Premiers push for major hike in health transfers ahead of 2021 federal budget

Theglobeandmail.com
March 5, 2021
Jeff Gray and Bill Curry

Canada’s premiers are presenting a united front ahead of the next federal budget, asking Prime Minister Justin Trudeau to act on their long-standing demand for Ottawa to increase its share of health care funding and provide provinces and territories with an extra $28-billion a year.

“It’s not abstract. It is very concrete. And it has major repercussions on the services that are provided to the population,” Quebec Premier Francois Legault said in French on Thursday, presiding as rotating chairman of the Council of the Federation at a virtual news conference alongside his counterparts from the other provinces and territories.

It’s a call that goes back decades. But the premiers have made it more forcefully in recent months, even as Ottawa has provided them with billions of dollars to fight the pandemic.

The premiers blame a growing structural funding gap for increasing wait times for surgeries and procedures -- backlogs since multiplied by the COVID-19 crisis. They complain that while health care costs are rising at 5 per cent a year, owing to an aging population and the costs of new treatments, the federal government’s health care transfers to the provinces are only increasing at 3 per cent a year, meaning Ottawa’s share of the bill is shrinking.

The provinces want the federal government, which now covers 22 per cent of health care costs, to immediately raise its share to 35 per cent. This would increase the cheque Ottawa hands the provinces and territories each year to $70-billion from $42-billion. The provinces also want the new cash to come with a guaranteed 5-per-cent annual increase.

Federal Intergovernmental Affairs Minister Dominic LeBlanc said in a statement Thursday afternoon that Ottawa agrees the Canada Health Transfer should be increased and that talks will continue. However, he made no commitment on an amount, or to have the issue resolved in time for the 2021 federal budget, which has not yet been scheduled. Mr. LeBlanc also said that eight out of every 10 dollars spent on pandemic relief so far has been federal money.

The premiers made their case directly at a first ministers meeting with Mr. Trudeau in December. In an interview, Manitoba Premier Brian Pallister said he was not encouraged by the Prime Minister’s response when the topic came up more recently during a conference call between Mr. Trudeau and the premiers.

“We had another call in January with the Prime Minister as well, where he kicked it down the road,” Mr. Pallister said. “He agreed that he would look at this, but not at this time. Then I guess my answer to that is, you’ve got to be able to multitask if you’re going to be the prime minister of Canada.”

None of the premiers showed any enthusiasm when asked about raising taxes to cover health care’s rising costs. Britain this week announced its largest hike of corporate taxes in decades in order to cover the hole left by COVID-19.

“If we are going to get out of these COVID-era deficits, we need economic growth,” Alberta Premier Jason Kenney said. “So, I’ll speak for Alberta, we don’t think that raising taxes and deterring investment would be the right approach.”

The premiers also released a 21-page report they commissioned from the Conference Board of Canada that argues the federal government can afford to significantly increase transfers to the provinces over the long term.

The numbers show Ottawa, despite massive COVID-19 spending, returning to surplus by 2033-34. Provincial deficits, however, continue to spiral upward. The report argues shifting more of the health care burden to the federal government would save costs, as Ottawa can borrow money more cheaply.

The report references work by Parliamentary Budget Officer Yves Giroux, who has long warned that while federal finances are sustainable, provincial finances are not. The PBO’s latest projections say while federal net debt as a percentage of GDP is shooting up as a result of the pandemic, it will quickly return to a long-term downward trend -- and vanish entirely by the 2080s. In contrast, the PBO forecasts that provincial net debt will keep climbing.