public Safety Canada to develop an overdose monitoring app for paramedics and other first responders.
    • $42 million over five years, starting in 2023-24, to the Royal Canadian Mounted Police; $6.2 million over five years, starting in 2023-24, to Public Services and Procurement Canada; and $1.6 million over five years, starting in 2023-24, sourced from existing resources, to Global Affairs Canada to take further action to work with our partners to tackle drug trafficking and stem the global flow of these devastating substances.

Indigenous Health Priorities

Budget 2023 continues to advance Indigenous Health Priorities through the following supports:

  • $810.6 million over five years, beginning in 2023-24, to support medical travel and to maintain medically necessary services through the Non Insured Health Benefits Program.
  • $16.2 million over three years, beginning in 2023-24, for interventions to reduce rates of tuberculosis in Inuit communities.
  • $2 billion over ten years, which will be distributed on a distinctions basis through the Indigenous Health Equity Fund.
  • $171 million in 2022-23 to Indigenous Services Canada to ensure First Nations children continue to receive the support they need through Jordan’s Principle.

Health Care Data

Initially announced as part of the Federal offer to the PTs, the government recommits $505 million over five years to the Canadian Institute for Health Information (CIHI), Canada Health Infoway and other federal data partners to work with PTs to develop new health data indicators, support the creation of a Centre of Excellence on health worker data, advance digital health tools and an interoperability roadmap, and support PT efforts to use data to improve the safety and quality of health care.

Health Human Resources

In Budget 2023, the government provides $45.9 million over four years to Employment and Social Development Canada starting in 2024-25, to expand the reach of the Canada Student Loan Forgiveness program to more rural communities. An additional $50 million over five years, starting in 2023-24, has been committed to develop and test innovative solutions to strengthen the retirement savings of personal support workers without workplace retirement security coverage.

Sexual and Reproductive Health

The government commits $36 million over three years, starting in 2024-25 to support community-based organizations that help make access to abortion, as well as other sexual and reproductive health care information and services, more accessible for vulnerable populations.

Other Health Priorities

  • The government committed to provide $10 million over two years, starting in 2023-24, towards ParticipACTION Let’s Get Moving Initiative, which will continue supporting national programming that aims to increase daily physical activity among Canadians.
  • The government proposes to temporarily cap the inflation adjustment for excise duties on all alcoholic products at 2% for one year only as of April 1, 2023.
  • The government proposes to provide $10 million over two years, beginning in 2023-24, to Employment and Social Development Canada to help address the unique needs and ongoing barriers faced by persons with disabilities and to support the reduction of health inequalities. Additionally, the government proposes to provide $21.5 million in 2023-24 to Employment and Social Development Canada to continue work on the future delivery of the Canada Disability Benefit.
  • In Budget 2023, the government proposes to amend the Food and Drugs Act to extend powers conferred by the Protecting Canadians from Unsafe Drugs Act (Vanessa’s Law) to natural health products.