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Finance Minister Jim Flaherty speaks to Bank of Canada Governor Mark Carney before meeting with his provincial and territorial and counterparts in Victoria on Dec. 19, 2011. (GEOFF HOWE/Geoff Howe/The Canadian Press)
Finance Minister Jim Flaherty speaks to Bank of Canada Governor Mark Carney before meeting with his provincial and territorial and counterparts in Victoria on Dec. 19, 2011. (GEOFF HOWE/Geoff Howe/The Canadian Press)

Federalism

Flaherty's 10-year health-care plan divides provinces Add to ...

Canada’s provinces are divided over a 10-year federal plan for health care that locks in efforts to slow rising costs – all delivered by Ottawa with little notice and no negotiation.

The plan that Finance Minister Jim Flaherty delivered over lunch on Monday in Victoria was welcomed as a sign of stability by most Western premiers, and largely greeted with outrage from Manitoba eastward.

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“My feelings have moved from surprise to anger,” Stan Struthers, Manitoba’s finance minister, said as the news sank in. “They just landed this on the table over the lunch hour. It caught us all by surprise.”

According to Ottawa’s plan, federal transfers for health care will continue at six per cent – a rate of increase set in a 10-year accord in 2004 – until 2016-17. After that, the plan has transfers move to a system that ties increases to the growth in nominal gross domestic product, which is a measure of real GDP plus inflation.

Mr. Flaherty said the plan is not open to negotiation, but some provincial ministers said there is still time to get Ottawa to change position.

Mr. Flaherty’s blunt approach is a sign of the pressure he is under to get Ottawa’s long-term spending on a sustainable path, but also recognition that Western provinces in particular are prepared to take on the issue because they are better shape economically.

For comparison’s sake, the increase in nominal GDP from 2011 to 2015 is expected to average 4.6 per cent during a period of low growth and low inflation. That means that with a stronger economy, the growth in transfers under the new system might not be much different from what it would be under the old six per cent rule. Ottawa also said increases to health transfers would not go below three per cent.

But Ontario Finance Minister Dwight Duncan called the offer a “a frontal attack on public health care” from Ottawa, insisting federal Conservatives were breaking a campaign pledge to stick to six per cent increases for the duration of any new accord. Mr. Duncan said the offer of less will force provinces to cut their health care budgets and, therefore, their services.

Mr. Flaherty called the plan an effort to move toward responsible spending.

“Our public health care system is a source of pride to all Canadians,” he said. “We all want to see a strong, sustainable system that is there when we need it for today and for our children and our grandchildren tomorrow.”

But as Mr. Flaherty defended his plan, heads were still spinning over the short notice with which it was delivered.

Mr. Duncan said he and his colleagues never saw it coming. Everyone was in a genial mood on Sunday evening when the provincial and territorial ministers joined Mr. Flaherty for a private dinner at Vista 18, a rooftop restaurant at the Chateau Victoria Hotel.

As the ministers dined on beef tenderloin, wild Pacific salmon and B.C. wines, they took in the stunning view of the harbour and congratulated themselves on how well they had all worked together during the recent economic downturn.

The ministers did not find out until Monday afternoon, after they wrapped up their formal meeting and headed into a working lunch with Mr. Flaherty, that he had already drafted the transfer agreements. As ministers and their staff began eating a buffet lunch, Mr. Flaherty strode into the room and handed out copies of the agreements to everyone.

As Mr. Flaherty began walking ministers through the documents, the mood shifted immediately to one of palpable anger.

Graham Steele, the finance minister from Nova Scotia’s NDP government, said he asked the first question: “’What is the process from here on?’” he recalled.

He said the answer from Mr. Flaherty was that there would be no process. This was Ottawa’s position.

Wes Sheridan, PEI’s finance minister, said he looked around the room, seeking reaction. “I caught Dwight Duncan’s eye. I looked across at [Quebec Finance Minister Raymond Bachand] We’ve been at this table a long time together.

“I couldn’t quite believe what we were seeing.”

Shortly after Mr. Flaherty made his plan public at a news conference, the finance ministers of Manitoba, Ontario, Quebec, Prince Edward Island, Nova Scotia and Newfoundland and Labrador went to the microphone as a group. Few pulled their punches.

When asked why Saskatchewan, Alberta and New Brunswick were not with them, Mr. Sheridan said there was a “quick decision” by some to form a front and speak.

“We’ll see how it breaks down in the next few days,” he said. “We have plenty of time. There is no rush. We have to get it right for the sake of the country.”

New Brunswick did not join the group of six because of concerns about retribution from Ottawa if officials publicly criticized the federal government, a source said. New Brunswick Finance Minister Blaine Higgs is more concerned about the equalization program than the Canada Health Transfer, the source said.

Speaking as host, B.C. Finance Minister Kevin Falcon reacted positively to the federal announcement. “I appreciate that certainty,” he said. “Obviously some of my colleagues feel differently.”



With reports from Carrie Tait in Calgary, Paul Waldie in Winnipeg and Karen Howlett in Toronto

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