Ottawa can’t keep adding expenses to the credit card without worrying about the bill at the end of the month.
Yet this is what risks happening if the minority Liberal government – anxious to respect the agreement that keeps it in power – gives in to the New Democrats’ demand to establish a national drug insurance program.
The pressure has increased since New Democratic Party (NDP) delegates, meeting at a convention last weekend, voted unanimously for a resolution in favor of a universal, comprehensive and entirely public program. .
No compromise. No half-measures, like covering only the 14% of Canadians who do not already have private or public coverage. No, it’s the New Democrat promise from the last election or nothing.
But here’s the problem.
The government cannot only copy the pages of the NDP electoral platform where it was a question of improving social programs without also retaining the pages where it was a question of increasing taxes to finance the expansion of the social safety net.
Remember that in 2021, the NDP made promises of $209 billion over five years, no less. A bill that their leader Jagmeet Singh wanted to absorb by making the “ultrarich” pay.
On the menu, there were notably tax increases for large businesses and for individuals earning more than $210,000. It was also a question of taxing capital gains more, that is to say the profit made when selling an asset, such as shares on the stock market or a triplex.
In reality, these measures were aimed much wider than the “ultrarich”.
But it is difficult to imagine the implementation of large-scale social programs, benefiting the entire population, without the middle class having to take a cent out of their wallet.
Are we ready to pay more taxes?
One thing is certain, we cannot pull on the credit elastic indefinitely, as the Trudeau government has done since coming to power. Under his leadership, the return to balanced budgets has become a mirage that disappears every time we get closer to it.
Since the submission of the last budget, expenditure has further increased by 28.6 billion over five years, in particular with investments in the battery sector and the improvement of the GST reimbursement for rental residential properties, according to recent calculations. of the Parliamentary Budget Officer (PBO).
As the fall economic update approaches, Ottawa must demonstrate fiscal rigor in a context where recession looms and interest rates could remain high for quite some time.
That makes a big difference for the government: interest costs on the debt will double, from 25 billion in 2021-2022 to 46 billion in 2024-2025. At this rate, it will take a while to repay the pandemic debt!
Especially if Ottawa adds other recurring expenses to the credit card… like a prescription drug insurance plan.
Mind you, there would be good reasons to put in place a universal program that would allow all Canadians to obtain medications essential to their health, without straining their budget.
A single-payer plan, where the bills are all paid by the state, would also make it possible to better negotiate drug prices. This would provide annual savings of up to $2.2 billion, according to the PBO.
In addition, a single plan would put an end once and for all to the inequity suffered by privately insured people who pay 18.8% more for their medications than those insured by RAMQ in Quebec. That’s 750 million too many every year.
Except that by imposing a national regime from coast to coast, Ottawa would happily trample on the flowerbeds of the provinces which already have their regime. In addition, it would deprive itself of the considerable sums that employers inject into their employees’ insurance plans.
Drug insurance in Canada is a complex mosaic that cannot be redrawn by snapping your fingers. A hasty decision by Ottawa could result in a waste of public funds.
This is what we saw with the Canadian Emergency Response Benefit (CERB), implemented at full speed during the pandemic without adequate oversight. Billions were squandered, the Auditor General found.
This is what we also saw with the dental insurance program, another NDP condition to support the minority government. The hastily put together program opened the door to abuse, according to the PBO.
But that did not prevent Ottawa, in its last budget, from continuing to deploy the program, the costs of which have doubled, without knowing exactly how it will fit in with the program that already exists in Quebec, to prevent people from are compensated in double.
Vigilance is therefore required with drug insurance which could cost 13.4 billion per year. Very far from a trifle. The last thing we want is another program designed in fourth gear that will further inflate Ottawa’s credit card.
The position of The Press
In itself, the idea of offering a drug insurance plan to all Canadians is noble. But Ottawa cannot continually expand the social safety net without increasing taxes to finance it.