In March of this year, New Brunswick's health minister suggested that the province's health-care system might consider the privatization of some services because the spending of $5.5 million a day on health services is not sustainable and healthcare costs in the province are reported to be going up by seven per cent a year.


Health Minister Mike Murphy wonders if the private sector could have a role in making the province's system more efficient.


No decisions have been made, no policies announced. It's a matter of public musing and discussion but the options are being evaluated. One option is a fee-for-service system. Others include the sub-contracting of delivered services, the consolidation of hospitals and a state-of-the-art ambulance delivery system.


In May, the Minister confirmed that some private-sector clients are paying to use hospital facilities in New Brunswick. "Third parties are using facilities” on a minimal basis said Murphy. Those third parties include the Workplace Health and Safety Commission and plastic surgeons.


The Minister said when labs and equipment aren't being used and funded by Medicare; the province could be renting them out to private-sector users to generate funds to use for public care. There may be some issues with that premise if publicly paid doctors are moonlighting after hours or cutting short their public service to earn money in the private sector.


I admire the Minister’s initiative in searching for ways to reduce the cost of delivering healthcare in New Brunswick. However, the renting of facilities and sub-contracting services to the private sector only makes sense if

• (a) standards of care are maintained or improved


• (b) there is no penalty to the public system and,


• (c) the cost to taxpayers is no greater than provision of care by the public system.

Private sector businesses and services function in response to profit need and shareholder return. That tends to drive cost up, not down.


The Americans operate a for-profit healthcare system. It’s the most expensive in the world.


In April this year, former President Bill Clinton told an audience in San Francisco that the U.S. "Healthcare system is immoral because it doesn't provide health care to everybody," Clinton said then "It's wildly uneconomical. We pay more than everybody else in the world for less."


Clinton said the United States spends 16 percent of its national income on health care, compared with 11 percent in Canada and Switzerland, the countries with the next highest spending. Forty five percent more in cost, yet the United States ranks only 37th in the world in overall health care, insures fewer of its citizens and pays more for its drugs. Nearly a third of U.S. health care spending goes to administrative costs, the highest in the world.


Clinton does not deny that some Americans have access to excellent health care, saying the success of his 2004 emergency quadruple heart bypass surgery makes him "a walking miracle."


But he said his case is also an example that not enough is being done on the prevention side. "We are great about treating sickness, but we are lousy at keeping people well," said Clinton, who also is working on the issue of childhood obesity.


The U.S. health care system ranks last among other major rich countries for quality, access and efficiency, according to two studies released in May by a health care think tank. The studies by the Commonwealth Fund found that the United States underperforms consistently relative to other countries.


"The United States stands out in these studies as the only nation that does not ensure access to health care through universal coverage and promotion of a 'medical home' for patients," said Commonwealth Fund president Karen Davis.


The U.S. ranked last in patient safety, timeliness of care, efficiency and equity. Americans were also last in terms of whether they had a regular physician. "The U.S. spends twice what the average industrialized country spends on health care but they're clearly not getting value for the money," said Davis.


She also noted that 45 million Americans or 15 percent of the U.S. population have no health insurance, which contributes to the country's medical woes.

It is estimated that 18,000 Americans die annually due to lack of insurance - a rather harsh outcome of healthcare rationing. Canadians provide healthcare for every citizen and enjoy longer, healthier lives than Americans, despite spending far less for healthcare than people in the United States. Canadians are quick to complain about wait-times for healthcare services but the fifteen percent of Americans (significantly more people than the total population of Canada) who do not have healthcare insurance wait much longer.

Reuters News Agency also reported in May that U.S. hospitals charge uninsured patients about two-and-a-half times more than those with health insurance. Hospital patients without health insurance and others who pay for medical care out of their own pockets were charged an average 2.57 times more than those with health insurance confirmed a study published in Journal Health Affairs in its May-June issue.

Hospitals in the United States set rates based on a formula that inflates prices in the belief they will come down during the negotiation process between healthcare providers and insurers. For-profit hospitals had the highest discrepancy between costs estimated by Medicare and prices charged, the study found.

Patients without health insurance lack the ability to negotiate. Hospitals defend the practice of up-charging non-insured patients by noting the fact they only recover about 10 cents on the dollar charged to uninsured patients.

A recent Harris Interactive poll of patients in the leading industrial societies of the world found that Canada ranked first and the United States last in patient satisfaction with health care.


In his search for efficiency and rationalization in New Brunswick’s healthcare system, Mike Murphy should be careful that he doesn’t throw out the baby with the bathwater.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at bill.bellstrategic@nb.aibn.

Nova Scotia Conservative MP Bill Casey was ejected from the federal Conservative caucus for voting against Finance Minister Jim Flaherty’s 2007 Budget.

Newfoundland Premier Danny Williams has been campaigning against the Budget for weeks.

Last week, Nova Scotia’s Premier Rodney MacDonald joined the chorus of opposition.

Notwithstanding their opposition, the Budget Implementation Bill was passed by the Conservatives together with the Bloc Quebecois and will now be scrutinized by the Senate.

In the meantime, the Atlantic Provinces Economic Council has released a study by Senior Policy Advisors Professor Paul Hobson of Acadia University and Professor Wade Locke of Memorial University in St. John’s Newfoundland that suggests New Brunswick will lose close to a billion dollars in “equalization” payments over the next seven years as a result of Flaherty’s 2007 Budget. Some dispute APEC’s conclusions but that’s not the issue.

The Atlantic Accord signed in 1985 and the Canada-Nova Scotia Offshore Petroleum Resources Accord, signed in 1986, gave Newfoundland and Labrador and Nova Scotia, respectively, the right to collect royalties on offshore oil and gas. In addition, the Accords provide equalization offset provisions to compensate the two provinces for potential reductions in equalization payments that might occur as resource revenues come on stream.

The 2005 Equalization Offset Payments Act provided for additional payments to ensure that each province receives 100 percent of the benefit of its offshore revenues and is not penalized by a corresponding reduction in equalization payments.

The 2007 Federal Budget establishes a ten province standard (one size fits all) measure of fiscal capacity and a more (the government’s words) predictable and stable payment system. The new program reverses a pre-election commitment to exclude natural resource revenues in the calculation of equalization payments and will now include 50% of these revenues in calculations, contrary to the intent and commitment of the above mentioned accords.

Equalization is a Government of Canada program that addresses fiscal disparities among provinces. Equalization payments enable less prosperous provincial governments to provide their residents with public services that are reasonably comparable to those in other provinces, at reasonably comparable levels of taxation. The Equalization Program was entrenched in the Canadian Constitution in 1982. Payments are unconditional – allowing receiving provinces to spend the funds according to their own needs and priorities.

Many confuse “equalization” payments with “transfer” payments which are received by every province. These are shared cost programs like the Canada Health Transfer provided in support of provincial health care, post-secondary education, social assistance and social services. Every province benefits from these transfers without reference to their economic circumstance.

The issue is whether a province generating wealth from a non-renewable resource like oil or gas should be receiving equalization payments when its (royalty) revenues are growing. Alberta does not receive equalization payments but it does receive transfer payments from the federal government.

The 1986 Offshore Petroleum Resource Accords clearly protected royalties from equalization claw-backs to enable Newfoundland and Nova Scotia to grow out of their economic disparity rather than neutralize the benefits of new revenues. Saskatchewan enjoys a similar circumstance. These were so-called “one-off” deals.

The 2005 Nova Scotia agreement triggered an upfront payment of $830 million that would allow the province to begin addressing its fiscal challenges. The 2005 Newfoundland & Labrador agreement was endorsed with an upfront payment of $2 billion to allow the province to reduce its debt.

Provinces like New Brunswick received no such payments. They were effectively penalized because they do not have oil and gas. The Harper Government takes the position that all provinces are equal, that disparity is a figment of the imagination, that the rich should get richer and the poor should look out for themselves.

The APEC study provides estimates of the revenue flows to the four Atlantic provinces under the pre-2007 Budget program and the post-Budget program for each fiscal year from 2007-2008 to 2019-2020, the year in which the Nova Scotia and Newfoundland and Labrador Offshore Accords expire.

It assumes that the aggregate of the fiscal equalization payments under the pre-Budget program would grow at an annual rate of 3.5% (as currently specified by legislation) and that non-oil and gas fiscal capacities for all provinces would grow at an annual rate of 1.4% (the aggregate rate of growth of per-capita fiscal capacity in Canada over the last ten years).

Based on APEC’s assumptions and projections, New Brunswick would benefit from a $68 million increase in revenues for the first two years under the revised Equalization program and reduced revenues in each year thereafter when compared to the “Fixed Framework”. In aggregate, the province would receive $1.1 billion less under the new Equalization program than under the pre-Budget formula.

New Brunswick is not blessed (so far) with off-shore oil and gas revenues. I have no issue with the deals cut by Newfoundland and Nova Scotia with the federal government. Indeed, I reject Jim Flaherty’s unilateral rejection of the 2005 Accords. I also believe the up-front payments to Nova Scotia and Newfoundland of $830 million and $2 billion respectively set a precedent that entitles New Brunswick and PEI to similar “bootstrap” investments.

New Brunswick’s “self-sufficiency” agenda depends to some extent on both the continuation of equalization payments and new investment required to wean the province away from equalization payments.

Nova Scotia, Newfoundland and Saskatchewan are considering legal actions against the federal government to recover the full benefits of their 2005 Accords. New Brunswick needs to make a case for its own deal, notwithstanding Stephen Harper’s rejection of one-offs and his bravado “sue me” if you don’t like it statements.

If New Brunswick is stonewalled on this issue, the Province may want to consider Mr. Harper’s challenge and join the other three provinces in a legal action.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at bill.bellstrategic@nb.aibn.

In January 2003, the then Minister of Natural Resources introduced the New Brunswick Electricity Act in the Provincial Legislature.

The Minister was quick to point out that NB Power had earned a solid reputation as a safe, reliable, service-oriented utility. He also said that NB Power was unable to meet some of the U.S. federal regulator standards for selling electricity directly in the United States.

I commented then that it was my understanding that NB Power was a public utility mandated to serve the people of New Brunswick, not customers in the United States.

The current government has designated energy and the export of energy as cornerstones of its self-sufficiency mandate. A few weeks ago, NB Power announced that it was seeking a 9.6% rate increase.

Last year, it sought an 11% increase that in turn was capped by the government of the day at 8%. That same government announced that it would rebate the provincial sales tax on home heating fuels, equivalent to the 8% rate cap.

Last week the New Brunswick Energy and Utilities Board (formerly the New Brunswick Public Utilities Board) announced that it would grant interim approval of the latest rate increase contingent on (a) the utility proving its need for a rate increase and (b) that in the event that it did not prove that need, that customers would be credited for whatever overpayment accrued during the public hearing process.

NB Power’s rate application cites rising fuel costs and the need to recover lost revenues from last year’s rate cap to justify the need for rate increases.

Some would argue that a company that generated $100 million in profits over the last two years does not need a rate increase but a $100 million profit on two year sales of nearly $3 billion is a paltry 4% or less of pre-tax sales;
far less than any private sector operator would demand and far less than any amount that would

• (a) permit significant debt repayment
• (b) reinvestment in the business and ,
• (c) generate dividend payments to the Provincial government that would equal returns on otherwise invested dollars.

Response from some segments of the New Brunswick business (manufacturing) community suggests that it is entitled to low electricity rates. Entitlement assumes ownership and god-like endowment without cost. Sorry folks, that’s not how the real world works.

The current government has indicated that it would be happy with a break-even operation. The utility cannot sustain itself on a break-even basis.

NB Power is a mish-mash of seven corporate entities: a holding company, a system operator, a finance company and four operating companies including a nuclear generating company, a non-nuclear generating company, a transmission company and a distribution company. The company applying for the rate increase is the distribution company. The companies penalized by rising fuel costs are the non-nuclear and the nuclear generating companies. This begs the question what is lost to consumers from inter-company transactions.

In NB Power’s most recent Annual Report 2004-05, fuel and purchased power costs (from other utilities like Quebec Hydro) were $497 million. That’s 36% of NB power’s operating costs.

A 25% increase in fuel and purchased power costs would be $124 million. In the past, it seems to me that we were told by the utility that every 1% increase in rates would yield about $10 million in new revenue. A 9.6% rate increase, based on 2004-05 revenues would yield about $134 million or $14 million for every 1% increase, not $10 million.

These inconsistencies create the kind of skepticism that has surrounded NB Power for years notwithstanding the fact that Atlantic Business Magazine recently named the utilility’s CEO, David Hay as one of the top CEOs in Atlantic Canada.

I do not accept the fact that NB Power has an obligation to New Brunswick’s business enterprises or indeed to its residential customers to provide electricity below cost or to provide it at rates deemed acceptable by the community unless we as taxpayers and residents of New Brunswick are prepared to mandate our provincial government to subsidize the utility for its losses. Government has a responsibility to ensure that the utility is operating efficiently and to ensure that its rates are fair.

There are two other considerations that colour the background of NB Power’s rate requests: the cost of export energy and the cost of climate change remediation. Customers of NB Power, resident in New Brunswick, commercial or otherwise should not be expected to finance the infrastructure that will facilitate the export of electricity to the United States. Customers of NB Power, resident in New Brunswick should not be expected to finance the burden of environmental cost inherent in the expansion of New Brunswick’s export generating capacity.

These are the costs of economic development, not the costs of service delivery to existing customers.

Customers of NB Power, resident in New Brunswick should be expected to fund the investment required to fund alternative energy sources and we should be expected to fund the research and the technology applications that would increase the efficiency of our energy consumption.

We should also expect our public utility to reward us with lower rates when we consume less and when we become more energy efficient. Current income levels (personal and corporate) will not support ever increasing rate increases. Self-sufficiency demands that we become more efficient and less consuming.

Whatever the decision of the New Brunswick Energy and Utilities Board in respect to NB Power’s rate application, it must reflect these realities.

Where the burden of cost is not sustainable, it must be subsidized by our tax dollars.

If we fail to realize the difference between internal energy sustainability and the cost to export, we will self-destruct. If we get it right, we can grow our economy exponentially.

W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at bill.bellstrategic@nb.aibn.

It’s ironic that Arnold Schwarzenegger, Governor of California should become North America’s leading climate change activist even as the President of the United States prepares to tell the world that he will not support G8 nations who are seeking agreement for a global reduction of greenhouse gas emissions of 50% below 1990 levels by the year 2050.

Mr. Bush will join India and China in the argument that such reductions would harm the economy. America is considered the world's number one polluter.

India, one of the countries that would be significantly affected by climate change announced this week that it too would not support the targets. India’s’ environment minister, Pradipto Ghosh says "reducing greenhouse gas emissions is likely to have significant adverse impacts on GDP growth of developing countries, including India".

The Government of Canada indirectly agrees with him by substituting “intensity” targets for hard cap reduction targets.

Meanwhile, Arnold Schwarzenegger was signing an agreement with Ontario Premier Dalton McGuinty to co-ordinate policies to reduce greenhouse gases emitted from cars and trucks. The next day, he signed an agreement with British Columbia to reduce emissions by 30% by 2020.

His Ottawa trip produced nothing but a promise from our Prime Minister to crack down on Hollywood film piracy. California has the world’s 8th largest economy and is leading the climate change fight with actions to fight global warming by reducing California’s dependence on fossil fuels. The State has adopted reduction targets that will reduce greenhouse gas emissions to 1990 levels over the next ten years and 80% below 1990 levels by the year 2050.

There is a substantial and growing body of evidence that our planet is warming and that one of the principle causes of that warming is the emission of greenhouse gases that trap the heat within our atmosphere. If left unchecked, consequences could be catastrophic.

“The Earth's average temperature will almost certainly rise by 1.8-4C (3.2-7.2F) during this century, according to the Intergovernmental Panel on Climate Change's (IPCC) Fourth Assessment Report and could rise as much as 6.4C (11.5F).

Temperature rises even at the middle of this scale would mean catastrophe. Hundreds of millions of people would be forced from their homes by sea level rises, storms, floods and drought. And our planet's biodiversity would face the greatest extinction since the dinosaurs were wiped out 65 million years ago. Some predict this could start happening as early as 2020. If we don’t do something about it, we will all live (or die) with the consequences.

People, who agree with this scenario advocate immediate reduction programs. People, who disagree, argue the science is not bullet-proof and action would produce economic penalty.

One has to ask the question “if survival of the planet is threatened by greenhouse gas emissions, what is the economic cost of doing nothing”.

At some point, somebody has to put a value on survival. If life means a dramatic lowering of greenhouse gas emissions then we have to take steps to reduce them, no matter what the economic cost. If the status quo is more important than life then we have to prepare ourselves for disaster.

Ironically, there is money to be made from addressing the problem of climate change. The Apollo Alliance in the United States promotes rejuvenation of the U.S. economy by treating clean energy as an economic and security mandate. Jerome Ringo, President of the Alliance testified on May 22nd before the U.S. House Select Committee on Energy Independence and Global Warming.

He says “avoiding catastrophic climate change will require enormous changes in the ways we harness, consume, and manage energy. But there is also opportunity. The new energy revolution will create whole new industries and millions of new jobs.

The Alliance estimates that $300 billion in U.S. federal spending over 10 years would create over 3 million jobs in a broad range of activities such as building more efficient transport, more efficient utilities, renewable energy investments, biofuels development, advanced grid technology and R&D initiatives”.

He says “we need to set in place specific policies that seize the economic growth and job creation potential of these new technologies. He cites the example of Japan in the 1990s, when that country decided that solar energy was a strategic industry and set in place long-term supports.

Today, Japan controls half the world's solar manufacturing even though the United States invented solar capture technology”.

Last week, the Government of Canada abandoned its responsibility to review the environmental impact of a new oil refinery in Saint John. I suspect this was designed to pave the way for a similar relinquishing of responsibility in Alberta where oil companies are seeking to expand development of the oil sands and coincidently increase the emission of greenhouse gases.

If the New Brunswick precedent is confirmed and the Feds do not conduct the oil refinery review, then it would follow that the Province of Alberta would be handed responsibility for conducting its own environmental impact studies for new oil sands projects.

Prime Minister Harper and his Minister of the Environment, John Baird has been reluctant to endorse meaningful reductions in greenhouse gas emissions. Baird talks about building a bridge between the European Union and the United States on the matter but offers little by way of support for the G8’s reduction targets. In my view, Baird should take the lead by announcing to the world that Canada is going to do something about climate change now by introducing new and specific gas reduction targets.

David Suzuki has been sounding the climate change warning for decades.

How ironic that Arnold Schwarzenegger, former movie actor, now Governor of California should have to come to Canada to initiate climate change agreements with two Canadian provinces while our federal government does nothing but wait in the wings for directions from Washington.
W.E. (Bill) Belliveau is a Shediac resident and Moncton business consultant. He can be contacted at bill.bellstrategic@nb.aibn.com Atlantic Insight is a published Blog inventory of opinion articles published weekly in New Brunswick's print media as written by W.E. (Bill) Belliveau, who is a resident of Shediac, New Brunswick, and small business owner, operating his Moncton-based marketing consultancy, Bell Strategic. He can be reached by e-mail at bill.bellstrategic@nb.aibn.