Morneau says he's open to fiscal stabilization reform - but provinces are pushing for health cash

Finance Minister Bill Morneau wrapped up a meeting with his provincial and territorial counterparts today, saying that he could announce improvements to the Fiscal Stabilization Program as early as January — despite being told that the provinces want to see larger health transfers before they'll agree to get behind a national pharmacare plan.

"The province of Saskatchewan brought forward a proposal on how we can move forward with fiscal stabilization reform," Morneau said. "I committed to asking my officials to begin an analysis and to getting back in January with not only a sense of the timeline that we can move forward for those discussions, but also a sense of the process ... that would enable that discussion and some potential changes to happen in the near term."

Morneau refused to say if he would consider making changes to the program retroactive, insisting that his department has to examine the proposal before he makes any positions public.

The Fiscal Stabilization Program is a relatively small federal program. It provides financial assistance to provinces facing a year-over-year decline in non-resource revenues that are greater than five per cent.

The maximum a province can receive under the program is $60 per person. The provinces of Alberta, Saskatchewan and Newfoundland and Labrador — which have been struggling economically since global oil prices began declining in 2014 — want that cap lifted so stabilization will better reflect today's realities.

Alberta's finance minister said the program needs a fundamental change. The province has been arguing the cap is inadequate given the size of its budget deficit in the wake of slumping oil prices.

"In our view, the cap should be removed," said Travis Toews ​on Tuesday morning. "That ultimately would have resulted in a $1.7 billion fiscal stabilization payment to Alberta, which we believe would have made a difference and would have served the program's intentions adequately."

Provincial Finance Minister present Ottawa with new stabilization plan

5 years ago

Duration 2:37

Federal Finance Minister Bill Morneau hosted the meeting which included Ontario's Rod Phillips, Alberta's Travis Toews and NL's Tom Osborne

Newfoundland and Labrador Finance Minister Tom Osborne said the program needs to be more responsive to quick downturns in the economy or in the royalties provincial governments receive from resource development.

"I get a sense from the federal minister that they're open to our proposal ... I'm absolutely certain we'll see a refined program," Osborne said.

Toews said he was encouraged by how open Morneau was to considering the stabilization request but added that the federal government needs to move quickly.

"I was quite satisfied with the robust, frank discussion," he said. I am "generally thankful to the other provinces that supported our position on fiscal stabilization. But time will tell.

"I can't over-emphasize the fact that timing is important here. Certainly within Alberta, there's a sense of alienation out West."

After the meeting, Ontario's Minister of Finance Rod Phillips praised Morneau for putting the provinces' stabilization request on the agenda for Tuesday's meeting, adding the country's finance ministers are "people who want to make progress."

Health care transfers

Prime Minister Justin Trudeau has instructed his new cabinet to work on a national pharmacare program. Phillips said his government wants to address that matter — but adequately funding the current health care system is his government's priority.

The premiers are asking Morneau to increase the federal health transfer by 5.2 per cent a year, rather than the current three per cent.

"That is about delivering the core service that we have today. And of course, if the federal government does, as they wish to do, have further discussions [on pharmacare], we have some specific areas that [Ontario Health Minister Christine Elliott] has already identified. It's an escalating expense and an important area."

Quebec's Finance Minister Eric Girard also said that his province wants to see a boost to the health transfer before taking steps toward a pharmacare plan.

Morneau said Tuesday's meeting was about listening to the provinces' concerns, rather than the federal government using the setting to push policy initiatives forward.

"I heard from many provinces that that their priority is, in the first instance, to look at how we can deal with this stabilization program to make sure it works," he said. "Another priority is to make sure that the health care system is delivering for Canadians across the country.

Morneau also said Canada's finance ministers need to make sure that they "deal with more than one thing at a time," calling pharmacare "the unfinished business of health care."

"That is something that Canadians have told us repeatedly. We don't think it's acceptable that some people just cannot afford to buy medication to deal with their health care issues," he said.