Queen’s Park should draw attention to healthcare spending

If there’s one thing Canadian politicians agree on, it’s this: our healthcare system needs more money. With overcrowded emergency rooms, long waiting times, and too few staff, healthcare is in a critical state. We need to save patients, and that’s going to require cash transfusions.

So which level of government should come to the rescue?

Canadian prime ministers have been crying out for poverty for several years now, demanding billions of dollars from Ottawa. We’re at a point where the casual observer might think healthcare is primarily a federal responsibility.

Not this one. That’s the province’s responsibility. And some provincial governments—Queen’s Park, I’m looking at you—are not meeting their obligations to pay.

In Ontario, that became crystal clear Tuesday when the Office for Financial Accountability (FAO) released a pre-budget review of provincial finances. One of the main conclusions of this report is that the province is underfunded for vital services.

The biggest shortfall will be in health care, FAO said. Under the current plan, funding for healthcare over the next three years would be $5 billion less than needed just to maintain existing programs.

Health care is already underfunded, but with this kind of budgeting, programs will be cut, not fixed.

Meanwhile, our finance minister hoarded $19.7 billion in “overfunding” over three years. FAO estimates that most of this money is in emergency funds that are not allocated for any particular purpose. That’s easy enough to make up for shortfalls in underfunded areas like health, education, justice, and post-secondary education.

You wouldn’t know it from listening to Queen’s Park, but Ontario’s finances are in great shape right now. Following last year’s $2.1 billion budget surplus, FAO predicts the province will run a small deficit this year but then a surplus next year and beyond.

The big measures of fiscal health are all moving in the right direction. The provincial debt is shrinking relative to the size of the economy. The cost of paying interest on debt, relative to income, also fell.

Ontario remains a wealthy province. We are very capable of pulling our weight on health care.

Of course there are good reasons for federal health funding, including to ensure that all provinces can meet high standards of care. But Ottawa reserves the right to hold itself accountable for public money. It is correct to attach conditions to federal funding.

According to news reports, one concern of federal negotiators is fundamental: they want guarantees that federal dollars for health care will actually be spent on health care.

In terms of drafting a bilateral agreement with Ontario, this is no small matter. Since being elected in 2018, the current government in Queen’s Park has implemented more than two dozen tax cuts, tax credits and fee cuts. These changes cost at least $8.2 billion a year from the provincial coffers. That money – or some of it, however – could easily go toward health care.

Apparently not.

Last summer, the federal minister for intergovernmental affairs Dominic Leblanc laid out the federal view in plain language: “We are not going to increase federal spending to the provinces on health care so that they can then reduce their own spending,” he said. In a sharp reference to Ontario, he added that federal health care dollars should not be spent “sending checks to people on election night.”

If reports are accurate, it now appears that any bilateral agreement between Ontario and Canada would require the province to at least maintain its current (perhaps inflation-adjusted) spending levels. That’s not a high bar. Ottawa could do more, especially in terms of blocking the province’s plans to siphon public funds for private gain. We’ll see.

Regardless of what happens next, however, one thing is clear: when it comes to healthcare spending, Ontario needs to start pulling its weight.

Sheila Block is a senior economist in the Ontario office of the Canadian Center for Policy Alternatives.