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Chapter 4 - Moving Forward on the Priorities of Canadians -
The Importance of Health

Highlights

• Confirmation of an additional $2 billion for the provinces and territories for health, bringing to $36.8 billion the funding provided under the February 2003 First Ministers’ Accord on Health Care Renewal.

• Establishment of a new Canada Public Health Agency as a focal point for disease control and emergency response.

• Immediate funding of $665 million in this fiscal year and over the next two years to improve Canada’s readiness to deal with public health emergencies.

• Improved tax fairness for Canadians with disabilities and caregivers.

• Increased funding of $30 million annually to support employment assistance programming delivered by provinces and territories for Canadians with disabilities.

Introduction

Canadians are justly proud of their social programs and are determined to see them maintained and improved.

Canada’s publicly funded, universal health care system stands as a clear testament to its commitment to ensuring equality of opportunity for all Canadians.

The Government of Canada is committed to:

• Providing growing and predictable funding for Canada’s health care system.

• Improving transparency and accountability of health care spending.

• Ensuring the sustainability of Canada’s health care system by facilitating needed reform and renewal of the system.

• Strengthening Canada’s public health system.

Growing and Predictable Funding for Canada’s Health Care System

In fulfillment of the February 2003 First Ministers’ Accord on Health Care Renewal and the important reform and reporting objectives it contained, the 2003 budget increased federal support for health care by $34.8 billion over five years. It also committed to an additional payment of $2 billion, contingent on funds being available in 2003–04.

At the January 2004 First Ministers’ Meeting, the Prime Minister announced that the additional $2 billion would be provided to the provinces and territories as a cash supplement to the Canada Health and Social Transfer (CHST) and allocated on an equal per capita basis. The supplement will be paid into third-party trusts upon passage of legislation. This will provide provinces and territories with the flexibility to draw upon their share of the $2 billion immediately or at any time during the next two years, according to their respective priorities, in support of the 2003 Health Accord and its objective of ensuring that all Canadians have timely access to quality health services.

This brings the total increase in federal support over the five-year period of the Health Accord to $36.8 billion. The majority of this funding is being provided to provinces and territories through increased transfer payments, including:

• $16 billion over five years through the new Health Reform Transfer.

• $14 billion (including the $2 billion in additional funding) for increases to health and social transfers (the CHST).

• $1.5 billion for diagnostic and medical equipment.

The remaining $5.3 billion has been allocated to meet other commitments made under the Health Accord, notably increased funding for federal health programs for First Nations and Inuit, the creation of a compassionate care benefit under employment insurance, support for research hospitals, and improved health care technology and pharmaceuticals management.

The Government of Canada’s investments over the 2003–04 to 2007–08 period covered by the Health Accord—and its other investments in health and social programs in recent years—have been implemented as part of a long-term legislated framework of predictable and growing support for provinces and territories that includes both cash and tax transfers.

• Legislated cash transfers to the provinces and territories for health and social programs will reach $28.1 billion in 2007–08. This constitutes an average annual growth rate of 8 per cent beginning in 2003–04—significantly higher than the projected 4.9 per cent rate of growth in nominal gross domestic product (GDP) over the same period (see Table 4.1).

• To help fund their health and social programs, the provinces and territories are also able to draw on the significant and predictable revenue growth they receive from tax transfers. The funds generated by these tax transfers will continue to grow in line with the overall growth of the Canadian economy, bringing overall cash and tax transfers to $49.3 billion in 2007–08 (see Table 4.2).

Table 4.1
Legislated Framework of Federal Transfers Supporting Health and Other Social Programs

Table 4.2
New Canada Health Transfer (CHT) and Canada Social Transfer (CST) Growing to $49.3 billion in 2007–08

Improved Transparency and Accountability of Health Care Spending

In addition to ensuring predictable, growing financing for Canada’s health care system, it is essential that the need for reform and renewal of the system—including greater transparency and accountability—also be met.

The February 2003 First Ministers’ Accord on Health Care Renewal reflects a cooperative undertaking by federal, provincial and territorial governments to improve access to health care, to enhance accountability for how health dollars are spent and for the results they achieve, and to ensure that the system remains sustainable over the long term. All governments agreed that each jurisdiction would report to its citizens annually on health care spending. Provinces and territories also agreed to report to their citizens annually on health reform initiatives and on enhancements to diagnostic and medical equipment and services.

Another key element of the Accord was the establishment of a Health Council, which began its operations in December 2003. The Council brings together diverse perspectives and a wealth of expertise in the health domain. It will monitor and make annual public reports on the implementation of the Accord, with an emphasis on its accountability and transparency provisions. The work of the Council will enable Canadians to assess the performance of the health system and the pace of implementation of the various commitments made in the Accord.

The Government has also fulfilled another commitment it made as part of the Accord, namely to ensure that its own contributions to health care be made more transparent—and thereby more accountable—to Canadians. The CHST is being restructured into two new transfers. Effective April 1, 2004, the CHST will be apportioned between the Canada Health Transfer (CHT), supporting provincial and territorial health programs, and the Canada Social Transfer (CST), supporting post-secondary education and social programs, including early childhood development and early learning and child care services. The apportionment reflects the percentage of health spending within overall provincial spending in the health and social sectors supported by federal transfers (see box on next page and Table 4.2).

Ensuring the Sustainability of Canada’s Health Care System

The framework of predictable and growing support for health care could not have been established without the successes achieved in restoring overall fiscal sustainability. The Government of Canada and provincial and territorial governments have all reinvested heavily in health care since 1998—at a rate of growth well beyond that of the economy as a whole:

• Publicly funded health spending is expected to reach nearly $85 billion in 2003, representing 7 per cent of Canada’s GDP.

• Canada’s combined private and publicly funded health spending is expected to reach $121 billion in 2003, representing 10 per cent of its GDP.

• Canada now ranks as the fourth highest spender on health among Organisation for Economic Co-operation and Development (OECD) countries (see chart at the bottom of next page).

Increasing concerns are being raised as to whether these trends are sustainable, concerns that are made more acute by future pressures on the health system, including the aging of Canada’s population. The result is a growing need for a thorough examination of whether Canada is getting the best possible results for what it is already spending on health care and how the performance of its health care system can be improved. To identify areas where improvement is required and to evaluate the progress of health reforms that are being pursued, Canadians need reliable, up-to-date information on the performance of the health system. Canadians also want assurances that new investments in health care will result in measurable progress toward reform.

Federal, provincial and territorial governments are all committed to meeting these objectives. As announced at the January 2004 First Ministers’ Meeting, the Prime Minister will convene a First Ministers’ Meeting this summer to discuss the sustainability of the health care system.

Strengthening Canada’s Public Health System

The recent experience with severe acute respiratory syndrome (SARS) has been challenging to Canada’s health system and to the health workers who worked tirelessly to protect Canadians’ well-being. Canadians have been vividly reminded that their physical and economic security remain vulnerable to infectious diseases and other threats to public health. They have also made it clear that significant reforms to Canada’s public health system are required to address future health emergencies resulting from global infectious disease outbreaks, such as SARS and avian flu.

The Challenge

In the wake of the SARS outbreak, governments commissioned several studies to shed light on how the crisis came about and identify needed reforms and investments in Canada’s public health system (see box on page 99). A key objective that was identified for improving Canada’s public health system was to develop a seamless public health system where all stakeholders play their appropriate role in ensuring that gaps and weaknesses in the system are addressed so that Canada is ready to respond promptly to an infectious disease outbreak similar to SARS. Rising trends of chronic diseases also pose a threat to the health of Canadians.

The Government of Canada is committed to addressing these challenges through new mechanisms for coordination, new investments in public health capacity, and collaboration with the provinces and territories. To help achieve these objectives, this budget proposes a number of measures to strengthen international coordination, improve emergency response capacity, enhance public health surveillance, and establish regional centres of excellence.

A New Canada Public Health Agency and a Chief Public Health Officer

The need to strengthen federal leadership and better coordinate federal resources in the field of public health were identified as critical challenges in the recent reports of the National Advisory Committee on SARS and Public Health, as well as the Standing Senate Committee on Social Affairs, Science and Technology.

A new Canada Public Health Agency will be established to strengthen Canada’s public health and emergency response capacity, and to develop national strategies for managing infectious diseases and chronic diseases. In the first instance, the new agency will draw on the $404 million in resources and expertise currently devoted to these activities in Health Canada, primarily the Population and Public Health Branch. The Government of Canada will identify programs and activities of Health Canada that will become part of the new agency and review how the resources associated with these programs and activities can be optimally refocused, as required, to meet the needs of the new agency and to achieve the objectives of public health.

The new agency, which will report to the Minister of Health, will focus on the management of infectious diseases, emergency preparedness and response, and chronic diseases. The agency will make citizen engagement a key priority. It will ensure that the Government’s public health activities are more accountable and transparent to Canadians, and it will make an important contribution to the development of an effective pan-Canadian public health network.

In addition to establishing the new agency, the Government of Canada will appoint, for the first time, a Chief Public Health Officer for Canada, who will lead the agency and will report to the Minister of Health. The Government of Canada will begin a national search with a view to recruiting and appointing the new Chief Public Health Officer as soon as possible. The Chief Public Health Officer will be actively involved in the design and creation of the agency—including its organizational structure and its role in developing a national approach to public health—in close consultation with all stakeholders. The Chief Public Health Officer will provide timely, objective and evidence-based advice on all matters pertaining to public health and national readiness for public health threats; provide leadership in advancing Canada’s interests in international agencies focused on public health matters; and help coordinate the national public health response during public health disasters and emergencies.

Immediate Funding to Address Gaps in Readiness

This budget provides, as a first installment, incremental funding of $665 million in this fiscal year and over the next two years to improve Canada’s readiness to deal with public health emergencies and address immediate gaps. This funding builds on the Health Canada resources to be transferred to the new Canada Public Health Agency and will be used to increase the capacity of federal, provincial and territorial public health systems.

Specifically, in addition to the $404 million to be drawn on from Health Canada, this budget sets aside $165 million over the next two years to assist in creating the new agency and to take immediate steps to address identified gaps, including:

• Increasing emergency response capacity by establishing Health Emergency Response Teams; replenishing the National Emergency Stockpile System with the necessary supplies (portable hospitals, mini clinics, blankets, etc.); expanding the Canadian Field Epidemiology Program to address human resource shortages in this important area; and providing funding for fellowships, bursaries, chairs and community-based public health apprenticeships.

• Enhancing surveillance by working with the provinces and other stakeholders to develop and implement improved data collection standards to facilitate sharing of public health information on a national basis. As described below, funding is also being provided to Canada Health Infoway to support the development and implementation of a national surveillance system.

• Establishing regional centres of excellence in public health and laboratory facilities to advance understanding and action on key priority areas such as communicable disease epidemiology.

• Expanding laboratory capacity through capital expansion at the National Microbiology Laboratory in Winnipeg and the Laboratory for Foodborne Zoonoses in Guelph, including acquisition of new equipment and creation of a new emergency operations centre for use during urgent situations like SARS. Increased funding will also be provided to support laboratory-based research to increase Canada’s diagnostic capacity.

• Strengthening international coordination and collaboration by linking the new agency to an international network for disease control and emergency response, alongside the World Health Organization, Centers for Disease Control and Prevention in the U.S., and other agencies in Europe and Asia.

A further investment of $500 million will be made available to assist in the development and implementation of a public health surveillance system, to help support a national immunization strategy and to help enhance public health capacity at the provincial and territorial levels, including:

• $100 million will be provided to Canada Health Infoway to allow the provinces and territories to invest in software and hardware with the goal of assessing, developing and implementing a high-quality, real-time public health surveillance system, with a particular focus on infectious disease monitoring, and including the integration of current disease-based surveillance systems. The Government of Canada is committed to ensuring that Canada’s public health system has the information technology systems needed to deal with future public health outbreaks or epidemics. Canada Health Infoway will work in partnership with all governments to build and implement a national surveillance system to assist public health professionals in the timely identification of infectious disease outbreaks such as SARS, and allow for evidence-based development and modification of public health programs.

• $400 million will be made available to the provinces and territories over the next three years^[1] to support a national immunization strategy and to assist in enhancing their public health capacities.

• $300 million for a national immunization strategy that would support the introduction of new and recommended childhood and adolescent vaccines (as proposed by the National Advisory Committee on Immunization). The SARS outbreak reminded Canadians about the importance of immunization to Canada’s public health system. This unexpected event suggested that the Government of Canada needs to do more in this key public health area. This new funding will build on the $45 million provided in the 2003 budget to improve the safety and effectiveness of vaccines, enhance coordination and efficiency of immunization procurement, and ensure better information on immunization coverage rates within Canada.

• $100 million will be made available to relieve stresses on provincial and territorial public health systems that were identified during the SARS outbreak, and to help the provinces and territories address their immediate gaps in capacity by supporting front-line activities, specific health protection and disease prevention programs, information systems, laboratory capacity, training and emergency response capacity.

The funding announced in this budget addresses immediate gaps in Canada’s public health system. Through these changes, Canada’s public health system will have greater capacity in surveillance, diagnosis and response, along with improved information sharing, training and education, and collaboration across jurisdictions. The Government of Canada expects to make further investments once the new Canada Public Health Agency is operational, the Chief Public Health Officer has developed a comprehensive public health plan, and the Government has had the opportunity to evaluate the need for additional resources.

Other Health-Related Measures

In addition, as described in the section "The Importance of Knowledge and Commercialization," this budget will provide further support for health research. This includes new funding for the Canadian Institutes of Health Research as part of the increase in granting council funding, and $60 million in 2004–05 for Genome Canada, of which a significant portion is expected to fund health-related genomics research.

Inclusion of Persons With Disabilities

The Government of Canada views greater inclusion of Canadians with disabilities as a national priority. Greater inclusion contributes not only to the well-being of persons with disabilities themselves, but also to the life and economy of the country through the contributions citizens make as they learn, work and volunteer.

Improving Tax Fairness for Persons With Disabilities and Caregivers

The Government is committed to improving tax fairness for persons with disabilities and those who care for them. In recent years a number of tax measures have been enhanced to recognize that persons with disabilities and those who care for them face extra non-discretionary costs that reduce their ability to pay tax. Since 1996 tax relief for persons with disabilities or above-average medical expenses and those who care for them has more than doubled from $600 million to more than $1.2 billion annually.

In the 2003 budget the Government established the Technical Advisory Committee on Tax Measures for Persons with Disabilities to advise the Minister of Finance and the Minister of National Revenue on tax issues affecting the community of persons with disabilities. The Technical Advisory Committee comprises members of organizations representing persons with disabilities, medical practitioners and private sector tax experts. It is scheduled to report in the fall of 2004. The 2003 budget also set aside $25 million in 2003–04 and $80 million annually, starting in 2004–05, to improve the fairness of the tax system for persons with disabilities and those who care for them, based on the findings of the committee. The $25 million set aside for 2003–04 has been reprofiled to future years.

This budget acts on an early proposal by the Technical Advisory Committee to provide better tax recognition of disability supports expenses, and improves the tax recognition of medical expenses incurred by caregivers on behalf of dependent relatives.

Based on its work to date, the Technical Advisory Committee has proposed that the Government address concerns raised by the community of persons with disabilities regarding the recognition of the costs of disability supports required for employment or education (for example, sign language interpreters and talking textbooks). Currently such supports are recognized under the medical expense tax credit (METC), which can result in income-tested benefits such as the goods and services tax credit being reduced and tax being paid on the income (including government assistance) used to purchase disability supports.

The budget proposes to create a new deduction for disability supports, which will allow expenses in respect of disability supports to be deducted from income if they are incurred for education or employment purposes. As a result, income used to pay for these expenses will not be taxed and will not affect income-tested benefits.

This measure will be effective as of the 2004 taxation year. It is estimated to cost $15 million annually and will be funded from amounts set aside in the 2003 budget.

This budget also proposes a measure to better recognize expenses incurred by caregivers.

Many Canadians provide care and support to adult family members, particularly elderly parents or grandparents or adult children with disabilities. Through measures such as the eligible dependant credit, the infirm dependant credit and the caregiver credit, the personal income tax system currently provides tax relief in recognition of the extra basic living expenses associated with providing support or care.

However, in many cases, caregivers incur medical and disability-related expenses, in addition to basic living expenses, for a dependent relative. While taxpayers paying such expenses for a spouse (and, in most cases, a minor child) can generally claim these expenses under the METC, the ability to claim medical expenses incurred for other dependent relatives under the METC is very limited.

To address this issue, this budget proposes to allow caregivers to claim more of the medical and disability-related expenses they incur on behalf of dependent relatives. The amount of this claim will be capped at $5,000. This measure will better recognize the costs of caregivers and ensure they receive fair recognition under the income tax system for medical and disability-related costs they incur on behalf of dependent relatives.

This measure will be effective as of the 2004 taxation year and is estimated to cost $20 million in 2004–05 and $25 million in 2005–06.

Better Workplace Integration

The Government will also work with its partners—provincial and territorial governments, employers and communities—to increase support for workplace integration of persons with disabilities.

This budget provides increased funding of $30 million annually in 2004–05 and subsequent fiscal years for the recently negotiated federal-provincial-territorial Multilateral Framework for Labour Market Agreements for Persons with Disabilities. The Multilateral Framework is the successor to the Employability Assistance for Persons with Disabilities program, under which the Government of Canada currently contributes an ongoing $193 million annually to support employment assistance programming for persons with disabilities delivered by provincial and territorial governments. This budget will bring total support under the Multilateral Framework to $223 million annually.

The Government will also ensure that its policies as the nation’s largest employer do more to promote the hiring and retention of Canadians with disabilities in government employment. It also intends to encourage similar action on the part of private sector employers in the federally regulated sector.

Reliable, up-to-date information is also essential for identifying and addressing needs for better workplace integration. Accordingly, this budget provides funding to enable a second Participation and Activity Limitation Survey to be conducted as part of the next census in 2006.

Facilitating Transitions Into Employment

In addition to providing greater support for workplace integration, governments need to ensure that persons with disabilities are not penalized when they decide to take up the challenge of reintegrating into the workforce. In particular, both the federal and provincial governments—the joint stewards of the Canada Pension Plan (CPP)—acknowledge the need to facilitate voluntary reintegration by recipients of CPP disability benefits into the workforce.

Currently recipients of CPP disability benefits who attempt to return to work, but abandon their efforts because of difficulties in overcoming their disability, are required to reapply for disability benefits. The delays and uncertainty associated with the need to reapply can discourage individuals from returning to work. Accordingly, this budget proposes an amendment to the CPP legislation that would allow for the reinstatement of disability benefits if a former recipient is required to cease working for reasons relating to his or her disability within two years of returning to work.

Table 4.3
The Importance of Health

¹ The $400 million will be paid into a third-party trust upon passage of legislation and will be allocated to the provinces and territories on an equal per capita basis. The funds will be accounted for by the Government of Canada in fiscal year 2003–04. Provinces and territories will have the flexibility to draw down funds as they require at any time before the end of 2006–07.  [Return]

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