By dramatically changing the health care funding formula, is Prime Minister Stephen Harper showing little concern for the future of the Maritime provinces?
The Health Accord “deal” that Harper practically threw in the face of the provinces and territories this week, not only cuts health funding for all the provinces starting in four years, but threatens to further widen the growing standard-of-living chasm between the “have” and “have not” provinces.
As their meeting ended in Victoria on Tuesday, the premiers vowed they will pressure the Conservative government to change the least equitable aspects of the so-called take-it-or-leave-it “agreement”. But what if the sometimes stubborn Harper government refuses to give much ground?
All citizens of the Maritimes – not just the governments – would have good reason to vehemently protest the new agreement because the provinces that would likely lose the most in the long term are Nova Scotia, New Brunswick and Prince Edward Island.
Increase in cost of living
If the 2016-17 part of the agreement goes into effect, the cost of living will increase in the Maritimes, and this will be another blow to the region’s problem of too many people leaving to live elsewhere in the country.
Parliamentary budget officer Kevin Page said in his evaluation of the agreement that, by going to the GST-based formula, the Conservatives plan to download onto the provinces perhaps as much as $31-billion by 2024.
Future federal payments will be based largely on the growth of each province’s GDP — the gross domestic product: the market value of all goods and services produced within a province during a year. The Royal Bank has predicted GDP rates for the provinces for 2012 and if by chance, these increases were to be the same in the period starting 2016-17, the four western provinces would receive health care expenditure increases roughly double those for the Maritime provinces.
Projected GDP increases for have provinces for 2012: B.C. 2.3 per cent; Alberta 3.9; Saskatchewan 4.2; and Manitoba 3.2.
Projected GDP increases for the Maritimes: 1.8; New Brunswick 1.8; Nova Scotia 1.6; and P.E.I. 1.9.
The result will be that once again many more millions of dollars will go to the already rich western provinces compared to payments to the Maritimes.
This means huge additional costs for the Maritimes and, combined with other factors, could be the straw that breaks the camel’s back in terms of more people making the tough decision to move to a more affordable part of the country.
A comparison of some facts about have-not Nova Scotia and have-province British Columbia indicate why thousands of people already leave the Maritimes.
Unemployment rate: Nova Scotia 7.8 per cent (plus thousands discouraged from being listed) British Columbia: 7 per cent. Conclusion: it’s much harder to get a job in Nova Scotia.
Consumer Price Index: Nova Scotia food: 135.9 B.C. food: 126 N.S. Shelter 132.2 B.C. shelter: 114.5 Overall index: Nova Scotia 124 B.C. 117.5 It is quite a bit more expensive to live in Nova Scotia.
Average hourly wages (mostly skilled): N.S.: $20.57; B.C. $23.51 (Employees earn on average $3 more an hour in B.C., but live more cheaply.)
Because of these and other factors, Nova Scotia already experiences a serious exodus of people. A TD Bank report in January 2011 said that during the years 2007 to 2010, Nova Scotia’s net loss of people to other provinces was 4,640. Incidentally, during the same period, 43,568 people moved from some part of Canada to British Columbia.
Unfortunately, with Nova Scotia having to shoulder the additional health costs in a very few short years, it is likely that many more people will be tempted to go west, leaving the province with too small a population base to develop as it would like.
And if this were not enough, the Harper government may want to make additional changes that would further damage the financial picture for the Maritimes.
For decades federal governments spent billions-of-dollars supporting economic development in poor parts of the country in an attempt to maintain some semblance of equality of opportunity and standard of living across the country.
Big change with Harper in command
But there is now a dramatic change in the attitude in Ottawa. For Stephen Harper it all comes down to, you guessed it, right-wing ideology. Tom Flanagan, a former Harper mentor, embraces the return of “classical federalism” to Canada:
“In the Canadian context, the revival of classical federalism is an essential part of classical liberalism (i.e. neoliberalism), with emphasis on smaller government, lower taxes and balanced budgets,” Flanagan wrote in The Globe and Mail. “It is good news that Stephen Harper’s Conservative government is now moving incrementally toward both classical federalism and classical liberalism.”
The Harper government believes that what happens in the marketplace should decide the fate of our country. So, if it is “bust” in P.E.I. when it’s “boom” in Saskatchewan, people should move west. That’s the law of the marketplace.
The neo-liberal ideology being implemented by the Conservatives may mean they will also want to fiddle with equalization payments: money transferred to the less prosperous provincial governments “to provide their residents with public services that are reasonably comparable to those in other provinces, at reasonably comparable levels of taxation.”
Nova Scotia, one of the provinces that receives the most under the concept, will receive a transfer payment (under the Atlantic Accord) in 2011-12 of $1.268-billion – a huge amount of money for the province.
Perhaps luckily for the Maritimes, the concept of transfer payments was enshrined in the Constitution in 1982, but this will not stop the Harper government from trying to compensate for the payments in one way or another.
If Harper gets his way in bringing a near-total market-driven economy to Canada, we could very well end up with a two-tier country — one for the rich and one for the poor.