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If Flaherty drops a bomb, the provinces shouldn’t be surprised

No one likes an unpleasant surprise at Christmas. But if Aunt Louise drops her Christmas cake in the mail every year and Uncle Mort delivers another ugly tie to be unwrapped each December, it ceases to be a surprise.So it was with the country’s provincial finance ministers Monday.
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No one likes an unpleasant surprise at Christmas. But if Aunt Louise drops her Christmas cake in the mail every year and Uncle Mort delivers another ugly tie to be unwrapped each December, it ceases to be a surprise.

So it was with the country’s provincial finance ministers Monday.

If they were surprised that federal Finance Minister Jim Flaherty dropped his health-care funding stink bomb at the lunch table in Victoria, then they weren’t paying attention. Or else this gnashing of teeth and national beating of the breast is largely feigned for the home audience.

“We were expecting to discuss how we were going to discuss federal transfers,” Quebec Finance Minister Raymond Bachand said after the meeting.

Really? Raymond Bachand, meet Stephen Harper.

This is how the Conservatives negotiate, whether it is with the federal opposition parties or the provinces. They don’t. They dictate.

But to be fair, they telegraphed this stance, through the media and through public statements by Flaherty and Harper in recent weeks.

One highly placed source said last week that health-care reform will never be seriously addressed until the funding question is put to rest. So Flaherty put it to rest, telling — not asking — the finance ministers that he would extend the six-per-cent increases in health transfers through 2016-17 (by which time Conservatives may not even be in power) before tying increases through 2024 to economic growth, with a floor of three per cent.

The good news for provinces is that they can now budget through 2017, but the bad news is the uncertainty following that date.

If health-care spending must be pared during another future economic downturn, it is bound to create hardship because the health-care system is under much more stress during economic downturns.

With no strings (apparently) attached to the funding proposal, Ottawa is essentially plunking the money on the table and letting the provinces go their own way.

Some provinces will be able to spend more on health care, others will bear a bigger burden of the aging population, others now have an opportunity to experiment with more private delivery.

One can feel Ontario Finance Minister Dwight Duncan’s pain — to an extent. He is facing a $16 billion deficit, stubborn unemployment, a possible credit downgrade, an aging population and an aging economic base. He is also looking at the same uncertain economic future as Flaherty.

His next budget is sure to be a bad-news budget in which hard decisions deferred in a bid for re-election must finally be taken. One of those will involve health-care spending, now 42 per cent of all Ontario expenditures.

But the province is already projecting slowing health-care spending, projecting a 3.6 per cent growth in costs next year, or almost exactly what Flaherty could be projecting in his transfers following 2016.

So Duncan is actually on board with Flaherty when it comes to reining in spending, even as Ontario asks for more. There are more shoes to drop in this debate, so it is too early to be apocalyptic about the future of the public, single-payer universal system.

The dangers may be real — Nova Scotia Premier Darrell Dexter mused Tuesday about signing on to this deal for only five years.

More likely, there will now be an opportunity, as Canadian Medical Association president John Haggie puts it, “to identify how resources will be used to improve patient care across the country.”

Premiers meet to discuss health care next month and federal Health Minister Leona Aglukkaq has suggested a meeting with her provincial counterparts aiming at the same goal.

Last week, Flaherty mockingly described himself in the House of Commons as “an elf.” If the provinces can grudgingly accept the funding parameters and work together within those constraints, the finance minister need not be known as “the Grinch.”

Tim Harper is a national affairs columnist with the Toronto Star.