Ottawa cutting health funding by $36 billion over 10 years, premiers say

Manitoba Premier Greg Selinger, right, reports on the impact of proposed changes to federal transfers to the provinces, as Nova Scotia Premier Darrell Dexter looks on at the annual Council of the Federation meeting in Halifax on Friday. (Andrew Vaughan / The Canadian Press)

HALIFAX -- Canada's premiers and territorial leaders say they stand to lose almost $36 billion in health transfers over a 10-year period if Ottawa proceeds with its disputed plan to alter how it calculates the payments to the provinces and territories.

Manitoba Premier Greg Selinger released the figures Friday on the final day of the Council of the Federation meeting in Halifax, saying the federal formula will cut billions out of equalization and health funding.

He took a fresh swipe at Ottawa for imposing the controversial funding scheme without consulting the provincial and territorial leaders, some of whom have long complained that the federal government is taking a unilateral approach to policy development.

"There is a very significant impact," Selinger said. "We remain very committed to the notion of co-operative federalism where there ought to be discussions about these matters before the decisions are taken because it does have a big impact on Canadians. Those resources will mean less money available for nurses and doctors and health care."

The report assesses the impact of Finance Minister Jim Flaherty's plan to change the calculation for how much money provinces receive in health transfers, which would take effect in 2014. He announced last December that health transfer payments would increase six per cent annually until 2017.

After that, the transfers would be tied to the rate of economic growth and inflation -- currently estimated to be about four per cent -- but the government wouldn't let the amounts fall below three per cent.

Under that scheme, the premiers estimate that the provinces will receive $36 billion less in federal transfers from 2014 to 2024, compared to the arrangements now in place.

Selinger said the new scheme reduces Ottawa's contribution to the health-care costs of provinces and territories to less than 20 per cent.

"The next thing we will do is have a further examination and further look at the impacts and the need for a deepened relationship on these issues with the federal government," Nova Scotia Premier Darrell Dexter said, adding that the premiers will discuss the issue at a meeting of provincial finance ministers this fall.

Selinger said they have to look at options under the federal arrangement that satisfy principles laid out by the premiers in January, when they struck the working group that examined the fiscal impact of the transfers.

"Those principles were that no province should be worse off and that Canadians should have the ability to have a comparable level of service wherever they live in the country," he said.

In March, calculations in Quebec's budget showed the changes would mean Alberta would receive $1.1 billion extra each year on average, while other provinces would lose hundreds of millions of dollars a year.

The federal government has said the new formula is generous, but Quebec, Ontario, Nova Scotia, Manitoba and Newfoundland and Labrador said Flaherty imposed the deal on them without leaving room for negotiations. Several Eastern provinces with small but increasingly elderly populations have said the scheme will result in punishingly high costs.

In a statement Friday, Flaherty reiterated the federal government's position.

"Federal health transfers are growing faster than provincial spending on health care," he said, adding that while the transfers are rising by six per cent a year, the projected growth in health spending by the provinces is less than four per cent this fiscal year.

But Quebec Premier Jean Charest panned the proposed formula, saying that one of the country's most treasured social programs can't be the victim of federal unilateralism and economic fluctuations.

"We do not say to people, 'Come back when economic growth will be better, we'll fix your arm,"' he said.

"Maybe in another world that happens. In our world, that's the real world in which we operate."