The notes, scribbled at the table by one of the participants, show that the strain surfaced from the very start. Allan Rock had been on the
job as federal health minister only a month when, during a July 25, 1997, meeting with provincial health ministers in Montreal, he
first broached the subject of cash compensation for Canadians who contracted the hepatitis C virus from tainted blood. The provincial response, according to notes obtained by Maclean ’s, from the federal side of the table, was icy. New Brunswick’s Russell King was “against it in principle.” Jim Wilson, the Ontario health minister, concluded “it was not a priority
for spending.” British Columbia’s Joy MacPhail felt compensation “sets a bad precedent.” As for Clayton Serby of Saskatchewan, who chairs the committee of health ministers, he stressed “not now.”
Federal-provincial relations are, of course, often frayed. But seldom have they seemed so close to the breaking point as last week, when the hepatitis C debacle degenerated into a spectacle of political oneupmanship. On March 27, the Chrétien government and the provinces agreed to offer $1.1 billion in compensation to the es-
timated 22,000 people who contracted the disease between 1986 and 1990. But that was before an intense campaign by the hepatitis C lobby asserted the package should cover all victims. One minute the agreement was off, the next, apparently, back on again. In between, the two sides
Bad blood derails the agreement on hepatitis C compensation
traded insults and engaged in an elaborate game of who said what during the earlier talks. By the end of last week, the deal looked off yet again as Quebec and Ontario called for an inclusive package covering everyone who caught the disease from tainted blood. No wonder hope for a resolution seemed slim as the nation’s health ministers prepared
to go back to the drawing board this week. ‘This thing,” said an exasperated Rock adviser, “has set federal-provincial relations back 10 years.”
For the federal Liberals, the political damage has been incalculable. Last week, the gloom deepened as weary Grits had to listen to Quebec and Ontario, two of the biggest roadblocks to the original deal, pledge up to $275 million to compensate the pre-1986 victims—then muse about suing Ottawa to ensure it throws new money into the pot. (British Columbia also offered to put in more money, as long as all the players reach agreement.) Coming up with additional cash may not be easy for Rock. The deficit fighters in cabinet prevailed when he tried to persuade them to ante up more than the $800 million the feds finally pledged to go with the $300-million provincial contribution. And that was before some of the provinces decided to abrogate the deal—a move that seems to signal a tectonic shift in the bedrock belief that while Ottawa and the provinces may squabble, they can still work together. “Co-operative federalism may not be dead,” says Donald Savoie, executive director of the Canadian Institute for Research on Regional Development at the University of Moncton, and an expert on federal-provincial relations. “But it is on its deathbed.”
The hepatitis C squabble is hardly the first symptom of the breakdown. Since taking power in 1993, the Chrétien Liberals have clashed with the provinces over cuts to transfer payments, their bid to harmonize the Goods and Services Tax with provincial taxes, and faced off with a B.C. government unwilling to let Ottawa negotiate alone with Washington over West Coast salmon quotas. Moreover, the provinces feel Ottawa betrayed them by changing the terms of the greenhouse gas emissions strategy that Canada took to last fall’s UN climate change conference in Kyoto, Japan.
While relations between Quebec and Ottawa have long been prickly, the worrisome thing for federalists is that suddenly Ontario Premier Mike Harris is sounding equally cantankerous. Once it would have been all but unthinkable to see a prime minister and a premier of Ontario publicly trade insults—as has been the case over the hepatitis C compensation package. “This is the crassest kind of political opportunism,” complained an aide to federal Intergovernmental Affairs Minister Stéphane Dion.
Has co-operative federalism run its course? Savoie suggests it is the victim of a federal government without the funds to establish national policies and provincial governments jealous of their jurisdictions. That prospect does not bode well for the spate of upcoming federal-provincial negotiations—on everything from a national home-care plan to managing greenhouse gas emissions. And today’s tensions may be teaching tomorrow’s leaders to be even warier of federal-provincial relations. After all, Canada’s next prime minister could be either Finance Minister Paul Martin or Rock—two politicians who have already learned the hard way about the pitfalls of risking their political capital on dealings with fractious provincial governments.
The story you want is part of the Maclean’s Archives. To access it, log in here or sign up for your free 30-day trial.
Experience anything and everything Maclean's has ever published — over 3,500 issues and 150,000 articles, images and advertisements — since 1905. Browse on your own, or explore our curated collections and timely recommendations.WATCH THIS VIDEO for highlights of everything the Maclean's Archives has to offer.