Posted at 5:00 a.m.
(Ottawa) Provinces will get almost $10 billion more than expected in health transfers over the next five years due to strong growth in the Canadian economy in 2021, learned The Press.
In concrete terms, this means that the provinces will share, on average, an additional sum of about $2 billion per year to fund health care. The provincial finance ministers were notified last month of this increase in health transfers, which will reach $45.2 billion in 2022-2023 and $48.7 billion in the following fiscal year. In 2026-2027, they should total 55.2 billion.
Since Ottawa ended the automatic 6% annual increase in Canada health transfers in 2017-2018, the Department of Finance calculates their increase by taking into account the three-year moving average of the growth of the gross domestic product (GDP nominal). However, the provinces are guaranteed a funding increase of at least 3% per year.
A 3% increase has been the norm for the past four years. However, the Canadian economy experienced strong growth in 2021, after a decline caused by the strict containment measures imposed in the spring of 2020 across the country because of the pandemic. Result: the increase in transfers will be 4.8% for the fiscal year beginning on 1er April, according to documents obtained by The Press under the Access to Information Act.
“Due to exceptional GDP growth in 2021, health transfers are projected to provide $9.8 billion more than projected in pre-pandemic projections over the next five years, at beginning in 2022-2023,” reads a briefing note from Deputy Minister of Finance Michael Sabia.
The increase of 4.8% is the largest set by the federal government since the entry into force of the new calculation rules, five years ago, specifies in this note addressed to the Minister of Finance, Chrystia Freeland. Health transfers are allocated to the provinces in proportion to their population.
No additional rise in pandemic
But this increase, although it is outlined in broad strokes in the briefing note from the Deputy Minister of Finance, will not weaken the determination of the provinces which are demanding a more substantial financial effort from the federal government.
For several years now, the provinces have been calling in unison for Ottawa to increase health transfers in order to cover 35% of the annual bill, compared to 22% at present. Such an increase would result in additional annual investments of $28 billion from the federal government.
Prime Minister Justin Trudeau reiterated this week that he is ready to discuss increased transfers with his provincial counterparts, but only once the pandemic is over. During the last election campaign, the Liberals promised to inject $9 billion into health care over four years, but imposed conditions. Thus, 3 billion should be used to hire 7,500 family doctors and nurses, while 6 billion should be used to eliminate waiting lists.
That said, the increase planned for 2022-2023 will certainly be part of the arsenal that the Trudeau government will use in its battle of figures which will oppose it to the provinces.
“Not an announcement”
According to the Bloc Québécois, which resolutely supports the provinces’ request, this 4.8% increase in transfer payments is nothing short of grandiose. It only reflects a calculation grid established by Ottawa. The only way to resolve this issue is to have the federal government pay 35% of the country’s health care costs annually.
“In fact, all this is not an announcement. The calculation mechanism means that there is a 3% increase or an increase linked to the increase in nominal GDP. With inflation, GDP increased. It goes without saying that the costs of the health system are going to be higher too”, said Bloc Québécois MP Mario Simard, his party’s critic for intergovernmental affairs.
In fact, none of this changes anything at all. You cannot be proud of applying what you are supposed to apply.
Mario Simard, Bloc critic for intergovernmental affairs
“The figure that we must keep in mind is the percentage of funding,” added Mr. Simard. Currently, the federal share is 22%. It is untenable. In 2013, the Parliamentary Budget Officer said that if nothing changed, the situation for the next 20 years would be untenable. We are right in there with the pandemic. »
Mr. Simard said that the Bloc Québécois intended to make the increase in transfers the constant battle when parliamentary work resumes on Monday.
The deputy leader of the New Democratic Party, Alexandre Boulerice, also said that the increase planned for this year did nothing to solve the basic problem.
“In the short term, this may be good news. But the problem is that the increase is linked to economic growth which is circumstantial. We don’t know if it will be sustainable. We do not want the funding of our health care system to depend on economic growth. […] Health is the top priority of Quebeckers and Canadians right now. There must be an increase in health transfers that is permanent and predictable. There is an uncertainty that does not allow us to rebuild our health system, which has been sorely tested,” argues Mr. Boulerice.
10.15 billion
Amount that Québec will receive for health care in 2022-2023
Source: Department of Finance Canada