This chapter examines the sustainability of financial arrangements within the Canadian federation. Fiscal performance is currently amongst the best in the OECD countries, but some refinements to the fiscal framework both at the federal and provincial levels may be helpful to prepare the economy to cope better with the long-term challenges of rising spending on health and long-term care. In addition, long-term projections at the general government level will help to verify whether current policies are consistent with Canada’s future needs. The federation has thus far achieved its goal of ensuring provinces have sufficient revenues to deliver similar public services at comparable levels of taxation. However, existing federal-provincial arrangements may not be sustainable over the medium run. Streamlining the system of transfers, as well as strengthening the accountability of the various levels of governments, would be beneficial. Moreover, the present equalisation system needs to be adapted to structural changes underway and the growing importance of the energy sector.