Well, I'm sure you read about it in the papers, or heard it in the news. Finance Minister Jim Flaherty handed the provincial finance ministers a deal outlining the federal government's contribution to health care for the next 10 years. No discussion was held among the ministers, the plan was not open to negotiation. Instead, the "deal" was unilaterally decided by the federal government and handed to the provinces in an excellent display of authoritarian rule.
So what was in the deal, you ask? Well the six per cent transfer from the federal government to the provinces will continue until the end of the 2016-2017 budget. Then the federal government will halve the contribution by tying it to nominal GDP (that's GDP that has not been adjusted for inflation). In the case of another recession, the government has added a floor of 3 per cent to the deal to ensure that funding does not fall below that floor (which still means it's half of the current transfer).
Most provinces are not happy. Darrell Dexter, Premier of Nova Scotia, said "our health care costs have outstripped the escalator (6 per cent) itself. That means the percentage of funding from the federal government actually declined." CCPA's Armine Yalnizyan makes a great note of clarification on the 6 per cent transfer and reminds us that provinces do not get the full 6 per cent. Instead, the transfer actually translates into about 0.9 - 1.4 per cent to the provinces.
While all of the interviews I've come across have shown the provinces to be understanding of the current economic environment and sympathetic to the fiscal restraints, they are also pleading for the federal government to be realistic about what a reduction in the transfer will mean for the quality of health care throughout Canada and what it will mean for our aging population. What the provinces and territories were hoping for was a discussion and negotiation with the federal government. Precedence in Canada has shown that federal ministers listen to the situation the provinces face and together they work out a deal. Instead Flaherty has treated the provinces like children by having them seen in Victoria, but not heard.
Well, we think it's time for the provinces to play this game like grown-ups apparently do. No more wasting time with discussion and negotiation, just tell the federal government what's going to happen so that they can appropriately plan. I've done the work for them and drafted the notice below. All the provinces and territories need to do now is fill in the blanks and send it off.
Dear Father Flaherty and Uncle Steve,
We have decided that we can no longer afford to send you an annual tax transfer of x amount. Instead we will send you x amount in taxes until 2016-2017 and then half of that until 2024. We thought you should know now so that you can plan ahead and get your finances in order. Perhaps you should consider innovation in your tax collection schemes by talking to corporations.
The Provinces & Territories
This article was first posted on the Council of Canadians blog.
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