Brian Tobin has enjoyed an insider’s view of the government spending debate from both sides of the federal-provincial divide. As a member of Prime Minister Jean Chrétien’s first government, he was part of the cabinet that slashed federal transfers to the provinces in the Liberals’ landmark 1995 budget. Now, as premier of Newfoundland, Tobin is getting a taste of trying to make those fewer dollars match the demands on his province’s health-care system. And Tobin is having second thoughts about Finance Minister Paul Martin’s cuts that helped end the threedecade run of federal budget deficits. “I’m not knocking Paul—I was there when we made the decision,” the Newfoundland premier told Maclean’s last week. “But we went too far. Health care is breaking down and medicare as we know it is heading out the door. There is no shame in saying we now need to adjust our decision.”
And so Tobin joined the nine other provincial premiers last week in demanding that Ottawa’s next budget restore $6 billion in federal transfer payments. With attention in Ottawa now almost fully focused on where to direct any new spending in the February budget, the premiers agreed during a 75minute conference call to loudly and unanimously clamour for more money. The $6 billion is a “top, top priority, given the stresses and strains on the health-care system,” said Saskatchewan Premier Roy Romanow, an opinion echoed to a man by the others. Chrétien quickly rejected the premiers’
demands. He questioned their principles, noting the original reason for the conference call had been to map out strategy for negotiations on the social union, a new powersharing arrangement with Ottawa. “Suddenly, it has become a question of money,” Chrétien said with a tinge of derision at the premiers’ shift in focus. “Everybody wants to get the money.” And Martin trotted out what effectively has been his mantra since last summer: stop salivating—our surplus is
small. “Anybody who looks at our numbers can see we’re fairly constrained as to the resources we have,” he said.
Actually, Martin’s numbers look pretty good: a surplus approaching $10 billion in the first seven months of the fiscal year that ends next April. But there are tremendous pressures on how to allocate it, from last week’s $900-million income support fund for farmers, to $1 billion in government revenue lost when he lowered Employment Insurance premiums this month (at the request of many provincial premiers, it should be noted). And Chrétien has always been skeptical of provincial claims that medicare is on its deathbed. His advisers point out that the Canadian system remains one of the world’s most heavily funded per capita (total spending reached $76.6 billion last year) and wonder why Ontario Premier Mike Harris needs more money when, for example, he has increased provincial health spending and delivered a hefty income tax cut.
Chrétien has already pledged that health will be the defining characteristic of his government’s next budget. But his antipathy to the idea of simply handing the provinces more money is so deep that even Health Minister Allan Rock has been reluctant to promise much in the way of new spending. Stung by past losses in tugs-of-war over money with Martin, Rock fears he will pay the political price if the increase falls short of expectations. He has studiously left any promises about a “health budget” to Chrétien and Martin. But there was a sign last week that Rock was dropping his reluctance to publicly battle for more cash. He wouldn’t allow himself to be pinned to a magic number, but for the first time he insisted the amount of new spending must be “significant.” Declaring that “public confidence in medicare is already starting to erode,” Rock told reporters he was “in there fighting” for more money.
Having served in Chrétien’s cabinet, Tobin also knows how the notion of cashgreedy provincial governments is embedded in the federal mind-set. “In federal politics, you really don’t know what’s going on at our level and it’s easy to assume this is just a money grab,” he said. “But medicare will live or die on this budget.” Some senior Liberals, including many of Chrétien’s advisers, do have other plans for the surplus, such as reversing the country’s diminishing productivity. But among Chrétien’s entourage, there is some nervousness that Canadians are beginning to blame Ottawa—not just the provinces—for longer waiting lists and closed hospital beds. Perhaps the big infusion of cash is needed after all, said one federal official last week, “if only to put the politics of health care behind us with this budget.” Given the rancour surrounding the issue, calibrating the size of that infusion correctly may be the most important decision this Liberal government makes.
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