12/18/2011 04:00 EST | Updated 02/16/2012 05:12 EST

Health Transfer Payments: Ottawa, Provinces At Odds On Proposed Increases, Sources Say


VICTORIA - Finance Minister Jim Flaherty will lay out what he's calling long-term plans for funding federal health transfer payments to the provinces and territories, but he won't reveal dollar figures.

Flaherty is meeting Monday in Victoria with provincial and territorial finance ministers for what he's calling important talks about health transfer payments.

He said Sunday, prior to a dinner meeting with the ministers, that he wants to introduce the Conservative government's medium- and long-range plans that are free of surprises and cuts.

"There'll be nothing sudden or abrupt going forward," said Flaherty, shortly after arriving in the B.C. capital. "I'll be able to talk to my colleagues about what we think needs to be done."

He said pensions and fiscal sustainability will also be on the agenda during Monday's gathering, but discussions about the health-care transfers will dominate.

"The most serious concern, the most serious discussion will be about transfer payments," Flaherty said. "We need to have a clear discussion about that. I will speak directly to my colleagues. This is important.

"The provinces need to plan," he said. "The federal government needs to plan and the territories need to plan. They need to know what's coming down the road. This is very important in terms of fiscal planning."

Flaherty said there will be no health spending cuts or reductions in social transfers.

Ottawa is currently committed to increasing health transfers at six per cent a year until 2016, while real gross domestic product is estimated to rise at about two per cent.

Trial balloons were floated over Parliament Hill last week about the federal government's future plans for health transfer payments, which left provinces feeling hungry.

Provincial sources have now been apprised that the objective is to link transfers to nominal, inflation-adjusted growth, which is estimated to be in the neighbourhood of 4.5 per cent.

Officials from four provinces told The Canadian Press that they are united in insisting the new accord, which takes effect after 2014, should continue with the current six-per-cent escalator.

The prime minister has been non-commital on the issue, only noting when asked Friday that health transfers have climbed from $19 billion to $27 billion a year under his watch.

"We will honour the health accord and we will ensure that there are increases into the future that are sustainable and that work to sustain the health care system that we're all going to depend on," he said.

It's also likely the provinces, particularly Ontario, will re-propose expansion of the Canadian Pension Plan.

Most provinces expected the main discussion to focus on a voluntary savings vehicle known as registered pooled pension plans.

The vehicle comes in the place of a direct expansion of the CPP, which Flaherty has rejected. It's designed for small firms that can't afford to offer their workers pension plans.

Quebec says it wants the plans made mandatory on firms with over 10 workers, and some provinces are considering making participation by employees mandatory as well.

The Canadian Federation of Independent Business has also asks the ministers to give the voluntary pooled plans a chance.

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