Saint John Telegraph Journal
November 18, 1999
Halifax Chronicle Herald
November 21, 1999

Whose surplus is it, anyhow? Certainly not the provinces’.

By Nancy Faraday-Smith

The provincial finance ministers, meeting in Toronto on Monday, think they’ve struck a reasonable compromise between pressing for federal tax cuts and extra transfers toward provincial budgets. In fact, all they’ve agreed on is the two things the provinces always agree on: that Ottawa is in the wrong and should give them more money. They remain deeply divided on a fundamental question: who has first claim on Ottawa’s surplus?

Quebec’s Bernard Landry says that it’s the provinces’. According to him, Ottawa savaged provincial budget-making in 1996 when it cut cash transfers for health, education and other social services. Ernie Eves, Ontario’s Treasurer, sees the priority being a reduction in the tax burden borne by taxpayers. At least Mr. Eves is half right.

If Quebec’s Finance Minister could find his pocket calculator, he would see that even some quick back of the envelope calculations reveal that Ottawa has cut a cumulative total of roughly $6-billion from transfers to the provinces since it introduced the Canada Health and Social Transfer in April 1996. That’s dwarfed by the roughly $15-billion in new revenues that taxpayers have sent to Ottawa over the same period. The long-suffering taxpayer, not the provinces, is the Saint George who slew the deficit dragon.

Besides, whatever the lamentations of the provinces, their fiscal position is not worse than Ottawa’s. Just the reverse is true. Looming surpluses notwithstanding, the federal government staggers beneath a far greater debt burden. Ottawa owes about $580-billion, or $18,932 for every man, woman, and child in the country.

The provinces only owe $331-billion, a “mere” $11,218 per person. Paying interest on the debt chews up 27.2-cents out of every tax dollar Ottawa collects while the average province only sees 14.9-cents out of each tax dollar go to its bankers. That’s why Mr. Eves is only half right in calling for Ottawa to cut taxes. By also throwing his support behind Mr. Landry’s demand for more spending, he shortchanges what must be one of Ottawa’s top priorities: cutting the ominous debt that hangs like a sword of Damocles over the head of each and every one of us.

Before we even think about more transfers to the provinces, we should be asking whether it will produce better quality results for Canadians. There is undeniable dissatisfaction with the quality of health care in the country, and the provincial governments try to boost their popularity by putting about the idea that somehow increased spending, financed by Ottawa, will put this right. But where is the evidence?

Since medicare’s inception, there has been only one year in which total public health care spending declined on a year over year basis: 1994 when, when spending was down 0.3% (or $1.75 per capita in constant dollars) relative to 1993. Health care is now the largest item of spending in provincial budgets, representing on average of about 30% of total spending. Current angst over health care “cuts” is really a reaction to a slowdown in the rate of increase in medicare spending, a slowdown, moreover, that has already been reversed by Ottawa.

The constant cry for more dollars is akin to a surgeon pumping endless blood transfusions into a patient without bothering to find the internal bleeding. Before receiving any further cash infusions from Ottawa, the provinces should have to show us that they’re wringing the best value from the money they’re already spending.

The problem is, they can’t. They can’t accurately tell us what kind of health care outcomes we are paying for. No Canadian jurisdiction is able to provide either systematic, regular and reliable information linking health outcomes with health care activities, or regular and reliable information about access to care. We don’t know how long waiting times are to see doctors, specialists or surgeons. We don’t know whether hospital stays improve people’s health, make it worse, or leave it unchanged.

Nor can health care consumers exercise a meaningful degree of choice over where health care dollars should go – so that we can show governments where our priorities are. We are not free to prefer less hospital care and more alternative medicine, more MRI scanners and fewer health care bureaucrats.

All of this leaves the system devoid of incentives and accountability, and illustrates the failures that are inherent in most if not all monopolies.

These failures will continue to exist regardless of how much money is pumped into the medicare system. The provinces need to move away from their tired old focus on spending levels and begin to get serious about accountability for the massive health care spending they’re already doing.

Taxpayers have earned tax cuts and debt reduction to protect programs in the future. If the provinces want more money for health care, they’ve got to earn it too. They’re far from having done so.