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"Federalism: A System in Evolution"
Notes for an address to the APEX
Ottawa, Ontario
April 25, 1996
Introduction
Aexis de Tocqueville was a fervent defender of the federal system, which he
saw as one of the combinations most favourable to the prosperity and freedom of
man. Accordingly, he said, "I envy the lots of those nations which have
been able to adopt it."
Well, that act of foresight is testimony to de Tocqueville's reputation as a
prophet of democracy. Four of the five wealthiest countries, in terms of per
capita GDP, are federations. Canada is one of those countries.
And yet, here at home, we rarely hear people saying good things about our
federal system. It is accused of being cumbersome, inefficient and impossible to
reform.
Nevertheless, my academic research and my new experience within the
Government lead me to conclude that a great deal of the criticism of Canadian
federalism is based more on myth than reality.
I would therefore like to take advantage of the forum I have been given here
today to try to make an accurate diagnosis of how our federation works. At a
time when the unity of Canada is threatened, I believe it is essential that we
be able to pinpoint the positive elements of our federal system, as well as the
areas where improvements must still be made to serve Canadians better and
bolster their confidence in their system of government.
As senior managers in the federal public service, you are directly concerned
by these matters. You administer government programs; you must continually do
more with less. You know better than anyone what works and what doesn't. You are
an indispensable asset for the Government in its efforts to renew our
federation. For that reason, I am very grateful to APEX for having invited me to
talk about how the federation works.
The advantages of federalism for Canada
I won't be revealing any state secrets if I tell you that Canada's
performance in economic and social terms is among the best in the world.
* Year after year, the UN ranks Canada number one in terms of quality of
life. * Canadians' life expectancy is among the highest in the world, and Canada
is number one in terms of the school attendance rate. * Canada is one of the top
five OECD countries in terms of per capita income and per capita GDP. * Between
1960 and 1990, Canada was number two among the G-7 countries in terms of
economic growth, and number one in terms of job creation. * Canada leads the G-7
countries and is in second place in the OECD (behind Sweden) in terms of the
lowest long-term unemployment rate, meaning unemployment lasting longer than 12
months.
Canada's excellent performance is not just an accident. Our federal system
has something to do with it. I believe that federalism has helped Canada to
prosper first and foremost because it is a flexible and dynamic system that has
struck the right balance between two fundamental principles: solidarity and
diversity.
Under the principle of solidarity, the government works for the common good
of all citizens and all regions, especially those less fortunate. And the
principle of diversity leads to the autonomy of local powers, citizens and
institutions.
Canada has attained a level of democracy, freedom, fairness and prosperity
that is almost unequalled in the world, in large part because we Canadians have
been intelligent enough to develop a way of practicing federalism that well
reflects the ideals of solidarity and respect for diversity.
First of all, we have put in place a network of social programs and a system
of equalization payments so that all citizens can have a comparable level of
well-being. We have even entrenched that principle of equalization in section 36
of the Constitution Act, 1982. That commitment to social solidarity is
unparalleled in the world.
Second, the constitutional division of powers, which gives the provinces
exclusive jurisdiction over such key areas as health, education, natural
resources and welfare, illustrates our commitment to extensive local autonomy.
Indeed, in terms of both sectoral powers and taxing and spending powers,
Canada's provinces are in many ways stronger than the American states, the
German Länder or even the Swiss cantons.
When I talk about the types of advantages that federalism gives Canada, I am
not talking only to Quebecers who might be tempted by the sirens of secession. I
am also talking to those who feel that our country is over-governed and who
dream of a unitary Canada.
Centralizing powers to a national government is not the solution. Imagine for
a moment the bureaucratic monster we would have to put in place if we had only
one ministry of education to administer every school in the country, from St.
John's to Victoria.
The importance of debunking myths
Over the past decade, those who believe in Canadian federalism, including
myself, have not always made the necessary effort to explain the advantages of
our system to Canadians. By leaving the field open to our opponents, we have let
a number of myths and falsehoods about our federation take root in public
opinion.
I'd like to take a few minutes to take a closer look at some of the main
criticisms made about our federation.
Is Canada really over-bureaucratized and over-governed?
If our system of government were truly cumbersome and inefficient, our public
spending, our tax burden and the size of our public sector, including all levels
of government, would be higher than in other comparable countries, particularly
unitary countries. And yet that is not the case.
Our public spending is not particularly high when compared with the average
among OECD countries. In 1993, for example, total government spending in Canada
represented 49.7% of Canada's GDP. This ratio is almost identical in Canada and
Germany (49.7% vs 49.4%), and it is higher than Canada's in a number of unitary
OECD countries, such as France (54.8%), the Netherlands (55.8%), Italy (56.2%),
Norway (57.1%) and Sweden (71.8%).
The size of Canada's public sector is not unusually high, either, when
compared with the average among OECD countries. In the early 1990s, public
sector employees had 20.6% of the jobs in Canada. That proportion is only
slightly higher than that of the United Kingdom (19.4%), and lower than that of
France (22.6%), Denmark (30.5%), Sweden (31.9%) and Norway (32%). Need I remind
you that all those countries have a unitary structure?
Finally, the tax burden is lighter in Canada than in many OECD countries. In
1993, total revenues collected by the various levels of government represented
42% of Canada's GDP. That ratio was higher than in Canada in 11 of the 19 OECD
countries for which data are available.
International comparisons highlight the fact that unitary states are not more
effective and efficient than federal systems. For one thing, the characteristic
centralization of unitary states makes it necessary to set up an extremely
cumbersome bureaucracy within the national government. For another thing,
unitary states cannot function either without creating different levels of
government administration. Unitary states also have regional and local
authorities, the difference being, however, that those authorities have much
less autonomy in relation to the central government than do Canada's provinces.
Are jurisdictional duplication and overlap really costing Canadian
taxpayers billions of dollars?
Despite international comparisons that are actually to Canada's advantage,
many Canadians remain convinced that the federal and provincial governments are
duplicating activities in a host of areas. After all, we do have federal and
provincial departments of health, the environment, agriculture, natural
resources, fisheries and transport.
A number of studies have shown that there is indeed a great deal of
jurisdictional overlap between Ottawa and the provinces. For example, Germain
Julien and Marcel Proulx, researchers at Quebec's École nationale
d'administration publique, have estimated that 60% of federal programs overlap
those of the Government of Quebec. A 1991 study by Canada's Treasury Board
Secretariat concluded that 66% of federal programs at least partially overlap
those of the provinces.
And yet, all the studies on overlap and duplication, including the notorious
Le Hir studies by the Government of Quebec, concluded that in the vast majority
of cases, federal and provincial activities are complementary rather than
redundant. For example, the Government could not withdraw from activities such
as management of national parks or correctional services without considerably
affecting service to the public.
It is also important to note that overlap is not the exclusive bane of the
Canadian federation, or even of federal systems in general. It is an issue that
concerns unitary states as well.
I'd like to share an example that was recently brought to my attention. Much
has been said lately about duplication of employment assistance measures. The
Official Opposition and the Government of Quebec often talk about blunders
caused by the approximately one hundred federal and provincial measures
currently implemented in Quebec. Incidentally, employment insurance reform is
expected to reduce the number of federal measures from 35 to 5.
Well, according to a recent edition of the French magazine L'Express, there
are currently some 2,300 different employment assistance measures in France.
That plethora of programs is due to the fact that municipalities, departments,
regions and the central government all implement their own measures, without
paying much heed to what the others are doing already. And to think that some
people would have us believe that we're the only ones who have problems with
overlap!
Is Canadian federalism truly an adversarial system where everything
is subject to endless squabbling between Ottawa and the provinces?
Although disagreements between the federal government and the provinces often
get a lot of press, it should not be concluded that our federation is plagued by
disagreement and conflict. Many issues are resolved every day, often at your
level, without attracting any media attention.
The most recent Inventory of Federal-Provincial Programs and Activities,
which came out last year, contains no fewer than 457 bilateral and multilateral
programs or agreements between Ottawa and the provinces. That means that the
federal government and the provinces are managing to get along and co-ordinate
their activities in a host of areas.
With your support, our government has taken various measures to promote a
renewed partnership with the provinces:
* the Efficiency of the Federation Initiative; * the Canada Health and Social
Transfer; * the National Infrastructure Program; * "Team Canada's"
trade missions; * the Employment Insurance Reform, particularly Part II of the
bill on active employment assistance measures; * withdrawal from certain areas
of provincial jurisdiction, including labour-market training, social housing,
mining, forestry and recreation; and finally * limitation of federal spending
power in areas of exclusive provincial jurisdiction.
Is Canadian federalism really a gridlocked system that cannot be
reformed?
The experience of recent decades shows that the small number of
constitutional changes has not prevented the federation from evolving
considerably on all fronts.
Let's take the example of the Program Review headed by my colleague Marcel
Massé. That exercise has already yielded impressive results, making it possible
to rebalance responsibilities among the federal government, the provinces and
the private sector. Unfortunately, those achievements have too often gone
unsung.
The Program Review will allow the Government to save some $19.2 billion by
1998-99 and cut more than 45,000 positions from the federal public service, a
reduction of almost 20%.
Our federal system has not evolved so substantially through greater
centralization of decision-making in Ottawa. The trend is clearly toward greater
decentralization. A variety of indicators confirm that:
* The number of federal employees in relation to the country's labour force
has dropped by almost half since the early 1950s. * In 1950, the federal
government collected $3.30 for every dollar of revenue collected by the
provinces; in 1993, it collected only $1.20. * In addition, for every dollar
spent by the provinces on goods and services, the federal government spent $2.46
in 1960, and only $0.67 in 1993, a drop of 76% in 33 years.
We have thus seen a gradual and remarkable redistribution of the federal
government's taxing and spending power to the provincial governments over the
past four decades.
As you can see, my assessment of how our federation works is largely
positive. Our federal system has allowed us to take on challenges in the past,
and I am convinced that it is also the best system to help us take on the
challenges that will unfold in the coming years.
Why federalism will help us take on the challenges facing us at the dawn of
the 21st century
The strengths of our federal system, namely its flexibility, its dynamism,
its solidarity and its ability to respect diversity, have served us well so far
and will continue to do so more than ever in the coming years, if we give them
the chance.
Throughout the world, we see countries and supranational organizations such
as the European Union trying to strike a balance between solidarity and
autonomy. In that regard, Canadian federalism has a lot to teach the rest of the
world in terms of how to balance those principles, and it will help us to take
on the new global challenges for which that balance is more essential than ever.
Because of economic globalization, more and more decisions with major
repercussions on Canadians' lives are being made at the international level.
Belonging to the G-7, NAFTA, the Commonwealth, the Francophonie, the
Organization of American States and the Asia Pacific Economic Cooperation
Council is a considerable asset for Canadians in defending their interests
internationally. Without the federal union, we would lose a number of those
assets.
Furthermore, trade liberalization at the international level favours
specialization of regional economies. The Canadian federation's characteristic
respect for diversity and regional autonomy will also serve us well in that
regard.
In social terms, a number of relatively new phenomena are helping to
transform the challenges facing Canada. An aging population, growing numbers of
single-parent families, diminished job security and a growing proportion of
citizens who depend on income security programs are issues that concern all
Canadians and are making us rethink our social protection system.
Once again, the core principles of our federation -- solidarity and local
autonomy -- will prove to be invaluable advantages. On the one hand, the
extensive autonomy the provinces have with regard to social policy will help
them find innovative solutions tailored to their specific needs. On the other
hand, Canadian solidarity will ensure that all citizens, no matter what region
of the country they live in, will have access to a comparable level of services.
In addition, federalism fosters emulation among the provinces and the
dissemination of productive experiences. Those are key elements for putting in
place effective public services.
Canadian society is increasingly bilingual and multicultural:
* Between 1981 and 1991, the number of people who said they had a mother
tongue other than English or French rose by 22%, while Canada's population
increased by only 13% over the same period. * In addition, the number of people
who can speak French has never been as high: according to 1991 census data, 32%
of Canadians, or almost 9 million people, are able to express themselves in
French. * In Quebec in particular, the French language has continued to
flourish. 93.5 per cent of Quebec residents say they can speak French fluently;
that is the highest rate of francisation since the beginning of Confederation.
Those indicators reflect our federation's respect for diversity. That
principle will enable us to continue to affirm Canadian society's linguistic
duality and multicultural nature. By respecting diversity, we will be able to
make the Canadian federation evolve in a way that makes Canadians in all parts
of the country feel more at home and better recognized.
What will we have to do to improve our federal system?
I am convinced that the federal system will be able to deliver the goods if
we continue to rely on those things that make it strong: solidarity and
diversity. In practical terms, we will have to focus our efforts on three tasks.
First, we must continue our efforts to make our federation more efficient.
We can better clarify the roles and responsibilities of the federal
government and the provinces, especially in areas of shared jurisdiction such as
the environment and agriculture. That clarification will yield both greater
accountability and greater efficiency.
In trying to minimize unnecessary overlap, our challenge also lies in
effectively managing overlap that is inevitable. We must ensure first that the
activities of the different levels of government complement one another well,
and second that there is productive co-operation between the different
governments.
Second, we have to try to make our federation work more harmoniously.
Because the federal government and the provinces share areas of activity,
good co-operation is essential. In areas where overlap is inevitable, unilateral
action is not desirable. In most cases, it can create conflict, duplication and
contradictions between federal and provincial policies.
For effective co-ordination of federal and provincial efforts, we must work
in partnership. That's true for us as elected representatives and it's also true
for you as public servants. By working together with the provinces, we will
succeed in serving the public better, making our federation work more
harmoniously and, ultimately, strengthening national unity.
For that reason, I feel it is essential that, before they are implemented,
all new federal policies and programs take into account the federal-provincial
dimension and the need for a more harmonious federation. Decisions that might
affect provincial governments' operations should ideally be made together with
the provinces. I can only encourage you to make co-operation with the provinces
one of your main criteria for excellence as senior managers in the federal
public service.
Third, and finally, to come back to my first point, we have to debunk the far
too many myths circulating about our federation and how it works. As federal
public servants, you have a key role to play in giving back our fellow citizens
confidence in their institutions.
You have the responsibility, which you share with the members of the
Government, to explain well to Canadians what the Government of Canada is doing.
As public servants, your responsibility is to clearly explain the programs,
services and activities you manage and to set the record straight about them if
need be.
To be able to make an accurate judgement about their system of government and
their institutions, Canadians have to have balanced information. Too often in
the past decade, they have been given only one side of the story.
Our federation certainly has its problems, as do all countries; in addition,
its unity is threatened. It is thus high time to underscore the federation's
tremendous achievements in terms of democratic and individual rights, freedom,
social solidarity, economic prosperity and respect for diversity.
Canada has considerable assets to maintain its privileged place among the
nations of the world. Our federal system is undeniably one of those assets.
Let's make sure we know how to put them to good use and make them work better.
Let's make an accurate diagnosis of our federation, so that we can prescribe
the right course of treatment for it.
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