Roy Romanow's long-awaited report on the future of health care in Canada recommends $6.5-billion in new money to improve the current health system.

The former Saskatchewan premier says the federal governemnt must loosen the purse strings and give the provinces close to the $7-billion in annual health-care funding increases they've asked for while demanding new accountability from the provinces on how money is spent.

The result would be the federal government funding at least 25 per cent of insured health services.

Mr. Romanow says a federal cash infusion of $15-billion through 2006 is also needed to expand medicare and demanding new accountability from the provinces on how money is spent.

"We need stable, predictable and long-term funding that is allocated in a way that makes it clear who is spending what and with what results," Mr. Romanow said Thursday.

He also emphasized that increased funding is only part of the solution.

"If the only result of these past 18 months of collective effort by Canadians is simply more dollars for health care period, than the time will have been wasted," he said.

The report also recommends $8.5-billion in short-term funding for key areas: diagnostic services, access to care in rural areas, primary care, home care and catastrophic drug costs.

Mr. Romanow says Canadians in rural areas should have a $1.5-billion fund to help lure health care workers and improve services.

Funding would be based on demonstrated needs and innovative ideas for improvements, the commission says.

"People in rural communities have poorer health status and greater needs for primary health care," Mr. Romanow writes in the report. "Yet they are not as well served and have more difficulty accessing health care services than people in urban centres."

The federal Finance Department has projected a budget surplus of about $3-billion next year, signalling that Mr. Romanow's proposals would be modest at first and increase in cost later in the decade.

Mr. Romanow has suggested that money be targeted to various areas and that a floor be established, below which federal funding would not fall.

Canadian Alliance Leader Stephen Harper said Thursday that while the system does need more money. Mr. Romanow's report is "pie in the sky."

"We've said that all along," Mr. Harper said. "But we've said is that the system needs funding to deal with the problems we actually have. What this report does is suggest new funding almost exclusively to expand the coverage of the system and to make the provinces undertake a series of new initiatives."

Finance Minister John Manley said Wednesday that he agreed Ottawa must inject billions of dollars more into the system, but at least two years would be needed to meet the target in the Romanow report.

"We admit that it will be necessary for us to increase the level of federal health funding by billions of dollars," Mr. Manley told reporters in Quebec where he is meeting with members of the province's business sector.

"Multibillion-dollar increases will be necessary — over an appropriate period of time so that we don't find ourselves slipping back into deficit. We certainly accept that we need to make significant increases in the amount of federal funding available."