Social Union Deal

Even Lucien Bouchard's glowering presence could not entirely sour the mood. In announcing a deal to overhaul the way Ottawa and the provinces work together on social programs, Prime Minister Jean Chrétien spoke proudly of "a new departure." Saskatchewan Premier Roy Romanow gushed that the agreement is "80 per cent of the solution to Canadian unity," while Ontario's Mike Harris crowed that it was "a tremendous day." And so it went for nine of the 10 premiers who lined up on Feb. 4, shoulder-to-shoulder with Chrétien, on the front steps of 24 Sussex Drive. The exception was Bouchard who was there to announce his refusal to accept a pact that fails to grant Quebec's demand for full compensation if a province decides not to go along with any new national social program. Yet the Quebec premier was not quite the odd man out. He was, after all, accepting a side agreement on health care - a meeting of minds that paves the way for Ottawa to transfer billions of dollars more to all the provinces.

After more than a year of talks on the high principles of social policy, it was high finance that sealed the deal. Ottawa and the provinces have been trying to hammer out an accord on Canada's social union since late 1997. A breakthrough seemed to come last summer, when Bouchard signed on to a bargaining position with the other premiers. After that, though, progress was spotty. By late January, Quebec Intergovernmental Affairs Minister Joseph Facal was fuming that he had "not seen a millimetre of movement" toward meeting his key demands. But Chrétien intervened to get the process back on track early last week. He invited the premiers to Ottawa for a final bargaining session - promising that he would be putting big money for health care on the table.

Money has always been at the heart of the social union debate. The provinces first decided to push for new rules after Ottawa slashed their transfers for health, education and social assistance in 1995. Their discontent with the status quo grew last year when Chrétien poured $2.5 billion into his new millennium scholarship fund, a move some premiers viewed as a blatant intrusion into their jurisdiction for education. In last week's deal, however, they got no promise that Ottawa will refrain from unilaterally cutting transfers in the future - only a commitment for one year's notice of any "significant funding changes." Similarly, when it comes to direct payments to individuals, like the new scholarship, the federal government promised only to give the provinces "three months' notice and an offer to consult."

More significant was Ottawa's compromise on how any major new social program would be designed. Under last week's three-year deal, at least six provinces would have to agree before any program could be launched that involves federal transfer payments to the provinces - such as a national home-care or a pharmacare plan. The two levels of government would have to agree in advance on the objectives, but each province would be left to work out the details of its own part of the program. And if a province was already accomplishing the aims of the new shared-cost program on its own, it would still receive the full amount of new federal funding - as long as the money was spent in a related area.

Those terms fell far short of Bouchard's demands. He said no Quebec premier would ever agree to a deal under which "six provinces and the federal government could trigger a new program, define national objectives, devise a framework for accountability, and then Quebec, to get compensation for its part of the program, would have to abide by the national objectives." Bouchard wants full compensation from Ottawa even if Quebec offers no comparable program. And, until recently, that was a bargaining position he shared with the other provinces. What persuaded the rest of the premiers to bend was a too-good-to-pass-up offer to restore federal transfer payments for health, starting in next week's 1999 federal budget. While the exact amount was being kept under wraps in the name of budget secrecy, one provincial official suggested the provinces could get as much as $6 billion more over three years.

Quebec will get its share, and Bouchard even signed a premiers' letter committing the provinces to spend the additional money on "core health services." In fact, on all other future social policy changes, Quebec will almost certainly be treated as if Bouchard had signed on to the social union framework. "Of course, what I'm offering, I intend to offer the same thing to everybody," Chrétien said. "I intend to use the mechanisms that have been developed to make the federation work with all the provinces." So while Bouchard declared that he was "not on the same train" with the other premiers, it seemed Quebec was in little danger of being left behind.

Maclean's February 15, 1999