Health transfers crept back into the news this past week with a call by the majority of provinces for a meeting between the premiers and the prime minister to settle the issue left hanging after the pre-Christmas dust-up involving health and finance ministers. It’s hard to predict how things will turn out, but what we’ve seen so far does not reflect well on the Trudeau Liberals.
After strutting into the pre-Christmas meeting with a take-it-or-leave-it offer the feds seemed surprised that the provinces and territories (with the regrettable exceptions of Nova Scotia, New Brunswick and Newfoundland) decided on the latter. There was not only surprise, but disappointment as well. According to a front-page story in the Globe and Mail, Health Minister Philpott was nearly in tears over the fact that the provinces didn’t bite on a last minute offer of some additional money targeted at mental health services.
Ontario Premier Kathleen Wynne called Jane Philpott’s angst a red herring. Staying with animal kingdom imagery, it could also be called a matter of chickens coming home to roost.
As discussed on this site a few times, the issue dates back to 2011 when the Harper government announced it would cut the rate of increase in the health transfers to three per cent from six per cent next April 1. The provinces want to keep the transfer at six. For years the planned cut was a big issue for provincial governments, health care workers and opposition politicians in Ottawa.
During the 2015 election campaign the NDP – with some hedging – promised to keep transfers at six per cent. Trudeau was cagier – while he did not commit to six per cent, the party platform promised to negotiate a new health accord with the provinces and territories, including a long-term agreement on funding. The platform also promised “an immediate commitment” to put $3 billion over four years into home care.
Home care delayed
The “immediate commitment” on home care was promptly shelved while Minister Philpott engaged her provincial and territorial counterparts in talks that have gone nowhere. That’s because the feds wanted to talk about details of home care and mental health services while the provinces wanted to discuss the other part of the Liberal platform commitment – namely negotiating a long-term agreement on funding similar to the one that has been in place since 2004.
Furthermore, they wanted to have those talks with Trudeau himself, and tried to have health transfers added to the agenda of both first ministers’ meetings on climate change. But that was to no avail and the health ministers were shunted off to join the annual pre-Christmas gathering of finance ministers to receive their take-it-or-leave-it offer.
Over the course of the one-day December meeting the feds made a show of improving the deal. In what one journalist described as a shell game, the “immediate” $3 billion over four years for home care was re-configured as $6 billion over 10 years. The feds also came up with $5 billion over the same period for mental health services and half a billion for a drug strategy. They also promised to increase the basic transfers by half a percentage point to 3.5%. The latter offer prompted the shell game comparison – the fixed 3.5% was instead of the greater of 3% or GDP growth, which is actually expected to exceed 3.5% in a year or so. Nice try.
After kicking the tires on the new model, the provinces and territories decided it was a lemon. They calculated that it would lead to the federal share of health spending drop from the current 23% to 20% instead of rising to the 25% that was the goal of the 2004 accord. Add to this the fact that the feds have pushed consistently to attach some strings to the home care and mental health money, a bugbear for the big provinces – especially Quebec – and “leave it” (at least for the time being) seemed like the better choice.
There’s a tendency, especially in the national media, to characterize events like the deadlocked meeting as a matter of gutless and/or greedy provinces clamouring for more federal money so they can keep their health systems running smoothly without raising taxes or curtailing other expenditures.
The media have also been willing to parrot a line the Liberals borrowed from the Harper government. The contention is that because some provinces have kept health spending flat the last few years (mainly by suppressing the wages of health care workers) while federal transfers have increased, health dollars are being diverted into other programs. This ignores the fact that for most of the years covered by the 2004 accord, increases in health spending by provinces exceeded the 6 % growth in the federal transfer. And Ottawa-centric reporters have also quick to jump on a Finance Canada update purporting to show that federal finances are in tatters. (Nova Scotia Observer will have more on that later in the week)
In any event, the feds are depicted as the responsible ones, holding the line on spending and forcing efficiencies in provincial health care systems. But there is another way of looking at the scenario, and it’s right in the Liberal platform.
Ah yes, the platform, the roosting chickens referenced earlier. While his finance and health ministers were misplaying “let’s make a deal”, Trudeau was in another part of town misremembering history. In an interview, Trudeau told the Canadian Press that the Liberals had campaigned on holding health transfers to three per cent and were just “staying faithful” to their election promises by playing hardball with the provinces and territories.
Obviously, Trudeau needs to re-read the platform, especially the part where it said that after years without discussions between first ministers (my italics) on strengthening health care it was time to “restart the important conversation and provide the collaborative federal leadership that has been missing during the Harper decade.” Threats from Morneau, emotion from Philpott and forgetfulness from Trudeau don’t equal collaboration. Plus, the platform sure makes it sound like the “important conversation” was supposed to take place among first ministers.
And although the platform didn’t say it, the conversation has to include the topic of money. In an op-ed piece in the Globe and Mail, former parliamentary budget officer officer Kevin Page reminded readers of PBO analyses projecting that with federal health transfers fixed at 3% the feds are on a fiscally sustainable course while provinces face a future in which they will have to chose between reduced services, higher taxes or massive debt. (Observer July 2015).
As Kevin Page put it “there is a sense of irony around the federal government playing fast and loose with spending in every area of federal influence except health care.”
Irony isn’t the half of it. Try politically misguided.
A few days after the health transfer meeting ended in a deadlock over money, the media revealed federal plans to throw half a billion dollars at celebrations marking the 150th anniversary of Confederation. Considering the importance of our public health care system to Canada’s sense of nationhood, re-directing that spare change into a new, needs-based health deal would be a far better way of celebrating Confederation and promoting Canadian unity.