In the perennial health care funding debate, the persistent argument from provincial premiers is they desperately need Ottawa to hand over more money.
This poor-us routine from the provinces, however, is more fiction than fact. Federal spending on health care has already surged, this space showed last week – up 67 per cent to $45-billion in 2021-22 from $27-billion a decade earlier. The numbers will be bigger in Tuesday’s federal budget, with the federal Liberals likely having more to say on the subject of health transfers. In February, Ottawa outlined $46-billion for new health spending over the next decade.
There’s no doubt health care across the country is strained. Limited hours for emergency rooms. Long waitlists for common surgeries. Lack of access to family doctors. But the premiers’ demand for more money is simplistic – it ignores reforms they could undertake – and suggests the provinces are somehow impotent bystanders, unable to take fiscal action on their own.
The premiers’ option to spend their own money is abundantly clear from provincial budgets tabled in recent weeks.
Provinces, like the federal government, have enjoyed a surge of revenue coming out of the pandemic. They have more money to spend and more is going to health, a boost coming only in part from the increase in federal transfers. But provinces are also making other choices: Quebec and Ontario both cut taxes, for one example. (Ontario also repeated its refrain that Ottawa’s promise of more health cash is a mere “down payment.”)
The premiers’ claim of financial need does not align with reality: the provinces are in pretty good financial shape. This is especially so considering how bad things looked in the depths of the pandemic several years ago.
What was feared to be an unending sea of red ink, deficits to the horizon and rapidly growing debt loads, instead morphed into a collective surplus among the provinces in 2021-22. They appear to be on track to do it again for the fiscal year coming to a close, 2022-23. Looking ahead, even with worries of a slow economy, or recession, 2023-24 still looks reasonably strong.
Ontario had resisted spending more of its own money on health care. But the province held the line on 2022-23 health spending at $75-billion, even though forecast revenue rose to $200-billion from $180-billion.
The province had forecast only small increases to health over the next several years, but reversed course in its budget last week, putting $81-billion into health for 2023-24. That health spending was $3.4-billion more than it had forecast a year ago for fiscal 2024.
Ottawa’s money accounts for half of Ontario’s new health spending in 2023-24, which is up 8 per cent compared with 2022-23, far higher than the 3-per-cent increase for overall spending.
British Columbia is a similar story. It saw a surge of revenue during 2022-23 but health spending during the fiscal year didn’t rise. In its 2023-24 budget, tabled in late February, B.C. increased health by 13 per cent in 2023-24, or $3.2-billion, of which additional money from Ottawa is about $1-billion.
Among other large provinces, Alberta and Quebec both increased health spending during the 2022-23 fiscal year, as revenue shot higher. Alberta’s health funding had been largely flat several years. For 2023-24, it is up 12 per cent compared with the original 2022-23 budget, which itself was the same as 2018-19. Quebec’s health spending is up 9 per cent compared with its year-ago budget.
Roughly a third of the new cash going to health care in both provinces, as in B.C., is coming from Ottawa. One difference: Alberta has a small surplus and Quebec a small deficit.
The provinces’ cap-in-hand act was always jurisdictional pantomime – and the latest provincial budgets are proof.
The better long-term solution is to put more fiscal responsibility for health care in the hands of the provinces, as this space argued last week. In 1977, the federal Liberals gave the provinces tax points: Ottawa cut its income taxes so the provinces could raise theirs. The amount paid by Canadians was unchanged.
The provinces chose to ignore those tax-point grants in the recent funding debate. But a new round of tax-point transfers makes sense: it would put the ability to generate health care dollars – and the responsibility for how well they are spent – in the hands of the provinces that deliver the services.