By John Ibbitson, Globe and Mail, December 18, 2011
(F)inance ministers meeting in Victoria on Monday will receive a stark message from Finance Minister Jim Flaherty: The second decade of the 21st century is turning into a mess. Everyone is going to suffer; no government can afford to spend more money; every government must instead spend less.
Canada will endure this foul weather better than most other developed countries, thanks to its well-capitalized banks, ample natural resources and sound finances at the federal level. But the weather will still be foul.
The provinces already know that Ottawa is looking to cut growth in health-care funding from the current level of 6 per cent annually to something like the nominal increase in gross domestic product – say about 4 per cent – after 2016.
Ontario Finance Minister Dwight Duncan figures that would cost the provinces $25-billion over 10 years in lost health transfers.
“This would damage health care and make it more difficult to transform the system,” he wrote to Mr. Flaherty in protest. The two men met Sunday night to discuss it.
The fact remains that Ottawa simply doesn’t have the money to continue funding health care at present levels. The Harper government now confronts projections of economic stagnation as far as the eye can see.
The Economist Intelligence Unit recently lowered Canada’s growth projections for 2012 to 1.7 per cent, “to reflect the deteriorating external outlook.” The outlook includes a deepening recession in Europe that could drag down the United States, taking Canada with it.
Growth of 1.7 per cent is not enough to lower unemployment or significantly increase government revenues, which is why the Tories will take an axe to every department in February, cutting them by 5 per cent or 10 per cent without exception.
The provinces can hardly expect Ottawa to boost transfers to them even as it slashes its own spending. They will have to fend for themselves. Thanks to another Harper government policy that is receiving far too little attention, some will fend better than others.
The Prime Minister is no fan of equalization, which is the policy of weighting federal transfers in favour of smaller and poorer provinces. He hails from the West, and all western provinces except Manitoba send out rather than receive equalization funding.
The Conservatives are determined that all future health care or other social transfers must be funded on a strictly per-capita basis, with any existing equalization component stripped out.
And Mr. Harper has made it clear that when the equalization program itself comes up for renegotiation in 2014, the Tories don’t envision any significant growth in the funding envelope.
Even worse for the Maritime provinces and Quebec, unless all sides can agree to a different formula, Ontario threatens to suck up much of whatever money is available, since the Moody-plagued giant is slowly but implacably turning into the sick man of Confederation as its manufacturing base continues to erode. Ontario is already the second-largest recipient of equalization, which makes no sense, since it is also the biggest contributor.
So whether it is finance ministers meeting in Victoria this week, or premiers meeting in Victoria in January, the message will be the same.
Provinces looking to fund health care while paying down their deficit before Moody’s comes knocking on their door should not look to Ottawa for help. The feds have got enough problems of their own.
Reducing transfer payments to the provinces from 6% to 4% for health care, plus gutting equalization payments and putting the country on a "per-capita" formula is another of Harper's dramatic transformations for this country.
The notion of sharing, when provinces are struggling, and when individuals are struggling, by those who have more than they need is central to the psychic and cultural infrastructure of the nation. It is a concept widely believed to have made this country a model of compassion, shared interests and inclusion, as opposed to the raw "survival of the fittest" that we can see in such dramatic tension everywhere in the U.S.
It is a quaint concept, this idea of sharing among the family, upheld by decades of successful and supporting governments of all stripes and colours. The fact that the West has resented having to make such payments, for example, to less rich Maritime provinces, does not take into account the celebrations in Newfoundland and Labrador when that province moved into a "have" position and out of a "have-not" position.
Hatred and contempt for anything Ontario, is a culturally embedded attitude, belief, perception and political ideology. Now that Ontario, having lost some 300,000 manufacturing jobs over the last three years or so, is confirmed as a "have-not" province, with Moody's just this morning threatening to downgrade the province's credit rating, and with it, that of Ontario cities, hospitals and school boards whose finances are directly tied to the province's, is not the time for the federal government to pull another "thumb-up-the-nose" approach to the funding proposals for national health care.
The federal government's capacity to find lots of cash for those purchases like Fighter Jets, and armed and unarmed ships is well documented. Funds for gazebo's, while a mere thorn in the side and not an item that would or could save the health care funding formula, along with funds for unneeded prisons...these are all available, and will be used to serve the government's short-sighted picture of the optimum future for the country.
How long will it be before Canadians, like our American neighbours, will face the stark choice between buying needed medicines and paying the rent or the mortgage?
How long will it be before Canadians wake up to the direction, and the destination planned for this country, by those in the majority in Ottawa and start to really understand that the interests of the Conservative government are not the national interests. They are not the kind of aspiration to which Canadians have become both accustomed and reliant. They are an agenda forged in the foundaries of corporatism and capitalism and fed by globalization none of which gives a whit about the real character of this country, as neither do the Harper conservatives.