Nova Scotia, New Brunswick split on Ottawa’s cash for health care offer

Nova Scotia and New Brunswick are parting ways over federal funding earmarked for the country’s health care systems.

READ MORE: Provinces unimpressed by Trudeau government over health care funding

After talks in Ottawa failed to reach a new federal health accord, New Brunswick said it would try and strike a bilateral deal.

Premier Brian Gallant told Global News Tuesday, New Brunswick was “keen” to work with provinces and territories but there was no agreement so now the province is working on a side deal.

“We’re in talks presently to see with the federal government if we can come to an agreement that would be good for New Brunswickers,” he said.

But Nova Scotia Premier Stephen McNeil said he’s still hopeful a deal can be reached with all provinces.

Provinces rejected two-pronged approach to health funding

There are two issues at stake: the Canada Health Transfer and the additional money Ottawa wanted provinces to spend in specific areas of the health system. In both cases Gallant said he was in agreement with the government’s offer.

Federal Finance Minister Bill Morneau was proposing a 3.5 per cent annual increase to the Canada Health Transfer. The increase is slower than the six per cent increase provinces currently enjoy, but bigger than the three per cent base rate that is expected to kick in in 2017.

The catch is that the three per cent base is tied to nominal GDP, whereas Morneau’s 3.5 per cent offer was not tied to economic growth. McNeil said he expected to get more under the legislated accord than what Morneau was offering Monday.

He also offered the provinces and territories $11 billion over 10 years for home care and mental health, as well as $544 million over five years for prescription drug and “innovation” initiatives, on top of a 3.5 per cent annual increase in health transfers.

Gallant said he is still hoping to get New Brunswick’s portion of the proposal in a bilateral agreement.

“We think that if there’s allocations that are based on smaller provinces’ needs and challenges then we can have a good deal for New Brunswick,” Gallant said.

Tweet This Click to share quote on Twitter: "We think that if there's allocations that are based on smaller provinces' needs and challenges then we can have a good deal for New Brunswick," Gallant said.

Nova Scotia however is sticking with its fellow provinces. McNeil said he didn’t say “no” to the proposal but he’s still asking for a 5.2 per cent annual increase to the health transfer from Ottawa — a number he said Ontario first proposed.

“We ran the numbers, that makes sense,” McNeil said.

He also said he’s not against the targeted funding for certain programs, but he wants the money included in the base rate so it can’t be unexpectedly cancelled after provinces have invested in new programs.

Provincial health budgets increased slower than federal spend

Health care spending in New Brunswick and Nova Scotia increased at rates well below the rate that federal money was increasing in the last two years, but McNeil said his province still needs the extra money from Ottawa.

In New Brunswick the provincial health budget went up by 2.8 per cent between 2014-15 and 2015-16 fiscal years. In Nova Scotia it went up by 3.6 per cent in the same time frame. Ottawa’s contribution that year increased by more than five per cent.

Despite the slower rate of growth McNeil said Ottawa should pony up more cash because its share of health care spending has slipped since the health transfers started decades ago.

On Monday, Morneau was categoric that his offer expired with the talks. But McNeil said he believes “there’s a deal here for the national government and provinces across the country.”

Gallant, in the meantime, said he was “optimistic” his province would reach a bilateral agreement with Ottawa.