Ontario Finance Minister Dwight Duncan is concerned about a signal from Ottawa that it may scale back the growth rate of federal transfers that help fund health care and education.

The minister said it would hurt provincial budgets if they were to receive any less from the federal government than they do now.

“I said at the time of my last budget last spring that’s very worrisome. We’re all struggling with deficits, we’re all struggling with demands for health care and so on,” he said.

Duncan was responding to an indication by federal Finance Minister Jim Flaherty that Ottawa may use inflation and economic growth — both of which are soft right now — as a guideline for future transfer payments.

Negotiations are already underway to put a new payment deal in place when the current system expires in three years.

Flaherty said in an economic update that despite a record $55.6-billion deficit last year, the federal government will still be able to balance the budget in about five years — in 2015-16.

The government’s official budget projections include a hit of about $5 billion from a decision to limit hikes to employment insurance premiums. It also assumes social transfer payments to provinces will continue to grow at the current pace after the agreement runs out in 2014.

But when asked how Ottawa plans to proceed after the current arrangements expire, Flaherty’s answer vaguely hinted toward closer ties to inflation and economic growth — the way equalization payments work.

Latest From ...