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Finance Minister Jim Flaherty talks to media during a lock-up for the federal budget in Ottawa on Tuesday, March 22, 2011. (Adrian Wyld/Adrian Wyld/The Canadian Press)
Finance Minister Jim Flaherty talks to media during a lock-up for the federal budget in Ottawa on Tuesday, March 22, 2011. (Adrian Wyld/Adrian Wyld/The Canadian Press)

Ottawa grabs the attention, but the provinces face the heavy lifting Add to ...

One level of government is grappling with major structural deficits, unavoidable cutbacks or tax increases, and the increasingly urgent question of how to preserve our public health system without having to cancel every other program.

Another level of government is able to cheerily promise an almost painless return to fiscal balance, while tossing trinkets at key voting groups.

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Guess which level of government we're going to spend the next couple of months focusing on.

Following all three opposition parties' rejection of the budget introduced Tuesday by Finance Minister Jim Flaherty, it now appears inevitable that a federal election will consume the country's available political attention this spring. That's unfortunate, since in the meanwhile it's provincial governments that will be doing most of the heavy lifting.

Mr. Flaherty was not the only Canadian finance minister to bring down a budget on Tuesday. In New Brunswick, better reflecting the country's challenges, Blaine Higgs served up some tough medicine - increases to gasoline and cigarette taxes, a small reduction in overall program spending - in order to lower the provincial deficit to about $450-million. Still, he was criticized for not attempting more ambitious structural reforms, and there's speculation that there's more dramatic stuff to come - expectations that Mr. Higgs did not exactly dampen when he promised "fundamental changes in the way we deliver essential services."

Next up will be Ontario Finance Minister Dwight Duncan, whose challenges make those of Mr. Higgs look almost modest by comparison. In his budget next Tuesday, he will deliver some manner of austerity measures aimed at reducing a provincial deficit pegged at $18.7-billion. It remains to be seen how exactly the province will achieve the monumental challenge of flattening health care's cost curve, which was at the centre of the long-term deficit-reduction plan that Mr. Duncan introduced last year.

Quebec's recent budget introduced major pension reforms, while ushering in a controversial tuition fee hike. In Nova Scotia, before a budget date has even been set, plans for education cuts and the downloading of service costs to municipalities are already causing angst.

Provinces that are comparatively rich in natural resources tend to be faring better. But even Alberta still faces a $3.4-billion deficit - this as it desperately needs to invest in health care, with a new study this week showing that it lags behind the national average on waiting times.

The federal government may itself have more challenges than Mr. Flaherty let on, in what was clearly intended as a budget to campaign on. But it doesn't face the same crunch, largely because it doesn't deliver health care - a program that will continue to get more expensive because of an aging population and the ever-increasing costs of new technologies and treatments. And it appears there will be little major disagreement on the basics of its fiscal framework in the coming election, at least between the two parties with a chance of forming government.

That campaign, of course, could still address some very serious issues. Ethics and open government deserve a public airing. The merits of corporate tax cuts, versus social spending, could make for an interesting debate. And hopefully, there will be at least some discussion of what will happen when the current federal-provincial transfer agreement expires in 2014 - the best available opportunity for the next government to advance its priorities in health care, whatever those might be.

But the domestic stakes will pale next to the ones in the provinces - at least five of which will have elections of their own before the current calendar year is out. It's there where the really fundamental debates about 21st-century government services will have to happen, even if many provincial leaders would prefer to avoid them.

"We're entering a very political season," Mr. Duncan said on Tuesday, as he responded to the federal budget and the imminent election.

The danger is that by the time we get to the elections that matter the most, voters will be too politicked out to give them the attention they deserve.

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