12/20/2011 10:45 EST | Updated 02/19/2012 05:12 EST

Nova Scotia's premier rejects new health funding formula as non-negotiable

Premiers who feel slighted by the federal government on health care funding expressed their frustration Tuesday at Ottawa's tone and position in what they thought were supposed to be negotiations on a long-term deal.

Some provinces are accusing Finance Minister Jim Flaherty of presenting a take-it-or-leave-it offer to his provincial and territorial counterparts in Victoria, a gesture they promise to rebuff.

"I think the process is unfortunate," said Saskatchewan's Brad Wall. "I think the finance ministers were expecting the beginning of a round of consultation and, at least on the transfer piece, that does not appear to be what the federal government's doing. They're saying here's the deal."

Nova Scotia Premier Darrell Dexter rejected the idea that the federal position isn't open to negotiation.

"Absolutely it's negotiable," he said in an interview on Tuesday.

At Monday's meeting, Flaherty said Ottawa plans to continue increasing health transfer payments at six per cent annually for the next six years. After that, he said transfer payments will be tied to the rate of economic growth and inflation, which gives the provinces and territories certain and stable health funding.

"We do need to talk about the way forward in terms of being fiscally responsible, not only at the federal level but across the country, all the governments,'' he said after the meeting.

"We all realize that public finances relate to revenues and we can't pretend that we can spend money that we don't have.''

Alberta Premier Alison Redford is backing the federal plan, saying it ends a disparity based on a per capita formula that's used to calculate health transfers that costs the province $900 million a year.

"What we were very pleased to see was an acknowledgment for the first time that Alberta needed to be treated equally on a per capita basis. That is a tremendous success for us," Redford said in Calgary.

Dexter said the federal funding plan will hurt smaller provinces like Nova Scotia.

"It will essentially divide the country into wealthier provinces that have a better ability to provide health care and those with lesser ability to be able to provide the same services," he added.

New Brunswick Premier David Alward also criticized the approach taken by the federal government.

"It is unacceptable that the federal government came forward with a unilateral proposal with no dialogue and no consultation," he told the legislature.

"We will do the necessary work we have to do to bring the federal government to the table where they need to be. We will work with the other provinces to see that take place."

New Brunswick wants the federal government to restore health transfers to 25 per cent of provincial health care costs, a position all four Atlantic premiers adopted at a meeting earlier this month. They say the federal share of medicare spending currently stands at about 20 per cent.

Alward said annual increases for health care also need to be maintained at six per cent.

Wall wants the six-per-cent increase in health funding extended beyond what the federal government is offering until 2017, and he thinks there should be other opportunities to get more money from Ottawa for innovations to improve patient care.

"Our province has always said it can't just be about money," he added. "It's got to be about better outcomes for patients. That will be our message back to the federal government."

Dexter said Nova Scotia might not sign a deal that goes beyond five years if some flexibility isn't shown by Ottawa.

"They know and we know that there will another election between now and the end of what their commitment is now, which is a six-per-cent escalator that goes out five years," he explained. "You know, maybe we'll just take a five-year deal."

Newfoundland and Labrador, Ontario, Manitoba, Quebec and Prince Edward Island have also slammed Ottawa's position.

British Columbia hasn't expressed the same outrage as other provinces, but Finance Minister Kevin Falcon said he has concerns with the per capita formula being used by Ottawa because it doesn't take into account the rising health costs associated with an aging population.

The Finance Department estimated on Tuesday that B.C. stands to receive $250 million less from Ottawa in 2014-15 because of changes in the per capita formula.

"We believe it should reflect the reality that some provinces — B.C., the Atlantic provinces and others — have issues around an aging population," Falcon said on Monday.

Ontario Finance Minister Dwight Duncan challenged Flaherty's assertion that the deal Ottawa brought to Victoria offers the provinces a clear understanding on the amount of money they can expect for years to come by linking funding increases to the rate of nominal gross domestic product.

"Mr. Flaherty talked about clarity. There's no clarity when you tie funding to GDP, which goes up and down, so there's absolutely no more clarity," he said on Tuesday. "That’s just nonsense."

Health Minister Leona Aglukkaq proposed to provincial and territorial health ministers on Tuesday that they meet on ways to improve health care in the new year. In a letter, she suggests they meet after the premiers and territorial leaders hold their own talks on health care in mid-January.

— With files from Jennifer Graham in Regina, Keith Doucette in Halifax, Kevin Bissett in Fredericton, Dirk Meissner in Victoria, Keith Leslie in Toronto and Bill Graveland in Calgary.