With an eye to using the coming federal election as leverage, Canada's provincial premiers are urging Ottawa to make significant investments – and they have narrowed their demands to two areas they say are crucial to the country: health care for an aging population and the nation's infrastructure.
At their annual Council of the Federation meeting on Prince Edward Island, premiers agreed that they are suffering from a fiscal imbalance between Ottawa and the provinces. And they argue it's time for Prime Minister Stephen Harper – as he prepares to balance the federal budget in 2015 – to shore up finances in these two areas.
Collectively, the provinces and territories are expected to record a combined budget deficit of $16.1-billion in fiscal year 2013-14, according to a report by the Conference Board of Canada. The provinces will have to make big cuts to spending to balance their books – and even then, revenues are expected to slow because of an aging population.
"They [the federal government] are going to be coming back into a balanced budget surplus situation in the very near future and we want to make sure that our priorities, and we believe Canadians' priorities, are going to be front and centre," said PEI Premier Robert Ghiz, the host of the meeting.
The premiers have not yet put a dollar figure on their demands. Rather, they will come up with a number for their meeting in January after having done research. Mr. Ghiz noted their requests must be "reasonable" or they will be ignored by the federal government.
The Conservative government immediately answered back, dismissing the premiers' plan and contention that there is a fiscal imbalance.
"Simply put there is no fiscal imbalance," the Prime Minister's communications director Jason MacDonald told The Globe and Mail in an e-mail. "In fact, under our government all major federal transfers to provinces and territories have increased by almost 60 per cent since '05-'06. We also created the single largest and longest infrastructure program in history, the New Building Canada Plan, worth over $50-billion."
Mr. MacDonald said the federal government has also cut taxes and "managed to do all of the above without cutting essential programs and services."
But Mr. Ghiz said that some provinces will have to cut drastically "to help make up for the extra demands in health care."
"Every budget in our government has been flat-lined and health care has been growing by 3 to 5 per cent," he said about PEI's three previous budgets. "If it continues on and the federal government does not come to the plate … we are probably going to see cuts to other departments just to maintain what we have in health care."
In December, 2011, the federal government changed its health-care funding formula with its take-it-or-leave-it, 10-year health accord that would guarantee an annual 6-per-cent increase until 2016-17. After that, increases would be tied to growth in nominal gross domestic product, a measure of GDP, plus inflation.
"Provinces with less money and an aging population are going to have a heck of time to meet their needs," explained Michael McBane, of the Canadian Health Coalition.
On infrastructure, the premiers argue it is underfunded. Ontario's Kathleen Wynne has spoken out strongly on this, saying Ottawa needs to provide stable and "resilient" investment in infrastructure.
As for more funding for health care and an aging population, Nova Scotia Premier Stephen McNeil says it's absolutely critical. He is leading a province that is aging rapidly as young people move west for jobs and "us old people are staying home and requiring [the use] of the health-care system," he said.
Alberta's acting premier Dave Hancock, however, will see his province's health transfers increase by $1-billion because of the young and increasing population. He has a different perspective on the issue:
"While we can all agree that aging is a very important issue for all of our jurisdictions … a province like Alberta has a booming birth rate and the other end of the spectrum is also an expensive part of the health system."