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Federal Finance Minister Jim Flaherty speaks to reporters before meeting with his provincial and territorial counterparts in Victoria on Dec. 19, 2011.

GEOFF HOWE

The Conservative government has surprised the provinces by unveiling its long-term funding plan for health and social transfers, presenting finance ministers with a multi-billion spending plan that runs until the year 2024.

Moving to pre-empt the high-stakes political drama that led up to the last 10-year health accord reached in 2004 by Liberal prime minister Paul Martin and provincial premiers, federal Finance Minister Jim Flaherty simply presented Ottawa's spending plans to the provinces Monday at an annual gathering of finance ministers in Victoria.

The 2004 deal – covering the health, social and equalization transfer programs – expires in 2013-14. The deal included annual 6 per cent increases for health transfers and 3 per cent increases to the social transfer. Mr. Flaherty announced that while the social transfer will continue at 3 per cent, the health transfer will move toward a formula based on economic growth.

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"We want to put the issue of funding behind us to allow us all to focus on the real issue - how to improve the system so the provinces and territories can ensure timely access to health care when needed," Mr. Flaherty said after meeting his provincial and territorial counterparts.

Under Ottawa's plan, funding for health would climb from $30-billion in 2013-14 to $38-billion per year in 2018-19.

Mr. Flaherty told reporters health transfers will continue to increase at 6 per cent a year until 2016-17 before moving to a system that ties increases to the growth in nominal Gross Domestic Product, which is a measure of GDP plus inflation.

Mr. Flaherty noted that nominal GDP is currently above 4 per cent. He also promised there would be a "floor" that ensures transfers will not fall below three per cent during the period of the agreement.

Asked about the reaction of the provinces, Mr. Flaherty hinted that some would have liked more time to digest the federal proposal.

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."

Moments after Mr. Flaherty announced the new five-year funding commitment, Ontario Finance Minister Dwight Duncan issued a statement, accusing the federal government of reneging on a promise made during the election campaign to support health care.

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If growth in health transfers is allowed to fall further to 3 per cent – the minimum set out by Ottawa beginning in fiscal 2018-19 – the federal government would be removing $36-billion in national support for health care, Mr. Duncan said.

"All we were looking to do was implement what the federal government campaigned on – 6 per cent a year growth in the Canada Health Transfer for the duration of the next health accord," he said. "Today they backed away from that."

Flanked in Victoria by colleagues from Quebec, Newfoundland, Nova Scotia, PEI and Manitoba, Mr. Duncan expressed further frustration with Ottawa's decision. "It represents a significant move away from the health-care table," he said.

Manitoba Finance Minister Stan Struthers echoed the sentiment. "This was very unilateral," he said, adding he wants further talks with Ottawa.

Mr. Duncan described the provinces as being blindsided by Mr. Flaherty behind closed doors. "He put the document in front of us and said, 'This is the way it's going to be,'" the Ontario Finance Minister said. "We all kind of paused; we all looked at each other."

Asked what kind of Christmas present this is for the provinces, Mr. Duncan was succinct: "It's a lump of coal."

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With a report from Karen Howlett in Toronto

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