A healthy deal for Manitoba?

After a long fight over future joint funding of health care in this province, on Aug. 21, Manitoba became the last province to sign a deal with the federal government. But what should Manitobans make of the recent agreement?

Difficult to say definitively whether Manitoba got a fair health deal, or if premier paid for stubbornness

Manitoba Premier Brian Pallister, centre, with Prime Minister Justin Trudeau (far left) and other premiers at the closing press conference of a first ministers' meeting in Ottawa on July 21. Although Pallister's government was the last to sign on to a federal health deal, Manitoba officials claim no lasting damage to intergovernmental collaboration was done, says Paul Thomas. (CBC News )

After a long fight over future joint funding of health care in this province, on Aug. 21, Manitoba became the last province to sign a deal with the federal government.

So, what should Manitobans make of the recent agreement? Did Pallister obtain a fair deal or did he pay a price for his alleged stubbornness? 

Both the context and the content of the deal make it difficult to provide completely objective, clear, concise answers to these questions.

Of all the many joint federal-provincial policy fields, health care is the most politically sensitive because it so personal, involving potentially life and death matters.

In announcing the deal, Canada and Manitoba had different political messages that they wanted to send. This led to the unusual situation of two news releases announcing the deal — one from Manitoba's health minister and a second joint news release — that allowed each government to stake out their positions.

Different messages from feds, province

The Trudeau government wanted to claim that it had negotiated a pan-Canadian health accord to replace an earlier decade-long accord established by a former Liberal government. That accord expired in 2014 and was not renewed by the former Conservative government of Prime Minister Stephen Harper.

Philpott thrilled Manitoba has signed health deal

5 years ago
Duration 1:27
Health Minister Jane Philpott announces the completion of the targeted health funding agreement now that Manitoba has agreed to a 10 year deal for home care, and mental health and addictions.

In contrast, Manitoba wanted to send a strong message that the proposals from the Trudeau government did not, in fact, provide sustainable federal funding to meet rising health costs being faced by provincial governments. In its news release, the provincial health minister insisted that it was simply signing a bilateral agreement, similar to those signed earlier by other provinces.

Implicitly, it denied that it was joining a national accord because there was no permanent resolution of the central concern that prompted the months-long holdout. Also, Manitoba reserved the right to continue its fight for higher, sustainable funding from the national government.

Increase in health transfer a sticking point

A further complication arises from the multi-dimensional, complex and technical nature of federal-provincial financial relationships in general and in the health transfer field in particular. 

The future annual rate of increase in the amount of the federal money transferred to the provinces under the Canada Health Transfer (CHT) was the principal reason why Manitoba was the last province to sign an agreement with Ottawa.

The CHT is based on legislation passed by Parliament. It is a general health transfer that is not earmarked for spending in particular domains of health care. It represents the largest amount of money transferred on a continuing basis to the provinces to support health programming.

Justin Trudeau during a campaign stop in Winnipeg on July 23, 2015. During the 2015 campaign, the Liberals promised to negotiate on health care transfers to the provinces. (Jillian Taylor/CBC)

Under the accord that expired in 2014, there had been a six per cent annual escalator. Before it was defeated in the 2015 election, the Conservative government of Stephen Harper had announced a reduction to a three per cent escalator as a way to address its deficit and to pressure provincial governments to curtail health spending that was increasing annually at a six per cent rate.

In the 2015 election the Liberals had promised to negotiate, not impose a new escalator. Once in office the Liberal government proposed that the CHT would grow in line with a three-year moving average of the nominal gross domestic product, with funding guaranteed to increase by at least 3.5 per cent annually.

An additional sum of money for targeted spending in the health field was also promised.

Pallister provided strong leadership: officials

According to several Manitoba officials, Premier Pallister provided strong leadership in forging a consensus among premiers that the guaranteed 3.5 per cent escalator was not acceptable because it would not keep pace with rising health costs.

For Manitoba, it was estimated that the reduction from the previous six per cent escalator to 3.5 per cent would mean $2.5 billion less from Ottawa over the next decade. This would mean that the Government of Canada would be covering only 19 per cent of health care costs in the province, an inappropriately low level of federal financial involvement, according to the premier.

Solidarity among the provinces/territories was short-lived.

Initially, Manitoba believed it gained leverage in negotiations from denying the Trudeau government its goal of a cross-country deal. However, it lost crucial allies when the larger, more affluent provinces of Quebec and Ontario accepted a deal.

Manitoba Premier Brian Pallister and Prime Minister Justin Trudeau during a July 29 meeting in Winnipeg. Initially, Manitoba believed it gained leverage in negotiations from denying the Trudeau government its goal of a cross-country health-care funding deal, says Paul Thomas. (Jillian Taylor/ CBC)

Another component of the agreement was a fund of $11 billion over a decade of federal money targeted at community/ home care and mental health in the provinces and territories.

Manitoba took mild objection to the federal government setting these spending priorities in the province and argued instead for funding directed to diabetes and Indigenous health.

The eventual agreement signed in August provides for Manitoba to receive nearly $400 million from Ottawa for community/ home care and mental health over the next decade.

Another monetary component of the deal is a small one-time payment of $5 million for the fiscal year 2017-2018 that will be spent on kidney disease treatment and the opioid crisis. 

Finally, the two orders of government agreed to work together, and with Indigenous organizations, to address the serious issues involved with the provision of Indigenous health care.

The announcement of the deal with Manitoba coincided with the signing by the national and all provincial/territorial governments of a "Shared Statement of Principles on Shared Health Priorities" which declared a commitment to collaboration, innovation and accountability.

Essentially same deal as other provinces

It took very tough negotiations to reach a deal. At one point, Manitoba alleged that the political chief of staff to the federal finance minister threatened the withdrawal of a $60-million grant from the National Research Council for a project called Factory for the Future that would support innovation in manufacturing in the province.

News reports suggested the threat was related to the stalemated health talks, but in fact the linkage was to the implementation of a carbon tax, a matter on which Manitoba has also opposed a plan proposed by the Trudeau government.

So what should we conclude about this episode? It was alleged that Premier Pallister risked losing federal money by his intransigence. A newspaper editorial inaccurately asserted that Manitoba lost a half per cent point on its CHT transfer.

The fact is that Pallister ended up with basically the same deal as other provinces. 

Another risk was that the fight might poison relations with Ottawa so as to compromise support for repairs to the Omnitrax rail line to Churchill and the province's requested delay in the implementation of marijuana legalization.

Manitoba officials insist, however, that working relationships remained professional and that no lasting damage to intergovernmental collaboration was done. 

A third risk was that media coverage reinforced the premier's image of being a hardball negotiator prone to inflammatory rhetoric.

Manitobans like to see the two orders of government working together. They don't know or care much about the arcane details of federal–provincial financial negotiations, but the outcomes matter because federal financial support contributes to more and better services in health and other policy fields.

Paul G. Thomas is a professor emeritus of political studies at the University of Manitoba. Conversations with several provincial officials who must remain anonymous corrected some mistaken interpretations and any remaining errors are my own.

This column is part of CBC's Opinion section. For more information about this section, please read this editor's blog and our FAQ.


Paul G. Thomas is a professor emeritus of political studies at the University of Manitoba where he taught Canadian politics for over 40 years. Many decades ago, he developed his lifelong interest in intergovernmental affairs in his first job out of university as a policy analyst for federal-provincial relations in Manitoba's department of finance. He admires both Gary Doer and Brian Pallister.