Friday, December 11, 1998
An unhealthy obsession
One of the stranger stories to be told one day is how conservatives in Canada wound up playing patsy to the provinces.

How is it, in particular, that conservatives should be lining up behind the provinces' demands for billions of dollars in handouts from the federal government? Or what else would you call the premiers' latest demand: that Ottawa should "return" the $6-billion it has "taken" from transfers to the provinces for health care?

It is remarkable, to begin with, to find conservatives echoing the public sector unions' claim that the problem with Canada's $80-billion health care system is that it is short of funds. It is more remarkable still that they should fall for the premiers' line that this multibillion-dollar raise in their allowances is a matter of respect for provincial autonomy.

When the National Action Committee on the Status of Women rails that any reduction in their federal grant is a threat to their "independence" as an advocacy group, conservatives are the first to snicker. What kind of independence, they ask, is dependent on government handouts? But when the premiers demand respect for their exclusive jurisdiction over health should take the form of billions of suspiciously federal-looking dollars, the right applauds.

A principled conservative might say that, if health care is indeed a provincial responsibility, the provinces should pay for it. Rather than increase federal transfers to the provinces, then, a principled conservative would insist they should be cut to zero.

True, this would eliminate any leverage Ottawa might have to enforce national standards, but at least we'd know who to blame if the system fell apart.

What, instead, is the premiers' version of "exclusive provincial jurisdiction?" That the federal government should underwrite provincial health-care programs, as before, only in larger amounts, and with no strings attached. We would have all the blurred accountability of the present system, but with none of the conditions that alone justify federal participation in the first place.

But then, maybe the provinces are not so keen on cutting the federal apron strings as they let on. Take their strange habit of demanding more money for "health care." Federal transfers are not earmarked in such terms, and haven't been since 1977. The $6-billion that the provinces speak of was cut from the Canada Health and Social Transfer, which is supposed to cover health care and post-secondary education and social assistance -- though in practice the provinces can spend the money on anything they like. To ask that federal funding should be explicitly tied to health care is to set back the cause of provincial autonomy a generation. Not that I'm complaining, mind you.

The provinces' curious subservience is shown in another way. The premiers are fond of claiming that the federal government has cut transfers to the provinces by "more" than it has cut its own spending. In strict dollar terms, this is nonsense: Transfers were reduced by $6-billion between 1995 and 1998, less than half the $13-billion overall reduction in federal program spending.

What the premiers mean is that federal-provincial transfers have been cut more proportionately. So whereas the CHST was slashed by more than 30%, spending on all other federal programs was reduced by less than 10%. But this comparison bears weight only if you measure the sacrifice imposed on each purely in terms of the federal funding it receives.

The provinces are asking us, in effect, to look at them as just another department of the federal government. When the Defence Department loses one-fifth of its budgetary allocation, it has to cut spending by one-fifth: There isn't any other source of funds. But federal-provincial transfers are only a small part of the provinces' total revenues. That 30% cut in the CHST works out to just 3% of all funds available to the provinces.

So if health care is really the priority the provinces claim, they can easily make up the shortfall from elsewhere in their budgets. By and large they have: The same Ontario government, for example, that complains so bitterly of federal "health care cuts" also boasts of having increased spending on health care over the same interval.

Of course, maybe the Ontario Tories would have spent even more on health had the feds kept the spigots open. But that's hard to square with a $5-billion tax cut. Maybe that's the right's real agenda: The feds should raise taxes so the provinces can cut them. But wouldn't it be simpler if each took responsibility for its own?