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"THE DECENTRALIZED NATURE OF
THE CANADIAN FEDERATION"
NOTES FOR AN ADDRESS AT
THE
UNIVERSITY OF OTTAWA
OTTAWA
MARCH 25, 1998
"We tend to forget that in reality Canada is highly
decentralized."
Jacques Parizeau
In another life, when I was a political science
professor at the Université de Montréal, I conducted various studies on
federal public administration. I remember discovering, along with my colleague
Jacques Bourgault, a professor at the Université du Québec à Montréal, that
the University of Ottawa had become the main breeding ground of deputy
ministers. More of our senior public servants have graduated from your
university than from any other. So you can imagine how nervous I am to be here
today, facing so many future servants of the nation.
And I'm all the more nervous because my topic
today is, precisely, the federal government, and more broadly, the federation as
a whole. In effect, I essentially have two things to say to you today.
First of all, our federation is decentralized.
That is very clear when you compare it with the other major federations. And
that's a good thing, by the way. Such a large and diversified country as Canada
could not function other than under a very advanced federative form. It is a
good thing that we have strong provinces, and I am a great admirer of "the
provincial state", if I may use such an expression. Each province can try
out solutions that are specific to its own culture and its own context, and
through healthy emulation, learn from the others. At the same time, however, the
provinces cannot behave as ten inward-looking republics, and there are broader
responsibilities that are the purview of a federal government. That's why it's
also a good thing that we have a federal government that is strong in its areas
of jurisdiction, and consistent, sustained relations between the two orders of
government.
Second, the federal government and the provinces
have greatly improved the federation in the past two years. The objective of
these reforms has been to clarify the roles of and strengthen cooperation
between the two orders of government. This federation serves us well and
compares favourably with other federations in many respects, but it is far from
perfect. It will always be changing. Prime Minister Jean Chrétien is determined
to continue improving our federation, step by step, in a spirit of cooperation.
Why do I want to talk about these two things
today? Once again, I have two reasons. For one thing, it so happens that there
is a government in my province that is proposing secession, alleging, among
other things, that the Canadian federation is too centralized. For example, in a
press conference on December 10, 1997, Premier Lucien Bouchard expressed fears
about the provinces being reduced to "a sort of sterile entity that would
not even be a large municipality."[translation] (Press conference by Lucien
Bouchard, Bernard Landry and Jacques Brassard, December 10, 1997, p. 32). His
Finance Minister, Mr. Bernard Landry, said on February 24, 1998, that he was
witnessing the "spectacle of a once confederate and then federal state that
is moving toward a unitary state."[translation] (Scrum by Bernard Landry in
response to the Martin budget, February 24, 1998, Quebec City, p. 3). The way
the separatist leaders describe the Canadian federation is, in my opinion,
completely surreal. I'd like to explain why.
For another thing, I believe that we have to be
fair to our federation, and not talk about it only when there are problems.
Tensions and conflicts between orders of government are normal. That exists in
all federations. It is also normal, I suppose, that these conflicts get more
headlines than do the agreements that are regularly reached by governments. But
allow me, as Canada's Minister of Intergovernmental Affairs, to say here today
that this federation works, and it's getting better.
1. A decentralized federation
The statement by Bernard Landry that I mentioned
a moment ago (Scrum by Bernard Landry in response to the Martin budget, February
24, 1998, Quebec City, p. 3) to the effect that the Canada of 1867 had been
conceived as a very decentralized confederation, where the provinces retained
most of the major public responsibilities, is a very widespread myth. I believe
this confusion stems in large part from the word "confederation"
itself, which evokes an association of sovereign states. In fact, in our case,
confederation signified the act of federating. And the people who designed that
federation meant it to be centralized. John A. Macdonald, as you know, would
even have preferred a legislative union. It was the delegates from Canada East
(Quebec) and the Maritime provinces who, very fortunately, pressed for the
federal choice.
This compromise among the Fathers of
Confederation put in place a system that was designed to be centralized, in
which the federal government was to keep the provinces in check through its
right to disallow their laws. The federal government inherited the main fields
of taxation and most of the public responsibilities then deemed important,
including those of an economic nature. Since it effected two-thirds of public
spending, it dominated the provinces, two-thirds of whose funding depended on
federal subsidies. (The Rowell-Sirois Report, vol. 1, Toronto, McClelland and
Stewart, 1963, pp 187-188).
Today's Canada no longer bears any resemblance to
that centralism. The Judicial Committee of the Privy Council and later the
Supreme Court of Canada have interpreted the Constitution in a way that respects
the autonomy of the provinces. The power of disallowance and the power of
reservation are no longer used. The emergence and development of the welfare
state have considerably expanded provincial jurisdictions relating to education,
health and social affairs. In 1960, federal spending was approximately
equivalent (50.47%) to that of the provinces and municipalities combined; today,
it is appreciably lower (38.67% in 1996).
So, the Canadian federation is decentralized
compared with what it was in the past. But is it decentralized when compared
with other federations today? Experts on comparative federalism say that it is.
Professor Edmond Orban of the Université de Montréal concluded in his study
for the Bélanger-Campeau Commission that "the [Canadian] provinces enjoy
relatively greater autonomy and, in the case of the larger provinces, relatively
greater opportunities than do the [German] Länder and, in particular, the Swiss
cantons."[translation] (Les implications de la mise en oeuvre de la
souveraineté : les aspects économiques et les finances publiques (première
partie), Exposés et études, volume 3, Commission d'étude des questions
afférentes à l'accession du Québec à la souveraineté, Bibliothèque
nationale du Québec, 1992, p. 429).
I can illustrate this comparison between
federations with an example especially dear to the heart of Mr. Bernard Landry:
the Canada Prenatal Nutrition Program. On February 24, he exclaimed:
"Just imagine, in this era of the principle
of subsidiarity, the era of building large-scale economic agreements, the era in
which Canada is boasting of its membership in the G-7 (...), it is infiltrating
prenatal care."[translation] (Scrum by Bernard Landry in response to the
Martin budget, February 24, 1998, Quebec City, p. 3).
When you describe it like that, it conjures up
mental images of federal bureaucrats wandering the streets handing out pints of
milk! But what's the real story?
The Canada Prenatal Nutrition Program is designed
to protect the health of babies of mothers deemed at risk. It was established in
1992 -- by the Conservatives, then, so you can see how nonpartisan I am. The
program is implemented in a province only if the federal government signs a
memorandum of understanding with the government of that province. The agreement
can be cancelled at any time at the request of either party. And guess which
province was the first to sign such an agreement: that's right, Quebec. Federal
funding is used on the basis of priorities and programs established by the
Government of Quebec.
Now, where did the idea for this program come
from? From a similar initiative by the United States federal government: the
Special Supplemental Food Program for Women, Infants and Children (Program
established in September 1972 under Public Law 92-433, an amendment to the Child
Nutrition Act of 1966). That's United States as in federation, as in G-7
country.
In fact, on a recent fact-finding mission to
Europe, I was struck by how much control Canadian provinces exercise in the
health care field in comparison with their counterparts in other federations.
In Belgium, for example, the federal government
is entirely responsible for setting policy in the health sector. In Germany,
health is an area of shared jurisdiction, but the Länder cannot legislate in
this field if the federal government has already done so. In Austria, the
federal government remains constitutionally responsible for both legislation and
implementation of most health care measures. In Switzerland, federal legislation
sets very detailed standards that must be respected by each canton.
Here at home, health care falls largely under
provincial jurisdiction. The federal government acts essentially through its
spending power, which is based on a clear constitutional foundation, as the
courts have confirmed. Incidentally, all major federations have a federal
spending power. With regard to health care, our federal government ties its
financial assistance to the provinces' adherence to just five standards, which
are in fact moral principles popular throughout the country: universality,
accessibility, comprehensiveness, portability, and public administration. The
objective is to protect our health care system from a process of Americanization
that would make it less accessible for everyone.
In making this comparison with other federations,
I do not wish to suggest that we toe the line of other federations and give the
federal government certain provincial responsibilities for health. Nor do I
claim that everything is perfect in our federal-provincial relations with
respect to health policy. I am merely saying that the current arrangement is in
no way a centralizing straitjacket; quite the opposite is true.
The way in which our provinces and the federal
government work together certainly has something to do with Canada's being
ranked fourth for the health of its population and second for the quality of its
medical practices (Healthcare International, National ranking on Health, British
Economist Intelligence Unit, 1st quarter 1997). At the same time, however,
Canadians see that our health care system is under tremendous pressure at this
time, even though we are one of the countries that earmark the greatest part of
their collective wealth for health care. (OECD Health Data 97, OECD, Paris,
1997. In terms of public spending on health as a percentage of GDP, Canada (6.9)
is in 5th place among the OECD countries, behind Germany (8.2), France (7.7),
Switzerland (7.1) and Belgium (7.0). In relation to total public spending,
Canada's spending on health stood at 14.5% in 1994, putting Canada in 7th place
among the OECD countries, behind Switzerland (18.6), Germany (18.4), Iceland
(17.2), the United States (16.4), Japan (15.2) and Australia (15.0)). More than
ever, our governments face the challenge of coming up with ways to work together
while respecting their jurisdictions.
Let me take another example from the headlines
that places our federation in a comparative perspective: the Millennium
Scholarships. The federal government has decided to establish a private
foundation and provide it with initial funding of $2.5 billion over ten years,
to give scholarships to low- and middle-income students. The federal government
is committed to consulting the provincial governments to ensure that the
foundation avoids duplication, uses existing provincial needs assessment
mechanisms, and has the power to contract with the provincial authorities to
select recipients. Moreover, Canada's Council of Ministers of Education will
play a key role in determining the foundation's directors.
The Government of Quebec is understandably
concerned about the risk of duplication. Indeed, that province has developed a
very complete scholarships program since it exercised its right to opt out with
financial compensation and adopted its first Act respecting Financial Assistance
for Students in 1966. So the governments need to talk and find a solution to
help each other help students.
But while the Government of Quebec's concerns are
understandable, it is completely unjustified for Quebec's Finance Minister to
see the establishment of this foundation as the hallmark "of a unitary
state that pays no heed to federal structures."[translation] (Scrum by
Bernard Landry in response to the Martin budget, February 24, 1998, Quebec City,
p. 3). For what can be said of other federations? In the United States, 75% of
public financial assistance to students comes from the federal government
(United States College Board) (Ulrich Teichler, in Higher Education in Federal
Systems, Douglas Brown, Pierre Cazalis and Gilles Jasmin, eds. Institute of
Intergovernmental Relations, Queen's University, Kingston, Ontario, 1996, p.
73). In Germany, it's 65% (Teichler, p. 151). In Australia (Teichler, p. 97) and
Austria (Teichler, p. 141), legislative authority for post-secondary education
lies with the federal government. In Switzerland, federal legislation to assist
universities is very complete and detailed.
In Canada, education is an area of exclusive
provincial jurisdiction under the Constitution. The federal government does not
legislate with respect to education. Nevertheless, financial assistance to give
Canadians better access to provincial educational institutions has long been a
field in which both orders of government are active. That joint action is more
necessary than ever in today's knowledge economy, where the competitiveness of
our work force is the key to maintaining our quality of life.
I could give even further examples of the
decentralized nature of our federation. But I will merely add here that all
federations have a federal spending power, but only in our federation is there a
right to opt out with financial compensation. I might also refer you to research
by Professor Watts of Queen's University (Comparing Federal Systems in the
1990's, Institute of Intergovernmental Relations, Queen's University, Kingston,
Ontario, 1996, p. 45), which indicates that the Canadian provinces are
unquestionably less dependent on conditional transfers from the federal
government than are the components of other comparable federations, and that our
federal government clearly attaches the fewest conditions to its
intergovernmental transfers. Canada is not the champion of decentralization in
everything, but the fact is that, in the very real world of federations, there
is doubtless nothing more autonomous than a Canadian province.
2. Our federation after two years of
change
It is in the nature of our federation to be
continually evolving. The status quo does not exist. Governments must simply
ensure that this change takes place with respect for the constitutional
jurisdiction of all and with the objective of a better quality of service to
benefit citizens. In my opinion, the federal government hasn't done too badly in
working with the provinces since the Liberal government was elected in October
1993, especially since the Throne Speech of February 27, 1996. (Speech from the
Throne to Open the Second Session of the Thirty-Fifth Parliament of Canada,
February 27, 1996). Why don't you be the judge:
Limiting the federal spending power. The
unilateral use of the federal spending power can undermine the provinces'
ability to set priorities. Therefore, in the 1996 Speech from the Throne (Speech
from the Throne to Open the Second Session of the Thirty-Fifth Parliament of
Canada, February 27, 1996, p. 7), the Government of Canada stated that it will
no longer use its spending power to create new shared-cost programs in areas of
exclusive provincial jurisdiction without the consent of the majority of
provinces. Moreover, any new shared-cost program in an area of exclusive
provincial jurisdiction will be designed so that provinces that exercise their
right to opt out are compensated, provided they establish equivalent or
comparable programs. The Government of Canada is the only federal government
that has voluntarily placed limits on the use of its spending power in this way,
and the only one with such an arrangement for opting out with compensation.
Although this commitment is not entrenched in the Constitution, it goes further
than the Meech Lake Accord, which did not require the agreement of a majority of
the provinces.
Passage of the Act respecting constitutional
amendments (C-110). The Government tabled and had passed the Act respecting
constitutional amendments (passed by the House of Commons on December 13, 1995,
and by the Senate on February 2, 1996). No constitutional amendment can be
tabled in Parliament and passed without the consent of each of the following
regions: Atlantic Canada, Quebec, Ontario, the Prairies, and British Columbia.
Adoption of the distinct society resolution.
The Government tabled a resolution in the House of Commons recognizing Quebec as
a distinct society in Canada that includes a French-speaking majority, a unique
culture and a civil law tradition. This resolution, which was adopted on
December 11, 1995, by the House on December 14, 1995 and by the Senate urges the
legislative and executive branches to take note of that recognition and be
guided accordingly.
Reduced conditionality of the main federal
transfer to the provinces. The replacement of the Canada Assistance Plan
(CAP) (passed in S.C. 1966-67, ch. 45; subsequently became chapter C-1 of R.S.C.
(1985) and Established Programs Financing (EPF) with the Canada Health and
Social Transfer in 1995 has given the provinces greater flexibility. The
provinces must continue to respect the five national health care standards and
the non-imposition of residency requirements for social assistance. In other
respects, they choose to utilize funding in accordance with their own priorities
on health care, post-secondary education and social assistance.
Clarification of roles in various fields.
To eliminate unnecessary duplication, the federal government has largely
withdrawn from the sectors of mining and forest development, recreation and
tourism. The Canadian Tourism Commission is building on its partnerships with
the provinces and businesses. The federal government is also negotiating the
transfer of the administration of social housing to the provinces; five
agreements have been signed to date.
The new job training agreements. The
federal government has now signed job training agreements with nine provinces
and both territories. (Getting Canadians Back to Work: A Proposal to Provinces
and Territories for a New Partnership in the Labour Market, Minister of Human
Resources Development, Douglas Young, May 30, 1996). The agreements allow the
provincial or territorial governments either to assume full responsibility for
training measures funded through the Employment Insurance account or to develop
a new co-management partnership with the federal government. Unemployed
Canadians and those seeking to upgrade their skills will have "one stop
shopping" for their training needs, thus fostering the additional objective
of making services more responsive to citizens' needs.
The National Child Benefit System.
(Measure announced in the Budget Speech, February 18, 1997, to implement a $6
billion national child tax benefit effective July 1998). At their request, the
federal government developed this major initiative jointly with the provincial
governments. The federal government will increase the value of child tax
credits, allowing provinces to redirect resources toward new programs to assist
low-income families and promote entry into the workforce. At a recent meeting of
ministers responsible for social services, a number of provinces presented their
planned reinvestment initiatives. To enhance the Earned Income Supplement the
federal government committed in the budget (February 18, 1997) to a second
contribution of $850 million to the System during the present mandate, that is
$600 million in new funding and the $250 million proposed in the 1996 budget.
Environmental harmonization. On January
29, 1998, the governments of Canada and all the provinces but Quebec signed an
agreement to improve cooperation between governments so as to guarantee better
environmental quality and the implementation of subsidiary agreements on
establishing national standards, inspection and environmental assessment. The
initiative includes a "one-stop shopping" approach, under which each
order of government will look after the activities it is best positioned to
handle, in an effort to eliminate overlap and achieve better results in this
field.
Harmonizing federal laws with the new Quebec
Civil Code. To capitalize on the bijural character of our country, the
Government of Canada has decided to harmonize its laws with the new Quebec Civil
Code adopted on January 1, 1994. Bill C-50 was tabled in the House of Commons
for first reading on June 12, 1998.
Agreement on internal trade liberalization.
The Agreement on Internal Trade, which was signed by the premiers on July 18,
1994 and came into effect on July 1, 1995, is designed to reduce barriers to
interprovincial trade and improve trade among the provinces , so as to eliminate
barriers to trade, investment and mobility in Canada. Ministers responsible for
internal trade met in Ottawa on February 20 and, with the exception of British
Columbia and Yukon, signed an agreement on provisions for expanding the
government procurement chapter to the MASH sector (municipalities, municipal
bodies, school commissions and boards, higher education bodies,
government-funded health services or social services).
Infrastructure Program. The infrastructure
program is a good example of the Government of Canada's willingness to work in
partnership with the provinces and municipalities to address the expectations
and needs of Canadians. Because this program was such a resounding success in
our first term, it has now been renewed. By March 31, 1999, $8 billion will have
been spent under this program. (Securing Our Future Together (Platform of the
Liberal Party of Canada - 1997), p. 43). The Liberal government launched this
$6-billion program in December 1993 and extended it for 1997-98, providing
additional funding of $600 million. That amount will be matched by equal amounts
from the provinces and municipal governments over the same period, for a total
of $1.6 billion in new investment.
The Team Canada formula. Team Canada was
created in 1994 as a unique partnership in which the Government of Canada, the
provinces, the territories and municipalities pool their resources to work
together with businesses and help more Canadians succeed on world markets. The
"Team Canada" formula and the trade missions that apply the principles
of that formula remain a core component of our job strategy.
The Canada Pension Plan. Population aging
is a phenomenon Canada intends to be better prepared for than other
industrialized countries. The Government of Canada and eight provinces have
reached agreement on changes to guarantee the viability of the Canada Pension
Plan (CPP), so that the Plan does not lack funding and contribution rates never
reach 14.2% ((Securing Our Future Together (Platform of the Liberal Party of
Canada - 1997), p. 65), as they would if nothing were done. Bill C-2,
establishing the Canada Pension Plan Investment Board, was passed in December
1997, to establish the contribution rate increases, implement a new investment
policy, and make minor changes to benefits.
The constitutional amendment for Quebec school
boards. This constitutional amendment will enable the Government of Quebec
to modernize its education system and establish linguistic school boards. Thanks
to the Constitution Act, 1982, this amendment could be effected bilaterally.
The constitutional amendment for Newfoundland
school boards. The amendment to Term 17 of the Newfoundland Terms of Union
ratified in 1949 will make it possible to secularize Newfoundland's school board
system, a request made by the provincial government following a province-wide
referendum on September 2, 1997. Term 17 purely and simply replaced section 93
of the Constitution Act, 1867, granting seven denominational groups the right to
have their own public schools. On a legal basis, then, the education system was
strictly denominational. There are no non-denominational public schools in
Newfoundland, and the education system has never been subject to the guarantees
or provisions of section 93. Because Term 17 applies to Newfoundland alone, it
could be amended through the bilateral process set out in section 43 of the
Constitution Act, 1982. That process, which has been used on two previous
occasions in respect of Term 17–in 1987 and again in 1997–requires only the
consent of the Senate, the House of Commons and the legislative assembly of the
province concerned. No other official intervention is required under any other
constitutional process or convention.
Social policy reform. The Government of
Canada is committed to working with the provinces to develop a more concerted
approach to social policy reform. In June 1996, the governments set up the
Ministerial Council on Social Policy Reform, a forum in which they can discuss
the best ways to modernize and assure the viability of Canada's social programs.
The Government and all the provinces except Quebec also agreed at the last First
Ministers' Meeting to begin negotiations on an eventual framework agreement on
the social union based on respect for the constitutional jurisdictions of each
order of government and cooperation between federal and provincial partners with
respect to planning and managing the Canadian social union.
Support for the Calgary Declaration. The
Calgary Declaration of September 14, 1997, which was made by the nine premiers
who believe in a united Canada, sets out fundamental values that can unite
Canadians. It recognizes the equality of citizens, the equality of status of the
provinces, Canada's diversity as expressed by its Aboriginal populations, its
two official languages and its multicultural character, as well as the unique
character of Quebec society. Public consultations on the declaration have been
conducted in every province. In Quebec, the National Assembly's Committee on
Institutions has held hearings on the Calgary Declaration; 17 of the 30
constitutional experts invited attended the hearings and expressed their
opinion. The Declaration has now been adopted in every provincial and
territorial legislature except Quebec.
Conclusion
I have just listed 17 changes achieved or
underway, many of which have been initiated in the past two years. I believe
that this is an impressive list of achievements. But the question is whether it
is a list of disparate, unrelated elements, or whether some consistency can be
found in the whole. In my opinion, the latter is true. There is an inherent
logic in the improvements that have been made to our federation in the past two
years. That logic is no better expressed than in the seventh principle of the
Calgary Declaration:
"Canada is a federal system where federal,
provincial, and territorial governments work in partnership while respecting
each other's jurisdictions. Canadians want their governments to work
cooperatively and with flexibility to ensure the efficiency and effectiveness of
the federation. Canadians want their governments to work together particularly
in the delivery of their social programs. Provinces and territories renew their
commitment to work in partnership with the Government of Canada to best serve
the needs of Canadians."
This is the key: what the most recent
constitutional platform of the Quebec Liberal Party calls "an inevitable
relation of interdependence" between governments, while respecting their
jurisdictions. (Recognition and Interdependence: Quebec Identity and Canadian
Federalism, Report of the Committee on the Evolution of Canadian Federalism,
December 1996, p. 44). We are no longer in the 19th century, when the financial
weight of the public sector as a whole was marginal in the economy. It now
accounts for almost half of the economy, so that government jurisdictions meet
in almost all activity sectors. The success of modern federalism lies in
interdependence and clearly defined roles.
And that, after all, is what Canadians want,
including Quebecers. The majority of them do not want much more centralization
or much more decentralization; they want better cooperation between their
governments, if the polls are anything to go by. (CROP/Insight, October 1996;
CROP, March 1997; EKOS, November 1997)
That said, there will always be conflicts between
governments. But the consequences are not always negative. Federations draw
their energy from a sort of ongoing tension. It sometimes makes life difficult
for politicians and bureaucrats, but citizens benefit from it. The reason the
smart money is on the federative form of government is that it is easier to find
solutions when disagreements are out in the open, among constitutional partners,
than in the rarefied atmosphere of huge centralized bureaucracies that weigh
down unitary countries.
So we need to seek cooperation and put in place
effective conflict resolution mechanisms. Above all, we need to be fair to our
federation and appreciate it for what it is: a decentralized federation that
works well. Canada is not a perpetual constitutional dispute, it is a principle
of caring, one of the greatest that humanity has invented. It is thanks to the
federative form that Canada has developed, that different populations, speaking
different languages and not always sharing the same cultural references, have
been able to unite around common objectives and attain one of the best qualities
of life. We must remain together and improve further this decentralized and
generous federation that is our common achievement.
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