British Columbia Budget 2002 |
One of the major fiscal problems British Columbia has been confronted with over the years is the increasing gap between the cost of funding its commitments for health programming and the amount of federal assistance provided through cash transfers. Indeed, all provinces have been negatively affected by this gap.
In the formative years of providing federal transfers for major social programs, the federal government was a full funding partner of the provinces, sharing costs on a 50:50 basis.
A new type of arrangement — block funding — was introduced in 1977/78. Henceforth, the federal transfer for health care and education would be uncoupled from provincial costs. Instead, it was set to grow in line with growth in the national economy. Unfortunately, only five years after the introduction of block funding, the federal government began to implement a multi-year series of measures designed to reduce its financial commitment.
Years of restraint in transfers culminated in the introduction of the Canada Health and Social Transfer
(CHST) in 1996/97. The CHST combined funding for health care, education and social services into a single transfer, and reduced the overall level of federal support. By 1997/98, the value of the federal transfer to all provinces had fallen by 33 per cent, to $12.5 billion, compared to 1994/95.
The preceding chart, illustrating the 25 year block funding period, reveals the weakness of the growth of the cash transfer in relation to BC's strongly growing health care costs.
With its 1999 budget, the federal government began to increase the value of the CHST transfer beyond the $12.5 billion level to which it had dropped. This culminated in the five year arrangement offered to the provinces in September 2000.
As the above chart shows, the new funding offers BC only a small respite from the long erosion in federal support for health care.
It will be a difficult task for BC, as for other provinces, to continue sustaining its health care system without a genuine renewal of the funding partnership with the federal government. Health care is BC's number one priority and it is the BC government's number one budget priority. It is time for the federal government to show that health care is its number one priority by paying its fair share.