The Parliamentary Budget Officer, Kevin Page, has released a report that shows the federal Conservatives' downloading of biillions in Medicare costs onto the provinces will greatly weaken both the public health care system and the finances of the provinces, causing them to either cut programs or to increase taxes.
A recent premier's report notes that the Cons' recent health accord removes $36 billion over 10 years from health services compared to what the current program would do if carried forward. It would reduce federal contributions to Medicare to less than 20% compared to the 50% federal contribution Medicare was originally funded at.
"The impact of the various federal reforms - assuming Ottawa could maintain current debt-to-GDP levels over the long-term, in the face of changing demographics - represents an extra $25 billion in fiscal breathing room for the federal government in 2012 alone, according to the PBO.
Approximately $14 billion of that relief comes from Ottawa's decision to trim the growth in health transfers over the longterm, according to the PBO report. That additional financial flexibility means the federal government could reduce its revenue, increase program spending or some combination of both while maintaining long-term fiscal sustainability. For example, going forward, the federal government would have the flexibility to reduce the GST another percentage point or two, said PBO officials.
While such measures might increase the deficit in the shortterm, federal finances and the debt-to-GDP ratio would remain sustainable over the long-term."
This would achieve several of Harper's objectives: (1) reducing the size of government and the federal government in particular; (2) provide an opportunity to reduce federal taxes, probably on the eve of the next election and probably with a token cut for the general population and a further large cut in corporate and upper income tax levels that meets both ideological and political objectives; (3) further marginalizing the role of the federal government of the country; and (4) helping build Harper's firewall around Alberta because reduced federal funding allows incredibly resource-rich Alberta to most easily provide for the federal service cuts it wishes to maintain, while not having to pay as much federal taxes as partial payment of the needs of poorer provinces.