Finance Minister Jim Flaherty is meeting with his provincial counterparts in Victoria on Monday, and the future of federal funding for health care and pensions is expected to dominate the discussions.
Flaherty said he will take the opportunity to outline long-term plans for federal health transfer payments to the provinces and territories in the talks, but he wouldn't disclose dollar figures.
"The provinces need to plan," Flaherty said from the B.C. capital. "The federal government needs to plan, and the territories need to plan. They need to know what's coming down the road. This is very important in terms of fiscal planning."
Pensions and fiscal sustainability will also be on the agenda for Monday's meeting, he said, but discussions about the health-care transfers will dominate.
The federal government is currently committed to increasing health transfers by six per cent annually until 2016, and Flaherty has pledged not to cut health spending or reduce social transfer payments.
Keep escalator, premiers say
Officials from four provinces told The Canadian Press they are united in insisting the new accord, which takes effect after 2014, should continue with the current six-per-cent escalator.
Ideas recently proposed on Parliament Hill about the federal government's plans with respect to health transfers have made some provinces nervous.
"It's probably the single most important issue facing federal-provincial relations today," Nova Scotia Finance Minister Graham Steele said in an interview Sunday with CBC News before he attended an informal dinner with Flaherty and his provincial counterparts.
Ontario Finance Minister Dwight Duncan said his government is eager to negotiate the details of a new health deal.
It's time to "seriously debate and discuss how it is we are going to ensure Canadians still have access to the best quality, public health-care system," Duncan told CBC News on Sunday.
Provincial sources said they have been told the objective is to link transfers to nominal, inflation-adjusted growth, which is estimated to be in the neighbourhood of 4.5 per cent.
'It's probably the single most important issue facing federal-provincial relations today.' — Nova Scotia Finance Minister Graham Steele
The prime minister has been non-committal on the issue, only noting when asked Friday that health transfers have climbed to $27 billion a year from $19 billion under his watch.
"We will honour the health accord and we will ensure that there are increases into the future that are sustainable and that work to sustain the health care system that we're all going to depend on," Stephen Harper said.
It's also likely the provinces, particularly Ontario, will repropose expansion of the Canada Pension Plan.
Pooled pension plans
Most provinces expected the main discussion to focus on a voluntary savings vehicle known as pooled registered pension plans or PRPPs.The vehicle comes in the place of a direct expansion of the CPP, which Flaherty has rejected. It's designed for small firms that can't afford to offer their workers pension plans.
Quebec says it wants the plans made mandatory on firms with more than 10 workers, and some provinces are considering making participation by employees mandatory as well. The Canadian Federation of Independent Business has also asked the ministers to give the voluntary pooled plans a chance.
Trial balloons about the federal government's future plans with respect to health transfers, have made some provinces nervous.
One floated in Ottawa last week had the federal government looking to limit increases in health transfers by linking it to GDP growth after 2016.
According to Duncan, anything below a six per cent annual increase in health transfers "is going to put huge pressure on the health care system that will mean effectively that Canadians will not have the same access that they have today."
"If they go down to the rate of inflation, it means they'll be transferring about $28 billion less to the provinces over the life of a 10-year accord than they are presently," Duncan said, adding "$10 billion of that would hit Ontario directly."
"It would mean direct cuts," Duncan said.
Premiers weigh in
Atlantic premiers were also quick to criticize the idea, pointing that tying health transfers to GDP growth would leave them with half of what they currently receive.
Nova Scotia Premier Darrell Dexter said a lot has changed in health care since the accord was signed in 2004.
"Our health care costs over the years has outstripped the escalator itself. That means the percentage of funding from the federal government actually declined."
Saskatchewan Premier Brad Wall said his province planned to pitch an idea that would tie some dollars to innovation.
"Take the nominal GDP and say that's for core health-care funding and whatever is left over, the provinces should use for innovation," Wall said.
For her part, British Columbia Premier Christy Clark said the provinces do have to work with Ottawa and show some flexibility.
"I want to make sure the federal government is making the biggest contribution that they can toward supporting our health care system, but I recognize provinces have a big responsibility to make sure we spend that money well," Clark said.
Duncan said he wants to know "what the federal contribution is going to be, over what period of time, and how do we ensure sustainability."
"My hope is that we can actually get the next accord done by this time next year," Duncan said.
The premiers are expected to compare notes and see whether they can forge a common front in their negotiations with Ottawa at a special meeting in January.