Second Wave Disrupts Smooth Sailing of FPT Relations

2 minute read

Federal, provincial and territorial (FPT) relations have been strong during the pandemic. Leaders worked across partisan lines to deliver programs and support to Canadians. But the goodwill that was built up over the last six months seems to be unravelling, at least with some provinces.

A look through the priority list from the most recent Council of the Federation meeting shows a number of unchecked “to-do” items, even after the government’s Speech from the Throne. The biggest one being an immediate, unconditional injection to the Canada Health Transfer (CHT) to bring the federal share of funding up to 35%. Despite public lobbying by four premiers, increasing the CHT was absent from the Speech from the Throne, though recommitments on pharmacare were front-and-centre. Unfortunately for the federal government, premiers are not in agreement on the pharmacare file. They are also concerned that the pharmacare promise may preclude any discussions of the health transfer from occurring. We anticipate the CHT to be priority one during the fall First Ministers’ Meeting, with the FPT goal of reaching a long-term agreement in time for the next fiscal year.

A fiscal stabilization program is also a priority for premiers, who would like to see the federal government make provinces whole in the face of revenue declines resulting from the economic downturn. Achieving this would be a tall order, particularly at a time where resources are scarce and officials are stretched beyond belief. While the federal government will likely continue rolling out specific programming through the provinces, reimbursement is likely to take a backseat.

Infrastructure spending is another hot button issue for Canada’s premiers. They are asking the feds to provide $10 billion per year for 10 years for provinces to access for local projects. Given current delays in getting infrastructure money out the door to provinces and territories, premiers are also looking for a more streamlined approach to delivering the funds. While the recent Infrastructure Bank investment is designed to kickstart projects, its focus is very specific and unlikely to be considered a solution by premiers. Stimulus spending has been on the backburner since the pandemic began, but provinces and territories may look to force the issue sooner rather than later – particularly in jurisdictions with low COVID-19 case counts. A possible solution could be to reallocate unspent money in the government’s Investing in Canada Plan. Even so, with construction season coming to an end, 2021 would be the earliest provinces could use these funds to get shovels in the ground.

The premiers will ultimately expect at least one of their asks to come to fruition in the much anticipated fall economic statement (if not sooner). If the Prime Minister wants to continue positive relations with his fellow first ministers, he should consider removing himself from the proverbial FPT “playground” and expedite transfers – albeit, with caveats for programs that align with the government’s priorities. Not doing so runs the risk of deteriorating a relationship that is proving very helpful to the government’s future election prospects.

Missed this week’s Look Ahead?

We’ve got you covered.

Articles we think you’ll like

Subscribe to our mailing list.