Averting National Bankruptcy

Jim Flaherty acts conservatively:

But Flaherty caught his provincial counterparts off guard, handing them a set 10-year revenue-sharing plan and saying later there would be no negotiations. “They would want more, of course,” Flaherty said of the provinces. “And that’s what they mean by negotiations, that it should always be 6 per cent forever, even if the economy is only growing at around 2 per cent,” Flaherty told CBC-TV.

With health transfers to the provinces at nearly $27 billion this year, the Harper government says Ottawa cannot afford to continue with annual funding increases that are not linked to economic growth and the level of government revenues.

The provincial governments are apoplectic. How dare the federal finance minister not give them whatever they want! For the moment this is, as Ontario's Dwight Duncan noted, a unilateral offer. It's not a deal and it is likely just a starting point in the political negotiations. Whether Mr Flaherty and Mr Harper have the intestinal fortitude to battle with ten provincial governments, the Tommy Douglas' worshiping MSM and panicky voters remains to be seen.

Jason Clemens and Brian Lee Crowley note:

First, they told the provinces that Ottawa is not an ATM and would not continue to enable their undisciplined spending behaviour through ever-growing transfers. Finance Minister Paul Martin didn't just stop increasing the transfers for health and social services - he cut the absolute amount transferred.

Second, and crucially, however, the Liberals provided the provinces with greater flexibility and autonomy in designing, regulating, and providing social welfare. They did this by removing conditions attached to federal social transfers and eliminated most national standards for social assistance. Less money coupled with greater autonomy and flexibility meant that the provinces had the power and incentive to actually solve welfare problems.

The Grits did not extend the same freedom in health care, due to its sacred cow status, and the last sixteen years have seen stagnation in reforming Medicare. The Flaherty plan would still have the government throw a lot of money at our health care system. The current plan, drawn up by Paul Martin and the provincial premiers in 2004, is simply a higher level of extravagance. Canada, as Crowley and Clements note, has one of the most expensive health care systems in the world. Money isn't the problem, it's the system.

As I've noted before, the Canadian health care system is unlikely to be reformed directly. A politician openly questioning the public policy logic behind Medicare would be skinned. Since fiscal reality is, ultimately, inescapable and politicians are a slippery lot, another route will likely be taken. Medicare will be reformed through delisting, previously covered health care services being pushed out into the private sector. The system will "de-evolve" back to its origins as a last resort for catastrophic illness or accident. 

That process could take years, even decades. Minister Flaherty's tightening of the spigot may help speed up the process. Politically he has staked himself the fiscal high ground: Rein in spending or we wind up like Greece. The provinces will scream that this is a cut, a lie the MSM will be complicit in propagating. Harper Tories Cut Health Care! Expect a ten part series in the Star about overworked nurses in the new year. 

Increasing spending at a rate in line with economic growth and inflation is not a "cut." A cut is a reduction, not an increase at a lower rate than hoped. Language is the first casualty of politics. The proposed restraints by Minister Flaherty are, well, sensible, so far as anything in the upside down world of socialized medicine can be described as "sensible." 

A decade ago I would have suspected that Flaherty was on a fool's errand. The public will never tolerate such a "cut." Times have changed. The fiscal situation is bleaker and the voters are fatigued with provincial-federal bickering. The Premiers have been crying poverty for so long that it ceases to have much resonance. The emergence of alternative media, from humble blogs up to outlets like Sun News, mean that the MSM echo-chamber no longer has its traditional monopoly. 

Take this little trick, from our friends at the Red Star:

Ontarians will face reduced health services later this decade under Prime Minister Stephen Harper’s plan to scale back Ottawa’s transfer payments to the provinces as of 2017, warns Dwight Duncan.

Most people don't read an article, they scan it. If you're only catching every other word you might just miss that the above is not a statement of fact, but merely the opinion of the Liberal Ontario Finance Minister. There are no quotations marks. This is a common trick for the MSM, used even more frequently in television, a medium conducted with the ADD addled viewer in mind. 

Repeating certain key words, like "cut", followed by "Prime Minister Stephen Harper" and the inattentive will begin to think that the PM is advocating a cut. Since it is a common theme in the MSM, as well as the school system, that Conservatives are "cutters" who care more about money than people, it's a repetitive messaging that dovetails with preconceived notions.

How many Canadians know that, over the last thirty years, federal Liberal governments have a better track record of balancing budgets than Conservative ones? Or that Mike Harris' "vicious" cut backs on social spending were driven in large part by the Paul Martin directed cuts in transfer spending. It isn't that the media has lied, so much that they have positioned the truth in such way as to be easily overlooked. 

Mr McGuinty and Mr Duncan are hoping the truth of Medicare's extravagance will continue to be overlooked. Here's to hoping otherwise.

 

Comments

[Patrick Bramwell]

An excellent analysis of Mr Harper' and Mr Flaherty's strategy. It is prudent, plausible and constitutionally correct.

I would argue, though, with your suggestion as to how to reduce health expenditures. By all means de-list some of the highly questionable services such as so-called "traditional Chinese medicine", chiropractic and other daft alternatives. These have a negligible effect on spending, I'm afraid (which, incidentally, is what the proponents of such quackery say to defend continuing public financing!).

The real rise in costs can first be traced to the continuing shift of what are really non-medical services and obligations onto the healthcare budget. The costs to health care centres of providing complete French services once their catchment area show +5,000 francophones in the most recent census is one example. The vast growth of social workers, pastoral counselors and alternative medicine practitioners is another. And, second, in every province the alarming rise of administrations. In Alberta there are now Vice-Presidents of almost everything in the "new" Alberta Health Services monolith, many with little if any experience in health care, most pitifully anxious to demonstrate through a blizzard of impractical and unrealistic new rules and regulations (with a distinctly authoritarian edge to them) that their inflated salaries are justified.

The people who are closest to patients: doctors and actual practicing nurses, are steadily being marginalized by the managers who, deluded by their own titles, believe "they know best".

[MIkhael Berry]

Go to any big city hospital.
Look at who is populating our beds. Ask yourself, how many of those seniors speak English or French, how many have been in this country for more than 10 years, and how many have paid A CENT in any tax except sales tax.

Our "free" healthcare is being abused on an epic scale by people who should have no right to it. They get ICU beds for months at a time, and actual Canadians have to wait 12 months for a knee replacement.