New Brunswick faces rising health care costs, growing debt

An independent parliamentary report that assesses the country's finances indicates New Brunswick is on track for rising health costs and more debt.

The Fiscal Sustainability Report by the Office of the Parliamentary Budget Officer (PBO) says limits imposed by the federal government on health transfers will eventually make it impossible for provinces and territories to handle the costs of an aging population.

New Brunswick is tied with Nova Scotia for having the oldest population in the country, with 18.3 per cent above the age of 65, according to the Canadian Medical Association. By comparison, the national average is 14.6 per cent.

"There will be significant cost pressures for the government, especially coming from the health sector," Mostafa Askari, Canada's assistant parliamentary budget officer, told CBC's Information Morning Fredericton on Friday.

"I mean, it's very clear that per capita health expenditures increase significantly for a higher age group." 

The findings are consistent with a letter Premier Brian Gallant sent to the federal party leaders last week.

Askari says he does not agree with federal Finance Minister Joe Oliver's claim that health transfers are increasing faster than the provinces can spend them.

Information Morning - Fredericton11:51Fiscal problems ahead

An independent parliamentary report says New Brunswick is on track for rising health costs and more debt

"Yes, right now health transfers are growing at six per cent. But as of 2017, that growth rate will decline significantly," at the rate of GDP growth, which is about three per cent, said Askari.

"And so, as a result, there will be more pressure on the provinces to find the resources that they need."

The report, which comes just months before the federal election, states: "subnational governments cannot meet the challenges of population aging under current policy. PBO estimates that permanent policy actions amounting to 1.4 per cent of GDP are required to put subnational government debt on a sustainable path."

Meanwhile, the PBO says the federal government is on track to eliminate its debt in 35 years.

Askari said he hopes MPs will use the information to raise questions and debate the issue and eventually make some kind of policy decisions.

"The decision could be somehow changing the health-care system, or find new sources of revenues, or reduce the spending in other areas. I mean, that's possible," he said.

"What I'm saying is that these are sort of the general solutions, but certainly some tough decisions need to be made."

Last week, Canada's premiers asked the federal government to increase the Canada Health Transfer to cover at least 25 per cent of all health-care spending by the provinces and territories.

The premiers, who issued a statement following the Council of the Federation meeting in St. John's, said the increase would help transform the existing health-care system and offset the impact of an aging population.