Health funding formula helps Ottawa, burdens provinces

Parliamentary Budget Officer Kevin Page has issued a report on the impact of Ottawa's formula for health care transfers after 2014. (Canadian Press)

Parliament's budget watchdog says the new health-care funding formula will slowly reduce Ottawa's support for medicare, but it will also put the federal government on a solid fiscal footing for the future.

The trouble is the provinces will have to shoulder a growing health-care burden over the long run and they can't afford to do that without cutting spending elsewhere or raising taxes.

Kevin Page, the parliamentary budget officer, crunched numbers from the federal government's recent announcement on how health care will be funded until 2024. He projected costs and revenues out to 2040-41.

In his report released today, Page found that Ottawa's promised cash transfers will keep pace with projected increases in provincial health spending until 2016-2017.

But after that, Ottawa's funding will be tied to expansion of the economy. Increases will likely average 3.9 per cent annually, compared to the previous six per cent, the report forecast.

That means Ottawa's share of provincial health-care funding will fall to an average of about 18.6 per cent for the coming two decades from about 20.4 per cent today. It will continue to slide significantly after 2035 if the policy persists.

As a result, Ottawa's debt burden will decline steadily, the report said. The federal government will have some room to cut taxes or increase spending and still maintain fiscal health.

The provinces, however, will find their debt rising and some jurisdictions will have to increase taxes, cut spending or both in order to stay on track.

The report comes as the premiers prepare for a crucial meeting on health-care financing in Victoria starting Sunday.

They will attempt to figure out how provinces should deal with health care after suddenly being handed a funding formula from the federal government last month.

Finance Minister Jim Flaherty announced increases in funding with no strings attached — signalling a federal step-back from health-care policy-making and a slow erosion of federal funding increases.

In another report released today, a coalition of health associations said federal and provincial leaders need to confront the deterioration in the health-care system, clarify their roles and then get to work fixing things.

The Health Action Lobby of 34 national health organizations polled leading health-system experts and compared Canada's regime to others around the world.

They found a consensus on what the problems in Canada's health care system are, as well as general agreement on how to fix them.

But they also found a lack of political leadership at both the federal and provincial levels.

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Quebec, Ottawa reach $2 billion HST deal

Ottawa and Quebec have finally signed a tax-harmonization deal that will give the province more than $2 billion.

Prime Minister Stephen Harper and Premier Jean Charest made the announcement at a joint news conference in Quebec City Friday.

The province had been seeking $2.2 billion in compensation for agreeing to combine the GST with its provincial sales tax nearly 20 years ago.

The Tories promised during the federal election campaign last spring to settle the matter by mid-September.

But the deadline was later extended until the end of the month to work out technical details.

One potential sticking point was whether Quebec could be compensated for harmonizing its provincial sales tax with the federal GST, while still collecting the tax itself.

The failure to reach a deal was a political lightning rod for Quebec sovereigntists over the years, with the Parti Quebecois and the Bloc Quebecois constantly berating their federalist foes.

Ontario and British Columbia received federal transfer payments for implementing the HST.

British Columbia has to return the $1.6 billion in transition funding after voters killed the province's HST in an August referendum.

Ontario received $4.3 billion from Ottawa after moving to the HST in 2010.

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Anti-oilsands sit-in urged for Ottawa

A group of prominent activists is calling for a sit-in to take place in Ottawa to protest Alberta's oilsands.

The civil disobedience is inspired by action in Washington, D.C., this week in which Canadian actress Margot Kidder and dozens of others were arrested.

The Council of Canadians, Indigenous Environmental Network and Greenpeace Canada hope to make the event "one of the largest acts of civil disobedience on the climate issue that Canada has ever seen," they say on the website set up to promote the event.

The Washington protesters are trying to convince the U.S. government not to approve TransCanada Corp.'s Keystone XL pipeline project, which would transport crude oil from Alberta to U.S. markets in Illinois and Oklahoma. The Keystone XL would be an extension of the existing line to Houston, TX.

The Canadian protest is set for Sept. 26, but there are no further details on what it will entail. The website warns participants will be risking arrest.

Maude Barlow, chair of the Council of Canadians, says the government needs a conversion plan to move to alternate energy sources.

“Tar sands mining has destroyed much of Alberta's water table and will put the fragile Ogallala Aquifer [the world's largest known aquifer] in peril. We join with the millions of Americans who oppose the expansion of this deadly industry," she said in a statement.

Alykhan Velshi, who runs a blog called ethicaloil.org that aims to promote Canadian oil, says the oilsands industry is improving, cutting carbon emissions and moving away from open pit mining. He says much of the oil around the world comes from countries with poor human rights records, so buying oil from Canadian companies is at least less money going to those countries.

"Obviously, groups like environmental organizations are free within our law to protest the oilsands. Certainly Canada is a country with free speech and they're exercising free speech," he said.

"I consider it unfortunate they're attacking Canada — a liberal democracy — and directing so few of their energies on Saudi Arabia and Venezuela.... I think their priorities are misplaced."

The U.S. State Department's environmental assessment on Keystone is due Friday.

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