Federal budget focused on tax cuts, not health

There was, to be sure, little in the way of deviation from Conservative script. But then, Prime Minister Stephen Harper made it clear from the time he began campaigning for the nation's highest office that he wanted his government to be known for tax relief, enhanced security and a sort of salt-of-the-earth accountability and predictability in which politicians unleash few surprises on unsuspecting Canadians.

From that perspective, the new minority government's first budget, delivered May 2, was a resounding success in that it ventured nary an inch from oft-repeated Conservative priorities, delivering a projected $26 billion in tax relief over 5 years, while reserving the bulk of its new spending for security measures.

It was, as Canadian Medical Association president Dr. Ruth Collins-Nakai noted, immediately apparent that it wasn't “a health-focused budget, [but rather] a tax cut budget.”

Still, Finance Minister Jim Flaherty's fiscal blueprint for 2006–07 had its health moments: new monies for pandemic preparedness, a national cancer strategy and, potentially, international AIDS and polio initiatives. But it offered nothing to alleviate the chronic shortage of health care professionals, Collins-Nakai said. “We would have liked to have seen some specific targeted money in terms of health human resources. We have a tremendous shortage here and it is patients who are going to continue to wait until we address that.”

Flaherty did, however, re-affirm Conservative intentions to honour federal commitments under the September 2004 federal/provincial/territorial 10-year Plan to Strengthen Health Care; to iron out a Patient Wait Times Guarantee with the provinces; and to re-open intergovernmental negotiations to redress the so-called fiscal imbalance to help the provinces fund delivery of health care.

Although the budget offered little insight into how the imbalance will be addressed, it clearly positioned the Conservatives by asserting that health care is a strictly provincial jurisdiction. Canadian Health Care Coalition President Sharon Sholzberg-Grey lamented the stance, inquiring “Where does that leave the federal government as the guardian of comparable services and in charge of the Canada Health Act?”

Among specific health initiatives was a new $1-billion/5-year outlay for pandemic preparedness, including a $400-million contingency fund for quick responses to any potential new strain of the H5N1 influenza virus that mutates into something easily transmissible among humans. The remaining $600 million will be divvied up amongst 4 departments and agencies primarily for the purchase of additional antivirals for the national stockpile or the expansion of ongoing public health programming, like one to develop domestic manufacturing capacity to produce an influenza vaccine (through the Quebec-based firm ID Biomedical).

Flaherty also honoured a Conservative campaign commitment to provide $260 million over 5 years to implement the Canadian Strategy for Cancer Control, a multi-pronged initiative developed over the past 7 years by advocacy groups and governments to oversee a forecast future explosion in the incidence of cancer, across a spectrum of activities ranging from prevention to surveillance, screening and palliative care.

“It's a comprehensive approach to managing cancer in Canada,” said Canadian Cancer Society Public Issues Manager M. Michelle McLean. “When the first iterations of the plan were developed years ago, several other countries took our plan and implemented it before we were able to and they've seen great success. In the United Kingdom, they've seen a 10% drop in cancer rates since implementing the strategy. We know this plan will have substantial impact in Canada.”

McLean and other public health advocates were also effusive about the new government's willingness to revisit so-called “sin taxes” to achieve health objectives, particularly its plan to hike cigarettes levies by $16.41 per carton starting July 1 to help offset revenues lost as a result of the 1% reduction in the federal Goods & Services Tax.

Other health measures included:

• a $500 tax credit to cover registration fees associated with children's participation in sports;

• expanded tax breaks for persons with disabilities, including increasing the maximum of the refundable medical expense supplement to $1000 from $767 and several measures to extend benefits under the Child Disability Benefit;

• an additional $450 million over 3 years for Aboriginal programs, an unspecified portion of which will go to health, including the provision of safe drinking water; and

• as much as $320 million for international health programs, including up to $250 million to the Global Fund to Fight AIDS, Tuberculosis and Malaria; and $45 million to support the Global Polio Eradication Initiative, providing the federal budget surplus tops $2 billion at the end of the current fiscal year.

Among the 26 tax measures were ones that will reduce the tax burden for physicians who are incorporated as small businesses and who earn their income through dividends. Potentially, their tax rates could be reduced as much as 4 percentage points. — Wayne Kondro, CMAJ

Figure. The minority government budget, tabled by Finance Minister Jim Flaherty, included 26 tax measures. Photo by: Canapress