Monday, December 19, 2011

Cooperative federalism in action

Updated 8:15 p.m. below.

As exercised by one of our intrepid cabinet ministers:
Mr. Duncan described the provinces as being blindsided by Mr. Flaherty behind closed doors. “He put the document in front of us and said, ‘This is the way it's going to be,’” the Ontario Finance Minister said. “We all kind of paused; we all looked at each other.”
Oh to be a fly on the wall in that room. Welcome to the majority government roll out of Harper's federalism!

The health care deal from on high runs until 2024, when we may possibly be driving flying cars or commuting with jet packs, who knows.
Mr. Flaherty told reporters health transfers will continue to increase at 6 per cent a year until 2016-17 before moving to a system that ties increases to the growth in nominal Gross Domestic Product, which is a measure of GDP plus inflation.

Mr. Flaherty noted that nominal GDP is currently above 4 per cent. He also promised there would be a “floor” that ensures transfers will not fall below three per cent during the period of the agreement.
Dwight Duncan states in reaction that this means "removing $36-billion in national support for health care."

Wonder what else is going to be tied to GDP growth? This is a new formula that is being applied to how government services should be measured and something that deserves some scrutiny. We are, by many accounts, heading into a low growth era. While it may sound quite prudent, tying health care funding to economic growth might prove to be a flawed mechanism. It might make sense for more discretionary spending but not core government services.

Update (8:15 p.m.): From CBC's report:
The provincial and territorial ministers were informed of the new federal formula over lunch.

Six of them lined up to speak out against the decision, citing a lack of negotiation with two years left to reach a new agreement.

They also complained that they didn't expect to be handed the new funding arrangement at this round of talks — they thought they were going to touch on how the talks would be set up.

Flaherty said there was one hour set aside to discuss the 2015-24 health transfers.
It's hard to understand why the federal government would be so high handed with a few years to go before the present accord expires. One hour of discussion on such a major issue, practically cutting out the major stakeholders in the decision making, seems quite negligent.