The story of a repeatedly jilted lover who, with vain hope, returns again and again to his partner is tragically familiar. Just as familiar as, say, provincial governments asking Ottawa for additional dollars for health care. 

In the beginning of the storied relationship on health funding between the federal government and the provinces, the provinces vowed to provide universal public health and Ottawa vowed to fund half the cost. Ottawa’s funding took various forms, from cash transfers to lowering federal taxes so provinces would have more “tax room” to fund health care (a transfer of “tax points” to the pointy-headed crowd). 

The early signals of Ottawa’s unfaithfulness were innocent enough — it changed the calculation of cash transfers by including provincial revenues that were the result of the tax point transfer. But the sideways glances soon became more overt. Having promised this tax room to the provinces, Ottawa proceeded to take it back with a series of tax increases. Ottawa’s cash contribution therefore declined in line with provincial growth while at the same time its total tax take was higher than it was prior to the transfer of tax points. 

Ottawa’s successful flirtations lead to an increased boldness. It reneged on the vow to cover half of health spending, but still used growing tax points to offset the cash payable to make up the smaller total. By the time the Chretien Liberals took office, the combination of caps, and continuing to count the tax points as part of their contribution, drove Ottawa’s cash contribution down to 17% of health care spending. 

Ottawa stopped using tricks to sidestep its vow with the 1995 budget announcement that total transfers for health, education and welfare would drop from $18.3-billion to $11-billion over the next few years. At this point, any self-respecting counsellor would have advised the provinces to cut their losses, and stop pretending that Ottawa should have a meaningful role in the funding of health. Better, the counsellor would have suggested, that provinces strike out on their own and think of other creative ways of funding health care. 

But no, like the jilted lover, the provinces began an annual pilgrimage to try and patch things up. Ottawa occasionally relented, but not without further reducing the self-respect of the provinces from time to time. Ottawa’s most offensive move came in 1998 when it gave up a few extra dollars for health in return for nine signatures on the Social Union Accord, an accord that allowed Ottawa much freer rein to intervene in other areas of provincial jurisdiction. Only Quebec reversed the humiliation — it refused to sign the Social Union Accord, but still took the money. 

Quebec is also one of only two provinces (Alberta is more quietly the other) that occasionally proposes a clear path back to self-respect — a greater degree of separation between Ottawa and the provinces on health care. And what better way to facilitate this separation than to ask Ottawa to provide additional tax room to the provinces to fund their own health care needs. Getting there needn’t require a full blown, 10-signature national accord. 

All the provinces need to do is change their request from $7-billion dollars in additional federal cash transfers to $7-billion in new federal tax cuts. For if Ottawa cut its taxes by $7-billion, provinces could then use this additional room (admittedly by raising their tax rates) to fund health care while keeping the tax burden on Canadians constant. 

This proposal has two other side benefits. First, Canada’s poor provinces would have access to just as much tax room as the rich provinces, because the equalization formula would include the additional tax room provinces used to fund health care. 

But even more important, this new revenue would grow as part of the provincial revenue stream. As economies expanded, the $7-billion would grow as well (again, equalization would spread this wealth around). No such mechanism currently exists with respect to federal cash transfers for health, never mind that any such mechanism would be subject to change at Ottawa’s whim. 

It’s high time the provinces chose the path to greater self-respect by starting the process of separation. And for those who think the provinces are unequal to the task, it is worth remembering that they have been single in the past — health care, after all, came of age in the province of Saskatchewan.