12/13/2011 03:11 EST | Updated 02/12/2012 05:12 EST

Jim Flaherty: Ontario Government Says Minister Is Reneging On Promise To Maintain Health Funding Hikes

TORONTO - Ontario is accusing the federal Conservatives of reneging on their election promise to maintain annual increases in health-care funding to the provinces — the first war of words in what's expected to be a contentious debate over a new health accord.

Anything less than the six per cent a year promised by the federal government will have a noticeable impact on health care in Canada's most populous province, Health Minister Deb Matthews said Tuesday.

"We need that money to continue to improve high-quality health care for the people of Ontario," she said.

"So we're going to continue to advocate as hard as we can for increased funding. Our seniors are counting on it."

Matthews was reacting to a National Post report that federal Finance Minister Jim Flaherty plans to tie any future increases in health-care funding to growth in the economy — about half what the provinces have received over the last eight years.

A spokesman for Flaherty would not "comment on speculation."

But sources say the government is unlikely to tie transfers to real GDP, which is forecasted to grow, on average, by 2.4 per cent a year between 2011 and 2015.

During the May 2 election campaign, Prime Minister Stephen Harper vowed to maintain annual increases of six per cent for two years after the current deal with the provinces expires in 2014. He also suggested that health care expenditure must be kept in line with government revenues, which are expected to grow by five per cent a year until 2017.

However, the Ontario Liberals say Flaherty made a commitment to extend those increases even further.

In an April 9 interview on CBC Radio, Flaherty said he'd keep the six per cent escalator for the length of any new health accord with the provinces.

"We will keep it at six per cent for whatever the duration of the agreement is," Flaherty told CBC.

"What you asked me was: how long would the agreement be? Well, I don’t know. We'll have to talk to all the provinces about that. It could be two years, five years, whatever. Whatever it is, six per cent."

Not all provinces share Ontario's concern over the federal contribution to medicare.

Ottawa can't keep increases at six per cent a year and balance the budget, said Alberta Finance Minister Ron Liepert.

"We would be far better off in Canada if we sat down collectively and started to address the real issue around health care and quit fighting about whether one's getting their fair share or not getting their fair share," he said in an interview.

"We have to work to make our health care system sustainable, not be fighting about one gets more tax points than the other."

But Ontario says the federal government cannot continue to reduce its contribution to health care as the population ages and demand increases.

The provinces and the federal government used to split the cost of medicare 50-50, Matthews said.

Ottawa currently provides 23 per cent of Ontario's health-care funds, while the province absorbs the rest of the costs, accounting for nearly half of every dollar it spends.

"We cannot continue to see the decline of federal contribution to health care," she said. "Canadians are counting on them."

The provincial Liberals, who are grappling with a $16-billion deficit this year alone, are planning to slow spending increases on health care to three per cent a year.

It doesn't make sense to tie health-care spending to economic growth, said federal Liberal Leader Bob Rae.

The elements that drive health-care spending — an aging population, new technologies and demand for higher levels of service — have nothing to do with economic growth, he said.

"I think we all recognize that health care needs to be brought under control, but to tie the federal government's contribution to an artificial concept like economic growth is frankly just wrong, because it's not what it is," Rae said.

— With files from Julian Beltrame and Joan Bryden in Ottawa