Thank you.
Thank you for inviting me. I am appearing today in my personal capacity, but also as a professor of political science who has been working for several years on subjects like the architecture of Canadian social programs and transfers, the issues I have been asked to address today.
I will start by saying I was a little reluctant to accept this invitation. I was sceptical about the possibility of a real discussion of a bill like Bill C-38, which is very long and lumps together a large number of very important issues, and which seems to have been passed precipitously. I decided that I could at least come and share that impression with you and comment briefly on the division I was asked to address—and I am glad there is only one: division 17 of part 4, which deals with changes to the Federal-Provincial Fiscal Arrangements Act.
Included in that division are two provisions relating to the Canada Health Transfer. In both cases, those measures had already been announced. The first provision involves allocating the Canada Health Transfer on a strictly per capita basis starting in 2014, and no longer using the value of the tax points transferred in 1977-1978. I will come back to this later. The second provision deals with the ceiling, starting in 2017-2018, on the growth of the Canada Health Transfer, based on economic growth. The two measures are very different, but they reflect the federal government's withdrawal from preserving our health care system, as well as a particular idea about redistribution across the federation.
We will start with the second one, which is probably the most important: the ceiling on growth based on economic growth. I will simply say that in order to evaluate that decision, that measure or approach, we have to understand where we are coming from, in Canada. We have to understand that the role of the federal government in health care funding was originally defined by the idea of the costs being shared equally by the federal government and the provinces.
In fact, there was never really equal sharing, but in 1976, the federal government did contribute 38% of health care costs paid. In 1980, that contribution fell to 25%. It declined considerably starting in 1995. We will recall that this was the year when the federal government took draconian measures to eliminate the public deficit. In 2000, the federal government's contribution to health care funding was a mere 10%. We have gone from a 38% contribution in 1976 to a 10% contribution.
In the first decade of this century, the Government of Quebec established the Commission sur le déséquilibre fiscal, the Séguin Commission, of which I was a member. The commission's purpose was to review all transfers within the Canadian federation. At the same time, the Romanow Commission was proposing that we return to a 25% financial contribution to ensure that the federal government continued to play its role.
By making growth in the federal transfer dependent on economic growth, we are instead moving toward a 19% contribution, which would be a step backwards. This measure is going to create a further fiscal imbalance in Canada and lessen the possibility of the federal government participating in broad policy directions in the health system.
The per capital allocation is also a measure that is far removed from the origins of our health care system. It completely separates needs from funding. It is an allocation that will essentially favour Alberta at the expense of virtually every other province.
In conclusion, I would recommend keeping a link between growth in health spending and the federal contribution, first.
Second, I would recommend that needs be taken into account, possibly by taking into account the number of seniors in the provinces.
With respect to my third recommendation, I have not talked about it, but we could come back to that in the discussion. It is that this also be reviewed in light of the equalization program, on which a ceiling was also imposed in 2008, which makes the mechanics of redistribution much less effective in Canada.
Thank you.