October 22, 1998
(Finance)

Provincial/Territorial Ministers of Finance present consensus paper

The attached consensus paper on Reinvestment in Canada's Healthcare System was presented today to federal finance minister Paul Martin by provincial/territorial finance ministers at their meetings in Winnipeg, Manitoba:

FEDERAL RE-INVESTMENT IN CANADA'S HEALTH CARE SYSTEM

INTRODUCTION

Canadians want their governments to re-invest in the health care system. Provinces and territories, who are responsible for operating the health care system in Canada, have responded by increasing health care spending in recent years despite the pressures this has created in other critical social program areas. The federal government, which provides a share of health costs through the block fund Canada Health and Social Transfer (CHST), has been reducing its support for health care. With its improved fiscal position, the federal government is now in a position to re-invest in the health care system.

On June 29, 1998, the federal Department of Finance released the results of public opinion research that had been conducted to survey the attitudes of Canadians about public policy choices. The polls reveal that in the hierarchy of preferred policy options, medicare is the number one choice for Canadians.

 

1997 AND 1998 ANNUAL PREMIERS' CONFERENCES

As part of the 1997 Annual Premiers' Conference, Premiers instructed their Finance Ministers to begin a process to reform federal-provincial/territorial (F-P/T) fiscal arrangements in Canada. The objective of this action was to ensure that the existing transfer mechanisms are strong enough to meet the challenges of providing high quality and comparable social programs to all Canadians now and in the future.

As a result of this direction, provincial and territorial (P/T) governments have worked closely on a detailed analysis of the current major fiscal arrangements and have considered various reform proposals. Issues of adequacy and equity for both the CHST and Equalization were at the heart of this analysis.

On June 15, 1998, P/T Finance Ministers met with the federal Minister of Finance to begin a process of reforming fiscal arrangements in Canada and presented detailed papers outlining the key issues respecting fiscal arrangements.

P/T Finance Ministers reported to the 1998 Annual Premiers' Conference on the status of their work. They forwarded to Premiers six papers unanimously supported by provinces and territories concerning fiscal arrangements, employment insurance, infrastructure, federal tax practices and principles for fiscal compensation.

At the end of the Conference, Premiers issued a consensus statement that health care is the number one priority of provincial-territorial governments. They noted that provinces and territories have worked hard to manage and maintain a quality health care system in the face of more than $6 billion in cuts to the CHST.

Premiers called on the federal government to restore funding to health care and to provide adequate growth to the transfers so that high quality health care will be available in the future. Premiers also noted that increased federal support should be provided through the existing transfer mechanisms.

"As their first priority for new federal spending, Premiers emphasized that the federal government must restore its funding to health care through the existing CHST arrangements. Premiers also agreed that funding for core health services, once restored, must be stable and adequate, before new health programs are established."

In response to the Prime Minister's concerns about the dedication of new federal funds to other areas, Premiers made the following statement.

"Premiers are committed to directing additional federal funds to core health services."

In terms of the future work of Finance Ministers, Premiers have directed Finance Ministers to continue their work on redesigning fiscal arrangements to ensure that all provinces and territories have the resources necessary to provide quality public services to Canadians.

"Premiers underscored the need to ensure that provincial and territorial governments have the resources to carry out their responsibilities, especially the delivery of social programs and directed their Finance Ministers to continue work on redesigning current arrangements to achieve this goal."

 

THE NEED FOR FEDERAL-PROVINCIAL-TERRITORIAL CONSENSUS

P/T Finance Ministers believe that upcoming discussions with the federal Minister of Finance should focus on the following key outcomes:

• agreement that health care is the number one priority for Canadians, as it is for the provinces and territories and as it should be for the federal government;

• agreement that the federal government should immediately re-invest in Canada's health care system and that this re-investment should be directed through the CHST so that it can become part of the integrated, coordinated health services provided by provinces and territories and to avoid the potential for waste, duplication and unnecessary administrative cost;

• agreement that other federal fiscal policies not undo any federal re-investment in Canada's health care system;

• agreement that adequate funding for health care requires a satisfactory escalator for CHST cash that acknowledges rising costs; and,

• agreement that a formal and cooperative mechanism for regular review of the CHST should be put in place to ensure that the health care system in Canada is being maintained in the future.

 

1. HEALTH CARE AS THE NUMBER ONE PRIORITY OF CANADIANS

Recent polls indicate that health care is the number one concern of Canadians. Premiers share this view and have "re-affirmed their commitment to maintaining and enhancing a high quality universal health care system for all Canadians."

Premiers are calling on the federal government to match its priorities with those of Canadians.

 

2. THE FEDERAL GOVERNMENT SHOULD RE-INVEST IN THE HEALTH CARE SYSTEM THROUGH THE CHST

The federal government relied heavily on cuts to the transfer programs in its deficit cutting exercise. Since 1994-95, the federal government cut cash transfers for health and other social programs through the CHST by $6.2 billion or 33 per cent while spending on other federal programs fell by just six per cent.

With the federal budget in a surplus position, the federal government should begin immediately to restore funding to the health care system. Full restoration should occur as soon as possible. The number one priority of Canadians is the improvement of the health care system. Federal priorities should reflect this view. Premiers support health care as the first call on new federal spending.

As the providers of health care services, provinces and territories have developed, or are in the process of developing, an integrated system of program delivery. Health needs are different in every province and territory. Individual provinces and territories know best what the needs of their health care system are.

Additional federal support for health care should be provided through the CHST so that money can be channeled directly to where it is most needed. The introduction of new federal initiatives would reduce provinces' and territories' capacity to fund core health services and place governments at odds over the future direction of health care in Canada.

 

3. FEDERAL RE-INVESTMENT IN HEALTH CARE MUST NOT BE UNDONE BY OTHER FISCAL POLICY ACTIONS

The federal government has many tools at its disposal with which to conduct its fiscal policies, many of which have an impact on provincial finances. The federal government should ensure that its policy choices in one area do not offset its commitment to additional health care funding.

 

4. ESCALATOR REQUIRED FOR THE CHST

Ensuring that health care funding is adequate in the future requires that there be an escalator in the CHST. As Finance Ministers have documented in previous papers, the current federal policy of providing $12.5 billion per year in CHST cash means that real per capita funding declines into the future as both inflation and population erode the real value of the cash.

P/T Finance Ministers have presented several options for incorporating an escalator into the CHST. They invite the federal Minister of Finance to bring his plan to the table to ensure that the health care system is preserved into the future.

 

5. COOPERATIVE MECHANISM FOR CHST REVIEW

In his September 13, 1998 statement to the Canadian Chamber of Commerce, the Prime Minister also recognized that health care is the top priority of individual Canadians and his government's next major investment. The Prime Minister also suggested that the federal government will act "in collaboration with the provinces" in terms of adding more money to health care.

This statement is taken in good faith by provinces and territories as indicative of the federal government's support for on-going cooperation in addressing fiscal arrangements. To this end, Premiers and P/T Finance Ministers have outlined a process for federal re-investment in the health care system.

• Provinces and territories call on the federal government to restore its funding to health care through the existing CHST arrangements.

• P/T Finance Ministers call on the federal Minister to work with them in reforming fiscal arrangements to ensure that all provinces and territories have adequate resources with which to deliver social programs. A necessary aspect of this reform is the introduction of a regular, formal review process for the CHST to address issues surrounding the adequacy of funding for health care. This process should be entrenched in the Federal-Provincial Fiscal Arrangements Act.

1998 10 22                       5:20 p.m.