|
"Our Two Federations: Contrasting Evolutions
and Common Challenges"
Notes for an address at the
Council of State Governments
Cleveland, Ohio
December 10, 1996
The U.S. and Canada would be unthinkable other than as federations. Federalism
has served both our countries well in the past. It is also the way of the
future. Indeed, the new global economy brings conflicting pressures, both for
larger alliances and for greater regional autonomy. Federalism is a flexible way
to reconcile these two pressures -- a fact which more and more countries are
recognizing. In Europe in particular, but also elsewhere in the world,
nation-states are grouping together in quasi-federal arrangements in response to
global economic imperatives. We in the United States and Canada are lucky to be
enjoying the benefits of a federal system, which many other countries are still
striving to achieve.
But federalism is more than an economic advantage, it is an ethic and a moral
principle. In a very fundamental way, federalist systems of government are
helping human beings all over the world to live together more harmoniously. This
is crucial in a world where, according to Professor Daniel Elazar of Temple
University in Philadelphia, there are some 3,000 human groups who are conscious
of their respective identities. Of the over 180 politically sovereign states now
in existence, over 160 are multiethnic in composition. Living side by side,
within the same state, with neighbours of different cultural backgrounds,
teaches people tolerance and thus makes them better citizens.
The English poet John Donne once said that "no man is an island".
His comment applies equally to cultures and peoples. There is no benefit in
being isolated and separated from others, trapped behind walls of fear and
misunderstanding. Federalism allows us to combine our strengths for projects
that will benefit all, but is also sufficiently flexible to facilitate the full
expression of regional identities. In short, it allows us the best of both
worlds.
Even a cursory glance at the world's federations reveals that no two are the
same. Your federation and ours are different. Their evolutions have been
different. But like all countries we face certain common challenges. I will deal
first with the past, tracing the contrasting evolution of our two federations.
Then I will discuss certain challenges our two federations are now facing. What
better forum than the Council of State Governments to have a useful and
stimulating discussion on these issues. Thank you for inviting me here today.
A tale of two federations
Those who think constitutions are the first and last word in the development
of a federation should be given pause by the experiences of our countries, which
have two of the world's oldest constitutions. Although, in their written form,
neither has changed a great deal, both our federations have evolved
dramatically. They demonstrate that major changes can be brought about without
altering a single comma in a constitution. Constitutions evolve -- often in
fundamental ways -- through judicial interpretation, changing conventions, and
the exercise, or non-exercise, of powers, rather than solely through formal
amendments. The U.S. provides a clear example of this, since it has developed
remarkably over time and yet, of more than 9,100 amendments that have been
proposed since 1789, a mere 26 have been ratified. In Canada, some of the powers
originally intended to give the federal government a strong hand -- such as the
right of disallowance and the power of reservation, which allowed the federal
government to overrule provincial legislation -- have fallen into disuse,
although they were used extensively in the 19th century. And today,
intergovernmental agreements and new collaborative approaches are permitting
substantial evolution without requiring amendments to our Constitution.
Federal constitutions are thus not strait-jackets that prevent change -- they
are instead frameworks which allow change to take place. That is why the U.S.
and Canada have been able to evolve in very different directions. The U.S. has
become more centralized over time, in spite of a relatively decentralist
Constitution. By contrast, Canada's Constitution was centralist at the time of
Confederation, but today we have one of the most decentralized of all
federations.
The spirit of the U.S. Constitution was decentralist. It gave restricted
powers to the national government and placed the residual authority with the
states. James Madison, writing as Publius, felt obliged to demonstrate
"that no one of the powers transferred to the federal government is
unnecessary or improper". By contrast, at the time of Confederation in
1867, the distribution of powers in the Canadian Constitution had a strong
centralist bias, including the allocation to the federal government of the major
residual authority, phrased as "peace, order and good government".
Canada's Fathers of Confederation wanted to avoid what they saw as a main
cause of the American civil war -- a weak federal government with an emphasis on
state autonomy. They also wanted to ensure national security and pan-Canadian
communications and economic development.
However, in spite of its centralist thrust, the Constitution Act of 1867
granted significant powers to the provinces -- for example, over language,
education and law. Canada's nation-builders believed that they could construct a
country with a strong central government, without destroying minority cultures
and languages or the particularities of Quebec and other regions. They believed
that French and English could live side by side and work together to strengthen
our nation. These beliefs are one of the greatest legacies our founders left us.
At the outset, then, Canada's federation was a great deal more centralized
than yours. Yet, today, even though there have only been four amendments to the
distribution of powers, our federation has become in many respects more
decentralized. This is shown by a variety of indicators. For example, in 1991,
federal expenditures, after intergovernmental transfers, as a percentage of
total government expenditures, were 58.5% in the U.S., as opposed to 40.8% in
Canada. In 1961, the comparable proportion for Canada was 49.7%. Furthermore,
according to a specialist in comparative federalism, Professor Ron Watts of
Queen's University in Ontario, approximately 80% of federal transfers to state
and local governments in the U.S. are conditional grants. In Canada, by
contrast, no less than 76% are now unconditional. How can we explain this
paradox? As I see it, five socio-economic and institutional factors, together,
provide at least a partial answer.
First, while the original distribution of authority in the U.S. identified
several shared functions, in Canada demarcation of the exclusive
responsibilities of each government was emphasized. In the U.S., the federal and
concurrent powers are set forth explicitly, but the Constitution left a large
unspecified residual power to the states. The courts have tended to interpret
what is "implied" in the federal powers as broadly as possible, which,
over time, has contributed to increased centralization. By contrast, in Canada,
where both provincial and federal powers were explicitly listed in the
Constitution, the courts have, since the late 19th century, interpreted certain
federal powers narrowly so as to expand provincial powers. Later, the courts'
focus on provincial authority over "property and civil rights"
effectively transformed that power into a replacement residual clause.
Second, the circumstances of our major minority groups are very different. In
your country, minorities are dispersed, and no one group is so concentrated in a
single state as to form a majority of that state's population. Therefore, your
minorities have tended to look to the federal government to support their
interests. In Canada, French-speakers are our most important minority group.
They are especially concentrated in Quebec, the second most populous province,
where 83% of the population is French-speaking. French-speaking Quebecers have a
special relationship with their provincial government, since it is the sole
government where the majority of elected representatives are French-speaking.
Although the Quebec government has at times supported centralist measures, it
has usually acted as a strong advocate of provincial autonomy. There is no
equivalent of this situation in the U.S.
Third, in the U.S., the executive and legislature are separated in both
orders of government, while in Canada legislative and executive powers are fused
in the executive-centred system of parliamentary government. Therefore, in the
U.S., divisions between President and Congress have been emphasized. In Canada,
the system is defined much more by federal-provincial relations than by the
division of powers between the legislative and executive branches of government.
Fourth, while there are 50 U.S. states, Canada has only 10 provinces. This
means that the relative clout of each province is considerably greater in
relation to the federal government than that of the individual American states.
The comparatively smaller number of provinces also contributes to achieving
consensus among governments, through such mechanisms as First Ministers'
Meetings, and to the building of partnerships between the federal government and
the provinces. Then again, it is also easier for the provinces to form strong
coalitions in their relationship with the federal government.
Finally, the differing international roles of the U.S. and Canada have had
important implications for the domestic status of their federal governments. The
superpower rank of the U.S., and its consequent military spending, have focused
attention on the central government. Canada, by contrast, is a middle power
internationally. Our federal government has therefore not been the focus of a
similar level of attention.
The challenges we share in both our countries
Federalism has served our interests well in the past. It has helped us become
leaders in terms of economic development and the standard of living our citizens
enjoy. It is surely not an accident that four of the world's five richest
countries are federations: Canada, the United States, Germany and Switzerland.
Today, we face the question of whether federalism will continue to serve us as
well in the 21st century. I am confident that it will. One of the strengths of
federal systems is that they are flexible enough to adapt and evolve when faced
with new challenges and new contexts.
It is clear that both our federations do face a number of challenges. Today,
I will talk about two of the major ones: first, the need to get our fiscal
houses in order while maintaining our social policies; and, second, the need to
maintain unity while adapting to our increasing cultural pluralism.
The fiscal and social policy challenge
Federalism has been wrongly criticized as promoting duplication and overlap,
and thus inflating government spending. This is simply not true. A study
released by the OECD in 1985 found that government expenditure as a share of GDP
was, on average, some 7% lower in federal as opposed to unitary states.
Moreover, today, among the least indebted industrialized countries, you find
such federations as Australia and Switzerland. Federalism does not increase the
risk of indebtedness, but it does not protect states from it either. However, if
a federal state has a debt problem, the flexibility inherent in federalism can
help it cope. Both our countries are good examples of this.
The U.S. federal deficit-to-GDP ratio stood at 5.2% in 1986, but in 1998, it
will be 1.1%. In Canada, our efforts are also bearing fruit. In 1985-86,
Canada's federal deficit-to-GDP ratio was 7.2%, but in 1997-98, that deficit
will be only 2% of GDP. On a borrowing requirements basis -- the measurement
that is used in the U.S. -- our budget will be balanced in 1998-99. Canadian
short-term interest rates are now about 1.5 % lower than those in your country.
Our efforts have also, in some cases, directly benefitted the provinces. For
example, the lower interest rates between January 1995 and June 1996 have
provided provincial governments with cumulative savings of about $1.3 billion.
Furthermore, the flexibility of our federation has allowed the provinces to find
their own ways to address their budget deficits, and seven have now balanced
their budgets or are showing a surplus.
Leaders of state and provincial governments in our two countries have
expressed concern that budget-cutting at the national level will be off-loading:
in the U.S. through what you call unfunded mandates, and in Canada through cuts
in transfer payments. You will not have any difficulty in finding provincial
premiers who suggest that there has been off-loading. But let me tell you that
between 1994-95 and 1998-99, transfer entitlements will fall by 10.5%, while
total federal department spending will decline by 21.5%. Furthermore, provinces
were notified a year in advance that such cuts were going to be necessary.
Making decisions about budget cuts is tough. But I can assure you that, despite
the need to make such cuts, Prime Minister Jean Chrétien, Minister of Finance
Paul Martin and our government have chosen to cut spending significantly in
areas such as transportation in order to preserve our social programs. We are
ensuring that cuts, where necessary, are fair to all provinces.
We have also responded to concerns about the use of the federal spending
power, which allows the federal government to make payments to governments,
institutions and individuals even in areas outside its jurisdiction. The
division of responsibilities in federations refers to legislative power, not
spending power. A federal spending power within the jurisdictions of member
states exists in all federations. In Canada, it has been the basis, for example,
of the national health system, a great source of pride for all Canadians.
Nevertheless, the provinces have argued that its unilateral use can undermine
their ability to set and follow priorities. Therefore we announced this year
that the federal spending power will no longer be used to create new shared-cost
programs in areas of exclusive provincial jurisdiction without the consent of
the majority of provinces. The federal government has taken the unique action of
voluntarily limiting its own spending power. This limitation reflects our
commitment to moving toward more harmonious and cooperative relations between
the federal government and the provinces.
In both countries, we are seeing some redistribution of responsibilities and
an attempt to give more flexibility to the states and provinces. In your
country, there has been a lively debate on welfare reform, with states taking
clearly divergent approaches. At the same time, the public on both sides of the
border want assurances that basic standards will be maintained, and that a
"race to the bottom," in which states and provinces compete to offer
the most stingy policies, will be avoided.
In Canada, we are working with the provinces to clarify the roles of the
different levels of government, to find innovative ways to pool our strengths,
and to build new partnerships. Two policy areas where we are seeing real
progress are job training and child poverty. By 1999, we will have transferred
the management of all job training funded through the Employment Insurance
program to those provinces interested in taking on this challenge. Meanwhile,
the federal government will continue working to ensure the interprovincial
labour mobility rights of Canadians are fully respected, and it will continue to
provide certain services such as the national labour-market information and
exchange system. Last Friday, we announced the first agreement in this area
between our government and the province of Alberta. With these new agreements,
an important element of flexibility will be injected into a public policy area
that is crucial in the new global economy.
Child poverty is a second area where Canadian governments are forging a
renewed partnership. Canada and the U.S. are the two industrialized countries
with the highest level of child poverty, and I know we are all looking seriously
at ways to address this. In the U.S., your new welfare reform law gives states
increased flexibility in managing programs for poor families, while encouraging
recipients to move from welfare to work. In Canada, a federal-provincial
ministerial council on social policy, jointly established last summer, has
agreed to treat benefits for children as a top priority. The ministers are
pursuing the idea of folding the existing federal child tax benefit and
provincial welfare payments for children into a new joint program.
The challenge of unity and pluralism.
Like the U.S., Canada is a very multicultural country. Cultural pluralism
will become more and more of a salient issue for both of us. Canada is also
bilingual, and both French and English are recognized as official languages. As
I mentioned earlier, our most prominent minority is concentrated in a single
province, Quebec. This has led to an additional challenge, as it has provided an
impetus for a secessionist movement.
It is important that I put the 1995 Quebec referendum on secession into
perspective. I am speaking to you as a Quebecer and a Canadian who is very
attached to both his identities. I am immensely proud of what Quebecers have
achieved together, building a vibrant, flourishing, predominantly
French-speaking society in a continent where English dominates. But I am also
extremely proud of what Canadians -- our wider family -- have achieved together,
in building a society in which respect for diversity and compassion prevails.
The vast majority of Quebecers feel as I do -- they are proud of both
identities. What we, as a government, must do, is show Quebecers that they do
not have to choose between the two identities that they cherish. We must show
them to what extent the Quebec identity and the Canadian identity complement
each another.
As a government, we must also demonstrate how well federalism responds to
Quebecers' needs, and encourage other Canadians to show how important Quebec is
to their sense of being Canadian. We can amply demonstrate the former, and we
are working toward recognition of Quebec's uniqueness within the Constitution as
a way for Canadians to demonstrate the latter. In the meantime, Parliament
passed a resolution in December 1995 recognizing "that Quebec is a distinct
society within Canada" by virtue of "its French-speaking majority,
unique culture and civil law tradition".
Americans are friends of Canada. The overwhelming majority of Americans
support a united Canada. And I know that they want a united Canada not only for
economic reasons. You want a united Canada because you don't want Canada setting
a bad example for the world, that of division, rather than a positive example,
that of unity. I know, for the same reason, that all Canadians -- Albertans no
less than Quebecers, Nova Scotians no less than Manitobans -- must work toward
reconciliation. We must do so not just for ourselves and our children, but also
for the many other people elsewhere who look to Canada as a source of hope. Many
of them can only dream of the advantages we enjoy as part of the Canadian
federal system. They want Canada to continue to send the right message, and to
show the world a model of harmonious cohabitation.
Let me give you an example which is particularly pertinent, because the
country in question has just, in an occasion important for all of us, signed a
new Constitution today. That country is South Africa. Unlike Canada, South
Africa doesn't have two official languages that are important internationally,
but rather 11 official languages. Also unlike Canada, South Africa is not
recognized as one of the best countries in the world in which to live. On the
country, it has just emerged from the vile experience of apartheid. Through
reconciliation and striving for a harmonious cohabitation of cultures, South
Africa will gradually regain the strength it needs to take on the human and
socio-economic challenges it faces. The only solution for South Africans is
unity, not fragmentation. Surely Canada, a country so blessed by fortune, should
offer South Africa hope, not an example of break-up.
Conclusion
Our federal systems, which have served us so well in the past, face major
challenges on the eve of the 21st century. We can both take inspiration from how
the other responds to the challenges we share. Through our trade links and all
manner of exchanges, like this meeting today, we can share our ideas, our
solutions, and our dreams.
Canada faces a unique challenge -- that of secession. Some say that the proof
that Canada doesn't work is the existence of a separatist movement in Quebec. I
think that, on the contrary, Canada works well. Our federation works, it can be
improved, and it will be improved if Quebecers and other Canadians resolutely
decide to work together. And we will choose to stay together, because the forces
of unity will prevail. I am confident that our two federal partners in NAFTA --
your country and Mexico -- will have a united, federal Canada as their partner
for many years to come. There is no doubt in my heart and mind that federalism
is the way of the future.
Check against delivery..
|
