The much-anticipated (by some) debate on health transfers put in a cameo in the federal election campaign this past week. On Wednesday the Liberals finally added a health care plank to their platform, promising $3 billion over four years for improved home care and an additional unspecified amount to reduce the cost of prescription drugs and expanded mental health programs. Justin Trudeau also promised to negotiate a new health funding accord with provincial leaders, but did not commit to maintaining a 6% annual increase in the health transfer past its scheduled expiry date of March 31, 2017.
The NDP, with some help from the media, were quick to point out that Trudeau’s health commitments of $3 billion-plus fell somewhat short of theirs. In a series of announcements during week seven, the NDP had laid out plans to spend $5.4 million on several programs, including $1.8 billion for home care and nursing homes, $2.6 for a drug plan and smaller amounts on health clinics and mental health for young people. All of this spending would be counted toward the NDP commitment to continue the 6% annual escalator past 2017.
Trudeau, asked directly by a reporter about the escalator, responded by repeating an old promise to “sit down with the provinces immediately to start negotiating the future of the Canada Health Transfer.” Although not ruling it out, it is questionable whether such negotiations would lead to a continuation of the escalator. Despite their willingness to run up the deficit for three years, the Liberal fiscal plan earmarks no money for continuing the transfer escalator introduced by Paul Martin in 2004. Their reluctance to commit is puzzling – if the Liberals plan to run deficits of $10 billion a year anyway, why not let the red ink rise to $11 billion and help out the provinces by continuing the escalator?
Of particular interest to provinces like Nova Scotia, neither the Liberals nor the NDP have said anything about changing the health funding formula to take into account the additional health costs associated with an aging population. Trudeau’s home care announcement, at a seniors’ residence in Surrey, B.C., took place the same day as Statistics Canada’s Quarterly Demographic Statistics reported that the number of Canadians over 65 has surpassed for the first time the number of children under 15. That milestone, accompanied by a report two weeks ago by the Canadian Medical Association calling for increased health transfers targeted at seniors, made Trudeau’s announcement a timely one. However, he missed another chance to toss a bone to the relevant provinces by failing to embrace another part of the CMA’s recommendation – to distribute such transfers disproportionately so that provinces with older populations get more.
And neither Trudeau nor Mulcair has said anything about repairing the damage to provincial bottom lines resulting from the Harper government’s decision to bring Alberta to the national per-capita average last year by taking $800 million from the health allotments of other provinces. That move reduced the base on which subsequent increases are calculated, a result that cost Nova Scotia at least $25 million in health transfers in 2014-15, and at least as much every year hereafter.
Both federal opposition parties seem to be wary of challenging the strict per-capita formula for health transfers, presumably for fear of hurting their chances in Ontario, where the Liberal provincial government has fiercely embraced the equal-per-capita dogma. Some indication of how carefully the main opposition parties are treading around the formulas for health and equalization transfers is available thanks to Quebec Premier Philippe Couillard. Couillard wrote to all five party leaders in mid-August on a range of issues, including health transfers and equalization. Couillard posted the leaders’ responses to his letter at: http://www.premier-ministre.gouv.qc.ca/actualites/nouvelles/2015-08-14-en.asp. Given the media obsession with polls and trivia like wearing of the niqab, those responses may be the best indication we get during this campaign of where the opposition leaders stand on those issues.
Like the Atlantic Provinces, Quebec wants the federal government to base health funding on “demographic realities,” rather than population size alone, to increase the federal transfer to 25% of health costs, and to remove caps on equalization. Even more than the health formula, those equalization caps have been costly for all provinces east of the Saskatchewan-Manitoba border. A 2014 report by the Parliamentary Budget Office showed that for 2014-15, the loss to the provinces from the Harper government’s unilateral changes to equalization have ranged from $49 per capita for Ontario to $898 per capita for Newfoundland. Nova Scotia was out $121 million in 2014-15, or $128 per person, third highest per capita loss after Newfoundland and Quebec.
In their replies to the Quebec Premier both Mulcair and Trudeau say nice things about their willingness to listen to Quebec’s concerns and meet with the provinces. They are vague on what they will do about the inequities caused by the Harper government’s approach to fiscal transfers. In translation, this is Mulcair on health transfers.
“We are aware that the provinces will now take 80% of the bill for health care. This harsh reality is due to the cuts by the Liberals and Conservatives over the last twenty years. The NDP believes that the federal government must be an active partner, respecting provincial jurisdiction in this area remains a priority for Quebecers and Canadians. Thus, the NDP takes the commitment to work with provinces and territories to ensure better access to care and the viability of long-term health system.”
And here is Trudeau.
“Transfers to the provinces are an issue of prime importance in federal-provincial relations. Unlike Mr. Harper, I do not intend to address this issue unilaterally. My party is aware of the challenges of rising health care costs and an aging population for provincial governments. If the party that I lead forms the government, it will convene a federal-provincial meeting to agree (to) a long-term agreement on the financing of health care.”
On equalization, Mulcair’s letter “deplores” the Harper government’s unilateral changes to equalization and declares willingness “to discuss its arrangements in the context of a broader discussion that will bring together all partners in the federation and will take into account other federal transfers.” Trudeau, on the other hand, puts parameters on any equalization dialogue – the “tax framework” left by the current government and the party’s commitment “to manage public finances responsibly.”
It is worth noting that Trudeau’s letter with its emphasis on responsible management of public finances was written before the Liberals discovered the political benefits of running deficits. It is not a good sign that no part of those increasingly popular annual deficits is currently earmarked to help provinces that have lost hundreds of millions of dollars as a result of the unilateralism that both Trudeau and Mulcair are quick to deplore. Perhaps that’s because unilateralism is not the whole issue. Perhaps unilateralism is just a symptom of the real issue – general abandonment of the notion that citizens, regardless of province, are entitled to “reasonably comparable levels of public services at reasonably comparable levels of taxation”, as called for in Section 36(2) of Trudeau Sr.’s big achievement, the Constitution Act, 1982.