"Rebalancing the Federation:
Diagnosis and Remedy"

Notes for an address as part of
the Pearson Luncheon Series

Edmonton, Alberta

April 26, 1996


No, I will not talk about distinct society today.

It is not that the recognition of Quebec in the Constitution is not a very important issue. Of course it is. Our country is in danger because of symbolic politics, because what some Canadians see as simple recognition, others see as special privileges. Addressing this issue is crucial to national reconciliation.

But there is another important aspect to this process of reconciling Canadians. This is an effective rebalancing of the federation.

I am happy to be here in Edmonton to discuss this issue, and I want to thank the Liberal Party and my colleague Ann McLellan for inviting me to address this Pearson Luncheon series.

Lester Pearson made all Canadians proud because of his work to achieve reconciliation between nations at the international level. And it was Lester Pearson who launched the first real process of dialogue to encourage Canadian reconciliation with the Laurendeau-Dunton Commission in 1964, which my father had the privilege of working for. So it is very appropriate for me to discuss how we can reconcile Canadians as part of a speaking series in honour of Lester Pearson.

It is also appropriate for me to discuss these issues here in Alberta. When we think about it, Quebec and Alberta have much in common. Part of national reconciliation will involve us getting to know each other better.

Two parallels come to mind immediately. First, both Quebec and Alberta have a deeply rooted tradition of having strong provincial politicians to represent their concerns, whatever we happen to think about them. Quebec has had Maurice Duplessis, René Lévesque, and of course, Lucien Bouchard. Alberta has had Ernest Manning, Peter Lougheed, and of course, Ralph Klein.

Second, both Quebec and Alberta share a sense of alienation from Ottawa. Both feel that they are not heard on issues which affect their identity. Both feel that their interests are not understood, and that they are not truly respected. Both have had valid grievances against the federal government.

But the parallel stops there. For in Quebec, these voices of provincial autonomy and this sense of alienation has led to a strong secessionist movement. There is not, thank God, such a movement in Alberta.

I have my own theory as to why this difference exists. Quebeckers are concerned about the survival of the French language, which brings me back to the recognition Quebec's distinctiveness, which I promised not to talk about... today.

Forgive me... You know how much I am committed to solving this major problem that threatens the unity of our country. But I'll stop at that. Let's return to Albertans' sense of alienation.

As I have said, there have been legitimate grievances in the past. What Liberal politician cannot be aware of the bad memories in Alberta of the National Energy Program? But not all provincial grievances are valid.

Reading the headlines and listening to many provincial politicians, both here in Alberta and all over Canada, you might conclude that our federal system is the worst in the world. Some people believe this myth.

I am not one of them. I accepted the Prime Minister's invitation to join his team for two reasons. First, to combat negativism and to dispel many of the myths people hold about this federation. And second, and more importantly, to help make this federation work even better.

I am not a doctor of medicine, but I am a doctor of political science. So as a doctor, I feel we must have an accurate diagnosis before we can determine the most effective remedy for the problems of our federation.

The diagnosis: we have a myth problem

It is not surprising that secessionists paint the situation darker than it actually is. They want to destroy Canada.

What is more upsetting is when people who believe in Canada do the same thing to further their own parochial interests.

Certainly, regional interests must be protected and promoted in a federation. But this must be done without ever losing sight of what's best for the whole country.

And one thing all Canadians and their politicians must remember is that despite our problems, our country is among the best, if not the best, in the world.

Perhaps what Winston Churchill said about democracy also applies to Canadian federalism: it is the worst possible system, except for all the others.

Consider the following facts:

This impressive international performance is not an accident. Our federal system has something to do with it. If our system was as cumbersome and inefficient as some people say, it would follow that our public spending, the size of our public sector, and our tax burden would be higher than other comparable countries. But this is not the case.

Our public spending is not that high when compared with other OECD countries. In 1993, total government spending in Canada represented 49.7% of Canada's GDP. This ratio is almost identical with Germany's, at 49.4%, and lower than France at 54.8%, the Netherlands at 55.8%, Italy at 56.2% and Sweden at 71.8%.

The size of Canada's public sector is not unusually high, either. In the early 1990s, public sector employees had 20.6% of the jobs in Canada. This is slightly higher than the United Kingdom at 19.4%, and lower than France at 22.6%, Denmark at 30.5%, or Sweden at 31.9%.

Finally, and contrary to what is said, the tax burden in Canada is lower than most other comparable OECD countries. In 1993, total revenues collected by all levels of government represented 42% of GDP in Canada, lower than 11 of 18 other OECD nations.

This being said, I do not think we should rest on our laurels. Of course our tax burden is still higher than it should be, of course the public sector can be made more efficient. This is why Paul Martin's deficit cutting budgets and federal Program Review are so important, and why the progress most provinces have made towards reducing or eliminating their deficits is so important. But let us keep a sense of perspective: Canada is not so bad, and our federal system does not make us more inefficient than others.

In fact, what international comparisons show is that countries with federal systems are usually more effective and efficient than unitary states. It is no accident that four of the five countries with the highest per capita income -- the United States, Germany, Switzerland, and Canada -- are federations.

Even within the club of federations, we see that Canada is not overly centralized. Canada has a lower proportion of federal spending compared to spending by regional and local levels of government than the U.S., Germany, Australia, or even Switzerland. Many provincial politicians have complained that Ottawa is too interventionist in provincial areas of jurisdiction, and this has created excessive overlap and duplication. There is some overlap and duplication, but it is sometimes greatly exaggerated.

For example, some people have questioned why Health Canada needs thousands of bureaucrats when health is a provincial field of jurisdiction. Isn't this just excessive administrative overlap?

In fact, the vast majority of Health Canada employees provide services that do not compete with provincial services -- they provide health services on Indian reserves that are not covered by the provinces, they perform research and test new drugs, and they are involved in national awareness campaigns on smoking and other public health issues. Only 25 Health Canada employees are involved in administering and overseeing the Canada Health Act.

The advantages of Canadian federalism

So we see that many of the complaints about the Canadian federation -- that Canada is inefficient and unproductive and excessively bureaucratic, and that this is the fault of a federal system full of unnecessary overlap and duplication -- are based on mythology, not reality.

The reality is that Canadian federalism is one of our greatest strengths. Sometimes even those who favour Canadian unity have lost sight of how valuable our federal system is. But keeping Canada together is not simply about keeping all parts of the country the same colour on the world map, it is about a certain ideal of government: the federal ideal.

The great French political thinker Alexis de Tocqueville once said that: "The federal system was created with the intention of combining the advantages which result from the magnitude and the littleness of nations."

Tocqueville noted that large nations had great advantages in trade and commerce, and enjoyed greater security in times of war or crisis, while small nations were likely to be more democratic, to have freer institutions, and a greater sense of social equality. Federalism is the best method ever invented of combining the strengths of large and small nations in a single state.

Another way of expressing this is as a balance of two principles: the principle of solidarity, which holds that governments should work for the common good of all citizens and all regions, and subsidiarity, which holds that power should be exercised at the closest level possible to the people, and that more central governments should respect the legitimate autonomy of citizens, independent institutions, and local levels of government.

This balance between solidarity and subsidiarity -- or autonomy -- means that as citizens and as regions within Canada we must be both independent and interdependent.

Our federalism in Canada has given concrete expression to these ideals of building solidarity and respecting local autonomy.

On the one hand, we have created a network of social programs and a system of equalization payments to ensure that all citizens enjoy a comparable level of well-being. We have even expressed this in section 36 of the Constitution Act, 1982, which commits governments to equal opportunity for all Canadians, equalization between regions, and comparable social services throughout Canada.

And I want to say here in Alberta, one of the provinces that has contributed the most to supporting solidarity between regions, that your contribution to sustaining our national solidarity is greatly respected and appreciated.

On the other hand, our constitutional division of powers, giving exclusive authority over such vital areas as health, education, natural resources, and social welfare to provinces expresses our commitment to a powerful local autonomy. In fact, in terms of both formal powers and taxing and spending authority, Canadian provinces are in many ways stronger than American states, German Länder, or even Swiss cantons.

All over the world we see countries and international bodies like the European Union seeking to balance solidarity and local autonomy, independence and interdependence. Canadian federalism, far from being a failure, can be an example to the rest of the world about how to balance these principles, and our federal experience will help us adapt to new global challenges in a world where both globalization and localization are becoming stronger forces.

As Jean Chrétien said in the House of Commons in his reply to the Government's Throne Speech: "We have seen that when the world looks to Canada, what they see is the future. Or rather the best hope for the future of what the world must become. Together, let's build that model of hope and confidence. That model for all mankind."

The remedy - rebalancing the federation

So now that we understand the nature of Canada's federalism, we can make an accurate diagnosis that will help us determine the best remedy. We can admit that Canada has some problems, that government can be made more responsive and efficient. But federalism is not one of our problems. In fact, a better application of the federal principle is the remedy for our problems.

Now, in this time of difficult testing for national unity, we can draw on our experiences of reconciling solidarity and autonomy to make the Canadian federation work even better.

We must find ways to make the Canadian federation more harmonious and to lessen the number of disputes between the provincial and federal governments. And this is exactly what the Government is suggesting in the Throne Speech.

Let me concentrate on four major unity initiatives announced by the federal government in the Throne Speech.

First, the federal government has limited its spending power. We will not create any cost-shared programs in areas of provincial jurisdiction without provincial cooperation. This has been a long-standing demand of all the provinces, and this is the first time in our history that any federal government has offered such a limit on its powers outside the context of formal constitutional negotiations.

Second, in terms of existing cost-shared programs in areas like health, post-secondary education, and social welfare, we will be exploring with the provinces new cooperative ways of working together while maintaining and securing national standards. Once again we will operate on the basis of mutual consent. By working in such a way, we will fulfill our obligation to maintain solidarity while respecting provincial autonomy.

Third, we are committed to resolving issues of overlap and duplication. We want to establish clearer lines of responsibility between different levels of government. Building for the future is far easier when there is greater clarity about who does what.

That is why the federal government will withdraw entirely from sectors that are more appropriately the responsibility of the provinces or others such as labour market training, forestry, mining, and recreation.

We are open to negotiations to clarify roles in such areas as environmental management, social housing, food inspection, freshwater fisheries and tourism.

Fourth, the federal government will exercise a leadership role to promote Canada's economic union, promoting greater labour mobility and interprovincial free trade.

We want to build stronger institutions, with the support of the provinces, to secure our economic union, such as a single Canadian securities commission and a national revenue collection agency.

These four areas, and other concrete reforms to the working of government, are central to our approach to national unity. The upcoming First Ministers' Meeting will be an important opportunity to consider ways to clarify the roles of governments, and to better promote our social and economic union.

As you see, the Throne Speech indicates clearly that the federal government is showing leadership in rebalancing the federation, but that we are open to the needs and suggestions of the provinces and others. Need for Consultation and Conclusion

We will also, of course, ask for the ideas of Canadian citizens as a whole as to how their governments can provide better services and become more accountable.

Politicians cannot do this alone. We must consult with people and find out from them which services they feel can best be provided by federal, provincial, or municipal governments, or other kinds of institutions.

This is why I am encouraging initiatives to discuss these questions -- whether it is grassroots groups discussing their government around a kitchen table or formal studies by academics or businesspeople. All kinds of ideas are needed.

What I am asking from all Canadians is for concrete suggestions of how governments can be made more effective . Our Prime Minister, Jean Chrétien, probably knows more about this country than anyone else in it, but his approach to questions of unity is not one of abstract constitutional visions, but one of pragmatic, concrete reform. He is open to almost any suggestion, if you can demonstrate that it is practical and workable, and will improve the lives of Canadians.

And I think on these practical questions we will find much common ground between Quebeckers, Albertans, and all other Canadians.

It is my hope that at the First Ministers' Meeting later this year we will be able to make concrete progress on making this federation work better, and to lay out a road map for further change.

And it is my conviction that by working together on these practical problems of rebalancing, and finding how much we all have in common as Canadians, Canadians will become less afraid to recognize each others' legitimate differences. Of course one of those differences is the distinctiveness of Quebec which I promised not to talk about ... today.

But by working together to reform our federal system, we will come to realize how Canada's diversity in all its forms -- its different regions, its multicultural heritage, its Aboriginal peoples, its linguistic duality -- is one of our strengths, and that federalism is the system that allows diversity to come together in a greater unity.

So please, participate in the debate in the coming months, help develop practical solutions that will allow us to improve and strengthen our federation.

Together, we can renew and restore our federal system. Together, we can save Canada, this model for all mankind.

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