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The December 2001 federal budget continues a long line of federal Liberal failures in budgeting for the health care needs of Canadians. Finance Minister Paul Martin decided not to enhance spending for health care even though Canadians are clear that health care is their number one priority even ahead of security issues. The few dollars thrown at health care will not have any appreciable effect on the services that Canadians need and are demanding.

What We Needed

Security for Health Care

  • Restore the billions in cuts since the Liberals took office. Add $5 billion per year to the CHST over and above the September 2000 increase, divided as follows:
  • -$2 billion a year to strengthen the existing acute care system

    -$2 billion per year for home and community care including long term care

    -$1 billion per year to initiate a universal pharmacare program

  • The federal government share of provincial health care expenditures should be increased to 25% over the next five years.
  • New programs such as pharmacare and home and continuing care should be funded on a 50/50 cost sharing basis with the provinces.
  • The government needs to demonstrate its support for publicly funded and delivered health care services by making the financial commitment to secure the sustainability of a strengthened and expanded Medicare system.
  • An investment in recruitment and retention strategies for health human resources to alleviate health care staffing crises across the entire system.

What We Got

  • No new funding for health care in the CHST. Instead, Martin chose to merely confirm $21.2 billion in health care funding already announced in September 2000. This one time funding is to end in 2005-06. Included in this amount is $18.9 billion in CHST transfers for health and $2.3 billion in funds targeted to medical equipment, information technology and primary care reform.
  • A renewed allocation of $95 million over four years to the Canadian Institute for Health Information.
  • A $75 million increase to the annual budget of the Canadian Institutes of Health Research supporting 13 institutes across the spectrum of health care.
  • A $25 million investment over two years to reduce fetal alcohol syndrome and fetal alcohol effects on First Nations’ reserves.
  • $5 million over two years to Health Canada to collect health data on First Nations’ people on reserve.

What It Means

Continued Under Funding

The federal government is recycling its September 2000 commitment to health care as a new commitment. While there will be additional transfers in each year until 2005-06, the base floor for the CHST will revert to $15.5 billion after fiscal year 2005-06 if there is not a further legislated commitment from the government. Further, these yearly increases will be greatly eroded when inflation and population growth are taken into account.

In effect, there are no new transfers as provincial governments have already incorporated the September 2000 health care funding into their planning until the year 2005-06 when the one time infusion of cash ends. And the provinces are clear that the funding is neither adequate to cover current expenditures nor adequate for them to plan beyond that time. Consequently, provincial governments will continue to cut services as a result of the historical shortfall in transfers and more dangerously will feel justified to look to the private sector to play a larger role in health care.

The biggest problem is that the federal government has ignored both the cries of Canadian citizens and provincial governments for greater investment in expanded health care services.

In September 2000, the federal government tried to ward off angry provincial premiers at a First Ministers conference by agreeing to a health accord that the Liberals claimed would replenish the cuts to the CHST dating back to 1993. While the $21 billion deal over five years did replenish some of the cuts it still falls over $10 billion short for health care. Also it does not provide any money for new programs such as home care or pharmacare or to strengthen existing services covered under medicare. This adds another $5 billion per year to the federal shortfall.

Historically, the federal share of provincial and territorial health care expenditures has been dropping. In 1977-78 the proportion was 24.9% and it rose to a high of 26.1% in 1979-80. Since then it has been on a steady decline reaching a pathetic low of 10.0% in 1998-99. The provincial push back to the federal government at that time was rooted largely in this withdrawal of federal financial commitment to health care.

The September 2000 infusion of cash resulted in a slight correction in the trend, sending the proportions back to the 14% - 16% range. Nevertheless, the correction does not make up for previous shortfalls and the projected proportion of federal expenditures to provincial expenditures will still only be 15.5% in 2005-06 when the September 2000 agreement ends. (see table 1 for a summary of the September 2000 CHST commitments and the federal proportion of health expenditures).

Increased Privatization

The federal starvation of the health care system continues despite constant warnings in past years. In March 2000 CUPE warned that the paltry allocation in the 2000 budget would not be enough to stave off massive privatization of health care. And in September 2000 CUPE again warned that the Liberals were too conservative in their estimation of the amount of the CHST cuts and that continued privatization would be the greatest threat to public health care. And we were right. It was not long before provincial premiers and health ministers began the cry that federal shortfalls could only be met with “increased private sector involvement.” And still the federal government continues to under fund health care and do nothing to stop provinces from implementing private for-profit options.

Public Private Partnerships (PPPs) are now springing up everywhere.The Gordon Campbell government in B.C. is going ahead with its planned public private partnership of a hospital in Abbottsford B.C.

Two of the frontrunners in the race to succeed Premier Harris in Ontario (Finance Minister Flaherty and Health Minister Clement) have embraced PPPs in health care as part of their misguided bold new vision. PPP hospitals have been announced for the William Osler Centre in Brampton and for the Royal Ottawa Hospital in Ottawa. It is also expected that Clement will announce a new PPP MRI clinic in the next year.

A policy of competitive bidding in home care in Ontario sounded the death knell for public home care in that province and has assured profits for private corporations. To add insult to injury, the democratic elections to the boards of Community Care Access Centres have been scrapped in favour of government appointed board members. For-profit corporations can only benefit from this move.

Ralph Klein has waited patiently for more than a year to allow the furor over Bill 11 to settle down and now the College of Physicians and Surgeons in Alberta have devised the guidelines for overnight stays in the private hospitals countenanced in Bill11. Once the contracts are let for these overnight stays the Canada Health Act will have been officially violated as part of Bill 11.

The Kirby Senate Committee, with Extendicare Director Michael Kirby at the helm, is promoting increased privatization of health facilities, services and insurance. Roy Romanow, charged with investigating the sustainability of the public health care system, has been heard to muse more than once about the desirability of user fees and increased private participation on health care.

Provinces, Commissions and Committees seem to be charging ahead with the full knowledge that the federal government will do nothing about privatization in health care. The fact that the federal government continues to fall far short on the financial commitment to make public health care sustainable sends a strong signal to provincial governments to continue their privatizing ways.

We are left to ask the question: What is federal government’s vision for health care?

We would have hoped that the federal government would see fit to outline plans to strengthen existing acute care and physician services and to expand health care services to include a home and continuing care program as well as a pharmacare program. The high cost of drugs is the single most important driver of increased health care costs. Government leadership on this matter would have been most welcome.

However, the December 2001 budget does not yield any clues that the federal government places a high priority on health care. Indeed, if we were to take the budget as a barometer, we would conclude that the federal government has given up on public health care. This approach is vastly out of step with the Canadian public and Canadians will be outraged.

Some Small Gains

While we do applaud the government’s new investment in Aboriginal health initiatives, it is a very small amount targeted to only a few specific initiatives. The investment is not commensurate with the significant problems in health status in aboriginal communities.

The renewal of funding to the Canadian Institute for Health Information is welcome but merely sustains the status quo. Similarly, the increased funding to the Canadian Institutes for Health Research is welcome but does not meet the needs of the institutes encompassed in the CIHR.


In this budget, the federal government continues its abdication of any leadership role in health care policy that it might have had in the past. The proportion of federal funding will continue to decrease as health care expenditures increase.

Changes to provincial health care policies which promote private for-profit health care will not be challenged by the federal government simply because they no longer have the fiscal leverage or credibility to do so. Under this budget, privatization will continue as the preferred method to deal with health care issues benefiting corporations while families and communities must find the resources to provide health coverage for themselves and for those who cannot afford privatized health care.

CHST 2000-01 to 2005-06


CHST Cash Base$15.5$15.5$15.5$15.5$15.5$15.5
Cash Increase (September 2000)-
Medical Equipment0.50.5----
Health Information0.5-----
Health Transition Fund Primary Care (September 2000)-
Federal Expenditures on Health as Percentage of Provincial Expenditures*13.8%15.1%14.8%14.5%16.0%15.5%

* Assume 5% annual increase in health expenditures

Sources: Canada, Department of Finance; CIHI

See other CUPE Facts on the 2001 Federal Budget for more detailed information about particular sectors. They are available from

the National Research Branch or at www.cupe.ca.