Finance Committee on May 17th, 2012

[The Chair, Conservative, James Rajotte]

I'm going to attempt to clarify this again, because it is a question of whether provinces are adjusting based on what the federal government has done

Mr. MacDonald, when you talked about provincial increases in their health care budget, you had a number of figures. Can you just read those again for the committee?

[Daniel MacDonald]

This is a series of figures from various budgets where specific spending targets were identified in the area of health care—not all provinces identified a specific target.

Prince Edward Island, in the 2012-13 budget, indicated that they'll cap health care spending at 3.5% in subsequent years. Nova Scotia, though it didn't provide a specific restraint target, did indicate that it has reduced health care administration costs to below the national average and has cut the rate of growth of health spending. New Brunswick said in their 2012-13 budget that health spending is projected to grow by just 3%, and can be managed to further reduce growth while focusing on priority improvements financed within the current system. Quebec, in budget 2010-11, shows a heath care funding growth target of no more than 5% annually, and this was reiterated in budget 2012-13. Ontario targets reduced health spending growth of 2.1% annually over the next three years. Manitoba indicated, although no specific target was identified, that they would manage spending in the health care system by increasing efficiencies and legislating a cap on administrative costs for regional health authorities. Saskatchewan targets a health care budget increase that is less than the increase in provincial revenue growth by March 31, 2017, based on a rolling five-year average. British Columbia provided no specific restraint target, but mentioned a 3% average annual growth in health care spending.

That would be the sum of it.

[The Chair, Conservative, James Rajotte]

I appreciate that very much. You have 3.5%, 3%, 5% in Quebec, 2.1% Ontario. The health accord agreement expires in 2014, but what we're doing is increasing by 6% in 2014-15, 2015-16, and 2016-17. We're increasing by 6% until 2017, and provinces are capping at 2% over the next three years. I don't quite understand that argument. Then in 2017-18, it's a moving average of nominal gross domestic product.

I want to clarify this—I think this is important for the committee. It is 6% until 2017, according to the budget and this legislation, and provinces can plan on this until 2017. You've correctly indicated that none of the provinces are spending up to that 6% year-over-year increase. I appreciate that clarification.

We'll go to Mr. Marston, and then Mr. Brison.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I think it's fair to say that a large chunk of the government costs are with the OAS and the transfer. At this point, the word would be that the federal government is seeking to stabilize the liabilities, especially after 2017, with this new model. I'm not going to critique that part of it. But I would think if that's the case, based on a reasonable increase to gross domestic product, there would be some pressure taken off the federal government in the area of the transfer.

Would you agree with that?

[Daniel MacDonald]

Sorry, can you repeat the last part of that question for me, please?

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

As we go forward, year to year, there are generally increases to the gross domestic product that are projectionable. At some point it's 2%, other times it's 3%, and other times it's even down to 1%. There's a flow of that and there's growth to the government over a period of time. So if you have a change where they're no longer giving the 6%--and I understand that--from that time forward in particular, would you say that some of the pressure has been taken off the liability, for lack of a better word, of the government?

[Daniel MacDonald]

As I said before, as the minister stated, it indicates this is a level that reflects taxpayers' ability to pay.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I don't dispute that.

What I'm really saying is that the relationship between the dollars coming in, generally speaking, and the costs going out will be stabilized because it will be linked to the GDP average. So at that point, instead of 6% they could conceivably have 2.5% that they're giving from that time forward. Would that be a reasonable assumption?

[Daniel MacDonald]

It depends on the—

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Of course it depends on factors.

[Daniel MacDonald]

—numbers relative to the fixed point as a percentage.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I'm only using that as a hypothetical example.

At that point there's then a saving to the government of 3%, or approximately that. Would that be a reasonable assumption?

[Daniel MacDonald]

In this specific case—

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

Relative to today.

[Daniel MacDonald]

—it would, yes.

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

This kind of strays, Mr. Chair, a little bit.

From my perspective, we know from a second report released by the PBO today that they're saying that he believes OAS is sustainable, principally because of the changes to the transfer. As I've said, some of the pressure is taken off here to allow for some of the pressure.

Would that be a fair statement?

[Daniel MacDonald]

I haven't had the luxury of reviewing the report, but—

[Wayne Marston, NDP, Hamilton East—Stoney Creek, ON]

I'm not trying to put you on the spot.

Mr. Caron would like to take the rest of my time.

[The Chair, Conservative, James Rajotte]

Okay.

Two minutes.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I believe I will be quicker than that.

I would like to go back to the list you just read about the ceilings the provinces are setting for the next fiscal year. Is that in fact province by province? Is that the list you just read? Are those estimates, projections?

[Daniel MacDonald]

Targets.

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Were those projections, those targets, known to the government when the decision to set a ceiling of 6% for three years and 3% for the following years was announced?

[Daniel MacDonald]

I can tell you that the actions that provinces took prior to December 2011 were known to the federal government, and we did have the—

[Guy Caron, NDP, Rimouski-Neigette—Témiscouata—Les Basques, QC]

My question concerns the targets that the provinces have announced.

We know that the provinces are trying to lower their costs. However, I'm talking about the targets that the provinces have set for themselves. Was this list, which you just read, known to the government when it was announced that transfers would be limited to 6% for three years and subsequently to 3%?

[Daniel MacDonald]

Unfortunately, the list I have in front of me isn't comprehensive about the date on which we knew each individual one.

As you know, I'm looking at Quebec, which dates to 2011. I know we knew about that. I know we knew about Ontario. My memory doesn't serve which ones we also knew about. Most of the ones I read out are the latest we had.