Canada's Provinces Seek
Billions for Health-Care

OTTAWA (Reuters) - Canada's provinces threw down the health-care gauntlet on Tuesday, demanding Ottawa pump C$24.7 billion ($15.9 billion) over the next four fiscal years into the cash-strapped public health-care system.

That amount would more than erase all of Finance Minister John Manley's forecast budget surplus of C$14.4 billion between now and fiscal 2005-06 (April/March).

But provincial finance ministers pointed out Manley has forecast C$18 billion in contingency and economic prudence reserves between now and the end of March 2006 so meeting their demands in full would still leave a surplus.

While provincial ministers took the extraordinary step of announcing their demand jointly prior to the start of two-day pre-budget talks with Manley, their federal counterpart insisted any new health care funds would come with strings.

"You know, we put C$23.4 billion in just two years ago. We had a signed agreement with the provinces and--this isn't a matter of conditionality--I don't think most Canadians are conscious that results have improved. So, I think we certainly want to see better results for additional money," Manley said.

Have-not provinces generally did not object to additional federal funds being earmarked for areas such as drugs, services and infrastructure but richer provinces rebuked what they call federal government intervention in their jurisdiction.

"It's been two years since they haven't honored their commitment," Alberta Finance Minister Patricia Nelson said.

HEALTH CARE DOMINATES TALKS

"Those dollars belong to the people of this country and health care is the number one issue and they should be transferred without delay," Nelson added.

Health care was the focus of debate during the talks that end on Wednesday afternoon. The provinces' demands raised the bar on expectations from November's recommendations by former Saskatchewan Premier Roy Romanow, who urged federal spending to rise C$15 billion by 2005-06, but were not rejected outright.

"We need health care investments this (fiscal) year and he, I think, recognizes and understands that and as I said he didn't say 'no'," Ontario Finance Minister Janet Ecker said.

But Manley said immediate new funds could not come before he consults with the prime minister, who would also first need to meet provincial leaders in late January, at the earliest.

"We reminded him it would be in everyone's best interests if it was possible to move that schedule up as quickly as possible," Nova Scotia Finance Minister Neil Leblanc said.

Romanow had said Ottawa -- which shares the cost of paying for health care with Canada's provinces -- should guarantee to pay at least 25 percent of primary health costs by 2005-06. Without that extra funding the federal government would likely pay around 15 percent of primary health costs in 2005-06.

"We asked the federal government to increase the (funding) to the 1994-95 levels," Quebec Finance Minister Pauline Marois said in reference to the last year before federal fiscal austerity began in earnest.

Manley is in the midst of preparing his first budget, due in February, after taking over the finance portfolio in June from Paul Martin, who was sacked from cabinet for running an unofficial campaign for the party's leadership.

Prime Minister Jean Chretien, due to retire in February 2004, laid out 22 new spending initiatives in September, one of which was bolstering health spending.

POTENTIAL LEADERSHIP CONTENDER

Manley, said to be mulling a leadership bid, must balance Chretien's desire for a legacy-setting budget with one showing his own spending priorities as a potential leadership contender, while maintaining Canada's hard-won fight against deficits.

"Out of that you have got to fund health care through increased transfers to the provinces, increased defense spending and certain Kyoto initiatives," said Rick Egelton, deputy chief economist at BMO Financial Group.

"It doesn't seem to leave very much left over and the larger the chunk of that that goes to health care the less you have for Kyoto and the military, so they're going to be tough discussions," Egelton added.

Canada ratified the Kyoto Protocol on climate change this month with Environment Minister David Anderson suggesting tax breaks may be in the next budget to encourage consumers to make their homes and vehicles more energy efficient -- an idea analysts said could mean a reduction in government income.

Ottawa also signaled its intention this month to make good on a C$2.9 billion maritime helicopter replacement program by 2004.

Reference Source 89

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