Provincial-Territorial Meeting of Ministers of Finance
NEWS RELEASE – TOWARDS ECONOMIC SECURITY AND FISCAL STABILITY
VANCOUVER, October 11, 2001 -- Provincial and Territorial Finance Ministers met in Vancouver to discuss the challenge of ensuring economic security and fiscal stability in Canada. The ministers agreed that a coordinated response with the federal government in meeting these challenges is very important.
Finance Ministers want to reassure Canadians that while the short-term economic outlook has become less certain following the September 11th terrorist attacks, Canada's economic fundamentals are sound. Low interest rates, reduced taxes and sound fiscal management on the part of governments are providing a secure base to build economic recovery. Ministers support the increased federal security measures and will work with the federal government to maintain Canada's close trading relationship with the United States.
The current economic downturn is expected to have an adverse effect on provincial and territorial budgets. Provincial and territorial ministers agree to work together in a managed process to address the diverse challenges across the country. In this context, they agreed to proceed to a regular monitoring of the economic and fiscal situation. Ministers further emphasize the importance of working closely with the federal government to ensure that all governments approach the current challenge in a coordinated fashion. They invite Finance Minister Paul Martin to meet with them informally at the earliest opportunity, and before the tabling of a federal economic statement or budget, to share information and develop common strategies toward economic security and fiscal stability.
Provinces and territories face a critical fiscal challenge: how to sustain health care and other vital programming in the face of mounting cost pressures and a weaker revenue outlook. Now, more than ever, the fiscal arrangements between the federal government and the provinces/territories must reflect the high priority Canadians place on health care, education and other social services administered by the provinces.
In the current context, Ministers emphasize the importance of addressing the Premiers' call to the federal government for moving forward on improving the fiscal arrangements between the federal and provincial/territorial governments, which include the following steps:
- Immediate removal of the equalization ceiling;
- Immediate work on the development of a strengthened and fairer equalization program formula, including as one possible alternative, a ten-province standard that recognizes the volatility around resource revenues, and comprehensive revenue coverage;
- Restoration of federal health funding through the CHST to at least 18 percent of program costs - up from the current 14 percent - and introduction of an appropriate escalator; and,
- Work on other CHST measures, including tax-point transfers as one possible alternative to the current CHST cash transfer.
Ministers intend to discuss these arrangements at a meeting with the federal finance minister scheduled for December 10th.
In short, while Provincial and Territorial Finance Ministers appreciate the immediate need for security initiatives, they urge the federal Minister of Finance to recognize that the ongoing priority in Canada remains the social programming cost challenge, particularly that of health care. Provincial and territorial finance ministers will assist health ministers to identify options for improving management of key areas of publicly funded health care – including pharmaceuticals. The objective is sustainable and secure health care in Canada.
In anticipation of forthcoming discussions, provinces and territories will jointly develop effective approaches to provincial and territorial fiscal stabilization.