Health deal with Ottawa reveals fiscal imbalance in Canada: Legault

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QUEBEC – Premier François Legault said Tuesday he is not considering the fight to get the federal government to shoulder a larger share of health care costs because the exercise has exposed a fundamental fiscal imbalance in Canada.

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But he said he and the other premiers face a daunting task in increasing their bargaining power with Ottawa, given the complexity of the funding problem and the lack of public outrage over Ottawa’s limited contribution to the system’s growing costs.

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“I’m not saying this is settled for 10 years,” Legault said at a news conference heading into the daily question period. “It’s not over at all.

“I’m still confident we can do more. So we’ll have to work harder.”

On Monday, Canada’s premiers and territorial leaders announced they plan to accept the health care transfer offer the federal government made to them last week. The offer represents an additional $46.2 billion for provinces and territories over the next 10 years.

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Ottawa’s proposal includes a five per cent annual increase to the Canada Health Transfer (CHT) for the next five years. After that, the transfer will return to an increase of three percent per year.

Manitoba Premier Heather Stefanson – who heads the Council of the Federation, which represents premiers and territorial leaders – said they have accepted the amount “for now” but intend to keep pressing Ottawa.

Noting the offer means Quebec will get just $1 billion in new funding this year, when it had hoped for $6 billion, Legault said the results of the process — which has dragged on for two and a half years — were disappointing.

Ottawa will continue to pay only 24 per cent of the costs of the health system. The premiers wanted it to be raised to 35 per cent.

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But accused by opposition parties of being too pliable to Ottawa and settling for a “discount offer”, Legault asked what ideas – besides proposing a referendum on independence – those parties had for raising more funds.

He admitted that the complexity of the funding problem makes it difficult to get Canadians to step up enough to pressure Ottawa to be more generous. Prime Minister Justin Trudeau is actually using the complexity of the Canada Health Transfer to his advantage to keep critics at bay, Legault said.

To convince Ottawa to pay more, Legault said he and the other prime ministers need to explain to Canadians that there is a real fiscal imbalance in the country. Currently, Quebecers pay 40 percent of their taxes to Ottawa, but the federal government only pays a quarter of health care costs.

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“We’re disappointed,” Legault said. “We will continue to make demands. The heart of the problem remains. The provinces will continue to finance 76 per cent of health expenditure. I understand this is complex. I note, unfortunately, that Mr. Trudeau exploits this complexity.

“It’s hard to explain that to Canadian citizens. But we’re going to have to re-explain that in the long term this is not sustainable; that the problem will continue to get worse because the provinces and territories have to support three-quarters of the growth (in costs ).

Legault said it’s too early to talk about a health-funding-themed referendum to put pressure on Ottawa, but it’s not out of the question either. A special commission to expose the fiscal imbalance has also been attempted in the past, he noted.

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Last week, he suggested Quebecers should send Ottawa a message at the next federal election.

“We’re going to have to explain,” Legault said. “We will have to see what means we have to ensure that we have the support of the population. But before we talk about a sectoral referendum, Quebecers and Canadians need to be convinced that there is a structural problem.”

On Tuesday, when opposition parties in the National Assembly learned the prime minister had closed the books on the process, they rallied around Legault, accusing him of capitulating prematurely.

Interim Liberal Leader Marc Tanguay said he was very surprised by what he described as “Quebec’s big resignation” on the issue.

“Even Ottawa, I think, was surprised at the speed with which this deal was done, a real discount deal for Ottawa,” Tanguay said.

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Parti Québécois leader Paul St-Pierre Plamondon criticized Legault for leading Quebecers to believe that economic and political gains were possible in Canada.

Instead, he’s offering a “it’s better than nothing” kind of Canada, the PQ leader said.

Québec solidaire co-spokesperson Manon Massé reacted skeptically to Legault’s statement that Quebec will nevertheless find the money to pay for the system even without Ottawa’s cash.

She said Legault’s failure has left a $5-billion hole in Quebec’s budget, which she said could result in service cuts.

Later in the afternoon, MNAs passed a PQ-sponsored motion that condemned “the inadequacy of Canada’s final offer (on health) and Ottawa’s gradual withdrawal when it comes to the health of Quebecers.”

The proposal stated that the current Canadian framework and the fiscal imbalance “places Quebec in a difficult financial situation.”

It was adopted unanimously: 116 votes in favour.

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