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Federal Finance Minister Jim Flaherty, left, and Ontario Finance Minister Dwight Duncan are seen in a July 2008 file photo. (Dave Chidley/The Canadian Press/Dave Chidley/The Canadian Press)
Federal Finance Minister Jim Flaherty, left, and Ontario Finance Minister Dwight Duncan are seen in a July 2008 file photo. (Dave Chidley/The Canadian Press/Dave Chidley/The Canadian Press)

John Ibbitson

By attaching no strings, Flaherty binds irate provinces to health plan Add to ...

Where was the first-ministers meeting? The tense communiqués? The last-minute proposal from Saskatchewan? The walkout by Quebec?

All gone, replaced Monday by a drab announcement from Finance Minister Jim Flaherty that, whatever the premiers say, lays what was supposed to be a major federal-provincial irritant to rest until well after the next federal election. Where was the fun in that?

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Quebec Finance Minister Raymond Bachand denounced Mr. Flaherty’s new 13-year funding formula as “totally unacceptable.”

But in fact Quebec and every other provincial government has no choice but to accept it, at least for now. That’s because the Conservatives are asking for nothing in return.

Liberal prime ministers Paul Martin and Jean Chrétien caused no end of trouble because they wanted to impose national standards on the health system as the price for any increased funding.

But Stephen Harper has always believed that things work best when Ottawa and the provinces stick to their respective knitting. And since the federal government is attaching no conditions to this deal, thus requiring no protracted negotiations, it alone decides how much it will give.

As it turns out, increases will continue at the current rate of 6 per cent annually until 2017, then slow to match the increase in the nominal gross domestic product (real growth plus inflation) until 2024. Annual increases will never be allowed to drop below 3 per cent.

Sources within the government report that Mr. Harper won’t interfere with any province that experiments with or expands private delivery of publicly funded care. But user fees, fully private care or other major violations of the Canada Health Act will result in clawbacks.

Each province must either take the deal or walk away. Ten years from now, some may have walked away.

Federal funding currently accounts for about 20 per cent of provincial health budgets. If costs increase annually above nominal GDP, which they might as the population gets older and sicker, then the federal contribution could become proportionately so meager that one or more provinces may decide it’s cheaper to impose copayments or let the rich purchase private care, and forgo the federal cash.

Of course, the provinces could use this advance notice to begin reining in health costs. But that may be over the rainbow.

There is another aspect of Monday’s announcement that warrants notice. Finance ministers from Manitoba to PEI lined up to condemn the future funding as inadequate.

But British Columbia Finance Minister Kevin Falcon praised Mr. Flaherty, saying it was up to provincial governments to bring health costs under control. Criticism from Alberta and Saskatchewan was also noticeable by its absence.

Once again we have the prosperous, growing West supporting a Western-based Conservative government, against the protests of the declining East.

Which brings us to Ontario. In previous health-care talks, every premier from John Robarts to Dalton McGuinty fought to limit federal influence over the province’s health policy. Ontario now has that freedom until well into the next decade.

But Ontario Finance Minister Dwight Duncan preferred to dwell instead on the future reduced funding increases – not decreases, mind you, just reduced increases that begin five years out – and on Mr. Flaherty’s rudeness.

The Finance Minister “put the document in front of us and said, ‘This is how it is going to be.’ And that’s just no way to do business,” he complained.

That this formula strips out the equalization component that the larger, richer provinces have always found galling in health funding deals should make it particularly welcome to the Ontario Liberals.

But with unemployment up, tax receipts down, deficits chronic and federal welfare (that is, equalization) cheques now a regular fact of life, Ontario appears to be turning into a larger version of New Brunswick.

For those of us who have watched Queen’s Park tussle with Parliament Hill for decades, the sight is something to behold.

Follow on Twitter: @JohnIbbitson

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