Greg Selinger Minister of Finance Winnipeg - March 6, 2002

1. Manitoba Department of FinancePresentation to the Commission on the Future of Health Care in Canada Greg Selinger Minister of Finance Winnipeg - March 6, 2002

2. Overview • Sustainability of health care must be considered in the context of the Canadian federation itself and the fiscal arrangements that underpin it • The fiscal imbalance existing between the two orders of government is addressed mainly through the CHST mechanism • Sustainability of health and other programs hinges on achieving an effective balance

3. Spending/Financing Developments • Health care’s share of provincial budgets increased over the 1990s • Key factors: • provincial decision to reinvest in Health Care in response to public concerns that access and quality was deteriorating • federal cuts in CHST - crowding out other areas

5. Crowding-Out • Health Care demands have been met at the expense of other needs -- education, justice, social services, infrastructure and economic development • Not a viable long-term solution since these form the base upon which we maintain and afford our health care system

7. Not just a Long-term Issue • Sustainability has a more immediate dimension • Provinces are facing a large and immediate cash crunch as well as difficult choices, while … • The December Fiscal Monitor points to $10 b surplus for the federal government in 2001/02 • Health as a percentage of GDP is expected to set new high water marks over the medium term

9. CHST • Federal funding for provincial social programs has been eroded since the inception of EPF through a series of unilateral federal changes to the funding formula • CHST cash as a share of provincial social program funding averaged about 18% in the first half of the 1990’s, fell to 11% by 1998/99 • The current level of 14% is forecast to fall to 13%

11. CHST • Manitoba favours a durable CHST-based solution to the problem of funding health care • Options like the recent proliferation of federal “tied-funding” schemes should be avoided since • ongoing provincial funding commitments are not matched by federal government, • they discriminate against provinces with lower fiscal capacity, and • they fail to reflect provincial priorities.

12. CHST and Federalism • Need to adopt a more cooperative than unilateral model to restore confidence in partnership • Current CHST funding levels are arbitrary • not based on actual costs • not based on ability to pay (revenue capacity) • not based on a negotiated or agreed to “share” • Federal/provincial cooperation and decision-making to sustain CPP is a better model

13. Conclusion • The task we face is not just to balance our own books, but to do it in a way that does not compromise our long-term economic potential and the provision of important public services • Our single-payer publicly administered health care system confers a cost advantage that must be preserved

14. Conclusion • There is probably enough fiscal capacity in government - writ large - to manage the cost pressures over the next decade, if we plan well • The challenge is federal government needs to become more fully engaged in funding health care through the CHST to address both the immediate cost pressures and the larger ones that loom in the coming decades