Finance Committee on May 8th, 2018

[Michael McLeod, Liberal, Northwest Territories, NT]

Thank you for that response. I realize it's not in the BIA, but I'm really trying to get some clarity on the issue.

Why would Yukon and the Northwest Territories be the only two territories receiving transition payments?

[Galen Countryman]

That is because, under the simulations that we ran, we found that only those two provinces would be negatively impacted. Nunavut, actually, would be positively impacted by the changes we're proposing.

[Michael McLeod, Liberal, Northwest Territories, NT]

I'd like to ask you how the proposed transition payments to both Yukon and the Northwest Territories were calculated.

[Galen Countryman]

They were calculated using a rather complex model, but looking at the technical changes that we were making to the territorial formula financing program, we made estimates using 2017-18 payments. If we applied these changes, how would those TFF payments change? We found that for Yukon and Northwest Territories, the payments did fall ever so slightly, so the government has proposed to compensate the territories on that basis for the renewal period.

[Michael McLeod, Liberal, Northwest Territories, NT]

Is that what triggered or motivated the federal government to renew the equalization program and the funding formula for the territories?

[Galen Countryman]

Under the current legislation, the authority to make the payments expires on March 31, 2019, so we have to make a renewal and there's a time limit. It's normal for the program to be renewed every five years.

[Michael McLeod, Liberal, Northwest Territories, NT]

Could you just maybe give us a little more information on the reimbursement for the health transfer? What was it for, how much, and what period did it cover?

[Gigi Mandy, Executive Director, Canada Health Act Division, Strategic Policy Branch, Department of Health]

It's not for any particular reimbursement. Under the Canada Health Act, deductions can be made to a province or territory if they permit extra billing or user charges within their jurisdiction. In that case, the minister of health is obligated to take a mandatory penalty equal to the amount of the extra billing or user charges charged to patients.

Those deductions are currently not reimbursable to a province. This would propose to allow the amount deducted to be reimbursed to a province if a province has taken corrective action and eliminated the cause of the problem that led to the deduction in the first place. It's to provide a positive incentive for provinces to take corrective action.

[Michael McLeod, Liberal, Northwest Territories, NT]

Will this provide the information that's required, and there are no other issues that will cause delay in the funding?

[Gigi Mandy]

There shouldn't be, no.

[The Chair, Liberal, Wayne Easter]

Thank you.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

My comments are along the same lines.

Normally, we make corrections to a piece of legislation to try to fix a problem. In this case, it is to address the problem of provinces not upholding the principles of the Canada Health Act.

Does the current legislation not say that the government can reduce or keep funds until the province complies with it? Does this really solve a problem or was this already possible previously?

I think that, in English, the legislation states:

“reduced or withheld”.

What problem are we fixing, if we could already withhold funds?

[Gigi Mandy]

You're correct. The government already has the ability to reduce or withhold monies under the Canada health transfer—what we refer to as “deductions” against a province. This is to allow that money to be refunded to the province after it has taken action to eliminate the problem that led to the withholding or reduction in the first place. Right now we have only a negative incentive.

If provinces are not in compliance with the Canada Health Act, money can be withheld or not given to them. This would put a more positive incentive in place, such that if they were subject to withholding of money but then took the corrective action to bring their province back into compliance with the Canada Health Act—eliminating charges to patients, for example—they could get money back, and it could be put back into their health care system.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Okay. I thought “withheld” was already a term that means that you withheld it and then, when you're okay to go, you give it to them.

[Gigi Mandy]

That's not currently available under the Canada Health Act. It was during the first three years that the Canada Health Act was in effect from 1984 to 1987. The act was brought in specifically to eliminate patient charges, and provinces were given three years to do so because they recognized they would have to change their legislation and their governance regimes, but if they did so—and all the provinces that were not in compliance did so—they got the money back. Since 1987, we haven't had that ability to refund monies that have been withheld.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

How far back in time can you go?

[Gigi Mandy]

It just starts with the 2017-18 fiscal year and, as deductions are normally taken in March, the ones that were taken in March of 2018 will be the first ones eligible to be refunded should a province come into conformance.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

As we speak, how much does this amount represent, the deductions to provinces?

[Gigi Mandy]

In March, there were deductions taken from two provinces totalling $26 million.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Okay, so is there money that will be earmarked by the finance department to make sure that when the province will comply, money will be ready to go and earmarked for that reason?

[Galen Countryman]

With this legislation, it will be a statutory provision, so it would automatically be a statutory cost. The economic and fiscal statements will be updated, and if there is a reimbursement, it will happen in that year. It would be under statute, so this would be a statutory authority to make the payment.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Okay.

[The Chair, Liberal, Wayne Easter]

Thank you.

Mr. Kmiec, go ahead.

[Tom Kmiec, Conservative, Calgary Shepard, AB]

I was going to ask questions, but Mr. Dusseault's questioning—

Will these changes materially change the total equalization and transfer payments being given right now to the provinces?

[Galen Countryman]

No. The total aggregate amount of equalization is set by formula. The total aggregate amount for all recipient provinces grows by the growth in gross domestic product, so that amount does not change.