[CUPE healthcare list] REAL POLITICS / FINANCE MINISTERS HEAD FOR A SHOWDOWN WITH OTTAWA

[Jennifer Whiteside <jwhiteside@cupe.ca>]

REAL POLITICS / FINANCE MINISTERS HEAD FOR A SHOWDOWN WITH OTTAWA

The Globe and Mail 
Mon Dec 20 2010 
Page: A4 
Section: National News 
Byline: Karen Howlett 

Canada's provinces are bracing for a showdown with the Harper government when finance ministers meet in Kananaskis, Alta., on Monday. Provincial ministers will present a united front in a potentially divisive debate over a federal funding accord for health care set to expire in 2013-14. They will push federal Finance Minister Jim Flaherty not to apply the brakes to transfer payments.

But on other agenda items, don't expect the provinces and territories to speak with one voice. In fact, there will be plenty of discord among the regions over such thorny topics as tackling deficits, a proposed national securities regulator and pension reform.

STOP LECTURING ME

Mr. Flaherty set the tone for the meeting by telling the country's provincial governments last week to speed up their plans to eliminate their deficits and balance their books by 2015.

That did not go over well with Ontario Finance Minister Dwight Duncan. He is grappling with a projected deficit of $18.7-billion for fiscal 2010-11, the largest of any province, and is expecting Ontario to remain in the red until 2018.

Before he starts telling others what to do, Mr. Duncan said, Mr. Flaherty should do a better job of managing his own financial affairs. He said Ottawa has continually understated the size of its deficit, now pegged at $55.6- billion.

"I don't think the pot should call the kettle black when it comes to deficits," Mr. Duncan said. "The fellow with the biggest deficit shouldn't be the one lecturing me."

On this point, Mr. Duncan could end up as the odd man out among his provincial peers. Other finance ministers said Mr. Flaherty has every right to set overall fiscal direction for Canada's provinces and territories.

Alberta Finance Minister Ted Morton suggested that if Ontario and Quebec do not get their deficits under control, Canada could head in the same direction as the European Union, where leaders are grappling with countries threatened by a debt crisis.

DIVVYING UP THE PIE

Mr. Flaherty will feel the heat from provincial ministers as they urge him not to curtail federal transfers for health care. The transfers are crucial because about 20 cents of every dollar the provinces spend on health care comes from Ottawa. They are slated to receive annual increases of 6 per cent until the Canada Health Transfer program expires in fiscal 2013-14.

Mr. Flaherty has hinted that he wants to tie the increase in transfers to inflation and economic growth, both of which are projected to remain in the range of 0 to 2 per cent in coming years.

The provinces will fight hard against that. Mr. Morton also runs the risk of igniting tensions with other provinces because he will argue that Ottawa is short-changing Alberta. His province receives lower per capita funding for health care than other regions, he argues.

Mr. Duncan said Canada's governments need to confront the challenges facing health care, which currently consumes about 40 cents of every dollar the provinces spend on programs.

"The discussions are going to be difficult. They are going to be chock full of controversy," he said. "But we can't shirk the debate."

BICKERING MINISTERS

Mr. Flaherty will have few allies around the table when he discusses his plans to create a national securities regulator. Only Ontario enthusiastically supports replacing Canada's 13 provincial and territorial regulators with a single entity. British Columbia and Nova Scotia are on board, but their support is conditional. Three provinces - Alberta, Manitoba and Quebec - are staunchly opposed.

Mr. Duncan warned last month that the plan is "falling apart." Alberta and Saskatchewan have had preliminary talks about the creation of a western regional regulator. And Nova Scotia has set out five conditions for supporting a single regulator, including compensation for lost revenue of about $10- million a year, and recognition that the province has jurisdiction to regulate securities markets.

"We don't want the federal government to assert exclusive jurisdiction over securities," said Nova Scotia Finance Minister Graham Steele