Proceedings of the Standing Senate Committee on
Social Affairs, Science and Technology

Issue 15 - Evidence

The Standing Senate Committee on Social Affairs, Science and Technology met this day at 3:52 p.m. to examine the state of the health care system in Canada.

Senator Michael Kirby (Chairman) in the Chair.

[English]

The Chairman: Senators, we are here to continue our investigation into the state of the health care system in Canada and what the federal role should be and how that role should be changed for the future to keep the system sustainable. We are delighted to have with us today as our witness Marc Lalonde, whom I think all of you know from a variety of jobs he has had in the past in both the private and public sectors.

Mr. Lalonde was the minister of health in 1977 when the method of the federal government's financial contribution to health care was changed from a 50-50 cost share formula. Prior to 1977, the federal government paid 50 per cent of an agreed set of health care costs between the federal government and the provinces. The formula was changed in 1977 under an act called the Established Programs Financing Act and moved to block funding. That is lump sum funding, not a direct cost-shared funding. It also moved to transfer part of that block funding to include not only cash but also so-called tax points. Mr. Lalonde may want to comment on that. We thought it would be important to understand the logic of that change since the tax point is hot in the sense of whether the federal government should still count it.

In addition, we will use this opportunity to talk about the issue of the management of major hospitals. For 14 years, Mr. Lalonde was the chairman of the board of a major hospital in Montreal. I think understanding that perspective of the health care system would also be helpful.

Finally, since he was minister of health at the time ParticipAction and other programs were started that were driven towards improving the health of Canadians, he might want to comment on that as well.

Mr. Lalonde does not have a written opening statement because he came in on a plane from England last night.

We thank you for being here, Mr. Lalonde. You know our format. Unlike the House of Commons, the questions will not be partisan, but they may be substantive. Please proceed.

[Translation]

The Honourable Marc Lalonde, P.C.: Honourable senators, I would like to begin by thanking you for your invitation. As the chairman has just explained, I for many years had to deal with health-related issues. During the last five years, my role has mostly been that of patient within our hospital system, and there is absolutely no doubt in my mind that it is thanks to this system that I am still on this earth and able to appear before you today.

It would obviously require more than 10 minutes to describe to you the conclusions I have drawn from my various experiences of the last 28 years. If I had the honour to exert some influence on the evolution of Canada's health policy between 1972 and 1984, since 1984, my experience has been mainly limited to the Quebec scene.

The chairman told you of the main reason for my appearance before the Committee, namely the Established Programs Act of 1977. I was also asked to deal with the Canada Health Act of 1984. I saw that I was to have appeared with my former colleague, Madam Bégin, who was unfortunately not available today, and she clearly would have been in a much better position than me to speak to you about this Act. Since I was Finance Minister at the time of the passage of the Act, I obviously took a professional interest in it, not only as Minister of Health, but also as Minister of Finance.

I will not waste time repeating the content of the Established Programs Act of 1977, the chairman having already summarized it for you today and several previous witnesses having, I believe, already abundantly dealt with it.

I am pleased to see at least two of my former colleagues, senator Callbeck and senator Robertson, who were on the other side of the table when I was Minister of National Health and Welfare. These senators must certainly have a very vivid recollection of the discussions held at the time. The chairman even stated that he was at the time a high ranked official at Privy Council and that he had strongly opposed, thankfully unsuccessfully, the passage of the 1974 Act. This goes to prove that it is wrong to think that officials always have the upper hand on ministers.

I would like to begin by saying a few words about the context preceding passage of the 1974 Act. At the time, it was the Department of National Health and Welfare. It covered virtually all the social and health care programs of the Canadian government. It was a time when the Health Minister covered approximately a third of all federal expenditures. In 1972, the Department was co-managed by two deputy-ministers: Mr. A. W. Johnson for Welfare and Dr. Maurice Leclerc for Health.

Following my appointment in 1972, we decided to undertake an in-depth review of the programs the Department was responsible for. In 1972, we published the orange book on Canadian social security reform and 1974 saw the publication of a document entitled, "A New Perspective on the Health of Canadians." This latter publication has been tabled with the committee and I will come back to it in detail later.

One of the main conclusions of these studies carried out in parallel by both branches of the Department was that it was essential to broaden the concepts that had led to the establishment of the welfare and health systems in Canada. Furthermore, the definitions contained in the existing federal legislation were creating certain problems that had to be dealt with.

At the time, the provinces had been complaining for several years. In my opinion, these complaints were for the most part justified by the fact that the application of the systems in place, both in the area of welfare and in that of health care, were an excessive intrusion of the federal government in areas under provincial jurisdiction. Furthermore, this federal system imposed too much rigidity and too many distortions in the distribution of financial resources in these areas.

Let me say a few words about the indubitable rigidities that existed. We were confronted with increasing costs in the areas of health and welfare during a period of stagflation, in other words, a stagnating economy and high inflation. The federal government wanted to contain costs and ensure greater equity between the provinces with regard to the contributions made. Some of the more well-off provinces had the means to support more generous programs that the federal government had to contribute 50 per cent to. Furthermore, the pressures aimed at containing costs had led us to a very strict regulation of the programs and of what was considered an eligible expenditure, both in the area of health and in that of welfare.

If the subject interests you, you could ask your researchers to dig up the rules in force at the time in the areas of health and welfare, and you will see to what extent federal regulation was detailed and how much debate there was with each province. You could thus see, for example, what type of bed was eligible or what type of welfare situation led to 50 per cent federal participation.

Furthermore, the provinces were arguing, and with reason. We were in agreement that the system in place discouraged innovation and concentrated resources in the most costly areas, namely health, hospital insurance and medical insurance. As a matter of fact, the purpose of the hospital insurance program in the 50's and medical insurance in the 60's was to guarantee to all Canadians basic hospitalization and medical care services. At the time, these two services were considered to be costly. The provinces and the federal government had agreed to a 50-50 cost sharing arrangement for these major programs.

Over time, we realized that this concept of health care was rather narrow and that there was a less costly alternative to hospitalization for a good many types of treatment. Unfortunately, this alternative was not eligible for cost sharing with the federal government. When the provincial Ministers of Health and Finance had the choice between a service for which the federal government would pay 50 per cent of the cost and another for which the province would have to pay 100 per cent, it is easy to imagine what the provinces' preference was, even if it was not, objectively speaking, the most efficient investment in terms of the benefits for health care programs.

The Government of Quebec wanted to set up local community service centres to take the overflow from the hospitals, promote less specialized services and improve accessibility. It however found itself in a situation where it was forced to absorb 100 per cent of the costs. The aim was if not to reduce the cost per unit, at least to broaden the services offered to the population.

That was the situation you had in the provinces. As for the federal government, you had another concern. Following publication of the orange book on welfare and the white book on health, we had come to the conclusion that we had to broaden our concept of services in this area. There was also greater and greater concern in the Department of Finance and in the government in general. We were stuck with paying 50 per cent of what the provinces wanted to spend in the areas covered, without having any say at all on the allocation of funding by the provincial governments. There was at the time a great desire for predictability of the federal government's obligations, both in the area of health and in that of welfare.

We wanted to alter the course. Negotiations with the provinces were undertaken and they led to an agreement on a new system that was embodied in the 1977 Act.

On the one hand, we had established greater flexibility for the provinces in the allocation of funding for welfare and health. On the other, we had obtained greater predictability of federal expenditures since we were establishing a per capita payment program that was tied in with the growth of the GNP. These payments were partly in the form of tax points and partly in the form of cash transfers to the provinces.

There is absolutely no doubt that the 1977 Act allowed the Canadian government and provincial governments to reach the two objectives they had been pursuing. I wish to emphasize that the intent at the time was not to reduce the federal contribution to the services already covered, but it is obvious that subsequent events proved that it was perhaps easier for the federal government to do this under the 1977 program than previously.

You asked me to comment on certain disadvantages, and some of these have already been mentioned here. It was obviously more difficult to evaluate the specific federal contribution to each program since you had payments covering a group of programs and since there was no specific allocation, contrary to what had previously been the case, to medical insurance.

Without a doubt this brought about a certain reduction of the political visibility of the federal government's contribution. In my opinion, this could very well have been counteracted by better more aggressive and more systematic information provided by the federal government as to its contribution to provincial programs.

There is a third disadvantage, perhaps the most serious one, that was a concern of ours at the time. There had been a lot of debate surrounding this and our fear was that the establishment of such a system might lead to a decrease in the political commitment of the government and of Canadian parliamentarians towards these programs if the link between the programs and the federal government's financial contribution was to become more and more vague.

Indeed, why would a federal MP vote in favour of the granting of funds that he or she would not be able to take credit for in any specific way in the eyes of his or her constituents? If he has the choice between offering a specific program about which he or she can say: "Here, the federal government is funding 100 per cent of this program" and a program where one gets lost in the maze of federal-provincial relations and funding allocation determined by the provincial government, it is obvious that the politician's natural tendency will be to lean towards what he or she can draw more credit from.

I believe that this factor did perhaps indeed facilitate the decisions of subsequent Canadian governments to make deep cuts in federal contributions to health and welfare. I will not talk about the 1984 Act because I am running out of time. We could perhaps come back to my views on the present system during the question period.

If I have a piece of advice to give the committee, and it is this: take the broadest possible view of the matter you are studying. Each time there is talk of a crisis in the area of health, people pounce on those questions dealing with the operation and funding of medical and hospital services. That is quite understandable since that is where most expenditures are made.

But if we want to improve the health of Canadians, these two sectors are but elements of a much broader picture that includes other elements that are no less important.

When I look at some of the debates going on now, I am tempted to make a comparison with the automobile industry. A few years ago, we had cars that left a lot to be desired quality-wise. One of the solutions envisaged was to build more garages, more service stations and more body shops. In this way, we would have ensured that all cars be able to be repaired when they fell apart in our hands.

We as a matter of fact saw the arrival on the market of better quality cars. Consumers had complained to such an extent that competition forced car manufacturers to improve the quality of their cars considerably. Then came government regulation, that forced the respect of certain standards, thus improving the quality of automobiles. Then came the realization that it was necessary to improve the quality of roads and to regulate speed.

Coming back now to the issue of health, I remember the anecdote of the lifeguard who spent all of his time pulling people who were drowning from the river. He asked why no one was there to warn people that if they went on the bridge, they risked falling into the river and drowning. It was a faulty bridge, without guard rails and it was falling apart.

That is similar to what we did in 1974 with the New perspective on the health of Canadians. We had identified four main factors in the health of Canadians, namely human biology, life styles, the environment and health care services. We had come to the conclusion that as far as cost-benefits were concerned, health care services were not the factor most likely to improve the health and longevity of Canadians.

When the document came out, it fell like a stone, but it was taken up in the United States by the World Health Organization. As is usually the case, Canadians, after hearing so much talk about it in other countries, starting telling themselves that they were perhaps on to something. The study had a tremendous impact on Canadian policies, both federal and provincial.

The Department of Health carried out much more refined studies on the issue. I noted that the Department recently published a new list of determining factors for health. There are nine of them: income and social status, social support networks, the level of education, one's job and working conditions, the physical environment, the person's biological and genetic baggage, habits and one's ability to adapt, healthy development in childhood and, finally, in ninth place, health services.

We might come back to this later if you are interested. In essence, these nine factors are developments of the four we had identified in 1974 and they constitute important instruments for analysis.

I spent the last two weeks in Washington, before going to England, and I read a series of articles in the Washington Post on one of the problems facing Americans today: the problem of obesity. I read that approximately 60 per cent of Americans presently suffer to some degree or other from obesity and that in the schools it has become extremely difficult to get students to exercise and to stay in shape.

Indeed, everyone sees it: all you have to do is go to a beach in the United States in the summer and you see that there is a serious problem somewhere. We are all aware of the grave consequences of obesity, especially for young people. There are two possible solutions: the first is to wait until these people become seriously ill and go to the hospital or to their doctor and require all sorts of costly services, and the second is to tackle the problem with a large-scale public education program. Such a program would target both physical education and eating habits. To quote the Latin of my childhood, Mens sana in corpore sano.

This implies the participation of the federal government, the provinces, the schools, the municipalities and the families. The impact on health could be tremendous. If we do nothing, the negative impact will also be tremendous and we will pay for it with health care costs.

This is just one example among many others. Experiments carried out over the last 25 years have shown that specific action for promotion and prevention in the area of health can produce rapid and significant effects.

It is to my mind critically important that the issue of health be examined in a broad context. I believe this is neither getting ahead of ourselves and losing our grip on the situation nor an alternative to the offering of top quality and efficient health care services.

Second, such an approach, by the federal government, would have consequences for the federal financial contribution. I believe that it would be a mistake to simply come back to a ceiling on the federal contribution to hospital care and medical services.

Third, in this area, and this is appropriate for the Senate, it is important to understand that the best solutions will be those that will bring about long term action. Even if some of the moves that might be made may have an immediate impact, we must avoid simply patching up the holes and rather look at the situation in its entirety.

[English]

The Chairman: Thank you very much, Mr. Lalonde. I understood your argument for block funding, that is to say, lump sum rather than cost sharing, because I agree with you about the rigidity. The block funding bothered me much less than the tax points. You talked about political credit. It seems to me that it is difficult for a government to get political credit when they have not suffered the political pain of doing the taxing. Giving away tax points really means that the individual taxpayer pays less to one government and more to the other, but they still pay the same amount. That is essentially how we did the tax point transfer.

My view has been that that is what decreased the legitimacy of the role of the federal government; it was not so much the block funding. That leads me to ask whether or not the Canada Health Act should simply be perceived as a way of the federal government getting back legitimacy that it gave up when it gave up tax points. In other words, it said, "Our only real legitimacy is the cash portion, so we better pass an act so that Canadians think we care about the health care system." I am deliberately putting it in an extreme way to set up the issue, but would you comment on the tax point question and legitimacy of the Canada Health Act once you have given away the tax points?

Mr. Lalonde: First, the transfer of tax points was not new in 1974. We did it in Quebec with post-secondary education a long time before 1974. Fundamentally, it was a political settlement with the provinces. We bought our peace at a certain cost, no doubt.

The issue was very politically important in Quebec in particular, but provinces generally felt that the federal government was spending money in what were recognized as provincial matters or provincial jurisdictions. We argued that, indeed, we were using the constitutional spending power that we had. It was clear that these programs would be in operation, we assumed, for a long time. Some provinces had tax points that brought in more money than others, and the provincial governments were insisting that they would feel much more reassured that they were not at the whim of the federal government if at least part of the transfer was in the form of tax points. It certainly had the impact of reducing the visibility of the contribution of the federal government, but that was the background for it at the time.

As to the 1984 act, I do not think it had anything to do with reasserting our visibility. It had to do with a genuine concern that there was, through the back door, erosion of the basic elements of medicare generally. Extra billing and additional fees for hospital care were creeping in right and left, and there was a necessity for the federal government to reassert the basic principles that were enshrined in the first legislation and to try to set up regimes that would provide for greater accountability in the way the provinces were using federal funds, in particular, for the public in general and for the federal government.

If you must look for a rationale for the 1984 act, I do not think you should look for it in terms of trying to recuperate some lost visibility that the federal government did not have or had lost. It was essentially that there was federal legislation that provided for fundamental principles to which the federal Parliament was unanimously attached. We were seeing erosion that, if not stopped at that time, might have led to a dismantling of the whole national system as we knew it. That was the rationale behind it.

Senator LeBreton: Mr. Lalonde, on the question of the block funding and the tax points and the Established Programs Financing Act, you advised quite rightly to take the long view. In view of what has gone on in the intervening years and the misunderstanding of the general public on the whole tax points issue, would you do it all over again? There is such misunderstanding in the public. I think that is part of the reason the federal government seems to be not getting as much credit as perhaps it deserves in health care funding. If you had to do it all over again, in hindsight, would there have been a better way to explain it to the public? I actually think that if you were to go to Main Street Canada and ask about the tax point system, people would not have a clue what it means in the individual provinces and would not know that some provinces use it in different ways than others.

Mr. Lalonde: I bet you that even inside Parliament there are many parliamentarians who would be at a loss to know what tax points mean in their own provinces. That is a very important and difficult question. Is your question to the effect that if it were to be done again we should not go down the tax point road?

Senator LeBreton: Using the benefit of hindsight, do you think that, from the federal government's perspective particularly, there would have been a way to get out of the 50-50 formula and do block funding and tax points so that it would have been clear to the public exactly what that meant?

Mr. Lalonde: I do not know whether it would have been possible to arrive at an agreement with the provinces. We had this with post-secondary education in Quebec at first, and then agreement was finally arrived at on the basis of the transfer of tax points. I do not know whether we would have been able to have the Established Programs Financing Act without some tax point transfer with the provinces. One might say that we could have said, "The hell with you, provinces. You will get it in cash and that is it." There would have been a row, but it would have been just another row in the history of Canada.

It was decided at the time that this was a reasonable compromise. If you assume that this was the right thing to have done at the time, I would say that the federal government should have been much more aggressive in spelling out what its contribution was year after year to the various provincial programs. I have always thought that the federal government was excessively discrete in that regard.

It was like the equalization payments that were going to Quebec and the Atlantic provinces and Manitoba in particular. I remember arguing with my officials and saying, "Well, why don't I go with a big cheque and deliver it with the media present? At least people will know something is happening." The response I got not only from the officials but also from colleagues in cabinet and from other provinces was, "No, if you do that, we will face a backlash in Ontario because they would say there goes another zillion dollars out of our pockets to Quebec or to the Maritimes and so on." We never did bite the bullet. We said, "So be it. We will need to explain to the people of Ontario and Alberta that it is good for Canada and that we should do it."

The shared cost program is not a lost cause by any means. The federal government should not hesitate to spend money on letting the public know where the money comes from and what it is for. I certainly would have no qualms as a taxpayer if the federal government were to spend money in that field. Canadian citizens have the right to know who is paying for what. However, to do that, you need a kind of systematic program of information as to what is done and how.

Senator LeBreton: Perhaps the ministers of health can do that when they meet. I think the public is confused. They look at the bottom-line dollar. It seems that now many things are hidden under the tax point issue. When they put all these issues on the table, the ministers of health can help the public sort out the confusion over what exactly each level of government does. That confusion is part of the problem. It is why people are starting to lack faith in the system. They really do not understand, and therefore they get their information from newspapers or from some horror story in a part of the country that might have no relation to the real situation. I wonder what the solution would be.

Mr. Lalonde: It is interesting. While I think most citizens recognize that health services are under provincial responsibility, it seems that a large part of the population believes that the federal government is not doing its share. I think there is a message for federal parliamentarians and federal government in that regard.

I also believe that contribution in tax points should not just be written off on the basis of, "It is gone, so it is gone." It is something that the federal government, at a certain stage, has said we will withdraw. That contribution, in my view, is still there. There is a way of evaluating it, certainly in terms of the contribution of the federal Parliament to provincial programs in the field of health or in the general field of the services covered now with the new system, which includes post-secondary education and health and welfare. At least there is a way of assessing the federal government's share. It is more difficult to be specific, because of the integration of the contributions, but the federal government could establish a fair distribution of those costs on the basis of the historical contributions and carry it forward. That could be done.

To come back to the last point in my presentation, I think the federal government has a very important role to play in terms of political leadership in the fields of health promotion and prevention in Canada and research. The research institutes that have been funded are a very important contribution of the federal government. Some of the research is funded 100 per cent, and much of the promotion and prevention could also be funded 100 per cent. It would be better if it could be done in full cooperation with all actors in the field. The federal government would get recognition for it. The legislation that you have passed in the tobacco sector is certainly related to health, and that is definitely federal leadership and a federal contribution that I believe the public has identified. They may not relate it to health directly, but it is. It is a matter of doing your political job of selling to the Canadian people the purpose of your actions in that field.

Senator Carstairs: Mr. Lalonde, was it ever envisaged under the Established Programs Financing Act that a point would be reached when the tax points would become almost the entire contribution of the federal government? That was the argument given, as you know, for the introduction of the Canada Health and Social Transfer. It appeared that Quebec would be the first province to no longer get any cash transfer but rather simply get tax points.

Mr. Lalonde: We never foresaw that Quebec would be in a position where the tax points would cover the full contribution of the federal government, and I do not believe it has happened yet. I do not know for sure, but I would be extremely surprised.

Senator Carstairs: However, that was, in fact, the rationale given for introducing the Canada Health and Social Transfer. The graph seemed to show that, as the tax points were getting larger, by the year 2002 Quebec would no longer get any cash transfer.

Mr. Lalonde: Perhaps, but I can tell you that that was not a particular concern at that time. We knew then that Alberta and Ontario might very quickly be in a situation where tax points would cover the federal contribution because of the more rapid growth of the tax points in those provinces. We felt that the advantage of flexibility and the possibility for the provinces to be much freer in determining their health policy and their social policy had a higher importance than for us as federal politicians to walk around saying we pay 50 per cent. We thought that we could and should be able to explain to the Canadian people that we were still making a contribution, albeit by tax points. It is a political job that must be done.

The importance of eliminating the distortions and rigidity of the system was well worth going the route of tax points and grants. It was not essential that it be in tax points; it could have been in grants. However, as I said, it was fundamentally a political fight. We felt that we did not need to go to war over tax points.

The Chairman: I guess I now understand exactly where I have had difficulty with the situation. Whether it was Quebec was not the issue. The data showed that in the period between 2002 and 2008, most provinces would not receive cash but only tax points. I said to myself, "Well, if I were a province not receiving any cash and getting only the revenue of the tax points that I got back in 1977, why would I not simply opt out of medicare and take the position that the feds are clearly not making any contribution?" Clearly, as a province I would not take the tax points, because to do that would create a colossal political problem. It would necessitate different levels of income tax in some provinces. That is the logic that has led me to be troubled by the tax point issue.

By the way, I absolutely agree that in 1977 it never crossed anyone's mind when one looked at the forecasts. It did not look like the cash would run to zero. However, I am bothered now because with no cash and only tax points, the minute a province decides to opt out, our leverage is gone. Therefore, I agree with Senator Carstairs. We went to the CHST to preserve a cash portion so that, in a sense, there would be a visible element of federal contribution and federal leverage and no one would opt out. Would you like to comment on that?

Mr. Lalonde: No.

The Chairman: Even though you do not want to, I would love to hear your comment.

Mr. Lalonde: I have been out of this game for too long. I think your analysis is quite right. The moment a province can claim that it is not getting any financial contribution from the federal government, why should it feel bound by federal rules? However, with some imagination, you can find other ways of putting the screws where they need to be put. I do not want to go into details there.

Senator Carstairs: My second question has to do with your report, which I think is as valid today as it was in 1974. There are determinants of health, and there are ways in which we can contribute to the better health of Canadians. My experience in a provincial legislature and at the provincial level shows me that governments are very reluctant to put into effect and to spend money on programs for which they cannot show a cost-benefit analysis. Every time they removed a preventive initiative, it was because we could not prove that it did what we thought it might do. How do we turn that around? How do we make people understand that prevention programs in fact can have as much if not greater effect on Canadians' good health as some intensive medical interventions?

Mr. Lalonde: May I start with an anecdote? It is one that arose right after the publication of that document. One of our first decisions as federal-provincial ministers at a conference following the publication of this book was to adopt unanimously the view that all provincial governments should pass a law imposing the compulsory wearing of seat belts in cars. Everyone was unanimous around the table. We all walked out of there, "Rah, rah, rah," press conference, unanimity, et cetera. The ministers of health went back home, and most of them were well received, but I can tell you that there were a few provinces where the transport minister was waiting with a big baseball bat, saying, "What are you doing in my bailiwick? There is no way you will decide for me what will happen on the roads of this province. That is not the responsibility of the health minister." There was even a province where they managed to pass the law but did not proclaim it for three or four years because the premier was concerned about backlash from the citizens.

We had statistics from New Zealand, which had passed a law in this regard, and from another country showing that with the adoption of the seat belt law you would see a reduction of approximately 25 per cent in serious injuries in car accidents. That happened in Canada as well. Within a few years, you could see the statistics showing the evidence. In the end, Alberta, which had previously refused, adopted the law, and Nova Scotia suddenly decided they would give Royal Assent to a law that they had adopted. The difference was the proof that it was effective, along with much pressure from community groups and organizations like the Canadian Public Health Association and others, which demonstrated to their provincial governments that something must be done.

Therefore, I believe that the role of community action will be extremely important. It is like the issue of environment. You impose rules and spend money knowing that you will not see the results tomorrow. The results will be in the medium and long terms.

There has been, in this country and elsewhere in the Western world, enough action by pressure groups and voluntary organizations that politicians have been forced to listen. You have green parties sitting in various Parliaments in Europe and elsewhere. The movement has taken a political form. The politicians that took too long to act saw a political opposition organize itself. In our system, political parties have been wise enough to move fast in order to avoid the creation of such a political party.

We need the type of action wherein the Minister of Health can be a leader, but he cannot be the only actor. There must be action that will take place on the basis of a collective action by the government, because in almost every instance it involves action by a number of departments of the government. Money is not the problem. A program of public education on obesity, for instance, is insignificant compared to what you spend on the health budget. What we need is a determination to go ahead with programs and do it consistently. The problem is that it becomes fashionable for a little while, some action is taken, then ministers change and officials change. The first thing you know, the programs disappears because you do not get elected on this in six months, money goes elsewhere, and that is the end of the program. What we need is a program that will be adopted and that will be consistently followed by governments.

For decades in Canada we have had the Canada Food Guide. That publication was recognized as one of the first and best nutrition guides in the world. When I was minister of health and welfare we were mailing out monthly family allowance and old age pension cheques. Today that is done electronically, therefore inserts cannot be mailed in addition to those cheques. We had a policy whereby every month such an insert would be mailed with every cheque. Those inserts dealt with various topics on keeping yourself in shape, as well as healthy lifestyle and nutrition. We were promoting the Canada Food Guide, and we were sending calendars once a year. That is perhaps old-fashioned and out-of-date now, but perhaps it is done today by e-mail. However, I feel disappointed that we are not pursuing similar actions more aggressively and systematically. You would see results more rapidly than you might expect.

We had the program called ParticipAction, for instance, which was aggressively promoted at a time when the majority of the money came from the private sector. Television stations were giving free time to promote physical exercise and to discourage smoking. We have seen the impact of that in terms of the number of people suffering from cardiovascular diseases. Several years after ParticipAction was introduced, we could see the improved statistics. In regard to smoking, we have seen the impact in terms of cancer of the lung amongst men. Unfortunately, women have decided to catch up with men in smoking; therefore, we see the figures for lung cancer increasing in women.

It is not a matter of saying that it is wasted money, that we do not see the results. You can show, on the basis of a number of programs that have been implemented, where we have made an impact. You can put dollar signs over that impact in terms of increased productivity and people who are alive today and still working and contributing through their taxes to help people who need health care. I believe it is a very saleable proposition to Canadians and to governments, except that you must have the right political leadership that will pursue programs systematically and consistently.

The Chairman: Since you quoted the obesity data from the United States, in Maclean's this week there is an article stating that 25 per cent of Canadian children between the ages of 4 and 9 are obese. It is not just American data that we are reading.

Senator Keon: First of all, I was delighted to listen to you, Mr. Lalonde. I am pleased to hear positive suggestions and not just a litany of everything that has been done. I agree with all of your suggestions.

Mr. Lalonde: I have more suggestions if you leave me five minutes at the end, Mr. Chairman.

The Chairman: We will do that.

Senator Keon: I should like to see us as a committee try to get our country out of the conundrum where we have this big sinkhole of funds that the provinces are saddled with; in other words, traditional medicare paying hospital and physician costs is destroying them financially. Some of the provinces will soon have 50 per cent of their budgets gobbled up in this.

We have come a long way with many things. We have some excellent programs, information and expertise in population health. The same applies to public health. We have had tremendous progress in health research in the last four or five years with the institutes and so forth. You spoke about health education, which is an area where we have failed. We have made some headway but there has been no consolidated thrust in health education. I believe we have failed in leadership in health for political reasons. I do not know who would dare step out there and try to be the leader. It would take a great deal of political maturity to do that without disturbing the provincial counterparts.

I am not sure that any of the formulas for funding that have been here since the 1950s have been ideal, but I do think that the federal leadership must increase. Many of the determinants of health care are national. Certainly the smaller provinces cannot deal with these things when it comes to environment and many of the other issues.

I should like to hear you speak to how you would see the situation unfold whereby the federal government could at least assume the leadership to beef up the non-medicare components of the system. I will repeat them: to get population health plugged into the public health of the country; the health care delivery system; health research, with feedback and outcomes; and, most of all, a serious program of health education that would not need to be that expensive but that would have continuity.

Mr. Lalonde: Thank you for your kind words.

Indeed, as we have both said, in the broader sense, the broader meaning of health and health policy, the federal government has a very large role to play, but I do not believe that it should attempt to play that role alone. If some provinces do not want to cooperate, I would say, "So be it."

Take the case of health education. Today, with the means of communication we have, there is nothing preventing the federal government from using the Internet and television and radio as much as it wants to do health education. However, I think it would be more effective if health education were to be integrated into the educational system and could show up in the classroom with the people who are in daily contact with the kids. I can see some provinces immediately up in arms, saying, "The federal government is intruding into education." If they want to do it and finance it, fine. Why would they not agree to do it on a concerted basis with other provincial governments and with the federal government?

Consider the issue of nutrition and young children. Can we help them be less dependent on junk food? Well, you can certainly do something federally, but much of that will need to come out of the classroom. Which provincial minister of health or minister of education would be against that? However, in our system, that it is not the responsibility of a teacher, so someone will need to be assigned that responsibility, and that means increasing the education budget for that particular purpose. I do not think it would cost zillions, and I think it would be a good investment by provincial governments, but that implies that the minister of health and the minister of education would need to work together. If necessary, the minister of health could take some of his money to help the minister of education if the provincial minister of finance agrees to contribute.

I say the federal government can do a great deal. It will be better if it could be done on a concerted basis. It does not need to mean that the federal government will start putting money in primary education.

In my view, the total contribution of the federal government to the field of health should increase. As part of that increase, much can be done in terms of negotiating concerted action by the federal government and the provincial government in the directions you have indicated. I think that can be done, but it would certainly require increased funding by the federal government.

By the way, this is one of my general conclusions. I do believe that there is room for additional money going into the health sector in the Canadian economy. We have been as high as 10.1 per cent of our GNP, I believe, and that includes private and public contributions. We have been down as low as 8.9 per cent. At the present time, we are around 9.1 per cent or something like that. I do not think we need to raise our contributions to 14 per cent like the Americans, or even to 12 per cent. However, taking into account the severe impacts that have been felt in our system because of the federal and provincial retrenchments during the 1990s, there should be an appreciable jump over the next few years to repair the damages that the system has suffered in the last few years, and then there should probably be a stabilization of the contributions. I would think that if we were targeting something like 10 per cent of our GNP going to the health sector over the next few years, then gradually coming down to between 9.5 per cent and 10 per cent, we would find that we had quite a lot of money to do what we need to do. I would say again that that would include a large component that would go into promotion and prevention.

Senator Robertson: Mr. Lalonde, it was a pleasure working with you when you were a federal minister of health. We had a comfortable relationship, and the tensions that we see now did not seem to exist then. I must say, perhaps because I am the senior citizen around the table, that historical perspectives can bring back many good memories and programs that one tends to forget about momentarily.

I would think that it might be wise for this committee to forget about tax points. I do not say that to be contentious, but since we are doing the historical resource thing, I think it should be on the table. When those tax points were transferred to the provinces, it was rather a fictitious gift. Those tax points were taken away from the provinces in the 1950s and 1960s. When they reverted back to the provinces, it balanced the books, shall we say, in those days. You may remember some of that debate. Knowing how the provinces feel about these issues <#0107> and they have longer memories even than I do about this -- I do not think they will give up on that issue with too much grace, shall we say, or enthusiasm. I do think it is important to remember that as we look ahead to our recommendations and how we think we should proceed.

I was interested in all of your remarks, Mr. Lalonde, good comments as usual, but I want to come back to the preventive programs. I agree with everything about the preventive programs. How to get them there is another matter, but perhaps it can be worked out. You were talking about the 50-50 cost sharing in the early days. We well understood that the federal government had to get out of that because the provinces, as wily as we were and are, shoved everything conceivable under the roof so you would not find out about it. You had no control over the cost escalation. It was very successful.

Most of us around this table feel that health care must move away from the hospital. The health care of the future will be delivered in the community, either in the workplace, the school or the home, and only those very ill people who have life-threatening circumstances or serious invasive processes should be accommodated under the roof, shall we say. We know there are savings, because pilot projects around Canada have proved the efficiency of those outreach programs.

We need to get the public and the governments to accept those programs in the home, in the workplace and in the school. To that end, I wonder if the provinces would not work just as energetically to push the care out of the hospital if we had 50-cent dollars on that type of care. Nothing speaks more clearly to the provinces than money, and it would save everyone cash. Hospital care is a tremendous expense. Even with the reduction in beds per population, in many areas you are looking at 40 per cent of the hospital beds being cluttered up by people who could be taken care of elsewhere. We need a carrot to get them out of there. You might be able to do it just with certain clearly defined programs, so that the games could not go on like they used to. Surely we are innovative enough to strengthen and save the program.

I do not need to remind you, Mr. Lalonde, that we are having a very rough time in our small provinces. Newfoundland is on a per capita basis, which I think is insane. Goodness knows where that came from, but it should not be that way. The smaller provinces with the smaller populations need a base to build on, and they do not have that base.

Would you like to comment on my ramblings?

Mr. Lalonde: Thank you, Senator Robertson, for your kind words and fond memories, which are reciprocal.

You talk about small provinces. It is not only the small provinces that have a serious problem. I was looking at the spending per capita in 1998 in Canada. The province that is spending the least per capita is not one of the small Atlantic provinces but Quebec, by quite a margin. Those figures are not official figures, but they were reproduced in Le Devoir of Saturday, April 30.

No doubt there has been much pressure, but there is also no doubt in my mind that there needed to be some pressure on the system. For 14 years I have been chairman of a large hospital in Montreal. We have been able to cut considerably without reducing the service to the people. There was a great deal of inefficiency in the system, and there still remain rigidities, partly due to the fact that it is a heavily trade-unionized environment. In the first few years I was there, you could not move a nurse from one floor to the other because the labour agreement provided that she could work in that department and that was it. I could go on and on about that. There was a cozy arrangement that had existed for a long time, and it was very difficult to effect change. Only the threat of hanging concentrated the mind and made us do many of the changes that could and should have been done before.

You are suggesting fundamentally introducing new distortions in the system. I would be very reluctant to encourage you to move in that direction, unless it were to be on very specific programs. It should be clear that it will be only for a very short time -- five years, whatever -- in order to jump start a system that pretty well everyone agrees on. Otherwise, you will see what we had with hospitalization insurance. Many people who should not have been in the hospital were in those beds because the federal government was paying 50 per cent of the bill.

If you could identify specific programs so that you would not end up with distortion in the distribution of health care and not end up with bad cost allocation, fine. However, I would hope that the federal government would not commit itself long-term in that respect, because you will end up distorting the allocation of funds generally, and that is the difficulty with those programs. I would rather see the federal government say, "We will pay 50-50, or 30 per cent or 40 per cent, but it will be for the whole field having to do with health in a very broad way, including health promotion and health prevention."

If we must go that way, I do not think we should target it. These definitions have changed considerably over the years, and we are discovering new ways of doing things with the passage of time. If you introduce rigidity in the allocation of funds, there will be a cost to pay for that.

Senator Robertson: I would not anticipate rigidity. I would consider a very selective process, and certainly it would have to be as an introductory program to concentrate the mind that things can happen outside the hospitals. As you say, 30 per cent in the broad spectrum is interesting also. Provinces may enjoy that more. However, there are ways today of definition that perhaps we did not have 30 years ago. There are ways of yardsticking programs today that we did not have 30 years ago. Measurable results are more easily obtained than they used to be. They are not easy, they are difficult, but there are yardsticks. It would be challenging for us to look at some of these things.

Mr. Lalonde: My preference would always be that programs would be paid for 100 per cent by the federal government.

Senator Callbeck: I, too, certainly appreciate your attending. I enjoyed working with you. Your remarks brought back memories about things I had not thought about for quite a while, such as the orange paper and the white paper and what was an eligible expense for the 50-cent dollars and so on. I had forgotten how rigid the system was then.

I wish to ask you about the Canada Health Act. We have heard experts say that it is outdated and that it is not flexible enough to allow for innovative reforms. We have also heard experts give the opposite opinion. I should like to hear your views on that. On the five criteria -- comprehensiveness, public administration, universality, portability and accessibility -- do you feel that any of those should be abolished and others added?

Mr. Lalonde: Many people blame the Canada Health Act for something it was not trying to do. The act does not introduce rigidity. The five criteria existed before. The Canada Health Act introduces clearer definitions through regulations, or otherwise, to ensure that these rules mean something. In that sense perhaps there is some rigidity. I have no qualms whatsoever about saying that the federal Parliament should maintain the five criteria that were enacted by Parliament in the past. In my view, those criteria remain as valid as they ever were.

I have not seen anywhere in the world anyone with the magic wand and the perfect solution. Our system is not perfect, but overall I see its problems as being manageable sometimes with money, but sometimes also with appropriate leadership and a sense of initiative. Those criteria, in my view, should not be abandoned or modified, certainly not in the current conditions. I see no problems in the present regime that would require abandoning those five criteria in order to correct or remedy those problems. Therefore, my position on this is clear and categorical.

The financing provides for a tremendous amount of flexibility. The provinces can do whatever they wish with the money they are getting now under the new financing regimes. With that, there are specific requirements to be respected for medical care and hospital care, quite clearly. I believe those requirements should be maintained. Nothing prevents a province from spending more money on home care or more money on health professionals other than doctors, if they wish to do so. They can use the federal funds for that purpose, but it is clear that for medical and hospital care you have some basic criteria. If some physicians prefer to opt out of the system, let them opt out. They are free to opt out but they cannot walk both sides of the street at the same time. That is the rule and I believe it is a good rule.

Senator Cook: I come from the smallest province, Newfoundland and Labrador.

Mr. Lalonde: I thought the smallest province was Prince Edward Island.

Senator Cook: In population, I believe Newfoundland is the smallest province.

Mr. Lalonde: I did not have the impression that Newfoundland had shrunk in the last few years.

Senator Cook: We are scattered more than in Prince Edward Island. We are further away from the tertiary care hospitals, of which there are only two at the moment. I have served on a hospital board for the past nine years and have struggled through the pangs of managing hospitals and turning seven into one and so on, and it was not easy. Out of that I saw some positive things emerge, one being community health and the other being home care. In our struggle to amalgamate and to be efficient, we have moved from one position to the other.

Having listened to all the other questions and answers, my question is this: When and how are we going to move outside of the lines from illness to wellness?

Mr. Lalonde: The federal financing at the present time encourages this. There is no restriction any more as to where the provinces allocate their funds in the field of health. They must respect some standards on the two programs I indicated, but otherwise they can allocate funds as they wish. For that, it is in the hands of provincial governments, who under our Constitution have the responsibility for those services. That is the way our country has worked and will continue to work, I suspect, for a long time. The federal government, again, can provide leadership, encouragement, political and financial support, but health services will be done essentially by provincial authorities and with much community involvement and community support.

That is the way Canadians are doing things and that is the way it should be done under a democratic system. I do not see the federal government taking the place of the provinces in that regard. You have seen those changes yourself in Newfoundland, and changes for the good. There has been significant improvement in terms of federal-provincial cooperation in the field of health. The Canadian Institute for Health Information, for instance, is a welcome development. I understand that there are now federal-provincial committees at a high level that are working quite cooperatively, as far as I can see, because all governments find themselves with their backs to the wall now. There may be a fair amount of posturing at times by political leaders, but at the official level people realize they must carry on working, and they should be encouraged in that direction. I will come back to what I have said in terms of concentration on the broadest interpretation of health and health policy, and I believe we can make progress.

I could conclude quite rapidly, Mr. Chairman, because I have bootlegged what I had intended to say into my responses to some of the last questions. I should like to repeat, however, that the five basic criteria that are in operation at the present time should be maintained. I do not believe that our system is broken, that we must rebuild it all over again starting from scratch more or less. I hear declarations by political leaders that the status quo is not an option. That depends on what they mean. If they mean that we must scrap what we have, I feel they are wrong. If they mean that we can improve on what we have, I feel they are right. I believe that many of those improvements can be brought in within the framework of what we have at the present time. We do not need to reinvent a whole new set of legislation in this field at the present time.

The honourable senators should ask themselves a couple of very simple questions to put it into perspective. Do we have, in Canada, a medical profession of high quality? I think Canadians in general would say yes.

Do we have health professionals who are competent and devoted to their profession? I would say in general yes, although there have been many morale problems with the troops because they have been hit right and left with difficult constraints in the last decade.

Do our institutions offer services that are comparable to the services offered in other developed countries? Definitely. The question is whether you are right at the top or right at the bottom. The answer is that we may not be at the top, but we are surely not at the bottom.

Is the life expectancy for Canadians comparable to that of other OECD countries? Only Britain and Japan have a longer life expectancy amongst the OECD countries, and it is interesting that they spend less on health services than we do in proportion to their GNP.

Is our infant mortality rate lower than that of other countries? Yes, our infant mortality is amongst the lowest in the world.

Is your regulation of health products, drugs and food providing Canadians with safe drugs and food? One must say yes, comparatively. Again, nothing is ever perfect, but look around.

Do we allocate a share of our GNP or per capita to health comparable to other countries? Again, it compares favourably. It is lower than the United States, especially per capita, but again our statistics indicate that, with the lower allocation of funds, we have been able to achieve pretty good result in terms of our national health.

I do not mean that there are no serious problems. Otherwise, you would not have been at work here, and your committee would not have been set up. However, I think we must put this in perspective and determine our task as a society, as Canadians.

I have already said that, in my view, there should be an increase in the share of public funding going to health, but that is not only a federal matter. In my own province of Quebec, for instance, the public expenditure going to health has gone down more significantly than the federal contribution has gone down. Both federal and provincial governments must look at their books in that regard and realize that, on a per capita basis at least, most provinces have cut to a point where now is the time to reintroduce significant funding.

My last point would be that I hope we can arrive at a regime between the federal and provincial governments where there will be stability in funding. We know why governments had to cut, but, in terms of health policy, this is no way to run a peanut shop. You need a regime where you know over the next several years how you will be operating.

In my province, I have seen radical and arbitrary cost cutting, and decisions have been taken that were purely looking at the short term. The Minister of Finance wanted to have a smaller deficit next year, and that was it. We ended up with the early retirement of nurses in Quebec. We made them an offer that they could not refuse. Next thing we knew, we were short of nurses. We are rehiring those willing to come back and paying them hefty remuneration. We are in a situation now where we are even sending people to the United States to be treated at public expense. Surely, this could have been foreseen. Surely, we know what the needs of the population will be over the next few years. It is mind boggling to see situations like this, and it is totally unacceptable. I can understand why there is such an outcry amongst the people in Canada about the current situation and the tendency to say, "A plague on both your governments' houses. It is your job to fix it; get going."

I hope that there will arise out of your deliberations a recommendation that the federal government at least look at providing a stable base of financing over the next decade.

The Chairman: Thank you for attending, Mr. Lalonde. We all appreciate not only your ideas but also your candour. Above all else, it is wonderful for us to see that your passion for public policy does not seem to have abated much in the 16 years you have been gone.

The committee adjourned.