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Alberta

Referendum will help Albertans kickstart national conversation about unfair Equalization, Danielle Smith

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This is an exert from a newsletter by Danielle Smith.  Click here to register to receive Danielle’s future newsletters.

Equalization referendum…

During the Stampede I met a pollster doing some polling on the equalization referendum in the fall. It has me worried. If the vote were held today there would be a lot of undecided. While it would likely still pass, we need the vote to be resounding so there can be no mistake how Albertans feel they are being treated.

For those of us who are diehard activists, voting “Yes” to remove equalization from the Constitution is a no brainer. When Brian Jean first proposed it I thought it was a waste of time. What’s is the point of having the province vote on a federal program? I initially thought.

Then Jean explained it to me in an interview and I thought the strategy was brilliant. By voting yes to delete a section of the Constitution it gets the ball rolling for a bigger conversation about Alberta’s role in Confederation. Under our parliamentary system – advised by court rulings and conventions – constitutional scholars say a “yes” vote will initiate a process that will unroll across the country. The federal government will be obligated to negotiate with Alberta in good faith and the other provincial legislatures will be compelled to consider a similar question in their provincial legislatures.

Here’s how it would work…
 
Here’s what could happen if we have a yes vote.

  1. The other provinces will be compelled to consider and vote on the issue. If there are 7 out of 10 representing 50 per cent of the population it will be removed from the Constitution.

Admittedly, this is an unlikely outcome. I think we could convince AB, BC, SK, ON and NF that we are all being similarly hosed under the existing equalization program, but how would you ever convince net recipients such as QC, NS, PEI, NB and MB? Still, it would get a national conversation going about why the net payers are so frustrated.

  1. If we don’t get others to agree, the principle of equalization stays in the Constitution, but we have a meaningful two-way dialogue about how it should be restructured, and that means designing it so QC no longer receives any money through the program from the rest of us.

I told you I went to the Fairness Alberta breakfast over the Stampede. Executive Director Bill Bewick is doing a terrific job digging into the numbers and explaining how absurd the entire program is.

Consider this: Newfoundland and Labrador is on the brink of bankruptcy and doesn’t qualify for equalization. Quebec has been running surpluses and paying down debt and they receive $10 billion from the program.

If I had my druthers, my starting point would be that only small provinces should be allowed to qualify for equalization. I think PEI has it particularly tough – attempting to run all the provincial programs that are available in other provinces with a population the size of Red Deer. Providing a top up for provinces in this situation is what the program should be all about. I want Islanders to have the same quality of health care, education, social services and infrastructure as we do.

But we need to be frank about this. The equalization formula has been manipulated and massaged mainly so federal politicians can give money to Quebec. Maybe it began with good intentions, as francophones began to assert themselves and their right to operate their businesses primarily in French and needed a hand up to catch up. Maybe it was justified when Quebeckers were sharply divided on whether it was worth it to stay in Canada, as evidenced by the 50-50 referendum result in 1995.

But today, it’s just taking advantage. In fact, it’s bordering on abuse.

Quebec is taking advantage of our goodwill…
 
Last week, Quebec’s Environment Minister Benoit Charette announced that Quebec would be rejecting a $14 billion project that would have seen GNL Quebec bring liquefied natural gas from Western Canada – principally Alberta – to Port Saguenay, Quebec so it could be exported on to Europe and Asia. Charette said it did not meet his standards for the environment:


“The promoter has not succeeded in demonstrating this, on the contrary,” he said, adding that the government is worried it would discourage natural gas buyers in Europe and Asia from moving to cleaner energy sources. “This is a project that has more disadvantages than advantages.”This is truly the last straw for me. If the Quebec government hates our energy industry this much and is actively working to destroy our natural gas industry I’m done with appeasement.

On the contrary, Minister…

Liquefied natural gas offers the best opportunity to reduce greenhouse gas emissions around the world. It is already “the cleaner burning fuel” as the ads used to say when I was growing up. It can easily replace coal in power plants and reduce greenhouse gas emissions in both China and India (which are adding coal-fired powerplants at a rate that dramatically exceeds the addition of wind and solar power everywhere in the world). Coupled with carbon capture and storage (underground) or utilization (for useful products including carbon nanofibre, concrete, industrial minerals, alcohol and ethylene) the greenhouse gas emissions problem can be solved. It is also going to be the base fuel for the new and emerging hydrogen economy, which will power all the heavy transportation we need to continue operating our global trade economy – marine vessels, trucks, trains, maybe even airplanes one day.

I am tired of placating the fantasy that our modern industrial economy is going to be powered by wind and solar and nothing else. Yes, hydrogen now offers a meaningful way for wind and solar to store the energy they produce, finally moving them towards being a reliable source of energy for our power grid. But once you’ve generated hydrogen at a wind or solar site, how do you transport it anywhere so it can be used for other purposes? The natural gas business can move it in pipelines. You can’t move hydrogen on powerlines.

But wind and solar are also not carbon neutral until concrete, steel, fibre glass, rare earth materials and transportation are carbon neutral. Wind and solar are not more environmentally friendly until they stop killing migratory birds and bats. Wind and solar are not environmentally neutral until we find a way to recycle them at the end of use (rather than dumping everything in a landfill).

If Quebec wants to interfere with the development of our resources, damage our economy and cost us jobs, I refuse to send them any more of our money. We cannot continue being economically hobbled by Quebec and damaged by federal government policy and expected to keep on shipping out dollars to Quebec. I would be delighted to see a financially independent, strong Quebec paying for their subsidized day care all on their own.

If they want to stand on their own two feet, bravo, let’s help them out. Let’s cut off the money pipeline.

Let’s help Quebec become financially independent…

Fairness Alberta has said three simple changes could cut the cost of the program in half and make sure Quebec is cut off almost entirely.

  1. Stop adjusting the program to increase expenditures with GDP growth. This just makes logical sense. As provinces get wealthier and develop more own-source revenue they should need fewer federal transfers.
  2. Adjust the payments to take into account inflation and different costs of delivering services in different provinces. It’s a lot more expensive to hire a nurse in Alberta than in PEI, for instance.
  3. Add four cents to Quebec hydro. Quebec subsidizes electricity rates which lowers the amount of revenues available to government. Imagine if Alberta sold oil and natural gas below market value and then asked Ottawa to make up the shortfall. It’s bananas.

None of this negotiation can happen unless Albertans send a strong message that they have had it with the status quo.

Voting yes in the referendum means you are voting to eliminate or renegotiate. Voting no means you are happy being treated as the doormat of Confederation. Vote yes and make sure to tell your neighbours and friends to also.

Because as Bill points out on his Fairness Alberta website, this particular program is only one way that extra money gets transferred out of Alberta. As of 2019, Alberta has transferred nearly $325 billion to the rest of the country. We have to start changing this. Equalization is just the start.

Alberta

Alberta takes big step towards shorter wait times and higher quality health care

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From the Fraser Institute

By Nadeem Esmail

On Monday, the Smith government announced that beginning next year it will change the way it funds surgeries in Alberta. This is a big step towards unlocking the ability of Alberta’s health-care system to provide more, better and faster services for the same or possibly fewer dollars.

To understand the significance of this change, you must understand the consequences of the current (and outdated) approach.

Currently, the Alberta government pays a lump sum of money to hospitals each year. Consequently, hospitals perceive patients as a drain on their budgets. From the hospital’s perspective, there’s little financial incentive to serve more patients, operate more efficiently and provide superior quality services.

Consider what would happen if your local grocery store received a giant bag of money each year to feed people. The number of items would quickly decline to whatever was most convenient for the store to provide. (Have a favourite cereal? Too bad.) Store hours would become less convenient for customers, alongside a general decline in overall service. This type of grocery store, like an Alberta hospital, is actually financially better off (that is, it saves money) if you go elsewhere.

The Smith government plans to flip this entire system on its head, to the benefit of patients and taxpayers. Instead of handing out bags of money each year to providers, the new system—known as “activity-based funding”—will pay health-care providers for each patient they treat, based on the patient’s particular condition and important factors that may add complexity or cost to their care.

This turns patients from a drain on budgets into a source of additional revenue. The result, as has been demonstrated in other universal health-care systems worldwide, is more services delivered using existing health-care infrastructure, lower wait times, improved quality of care, improved access to medical technologies, and less waste.

In other words, Albertans will receive far better value from their health-care system, which is currently among the most expensive in the world. And relief can’t come soon enough—for example, last year in Alberta the median wait time for orthopedic surgeries including hip and knee replacements was 66.8 weeks.

The naysayers argue this approach will undermine the province’s universal system and hurt patients. But by allowing a spectrum of providers to compete for the delivery of quality care, Alberta will follow the lead of other more successful universal health-care systems in countries such as Australia, Germany, the Netherlands and Switzerland and create greater accountability for hospitals and other health-care providers. Taxpayers will get a much better picture of what they’re paying for and how much they pay.

Again, Alberta is not exploring an untested policy. Almost every other developed country with universal health care uses some form of “activity-based funding” for hospital and surgical care. And remember, we already spend more on health care than our counterparts in nearly all of these countries yet endure longer wait times and poorer access to services generally, in part because of how we pay for surgical care.

While the devil is always in the details, and while it’s still possible for the Alberta government to get this wrong, Monday’s announcement is a big step in the right direction. A funding model that puts patients first will get Albertans more of the high-quality health care they already pay for in a timelier fashion. And provide to other provinces an example of bold health-care reform.

Nadeem Esmail

Senior Fellow, Fraser Institute
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Alberta

Alberta’s embrace of activity-based funding is great news for patients

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From the Montreal Economic Institute

Alberta’s move to fund acute care services through activity-based funding follows best practices internationally, points out an MEI researcher following an announcement made by Premier Danielle Smith earlier today.

“For too long, the way hospitals were funded in Alberta incentivized treating fewer patients, contributing to our long wait times,” explains Krystle Wittevrongel, director of research at the MEI. “International experience has shown that, with the proper funding models in place, health systems become more efficient to the benefit of patients.”

Currently, Alberta’s hospitals are financed under a system called “global budgeting.” This involves allocating a pre-set amount of funding to pay for a specific number of services based on previous years’ budgets.

Under the government’s newly proposed funding system, hospitals receive a fixed payment for each treatment delivered.

An Economic Note published by the MEI last year showed that Quebec’s gradual adoption of activity-based funding led to higher productivity and lower costs in the province’s health system.

Notably, the province observed that the per-procedure cost of MRIs fell by four per cent as the number of procedures performed increased by 22 per cent.

In the radiology and oncology sector, it observed productivity increases of 26 per cent while procedure costs decreased by seven per cent.

“Being able to perform more surgeries, at lower costs, and within shorter timelines is exactly what Alberta’s patients need, and Premier Smith understands that,” continued Mrs. Wittevrongel. “Today’s announcement is a good first step, and we look forward to seeing a successful roll-out once appropriate funding levels per procedure are set.”

The governments expects to roll-out this new funding model for select procedures starting in 2026.

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The MEI is an independent public policy think tank with offices in Montreal, Ottawa, and Calgary. Through its publications, media appearances, and advisory services to policymakers, the MEI stimulates public policy debate and reforms based on sound economics and entrepreneurship.

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