Provincial demands too high: Morneau
• Provincial demands for an increase in federal health transfers are “out of the realm” of anything the Trudeau government would consider, the federal finance minister said Friday.
In an interview ahead of Monday’s federal-provincial meeting on health funding, Bill Morneau insisted Ottawa won’t agree to keep the annual increases in transfers — the so-called health “escalator” — above three per cent or the yearly level of growth in nominal gross domestic product.
Ottawa also won’t entertain calls to raise the federal share of spending to 25 per cent of provincial health budgets, Morneau told The Canadian Press.
Instead, he said the government wants to explore ways to work with the provinces on specific investments in areas that Ottawa believes will have a measurable impact, such as home care and mental health.
Ottawa is prepared to put a “significant” amount of money toward these goals over a period longer than five years, he added.
“The provinces’ requests are out of the realm of anything that we would consider,” said Morneau, who is hosting finance ministers for a working dinner Sunday night before Monday’s main event, which will also include health ministers.
“We’re not going to be talking about percentages — either in the escalator ... or in terms of the broader percentages.”
Morneau’s remarks make it clear that a significant gap remains between the two sides heading into the next phase of the long-running talks.
The federal government fully intends to allow the escalator to drop to three per cent from six, which is where it’s been since 2004.
Starting in April, the rate is due to be three per cent, or the three-year moving average of nominal gross domestic product growth, whichever is higher.
In 2016-17, the federal government transferred a total of just over $36 billion to the provinces for health care. If these transfers are left to grow by three per cent next year — instead of six — Ottawa would trim nearly $1.1 billion from its combined payments to the provinces.
Provinces and territories say they fear this will leave big holes in health-care budgets that they insist need every federal dollar they can get.