(Version française disponible ici)

Almost a year ago, the federal government and the provinces agreed to increased funding for health care. The provinces accepted the offer reluctantly because it fell short of their demands and part of the funding came with strings attached.

The Canada Health Transfer (CHT), the funding vehicle favoured by the provinces, did receive a one-time addition of $2 billion for 2023-2024, as well as a guaranteed annual increase of five per cent for the next five years. But substantial funding of $25 billion over 10 years was earmarked for conditional bilateral agreements.

This conditional additional funding is the latest example of Ottawa using federal funds to meddle in provincial public policy. This was also the case recently for the National Child Care Program (from which Quebec was able to withdraw unconditionally and with full compensation), and the Housing Accelerator Fund.

This time, to gain access to the remaining health funding, each province had to sign an agreement in principle with Ottawa, and then submit a provincial action plan describing how the funds will be used and progress measured.

By March 1, 2023, less than a month after the federal government’s proposal, all provinces except Quebec had signed an agreement. Clearly, despite the hype describing Ottawa’s proposal as inadequate, the other provinces were prepared to set aside the defence of the provincial prerogative in health care to receive their share of funding.

Four provinces took the next step to have access to full funding: British Columbia in October, Prince Edward Island and Alberta in December, and Nova Scotia in January.

According to a recent article in The Hill Times, other provinces have already submitted or are in the process of submitting their action plans.

In the rest of Canada, resistance seems to fade more quickly when it comes to federal money than it does with regulatory policies affecting, among other things, natural resources. In Quebec, debates about federal spending power and fiscal imbalance are matters of principle. For the other provinces, these are fiscal debates: is this good for our public finances?

Just how much money are we talking about?

It’s always a little difficult to keep track of all the different announcements and funding vehicles. The bilateral portion of this agreement provides $2.5 billion annually for the provinces over the next three years. To access the funding to which they are entitled for 2023-2024, the provinces must have submitted their action plans and signed the final agreement by March 31.

According to this procedure, Quebec would therefore be entitled to approximately $500 million for 2023-2024 and $1.5 billion over three years. Five hundred million dollars is not a panacea for a health-care system under pressure, on which the provincial government will spend more than $50 billion this year, and which also accounts for nearly 45 per cent of its departmental spending. But it’s not nothing, either.

Two other increases were part of the federal announcement: a five per cent growth in the CHT for the next five years, and a one-off increase of $2 billion in 2023-2024. Quebec estimates its share of this one-time top-up amount at $447 million.

Although the CHT is, in principle, a transfer with no conditions other than compliance with the Canada Health Act, it seems that Quebec is still waiting for this top-up payment for 2023-2024. If this is indeed the case, it is completely contrary to the very nature of the CHT, which should not depend on the signing of a subsequent agreement. Ottawa has no defence here.

But what conditions?

Basically, everyone except Quebec has agreed on a series of key areas for improvement: greater access to family health services, fewer COVID-19-related surgical delays, more family doctors and nurses, better mental health and addiction services, and modernization of health data (e.g., more digitization of medical records).

As each health-care system is different, it’s up to each province to decide how they will act on these major axes and to describe their approach in the action plan submitted to Ottawa. It’s clear, then, that Quebec’s opposition is one of principle since these very general conditions fit perfectly with the province’s own objectives.

PODCAST: The fundamentals of fiscal federalism

Most Canadians want higher health transfers, preferably without conditions

Accountability is where the problem lies. Although the bilateral agreements signed state that accountability will be to Canadians, the federal government could decide to withhold funds if a province cannot report on how previous money was spent.

Of course, Ottawa puts conditions on these transfers to ensure the money is actually spent on health care. But the general idea that a province should be accountable to Ottawa is contrary to the principle of Canadian federalism, in which there is no hierarchy between levels of government, and each is sovereign in its areas of jurisdiction. Once again, Quebec finds itself in the paradoxical role of guardian of the federalist principle.

No conditions for Quebec?

Ottawa has often been open to granting Quebec unconditional funding in other areas. This was recently the case for daycare funding: Quebec and its network of subsidized daycares already met the conditions Ottawa imposed on other provinces. Unconditional funding was a matter of course.

When it came to housing construction, Quebec’s rules prevented Ottawa from holding direct talks with the province’s cities, unlike other Canadian cities. The federal government therefore agreed to pay Quebec its share of the total amount, $900 million, with no strings attached. Both sides justified this unconditional amount by citing shared objectives and the fact that Quebec was adding its own $900 million.

The other provinces belatedly and timidly voiced their displeasure at the idea of Ottawa sending money directly to the cities, which are, as the saying goes, creatures of the provinces.

In the case of the health agreements, it’s a safe bet that the federal government will be less inclined to offer this annual funding to Quebec commitment-free given the other provinces have already agreed to provide a detailed action plan, to develop clear performance indicators, and to demonstrate results.

Quebec can’t be both inside and outside the federation

If past performance can predict future results, we can expect the agreement with Quebec to be asymmetrical, i.e. different from that of the other provinces, and therefore with minimal conditions. This was the case, for example, in the 2017 health agreements. At the time, the other provinces agreed to participate in the development of common indicators and to share this data for comparison purposes.

This is where Quebec should voluntarily get more involved. Quebecers need to be able to judge the work done in health care with indicators comparable to those in other provinces. At the time of the 2017 agreements, Quebec had only committed to participating as an observer in the work of the Canadian Institute for Health Information (CIHI), which publishes a host of pan-Canadian indicators, and from which Quebec is too often absent. This round of agreements provides an opportunity to remedy this situation.

In keeping with the principles of Canadian federalism, health funding from the federal government should not be tied to provincial accountability to Ottawa in a field under their jurisdiction. But accountability to Quebecers means that the Legault government must ensure that its citizens can judge the results of its policies for themselves. There’s no better way of doing this than by comparing our progress with that of the rest of the country.

Do you have something to say about the article you just read? Be part of the Policy Options discussion, and send in your own submission, or a letter to the editor. 
QSAITDOPP
Charles Breton is the executive director of the Centre of Excellence on the Canadian Federation at the Institute for Research on Public Policy (IRPP) and the former research director at Vox Pop Labs. He holds a PhD from the University of British Columbia. Follow him on Twitter: @charlesbreton

You are welcome to republish this Policy Options article online or in print periodicals, under a Creative Commons/No Derivatives licence.

Creative Commons License