CANADIAN FEDERALISM
Canadian Federalism
Performance, Effectiveness, and
Legitimacy
Fourth Edition
EDITED BY HERMAN BAKVIS AND
GRACE SKOGSTAD
UNIVERSITY OF TORONTO PRESS
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Title: Canadian federalism : performance, effectiveness, and legitimacy / edited by Herman
Bakvis and Grace Skogstad.
Names: Bakvis, Herman, 1948–, editor. | Skogstad, Grace, 1948–, editor.
Description: Fourth edition. | Includes bibliographical references and index.
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Contents
Contributors vii
Preface ix
Part One: Socio-Economic Foundations, Institutions, and
Processes of Canadian Federalism
1 Canadian Federalism: Performance, Effectiveness, and Legitimacy 3
herman bakvis and grace skogstad
2 Self-Rule vs. Shared Rule: Canada as a Case of Comparative
Federalism 31
jörg broschek
3 Quebec and the Canadian Federation 59
david cameron
4 The Courts, the Division of Powers, and Dispute Resolution 90
gerald baier
5 Criminal Justice and Criminal Law 114
dennis baker
6 Federalism, Political Parties, and the Burden of National Unity:
Still Making Federalism Do the Heavy Lifting? 138
herman bakvis and a. brian tanguay
vi
Contents
7 Intergovernmental Relations in a Complex Federation 165
robert schertzer
Part Two: The Social and Economic Union
8 Federalism and Canada’s Economic Union 195
grace skogstad and matt wilder
9 International Trade and the Evolution of Canadian
Federalism 222
christopher j. kukucha
10 Fiscal Federalism: The Importance of Balance
251
douglas m. brown
11 The Three Federalisms and Change in Social Policy 282
keith g. banting
12 Federalism and Universal Healthcare: A Question of Performance
and Effectiveness 310
herman bakvis
13 Federalism and Immigration in Canada 337
mireille paquet
14 Federalism and Canadian Climate Change Policy 363
mark winfield and douglas macdonald
Part Three: Re-imagining the Federation
15 Nation to Nation? Canadian Federalism and Indigenous
Multi-level Governance 395
martin papillon
16 Municipalities in the Federation 427
jack lucas and alison smith
17 Conclusion: Taking Stock of Canadian Federalism 453
grace skogstad and herman bakvis
Index 479
Contributors
Gerald Baier, Associate Professor of Political Science, University of
British Columbia
Dennis Baker, Associate Professor of Political Science and Director of
Criminal Justice and Public Policy, University of Guelph
Herman Bakvis, Professor Emeritus, School of Public Administration,
University of Victoria
Keith G. Banting, Professor Emeritus, Political Studies, and Stauffer
Dunning Fellow, School of Policy Studies, Queen’s University
Jörg Broschek, Associate Professor of Political Science and Canada
Research Chair (Tier 2) Comparative Federalism and Multilevel Governance, Wilfrid Laurier University
Douglas M. Brown, Associate Professor of Political Science, St. Francis
Xavier University
David Cameron, Professor of Political Science, University of Toronto
Christopher J. Kukucha, Professor of Political Science, University of
Lethbridge
Jack Lucas, Associate Professor of Political Science, University of Calgary
viii
Contributors
Douglas Macdonald, Senior Lecturer Emeritus, School of the Environment, University of Toronto
Martin Papillon, Directeur du Centre de recherche sur les politiques
et le développement social (CPDS) and Professor of Political Science,
Université de Montréal
Mireille Paquet, Associate Professor of Political Science, Concordia
University
Robert Schertzer, Associate Professor of Political Science, University of
Toronto Scarborough and University of Toronto
Grace Skogstad, Professor of Political Science, University of Toronto
Scarborough and University of Toronto
Alison Smith, Assistant Professor of Political Science, University of Toronto
A. Brian Tanguay, Professor of Political Science, Wilfrid Laurier University
Matt Wilder, SSHRC Postdoctoral Fellow, University of Toronto
Mark Winfield, Professor of Environmental Studies, York University
Preface
This fourth edition of Canadian Federalism: Performance, Effectiveness, and
Legitimacy examines the same three questions raised by the three earlier
editions. How well are the institutions and processes of Canadian federalism
performing? Are they effective in addressing substantive problems? And
are they seen as legitimate by the various communities and constituencies
that make up Canada? In addition, there is continuity with earlier editions
insofar as most of the policy sectors and institutions under scrutiny in the
previous editions are also the subjects of the chapters in this fourth edition.
There are also important changes in this edition that go beyond updating chapter material to take account of developments in Canadian
federalism since the last edition, eight years ago. We have several new
authors: indeed, 40 per cent of the authors of chapters in this collection
are new to this edition. Many of the new authors are also in the early stages
of their careers, a feature that we believe attests to the intergenerational
interest that Canadian federalism evokes among political scientists in our
Country. Adding new authors has also enabled us to include, for the first
time, chapters on two important topics. One is Dennis Baker’s chapter
on criminal justice and criminal law: the sole subject matter in Canada’s
Constitution that assigns responsibility for legislating and administering
a subject matter to the two different orders of government. The other
is Jörg Broschek’s chapter on comparative federalism, which highlights
how the Canadian emphasis on interstate and jurisdictional federalism
distinguishes Canada from most other federations.
x
Preface
This fourth edition is possible only because of the efforts of many people. We are extremely grateful to the authors of the chapters that appear
herein. We also thank our publisher, the University of Toronto Press,
and, in particular, Mat Buntin and Marilyn McCormack. Mat managed
the early stages of the publication of this text and Marilyn managed the
review and publishing process. We also thank the anonymous reviewers
commissioned by UTP who found merit in this collection and whose
comments saved us and the other authors from errors.
As we write this note in early April 2020, the COVID-19 pandemic has
hit Europe and North America with full force. It comes at a time when
this text is in its final stages of publication. While there can be little
doubt of the enormous impact of the pandemic on Canadians’ health
and social and economic well-being, its transformative effects on Canadian federalism will not be fully evident for some time. To date, there
appears to have been a very welcome degree of collaboration among the
senior leaders of our provincial, territorial, and federal governments in
tackling the crisis. Whether this “we’re all in this together” spirit will endure remains to be seen. So do the consequences for intergovernmental
relations of the fiscal policies being undertaken by our governments to
mitigate the economic fallout for Canadians. Once the pandemic crisis
is behind us, we hope that the conceptual and analytical tools used in
this book will prove helpful in assessing the performance of Canadian
governments, as well as the effectiveness and legitimacy of their responses
to this unprecedented challenge to our country and, indeed, the world.
Herman Bakvis
Grace Skogstad
PART ONE
Socio-Economic Foundations,
Institutions, and Processes of
Canadian Federalism
CHAPTER ONE
Canadian Federalism: Performance,
Effectiveness, and Legitimacy
Herman Bakvis and Grace Skogstad
Since the latter half of the nineteenth century, Canada has sought to unite
a linguistically and regionally diverse citizen body within the confines of
a single nation-state. The chosen formula has been federalism, primarily
through self-rule in two main orders of government. A central government
rules on matters common to all citizens, while subnational governments –
provincial, in Canada’s case – rule on matters involving regionally distinctive populations. The federal formula also requires that a balance be
struck such that neither order of government is subordinate to the other
(Watts, 1999: 1). From most perspectives, over time the Canadian federal
arrangement has succeeded in striking the requisite balance between unity
and diversity. It has also proven to be both flexible and resilient, allowing
Canada to adjust its public policies to changing circumstances.
Even so, there have always been critics of the way Canadian federalism
performs. Some observers have claimed that the federal “balance” is lopsided, skewed by a tendency to either centralization or decentralization;
others, that effective policy-making is hampered by either intergovernmental
conflict or elite collusion. The legitimacy of the Canadian federal system
has also been found wanting by groups with a strong sense of their own
national identity, notably francophone Quebeckers and Indigenous peoples.
The purpose of this text is to investigate the state of contemporary
Canadian federalism. It does so by asking three questions. How well
are the institutions of Canadian federalism performing? How do existing patterns of intergovernmental relations help or hinder effective
4
Herman Bakvis and Grace Skogstad
policy-making? And how do Canadians evaluate the legitimacy of the
institutions, processes, and outcomes of intergovernmental relations?
The investigation that follows has three dimensions: descriptive, evaluative, and explanatory. To explain the performance, effectiveness, and
legitimacy of Canadian federalism it is necessary to look at a number of
factors besides the structures of federalism itself. The Canadian federal
system, like federal systems elsewhere, is embedded in a broader social,
economic, institutional, and political context. In other words, the institutions and processes of federalism can be seen as both responding to
and shaped by
1 structural cleavages in Canadian society, of which the most important historically have been ethno-linguistic and territorial differences in identities, values, and material/economic base;
2 the interests and ideas of authoritative political leaders in provincial and national capitals; and
3 extra-federal institutions including, most prominently, the Constitution and the parliamentary system.
These contextual factors, together with others originating in the
international political economy, shape the performance of Canadian
federalism. Some of them, like the Westminster parliamentary system,
are relatively stable over time, and so their effects tend to be stable as
well. Others, like the ideas and interests of first ministers, may vary
quite widely: as the individuals and the parties who hold the highest
government offices change, so (to a greater or lesser degree) does the
functioning of Canadian federalism. Furthermore, with new personnel
and their ideas, traditional institutions and practices may well be put to
different uses and take on new meanings. A major objective of this text
is to highlight how these institutional and contextual features interact
with the structures and processes of federalism to shape the latter’s
performance, effectiveness, and legitimacy over time.
PERFORMANCE: INSTITUTIONS AND PROCESSES
Assessing the performance of the Canadian federal system means above all
focusing on the functioning of the institutions and processes of Canadian
Canadian Federalism: Performance, Effectiveness, and Legitimacy
federalism. These institutions and processes are, first, the constitutional
division of powers between the two orders of government, along with the
process of judicial review to which it is subject; second, the institutions of
intrastate federalism that provide for the representation of constituent
units within the central government and the management of conflicts
between the two orders of government; and, third, the institutions and
processes of interstate federalism through which the two orders relate
directly to one another. Throughout this book, three criteria are used
to assess performance: the consistency of governing arrangements with
federal principles; the “workability” of the institutions in question, both
formal and informal; and the capacity of federal institutions to produce
results in the form of agreements.
Consistency with Federal Principles
Following K.C. Wheare (1951), a mid-twentieth-century writer, a key
principle of federalism is that each order of government is autonomous
within its sphere of authority: its jurisdictional powers may be altered only
in conformity with constitutional provisions, never through unilateral
action by the other order of government. Two questions are relevant here.
Does the centre recognize the component units as full members of the
federation, with their own powers and the authority to act on them? In
addition, do the constituent units recognize the central government as
having its own proper and autonomous role? To answer these questions,
we begin by examining Canada in comparison with other federations
(chapter 2, by Jörg Broschek), the place of Quebec in Canada (chapter
3, by David Cameron), and judicial review of the formal division of
powers in the Canadian Constitution (chapter 4, by Gerald Baier). The
chapters demonstrate, respectively, how the emphasis on self-rule for the
two orders of government, Quebec’s insistence on respect for federal
principles, and the courts’ interpretation of the formal Constitution have
thwarted the centralist vision of the federation of John A. Macdonald
and ensured respect for the federal principle.
The second principle of federalism follows from the first, namely the
purpose that federal systems are created to serve: to provide a balance
between unity and diversity. The relevant “performance” question here
is whether the mechanisms of interstate and intrastate federalism in fact
secure the balance needed to ensure that the system does not slide into
5
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Herman Bakvis and Grace Skogstad
either a confederal arrangement (with the central government subordinate to the constituent units) or a unitary system (with the constituent
units subordinate to the central government). Generally, the federal
balance is a function of both the pattern of intergovernmental relations
(interstate federalism) and the representation of constituent units in the
central government (intrastate federalism).
As explained by Broschek in chapter 2, intrastate federalism is weak
in Canada because, unlike most other federations, Canada lacks an
effective second chamber of Parliament. The German upper house
(Bundesrat), for example, is composed of representatives of the state
(Länder) governments, while the Australian and American senates provide
direct representation for citizens of the various constituent states. But
the Canadian Senate offers no such representation to the provinces or
the citizens in them. With limited opportunity for formal representation
of provincial interests in federal policy-making institutions, provincial
governments have acquired over time greater authority to speak on
behalf of the people within their borders. As well, as Broschek notes,
the Canadian federation with its separate lists for federal and provincial
powers places a premium on self-rule rather than shared rule. As such,
Canada stands in opposition to federations such as Germany where joint
decision-making in various policy areas tends to the norm. In such federations both orders of government must agree, typically either through
unanimity or some sort of qualified majority depending on the rules in
place, to arrive at decisions. In Canada there are relatively few places in
the Constitution where joint decision-making is required.
One consequence of the emphasis on self-rule and the relative paucity
of intrastate bodies is that in Canada the task of securing the federal balance falls mainly to interstate federalism, since most intergovernmental
activity takes places between governments rather than within an intrastate
body such as a senate.
“Workability”
We adopt J.S. Dupré’s (1985: 1) classic definition of well-performing
federal institutions and processes as providing forums “conducive, and
perceived to be conducive, as the case may be, to negotiation, consultation, or simply an exchange of information.” Given a changing policy
environment and continually shifting agendas, governments need to
Canadian Federalism: Performance, Effectiveness, and Legitimacy
interact with each other in order to address mutual problems and manage interdependencies; at a minimum, they need to communicate with
one another in order to make adjustments in their respective roles. As
policy interdependence increases, so does the need for coordination
and collaboration.
Capacity to Produce Results
In a federal system, producing results means reaching agreement on
issues. Conflict is inherent in federal systems. Thus a crucial test of their
performance is their ability to manage intergovernmental conflict. Simply agreeing to disagree may be one way of managing conflict. However,
citizens will normally expect the two orders of government to set aside
their differences and deal with the issues upon which citizens’ well-being
and the integrity of the political community as a whole depends.
In brief, to perform well a federal system must respect federal principles, sustain the balance between unity and diversity, provide a setting
for discussion and negotiation between governments, and facilitate
agreement, or at least understanding, on major issues in a manner that
respects the positions of both levels of government. Given the centrality of
interstate federalism to the performance of the Canadian federal system,
patterns of federal–provincial relations is a primary theme in this book.
The chapters that follow make it abundantly clear that there is no
single way to describe intergovernmental relations in Canada. Patterns
shift not only over time but across issues within a single period, and
scholars have used a variety of labels to describe them. Figure 1.1, for
example, locates several models of federalism along a continuum from
independence to interdependence of the two orders of government.
At one end of the continuum, central and provincial/territorial governments are independent of one another. This is the classical form of
federalism: the “watertight compartments” model in which each order
of government has exclusive authority in its sphere of jurisdiction; the
emphasis is on self-rule, and no attempt is made to consult or coordinate
activities with the other order (Wheare, 1951). But exclusivity of jurisdiction in itself does not ensure respect for the federal balance. Much
depends as well on the distribution of legal authority across the two
orders of government: each must have sufficient authority to maintain
the unity–diversity balance. Striking that balance in the Constitution Act
7
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Herman Bakvis and Grace Skogstad
Figure 1.1. Models of Canadian Federalism
Independent
Governments
Collaborative
Shared Cost
Unilateral
Shared Cost
Collaborative Joint DecisionAsymmetrical
Regulatory
Making
of 1867 (formerly the British North America Act, 1867 ) was crucial to the
formation of a political and economic union that included Quebec.
Scholars have generally situated the Canadian federal Constitution
in the late nineteenth century at the “watertight compartments” end
of the continuum. As Broschek notes in chapter 2, in contrast to most
other federal constitutions, the 1867 Act assigned almost all subject matters to either the federal or the provincial order of government, giving
that order the exclusive authority both to make laws in that area and to
implement them. The one exception is criminal law: what constitutes
criminal activity is defined by the federal government in the Criminal Code,
but the provinces are responsible for enforcing that legislation. Dennis
Baker in chapter 5 explores some of the consequences of this arrangement in the criminal law area. There are also three areas of shared or
concurrent jurisdiction: immigration and agriculture have been shared
jurisdictions since 1867, and pensions joined them in the mid-twentieth
century. Keith Banting in chapter 11 discusses joint decision-making in
connection with reform of the Canada-Quebec Pension Plan, an area
of shared jurisdiction.
Thus, the federal system created in 1867 was situated near the left-hand
end of the continuum – but at the same time it was not entirely consistent
with the watertight compartments model. In fact the compartments were
far from impermeable (Stevenson, 1993; Watts, 2003), and the central
government had various instruments it could use in areas of provincial
jurisdiction: the power to appoint lieutenant-governors with the right
to reserve provincial legislation; the declaratory power that allowed the
federal government to take over provincial undertakings in the national
interest; the power of the lieutenant-governor to reserve provincial
legislation for her majesty’s pleasure; and the power of the governor
general to disallow provincial legislation. Federal challenges to provincial legislative authority through these “quasi-federal” mechanisms were
infrequent by the late nineteenth century, but it was not until 1943 that
Ottawa used the power of disallowance for the last time.
Canadian Federalism: Performance, Effectiveness, and Legitimacy
Since the 1930s Canadian federalism has moved towards the other
end of the continuum. As governments at both levels expanded the
range of their activities, jurisdictional overlap and policy interdependence intensified. So did the need for consultation and, eventually, coordination. “Consultation” as a model of intergovernmental relations
means that governments exchange information and views before acting
independently, leaving the other order to make its own arrangements
(Watts, 2003). “Coordination” means going beyond consultation to
develop mutually acceptable policies and objectives, which each order
of government then applies in its own jurisdiction.
Successful intergovernmental co-operation around taxation policies
during the Second World War continued after 1945 as the Canadian social welfare state was constructed. A period of federal dominance during
the Second World War gave way to an era of “co-operative federalism”
during the 1950s lasting into the early 1960s (Simeon and Robinson,
1990: chap. 6, 8, and 9). Together, fiscally and politically strong provincial governments and a national government armed with a potent
spending power create social programs in areas of provincial jurisdiction
like healthcare, post-secondary education, and social assistance. (For a
more detailed discussion of “shared-cost federalism,” see Keith Banting
in chapter 11.) As noted above, at least one of these social programs, the
Canada-Quebec Pension Plan (C/QPP), led to a joint-decision model
of federalism: not only did the two orders of government work closely
to construct the pension plan, but under its decision-making rules any
changes to the plan required the agreement of a specified number of
provincial governments as well as Ottawa.
Chapter 3 on Quebec by David Cameron goes to the heart of one
of the more fundamental asymmetries in the Canadian federation: the
relationship between Quebec, the federal government, and the rest of
Canada. The Quebec-Canada asymmetry is reflected in a number of policies and programs, such as Quebec having its own public pension plan,
albeit one coordinated with the Canada Pension Plan. In the concluding
chapter (chapter 17) we will return to Figure 1.1 in conjunction with
a more detailed discussion of the applicability of the six models across
different policy domains.
Collaborative and, earlier, co-operative federalism have long coexisted with competitive federalism. The competitive dynamic is virtually
inherent in Canadian federalism, rooted in ideological diversity, genuine
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Herman Bakvis and Grace Skogstad
differences of interests arising from differences in material/economic
base and societal demands, and the electoral imperative to gain credit
and avoid blame (Simeon, [1972] 2006). Led by different political parties,
fighting elections at different times over different issues, provincial and
national governments inevitably butt heads as each government seeks
to maximize its autonomy, jurisdiction, and standing with voters. (See
chapter 6 by Bakvis and Tanguay on the role of parties and party systems
in shaping federal–provincial relations.) Intergovernmental competition
reached a zenith during the 1970s and early 1980s, when province-building
ambitions clashed with the unilateral nation-building initiatives of Prime
Minister Pierre Trudeau, as reflected, for example, in the 1980 National
Energy Program and constitutional patriation and reform. Competition
receded somewhat during the Mulroney era (1984–93).
Whether in its co-operative or its competitive form, the pattern of
intergovernmental relations that took shape in the 1960s brings elected
and appointed officials of the two orders of government into repeated
interaction. Labelled “executive federalism” (Smiley, 1976: 54), this is
still the defining feature of Canadian federalism. The predominant role
of governmental executives (ministers and their officials) in intergovernmental relations is a uniquely Canadian phenomenon that originated
in the combination of Canada’s jurisdictional federalism and the Westminster parliamentary system.
As noted earlier, Canada’s weak intrastate federalism gives provincial
governments both the opportunity and the incentive to claim an exclusive right to represent the interests of Canadians within their borders. In
chapters 2 and 7 Broschek and Robert Schertzer respectively elaborate
on how the logics of the parliamentary and federal systems combine to
create this effect. The national government lacks effective forums for
the representation of “provincial” interests. At the same time, political
authority is concentrated in the executive: the prime minister/premier
and cabinet (Savoie, 1999; White, 2005). Executives at both levels thus have
considerable latitude to strike bargains on behalf of their governments.
And because these executives are relatively few – numbering fourteen
with the inclusion of territorial governments – the federal–provincial
bargaining characteristic of executive federalism is, at least in theory,
logistically manageable in a way that it would not be in the United States,
for example. Accordingly, interprovincial disputes are generally resolved
through direct negotiations between ministers or senior officials rather
Canadian Federalism: Performance, Effectiveness, and Legitimacy
than in the upper chamber of the central government, as, for example,
in Germany.
As suggested above, executive federalism is also a response to policy
interdependence: the overlap and duplication that are inevitable with
two activist orders of government. Since the rise of the modern welfare
state in the mid-twentieth century, there have been very few policy areas
in which either Ottawa or the provinces can operate without bumping
into the jurisdiction of another government. Thus, finding an effective
solution to a policy dilemma, even one that lies entirely within the jurisdiction of a single order of government, invariably requires collaboration
with the other order. At the very least, the government with the authority
to decide must take into account its implications for other governments.
Executive federalism, with its dual logic of co-operation and competition,
is therefore central to any discussion of the performance of Canadian
federalism, as well as its effectiveness and legitimacy.
The most important forums of intergovernmental consultation and
coordination are
1 first ministers’ conferences (FMCs) and first ministers’ meetings
(FMMs) of premiers and the prime minister;
2 ministerial meetings (i.e., meetings of the various ministers holding
a particular portfolio, such as health or the environment);
3 meetings of public servants (officials); and
4 interprovincial meetings of the provinces and the territories, in
which the federal government does not take part.
FMCs were particularly frequent during the constitutional negotiations of
the early 1990s, after which they declined in number and were replaced
by less formal FMMs. At the same time, the numbers of ministerial and,
especially, officials’ meetings began to increase, and they have grown
steadily ever since.
These forums of executive federalism have often provided opportunities
for intergovernmental co-operation, allowing politicians to circumvent
constitutional rigidities and respond more directly to societal demands
and problems. Co-operation is most likely when the stakes are relatively
low and the participants share the same values, typically in a substantive
policy domain. When the stakes are higher, political elites may not be
so willing to compromise, and the forums of executive federalism can
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Herman Bakvis and Grace Skogstad
become venues for intergovernmental competition. This dysfunctional
feature of executive federalism, Dupré (1985) has argued, has been promoted by the centralization of intergovernmental relations within first
ministers’ offices and specialized agencies. It manifests itself in particular
at the upper levels: at FMCs or meetings of finance ministers, where the
stakes tend to be very high.
Since the mid- to late 1990s, some analysts have identified a new
variant that they call “collaborative federalism.” For Cameron and Simeon (2002: 49) the distinguishing feature of collaborative federalism is
“co-determination of broad national policies.” This collaboration takes
one of two forms: federal and provincial/territorial governments “working
together as equals,” or provincial and territorial governments working
together to formulate national policy themselves, without the federal
government. For Lazar (1997), collaborative federalism is less hierarchical
than the co-operative federalism of the Pearson and Trudeau years (the
1960s and 1970s), when Ottawa alone initiated shared-cost programs and
the provinces followed its lead. In some respects, collaborative federalism
reflects Canada’s evolution, since the era of co-operative federalism,
into one of the world’s most decentralized federations, with federal and
provincial governments relatively evenly balanced in their power and
status and at the same time highly interdependent (Watts, 1996: 111).
Collaborative federalism represents an effort to formalize the increasingly informal, rules-free relationship that had developed between the
two orders of government under executive federalism. Agreements like
the 1995 Agreement on Internal Trade (AIT), replaced in 2017 by the
Canadian Free Trade Agreement (CFTA; see chapter 8 by Grace Skogstad
and Matt Wilder), the 1998 Canada-Wide Accord on Environmental Harmonization, and the 1999 Social Union Framework Agreement (SUFA)
sought to clarify and streamline government responsibilities in order to
minimize the negative spillover effects for other governments and/or
industry. These agreements are not legally binding (“justiciable”), but
they do include dispute settlement mechanisms. Whether this rule-based
federalism is effective in managing the conflict inherent in federal systems
is a question taken up by Gerald Baier in chapter 4.
Collaborative federalism emerged in response to the circumstances in
which Ottawa and the provinces found themselves in the 1990s. Formal efforts
to reverse the decline in perceptions of the performance and legitimacy of
the federal arrangement through constitutional reform – specifically the
Canadian Federalism: Performance, Effectiveness, and Legitimacy
Meech Lake Accord (1987–90) and the Charlottetown Agreement (1992) –
had failed. When the Liberal government of Jean Chrétien took power
in 1993, it rejected constitutional reform as a way of correcting perceived
deficiencies in the Canadian federal system. The need to demonstrate that
the federal system could be renewed and reformed to work in the interests
both of Quebec and of the other provinces was heightened following the
razor-thin defeat of the separatist forces in the 1995 Quebec referendum.
Collaboration was not the only strategy, however. The referendum result
also stiffened Ottawa’s resolve vis-à-vis Quebec separatists, as well as its determination to demonstrate that the government of Canada was a power
to be reckoned with. The Reference re Quebec Secession and the subsequent
Clarity Bill were two indications of this “tough love” aspect of its strategy.
Three other circumstances also promoted collaborative federalism.
First was the increasing regional and global integration of the Canadian
political economy in the 1990s. It exposed Canadian firms to more foreign competition even while it opened new foreign markets for them. It
also required Canadian governments to share more of their sovereignty
with international rule-making and rule-enforcement institutions, such
as the World Trade Organization. These developments highlighted the
interdependence of governments; responding effectively to them, it is
argued, demanded greater policy coordination and collaboration between
governments within Canada. A second factor was the increasing regionalization of Canada’s national political parties after 1993 with the rise of the
Reform and Bloc Québécois parties. (See chapter 6.) As the governing
Liberal party became progressively more vulnerable to charges that it did
not represent all parts of the country, provincial governments increasingly
became the champions of interests and ideas not represented in Ottawa.
A third factor was the ascendancy of neo-liberalism and the companion
philosophy known as new public management. While the former called for
governments to play a smaller role in society and the market, the latter
called for governments to work more closely with one another in the
interest of greater administrative efficiency and clarity. Proponents of
new public management and collaborative federalism espouse similar
values and tenets: decentralization, less emphasis on formal rules, and
more flexible and informal arrangements (Simeon, 1997).
At the same time, regional and global economic integration and the
new public management philosophy created pressures for extension of
the collaborative model to embrace non-state actors. And a shift in the
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political culture, away from elitist and non-transparent executive federalism towards more direct citizen input into decision-making, had a
similar effect (Nevitte, 1996). Among the societal cultural changes that
have been particularly consequential, as Martin Papillon explains in
chapter 15, is the growing determination of the First Nations in Canada
to move beyond the legacy of colonialism and take more direct control
over their own affairs in many areas.
A number of contextual factors ensured that the competitive dynamic
never disappeared from intergovernmental relations in this period,
despite the rhetoric of collaborative federalism. Fiscal deficits at both
levels of government put the two starkly at odds over who would fund
costly social programs like healthcare (see chapter 12). And in other
policy domains, as the first edition of Canadian Federalism (2002) showed,
initiatives such as the National Child Benefit (1998) demonstrated that
the Chrétien government never entirely abandoned the “independent
governments” model.
As the chapters that follow will make clear, Canadian federalism has
taken a variety of forms, sometimes simultaneously: co-operative and
competitive, collaborative and independent. Figure 1.1 captures neither
the competitive dynamic nor the element of unilateralism in intergovernmental relations. Lazar’s (2006) typology of intergovernmental relations
in the area of social policy subdivides the “independent governments”
model into classical federalism and unilateral federalism. In the former,
governments act independently, and each remains within its own constitutionally assigned jurisdiction; in the latter, one order of government
(usually the federal) imposes its views and priorities on the other, usually
by attaching conditions to its fiscal transfers. Lazar differentiates unilateral
federalism, which he reserves for cases of policy interdependence, from
“beggar-thy-partner federalism,” in which governments act independently
but the actions of one impose substantial obligations on the other (2006:
29). Accordingly, the classical federalism of independent governments,
collaborative federalism, joint-decision federalism, unilateral federalism,
competitive federalism, and shared-cost federalism are all models at play
in Canadian federalism.
The chapters that follow in this collection examine the factors
that affect the model and performance of federalism in specific
policy domains. As a prelude to these close analyses, it is useful to
reflect on system-wide factors that have affected the models and
Canadian Federalism: Performance, Effectiveness, and Legitimacy
performance of the Canadian federation in recent decades. One is
the integration of the Canadian and American economies. Writing
in the early 2000s, scholars like Lazar, Telford, and Watts (2003) and
Simeon (2003) argued that there was no evidence that regional and
global integration were undermining the federal bargain or having
a discernible impact on Canadian federalism and intergovernmental
relations. However, as Christopher Kukucha discusses in chapter 9, the
increasing intrusion of international trade agreements into provincial
areas of jurisdiction has the potential to reshape intergovernmental
relations because provinces alone have the authority to implement
provisions of international treaties that fall within their jurisdiction.
This development can be expected to create incentives for a model
of collaborative federalism.
A second system-wide factor affecting the performance and model of
Canadian federalism are the ideas and goals of Quebec governments.
Since 2003, except for a PQ minority government in 2012–14, Quebec
premiers have adopted a position of working with other Canadian governments to achieve their goals. Liberal Premier Jean Charest (2003–12)
took the lead in the creation of the Council of the Federation, which
potentially made it easier for the ten provincial premiers and three territorial leaders to develop a common bargaining position vis-à-vis the
government of Canada. Liberal Premier Philippe Couillard (2014–18) also
sought conciliation with the rest of Canada and at one point suggested
reopening the constitutional file so as to ensure that Quebec became a
full-fledged member of the Canadian federation. Since the election of
his Coalition Avenir Québec party in October 2018, Premier François
Legault has adopted a self-declared pragmatic approach to politics and
federalism. Whether Legault’s pragmatism lends itself to co-operative or
competitive federalism can be expected to depend upon the extent to
which the province’s goals are consistent with or in conflict with those
of other Canadian governments.
A third systemic factor that affects the performance of Canadian federalism is the ideas of first ministers at the federal level regarding how
federalism can and should work (see chapter 7 by Robert Schertzer).
Conservative Prime Minister Stephen Harper (2006–15) publicly espoused
a policy of Open Federalism that respected provincial jurisdiction and
was less intrusive in provincial affairs (Harmes, 2007). Such a policy,
alongside the Conservative government’s “small government” preference,
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implied the need for less intergovernmental collaboration. Unlike previous Liberal governments that sought to demonstrate the importance
of the national government (and thus garner votes) by expanding the
scope of federal activity to include spheres of provincial jurisdiction like
health, child care, and cities, the strategy of the Harper Conservative
government to achieve these same ends was to expand the role of the
government of Canada in areas of federal jurisdiction like defence and
criminal justice (prisons), and to retract it in areas of provincial jurisdiction like healthcare (see chapter 12) and the environment (chapter 14
on climate change). That is, while the Paul Martin Liberal government’s
minority status (2003–6) and its search for votes lent momentum to collaborative federalism, the Conservative government’s philosophy veered
towards the independent governments’ model.
However, the Harper Conservative government’s preference for a
lesser government role in the economy was derailed to some considerable degree when it was forced – on real threat of defeat – by opposition
parties into stimulus spending to mitigate the effects of the downturn in
the American and global economy after September 2008. This stimulus
spending subsequently entailed collaboration with provincial/territorial
and municipal governments on rescue plans for auto plants in Ontario
and accelerated spending on infrastructure projects. The Conservative
government also discovered the electoral benefits of infrastructure
projects; like Liberal and Progressive Conservative governments before
them, the party’s brand was promoted on new bridges and highways in
closely fought ridings.
The election of the Justin Trudeau Liberal government in 2015 and
its promised “sunny ways” approach to federalism heralded a return to
greater collaboration and a move away from the disengaged attitude of
the Harper Conservative government. Ottawa introduced a new Canada
Child Benefit that altered the Harper-era changes. It increased the size
of the child benefit received by families, making it tax free as well as
means-tested and eliminating the advantages given to single-income
families. These changes were made with the view of giving more money
to middle- and lower-income families. The Canada-Quebec Pension
Plan was reformed to enhance retirement benefits by approximately
50 per cent once fully implemented. Although two or three provinces
were initially opposed to the enhancements, once the critical threshold
of the C/QPP amending formula was reached (seven out of ten provinces
Canadian Federalism: Performance, Effectiveness, and Legitimacy
encompassing two-thirds of the population), recalcitrant provinces such
as Saskatchewan and Manitoba came on board.
A fourth factor that affects the performance of federalism across several policy domains is the shift in economic power westward, especially
to Alberta, notwithstanding the significant decline in energy prices since
2014. For the first time in Canada’s history, the redistribution of wealth
across provinces put Ontario in the equalization-receiving category in
2009–10, where it remained for the next nine years. Alberta’s shifting
economic fortunes in the federation have also put pressure on the equalization program more broadly. As Douglas Brown explains in chapter 10,
Alberta governments – NDP and Conservative – have complained that
Alberta gets the “short stick” on equalization. Notwithstanding the fact
equalization is financed exclusively by the government of Canada through
its general revenues, Conservative Premier Jason Kenney threatened to
hold a referendum on whether Alberta should continue to contribute
to the equalization program. Alberta’s referendum threat can be read
as evidence of the frustrating situation in which the province finds itself:
one of low world energy prices and a stalemate over the completion of
the Trans Mountain pipeline expansion and access to Asian markets for
Alberta bitumen. The impasse over Trans Mountain has pitted Alberta
against not only Ottawa but also BC. The two provinces launched court
actions against each other over threats to cut off the other’s oil supplies
and wine shipments respectively.
And, finally, a fifth systemic factor that affects the model and performance of federalism is the ideology and partisan affiliation of governments
at the two orders. There is some evidence that federal and provincial
governments that share an ideological affiliation (and therefore, usually,
a partisan affiliation as well) are more likely to co-operate with one another than those that are not aligned on ideological or partisan grounds.
One example is the C/QPP reform. The province of Ontario under the
Liberal government of Kathleen Wynne pushed hardest for the C/QPP
enhancement. Without that impetus, the amendment would have been
unlikely. In another policy area, Mark Winfield and Douglas Macdonald
(chapter 14) highlight how changes in the governments of Alberta and
Ontario, and several others, led to the unravelling of the Trudeau government’s carbon pricing strategy. The Ontario Conservative premier
not only repudiated the agreement his Liberal predecessor as premier
had struck with Ottawa, but also challenged the constitutionality of the
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federal government’s legislation and required all gas stations in Ontario
to post stickers holding Ottawa responsible for the increase in the price
of gas. The chapters on federalism and political parties (chapter 6) and
climate change (chapter 14) both suggest what has to date been a significantly underestimated role for political parties and, in particular, the
electoral cycle, in shifts between collaborative and competitive federalism.
EFFECTIVENESS: POLICY OUTPUTS AND
OUTCOMES
“Effectiveness” refers explicitly to policy outcomes: the public policies
and programs made within and resulting from the web of intergovernmental interactions. How effective are they in dealing with the substantive
problems that occasioned intergovernmental bargaining and conflict
resolution in the first place? How efficient are the resulting programs
in marshalling resources? Do policies allow for asymmetry where it is
desired and appears warranted? Do policy outcomes allow international
commitments to be met? The fact that two or more governments reach
agreement on a particular issue does not necessarily mean that the
underlying social or economic issues have been effectively resolved.
Focusing on substantive policy typically requires the use of benchmarks
or standards to see how policy outcomes measure up. But assessment is
easier in some policy areas than in others. In the case of the environment,
it is possible to measure quantities of emissions and effluents. In other
areas, however, one has to depend on more qualitative assessments. The
quality of policy outcomes often lies in the eyes of the beholder. It is also
useful to remember that there is a distinction between “policy outcomes”
and “policy outputs.” Policy outputs – the decisions made regarding
programs and policies – may have unintended consequences, and as a
result their actual outcomes may look quite different from the original
plan. It is often only with hindsight that the distinction between outputs
and outcomes becomes clear.
It is difficult to determine exactly how federalism and intergovernmental relations affect public policy outcomes. First, developments in
any policy area are contingent on several factors, of which federalism is
only one – though it may be the most important. Studies of federal systems have found no discernible effects of federalism on policy outcomes
Canadian Federalism: Performance, Effectiveness, and Legitimacy
and have had difficulty identifying any differences between federal and
decentralized unitary states in this respect (Braun, 2000; Norris, 2005).
Second – and a reason why those studies have yielded few results – is that
the effects of federalism on policy-making are likely to depend on the
prevailing model of federalism: independent governments, unilateralism,
competitive, collaborative, or joint-decision (McRoberts, 1993; Banting,
chapter 11 in this volume). Nonetheless, over the past decade there has
been a revival of interest in linking federalism, and specific forms of federal governance, not only to policy outcomes but also to accountability
regimes (e.g., Graefe, Simmons, and White, 2013). More recent work
suggests that poor outcomes are often a function of a mismatch between
a specific performance management regime and a particular form of
federal governance (see Jones et al., 2019).
Any discussion of how different models of federalism shape public
policy outcomes in Canada must begin with a discussion of the spending
power: the power that allows the Parliament of Canada to make payments
to individual Canadians, institutions, or provincial governments for
purposes outside its constitutional jurisdiction. Although the spending
power can be used in a way consistent with the independent governments
model (e.g., when the federal government makes payments directly to
individual Canadians for child care or to post-secondary educational
institutions), it is more often used as an instrument to increase interdependence across the two orders of government.
The federal spending power has important implications for the performance, effectiveness, and legitimacy of the federation. It breaches
the federal principle of exclusive jurisdictions and (as will be discussed
further in the next section) undermines the legitimacy of the federal
system in the eyes of many Quebeckers in particular. The chapters on
social policy in this volume (chapters 11 and 12) suggest that its impact on
the effectiveness of the federation may be more positive. But the impact
of its use has generally been judged differently, depending on whether
it is used unilaterally (in a model of unilateral federalism, to use Lazar’s
[2006] term) or constrained by collaborative or joint-decision federalism.
The arm’s length or “independent governments model” of classical
federalism preserves autonomy and freedom of action at both levels. It
gives each government the opportunity and flexibility to experiment
and innovate in devising solutions to policy problems (Banting, 1995).
Indeed, citizens who live outside an innovative state or province may
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eventually benefit from its experiments. The classic Canadian example
is the adoption of universally available and publicly funded hospital
and clinical care, following Saskatchewan’s pioneering example (see
chapter 12). A more recent example is child care; Quebec’s innovative
low-cost, universally available program has provided an attractive model
for child-care advocates in other provinces.
Some analysts argue that the “independent governments” model is
likely to be particularly efficacious in addressing citizens’ demands when
the competitive dynamic is uppermost (Breton, 1996; Harrison, 1996;
Young, 2003). Competition across provinces can create “a race to the
top” when voters press their provincial governments to emulate policies
and standards developed somewhere else (Harrison, 2005). In a period
of buoyant finances, the competition for voters’ support can lead both
orders of government to expand public services and take on new state
activities, as Banting demonstrates in chapter 11.
The “independent governments” model can also work to the advantage
of non-state actors with the resources to organize on both federal and
provincial fronts. Having two access points, federal and provincial, gives
non-state actors two kicks at the can, allowing them to play one order
of government off against the other in pursuit of their policy objectives.
There are, of course, downsides when governments act independently
of one another and fail to coordinate their activities. The risks of policy
incoherence and program incompatibility increase. Problems are more
likely to be ignored when blame can be shifted to the other order of
government. This dynamic is especially likely when it is unclear which
level of government should be responsible for addressing a problem,
or when resolving it will entail significant financial or political costs.
Even when intergovernmental competition promotes the development
of new programs, the results may not be entirely beneficial. Policies
may be designed with more concern for the interests of the sponsoring
government than for efficacy in dealing with the problem at hand. A tax
benefit or direct payment to parents to help cover child-care costs, for
instance, may serve the interests of a government seeking to improve its
image among voters; however, such a policy may do very little to create
the new daycare spaces that working parents need.
The joint-decision-making model is often associated with ineffective
policy-making and poor outcomes (Scharpf, 1988; Pierson, 1995). This
model requires joint action of governments at both levels, by virtue of
Canadian Federalism: Performance, Effectiveness, and Legitimacy
either unanimous or super-majority agreement. Governments lose their
autonomy and flexibility, but they do retain the power of veto. With multiple points at which change can be rejected, joint decision-making can
lead to a number of “traps.” Existing programs become difficult if not
impossible to modify. When agreement is reached, the outcome is often
less than optimal – a “lowest common denominator” solution, designed
to satisfy the most recalcitrant party. As with any collaborative model,
resolving substantive problems in the most effective and efficient way is
likely to take second place to the political and institutional concerns of
state actors, to the desire for status and recognition, and to gain credit
and avoid blame. From the perspective of non-state actors, the multiple
“veto points” offered by a joint-decision model present both opportunities
and obstacles. As Banting explains in chapter 11, those who favour the
status quo are likely to welcome the high threshold of agreement for
policy change, while those who seek change will be frustrated.
Co-operative and collaborative models fit somewhere between the
“independent governments” and joint-decision models, depending on
how formalized they are and how much scope they leave for independent
action by governments. Social safety-net programs are a case in point.
At first the government of Canada contributed half the costs of hospital
care, post-secondary education, and social assistance. Then it reduced its
financial contribution for these programs, leaving the provincial level to
pay a larger share of the tab, although the shift to block funding gave the
provinces more tax room and more scope to direct the money as they saw
fit. More recent forms of collaborative federalism have limited the participating governments’ scope for action; SUFA, for example, constrains the
federal spending power even while recognizing its legitimacy. It is often
said that the more rule-bound the collaborative model, the greater the
likelihood that intergovernmental relations will be hampered by these
joint-decision traps, particularly if unanimity for decisions is required.
On the other hand, specific rules governing decision-making that allow
for qualified majority decision-making (as distinct from unanimity), as
in the case of the Canada Pension Plan, can help limit the occurrence
of joint-decision-making traps (Brown, Bakvis, and Baier, 2019).
The ability of Canadian federalism to tackle major policy challenges
has varied over time. The Depression of the 1930s is widely seen as a
low-water mark, when the Judicial Committee of the Privy Council insisted
on a classic interpretation of federalism that prevented the national
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government from playing a broader role in social and economic programs
to address the needs of Canadians. Federalism scored higher points
after the Second World War, as governments variously recognized their
interdependence, co-operated, and competed with one another for the
political affections of Canadians (Simeon, [1972] 2006). If international
indices measuring physical and social well-being and overall quality of
life are reliable guides, it appears that federalism has not impeded Canadian federal and provincial governments in their pursuit of effective and
coherent policies, either jointly or separately. However, if one looks at
specific areas the variation in effectiveness becomes apparent. Chapter 12
on healthcare argues that Canada’s effectiveness in this area is subpar
compared to other nations and that the particular form of federalism
at work here is in good part to blame.
Thus, the effectiveness of Canadian federalism depends on both the
policy area or substantive issue in question and the model of federalism
at work. The following chapters cover a wide array of policy areas: from
social policy and healthcare to the environment, economic development,
skills training, and international trade. They also investigate some subjects that involve multiple policy issues: cities, Indigenous governance,
recognition of Quebec’s distinct needs, and the role of non-governmental
actors in intergovernmental relations. These policy areas have been
chosen for three reasons.
First, they are essential to the integrity of the Canadian social and economic union. In the field of social policy, for example, programs such as
child and healthcare represent principles central to Canadian identity and
citizenship: all Canadians, regardless of where they live, share both the
obligation to finance these programs and the right to benefit from them.
It is the sense of mutual obligations and rights that underpins Canada as
a social union (Courchene, 1994). Policies in areas such as international
trade (chapter 9 by Christopher Kukucha) and climate change (chapter
14 by Mark Winfield and Douglas Macdonald) have more to do with the
productivity and competitiveness of the economic union. At the same
time, distinctive provincial needs and tastes in these policy areas reinforce
claims for provincial jurisdiction and policy diversity. This policy array
therefore provides insight into the balance struck between the rights
and duties of membership in the social and economic union, on the one
hand, and recognition of the diverse needs and circumstances of the
constituent provincial units and communities, on the other.
Canadian Federalism: Performance, Effectiveness, and Legitimacy
Second, the policy areas chosen for examination are ones that allow
us to assess the resilience and adaptability of Canadian federalism in
response to different kinds of challenges. The contextual shift from a
period of government deficits to one of fiscal surpluses, and vice versa,
for instance, has significant implications for social policies (health, child
care, and post-secondary education); it also tests the capacity of fiscal
federalism to continue playing the role of an east–west “social railway”
ascribed it by Thomas Courchene (1994). Canadians’ commitment to
income redistribution appears to be threatened as we increasingly trade
more with non-Canadians than with each other. Canada’s participation
in international environmental treaties and protocols tests the capacity of the two orders of government to devise a coherent response to
evolving international environmental norms and to implement effective
international agreements at home. Similarly, Canada’s integration into
the North American political economy tests the collaborative capacities
of Canadian governments, in this case to develop coherent trade and
economic development strategies.
Third, the policy areas and issues examined in this book contain a
mix of high- and low-profile issues on which the dynamics of intergovernmental relations, and potentially the models as well, can be expected
to differ (Dupré, 1985). Some issues, like economic development
strategies, post-secondary education funding, fiscal federalism, and
international trade, are of interest to specialized policy communities.
Others, like healthcare, attract the attention of all Canadians. Some
fall somewhere in between, engaging the attention of the general public only intermittently. Intergovernmental competition is expected to
be greater on high-profile issues, particularly when the issue is an old
one with a history of intergovernmental acrimony (e.g., healthcare),
while co-operative or collaborative models are more likely to come to
the fore on issues of interest mainly to those citizens with a direct stake
in the policy. International trade and climate change are examples
here. Issues that touch deeply on provincial areas of jurisdiction, or
that are associated with a history of intergovernmental acrimony, are
likely to prove especially difficult tests. Policy interdependence itself is
not necessarily a barrier to effective policy-making; indeed, at times it
is necessary. Whether it becomes a problem will depend on the public
salience of the policy area and the historic legacy of intergovernmental
relations attached to it.
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Even though the focus of this text is on the role of federalism in policy development, it is important not to exaggerate federalism’s impact.
Developments in any one policy area are contingent on a number of
factors, and (as we observed earlier) federalism’s impact in that area may
be minimal at a particular point in time. At other times federalism may
well be the crucial factor determining success or failure. Furthermore,
neither competition nor co-operation should be automatically equated
with positive outcomes. Competition can be associated with either innovation or stalemate; co-operation with either problem resolution or
elite collusion.
LEGITIMACY
Governments must be perceived as legitimate if they are to count on
the unequivocal support of citizens. Legitimacy is a reflection of the
public’s perceptions of the appropriateness of governing arrangements and their outcomes. In federal systems, the cleavages of region,
culture, language, and the division between Indigenous peoples and
immigrant settlers (to name the most obvious case) raise the real
possibility that some citizens may view the governing arrangements
associated with federalism as legitimate and others may not. To appraise
the legitimacy of Canadian federalism, therefore, we view it through
the separate lenses of the various communities and constituencies
that make up Canada.
One highly relevant question for appraising the legitimacy of Canadian federalism is whether the governing federal arrangements
incorporate the various constituent units’ understandings of their
own roles and status in the federal system. As David Cameron explains
(chapter 3), Quebec’s political elite (if not most of its population) has
had a different understanding of federalism from its counterparts in
other provincial capitals and in Ottawa. For Quebec’s political elite,
the federal union represents the union of two political communities,
“peoples,” or “nations”: one English-speaking and located mostly outside Quebec; the other overwhelmingly francophone and based in
Quebec. In the words of Claude Ryan (2003: 1), “Quebec is the seat
of a national community. Its legislature and government are national
institutions, at least in their jurisdictions.” English-speaking Canada,
Canadian Federalism: Performance, Effectiveness, and Legitimacy
by contrast, sees the country as a union of territorial units (provinces),
all of which are equal in legal status. In other words, the distinction
is between Canada as a multinational federation (of which Quebec is
one of two or more constituent nations) versus Canada as a territorial
federation (Tully, 1995).
The understanding that Quebec constitutes a distinct political community
within Canada has led Quebec’s political elite to demand two things of the
federal system: (1) formal recognition of Quebec’s distinct status within
the federation and, consistent with such recognition, (2) ­preservation
and expansion of the province’s legal authority and autonomy so as to
safeguard the unique cultural and linguistic character of the Quebec
national community. For Quebec’s political elite, the legitimacy of the
federal system depends overwhelmingly on the degree to which it provides for asymmetry between Quebec’s status in the federation and that
of the other provinces (Gagnon, 2001).
There has always been some asymmetry in the autonomy and power
of different provinces within the Canadian federation (Watts, 2005).
Some asymmetrical features were embedded in the Constitution Act of
1867; others have been introduced over time. One example of the latter
is the administrative arrangement under which Quebec runs its own
version of the Canada Pension Plan. All the provinces were offered this
option and could take it up. While Alberta has indicated its interest in
doing so in the post-2019 federal election period, Quebec remained the
only province to offer its own pension plan through to 2020. Even so,
Quebec’s aspirations for formal recognition of its distinct status within
the federation were thwarted by the Constitution Act, 1982. The failure of
subsequent efforts at constitutional reform in the Meech Lake Accord
and the Charlottetown Agreement almost proved deadly for Canadian
federalism. The 1995 referendum on Quebec’s secession from Canada
was defeated by the slimmest of margins.
Quebec is not the only political community to question the legitimacy
of Canada’s federal Constitution. So do the Indigenous peoples in Canada.
Martin Papillon (chapter 15) reminds us that Indigenous peoples also
seek recognition and greater control over their own communities, often
through a third order of self-governing communities. Papillon explores
the progress that has been made towards Indigenous self-government
and the obstacles that still lie in the way of reconciling the federal system
and Indigenous self-government.
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A different sort of pressure on the federal system comes from the order
of government that has been excluded from the federal arrangement.
Advocates for the municipal level argue that changes in the global economy have put cities at the heart of provincial and national competitiveness strategies, and therefore that cities urgently need greater political
autonomy and more fiscal resources. Jack Lucas and Alison Smith weigh
the case for city-states against that for better coordination of federal and
provincial policies with respect to cities in chapter 16.
For many Canadians, including executives of most of the English-speaking
provinces, assessing the legitimacy of the Canadian federal system means
examining the appropriateness of the procedures and processes followed
in policy-making and the substantive features of policy outcomes. Are
the rules of the game by which governments interact and negotiate to
arrive at policy decisions accepted by governments themselves? How
well do existing federal institutions and intergovernmental processes
conform to citizens’ expectations regarding their own roles as participants in decision-making? Are these processes consistent with norms
of accountability and transparency? Do they meet the expectations of
the relevant policy community? Do the outcomes of intergovernmental
policy-making reflect the distinct values and preferences of the communities concerned? Are they consistent with those communities’ standards
of effectiveness, efficiency, and fairness?
The three criteria – performance, effectiveness, and legitimacy –
are closely linked. Weak performance, in the form of gridlock in executive federalism, for instance, will normally lead to policy ineffectiveness.
Problems will go unresolved where effective action requires intergovernmental co-operation. Yet intergovernmental consensus in itself does
not necessarily yield effective policies. It may simply mean that the two
orders of government have agreed to ignore politically difficult issues.
Repeated over time, policy ineffectiveness will only lead citizens to give
failing marks to the system as a whole. Similarly, a federal system that
underperforms by failing to provide sufficient scope for the expression
of regional particularities will also undermine the legitimacy of the
system. Because legitimacy is appraised in both substantive and procedural terms, the links between effectiveness and legitimacy are complex.
Furthermore, the norms, procedures, and rules are often opaque.
One would ordinarily expect citizens to support federal practices that
yield effective policies by addressing problems in a timely and efficient
Canadian Federalism: Performance, Effectiveness, and Legitimacy
manner. If the political culture places a high priority on democratic
processes, however, policies arrived at through closed, non-transparent,
and unaccountable processes may still be viewed as illegitimate, even if
they are highly effective in delivering certain outcomes.
When individual Canadians are asked to appraise the legitimacy of
Canadian federalism, they appear to be much more interested in outcomes
than in respect for federal principles. Cutler and Mendelsohn (2001)
found that Canadians outside Quebec show little concern for whether
governments respect the constitutional division of powers. They found
Canadians care more about results in important policy areas and want
governments to co-operate to achieve those results.
Even so, individual Canadians’ perceptions of the legitimacy of Canadian federalism are likely to be based on both the results of executive
federalism (output legitimacy) and its procedures (input legitimacy).
Certainly, Jennifer Smith (2004) argues that Canadian federalism falls
short when it comes to promoting democratic participation in the
policy-making process.
Upon entering the third decade of the twenty-first century, federalism
continues to provide the essential framework for governance in Canada.
How effectively and legitimately it does so, and how it is changing as
political elites within both orders of government grapple with contemporary challenges, is the subject of the chapters that follow.
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Banting, K. 1995. “The Welfare State as Statecraft: Territorial Politics and
Canadian Social Policy.” In European Social Policy, edited by S. Leibfried and
P. Pierson, 269–300. Washington, DC: Brookings Institution.
Braun, D. 2000. “Territorial Division of Power and Public Policy-Making:
An Overview.” In Public Policy and Federalism, edited by D. Braun, 27–56.
Aldershot, UK: Ashgate.
Breton, A. 1996. Competitive Governments: An Economic Theory of Politics and
Public Finance. New York: Cambridge University Press.
Brown, D., H. Bakvis, and G. Baier. 2019. Contested Federalism: Certainty and
Ambiguity in the Canadian Federation. 2nd ed. Don Mills, ON: Oxford
University Press.
Cameron, D., and R. Simeon. 2002. “Intergovernmental Relations in Canada:
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Courchene, T.J. 1994. Social Canada in the Millennium: Reform Imperatives and
Restructuring Principles. Toronto: C.D. Howe Institute.
Cutler, F., and M. Mendelsohn. 2001. “What Kind of Federalism Do
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policyoptions.irpp.org/magazines/should-we-legalize-drugs/what-kind
-of-federalism-do-canadians-outside-quebec-want/.
Dupré, J.S. 1985. “Reflections on the Workability of Executive Federalism.”
In Intergovernmental Relations, edited by R. Simeon. Toronto: University of
Toronto Press.
Gagnon, A.-G. 2001. “The Moral Foundations of Asymmetrical Federalism.”
In Multinational Democracies, edited by A.-G. Gagnon and J. Tully, 319–38.
Cambridge: Cambridge University Press.
Graefe, P., J.M. Simmons, and L.A. White, eds. 2013. Overpromising and
Underperforming?: Understanding and Evaluating New Intergovernmental
Accountability Regimes. Toronto: University of Toronto Press.
Harmes, A. 2007. “The Political Economy of Open Federalism.” Canadian
Journal of Political Science 40, no. 2: 417–37. https://doi.org/10.1017
/S0008423907070114.
Harrison, K. 1996. Passing the Buck: Federalism and Canadian Environmental
Policy. Vancouver: University of British Columbia Press.
———, ed. 2005. Racing to the Bottom? Provincial Interdependence in the Canadian
Federation. Vancouver: University of British Columbia Press.
Jones, S., G. Bouckaert, P. Fafard, and L. Bernier. 2019. “Strange Bedfellows:
Federal Systems and Performance Management.” Regional and Federal
Studies 29, no. 4: 479–505. https://doi.org/10.1080/13597566.2018
.1517086.
Lazar, H. 1997. “Non-Constitutional Renewal: Toward a New Equilibrium in
the Federation.” In The State of the Federation 1997: Non-Constitutional Renewal,
edited by H. Lazar, 3–38. Kingston, ON: Institute of Intergovernmental
Relations, Queen’s University.
———. 2006. “The Intergovernmental Dimensions of the Social Union: A
Sectoral Analysis.” Canadian Public Administration 49, no. 1: 23–45. https://
doi.org/10.1111/j.1754-7121.2006.tb02016.x.
Lazar, H., H. Telford, and R.L. Watts. 2003. “Diverse Trajectories: The Impact
of Global and Regional Integration on Federal Systems.” In The Impact
of Global and Regional Integration on Federal Systems: A Comparative Analysis,
edited by H. Lazar, H. Telford, and R.L. Watts, 1–36. Kingston, ON:
McGill–Queen’s University Press.
McRoberts, K. 1993. “Federal Structures and the Policy Process.” In Governing
Canada: Institutions and Public Policy, edited by M.M. Atkinson, 149–78.
Toronto: Harcourt Brace Jovanovich.
Nevitte, N. 1996. The Decline of Deference: Canadian Value Change in Cross-national
Perspective. Peterborough, ON: Broadview.
Canadian Federalism: Performance, Effectiveness, and Legitimacy
Norris, P. 2005. “Stable Democracy and Good Governance in Divided
Societies: Do Powersharing Institutions Work?” Faculty Research
Working Paper RWP05-014. Cambridge, MA: John F. Kennedy School of
Government, Harvard University.
Pierson, P. 1995. “Fragmented Welfare States: Federal Institutions and the
Development of Social Policy.” Governance 8, no. 4: 449–78. https://
doi.org/10.1111/j.1468-0491.1995.tb00223.x.
Ryan, C. 2003. “Quebec and Interprovincial Discussion and Consultation.”
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www.queensu.ca/iigr/sites/webpublish.queensu.ca.iigrwww/files/files
/WorkingPapers/CouncilFederation/FedEN/7.pdf.
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Policy in Canada. Toronto: University of Toronto Press.
———. 1997. “Rethinking Government, Rethinking Federalism.” In The
New Public Management and Public Administration in Canada, edited
by M. Charih and A. Daniels, 69–92. Toronto: Institute of Public
Administration.
———. 2003. “Important? Yes. Transformative? No. North American
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Telford, and R.L. Watts, 125–72. Kingston, ON: McGill–Queen’s University
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Research on Public Policy.
CHAPTER TWO
Self-Rule vs. Shared Rule: Canada as
a Case of Comparative Federalism
Jörg Broschek
Canadian federalism represents a fascinating case for comparative
federalism scholarship for at least three reasons. First, it is remarkable
that Canada adopted a federal Constitution in the 1860s, rather than
embarking on what was then the predominant unitary pathway of state
formation. Second, the drafters of the Constitution constructed a federal
institutional architecture that, in an almost exceptional way, displayed
features of self-rule at the expense of shared rule. Finally, in interaction
with other institutional, ideational, and societal factors, this institutional
framework has facilitated a distinct pattern of federal dynamics that
has been, at the same time, highly resilient and highly conducive to
political change.
State formation entails the creation of a new political, administrative,
economic, and cultural centre. As such, it is an inherently conflict-laden
process, generating centre–periphery conflicts. Federalism is only one
contingent institutional solution to accommodate such conflicts. In
fact, unlike Norway or Italy, Canada belongs to the small number of
nineteenth-century nation-states that became federal states.1 In order to
reconcile diverging interests between those actors who favoured a strong
central government and those who represented peripheries, the Fathers
of Confederation were influenced by two different models of territorial
politics, the British and American approaches, and aligned them in a way
that would facilitate a constitutional compromise. While they adhered to
the British tradition of Westminster-style government, the Constitution
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Jörg Broschek
drafters refrained from accommodating peripheral interests within a
unitary framework as in Britain’s “dual polity” (Bulpitt, 2008). Instead,
they emulated the American approach to reconcile centre–periphery
conflicts by entrenching a federal system.
The reconfiguration of both institutional traditions in the context
of Canadian state formation established a new variant within the small
universe of federal democracies. While most federal systems seek to balance the institutional capacity of each governmental tier for autonomous
action through self-rule with the need to collaborate through shared
rule, Canadian federalism places an almost exceptional emphasis on
self-rule. Shared rule, by contrast, has always been underdeveloped. As
such, the Canadian case stands in sharp contrast with the German case,
where shared rule is the most defining feature of the federal architecture.
Other federal systems such as Australia, the United States, or Switzerland
rank somewhere in between.
The institutional imbalance between self-rule and shared rule results
from the combination of Westminster democracy on the one hand and
a dual conception of federalism on the other. Both institutional elements have reinforced each other, concentrating power resources on
the federal and provincial levels rather than sharing them between and
among territorial units within the federal arena. This basic institutional
configuration is highly path-dependent and has become more firmly
entrenched over time, with important implications for institutional and
policy dynamics. While it has been difficult to reverse this pathway by
enacting structural reforms that would strengthen shared rule within
the federal system, Canadian federalism is certainly not static. As will be
argued in this chapter, institutional resilience has kept federalism open
for ongoing dynamic adjustments.
The chapter is divided into four parts. The first section introduces an
analytical framework for analyzing similarities and differences between
and among federal systems. Building on this framework, the second
section situates the Canadian case within a broader comparative setting. The third section examines how Canadian federalism performs in
historical-comparative perspective. The final section provides a focused
discussion of how the distinct configuration of federalism in Canada
generates distinct problems related to policy effectiveness and legitimacy
that differ profoundly from those observed in “shared rule” federations
like Germany.
Self-Rule vs. Shared Rule: Canada as a Case of Comparative Federalism
COMPARING FEDERALISM: AN ANALYTICAL
FRAMEWORK
Federalism is one option to accommodate centre–periphery conflicts within
territorially divided societies. The creation of the modern state was an
inherently centralizing, conflict-laden process. While cultural, economic,
and political elites aspired to establish a new centre through the concentration and territorial expansion of political authority, peripheral groups
sought to entrench mechanisms that would prevent them from becoming
marginalized within the new polity (Rokkan, 1999). In most cases, such
mechanisms were entrenched within a unitary state. Only about 25 out of
approximately 200 states (12.5 per cent) have a federal constitution, and
only 8 out of 36 OECD countries (22 per cent) are federations. Although
unitary states such as the United Kingdom and Spain feature regional units
as well, federalism conceives sovereignty as shared between the federal
level and constituent units. By contrast, in unitary states sovereignty is
considered to be indivisible and vested exclusively within the central level
of government (Hueglin and Fenna, 2015; Watts, 2008).
The distinction between unitary and federal states tends to obscure, however, the fact that federalism itself is a highly diversified,
multi-dimensional phenomenon (Benz and Broschek, 2013). At least
three interacting dimensions need to be distinguished: the societal, the
ideational, and the institutional.
First, the sociological foundation of federal systems varies (Amoretti
and Bermeo, 2004; Erk, 2007). As a constitutional form of conflict accommodation, federalism reflects the existence of territorially defined
social cleavages. Such cleavages have historical roots in state formation
processes and divide societies along linguistic, ethnic, religious, economic, and cultural lines. The configuration of territorially defined
cleavages during state formation differs, and while some cleavages may
become reinforced over time, others may weaken. The social cleavage
structure of federal systems, therefore, varies in terms of the number,
types, and intensity of territorially defined cleavages that lie at the heart
of centre–periphery conflicts. Moreover, the configuration of territorially
defined cleavages also affects nation-building within federal systems. The
salience of linguistic cleavages, especially if reinforced through religious
and/or cultural cleavages, can lead to the emergence of multinational
federations (Amoretti and Bermeo, 2004; Gagnon and Seymour, 2012).
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Jörg Broschek
Second, as mentioned above, the existence of territorially defined
cleavages alone cannot explain the emergence of federalism. If analyzed in isolation, cleavages also do not tell us much about the specific
operation of federal systems. Scholars of comparative federalism have
argued, therefore, to take ideas more seriously to understand how abstract
cleavages shape political discourses within federal systems (Béland and
Lecours, 2011: 201; Benz and Broschek, 2013). Ideas manifest themselves
in debates about unity and diversity, the narratives about the normative
foundations of federalism as well as the construction of (national) identities, communities, and loyalties towards the federal and sub-federal
level. The degree of contestation within a federal system becomes visible
through competing ideas in discursive interactions about the role and
authority of sub-federal and federal governments. On a more general
level, ideas find expression in two different, yet related, principles of
federalism: self-rule and shared rule. Self-rule represents the idea that
political authority within a federal system should primarily be exercised
autonomously by sub-federal units (such as provinces, states, cantons, or
Länder) and the federal level, respectively. Accordingly, each level of government should enjoy as much freedom as possible to act independently
from the other. Shared rule, by contrast, highlights interdependence
and power-sharing. Accordingly, this principle represents the idea that
federal and sub-federal governments should work together in the exercise
of political authority (Broschek, 2015; Watts, 2008).
Third, the institutional configuration of federalism reflects the relative weight of self-rule and shared rule. Both ideational principles are
variously built into the architecture of federal systems (Watts, 2008: 8).
Federal systems consist of four main institutional building blocks: the
allocation of powers, fiscal federalism, the system of intergovernmental
relations (IGR), and the second chamber. Each institutional component
tends to align with either self-rule or shared rule and contributes to
define the overall shape of a federal system (Table 2.1).
The allocation of powers can be either dual or shared and integrated.
In dual federations, jurisdictions are allocated exclusively between
both governmental tiers. In shared-powers federations, both levels
have authority to act. An integrated allocation of powers represents
a distinct form of shared powers that we typically find in some Continental European federations. Here, one level (usually the federal) has
the power to legislate in a certain policy domain while the other level
Self-Rule vs. Shared Rule: Canada as a Case of Comparative Federalism
Table 2.1. Self-Rule and Shared Rule in Federal Systems
Allocation of
powers
Self-Rule
Shared Rule
Dual and exclusive jurisdiction
Shared and/or
integrated (one level
legislates, the other
level implements)
Shared taxing powers
Encompassing
equalization
schemes, jointly
administered
High degree of
organization,
including decision
rules like qualified
majority versus
unanimity
Low or non-existent
scope for unilateral
action, compulsory
negotiations through
collaboration and
joint decision-making
Rather strong; Council
model (regional
interests represented
on federal level
through constituent
units’ governments)
Fiscal federalism
Exclusive taxing powers for
each governmental tier
No or only focused equalization
schemes, administered by
one governmental tier
Intergovernmental Low degree of
relations (IGR)
institutionalization
High scope for unilateral action,
voluntary co-operation
contingent on willingness of
governments
Second chamber
Rather weak; Senate model
(regional interests
represented on federal level
through elected senators)
(usually constituent units) implements federal legislation, with varying
degrees of autonomy.2
Fiscal federalism reflects self-rule if both governmental tiers are equipped
with exclusive access to tax revenue and if redistributive mechanisms –
most notably horizontal and/or vertical equalization programs – are
weak or non-existent. By contrast, encompassing equalization schemes
and shared taxing powers indicate alignment with the idea of shared
rule federalism.
Moreover, if the system of IGR is based on self-rule federalism, it tends
to have a low degree of institutionalization, allowing for unilateral action
and/or co-operation on a voluntary basis. By contrast, shared rule federalism provides for a highly institutionalized system of IGR with little or no
room for unilateralism. Instead, collaboration and joint decision-making
are the predominant modes of interaction (see also the introductory
35
36
Jörg Broschek
chapter in this volume). These modes of interaction are also governed by
specific decision rules such as qualified majorities instead of unanimity,
which may limit the ability of one single actor exercising a veto.
Finally, to be consistent with self-rule federalism, regional participation
rights in federal decision-making need to be limited. Accordingly, the
second chamber is weak and/or organized around the senate principle.
In the case of shared rule federalism, the second chamber is strong
and, ideally, offers constituent units’ governments a voice in federal
decision-making, as exemplified in the German Bundesrat. The German
Bundesrat is not directly elected. Instead, it is composed of representatives of sub-federal governments, who enjoy strong participation rights
in federal legislation. In many instances, a majority of the Bundesrat can
even veto bills introduced by the federal government.
Table 2.1 represents a stylized analytical framework to compare institutional variation among federal systems. Individual cases combine
elements of self-rule and shared rule and can be mapped on a continuum
between two extreme poles: self-rule on one end, shared rule on the other.
From a comparative perspective, Canadian federalism is remarkable, as
shared-rule elements are extremely weak and decision rules, except for
constitutional amendments and the Canada-Quebec Pension Plan, largely
absent. Instead, the institutional architecture of Canadian federalism
resembles almost an ideal-type of self-rule federalism.
SITUATING THE CANADIAN CASE
Canada belongs to the six “classical” federations that came into existence
in North America and Europe as so-called “coming together” federations
(Stepan, 1999): the United States (1789), Switzerland (1848), Canada
(1867), Germany (1871), Australia (1901), and Austria (1920). Coming
together federations are aggregative in the sense that representatives from
prospective constituent units negotiated the creation of a new federal
state. In this respect, they differ from more recent cases of “holding
together” federations, such as Belgium, where an existing unitary state
was transformed into a federal state in 1993 in order to prevent secession.
On the one hand, Canadian federalism shares important institutional
similarities with the other federations in the Anglo-Saxon tradition, the
United States and Australia, while it differs from those federations in
Self-Rule vs. Shared Rule: Canada as a Case of Comparative Federalism
the Continental European tradition: Switzerland, Germany, and Austria
(Table 2.2). A dual allocation of powers is a typical feature of the former. In all three cases, the drafters of the Constitution were guided by
the principle of self-rule, expecting that it would be possible to clearly
demarcate spheres of exclusive authority for each governmental tier.
Consistent with this motive, moreover, the system of IGR has always
featured a comparatively low degree of institutionalization.
The historical context for state formation in Continental Europe was
different from the experience of the Anglo-Saxon settler societies and
promoted, early on, a stronger role for shared rule. Unlike in the colonial
context of North America and Australia, in Europe many prospective
constituent units – like Prussia or Bavaria – had developed modern
state structures with significant bureaucratic capacities in the early and
mid-nineteenth century, prior to federalization. While the newly created
federal level assumed new competencies, it remained therefore dependent,
to various degrees, on the administrative capacities of sub-federal units.
As a consequence, the allocation of competencies is more often shared
or even integrated, and the greater need for coordination resulted in a
more institutionalized system of IGR (Benz, 2013; Lehmbruch, 2019).
On the other hand, the distinction between Anglo-Saxon and Continental European federations is not clear-cut. For example, Canadian
federalism shares with Switzerland and Belgium societal heterogeneity,
in particular linguistic and pronounced regional economic diversity. In
addition, Belgium and Canada are both multinational federal democracies
with contested ideational foundations of federalism. In all three federations, moreover, self-rule has always remained an important feature of
the institutional architecture. Sub-federal units in Belgium (the regions
and communities) and Switzerland (the cantons) enjoy considerable
legislative autonomy in important jurisdictions such as taxation and
healthcare, similar to the Canadian provinces. The Swiss cantons also
have more leeway, which means stronger self-rule capacities, when they
implement federal legislation than in the German and Austrian Länder.
Finally, noticeable differences also exist within the sample of federations in the Anglo-Saxon tradition. In the United States, federalism
was established with the framework of a presidential system, while in
Canada and Australia federalism is linked to a specific type of parliamentary system: Westminster democracy. The interaction of federalism
and “extra-federal” institutions (see the introductory chapter in this
37
Created in 1789
De-federalization
1861, refederalization
1865
50 states
Socio-economic
and sociocultural diversity
moderate-strong
Mono-national
Historical
Sub-federal
units
Societal
(territorial
cleavages,
national
integration)
United States
Socio-economic
and sociocultural/
linguistic
diversity
moderatestrong
Mono-national
26 cantons
Created in 1848
Replacement
of federal
constitutions
in 1874 and
1999
Switzerland
Socio-economic
and sociocultural/
linguistic
diversity
strong
Multi-national
10 provinces,
3 territories
Created in 1867
Canada
Table 2.2. Canadian Federalism in Comparative Perspective
Socio-economic
and sociocultural
diversity
moderate
(since 1990)
Mono-national
16 Länder
Created in 1871
Replacement
of federal
constitution
in 1919
De-federalization
1933, refederalization
1949
Germany
Socio-economic
diversity
moderate
and sociocultural
diversity
low-moderate
Mono-national
6 states, 3
territories
Created in 1901
Australia
Socio-economic
diversity
moderate
and sociocultural
diversity low
Mono-national
9 Länder
Created in 1920
Defederalization
1934; refederalization
1945
Austria
Socio-economic
and sociocultural
diversity high
Multi-national
3 regions, 3
communities
Created in 1993
Belgium
Dominance of
self-rule with
shared rule
counterweights
Institutional
foundation of
federalism
Self-rule and
shared rule
balanced
Not contested
in principle
Dominance of
self-rule, weak
shared rule
Contested
(compact
theories,
Indigenous
rights vs.
settler society)
Dominance of
shared rule,
weak self-rule
Not contested
Dominance of
self-rule with
shared rule
counterweights
Not contested
Dominance
of shared
rule, weak
self-rule
Not contested
Dominance of
self-rule with
shared rule
counterweights
Contested
(Flemish
Movement)
Source: Author’s compilation building on Forum of Federations (2005); Hueglin and Fenna (2015); Loughlin et al. (2013); Watts (2008).
Note: De-federalization is defined as the termination of a constitutionalized federal relationship between and/or among constituent units and the federal
level. Re-federalization is defined as the institutionalization of a federal system after it had been temporarily abandoned.
Not contested
in principle
(but ongoing
relevance of
states’ rights
doctrine)
Ideational
foundation of
federalism
40
Jörg Broschek
volume) has important consequences. For example, while regional interests in the United States participate in federal decision-making through
elected senators in Congress, a distinct version of intrastate federalism,3
in Australia and, even more so, in Canada regions are represented in
the system of IGR, or interstate federalism. In both federal systems, sub-­
federal governments seek to influence federal decision-making primarily
in negotiations with their federal counterpart in what is called “executive
federalism” (Smiley, 1976: 52ff.) or, for Canada more specifically, “federal-provincial diplomacy” (Simeon, 2006). And finally, although the
two Westminster democracies, Australia and Canada, are very similar in
their basic configuration, they differ profoundly in their long-term institutional trajectories. While Canada was a highly centralized federation
at the outset, Australia was highly decentralized. These initial outcomes
of state formation were reversed in both cases over time, with Canada
becoming one of the most decentralized and Australia one of the most
centralized federations worldwide.
Societal, ideational, and institutional variations of federalism have
important implications for assessing the performance, effectiveness,
and legitimacy of individual federal systems. First, by comparing federal
systems synchronically, at a given point in time we observe significant
differences regarding the societal context (cleavages, nation-building),
the ideas and discourses shaping the politics of federalism, and the institutional configuration of federal systems. This becomes particularly
obvious through a comparison of most dissimilar cases, such as Canada and
Germany. Canada is a multinational federal democracy. Its federal society
is characterized by pronounced regional economic and socio-cultural
cleavages, and the ideational foundations have been contested from the
beginning. Germany, by contrast, is mono-national. Although regional
economic and socio-cultural differences have increased since German
reunification in 1990, they are still moderate from a comparative point
of view and the ideational foundations of federalism are not contested.
Moreover, the institutional configuration of federalism contrasts sharply
in both cases. Accordingly, the definition of problems for the performance and effectiveness of federalism, as well as the range of options
considered as legitimate, are very different in both federal systems.
Second, if we compare federal systems diachronically (meaning
their dynamic development over time), we can also observe interesting
similarities and differences. Federal systems are not static. All three
Self-Rule vs. Shared Rule: Canada as a Case of Comparative Federalism
dimensions of federalism change over time, and so do the definition of
problems, the scope of viable solutions, and, possibly, the perception of
what is considered acceptable or not. Change, however, does not emerge
in a vacuum. As will be illustrated in the following sections, it is always
bounded by past developments, ideational and institutional constraints.
PERFORMANCE
The Federal Principle: Ideational Ambiguity
Canada has survived as a multinational federal democracy since its formal establishment through the BNA Act in 1867. It has shown itself to be
capable of addressing substantial crises without falling apart. Like in Switzerland or Australia, federalism has been a persistent feature of Canada’s
political order. This sets Canada apart from cases where federalism was
suspended and reintroduced in the wake of major critical junctures, such
as occurred in the United States during the Civil War between 1861 and
1865, in Germany between 1933 and 1949, and in Austria between 1934
and 1945 (see Table 2.2). Canada also contrasts with other multinational
but unitary states such as Spain or the United Kingdom. In Spain, for
example, the transition from a unitary to a federal state failed in 1873
and set the country on a different constitutional trajectory that makes
it very difficult to accommodate territorial conflicts today. Belgium, by
contrast, eventually adopted a federal constitution in 1993, following an
incremental process of decentralization reforms after 1970. However, it
is still grappling with its unitary past (Swenden and Jans, 2006).
In this respect, Canada has been consistent with the federal principle.
To be sure, the federal powers of reservation and disallowance, along with
the declaratory power, represented elements of Canada’s political order
at odds with the constitutional principle of federalism. As these powers
were frequently deployed in the aftermath of Confederation, the period
between 1867 and 1896 is often described as an era of “quasi-federalism.”
With the transition from John A. Macdonald’s Conservative government
to the Liberal government under Wilfrid Laurier, these powers came to
be used far less frequently, giving way to the era of “classical federalism”
during which federalism established itself as a principle that was widely
recognized (Simeon and Robinson, 1990).
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Jörg Broschek
At the same time, however, the meaning of federalism remained
open and contested (Brown, Bakvis, and Baier, 2019; Gagnon, 2009;
Rocher, 2009). Again, the Canadian case differs, to varying degrees,
from other modern federations. In Germany, for example, Unitarismus,
a widely shared belief among political and economic elites in the necessity to establish uniform conditions within the formal confines of a
federal constitution through collaboration, superseded a long-standing
tradition of federal ideas rooted in the autonomy of diverse regions
during the second half of the nineteenth century (Lehmbruch, 2000).
A similar predominant ideational commitment to foster uniformity
and harmonization can be found in Australia or Austria. Even in the
United States or Switzerland, where territorial diversity is more broadly
accepted, federalism is rooted in an ideational consensus that emerged
in the aftermath of order-shattering events. Post-reconstruction in the
United States, for example, was an effort not only to re-institutionalize
political authority within a federal framework, but also to solidify a new
understanding of federalism that would buttress a more centralized
developmental pathway (Johnson, 2007). In Switzerland, the Sonderbundwar of 1847 initiated the transformation of the formal confederal order into a federal constitution. Although this original federal
constitution was overhauled twice, in 1874 and 1999, its foundational
ideational premises have been relatively stable, as reflected in a general consensus on the nature and origins of state authority (Kriesi and
Trechsel, 2008).
A similar ideational “lock-in,” or historical entrenchment of a widely
shared belief in the normative foundations of the federal order among
a majority of the population and political elites, has never happened in
Canada. In this respect, Canadian federalism is a rather rare case in the
Global North. As Peter Russell (2017) has argued, historically Canada’s
federal multinational democracy still copes with the legacy of two “incomplete conquests.” Centre-formation in Canada lacked the penetrating
power of similar processes in other federations as European imperial
powers refrained from a complete conquest of Indigenous peoples and the
francophone population. This legacy, in turn, hampered any subsequent
efforts among the three “foundational pillars” to constitute themselves
on the ideational level as one demos – in other words, as a political community whose members can, despite all differences, mutually agree on
a set of foundational values that constitutes its existence (Russell, 2004).
Self-Rule vs. Shared Rule: Canada as a Case of Comparative Federalism
Although it was possible to reach a compromise on a federal constitution between 1864 and 1867, the federal principle itself remained “in
flux” (Vipond, 1989: 5). Under the leadership of Ontario’s premier Oliver
Mowat, the so-called provincial rights movement began to challenge John
A. Macdonald’s imperial conception of federalism (Armstrong, 1981;
Vipond, 1991). Over the course of the late nineteenth and early twentieth
centuries, the provinces cultivated two powerful counter-narratives in
the form of compact theories about the historical foundations and normative implications of Canadian federalism (Cook, 1971). Accordingly,
Confederation had to be interpreted either as a compact among equal
provinces or, in the view of Quebec, as a compact between the two founding nations: the French and the English. While both reject a centralized
federal system and a subordinate role of the provinces, they disagree about
the role of the provinces themselves. While the narrative that Canada is
a compact among equal provinces opposes asymmetrical arrangements
for individual provinces, the narrative of Canada as a compact between
two nations serves as a normative foundation for Quebec’s claims to be
recognized as a distinct society and province within Canada. Moreover,
Indigenous peoples have vigorously articulated their own interpretation
of Canadian federalism, adding another layer of ideational complexity.
For the most part, Indigenous rights advocates envisage a renewed
nation-to-nation relationship that can be reconciled with the existing
institutions of Canadian federalism (Hueglin, 2003; Ladner, 2017). For
others, similar to the argument of Quebec sovereignists, consequential
de-colonialization needs to be conceived of as territorial coexistence
outside a shared framework of Canadian state authority (Alfred, 1999).
Institutional Ambiguity: The Legacy of Interstate
Federalism
From a comparative point of view, Canada’s dual approach to the allocation of competencies is similar to that in the United States, Australia,
Belgium, and, to some degree, Switzerland. The main rationale behind
this approach is to assign state functions exclusively to either order, creating “watertight compartments.” The original BNA Act of 1867 appears
to epitomize this approach through a dual list enumeration (Hueglin
and Fenna, 2015). With the exception of agriculture, immigration, and
criminal law, the Fathers of Confederation assigned almost all state
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functions of the time to either the federal level or the provinces, rather
than creating a single or multiple list approach, which would tend to
leave greater scope for concurrent powers. The dual list approach, however, entailed a paradox because the delegates obviously refrained from
delineating rather precisely the scope and boundaries of the provisions
entailed in sections 91 and 92 of the BNA Act. It was only possible to reach
a consensus on a federal Constitution as long as advocates of a more centralized form of federalism and those who favoured a more decentralized
federation could interpret the compromise in their own way. As Vipond
(1989: 7–8) states, “most supporters of the Confederation proposal did
their best to avoid giving these general propositions substance.... [T]he
text read one way, seemed to guarantee local self-government [but it]
could be read with equal ease as a massive hedge against local control.”
Institutional ambiguity, therefore, facilitated agreement, but left many
questions unresolved. It shifted problems into the future and passed them
over, for the most part, to the Judicial Committee of the Privy Council
(JCPC) in London to solve. In this respect, the Canadian case does not
represent an idiosyncrasy per se. Federal constitutions are often regarded
as incomplete contracts (Farrell and Héritier, 2007), and the Canadian
case does not differ from other federations that feature strong elements
of self-rule such as the United States or Australia. Ambiguity became
amplified, however, in a very distinct way through the lack of intrastate
federalism and the presence of Westminster democracy.
Canadian political scientists disagree in terms of how they assess the
relative importance of intrastate federalism in the original constitutional
scheme. For some, like Donald Smiley (1971) or Roger Gibbins (1982),
the delegates anticipated that the Senate would serve as an important
institutional device for regional representation in federal politics. In addition, informal institutions like the regional composition of the cabinet
and caucuses would ensure that regional interests have a safeguard at the
federal level. For others, the Canadian case was highly consistent with the
principle of self-rule federalism from the very beginning (Smith, 1984;
Vipond, 1989). From this perspective, Canada appears as almost unique in
the way it lacked almost any effective institutional checks through mutual
entanglement even at the moment of creation. Regardless of how one
evaluates these diverging interpretations, it is more important that there
seems to be consensus on the decline of intrastate federalism over time,
however pronounced at the outset. The lack of responsiveness of federal
Self-Rule vs. Shared Rule: Canada as a Case of Comparative Federalism
institutions, most notably the executive, to regional demands was experienced in particular by francophone Canadians in a series of events in the
aftermath of Confederation. Interventions by francophone members of
the federal government and the government of Quebec to prevent the
enactment of the New Brunswick Common Schools Act in 1871, the execution
of Louis Riel in 1885, or the Public Schools Act in Manitoba in 1890 can
be seen as a sequence of “negative feedback effects,” a mechanism that
undermines the effectiveness of an institution over time (Jacobs and
Weaver, 2014). Rather than relying on intrastate federalism, provincial
governments thus further capitalized on the potential of institutional
ambiguities entailed in the dual allocation of powers to consolidate and
protect their interests within the federal arena (Broschek, 2012).
Westminster democracy further reinforced this trend. Although the
principle of parliamentary supremacy is not without limits, institutional
ambiguity makes it very difficult to determine where it ends. This has
opened the door for federal governments to bypass the division of
powers. After the JCPC limited the scope of the peace, order, and
good government clause, which had to be balanced against a broad
interpretation of section 92(13) (provincial property and civil rights),
and the gradual disuse of the powers of reservation and disallowance,
the federal government developed the functionally equivalent federal
spending power doctrine during the twentieth century (Telford, 2003).
This institutional resource allowed the federal government to launch
programs unilaterally, or to foster provincial compliance through the
“shadow of hierarchy” (Scharpf, 1997). Ottawa used its spending power
to nudge policy innovation in areas of exclusively provincial jurisdiction
without encountering effective opposition through a second chamber as
occurs in the United States, Germany, or Switzerland. Moreover, Westminster democracy on the provincial level encouraged a distinct form of
province-building. As Lori Thorlakson (2000) has argued, the German
Länder are not per se weaker than the Canadian provinces. The main
difference between both developmental trajectories is the form of what
she calls “government-building” – the more encompassing notion for
“province-building” introduced by Canadian scholars. While the Länder
developed considerable administrative authority as a consequence of the
integrated division of powers, the provinces have expanded legislative
authority and widened the scope of provincial public policy in important
areas of social and economic policy. And while shared rule provisions
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enable the German Länder to effectively shape, or even block, important
federal legislative initiatives, the provinces are successful in carving out
policy space and aggrandizing their jurisdiction.
Federal Dynamics between Reform and Adaptation
The historical development of Canadian federalism reveals a remarkable
capacity to generate institutional change. Leaving aside rather exceptional
episodes like the era of “mega-constitutional politics” (Russell, 2004),
Canadian federalism has been largely immune to stalemates resulting
from the “joint-decision traps” or divided government obstacles found in
Germany or the United States (Brady, 1993; Lehmbruch, 2000; Scharpf,
1997; Schultze, 1984).
The comparatively high capacity to produce institutional change in
Canada is not, however, without limitations. Institutional change itself
can take two different forms: explicit and deliberate as institutional
reform or, alternatively, implicit and more passive through adaptation
(Benz and Colino, 2011). While Canadian federalism has demonstrated
a comparatively high capacity for adaptation, institutional reforms
seeking to rebalance self-rule and shared rule are more difficult to
achieve. Institutional reforms directed at strengthening shared rule,
most notably through intrastate federalism, have frequently failed.
They either never materialized, as in the case of Senate reform or, as
with the Social Union Framework Agreement of 1999, often had little
effect. In fact, in comparative perspective Canada is among those federations that produce a high number of intergovernmental agreements.
A comparative study by Jeffrey Parker (2015) ranks Canada second in
a sample of six federations. But intergovernmental framework agreements in Canada are vulnerable because they are usually not binding.
Their workability depends on the willingness of political actors to
comply. Changing governmental priorities, which have the potential to
be more sweeping in Canada’s Westminster democracy than in other
parliamentary democracies, or deliberate neglect are often detrimental
to institutionalizing and internalizing routinized co-operation on an
ongoing basis. A recent example is the Pan-Canadian Framework on
Clean Growth and Climate Change of December 2016 (see chapter 14
by Winfield and Macdonald). Prime Minister Justin Trudeau’s attempt
to relaunch a new era of collaboration within the intergovernmental
Self-Rule vs. Shared Rule: Canada as a Case of Comparative Federalism
arena appeared to have gained some momentum when all provinces
except Saskatchewan agreed to this new framework agreement. However, federal and provincial unilateralism soon resurfaced through
the battle over carbon pricing between Manitoba, New Brunswick,
Ontario, Saskatchewan, and Alberta on the one hand, and the federal
government on the other hand.
Some institutional reforms aimed at strengthening shared rule certainly succeeded. An example is the Council of the Federation (CoF).
There is still considerable scepticism regarding the CoF’s innovative
potential (Simmons, 2017), but fifteen years after its inception it displays a greater degree of activism than its Australian counterpart, the
Council for the Australian Federation (CAF), which was created in
2006 as a horizontal intergovernmental forum for state and territory
governments (Collins, 2015). However, a broader comparative-historical perspective suggests that the CoF has a weak institutional basis.
For example, the Conference of Cantonal Governments, a similar
horizontal body created in Switzerland in 1993, has a secretariat with
about twenty-seven permanent staff, compared to about two positions
in the CoF secretariat in Ottawa.
Institutional reforms are often path dependent. Change is bounded
and easier to achieve as long as it reinforces rather than reverses the
established institutional logic of federalism. In federal systems that feature strong elements of shared rule, institutional reforms often aim at
disentangling both governmental tiers. Conversely, federations that display
strong features of self-rule, like Canada or Australia, seek to entrench more
elements of shared rule, or intrastate federalism. Preliminary evidence
suggests that such attempts are only of very limited or moderate success
at best (Broschek, 2015). For example, major institutional reforms that
strengthened self-rule, like the ongoing devolution of authority toward
the territories, the creation of Nunavut in 1999, and the Nisga’a Treaty
of 1998, were enacted, but Senate reform failed.
If institutional reforms are difficult to achieve, political actors can
revert to adaptation. The combination of institutional ambiguity and
power concentration in Canadian federalism has proven to be particularly conducive to this mode of institutional change, offering a broad
array of options to alter the status quo without formally changing the
institutional framework. The reinterpretation of the scope of jurisdictional boundaries through landmark decisions such as the Labour
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Conventions Reference (UKPC 6, [1937] A.C. 326) or, more recently, the
Supreme Court decision in the Comeau case (2018 SCC 15) exemplify the
judiciary’s important role in promoting adaptive change. In these cases,
the courts empowered the provinces by giving provincial jurisdictions a
broad interpretation. In other cases, like the Crown Zellerbach decision
in 1988 ([1988] 1 S.C.R. 401), institutional ambiguity strengthened the
authority of the federal government by widening the scope of the peace,
order, and good government clause. Moreover, governments themselves
have been able to exploit ambiguities through “conversion”: that is, by
redirecting old institutions to new purposes (Mahoney and Thelen, 2010:
17). An illustrative example is the federal spending power doctrine. It
can be seen as an effort to re-establish institutional power resources in
a changing environment. As the powers of reservation and disallowance
were no longer viable options, the federal government developed the
spending power doctrine in the context of the emerging welfare state
as a tool to bypass constraints emanating from the division of powers.
The judiciary generally seems to play a greater role in resolving jurisdictional conflicts between the federal level and constituent units in
federations that align more with the principle of self-rule. Shared rule
federations like Germany or Switzerland, by contrast, are more rigid.
An integrated allocation of authority, for example, is less ambiguous
as each order of government assumes a certain function (legislation or
implementation). Constitutional disputes are thus more frequent in
federations that feature a dual allocation of competencies. Similar to
Canada, the Supreme Court in the United States and the High Court in
Australia have significantly shaped authority relationships between the
federal level and constituent units. Supreme Courts in the United States,
for example, have variously interpreted the Interstate Commerce clause
and, in doing so, altered authority relationships between Washington
and the states. The Australian High Court fundamentally reinterpreted
the reserved state powers doctrine in 1920, paving the way for a more
centralizing dynamic. What makes Canada different, however, is the
lack of intrastate mechanisms and the realities of Westminster democracy. In the United States, for example, a broader interpretation of the
Interstate Commerce clause in the context of the New Deal legislation
was counteracted by Southern Democrats in the Senate, who were able
to water down progressive legislative initiatives (Finegold, 2005). The
federal government in Canada, by contrast, was able to deploy the federal
Self-Rule vs. Shared Rule: Canada as a Case of Comparative Federalism
spending power to circumvent the restrictions imposed by the JCPC in
the context of the Employment and Social Insurance Act in 1937 (see also
Banting in chapter 11 of this volume).
Finally, the importance of adaptation for federal dynamics in Canada can also be observed in the system of intergovernmental relations.
While intergovernmental arrangements vary significantly in individual
sectors (Schertzer, McDougall, and Skogstad, 2016), they have oscillated
between collaboration and unilateralism on the level of first ministers.
This cyclical dynamic contrasts with more persistent patterns in many
other federations: most notably, those in Continental Europe that feature
a higher degree of IGR institutionalization. Canadian prime ministers,
by contrast, have an incentive to develop distinct leadership patterns to
address issues related to the economy, national unity, and the welfare
state (LeDuc and Pammett, 2016). Different leadership styles often affect IGR: some prime ministers, like Brian Mulroney or Justin Trudeau,
embrace a collaborative approach while others, like Pierre Trudeau, Jean
Chrétien, or Stephen Harper, revert back to unilateralism.
EFFECTIVENESS AND LEGITIMACY
Federalism can have an enabling or constraining effect on policy development. From a comparative point of view, the high propensity for
adaptive institutional change in Canada is also reflected at the level
of public policies. The concentration of power at both governmental
tiers, Westminster democracy, and the weakness of intrastate federalism
enable provincial and federal governments to innovate either unilaterally or through co-operation. Joint decision-making, the dominant
intergovernmental mode in Germany, is rare and largely limited to the
Canada-Quebec Pension Plan and constitutional policy, and involves
specific decision rules. In a similar vein, the federal government is not
confronted with a strong second chamber, as in Germany or the United
States, or mandatory referenda as in Switzerland, institutional features
that have the potential to obstruct policy innovation. Both governmental
tiers not only enjoy legislative, regulatory, and fiscal resources to innovate,
experiment, and learn from each other, but they can also adopt various
intergovernmental modes to tackle policy issues. These modes vary from
negative coordination, where governments mutually adjust their actions
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in response to initiatives from other governments, to different forms of
positive coordination like consultation, co-operation, or collaboration
(see Bakvis and Skogstad in chapter 1 of this volume).4 By and large positive effects of this institutional configuration can be seen, for example,
in the field of primary and secondary education policy, where Canada
performs significantly better than other federal systems (OECD, 2016;
Wallner, 2014). Immigration and international trade policy also represent
policy areas characterized by productive intergovernmental co-operation
between the provinces, territories, and the federal level (see Paquet,
chapter 13, and Kukucha, chapter 9, in this volume).
Institutional constraints are lower in Canadian federalism than in
other federations, most notably those which feature strong elements
of shared rule. Yet de facto policy interdependencies nevertheless exist
and are even further reinforced through a comparatively high degree
of uncertainty and ambiguity (Brown, Bakvis, and Baier, 2019). These
institutional conditions can also work against effective policy development. For example, provincial policy innovation may not be sufficient
to create policy transformation within a pan-Canadian context, as in
what so far have been failed efforts to establish a national pharmacare
program or a Canada-wide framework for the creation of early childhood
development and daycare policy (Friendly and White, 2012). Moreover,
Westminster democracy perpetuates such problems, as it is particularly
prone to swift policy reversals, typically following an election, putting
“reforms at risk” (Patashnik, 2008). In the absence of either a federal
government committed to take on a leadership role by promoting change
through the “shadow of hierarchy” (Scharpf, 1997), or the internalization
of norms that encourage deliberation and problem-solving rather than
pure bargaining among the provinces (horizontally) or between the
federal and provincial/territorial level (vertically), policy effectiveness
may be difficult to achieve (Schertzer, McDougall, and Skogstad, 2016).
The question of policy effectiveness is inherently tied into the question
of legitimacy in federal systems. Output legitimacy refers to the capacity
of governments to produce effective policy solutions, to promote the
general welfare of citizens, and to protect minorities from oppression by
majorities (Scharpf, 1999). Issues typically identified in reform discourses
often resemble those in federations that align more with self-rule, like
Australia, and are diametrically opposed to those in shared rule federations like Germany. Shared rule tends to generate problems resulting
Self-Rule vs. Shared Rule: Canada as a Case of Comparative Federalism
from the constraining effect of federalism. Accordingly, federalism is
considered to promote lowest common denominator outcomes, stalemate,
or even deadlock while the capacity to innovate is low (Schultze, 1999).
By contrast, self-rule federalism is more conducive to policy innovation,
but effectiveness may suffer, as indicated above, from policy shifts and
reversals, or duplication and overlap (Broschek, 2015).
Input legitimacy refers to the responsiveness of elected officials, which
means the degree to which their actions correspond with citizens’ preferences, expressed primarily through elections (Scharpf, 1999). Canada’s
self-rule federalism mitigates serious problems for input legitimacy that
often surface in discourses on the quality of democracy in more entangled
shared rule federations. In Germany and Austria, for example, federalism is often blamed for the ongoing disempowerment of sub-federal
legislatures, the obstruction of a federal government’s agenda through
the second chamber, and blurred responsibilities (Schultze, 1999). In
particular, compulsory negotiations through joint decision-making
undermine democratic accountability. Joint decision-making, as Fritz
Scharpf (1993) has aptly put it, often results in compromises that satisfy
no one, and no one wants to accept political responsibility. Sub-federal
legislatures, moreover, usually have no choice but to ratify such packages
negotiated behind closed doors.
In Canada, negotiations behind closed doors do not jeopardize democratic accountability in the same way because they are, for the most part,
voluntary. Executives can, at any time, exit the negotiation table and pursue
their political agenda unilaterally. Accordingly, federal and sub-federal
legislatures are not necessarily weakened through executive federalism
in a similar way. Rather, the main problem for input legitimacy results
from the possibility of federal encroachment. Notably, the unilateral
use of the spending power in areas of exclusive provincial jurisdictions
arguably represents the most prominent threat to input legitimacy.
CONCLUSION
Building on the distinction between self-rule and shared rule as two foundational principles of federalism, this chapter has situated the Canadian
case within the universe of the seven federations in the Global North:
the six classical federations plus Belgium. This analytical distinction is
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more encompassing than other prominent concepts that usually focus
on one or two constitutive features of Canadian federalism, such as its
multinational character or its decentralized nature (see, for example,
Erk, 2007).5 The self-rule/shared rule lens promises to capture similarities and differences among federal systems and their dynamics that are
often ignored in the literature.
The Canadian case belongs to the group of Anglo-Saxon federations
that emerged from de-colonialization within the British Empire. As such,
it shares important similarities with American and, even more so, Australian federalism. In all three cases, self-rule is predominant, albeit with
important modifications. Self-rule is manifested in a dual allocation of
competencies, the predominance of interstate federalism, and, accordingly,
a comparatively low degree of institutionalization of IGR. Shared rule and
intra-institutional checks for regional interests in federal decision-making
processes exist in all three federations as well, but they tend to be
weaker than in the Continental European federations.6 In these cases,
the integrated allocation of competencies and strongly institutionalized
intergovernmental relations reflect the significance of shared rule for
the practice of federal politics. In Germany and Switzerland, the strong
second chamber further magnifies these institutional characteristics.
Such differences in institutional configuration have important implications for the performance, effectiveness, and legitimacy of federalism.
Ambiguity and unpredictability often lie at the heart of reform discourses
not only in Canada, but also in the United States and Australia. Jurisdictional duplication and overlap, for example, result from ambiguity
while concerns about unilateral behaviour stem from unpredictability.
Political reforms often seek to address such problems through the system
of intergovernmental relations, with varying success. In the United States,
for example, efforts to improve co-operation through executive federalism are difficult to achieve not only due to the sheer number of state
governors, but also because the presidential system privileges legislative
rather than executive actors representing regional interests through the
Senate. In Australia, the Council of Australian Governments (COAG)
has provided a more formalized forum for vertical intergovernmental cooperation between the Commonwealth and the states and territories
since the early 1990s. However, it suffers from the Commonwealth’s
dominant role insofar as the COAG is directly located within the federal government.
Self-Rule vs. Shared Rule: Canada as a Case of Comparative Federalism
Comparison of Canada with more dissimilar cases like Austria, Germany, and, to some extent, Switzerland can be equally important to
better understand the Canadian case. It shows how the performance of
federalism in these cases is shaped through institutional entanglement
rather than uncertainty and ambiguity. Related problems for the effectiveness and legitimacy of federalism are stalemate, muddling through,
and a lack of democratic accountability – problems that are very different
from those usually identified in Canadian federalism.
NOTES
1 During nineteenth-century state formation, federalism became a persistent
feature of the state in six cases: Mexico (1824), Switzerland (1848), Argentina (1853), Canada (1867), Germany (1871), and Brazil (1891).
2 In Canada the federal level and the provinces implement their legislation
through their own public service (Service Canada and, for example, Service Ontario). In Germany, by contrast, citizens usually deal with Land
or municipal administrations in areas of federal jurisdiction. The federal
public service is limited to a few core exclusive jurisdictions like foreign affairs, customs, or the national civil aviation authority (Laufer and Münch,
2010: 132–3). One notable exception in Canada is the Canada Revenue
Agency (CRA), which is akin (yet not similar) to an integrated allocation
of powers, as the CRA administers income and corporate taxes for most
provinces.
3 Alan Cairns (1979) has distinguished two versions of intrastate federalism:
either by rendering the federal level more responsive to regional interests,
for example through a more effective representation of regions in federal
institutions like the second chamber (“centralist intrastate federalism”), or
by empowering the role of provincial governments directly at the federal
level, for example by replacing the Senate model with a second chamber
that follows the German Bundesrat model (“provincial intrastate federalism”). In this model, the second chamber is composed of sub-federal
executives and not elected senators. Regional interest representation in the
United States corresponds to the first model, that is, “centralist intrastate
federalism.”
4 On the distinction between “negative” and “positive” coordination, see also
Scharpf (1997).
5 For an excellent review of approaches to the comparative study of Canadian federalism, see Hueglin (2014).
6 The notable exception is Belgium, which has a more dualistic structure reflecting self-rule.
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GLOSSARY
cleavages A concept developed in political sociology to identify and analyze
the main structural dividing lines within a society like ethnicity, religion,
or class. Territorially defined cleavages capture conflicts between groups
within a society that are concentrated within certain territorial boundaries,
like provinces or regions. They are often historically rooted in centre–
periphery conflicts and have socio-economic, socio-cultural, and/or
socio-political foundations. Examples in Canadian federalism include the
cleavage between western and central Canada or between Quebec and the
Rest of Canada (ROC).
coming together federalism A federal system created through association of
previously independent constituent units.
holding together federalism A federal system that replaces a unitary state,
often as a response to the threat of secession.
input and output legitimacy Indicate two types of legitimacy in democratic
systems. Input legitimacy refers to the normative requirement that
political decisions need to reflect the preferences of the citizens, most
notably through effective participation. Output legitimacy refers to the
normative requirement that political decisions also need to effectively
address policy problems, promote the general welfare of the citizens,
and protect minorities from the potential threat of the “tyranny of the
majority.”
institutional ambiguity Captures the relative openness of institutional rules
to more than just one interpretation.
joint-decision trap A concept introduced by Fritz Scharpf to analyze the
pathologies of joint decision-making. Because political decisions depend
on agreement on a large number of actors representing the federal and
sub-federal levels, joint decision-making tends to promote deadlock or
lowest common denominator solutions. As a consequence, joint decisionmaking loses legitimacy, but political actors are often unable to adopt a
different mode because exit options are rarely available.
self-rule versus shared rule Two different principles of federalism.
Self-rule emphasizes autonomy and the capacity of the federal and subfederal levels to make collective decisions independently of each other,
within their respective scope of jurisdiction. Shared rule emphasizes
interdependence and the need for collaboration between the federal
level and sub-federal units (vertically), as well as among sub-federal
units (horizontally). Both principles variously underpin the institutional
architecture of federal systems and inform political discourses about
federalism reforms.
state formation The historical process of constructing a modern territorial
sovereign state.
Self-Rule vs. Shared Rule: Canada as a Case of Comparative Federalism
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Jacobs, A., and K. Weaver. 2014. “When Policies Undo Themselves: SelfUndermining Feedback as a Source of Policy Change.” Governance 28,
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Johnson, K. 2007. Governing the American State: Congress and the New Federalism,
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Ladner, K. 2017. “Taking the Field: 50 Years of Indigenous Politics in the
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Laufer, H., and U. Münch. 2010. Das föderative System der Bundesrepublik
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Self-Rule vs. Shared Rule: Canada as a Case of Comparative Federalism
LeDuc, L., and J. Pammett. 2016. Dynasties and Interludes: Past and Present in
Canadian Electoral Politics. 2nd ed. Toronto: Dundurn Press.
Lehmbruch, G. 2000. Parteienwettbewerb im Bundesstaat. 3rd ed. Wiesbaden: VS
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———. 2019. “Sub-Federal State-Building and the Origins of Federalism:
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Broschek, and J. Sonnicksen, 369–85. London: Palgrave Macmillan.
Loughlin, J., J. Kincaid, and W. Swenden, eds. 2013. Routledge Handbook of
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Mahoney, J., and K. Thelen. 2010. “A Gradual Theory of Institutional
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University Press.
CHAPTER THREE
Quebec and the Canadian Federation
David Cameron
Evaluating Canadian federalism according to the three criteria of performance, effectiveness, and legitimacy is a challenging exercise; the
judgments inevitably carry a good dose of subjectivity, depending on the
perspective and frame of reference one brings to bear on the subject.
In the midst of the bloody American Civil War, it would have been hard
to argue that American federalism was a success. Austrian federalism
would have been hard to discover and applaud in 1938–45, when Nazi
Germany took over the country and incorporated it into the Third Reich.
So when, in the life of a country, you make your assessment is important.
But there is also the question of what you are assessing. What is
success and how will you recognize it? Is it simple survival, endurance,
living from one year to another? Or is it meeting the purposes for which
the federation was created in the first place? Is it the capacity of that
political community to suppress violence and unmanageable conflict?
To act as a barrier to tyranny? Or is it the measures many federalism
scholars often use – the fostering of local experimentation, the alleged
fact that the states or regions in a federal system are schools for democracy, and federalism’s capacity to bring government closer to the people?
Is it simply good government? Or, finally, is it a federation’s apparent
utility in managing ethno-cultural, religious, and other forms of diversity
within the country?
Questions of this magnitude arise when one is seeking to evaluate the
Canadian federation in relation to Quebec and Canada’s francophone
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population, because French-English relations go to the existential heart
of the Canadian political community. How you assess Canada’s performance in this domain depends radically on your foundational values and
preferences. Lord Durham would no doubt have judged the evolution
of the country on the basis of whether it was leading effectively to the
assimilation of French Canadians into English-speaking North America
(Durham, 1982; Cameron, 1990). John A. Macdonald would have assessed
the issue differently; to the extent that Quebec and French Canada did
not get in the way of building a strong national (meaning Canadian)
government and a strong national economy, he would have pronounced
the arrangements successful (Ajzenstat et al., 2003). A.A. Dorion, however,
as one of the most eloquent exponents of the French-Canadian view in
the Confederation debates, took a very different position; the purpose
of the new federal arrangement, and the single most important criterion
of its success, would be the degree to which it protected the survival of
French Canada (Waite, 1963).
Evaluative differences almost as great exist today, although few
contemporary Canadians would seriously adhere to the Durham
view. Nevertheless, the assessment of the performance, effectiveness,
and legitimacy of the Canadian federation as it relates to Quebec engenders widely different opinions. Some – and I would place myself
in this camp – regard the operation of Canadian federalism vis-à-vis
Quebec as a success. Despite many failures, setbacks, and injustices,
the federal framework has permitted the francophone community
in Quebec not simply to survive, but to develop, to transform itself
according to its lights. French-speaking Canadians have used their
majority status in Quebec to shape the provincial government and
public policy very substantially to suit their needs, and Quebec as a
federal actor has profoundly influenced the character and operation
of Canadian federalism. What is more, with the Supreme Court’s judgment on the Secession Reference in 1998, Canadians now know that
the country rests ultimately on the consent of the people in its federal
units, and that it is possible for a province to secede constitutionally
from Confederation if there is a clear and authoritative withdrawal
of that consent.
A large number of Quebec citizens, and many, perhaps most, of the
Québécois political elite, on the other hand, would likely regard the
Quebec and the Canadian Federation
Canadian federal experience as deeply flawed, a story of continuing
failure so far as Quebec is concerned.1 The English-speaking majority
in Canada, on this view, has consistently used its power and control over
the federal government to ensure that its vital interests are protected,
and to resist the continuing efforts of members of the francophone
community to secure their rights, advance their interests, and establish
a standing in the federation that they themselves would recognize as
just and appropriate. Through the aggressive use of the spending power
and the passage of the 1982 Constitution, the federal government has
sought to trump the constitutional distribution of authority between it
and the provinces, centralizing power in Ottawa. Quebec is subject to
the 1982 Constitution, but not a consenting party to it, leading to the
perverse situation that the jurisdiction which, far more than any other,
pressed for constitutional reform is the only jurisdiction whose aspirations were not met.
There is no way that I know of to establish a federal balance sheet on
this matter that everyone could agree to. The differences are not rooted
in miscalculation, but in different worldviews. François Rocher (2009:
81) points out that “even the least attentive observer would note that the
interpretation of the evolution of Canadian federalism differs greatly
depending on the origin of the author.” And compelling evidence can
be advanced on both sides. Just as I would acknowledge that the fact that
Quebec has never signed on to the 1982 Constitution raises a question
about the legitimacy of Canada’s constitutional arrangements, so, I
imagine, would Québécois colleagues acknowledge that the experience
of French-speakers and of Quebec within Canada since Confederation
could have been a whole lot worse.
It is helpful to make these widely diverse understandings of the situation clear at the beginning of this chapter, so that the reader will have
a sense of the larger context within which the narrative is placed. It is,
then, not so much a matter of establishing an uncontested truth, as it
is a matter of appreciating the angle of vision from which one gazes on
the Canadian federal experience.
In what follows I suggest that there were a number of reasons why a
federal structure of government for Canada seemed – if not inevitable –
at least highly logical, and I argue that the role of French Canada and
Quebec was critical in establishing a vibrant federal system in this country.
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FEDERATIONS AND UNITARY STATES: THE LOGIC
OF FEDERAL GOVERNMENT IN CANADA
Federations are not at their inception the naturally emerging product
of long historical experience (as is, for example, the United Kingdom),
but “artificial” constructs, created by explicit agreement at a certain
historical moment. These political regimes are self-consciously willed
into being by an agreement or compact, usually a federal constitution, which establishes a new political order. If a political regime is
the product of a formal founding moment or social compact, then it
is possible to give reasons for why the deed was done. What are the
characteristic reasons for creating federal structures? Some of the
most obvious are
•
•
•
•
large size of the territory;
defence and common security;
creation of a larger, stronger economic union;
the accommodation of history, tradition, and local loyalties as new
states are formed;
• the accommodation of significant, territorially concentrated ethnic,
cultural, linguistic, or religious differences in existing states; and
• the protection of liberty by the dispersion and limiting of state
power.
In the case of Canada in 1867, two of the key reasons that several of
the colonies of British North America chose to establish a new political
association were, first, the need to create a strong, common security zone
for all the colonies, faced with a retreating Britain and a powerful and
bellicose American North, flushed with its recent victory over the South
in the Civil War, and, second, the desire to create an integrated economy
and transportation system in the top half of North America, and to settle,
develop, and control the central and western part of the continent north
of the 49th parallel. These were reasons to form a new, larger political
association, but they were not, in themselves, reasons for federalism; in
principle, a new, large unitary state would have done these tasks just as
well or better, which is in fact what John A. Macdonald believed.
However, a unitary state was not in the cards for a number of reasons.
One obvious factor was the sheer size of the territory under consideration,
Quebec and the Canadian Federation
particularly given the available communications technologies of the
day. The idea that, in the huge territory of British North America, a
single, unitary state could effectively perform all the necessary duties
of an emergent modern democratic state was not plausible; dispersing
the powers and responsibilities of the state in a decentralized form of
government made good sense.
Equally important were two elements in the socio-political situation
confronting the founders at the time of Confederation. British North
Americans in large numbers felt a strong loyalty to their own colonial
governments and to the political communities of which they were already
members. They were not prepared to abandon these local governments
in favour of an untried experiment in a new, larger, and more distant
political realm. The strength of local loyalties and the suspicion of the
new arrangements can be seen in the fact that two of the colonies that
had been party to the discussions declined to join Confederation in
1867; Prince Edward Island did not enter Confederation until 1873,
and Newfoundland stood apart until 1949. Further evidence of local
loyalty and suspicion of the new arrangements may be seen in the fact
that one of the original signatories, Nova Scotia, had second thoughts
soon after coming on board and tried unsuccessfully to get out of the
deal to which it had just signed on.
The second socio-political element was French Canada. It would be
no exaggeration to say that a larger political association that failed to
make substantial provision for the protection and self-government of the
French community in North America would have been impossible. The
preservation of a coherent French community and the re-establishment
of a significant capacity for that community to govern itself after the
experience of the United Province of Canada were unconditional objectives during the Confederation debates.
That covers five of the items on our list above – size, security, the
economy, local loyalties, and ethno-cultural diversity. The sixth – the
protection of liberty – was not really a concern for the colonial politicians
who put the Confederation bargain together. Britain’s North American
colonies had all been granted responsible government by the time the
discussion of these new arrangements occurred. There was simply an
assumption that the benefits of self-government and the protection of
liberties that the colonial societies were enjoying would be carried forward
into whatever new institutional framework was created.
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The two spoilers, then – the two requirements that absolutely had to
be met if the new Canadian association were to be accomplished – were
the preservation of the colonial units and their governance capacity, and
the preservation and self-government of French Canada: both drove the
Fathers of Confederation to federalism. It would be difficult to say that one
was more essential than the other; both were necessary for the Confederation bargain to be consummated, and from then on, both echo through
the Canadian federal story. Our focus in this chapter, however, is on the
place of French Canada and Quebec in the Canadian federal system.
FEDERAL PRESSURES BEFORE FEDERALISM:
THE FRENCH FACT PRIOR TO 1867
The association of distinct communities, then, is a principle buried deep
in our history. The encounter of European settler societies with Indigenous communities and governments brought two radically different
civilizations in contact with one another. Until the power of Indigenous
people was reduced, the British Crown took care to recognize and treat
Indigenous communities as pre-existing autonomous entities. The federalizing potential of this reality was submerged for well over a century,
not to rise again until the latter half of the twentieth century.
The French were the first to confront this challenge in what was
ultimately to become British North America. The arrival of French explorers and settlers in the sixteenth and seventeenth centuries raised the
question of intercultural, and indeed, inter-civilizational, relationships.
The English inherited the issue when they assumed control of this part
of North America in 1759, but they faced another, even more fateful,
challenge: how were they to deal with the 65,000-strong French community they encountered on the banks of the St. Lawrence? Acadian-style
expulsion proved not to be an option; forced integration or assimilation
was not feasible, and – for some of the early imperial representatives –
not desirable. Accommodation in some form or another was the chief
remaining alternative.
It would be wrong to leave the impression that this was a clear policy
choice, taken self-consciously at one point in time, after careful discussion
and analysis in Great Britain’s Whitehall. The choice was made in fits
and starts over decades, largely by dint of geopolitical events to which
Quebec and the Canadian Federation
the British imperial authorities had to respond. A policy direction could
be set in Whitehall, but it had to be implemented a couple of thousand
miles across the sea in British North America, and both distance and
local exigencies offered policy space to local British officials in North
America to adapt policy and develop actual arrangements that could be
implemented in the practical circumstances they faced.
One can get a sense of the movement of policy in the early years by
reviewing some of the critical documents of the period. The Royal Proclamation of 1763 enunciated the basis on which relations with Indigenous
peoples would be carried on; it sought to limit the westward expansion
of the American colonies; it provided for representative institutions; and
it outlined a policy of assimilation for the French who had stayed on in
British North America after the Conquest or Cession. The Quebec Act
of 1774 has often been called the charter of French Canada. Passed in
anticipation of the pending American Revolution of 1775–81, the Quebec
Act offered French Canada, and especially its elites, much of what they
sought: toleration of French Canada’s way of life, the establishment of
the Roman Catholic Church and its power to collect tithes, a special oath
to permit Catholics to hold civil office, an acceptance of the seigneurial
land holding system, and recognition of the French civil law.
The Constitutional Act, passed in 1791 after the American Revolution
had successfully delivered independence to the United States, recognized
the loss of territory to the US, and attempted to cope with the heavy influx
of Loyalist immigration to British North America by dividing Quebec
into Upper and Lower Canada, implicitly acknowledging Lower Canada
as the homeland of the French Canadians. It retained French civil law
and the establishment of the Roman Catholic Church in Lower Canada,
and supported the introduction of representative government in both
Canadas, with French Canadians enjoying political rights to vote and
run for office in the Lower Canada Assembly.
The Durham Report of 1839, prepared in the aftermath of the 1837
rebellions in Upper and Lower Canada, proposed a return to the assimilation strategy of earlier years. Dismissing French Canadians as an
“uninstructed, inactive, unprogressive people,” Lord Durham believed
North America belonged to the English, that “great race which must,
in the lapse of no long period of time, be predominant over the whole
North American Continent” (Durham, 1982: 27, 146). Durham believed
that by reuniting Upper and Lower Canada in a new United Province of
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Canada, the continuous immigration of English-speaking peoples would
swamp the French Canadians over time and lead to their assimilation
into English-speaking North America. He also proposed the introduction
of responsible government, making the British representative subject
to the will of the colonial assembly, bringing a substantial measure of
self-government to the British colony.
The British government proceeded with part of Durham’s proposals,
passing the Act of Union in 1840, which created the United Province of
Canada, but declined to institute responsible government, which did not
come to the British North American colonies until 1848. English and
French Canadians worked within the United Province system until it was
dismantled by Confederation in 1867, but it did not have the hoped-for
effect. Instead of leading to the assimilation of French Canadians into an
English majoritarian political system, leaders from the two communities
turned this expectation on its head, paying scrupulous attention to the
needs and prerogatives of the two linguistic communities, and instituting
a practice of double majorities and other consociational arrangements
for the conduct of the business of the province. What was meant to lead
to assimilation in reality confirmed the significant dualism of Canadian
society, and the need to find means to accommodate that dualism in
our national politics.
By the time the Confederation bargain was negotiated in the mid-1860s,
the continued existence of the French Catholic community was a given
and an unquestioned fact; finding the means of accommodating that fact
appropriately in the new constitutional arrangements was one of the key
challenges of the negotiations that led to the establishment of Canada.
CONFEDERATION: IRRESOLUTION AT THE HEART
OF THE 1867 DEAL
The British North America Act, now known as the Constitution Act, 1867,
responds to this central element of Canadian diversity in a number of ways:
• It established Canada as a federation, thus responding to both the
regional and the binational features of British North America.
• It severed the United Province of Canada, which had amalgamated
Upper and Lower Canada in 1840, thereby giving provincial status,
Quebec and the Canadian Federation
•
•
•
•
with government power and constitutionally defined jurisdictions,
to Quebec, where the vast majority of French Canadians lived.
Thus, Confederation’s country-building aspiration had an element
of separation embedded in it.
The jurisdictions allocated to provinces – and therefore to Quebec –
were the matters of greatest concern to French Canadians seeking
to protect and control their own community: hospitals, charities,
education, municipal institutions, the solemnization of marriage,
and property and civil rights in the province.
The French system of civil law was recognized in Quebec for civil
matters.
The French and English languages were accorded a limited degree
of constitutional status. Either could (and still can) be used in the
debates and proceedings of the Parliament of Canada and the Legislature of Quebec, and in the courts of the two jurisdictions.
The Catholic and Protestant school systems existing at the time of
Confederation or established afterwards were given constitutional
protection.
Unresolved at the country’s inception, however, and still unresolved
today, are two competing conceptions of Canada’s federal association and
the meaning of 1867. Is Confederation best understood as a constitutional
agreement among the four original provinces, now grown to ten, or as a
compact between two founding peoples? An act or a pact (Stanley, 1956;
Canada, Royal Commission on Bilingualism and Biculturalism, 1965;
Paquin, 1999)? Most English-speaking Canadians would incline to the
first view; the vast majority of French-speaking Canadians would argue
it is the second. The Fathers of Confederation were able to agree on
the formal terms of the new political association, but not on its deeper
meaning. Each side was able to preserve its own view of itself and its own
view of the federal association. Were there two peoples coming together
in an historic compact, each pre-existing and each pursuing the protection and advancement of its own identity in the new configuration? Or
was it an act bringing into a new association a group of British colonies,
populated predominantly by British colonists, where the question of
people or peoples did not seriously enter into the equation?
Thus was created the greatest fault line in the Canadian political order –
a disagreement about the very meaning of Canada, which lay, for the
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most part unacknowledged, at the deepest foundation of the Canadian
state. Both sides, for the sake of getting agreement and creating the new
political regime, came to terms on what they could agree on and were
complicit in burying this cleavage so far as possible beneath the terrain
of normal political discourse.
The issue of the constitutive status of Canadian federalism was not
resolved, therefore, but covered over in the 1867 Constitution. The
Canadian federation is formally an association of provinces, not a union of peoples, but there was enough of the latter in the agreement to
permit Quebec to participate and to allow that other conception of the
association to establish itself and endure. Far from disappearing or being rendered powerless by inattention, this cleavage has had the power
to unleash political earthquakes and to shake the very foundations of
the constitutional order. And it has done so, regularly, in our history.
Canada’s moments of deepest conflict have invariably led Canadians to
the edge of this existential chasm between political worldviews. The Riel
Rebellions of 1869 and 1885, the Manitoba Schools Crisis in the latter
part of the nineteenth century, the Conscription Crises in World War
I and World War II – all have drawn their destructive energy from this
underlying and virtually unbridgeable cleavage. The terms of reference
of Quebec’s renowned Tremblay Commission, established by Premier
Maurice Duplessis in 1953, left no doubt about the Quebec government’s
view of the salience of this issue nor about the government’s position:
the first article of the Commission’s terms of reference states that “the
Canadian confederation, born of an agreement between the four pioneer
provinces, is first and above all a pact of honour between the two great
races which founded it” (Kwavnick, 1973: 1). As we shall see below, that
divergence of view continues unabated, although in a modern idiom.
Until the 1960s there was a further ambiguity. On the francophone
side of the equation, how was one to understand the French fact in
Canada? Was it to be understood as French Canadians wherever they
found themselves across the country, or as Quebec (or, yet again, the
French in Quebec)? Quebec was always recognized as the foyer principal of
French Canada, but the other, more expansive view included as well the
francophones of New Brunswick, who today compose around one-third
of that province’s population, the 500,000 or so Franco-Ontariens, and
the smaller groups scattered elsewhere in the country; on this more
expansive view, these people were understood as integral parts of the
Quebec and the Canadian Federation
French-Canadian community in North America. For much of our political
existence, both conceptualizations of francophone identity had currency
and were a vital part of public debate. The status and prospects of French
Canada writ large was clearly at the centre of the nineteenth-century Riel
and Schools controversies in Manitoba: would the western part of the
country be French and English, or was it to be the preserve of English
speakers? At one point this was thought by many French Canadians to
be an open question, although by the end of the nineteenth century,
English Canadians in the other provinces had made it pretty clear that
the west would be anglophone (Heintzman, 1971).
This ambiguity over how to understand the French fact in Canada was
dissolved during the 1960s with the fragmentation and provincialization
of French Canada. French Canadians in Quebec adopted a statist nationalism very different in its character and implications from the more
religiously based French-Canadian nationalism of the previous century.
Their central preoccupation became the fortunes of the French-speaking
community within Quebec–the Québécois; this view undermined the
broader multi-province understanding of French Canada. Over time,
the French minorities in the other provinces drew the lesson from the
new situation and began to redefine themselves in provincial terms. The
Acadiens of New Brunswick had thought of themselves in distinctive
terms for some time, but the Franco-Ontariens, Franco-Manitobains,
Fransaskois, and so on, realizing that they could no longer rely on the
leadership of the French Canadians in Quebec for their survival, came
to understand that they would have to deal directly with their own provincial governments, often with the assistance of a concerned federal
government. How did this shift in perspective and positioning occur?
FRENCH CANADA AND QUEBEC IN THE
FEDERATION PRIOR TO 1960
Much has been written about the nature of French Canada and Quebec
in the generations after Confederation. Over time, a defining myth grew
up in French Canada depicting the character of that community and the
way in which it saw itself differentiated from the rest of North American
society. French Canada was understood to be defined by its Catholicism; its
rural, agrarian economy and social structure; and the French language.2
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Life was thought to revolve around the parish church, with the church
rivaling the state as the central institution of French Canada.
The myth was not without substance, but the reality of French Canada
was always richer and more diverse than allowed for (McRoberts, 1993:
chaps. 2–4). Yet the myth was powerful in shaping the attitudes, assumptions, and behaviour of people both within and outside Quebec. The
virtue of the federal system was that it created a subnational government
with special responsibility for the protection of the heart of the French
Canadian community in North America, the territory where a decisive
majority of French Canadians lived. The job of that government was to
help preserve a way of life and to shield the community from the corrosive impact of a huge and growing English majority in North America.
The Tremblay Report (Quebec, Commission royale d’enquête sur les
problèmes constitutionnels, 1956) was the most elaborate and philosophically sophisticated statement of this general worldview and remains
influential today (Laforest, 2010). Yet it described a society that was
already in the process of disappearing. By the time the Tremblay Commissioners reported, Quebec was long since more urban than rural, more
industrial than agricultural. The Quebec provincial government under
Premier Maurice Duplessis functioned largely within the framework of
this myth and did relatively little to help Quebec and Quebeckers adjust
to the modern realities with which their society was increasingly infused.
What role did Quebec play in the evolution of the Canadian federal
system during this period? It was something like a sheet anchor that
imposed a constraint or a drag on what might otherwise have been a
powerful drift in the development of the federal system. The existence
of the Province of Quebec in Canada’s federal order meant that there
was a federal constraint on English-speaking Canada, limiting the extent
to which the processes of modernization and the centralizing effects of
world wars and economic depression were able to trump the forces of
decentralization in the country.3
THE QUIET REVOLUTION: INTERGOVERNMENTAL
RELATIONS TRANSFORMED
With the death of Duplessis in 1959 and the untimely demise of his
successor, Paul Sauvé, in 1960, the rudderless Union Nationale was
Quebec and the Canadian Federation
defeated by the Quebec Liberals in the 1960 provincial election, and
the Quiet Revolution began. Much has been written about this period
of Quebec’s history, and some have argued that it does not really qualify
as a “revolution,” quiet or noisy, because, for example, there were no
radical structural changes in the institutions and governing processes of
the province (McRoberts, 1993: chap. 5). In fact the transformative forces
of urbanization and industrialization had been working their magic in
Quebec for generations; Quebec society had been changing throughout
the earlier part of the twentieth century, as had the rest of Canada. Like
elsewhere, French Canadians were moving off the farms and villages of
the provinces into the factory towns and cities of the region; some were
moving right out of Quebec, to states south of the border (Brault, 1986).
The Quiet Revolution may be best understood as a period of ideological and political, rather than material, transformation, in which the
conservative nationalism of the previous era was rapidly replaced by a
positive, liberal nationalism; the provincial state assumed pride of place
in the institutions of the French-speaking community, quickly pushing
the Catholic Church into the background; the government assumed
responsibility for education and for establishing some of the basic institutions of the modern welfare state. It became as well far more active in
the development of the provincial economy. It was, therefore, not simply
a sudden shift at the level of ideology, but a period of significant policy
and institutional innovation as well. There were significant changes at
the level of society, too. Perhaps the most eloquent testimony of this
is found in the precipitous decline in Quebec’s birthrate. As Kenneth
McRoberts points out, in 1956 Quebec’s fertility rate was close to four
children per couple. “Yet, over the years 1959–72, it plummeted 56 per
cent, falling below the rate of 2.1 needed to maintain population size”
(McRoberts, 1993: 139). In a few short years, Quebec’s birthrate fell
from the highest to the lowest in Canada.4 This extraordinary decline
symbolizes a remarkably rapid shift in social norms and practices within
the French-speaking community, as well as the breathtaking decline in
the role of the Catholic Church in the life of Quebec.
The impact of the Quiet Revolution on the federal government and
intergovernmental relations was immediate. Where traditionally Quebec had adopted a protective posture in intergovernmental relations,
seeking to defend its position and its people’s way of life, it became in
the 1960s an agenda-setting government, demanding changes in the way
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in which the federation worked and actively pursuing policy goals that
would invest Quebec with a greater capacity to determine its own social
and economic development. The challenge to Canadian federalism was
of two sorts: the quest for increased autonomy and greater jurisdictional
control for Quebec; and the demand for greater fiscal resources, both
through a decentralization of tax space from Ottawa to the province
and increased federal fiscal transfers. Quebec’s desire for greater tax
room was shared by a number of provinces seeking to reverse the fiscal
centralization that had occurred during the war years, but, unlike the
other provinces, it placed its demands in the context of nation-building.
Faced with a reformist government in Ottawa under Lester Pearson
(1963–8), Premier Jean Lesage and his colleagues acted adroitly on the
intergovernmental front to ensure that progressive social and economic
policy was executed within Quebec by Quebec, rather than by the federal
government. A good example of this can be seen in Ottawa’s effort to
establish a national pension plan. Through stormy intergovernmental
negotiations, Quebec succeeded in opting out of the Canadian plan,
introducing its own version and using the capital it generated to establish the Caisse de dépôt et placement, which became in time a powerful
provincial investment and economic development vehicle. The Quebec
government’s reformist zeal was demonstrated by the nationalization of
a number of private hydroelectric companies in 1962 and their incorporation into Hydro Quebec.
The period of the Quiet Revolution, from 1960 to around 1966,
marked a profound shift in Quebec’s self-conception, its development
strategies, and thus its approach to federalism and intergovernmental
relations. Quebeckers increasingly wanted to see themselves as members
of a modern national community and expected their government to
help them build a set of institutions and the social, educational, and
economic capacities appropriate to a modern state – but en français. The
government’s desire to respond and to find the resources needed to do
the job set it on a collision course with Ottawa. Quebec’s goals produced
not only acute intergovernmental conflict but also a deepening cleavage
in identities and in perceptions of the roles of the two orders of government. Earlier French-Canadian nationalists had been inclined to argue
that the problem was that the constitutional order was not respected by
Ottawa; increasingly, Québécois nationalists contended that the problem
was that the Constitution itself needed to be transformed.
Quebec and the Canadian Federation
THIRTY YEARS OF TRAVAIL: 1965–1995
The Quiet Revolution marked the onset of an extended period of
nation-building in Quebec, which ripened into demands for constitutional
reform and ultimately spawned a powerful sovereignist movement. How
was the nation understood? The essentially binary view of the federation did not change, but the idiom through which it was expressed was
different, as was the sense of collective identity. French Canadians in
Quebec identified themselves as Québécois, and the distinctive features
of their national community narrowed and sharpened. Where once
the dimensions of identity were understood to be multiple – French,
Catholic, rural – they were reduced effectively to one. The Québécois
were defined by language, by the singular fact that they spoke French.
In his 1968 manifesto for sovereignty-association, An Option for Quebec,
René Lévesque wrote: “At the core of this [Québécois] personality is the
fact that we speak French. Everything else depends on this one essential
element and follows from it or leads us infallibly back to it” (Lévesque,
1968: 4). This reshaping of identity was inevitable, once Quebeckers
became more like the rest of North American society in their lifestyle
and aspirations, and the markers of religion and rurality were discarded.
Until the 1960s, no Quebec government had established a language
policy; it was not seen to be necessary (Gagnon and Montcalm, 1990).
By the end of the decade, this had changed; a succession of governments
passed language legislation, culminating in the Parti Québécois Bill 101
in 1977. Language has been a central policy preoccupation ever since.
The cleavage noted earlier resurfaced with a bang at the start of this
long period of nation-building, but it was different because the perception of national identity and the economic and political circumstances
were different. French-speaking Canadians were still inclined to view
the federal relationship in dualistic or binary terms, at least so far as the
principled meaning of Confederation was concerned, if not in constitutional fact. A central part of their constitutional ambitions was in fact
to bring the terms of the foundational document into line with reality
as they perceived it. The two-nations theory, special status for Quebec,
the distinct-society concept, the notion of sovereignty-association – these
ideas were all ways of representing the constitutional implications of the
French fact within the context of the binary relationship that, in the
view of the Québécois, lay at the heart of the Confederation bargain.
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These concepts were at bottom constitutional in character; they implied
a particular understanding of the Canadian federal system, not just of
Quebec, and they fostered a different style of intergovernmental relations.
Much of the next thirty years of intergovernmental discussion was
devoted to an often-heated debate about the validity of these concepts
and whether or not they were to receive constitutional expression. Most
of the normal intergovernmental business of the federation – relating,
for example, to fiscal arrangements; federal support of healthcare, social
assistance, and higher education; pension policy; the free trade agreements;
international relations; and so forth – was mediated through Quebec’s
nation-building aspirations. The pressure for change was relentless, no
matter what party or political leader was in office in Quebec City. For
three decades Quebec put Canada to the question in an unrelenting
effort to transform the relationship.
The debate was played out on several fronts. First of all, there was
a vigorous and often rancorous discussion “within the family” – both
among Quebeckers themselves and their political leaders within the
province, and between francophone political elites in Quebec City
and Ottawa. At times it seemed as if the rest of the country were onlookers, so intense was the contestation between and among francophone citizens and their political leaders. Pierre Elliott Trudeau led
the federal Liberal Party during much of this period (1968–79 and
1980–4), and the conflict between him and René Lévesque invested
the discussion about Quebec’s place within or outside Canada with a
highly personal dimension, most in evidence publicly during the 1980
referendum campaign and in the constitutional talks that followed. This
was the heyday of executive federalism and numerous first ministers’
conferences – many of them televised – convened to tackle the large
questions of the day.
These conferences became the forum within which not just the conflict between Ottawa and Quebec City could be played out, but also the
place where the differences between Quebec and the rest of the country, and latterly between many of the other provinces and the federal
government, were given expression, often personified by compelling
provincial premiers. Intergovernmental relations at this time tended to
be both more public, more aggressively conflictual, and more obviously
“zero-sum” in character. The stakes were seen to be higher than usual,
having to do with collective identities, membership in the federation, and
Quebec and the Canadian Federation
the “architectural” features of the Canadian political community, such
as constitutional reform and control over energy policy (Russell, 2004).
Québécois saw themselves as a nation, and there was a tendency within
French-speaking Canada to view the other partner in similar terms. Just as
there was a French-speaking national community, so, it was believed, there
was the equivalent in English-speaking Canada – a national community
that lay behind the superstructure of the other provincial governments,
and that had the singular advantage of being able to count on, not only
its many provincial governments, but the federal government as well,
to see to its interests. That was not for the most part how the rest of the
country understood itself, and it seemed less and less true as the 1960s
and 1970s wore on.
It was not just Quebec but the rest of the country that was changing,
and many of the other provinces during this period embarked on a
process of province-building, seeking to strengthen provincial institutions and policy capacity, and challenging the federal government for
control and resources. Some of this was learned from observing Quebec.
Unintentionally, Quebec broke trail for the other provinces and inadvertently encouraged them to pursue their own process of redefinition and
regional development. The hierarchical model of the federal–provincial
relationship was gradually set aside by many of the provinces and replaced with a more egalitarian and less paternalistic assumption about
the respective roles of the federal and provincial governments. This
change helped to further fragment whatever understanding of an
English-Canadian national community there may have been and reinforced the belief that the Canadian federation was an association of
provinces, not a partnership of two nations.
The thirty years of travail or mega-constitutional politics (Russell, 2004)
are bracketed by Quebec’s Quiet Revolution at the beginning and the
second Quebec referendum on sovereignty at the end. In between, there
was the passage of Canada’s Official Languages Act, the October Crisis,
the election of the PQ, the passage of Bill 101, the first referendum on
sovereignty-association in 1980, the debate over the Constitution and its
patriation in 1982 with the introduction of an amending formula and
a Charter of Rights and Freedoms, the negotiation of the Meech Lake
Accord in 1987 and its demise in 1990, the intergovernmental agreement on the Charlottetown Accord and its referendum defeat in 1993,
and the razor-thin victory for the federalist forces in the second Quebec
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referendum in 1995. All of these bore directly on the effort to find a
way of accommodating the new Quebec in the Canadian federation.
Alongside these, there were major intergovernmental issues, such as the
successive adjustment of the fiscal arrangements between the federal
government and the provinces and the establishment of some of the
key components of the Canadian welfare state (pensions; support for
health, post-secondary education, and social assistance; the adjustment
of employment insurance programs), the National Energy Program, and
the free trade agreements. Each issue had Quebec-sensitive dimensions to
it, and all issues involved Quebec directly as a participating government
in the federal–provincial forums that tackled them.
These were unusually stressful and significant decades for the Canadian
federation and for intergovernmental affairs. Why did Canada experience
these acute federal and national-unity pressures? Why did they burst out
when they did and in the way they did? It is not every day that the very
existence of a modern democratic state is called into question.
I would suggest that three factors help us in some measure to understand what brought on these existential pressures. The first and most
obvious is the rapid transformation of Quebec and Quebec society, which
put Canada dramatically to the test. What might be understood as the
increasingly acute contradictions between what was happening on the
ground in French Canada, socially and economically, and the formal
belief system that framed its culture came to a head after the death of
Duplessis, unleashing a wave of political reform and attitudinal change. It
soon became apparent that Quebeckers increasingly wanted many of the
same things as their English-speaking compatriots, but they wanted them
in a French-language universe. Whereas the divergence of aspirations
in the previous era had reduced head-to-head competition between the
two linguistic communities, Quebec and French Quebeckers after the
Quiet Revolution began to share the same ambitions as other Canadians –
educational achievement, economic and commercial opportunity, a
secular, urban life, the nuclear family. Prior to the Quiet Revolution,
the two societies were well positioned to minimize conflict except in
moments of crisis; each community thought of itself as espousing different values and pursuing distinguishable social and economic objectives.
In normal times, members from each side could get on with their lives
without directly confronting one another, because the relationship was
not understood to be directly competitive. This was always less true in
Quebec and the Canadian Federation
practical reality than it was at the level of myth and opinion, but there
was, nevertheless, a significant shift with the transformation of Quebec
starting in the 1960s. Now, values and aspirations began to converge, with
the result that there was more direct competition between members of
the two groups; if francophones in Quebec were to fulfill their ambitions,
anglophones would need to give way, linguistically and economically.
The stress arising from change was felt at the federal level as well.
French-speaking Canadians challenged their subordinate status in
the country’s common institutions, and demanded its correction – in
Parliament and in the cabinet, in the public service, and in the general
operations and agencies of the federal government. A new flag for Canada
was adopted in 1965, as part of the effort to respond to these pressures,
just as the country’s currency had been “bilingualized” about a decade
before; the symbolic apparatus of the state was gradually altered, with
the removal over time of outward manifestations of the British link and
their replacement with indigenous forms of representation.
The shift was most evident in the regulation of language. The Government of Canada, while struggling to block or limit Quebec’s drive for
special status, also attempted to broaden the recognition of the French
fact, not only in Quebec, but across Canada. The Official Languages Act,
passed under the leadership of then Prime Minister Trudeau in 1969,
made French and English official languages for all matters pertaining
to the institutions of the Parliament and Government of Canada, and
provided for services to citizens in either official language, where the
numbers warranted. In addition, the federal government began supporting
second-language and minority-language education in the provinces across
the country, with the hope that increasing numbers of young Canadians
would grow up with a reasonable knowledge of the second language.
In Quebec, language rapidly took centre stage politically. The disappearance of other markers of identity increased the sense that the residual, thinned-down identity was fragile and at risk. Given that the French
language had become the critical identifier of the Québécois, its health
and status became an obsessive preoccupation of opinion leaders and
politicians. A draft of Bill 101 was the first piece of legislation the newly
elected Parti Québécois placed before the National Assembly in 1977
(Fraser, 1984: 91–112). French also assumed a central place in Quebec’s
nation-building strategy, because it would prove to be the instrument
for altering the relationship and relative status of the two language
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communities within the province. The various pieces of language legislation, passed over a decade from 1969 to 1977, were designed to do
several things. Most importantly, they aimed to ensure that immigrants
to Quebec would integrate themselves into the francophone community,
not the anglophone.5 This became critical as the French-speaking Canadian birthrate plummeted; it was believed that, depending on whether
immigrants integrated into the French-language or the English-language
community in Quebec, immigration would either be a boon to the survival
of the Québécois in North America or the instrument of their collective
demise. The language legislation was also designed to guarantee that
the language of business and commercial life, and, more generally, the
normal language of the province, would be French. The minorisation of
the English-speaking community in Quebec was necessary if French were
to become the dominant language in its foyer principal in North America.
A second factor that explains why the country entered into this difficult
period as and when it did is the evolution of English-speaking society
in Canada. In the decades following World War II, English-speaking
Canada was changing, too, partly as a result of the general post-war
modernization processes most societies were experiencing, and, more
specifically, because of a reform of immigration policy in the 1960s to
allow easier access for immigrants from Asia, Africa, Latin America, and
the Caribbean. This reform sharply increased the racial, cultural, linguistic, and religious diversity of Canada’s immigrants and contributed
to the reconceptualization of Canada from a British North American
community with a large French minority to a multicultural society composed of two major language groups. Thus, while Quebec was rapidly
and demonstrably changing, the rest of the country was going through
its own even quieter quiet revolution, partly in response to the Quebec
challenge and partly as a result of the significantly different immigration
patterns that began to transform Canada’s cities. Some of the stress on the
federation arose, then, out of the effort to accommodate and reconcile
these two overlapping but distinctive processes of change.
A third factor in explaining the charged character of our politics
and intergovernmental relations during much of this period had to do
with leadership. In René Lévesque, the sovereignty movement found a
political leader who was trusted and held in high regard by the Quebec
people, enabling the Parti Québécois over time to become a highly
successful political party and provincial government. Lévesque offered
Quebec and the Canadian Federation
reassurance to the many people who thought at the time that the sovereignty of Quebec was a radical and dangerous proposition. Fatefully, he
was confronted in Ottawa with another Quebec politician who was highly
regarded and trusted, but who took a position aggressively contradictory
to that of Lévesque. Pierre Trudeau was the unusual sort of political
leader who argued his position from first principles and, at least on the
national question, wished to make things clear. Given his passionate
anti-nationalism, together with the fact that he was a French-speaking
Quebecker, it is no surprise that the debate over Quebec’s status took
on an air of even higher drama than it otherwise would have.
More generally, the fact that the majority of the key federal political
players during this whole period were Quebeckers made the debate,
among many other things, a passionate in-house struggle between
members of the Quebec family. The period starts with Lester Pearson
in charge in Ottawa (1963–8), and came to an end during Jean Chrétien’s rule (1993–2003). Quebeckers held the office of prime minister
for thirty-five of the forty years between 1963 and 2003. Consider how
different things might have been had Robert Stanfield defeated Pierre
Trudeau in the 1968 election. Instead of confrontation and internecine
contestation within the Quebec family, one would have had a continuation of the pragmatic, low-key, accommodative style that marked the
leadership of Lester Pearson; though none of us can say what the result
would have been, the tone would clearly have been very different from
that set by Trudeau. The importance of the conjunction of leadership
with circumstance and opportunity is often underestimated in assessing
the reasons for the unfolding of political events.
THE RETURN OF NORMAL POLITICS
Although it was not evident at the time, the 1995 Quebec referendum
on sovereignty marked a turning point in Canada’s long period of intergovernmental travail. The close referendum result might have suggested
that 1995 set the stage for the final contest between sovereignists and
federalists in Quebec. But, surprisingly, the outcome set the stage for
something very different: the gradual return of normal politics in Canada.
With the narrow defeat of the referendum, it was as if Quebeckers –
francophone and anglophone, sovereignist and federalist – had had
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enough. The heat went out of the nationalist debate, both within and
outside Quebec, and it appeared that Canadians – whether out of boredom, fatigue, or frustration – simply turned their minds to other things.
In Quebec, Lucien Bouchard, who had succeeded Jacques Parizeau as
premier of Quebec in January 1996, declared that he had no intention of
holding another referendum on sovereignty until “winning conditions”
presented themselves. None did prior to his retirement from politics in
March 2001 and the defeat of the PQ under Bernard Landry in 2003.
Not even the passage of the federal Clarity Act in 2000, in response
to the 1998 Supreme Court Reference on Secession (Schneiderman,
1999), was enough to deter the Québécois and other Canadians from
their determination to set aside the sturm und drang of high-wire constitutional politics for the pursuit of a quieter life. Citizens, it seemed, had
no stomach to continue the bruising national debate they had carried
on for the previous thirty-five years.
The politicians followed suit. The warriors of the national-unity
battles were replaced by politicians of less heroic stripe, who viewed
politics more prosaically as a means of regulating conflict and pursuing
common public purposes in a democratic society, and less as a glorious
field of conflict in which battles are lost and won before an anxious and
admiring audience of citizens.
The salience of summit federalism decreased dramatically, and intergovernmental relations returned to pretty much what they had been
historically: a game politicians play with one another, generally out of
the public eye. Federal–provincial disputes – whether about the fiscal
imbalance, equalization, or Ottawa’s transfers to the provinces to support
social programs – ceased to be heavily burdened with national-unity
implications, and began to look more like the normal, ongoing conflicts
that arise in any functioning federal system.
By the time Stephen Harper assumed office as the leader of a minority Conservative government in 2006, the shift to normal politics had
conclusively been made. In that year, consistent with what was then his
Quebec strategy, Harper brought a resolution to the House of Commons
recognizing Quebec as a nation within Canada. Despite the fact that he
sprang the idea on the opposition parties with only a few hours’ notice,
the resolution passed with massive support from all parties – 265 members
to 16. The resolution declared that “the Québécois form a nation within
a united Canada.” During the debate, the prime minister stated that the
Quebec and the Canadian Federation
rationale for the motion was simple: “Quebeckers want recognition, respect
and reconciliation ... they do not want another referendum” (House of
Commons, 2006, 2035). Three days later, Quebec’s National Assembly
in a vote of 107 to 0 recognized “the positive nature of the motion”
(Quebec National Assembly, 2006, 697–8). If there were any doubts that
Canadians had no wish to re-enter the national-unity fray, this initiative
surely put the matter to rest. In acknowledging that Quebec is a nation,
the House of Commons resolution – at least conceptually – went further
than granting special status to Quebec or recognizing it as a distinct society. While it is true that the recognition took the form of a parliamentary
resolution rather than a constitutional amendment, it was striking how
little public debate or reaction it occasioned, despite the federal minister
of intergovernmental affairs of the day resigning in protest.
A survey by the Mowat Centre, entitled Portraits 2017: A Fresh Look at
Public Opinion and Federalism, underlined this shift back to normal politics
(Parkin, Hartmann, and Alwani, 2017). Focusing on opinion in Ontario
and Quebec, it showed that the people in these two provinces shared
the same priorities for making the country better. Neither Ontarians
nor Quebeckers were noticeably dissatisfied with the current division of
powers between the two orders of government, and enlarging Quebec’s
jurisdiction at the expense of Ottawa was no longer a priority matter for
Quebeckers. Collaboration between the two orders of government was
positively regarded by people in both provinces, and there appeared
to be a common view in the two provinces that federal resources were
generally distributed fairly. The identity of Quebeckers was more strongly
associated with their province than was the case with Ontarians, and they
continue to hold a more decentralized orientation overall, but these
differences did not appear to lead to significantly different approaches
to the federation and its functioning.
Clearly, though, the return of normal politics does not mean the disappearance of conflict or the attenuation of diversity. The resounding
2018 defeat of Philippe Couillard’s Liberal Party in Quebec brought the
Coalition Avenir Québec (CAQ) into government in the province. Quebec’s traditional sovereignist party, the Parti Québécois, took a drubbing
in that provincial election. It lost twenty of the thirty seats it had held at
the previous election in 2014, mostly to the CAQ.
A strongly nationalist but non-sovereignist political party, the CAQ
has asserted Quebec’s distinctive identity in a number of ways, the most
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dramatic being Bill 21, An Act Respecting the Laicity of the State. Highly
popular within the province, this 2019 legislation prohibits a broad range
of public officials (those with coercive authority; Crown prosecutors,
government lawyers, and judges; and school principals and teachers)
from displaying religious symbols while they are on duty. It also requires
people receiving public services to uncover their faces for identification or
security purposes. The legislation invokes the notwithstanding provision
(section 33) of the Canadian Charter of Rights and Freedoms to exempt the
legislation from its provisions.
Bill 21 has attracted vigorous opposition both within and outside of
Quebec. It became an issue in the 2019 federal election campaign, with
the federal parties uncomfortably discussing whether the Government
of Canada should challenge the legislation. The federal election also
surprised many people with the resurgence of the Bloc Québécois,
once thought to be in its death throes. Led by a highly experienced
communicator, Yves-François Blanchet, the Bloc – sovereignist, but not
actively pursuing sovereignty – made an effective case to the Quebec
electorate that it was in their interest to have the Bloc in the federal
Parliament, single-mindedly focusing on the needs and aspirations of
Quebec. Buoyed by the weakness of the other parties, the Bloc increased
its parliamentary representation from ten to thirty-two seats, picking up
three Conservative, eight Liberal, and eleven NDP ridings. For those who
have observed the decades of struggle over the sovereignty of Quebec,
what is striking in these cases is that the pursuit of nationalism and the
protection of national identity are alive and well in Quebec, but the
aspiration for independence is not.
If the Quebec question has moved off the national political agenda,
what has taken its place? Nothing of equivalent magnitude or intensity,
but the main contemporary locus of conflict in the Canadian federation
has shifted westward, to western Canada, where the aspirations for natural resource development collide with climate concerns. At present,
climate change, pipeline politics, and Indigenous issues have moved to
the forefront, shaping both national politics and the politics and policy
debates within several provinces. The October 2019 federal election
underlined this. The debate about the federal carbon levy, which attracted fierce opposition from the premiers of Ontario, Saskatchewan,
and Alberta, was really a controversy about climate change and the
petroleum-based economy. The election results revealed a reawakening
Quebec and the Canadian Federation
of western alienation not seen for many years, but it also uncovered a
significant national majority in favour of serious public measures to
combat climate change.
CONCLUSION
Performance. Effectiveness. Legitimacy. How does one evaluate Canadian
federalism’s performance in relation to Quebec? How does one assess
Quebec’s contribution to Canadian federalism?
Let me take the second question first. How does one assess Quebec’s
contribution to Canadian federalism? If one regards the structure and
processes that compose governance in Canada to be in part a learning
system, then it may be said that a great deal of growth and democratic
learning has arisen out of the often frictional relationship between
the French and English in Canada. The experience of more than two
centuries of cross-cultural accommodation within the frame of a single
political order teaches people something about the political arts of compromise, tolerance, and respect for the position of the other. Painfully,
Canadians have learned that winner-take-all politics is not a recipe for
success or community amity north of the 49th parallel. We learn that
there are some social cleavages that cannot be overcome without doing
violence to one’s deepest values, but that they can only be lived with,
generation after generation. Our internationally recognized capacity
for multiculturalism and productive immigration, as well as our belated
efforts to make things right between Indigenous and other Canadians,
owe something to our experience of living within a political community
inhabited by two large linguistic and cultural groups.
Let me turn now from political culture to constitutional and political structure. Here Quebec’s contribution is somewhat clearer. In the
absence of French Canada and Quebec, our federal system would have
been very different. Earlier I described French Canada’s conservative,
reclusive nationalism prior to the 1960s as a kind of sheet anchor, restraining Canada from drifting more and more towards a centralized
federal system. From the 1960s to the 1990s, Quebec became much more
than simply a drag on the ambitions of the federal government, instead
directly challenging it and claiming – in many cases, successfully – that
political power and policy authority should flow away from Ottawa and
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towards Quebec. Indeed, it wanted an actual reconstitution of the system
along these more decentralized lines. For at least a hundred years until
the dawn of the twenty-first century, most of the dominant economic,
social, and political forces seemed to have favoured the increase and
concentration of power in central governments. One of the most powerful corrective mechanisms in federations, constantly making the case
for decentralization and the dispersion of power, has been territorially
concentrated ethno-cultural diversity. In this respect, Quebec has been
a faithful, steady counterweight to the forces of centralization in the
Canadian federation.
This line of reasoning doesn’t quite complete this very limited exercise in evaluation, because one would still have to sort out whether
constraining the forces of centralization in Canada is a good or a bad
thing. People are entitled to hold different opinions on the matter, but
it certainly seems to be the case that Quebec was instrumental in the
preservation of a vital, functioning federal system in Canada.
What of the first question? How does one evaluate the Canadian
federation’s performance in relation to Quebec? Has Canada’s federal
system been good for Quebec? Here it is necessary to emphasize once
again the fact that there are radically different opinions on this matter,
symbolized by the fact that the Parti Québécois and a good portion
of the Quebec population have wanted to wind up the federal experiment, while many other Quebeckers and a great majority in the rest of
Canada believe that that would be a disaster. In my view the Canadian
federation and political system have been good for Quebec, for French
Canadians, and for the Québécois. It has been the framework within
which French Canada has survived, within which it has changed, and
within which Quebec is now flourishing.6 Canadian federalism has largely
accommodated Quebec’s evolving conception of itself and its developing
expectations for self-government. Canada has not responded as fully or
as quickly to Quebec’s declared needs as many in Quebec would like,
but the country has listened and changed. The language barrier and the
social distance between the two societies remain in place, and, despite
efforts to increase second-language capacity, relatively few surmount it
comfortably, but this arguably is not a reasonable criterion of assessment
in a large, decentralized federal country, especially on a continent in
which the world’s lingua franca is dominant.7 Indeed, some degree of
linguistic separation may be beneficial to the preservation of Quebec’s
Quebec and the Canadian Federation
French-language society. On balance, then, I would say that Quebec has
benefited from its association with the rest of Canada. The Canadian
federal system has performed fairly effectively over the years in relation
to the Quebec question.
But what of legitimacy in the eyes of Quebeckers? Here there is a
serious question. All other provinces agreed to the passage of the 1982
constitutional amendments; Quebec did not. The Government of Quebec
and the National Assembly both opposed the passage of the Constitution Act. In the Quebec Veto Reference, the Supreme Court of Canada
unanimously held that Quebec did not possess a veto; given the fact that
nine provinces and the vast majority of the Canadian population plus the
federal government supported patriation, one could argue that the act
was not only legal, but legitimate. One can add, as Pierre Trudeau did,
that his Liberal government in Ottawa had recently been elected (1980),
winning seventy-four out of seventy-five seats in Quebec; its support of
the Constitution Act, therefore, must reflect the perceived legitimacy of
the amendments on the part of the province’s federal representatives.
But these arguments do not cut much ice with some Quebeckers,
and the reason why goes back to the competing conceptions of the
federal association that lie unresolved at the heart of Confederation. Is
it an association of provinces or of French and English peoples? If one
takes the latter view, and we have seen how widely accepted that view
is in French-speaking Canada, then the constitutional amendments
of 1982 are – even if formally legal – lacking in legitimacy in that they
proceeded despite the opposition of one of the country’s two founding
peoples (Laforest, 1992). And the voice of the people of Quebec speaks
through the National Assembly and the Government of Quebec, not
through Parliament and its Quebec representatives, even if the prime
minister is a Québécois.
You can accept that view of the country as valid or not, but it is difficult to deny that Quebec as a jurisdiction plus a proportion of the
French-speaking citizens of Canada have withheld recognition of the
patriation of Canada’s Constitution as a legitimate act. This is a deficiency
in our constitutional arrangements, which, were it possible, it would be
desirable to repair.8 While I share the view that reopening the constitutional file is inadvisable, I nevertheless am of the view that until this
situation is corrected – until Quebec consents to the 1982 Constitution –
there is something awry in our constitutional and federal arrangements.9
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NOTES
1 Public opinion polls consistently find a large minority of Québécois to
be in favour of the sovereignty of Quebec. According to Alain-G. Gagnon
(2009: 3): “As it is practiced in Canada, federalism has never been popular in Quebec. It is not that the Québécois are opposed to federalism in
itself but rather that they refuse to accept the way it is implemented by
Ottawa.”
2 Michel Brunet (1957) identifies three themes in traditional French-Canadian thinking: agriculturalism, anti-statism, and messianism.
3 This is not something that Quebec achieved all on its own. The local loyalties of other parts of the country also had a role to play. Oliver Mowat,
premier of Ontario from 1872 to 1896, was in fact the first defender of provincial rights, battling John A. Macdonald in a series of legal and political
disputes to enhance the power and authority of Ontario.
4 Jean Chrétien reflects this transformation. He was the eighteenth of nineteen children, nine of whom perished in infancy. He and Aline Chrétien
have three children, one of them adopted.
5 The Quebec concern with immigrant integration continues unabated;
witness the passage in 2019 of Bill 21, which forbids public servants in positions of authority from wearing religious symbols and requires persons
giving or receiving public services to do so with their faces uncovered.
6 It must be admitted, though, that the interplay since World War II of Quebec nationalism, urbanization, and federalism has made the position of
francophone minorities outside of Quebec more fragile.
7 Language Matters: How Canadian Voluntary Associations Manage French and
English (Cameron and Simeon, 2009) explores linguistic practices at the
level of civil society organizations and finds that bilingualism is a feature of
head offices and leadership actors, but not of members.
8 I have explored, with Jacqueline Krikorian, a possible way in which this issue might be tackled (Cameron and Krikorian, 2008).
9 I have argued elsewhere, however, that the legitimacy of a political order
rests on a broader foundation than a single act or event such as the passage
of the 1982 Constitution (Cameron, 2015).
GLOSSARY
Bill 101 The Charter of the French Language (Bill 101), passed by the Quebec
National Assembly in 1977, made French the official language of Quebec.
Its purpose was “to make French the language of government and the
law, as well as the normal and everyday language of work, instruction,
communication, commerce and business.”
Clarity Act The federal Clarity Act (2000) followed the findings of the 1998
Supreme Court Secession Reference opinion. It provided that the federal
government would not enter into negotiations with a province on the basis
Quebec and the Canadian Federation
of a referendum on secession unless the House of Commons determined
that the referendum question was clear and a clear majority of the
population of the province had voted in favour.
Conscription Crisis – World War I The first Conscription Crisis broke out
in 1917, when Prime Minister Borden passed legislation implementing
compulsory military service in Canada to assist in the recruitment of troops
to fight in Europe. Most French Canadians opposed the legislation while
most English Canadians favoured it.
Conscription Crisis – World War II Acutely aware of the divisive impact
of conscription in the previous war, Prime Minister Mackenzie King
pledged that there would be no conscription for overseas military service.
In response to strong public pressure from English Canada, King held a
plebiscite seeking to be released from the pledge. It passed, but 73 per
cent of Quebec voters voted against the proposal, while over 80 per cent
of voters in the other provinces voted in favour. King passed legislation
formally authorizing conscription if necessary.
Durham Report Lord Durham’s 1839 Report on the Affairs of British North
America, reporting on the 1837 Rebellions in Lower and Upper and
Canada, is best known in Canada for its severe comments on French
Canadians and their society, and its recommendation to consolidate Upper
and Lower Canada in a united province.
Manitoba Schools Crisis In 1890, Manitoba abolished French as an official
language in the province and withdrew public funding for separate
denominational schools, thereby effectively ending the English Protestant
and French Catholic school systems. These measures removed the
protections of the Manitoba Act of 1870, which had brought Manitoba
into Confederation. They deeply offended the French, Catholic minority
in the province and outraged opinion in Quebec, but Manitoba’s actions
were ultimately upheld by the highest court (then the British Judicial
Committee of the Privy Council).
Riel Rebellions The Métis leader, Louis Riel, led two rebellions in what
became Manitoba and Saskatchewan, opposing the settlement of
the Prairies by English-speaking easterners and the displacement of
Indigenous peoples. The Red River Rebellion occurred in 1869, and the
North West Rebellion took place in 1885.
sovereignty-association The central plank in the Parti Québécois platform
under René Lévesque was sovereignty-association, a scheme that called
for the independence of Quebec, linked to a negotiated political and
economic association with the rest of Canada.
Supreme Court Reference on Secession In response to the question of
whether Quebec had the right to unilaterally declare its independence,
the Supreme Court of Canada found that Quebec possessed no such right,
either in international or Canadian law. But it also said that, in the event
that a clear majority of provincial voters in response to a clear question
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favoured independence, there would be a constitutional obligation on the
part of the rest of Canada to negotiate with Quebec.
Tremblay Report Quebec Premier Maurice Duplessis created the Royal
Commission of Inquiry on Constitutional Problems in 1953 in response
to what he saw as the centralizing approach of the federal Rowell-Sirois
Report and the Massey Commission. The Tremblay Report elaborated a
powerful philosophically grounded view of traditional French-Canadian
culture and advanced a classical understanding of federalism in which
each order of government (but particularly the federal government) would
confine itself scrupulously to its own sphere of jurisdiction.
REFERENCES
Ajzenstat, Janet, Paul Romney, Ian Gentles, and William Gairdner, eds. 2003.
Canada’s Founding Debates. Toronto: University of Toronto Press.
Brault, Gerard. 1986. The French-Canadian Heritage in New England. Hanover,
NH: University Press of New England.
Brunet, Michel. 1957. “Trois dominantes de la pensée canadienne-française:
l’agriculturisme, l’anti-étatisme, et le messianisme. Essai d’histoire
intellectuelle.” In Écrits du Canada français III, 33–117. Montreal.
Cameron, David. 1990. “Lord Durham Then and Now.” Journal of Canadian
Studies 25, no. 1: 5–38. https://doi.org/10.3138/jcs.25.1.5.
———. 2015. “Canada’s Constitutional Legitimacy Deficit: Learning to Live
with It.” In Thinking Outside the Box: Innovation in Policy Ideas, edited by
Keith Banting, Richard Chaykowski, and Steven Lehrer, 277–94. Kingston:
McGill-Queen’s Press.
Cameron, David, and Jacqueline Krikorian. 2008. “Recognizing Quebec in the
Constitution of Canada: Using the Bilateral Constitutional Amendment
Process.” University of Toronto Law Journal 58, no. 4: 389–420. https://
doi.org/10.1353/tlj.0.0010.
Cameron, David, and Richard Simeon, eds. 2009. Language Matters: How
Canadian Voluntary Associations Manage French and English. Vancouver:
University of British Columbia Press.
Canada, Royal Commission on Bilingualism and Biculturalism. 1965. A
Preliminary Report of the Royal Commission on Bilingualism and Biculturalism.
Ottawa: The Commission.
Durham, Lord. 1982. Lord Durham’s Report: An Abridgement, edited by Gerald
M. Craig. Ottawa: Carleton University Press.
Fraser, Graham. 1984. PQ: René Lévesque and the Parti Québécois in Power.
Toronto: Macmillan.
Gagnon, Alain-G., ed. 2009. Contemporary Canadian Federalism: Foundations,
Traditions, Institutions. Toronto: University of Toronto Press.
Gagnon, Alain-G., and Mary Beth Montcalm. 1990. Quebec: Beyond the Quiet
Revolution. Scarborough: Nelson Canada.
Quebec and the Canadian Federation
Heintzman, Ralph. 1971. “The Spirit of Confederation: Professor Creighton,
Biculturalism, and the Use of History.” Canadian Historical Review 52, no. 3:
245–75. https://doi.org/10.3138/CHR-052-03-01.
House of Commons. 2006. Debates. 39th Parl., 1st Sess., no. 087, November 27,
2035.
Kwavnick, David, ed. 1973. The Tremblay Report. Toronto: McClelland and
Stewart.
Laforest, Guy. 1992. Trudeau et la fin d’un rêve canadien. Sillery, QC: Editions du
Septentrion.
———. 2010. “The Meaning of Canadian Federalism in Québec: Critical
Reflections.” Revista d’Estudis Autonòmics I Federals, no. 11 (October): 10–55.
Lévesque, René. 1968. An Option for Quebec. Toronto: McClelland and Stewart.
McRoberts, Kenneth. 1993. Quebec: Social Change and Political Crisis. 3rd ed.
Toronto: McClelland and Steward.
Parkin, Andrew, Erich Hartmann, and Kiran Alwani. 2017. Portraits 2017:
A Fresh Look at Public Opinion and Federalism. Toronto: Mowat Centre.
Paquin, Stéphane. 1999. L’invention d’un mythe: Le pacte entre deux peoples
fondateurs. Montreal: VLB.
Québec, Commission royale d’enquête sur les problèmes constitutionnels.
1956. Rapport de la Commission royale d’enquête sur les problèmes constitutionnels,
4 vols. Québec: La Commission.
Quebec National Assembly. 2006. Votes and Proceedings, no. 065, November 30,
697–8.
Rocher, François. 2009. “The Quebec-Canada Dynamic or the Negation of
the Ideal of Federalism.” In Contemporary Canadian Federalism: Foundations,
Traditions, Institutions, edited by Alain-G. Gagnon, 81–131. Toronto:
University of Toronto Press.
Russell, Peter. 2004. Constitutional Odyssey: Can Canadians Become a Sovereign
People? 3rd ed. Toronto: University of Toronto Press.
Schneiderman, David, ed. 1990. The Quebec Decision: Perspectives on the Supreme
Court Ruling on Secession. Toronto: James Lorimer and Company.
Stanley, George F.G. 1956. “Act or Pact: Another Look at Confederation.” Report
of the Annual Meeting of the Canadian Historical Association 35, no. 1: 1–25.
Waite, Peter B., ed. 1963. The Confederation Debates in the Province of Canada,
1865. Toronto: McClelland and Stewart.
89
CHAPTER FOUR
The Courts, the Division of Powers,
and Dispute Resolution
Gerald Baier
Canada’s federal system has, for some time, been characterized by a
large gap between the jurisdictional map of the written constitution and
the activities of governments. Overlapping jurisdictional responsibilities
and the dominance of federal financial powers make the formal division
of powers a relatively poor guide to “who does what?” in the Canadian
federation. After a sequence of failures to amend the Constitution in the
1980s and 1990s, the primary agent of evolution in the federation has
been intergovernmental negotiation. Rather than alter the Constitution
to reflect the practices of the federation, intergovernmental relations
have sought the accommodation of differing governmental priorities and
preferences through co-operative institutions, some relatively advanced,
others much more piecemeal and ephemeral. Since the 1960s, the products of this mutual priority-setting, negotiation, and co-operation have
committed governments to increased collaboration and have further
blurred the question of “who does what?”
In a more “classical” federal system there would be bright line divisions between national and sub-unit jurisdiction, and courts would play
a central role patrolling boundaries and keeping governments to their
constitutionally assigned tasks. The role of courts in such a case is largely
to give greater certainty to the meaning of constitutional assignments
and to update the division of powers to accommodate unanticipated
governmental activities. In a federal system characterized by the blurring of responsibilities, the role of courts is less clear. A preference for
The Courts, the Division of Powers, and Dispute Resolution
collaborative, intergovernmental federalism certainly does not mean that
all conflict disappears, or that governments will not ultimately rely on
their constitutional authority to pursue policies that other governments
do not like or refuse to co-operate with. As evidence, one need look no
farther than pipelines and carbon pricing in the present federation.
But governments in a more co-operative system of federalism prefer to
negotiate rather than litigate. Negotiating keeps the executive power
in greater control of outcomes, even if other governments have to be
involved. Litigating the Constitution to create brighter line rules is risky,
as the courts and, ultimately, a constitutional court have the last word.
This chapter examines the place of courts, particularly the Supreme
Court of Canada (SCC), in Canada’s collaborative federal model. Although there is an almost ever-present need for dispute resolution in
a federation like Canada, its courts are not necessarily the institutions
called on to settle intergovernmental disputes. Today, when courts are
relied upon to resolve intergovernmental disputes it is a clear sign that
governments have either run out of opportunities and patience for
negotiation or have taken entrenched positions that do not allow them
to compromise with one another. Alternatively, courts are also engaged
in the processes of Canadian federalism when citizens seek to enforce
constitutional obligations that their governments may be trying to avoid
through the obfuscation of jurisdictional ambiguity.
Two trends are notable. First, the fledgling institutions of intergovernmental co-operation and collaboration have sought to displace
some of the referee role of the Supreme Court in disputes, with mixed
success but not without some blessing from the court itself. Second, the
Supreme Court still finds itself playing the role of referee or umpire
when governments reach the limits of their co-operative or collaborative
capacity. Provincial governments appear to see court challenges against
Ottawa or their fellow provinces as a way to help win elections or prove
ideological bona fides rather than solve intergovernmental problems.
Certainly, the constitutional challenge by some provinces to the federal
carbon pricing regime appears to fall into this category.
The chapter begins with a brief description of how judicial review of
the Constitution has historically shaped Canadian federalism. It then
looks at a selection of recent interventions by the Supreme Court in
issues of intergovernmental conflict. These examples illustrate the more
traditional role of the Supreme Court in intergovernmental relations,
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but also some of the court’s own ambivalence about its umpire role.
The chapter then compares these recent approaches with the alternatives that have been produced in the post–Charlottetown Accord era
of intergovernmental agreements. Finally, the role of judicial power in
intergovernmental relations and the approaches taken by governments
and the courts to some contemporary federal–provincial conflicts are
illustrated. Special attention is given to court cases involving Quebec
and federal initiatives to combat climate change.
The seeming ambivalence of the Supreme Court about its umpire
role puts the federal system at something of a crossroads. In recent
years, the Supreme Court has been willing to be definitive and enforce
an interpretation of the jurisdictional map if it appears necessary to
resolve intergovernmental disputes. At other times, it has deferred
its responsibility for patrolling the boundaries of the federation and
encouraged negotiation and intergovernmental solutions under the
umbrella of what it routinely labels “co-operative federalism.” Given
the preference of intergovernmental actors to settle disputes away from
the courts, when the Supreme Court adopts the latter attitude – and is
willing to endorse co-operative federalism as an alternative to its role
as judicial umpire – the result is to minimize the oversight role of the
courts in upholding the Constitution. In effect, when the Supreme Court
abdicates its umpire role, the manoeuvrability of governments over the
guarantees of the federal Constitution is prioritized.
JUDICIAL REVIEW AND CANADIAN FEDERALISM
Where did Canada’s decentralized federation come from? Historically,
critics often indicted judicial review as responsible for the expansion of
provincial power. If not for the permissive interpretation of provincial
powers by the Law Lords of the Judicial Committee of the Privy Council
(JCPC), went the argument, the strong central government envisioned
by the Fathers of Confederation would have been realized. Early disputes
between the provinces and the federal government gave a more prominent role to the judiciary as an umpire. For nearly the first 100 years
of Confederation, governments challenged the respective boundaries
of one another’s constitutional powers. In particular, the provinces
successfully challenged the scope of the federal Parliament’s power to
The Courts, the Division of Powers, and Dispute Resolution
make laws for the “peace, order, and good government” (POGG) of
Canada, as granted by the preamble to section 91 of the Constitution Act,
1867. At Confederation, this clause was generally believed to represent
a grant of residual or plenary power that, with the help of the federal
government’s assumption of the seemingly most important legislative
and taxing powers, as well as its powers to reserve or disallow provincial
legislation, would ensure that Canadian federalism took a centralized
form. However, the scope of the POGG clause was profoundly influenced
by those early challenges and the interpretation of the JCPC.
Rather than read POGG generously as the centralist Fathers of Confederation had seemingly intended, the JCPC chose to restrict the scope
of the clause. It categorized POGG largely as an emergency provision –
to be resorted to only on rare occasions. The emergency interpretation
of POGG was distinguished early on from a second interpretation that
extended the power to cover matters of a national concern. The national
concern interpretation was rarely granted. When POGG was successfully
invoked, it was usually for emergency circumstances. In contrast, the JCPC
favoured the enumerated powers of the provinces, especially the power
over property and civil rights granted by section 92(13). Portions of the
federal Parliament’s response to the Great Depression (the so-called Bennett New Deal) were ruled ultra vires according to this pattern, thus raising
the considerable ire of progressive legal and political observers in Canada.
The Canadian critics of the JCPC took it as gospel that a Canadian
court would not interpret the federal Parliament’s POGG power so restrictively (Laskin, 1951; see Cairns, 1971). After the abolition of appeals
to the JCPC in 1949, the early years of the autonomous Supreme Court
seemingly proved the critics right. In one of its last decisions on Canadian
federalism, the Canada Temperance Federation case, the JCPC offered up
the possibility that POGG could be more generously interpreted in areas
of national concern. The Supreme Court took full advantage of this line
of reasoning and began to define a broader scope for the POGG power
under the national concern doctrine. The court included under the
rubric of POGG the national control of aeronautics ( Johannesson, 1952),
atomic energy (Pronto Uranium Mines, 1956), a national capital region
(Munro, 1966), and seabed natural resources (Offshore Minerals, 1967).
This cautious run of centralization was essentially brought to a halt
by the Anti-Inflation Reference case of 1976. The Supreme Court, led by
one of the most outspoken critics of previous POGG jurisprudence,
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Chief Justice Bora Laskin, was asked to consider the constitutionality of
the federal government’s inflation control legislation. If ever the debate
between an emergency and national concern justification for the use
of the POGG power was to be resolved, this case presented amenable
facts for consideration. The decision of the court, however, offered no
clear interpretation of POGG as a justification for the exercise of federal
power in matters of national concern. The court left unresolved the
potential of a federal plenary power and in the process ushered in a
period of “balanced” federalism that has seemed to favour neither level
of government (Hogg, 1979; Russell, 1985).
Recent decades have seen sporadic attention paid to questions of
constitutional jurisdiction. Since the Anti-Inflation Reference (1976), the
Supreme Court has opened up some possibilities for the extension of
federal power under POGG, but it has also seemed to maintain the balanced approach embodied by the Anti-Inflation decision (Baier, 2006).
Federal power over the environment as a matter of national concern was
first justified under the POGG clause in Crown Zellerbach (1988), but the
court subsequently backed away from too generous an interpretation of
the national concern doctrine. In Hydro-Quebec (1997) and the Firearms
Reference (2000), the Supreme Court opted for a more generous interpretation of the federal power over criminal law instead of a generous
interpretation of the POGG power.
More recently, however, two provincial courts of appeal explicitly raised
the national concern branch of POGG in reference cases where the two
provinces (Saskatchewan and Ontario) challenged the federal government’s carbon pricing scheme. In both cases the decisions found Ottawa’s
legislation to be intra vires, explicitly citing national concern over climate
change as one of the valid reasons for Ottawa undertaking its scheme (Reference re Greenhouse Gas Pollution Pricing Act [SK 2019]; Reference re Greenhouse
Gas Pollution Pricing Act [ON 2019]). Alberta has been more successful in
its court of appeal, which narrowly found the federal scheme to be ultra
vires Parliament. Appeals of the Saskatchewan and Ontario rulings will be
heard by the Supreme Court in March 2020. POGG features prominently
in the federal government’s arguments. Several other provinces acted
as intervenors, doing so on a variety of grounds (e.g., Quebec favours
carbon pricing but rejects Ottawa’s authority to price carbon; Ontario,
Saskatchewan, and Alberta reject both pricing carbon and Ottawa’s right
to price it). These challenges will have repercussions for many years to
The Courts, the Division of Powers, and Dispute Resolution
come, not only for the country’s capacity to deal with climate change but
also for other areas where “national concern” might apply.
POGG jurisprudence is only one part of the history of how the division
of powers has been interpreted by Canada’s highest courts. The federal
trade and commerce power has been interpreted in an equally restrictive
way, particularly when compared to its broadly construed “cousin” in the
commerce power of the United States government. Perhaps as a result
of its lack of success in the courts, the federal government has tried to
assert itself less with legislation and more with its spending power and
subsequent agreements with the provinces.
The Securities Reference (Reference Re: Securities Act, 2011) is one of a few
recent cases that signalled the Supreme Court’s preference for sending
governments back to the negotiating table rather than imposing jurisdictional solutions upon them. Perhaps ironically, in Securities it did so
while at the same time making the case for a court-preserved division of
powers. The Harper government sought to create a national securities
regulator to add capital markets to some of the already substantial powers
the federal government has over banking regulation. For a long time,
such proposals have regularly encountered considerable resistance from
the provinces who had been the primary regulators of stock exchanges
and had shown some evidence of being willing to co-operate with one
another in their regulatory efforts. The Harper Conservative government,
with the support of the Liberal government of Ontario, by far the largest
provincial regulator of securities, brought forward legislation in 2010 to
create a single national regulator. Due to objections from several provinces (Alberta and Quebec prominent among them), the legislation was
simultaneously referred to the Supreme Court to test its constitutionality.
The federal government sought to justify its new regulator on the basis
of its section 92 power over trade and commerce. Like the POGG power,
trade and commerce has been acknowledged by the court in the past
to have a “national concern” branch. A unanimous court ruled against
the proposed regulator and rejected the national concern justification.
The court also noted that, even while co-operation between federal and
provincial governments had become the “dominant tide” of Canadian
federalism, the court still had a duty to patrol boundaries. To wit: “The
‘dominant tide’ of flexible federalism, however strong its pull may be,
cannot sweep designated powers out to sea, nor erode the constitutional
balance inherent in the Canadian federal state” (para. 62).
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The court’s investigation of securities regulation determined that
many parts of what amounts to present-day regulation can and have been
accommodated under provincial laws pertaining to property and civil
rights. To jettison these provincial efforts in favour of a federal claim
to take over the whole of securities regulation because of the existence
of some national (or even international) aspects of the field could not,
in the court’s view, be justified. Co-operative federalism re-emerged in
the conclusion of the judgment where the court counselled the federal
government and provinces to return to the table and consider a more
co-operative scheme that would allow each order of government to regulate in the areas that more properly adhere to their previously affirmed
constitutional jurisdictions. The court argued that “a cooperative approach
that permits a scheme that recognizes the essentially provincial nature
of securities regulation while allowing Parliament to deal with genuinely
national concerns remains available” (para. 130).
In many ways the Securities decision is redolent of the Labour Conventions
case of 1937. Then, the JCPC, drawing on a similar nautical metaphor,
ruled regarding the performance of Canada’s treaty obligations:
In totality of legislative powers, Dominion and provincial together,
she [Canada] is fully equipped. But the legislative powers remain
distributed, and if in the exercise of her new functions derived from
her new international status Canada incurs obligations they must, so
far as legislation be concerned when they deal with Provincial classes
of subjects, be dealt with by the totality of powers, in other words by
co-operation between the Dominion and the Provinces. While the
ship of state now sails on larger ventures and into foreign waters
she still retains the water-tight compartments which are an essential
part of her original structure. (Attorney General of Canada v. Attorney
General of Ontario [1937] A.C. 327, III Olmsted 180 (Privy Council))
THE SUPREME COURT AND CO-OPERATIVE
FEDERALISM
As indicated by the Labour Conventions decision noted above, the recent
endorsement of co-operative federalism is not new for the Supreme
Court. However, the court’s understanding of co-operative federalism
The Courts, the Division of Powers, and Dispute Resolution
has varied over the years. In the past, its decisions have been less about
encouraging governments to find co-operative solutions and more about
recognizing the limits of what the court can enforce when federal and
provincial governments enter into long-run commitments that, at least
to some degree, subvert or ignore the constitutional division of powers.
The products of a flexible approach to federalism are generally found in
more transactional agreements between governments or occasionally in
federal legislation outlining standards or regulations to which the provinces must conform in order to receive federal funds or programming.
These intergovernmental agreements are the backbone of the federal
system. However, they are notorious for their weak degree of internal
or judicial enforceability. As products of negotiation and compromise
they are much more dependent on the goodwill of the partners to the
agreement than they are on the Constitution, which is more transparent
and legally enforceable (justiciable) by governments or citizens. As Katherine Swinton notes, “the method for resolving disputes about obligations
between governments tends to lie in the political, rather than the legal,
arena. Indeed, some intergovernmental agreements are designed not
to be enforceable in any other forum” (1992: 140).
The observation that intergovernmental agreements are political,
not legal, documents is bolstered by the unwillingness of the Supreme
Court to interfere when disputes have arisen about such agreements. The
leading example and illustrative case is the Reference Re: Canada Assistance
Plan (CAP ; 1991), in which a unanimous Supreme Court refused to limit
Parliament’s power to unilaterally alter (and reduce) its obligations to
provinces under long-standing federal–provincial cost-sharing agreements.
Parliament was able to limit the increases in CAP grants to the provinces
not then receiving equalization, despite a history of 50/50 cost-sharing.
The provinces had no legal recourse to force the continuation of equal
cost-sharing, even when departure from this formula was likely to have
a negative impact on the delivery of services.
The CAP case is generally interpreted as a warning to the provinces
about the risks they take in dealing with the federal government in the
strictly non-constitutional realm (Barker, 2000; Baier, 2002a). But the
CAP reference only touches on what might be called the external enforceability of intergovernmental agreements. Since the Canada Assistance
Plan never took a constitutional form, altering Parliament’s obligations
was as simple as passing new legislation and, as the court ruled, the
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provinces had few grounds on which to appeal. Any federal or provincial
legislation has a duty to abide by constitutional guarantees, whether of
federalism jurisdiction or of rights. These obligations are matters of
external enforceability; that is, courts must ensure that legislation, including legislation that enacts intergovernmental agreements, still abides
by rules like the division of powers. When agreements go unaltered, but
remain unimplemented or are not respected by one party or another,
there is an added dimension of internal enforceability. The court essentially
argued in the CAP case that no external guarantee in the Constitution
or elsewhere existed to stop the federal Parliament from changing the
internal terms of its agreement with some or all of the provinces in the
exercise of its constitutionally assigned power to spend.
Doubts about the external enforceability of intergovernmental
agreements have always been present (Sossin, 1999),1 but increasingly
the possibility that intergovernmental agreements have some internal
enforceability seems headed for the same fate. In the Finlay cases, a
recipient of social benefits tried to ensure that the government of Manitoba lived up to what she argued were its obligations under the Canada
Assistance Plan. Although the complainant was initially successful at the
lower court level, a narrow majority of the Supreme Court in Finlay (1993)
did not support the argument and refused to directly patrol the program
and its funding levels, leaving it to the province to achieve “substantial
compliance” with the objectives of the CAP. This ruling dashed hope
that courts would recognize that “intergovernmental agreements are
not the preserve of the signatory governments” and that courts would
give “the citizen status to patrol the intergovernmental relations process
and to enforce obligations between governments” (Swinton, 1992: 145).
The court’s more recent encouragement to governments to negotiate
seems to ignore its own role in forcing governments to collaborate lest
judicial enforcement be necessary. For example, the Chicken and Egg Reference (Attorney-General for Manitoba v. Manitoba Egg and Poultry Association
et al., 1971) was a tactical use of judicial review by the province of Manitoba
to challenge interprovincial trade barriers set up by Ontario and Quebec,
largely in response to one another. Ultimately those governments, with the
aid of the federal government, found a co-operative solution satisfying to all
parties, but there was a sense that co-operation was greatly assisted by the threat
of a more unilateral finding by the Supreme Court that might jeopardize
provincial powers over intraprovincial marketing of agricultural commodities.
The Courts, the Division of Powers, and Dispute Resolution
Governments’ recourse to the courts can be seen as an effort to set
the agenda, or perhaps more accurately, to alter the playing field of negotiations by altering the relative constitutional resources of the actors. A
government’s hand in negotiation and compromise is strengthened if it
can be assured it has a stronger constitutional claim to jurisdiction than
its opponents. An example is the intervention of the Supreme Court in
the Reference Re: Employment Insurance Act (2005), which forced the court
to revisit questions about unemployment insurance and pension schemes
first considered in the 1930s. At that time, constitutional amendments
became necessary to provide the federal government with adequate
constitutional jurisdiction to deliver services in some of those fields.
The federal government has since used that heading of employment
insurance to design a number of different benefit programs, including
plans for maternity and parental leave from regular employment.
Quebec has long sought greater control over social and economic
policy matters in which the federal government exercises jurisdiction.
At Quebec’s behest, the Meech Lake and Charlottetown Accords both
contemplated limits on federal jurisdiction in provincial labour market
development. Since those failed attempts at constitutional change,
Quebec has sought more control over areas of social welfare related
to employment, including the provision of parental leave. Because the
parental benefit program is somewhat outside the original rationale of
unemployment insurance, a case could be made that provinces could
provide such programs under their own social welfare jurisdiction. Most
provinces have demurred from the expense. However, during the Liberal
government of Jean Chrétien, federal parental benefits were reduced,
giving the Quebec government added incentive to implement its own,
more generous program. Quebec sought to retain federal transfers for
parental leave benefits to Quebeckers, but to have them administered
by the provincial, rather than the federal, government.
Negotiations between Quebec and Ottawa through the late 1990s
failed to produce an agreement. In 1999, the Chrétien government reversed its original policy and increased the federal benefits substantially.
It also suspended efforts to negotiate an opt-out version of the parental
leave program with Quebec. Quebec went ahead with its own enhanced
program but initiated a challenge to the constitutionality of the federal
government’s program. The Quebec government argued that the employment insurance power was intended to cover only people who were
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involuntarily unemployed but able to work, and that the parental leave
provisions of the federal program were ultra vires. The Quebec Court of
Appeal agreed. It offered a fairly narrow reading of the federal power
and found that parental benefits more appropriately belonged under
the provincial constitutional headings of “property and civil rights” or
“matters of a merely local nature.”
The federal government appealed the ruling to the Supreme Court
because it jeopardized not only the parental leave program delivered
by the employment insurance legislation, but also programs for sickness
and compassionate leave: levers that future governments have used to
be more generous on matters of social policy. The federal government
also renewed negotiations with Quebec for some shared delivery of the
enhanced Quebec plan. In October of 2005, the Supreme Court ruled
unanimously that parental benefits were legitimately part of the federal
power for employment insurance in the amended section 91(2a) of the
Constitution Act, 1867. The ruling was almost irrelevant, as the negotiations
between Quebec and the federal government had been settled earlier
that year. The federal ministers involved in the negotiations repeatedly
hailed the agreement as evidence that co-operative federalism works.
One might be sceptical about how well the negotiations would have
gone if the spectre of an adverse constitutional ruling was not hanging
over both parties.
The more compelling weakness of the seeming preference for
co-operative federalism by the Supreme Court is the weak position that
it puts citizens in when seeking to challenge the preferences of their
governments. Donald Smiley (1979) long recognized that the forums
of intergovernmental relations were democratically imperfect. They
left citizens on the outside of intergovernmental co-operation, even
when such co-operation might ignore citizen preferences or seek to
avoid the traditional accountability for jurisdictional matters assigned
to governments under the Constitution. Healthcare, as a paradigmatic
case of intergovernmentalism, is a very good example.
In Chaoulli v. Quebec (Attorney General) (2005), Dr. Jacques Chaoulli,
a physician activist who had long contested regulations in the Quebec
healthcare system, challenged restrictions in Quebec’s Health Insurance
Act and Hospital Insurance Act that prevent residents in the province from
purchasing private health insurance or private services in a hospital. He
argued that the excessive delays experienced in the Quebec health system,
The Courts, the Division of Powers, and Dispute Resolution
combined with the lack of private options for patients that result from
legislative prohibitions against private insurance and care, amounted
to violations of federal and provincial Charter rights to security of the
person. Chaoulli’s argument did not challenge the constitutionality of
provincial jurisdiction over healthcare; in that sense it is not a typical
federalism or division of powers controversy.
The Supreme Court of Canada agreed that the undue wait times
experienced in the Quebec public system and the lack of private alternatives amounted to a violation of rights under the Quebec (but not the
Canadian) Charter. Finding a violation under the Quebec Charter, but
not the federal Charter, limited the application of the decision solely
to the province of Quebec. Had the court found a violation of federal
guarantees, legislation in other provinces similar to that in Quebec would
also have been found to be unconstitutional.
A long-running case that has been playing out in the BC Supreme
Court since 2009 (still ongoing as of the start of 2020) covers much of the
same ground as Chaoulli (namely challenging the single-payer system and
a ban on the extra-billing regime) on Charter grounds. The case exists
largely due to the crusade of Dr. Brian Day, founder of the Cambie Surgery
Centre and an advocate of opening up the Canadian health system to
more private provision of services.2 Day’s efforts to change government
policy toward healthcare through lobbying or other methods have been
largely unsuccessful even though he has been president of the Canadian
Medical Association, the primary professional and lobbying organization
for Canadian doctors. The case has taken many years to proceed to trial
and has highlighted some of the inertia in health policy-making. The
Charter arguments being made in the case, specifically around section
7 of the Charter, have been getting a more receptive hearing from the
court in recent years, so it may yet have some impact on the shape of
the healthcare system.
Another case where an individual has been able to challenge the
relatively closed intergovernmental system is what has become known as
the New Brunswick Beer case (Comeau, 2018). In 2012, Gerard Comeau,
a New Brunswick resident, purchased a significant amount of alcohol in
Quebec, where prices were cheaper than in his home province. Upon
crossing the border Mr. Comeau had his purchases seized and was fined
$300. Comeau challenged the restriction on interprovincial transport of
alcohol in provincial court and won. The case was eventually appealed to
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the Supreme Court where the restrictions were upheld. A long-standing
irritant for both citizens and commercial interests has been the existence
of trade barriers between the provinces. Despite apparent prohibitions
to such barriers in the Constitution, the provinces have historically
been protective of local industries and interests, and that has resulted
in a number of formal and informal practices restricting trade across
provincial boundaries. In Comeau the court found that the guarantee of
a free market in section 121 of the Constitution Act, 1867 did not prevent
provinces from pursuing other regulatory or policy goals (in this case
the regulated sale of alcoholic beverages). The court’s language even
puts something of a damper on its apparent enthusiasm for co-operation
between the provinces. Given the room to create indirect trade barriers
that the Comeau decision leaves, and the limited success that the federal
government has had in promoting a freer market within the country
(see chapter 8), mechanisms for coordination and conflict resolution
between the provinces will likely remain relatively inaccessible to citizens
and corporations.
Still, the important lesson of these three cases is the opportunity that
litigation provides for ordinary citizens to become involved in intergovernmental relations. Drs. Chaoulli’s and Day’s activism on healthcare issues
have taken a variety of forms prior to their constitutional challenge. By
challenging the constitutionality of legislation, Chaoulli and Day have
been able to impact an area otherwise dominated by intergovernmental
negotiations and a certain degree of indifference to change, despite
well-documented challenges in the healthcare system. While it has
become gospel for Canadian politicians to pledge their support for the
healthcare system or to promise fixes to the system for future generations,
there are serious accountability flaws in a policy field so dominated by
intergovernmental interaction. Most Canadians have difficulty identifying
who is even responsible for the delivery of healthcare, making it hard for
them to influence policy or to hold anyone accountable (Cutler, 2004).
Resorting to constitutional challenges may be an imperfect tool, but it
is an opportunity nonetheless to infiltrate some of the closed circles of
intergovernmental policy-making and to make governments respond.
Federalism litigation, we should not forget, is routinely commenced by
individuals or societal actors who disagree with the enacting government’s constitutional authority to proceed as it had. Efforts to break
into the closed club of healthcare policy-making that constitutes the
The Courts, the Division of Powers, and Dispute Resolution
intergovernmental protocol reminds us of the limited opportunities
for some interests to get a hearing in a collaborative federalism world.
THE SUPREME COURT AND QUEBEC
While a dominant theme of the Supreme Court in recent decades has
been the avoidance of drawing clear jurisdictional lines and attempting to
strike a balance between orders of government, there have been a limited
number of cases where the court has drawn firmer lines, primarily involving
Quebec or issues of major concern to Quebec. And in these cases the court
endeavoured, implicitly or explicitly, to protect Quebec interests. Four of
these cases merit discussion, one of them dating back to 1997 and three of
them during the latter half of the Harper government’s tenure. The first
case, the Secession Reference (1998), followed the near loss of the Yes side in
the 1995 Quebec referendum. Revolving around the question of whether
Quebec had a right to secede and to hold a referendum on the question,
the case was initiated by an individual in Quebec in Quebec courts. The
federal government then took it up and referred it to the Supreme Court
in the form of three questions: Under the Canadian Constitution can
the Quebec government or legislature effect the unilateral secession of
Quebec? Is there, under international law, a right to self-determination?
If there is a conflict between domestic and international law on the right
to self-determination, which would prevail in Canada?
Although the SCC ruled that Quebec did not have a constitutional
right to unilateral secession, it did say that Ottawa and the other provinces were obliged to engage Quebec (or any other province) in good
faith negotiations if there was a referendum result with a clear majority
on a clear question favouring secession. The ruling left unspecified what
constituted a clear majority and a clear question and passed on this responsibility to the political realm, which filled in the details when the Liberal
government passed the Clarity Act in 2000. The Quebec government did
not support the reference, nor did it act as an intervenor. However, while
not necessarily seeing itself as a winner in the case, Quebec secessionists
“took heart that the court recognized formally that Canada is divisible”
(Bateman et al., 2017: 158). Between the Secession ruling and the Clarity
Act, the net result was a less ambiguous set of rules around an important
question in a federation where such rules are generally lacking.
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Two further bright line cases relating to Quebec were the Nadon and
Senate Reform references. The Nadon case (Reference Re: Supreme Court Act,
ss. 5 and 6, 2014) was particularly dramatic insofar as Chief Justice McLachlin was accused by the Harper government of undue interference in
the process to fill a vacancy on the court itself. There are expectations,
one might argue even constitutional conventions, around regional
representation on Canada’s Supreme Court. But the Supreme Court Act
clearly requires that three of the justices are appointed from the bar of
Quebec. Marc Nadon, a semi-retired federal court judge, was appointed
to fill a Quebec vacancy in the fall of 2013. Prior to the appointment,
Chief Justice McLachlin had called the minister of justice to alert him
that Nadon might not be eligible given that he had not been a member
of the Quebec bar for some time. After Justice Nadon was sworn in, his
appointment was challenged in court by a private citizen in Toronto.
The Quebec government in turn asked the federal government to
refer the matter directly to the Supreme Court, which it did. In the
subsequent six-to-one ruling the court found that appointees filling a
Quebec vacancy had “to be currently either a section 96 Quebec judge
or a member of the Quebec bar,” thus making the Nadon appointment
invalid (Bateman et al., 2017: 180). The same judgment also ruled that
a proposed change by the Harper government to the Supreme Court Act,
which would have rendered the currency requirement inapplicable, constituted a constitutional amendment requiring the application of section
41 of the Constitution Act, 1982. It requires the unanimous consent of
the provinces in addition to the federal Parliament. With this decision
the court affirmed the unique role, expectations, and requirements
applicable to the three Quebec positions on the nine-member court.
When the most recent Atlantic vacancy on the court emerged, Prime
Minister Trudeau considered abandoning the regional representation
requirement in favour of other forms of representation, including the
possibility of appointing the first Indigenous justice to the court. When
Chief Justice McLachlin’s seat on the court became vacant at her retirement, Prime Minister Trudeau acknowledged the “custom of regional
representation” (Yakabuski, 2017) and ensured that she was replaced
with a western Canadian appointee.
In 2019, the Trudeau government announced a special process for
the Quebec government to appoint two members to the independent
advisory board responsible for developing the short list of candidates
The Courts, the Division of Powers, and Dispute Resolution
for Supreme Court vacancies from Quebec (Fine, 2019). The process
was used for the first time in July of that year for the appointment of
Justice Kasirer, to the apparent satisfaction of the Quebec government.
The significance of the affirmation of the unique position of Quebec
justices on the court should not be underestimated given the fact that it
is one of the few formal intrastate institutions in the Canadian federation.
The Senate Reference case (Reference Re: Senate Reform, 2014) involved
reform of the Senate, an issue that proved to be a continual preoccupation of Prime Minister Harper and his government. Late in the
Conservative government’s final term, it referred to the Supreme Court
a list of six questions touching on term limits for Senate appointees,
the capacity of the federal Parliament to alter fixed term limits, to set
up mechanisms to allow Parliament and the provinces to consult with
their citizens on possible nominees to the Senate, whether the property
qualifications for senators can be repealed, whether Parliament can
abolish the Senate outright and, if not, whether the unanimity rule of
the Constitution’s amending procedure is then required. The government received a negative response to four of its six questions. Only in
the case of property qualifications did the court allow that Parliament
had the authority to alter them.
As Bateman et al. (2017) point out, even though it was a continual
preoccupation throughout its term in office and even though an earlier
SCC decision on Senate reform (Reference Re: Authority of Parliament in
Relation to the Upper House, 1980) indicated there would be major constitutional roadblocks, the Harper government had done very little to engage
provinces on the possibility of Senate reform or the need to deploy the
amending formula. When the Supreme Court’s unanimous opinion was
delivered, most provinces, many of which were not averse to outright
abolition, expressed disappointment. But not Quebec, which hailed the
decision as historic. As Brown, Bakvis, and Baier (2019: 266) note, “For
Quebec, the decision was clearly an affirmation that it had the capacity
to say no to substantial changes, even for an institution that it held in
low esteem and to which it attached little importance.”
The Securities Reference case, discussed earlier, affected all provinces,
but, as with the Senate Reference case, the stakes were higher for Quebec.
Its civil code contracts and other matters related to civil law are handled
differently compared to other provinces. Furthermore, the financial sector under provincial regulation – caisse populaires (equivalent of credit
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unions) – handles many more transactions than do federally regulated
banks, and constitutes a bigger share of the financial sector in Quebec
than in other provinces. According to William Coleman (2002), over the
years Quebec developed a far more extensive and variegated regulatory
system than elsewhere.
Thus, for Quebec the SCC ruling that the proposed national securities
regulator was ultra vires was seen positively. At the same time, the court’s
counsel to seek “cooperative solutions that meet the needs of the country as a whole as well as its constituent parts” (Reference Re: Securities Act,
2011) is not something that the Quebec government is likely to embrace,
given the negative connotations associated with co-operative federalism
in that province. In years past, particularly in the early post-war era,
co-operative federalism was synonymous with the top-down, cost-shared
federal initiatives, actively resisted by the governments of Duplessis and
Lesage. According to Brown, Bakvis, and Baier (2019: 266), its fear in
this respect was “at least partially realized when, subsequent to the ruling,
the Conservative government launched its Cooperative Capital Markets
Regulator initiative.” The Quebec government referred this scheme to its
court of appeal, which ruled it invalid on the grounds that it subjected
the province’s power to legislate to an external entity (Renvoi relatif à la
réglementation pancanadienne des valeurs mobilières, 2017). A year later the
SCC reversed the decision, ruling that joining the new Pan-Canadian
Cooperative Securities Regulator did not entail a provincial legislature
transferring its sovereignty to an external body (Reference Re: Pan-Canadian
Securities Regulation, 2018). Quebec did not win its case, but neither did it
lose it, since membership in the new Pan-Canadian regulator remained
voluntary. According to Brown, Bakvis, and Baier (2019: 266), what appeared to be “at stake was the fact that Quebec could see no recognition
at all of its unique position in this field in the new federal legislation.”
To recap, in Nadon the court recognized that the requirement for
three judges to come from the bar of Quebec “is to ensure not only
civil law training and experience on the Court, but also to ensure that
Quebec’s distinct legal traditions and social values are represented on
the Court, thereby enhancing the confidence of the people of Quebec in
the Supreme Court as the final arbiter of their rights.... [This] protects
both the functioning and the legitimacy of the Supreme Court as a general
court of appeal for Canada” (Reference Re: Supreme Court Act, ss. 5 and 6,
2014). This role of the Quebec justices does not mean that they always
The Courts, the Division of Powers, and Dispute Resolution
or even mostly act in unison. According to a detailed examination of
the rulings and public statements of Quebec Supreme Court justices by
Robert Schertzer (2016), there is in fact considerable variation in how
they view their role as Quebec representatives.
Nonetheless, even this brief review of Quebec-related SCC decisions
suggests that the representation of Quebec’s unique values on the court
has had an impact on Quebec-related cases. The reaction from Quebec
governments, both Liberal and PQ, to these decisions has generally been
positive, suggesting that within Quebec the confidence in and the legitimacy of the court as the final arbiter has at a minimum been maintained,
if not enhanced. This legitimacy will matter when rights issues related
to the province’s secularism law make their way to the Supreme Court.
CONCLUSION: THE DEVIL YOU KNOW
The judicial review of federalism is a difficult practice to defend on strictly
democratic criteria. This volume’s benchmarks of performance, effectiveness, and legitimacy provide some grounds for doing so. While judicial
reasoning is not always as consistent or as objective as its practitioners may
profess (and hence may lack legitimacy), the use of a judicial umpire is
a relatively efficient and final (and thereby effective) mechanism for the
resolution of intergovernmental disputes. Judicial power has become
increasingly scrutinized by Canadians since the enactment of the Charter
of Rights and Freedoms, but at the same time the practice of federal judicial
review in Canada has a more muted political character than is generally
true of other federal high courts (Baier, 2002b), and engages seemingly less
controversial issues than rights litigation. It is controversial, however, as the
Supreme Court’s power in the federation runs up against the incrementalist,
pragmatic style favoured by intergovernmental relations.
The court’s cautious approach notwithstanding, over the past two
decades it has rendered a number of decisions that have been crucial
in maintaining a careful balance between federal and provincial powers and, over the past decade, in affirming the federal character of the
Constitution, especially with respect to Quebec’s unique position in
Confederation. In doing so the court perhaps can be criticized for the
homogeneity of its views, where all the justices appear to be singing from
the same legal song sheet. In the case of Comeau (2018) and his challenge
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of section 121, a complex case to be sure, one might have expected to
see more division among the justices or more caveats on how provinces
use policy or regulatory objectives to trump the core provisions of section 121. And in the Securities case (Reference Re: Securities Act, 2011) some
legal scholars are undoubtedly discomfited not only by the echoes of the
JCPC era but also by the uncritical acceptance of a weakly articulated
co-operative federalism.
Even if judicial review has only a limited direct role in shaping the
federation, the resources it assigns are still important to the settlement
of intergovernmental issues. Judicial settlement of disputes is by its
nature much more zero-sum than negotiation and compromise. For
the most part, only one party wins in any given constitutional litigation.
While negotiation can overcome those results, judicial determinations
have some influence on the bargaining power that participants have in
the negotiations.
Hence, the effectiveness and definitive nature of judicial review has
probably led governments to opt out of judicial settlement of disputes.
Here we encounter a question of overall performance. While judicial
review is seen as generally legitimate and is effective, overall dispute
resolution suffers from weak performance. The provinces, according to
this thinking, are right to be suspicious of the new third-party umpires
created in intergovernmental agreements or of leaving those agreements to the enforcement of the courts. But the creeping informalism
of Canadian federalism may not ultimately be to the advantage of the
provinces or of democracy. Federalism litigation is not the zero-sum
game participants may think. In many of the cases discussed above, the
Supreme Court’s traditional role as an arbiter of the division of powers
plays only a part in the eventual outcome of an intergovernmental policy
dispute. If the Supreme Court cannot settle the dispute, what particular
advantage does it offer?
Its advantages are procedural ones. Judicial review, unlike the newer
mechanisms of intergovernmental dispute resolution such as the ones
discussed in chapter 8 for resolving internal trade disputes, offers actors
other than governments an opportunity to be engaged and influential
in the politics of intergovernmental relations. It also reinforces the
constitutional character of the federal order. It reminds governments
that the Constitution, not intergovernmental compromise, is meant
to be supreme. If intergovernmental agreements are all that holds the
The Courts, the Division of Powers, and Dispute Resolution
federation together, the federal order will begin to be much more confederal, dependent upon the goodwill of governments rather than the
guarantees of the Constitution.
Students of executive federalism have increasingly questioned the
weak accountability and transparency of intergovernmental relations,
and the undemocratic character of executive federalism. As more and
more of the business of Canadian federalism is done at the executive
level, the critique rings truer and truer. The emphasis on settling, avoiding, or amicably resolving disputes in the new collaborative federalism
is certainly about pursuing noble goals of co-operation, but it is also
about keeping the business of governing and policy-making strictly in
the preserve of governments. This is poor performance for the intergovernmental system. As Harvey Lazar (2003: 5) has noted, “differences
among governments are normal and intergovernmental conflict can be
constructive when it exposes competing ideas to public deliberation.”
Collaborative federalism, as it has been practised in Canada, often tries
to erase that advantage from the intergovernmental process by keeping
it behind closed doors.
Federalism litigation, we should not forget, is routinely commenced
by individuals or societal actors who disagree with the enacting government’s constitutional authority to proceed as it had. Whether one agrees
or disagrees with the positions of Dr. Chaoulli, the Cambie Surgery
Centre, and Mr. Comeau, their efforts to break into the closed clubs of
healthcare policy-making and interprovincial trade are reminders of the
limited opportunities for some parties to get a hearing in a collaborative
federalism world. Indigenous communities, with a separate set of rights
enumerated in the Constitution, have been less likely to pursue these
kinds of interventions. But they too are on the outside of government
decision-making more often than not. More judicial review would improve
the performance of the intergovernmental dispute settlement system by
truly opening up intergovernmental relations to outsiders, that is to say,
to actors other than governments. Such opportunities to avail oneself of
constitutional guarantees against governments have all but disappeared in
the dispute resolution mechanisms of contemporary federalism. Certainly,
the Charter of Rights and Freedoms provides an opportunity to hold intergovernmental agreements to an individual rights standard, but the courts
have proven fairly resistant, Chaoulli (2005) notwithstanding, to second
guessing the policy choices of legislatures in issues of intergovernmental
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co-operation. That certainly appeared to be the case with Comeau (2018),
and governments seem to prefer this limited oversight.
Nonetheless, in the present era, with cases looming over carbon pricing
and pipelines and with some provincial governments more than willing
to take the risk of a negative legal outcome, the Supreme Court may
well find itself having to revisit issues related to POGG and the national
concern branch, issues that it has largely avoided over the past two decades. In brief, with a shift to a more combative form of federalism, we
may also see a more prominent role for the court.
NOTES
1 Sossin includes “disputes involving intergovernmental relations” among the
settings that stand outside the reach of judicial inquiry.
2 Since the case is still ongoing and as of early 2020 no verdict has been delivered, there is no formal reference yet for this case. A link to the various
documents and proceedings can be found here: http://www.savemedicare.
ca/court_documents.
GLOSSARY
intra vires A concept used by the courts in constitutional law cases when
deciding whether or not a law passed by a federal or provincial legislature
is within (“intra”) the powers (“vires”) of that legislature. Governments as
well as citizens can challenge the validity of a law by asking a court to rule
whether the law is indeed intra vires of the legislature. It is the opposite of
ultra vires (see below).
Judicial Committee of the Privy Council (JCPC) Served as the final court
of appeal for Canada until 1949 when the Supreme Court of Canada
took over that function. Founded in 1833, the JCPC is composed of
senior judges and still hears appeals from some smaller Commonwealth
countries. Its role in shaping the Canadian Constitution in the nineteenth
until mid-twentieth century was highly controversial given that several of its
decisions appeared to favour provincial powers over federal ones.
peace, order, and good government (POGG) Frequently referred to by
its acronym, POGG, in the Canadian constitutional context refers to
wording in section 91 of the Constitution Act, 1867 (previously labelled the
British North America Act, 1867) that gives purpose to the overall objective
of the Canadian federal government. It was also seen at the time of
Confederation as a residual power held by the federal government, in
The Courts, the Division of Powers, and Dispute Resolution
contrast to the United States where the states held the same power. John A.
Macdonald and other Fathers of Confederation felt that, along with other
federal powers such as disallowance, it gave the federal government scope
to override provincial powers when necessary. The wording of POGG
is both general and ambiguous, and perhaps for this reason the JCPC
was reluctant to use it to justify federal laws when they were challenged.
Instead, by the twentieth century it had reduced POGG to an emergency
power very narrowly defined.
Secession Reference Following the 1995 sovereignty referendum in Quebec,
the government of Canada referred three questions on the legality of
a unilateral declaration of independence to the Supreme Court. The
court ruled that a unilateral declaration had no legal grounding in either
domestic or international law, and should a clear majority of residents in
a province vote to secede from Canada on the basis of a clear referendum
question, the federal government and the other provinces had an
obligation to negotiate secession. The federal government based its 2000
Clarity Act on the ruling.
ultra vires The opposite of intra vires (see above). Courts in ruling on the
constitutionality of a law may decide that it is beyond the powers (ultra
vires) of the legislature to pass such a law.
REFERENCES
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Performance, Effectiveness and Legitimacy, edited by H. Bakvis and G.
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———. 2002b. “New Judicial Thinking on Sovereignty and Federalism:
American and Canadian Comparisons.” Justice System Journal 23, no. 1: 1–24.
———. 2006. Courts and Federalism: Judicial Doctrine in the United States, Australia
and Canada. Vancouver: University of British Columbia Press.
Barker, P. 2000. “Acceptable Law, Questionable Politics: The Canada
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Bateman, T., J.L. Hiebert, R. Knopff, and P. H. Russell, eds. 2017. The Court
and the Charter: Leading Cases. 2nd ed. Toronto: Emond Montgomery.
Brown, D.M., H. Bakvis, and G. Baier. 2019. Contested Federalism: Certainty and
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Cairns, A. 1971. “The Judicial Committee and Its Critics.” Canadian Journal
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Coleman, W. 2002. “Federalism and Financial Services.” In Canadian
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G. Skogstad, 178–96. Don Mills, ON: Oxford University Press.
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Cutler, F. 2004. “Government Responsibility and Electoral Accountability
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Fine, S. 2019. “Quebec to Have Say on Its Supreme Court Picks.” Globe and
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Hogg, P. 1979. “Is the Supreme Court of Canada Biased in Constitutional
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Laskin, B. 1951. “The Supreme Court of Canada: A Final Court of and for
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Lazar, H. 2003. “Managing Interdependencies in the Canadian Federation:
Lessons from the Social Union Framework Agreement.” In Constructive and
Co-operative Federalism? Kingston, ON: IIGR/IRPP.
Russell, P. 1985. “The Supreme Court and Federal-Provincial Relations: The
Political Use of Legal Resources.” Canadian Public Policy 11, no. 2: 161–70.
https://doi.org/10.2307/3550698.
Schertzer, R. 2016. “Quebec Justices as Quebec Representatives: National
Minority Representation and the Supreme Court of Canada’s Federalism
Jurisprudence,” Publius 46, no. 4: 539–67. https://doi.org/10.1093
/publius/pjw017.
Smiley, D. 1979. “An Outsider’s Observations of Federal-Provincial
Relations Among Consenting Adults.” In Confrontation and Collaboration:
Intergovernmental Relations in Canada Today, edited by R. Simeon, 105–12.
Toronto: Institute of Public Administration of Canada.
Sossin, L.M. 1999. Boundaries of Judicial Review: The Law of Justiciability in
Canada. Scarborough, ON: Carswell.
Swinton, K. 1992. “Federalism under Fire: The Role of the Supreme Court
of Canada.” Law and Contemporary Problems 55, no. 1: 121–45. https://
doi.org/10.2307/1191760.
Yakabuski, K. 2017. “Trudeau’s Supreme Court Conundrum.” Globe and Mail,
November 20, 2017. https://www.theglobeandmail.com/opinion
/trudeaus-supreme-court-conundrum/article37024619/.
CASES
Attorney-General for Manitoba v. Manitoba Egg and Poultry Association et al., [1971]
S.C.R. 689.
Chaoulli v. Quebec (Attorney General), [2005] 1 S.C.R. 791.
Finlay v. Canada (Minister of Finance), [1993] 1 S.C.R. 1080.
Johannesson v. West St. Paul, [1952] S.C.R. 292.
Munro v. National Capital Commission, [1966] S.C.R. 663.
Pronto Uranium Mines, Ltd. v. O.L.R.B., [1956] 5 D.L.R.(2nd).
R. v. Comeau, [2018] 1 S.C.R. 342.
R. v. Crown Zellerbach, [1988] 49 D.L.R. (4th).
R. v. Hydro-Québec, [1997] 151 D.L.R. (4th).
The Courts, the Division of Powers, and Dispute Resolution
Reference Re: Anti-Inflation, [1976] 68 D.L.R. (3rd).
Reference Re: Authority of Parliament in Relation to the Upper House, [1980]
1 S.C.R. 54.
Reference Re: Canada Assistance Plan, [1991] 83 D.L.R. (4th).
Reference Re: Employment Insurance Act (Can.), [2005] 2 S.C.R. 669.
Reference Re: Firearms Act (Can.), [2000] 1 S.C.R. 783.
Reference Re: Greenhouse Gas Pollution Pricing Act, [2019] ONCA 544.
Reference Re: Greenhouse Gas Pollution Pricing Act, [2019] SKCA 40
Reference Re: Offshore Mineral Rights of B.C., [1967] S.C.R. 792.
Reference Re: Pan-Canadian Securities Regulation, [2018] SCC 48.
Reference Re: Securities Act, [2011] SCC 66, 3 S.C.R. 837.
Reference Re: Senate Reform, [2014] SCC 32.
Reference Re: Supreme Court Act, ss. 5 and 6 (Nadon), [2014] SCC 21, 1 S.C.R. 433.
Reference Re: The Secession of Quebec, [1998] 161 D.L.R. (4th).
Renvoi relatif à la réglementation pancanadienne des valeurs mobilières, [2017]
QCCA 756.
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CHAPTER FIVE
Criminal Justice and Criminal Law
Dennis Baker
Unlike virtually all of the other powers found in sections 91 and 92 of
the Constitution Act, 1982, which typically assign a whole “subject-matter”
to one level or the other, Canada’s criminal justice powers are divided
functionally. Section 91(27) grants the federal Parliament the “exclusive legislative authority” over all matters coming within “The Criminal
Law ... including the Procedure in Criminal Matters.” Section 92(14)
states that each provincial legislature “may exclusively make Laws” in
matters coming within the “Administration of Justice in the Province.”
This form of “horizontal or administrative federalism” is common in some
federal systems (Germany, for example), but it is otherwise alien to the
Canadian federal design (Brown, Bakvis, and Baier, 2019: 11).1 Its usage
for Canada’s criminal justice powers reflects an understanding that the
awesome power of criminal prosecution requires “a careful and delicate
division of power” (Wetmore, 1983: 305), separating the federal Parliament’s power to make criminal law from the provincial power to enforce it.
Explaining and evaluating the features of Canadian criminal justice
federalism is the task of this chapter. But given the anomaly of its functional
nature, a modified “performance, effectiveness, legitimacy” framework
is needed for this peculiar area of Canadian federalism. The editors of
this volume include fidelity to constitutional text and a balance between
diversity and unity as part of “performance,” but, for the criminal justice
powers, the textual division is especially important. To perform well, this
division of powers must not simply preserve a core subject area (as the
Criminal Justice and Criminal Law
other powers in sections 91 and 92 require) but also maintain the unusual
functional separation that characterizes the criminal justice powers. In
general, Canadian federalism has eschewed “watertight compartments,”
at least since 1949 when the Supreme Court of Canada replaced the Judicial Committee of the Privy Council (JCPC) as the final court of appeal,
in favour of doctrines that are more generous to legislative activity at
both levels. While the “pith and substance” of legislation must be within
a level of government’s jurisdiction, “ancillary” effects on the other’s
jurisdiction are routinely allowed, and the courts have been generous in
finding a “double aspect” to many issues, allowing both levels to legislate
in any given area. This approach is more problematic when the division
also requires a functional separation since these more general doctrines
invite both levels of government to undermine the uniformity of criminal law and other criminal justice norms that ­functionalism is meant
to protect. By allowing the provinces to essentially legislate criminal law
and permitting the federal government criminal enforcement powers,
the liberty-protecting purpose of dividing criminal justice powers has
diminished over time.
In the same vein, “effectiveness” must be understood differently in the
functional context. When it comes to criminal justice, “effectiveness” can
be a problematic standard. After all, the most efficient criminal justice
system, where the crime rate might be lowest, might also be one with
few regards for procedural rights and where a small number of actors
could exert total control over the system. Such a police state would likely
be an anathema to most Canadians. A better measure of effectiveness
would ask whether criminal justice policies fulfill the functions expected
of them, regardless of whether the division of powers contributes to or
interferes with that function. A full answer would be beyond the scope
of this chapter and a subject more appropriate for a book on criminal
justice rather than federalism, but the federal framework of Canada
policing provides an instructive example. Policing needs are met by an
adaptive arrangement that pays little regard to federal principles but
responds to changes in circumstance and fiscal capacity. But, as described
in detail below, those neglected federal dimensions continue to impose
costs and introduce obstacles to accountability.
In the third and final section of this chapter, the legitimacy of criminal justice federalism is discussed. Canadians as a whole demonstrate
considerable confidence in their criminal justice system, despite any
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shortcomings of the division of powers. In general, Canadian criminal
justice actors and institutions enjoy relatively high levels of support,
but this support is not uniform and is noticeably weaker among some
communities. This variation is due primarily to non-federalism factors
(and typically related to controversies over police behaviour), but with
respect to Indigenous communities, federalism plays an exacerbating
role in further alienating vulnerable Canadians from criminal justice
administration. As federal subjects, by virtue of section 91(24) of the
Constitution Act, 1867, Indigenous peoples are less likely to be participants
in the provincially driven criminal justice administration. While this is
hardly a complete explanation for their poor treatment throughout the
criminal justice system, Canada’s federal design is an additional troublesome obstacle for the reconciliation that is already so difficult to achieve.
MAINTAINING THE FUNCTIONAL DIVISION
OF POWERS
The functional division of criminal justice powers operates in a political
context where both the provinces and the federal government have strong
incentives to act. “Each level of government bears a portion of the costs
of criminality,” the Supreme Court of Canada notes, “and each level of
government therefore has an interest in its suppression” (Chatterjee, 2009:
para. 15). With a near-constant parade of high-profile cases attracting
media attention, crime is almost always a salient issue that politicians
will seek to address. While each level of government does have a lever
to alleviate crime, the functional divide is vulnerable to overreach and
to “elite collusion” that circumvents some of the burdens the divide is
designed to preserve.
The origins of the functional division stem from two competing impulses at the time of Confederation: a desire for national uniformity in
criminal law and an appreciation for local justice. With respect to the
latter, there was little appetite to disrupt the already-established systems
of local justice in each of the provinces/colonies. Local prosecutors –
originally private citizens themselves – were preferred to distant ones who
might be less interested in seeing justice done or insufficiently sensitive
to local circumstances. Similarly, local police were already in place in
urban areas prior to Confederation (Toronto Police established in 1835,
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with Quebec City and Montreal following soon afterwards in 1838). In
1867, as Justice Dickson observed, it was natural for this existing system
of “local administration of justice, local police forces, local juries, and
local prosecutors” to be “perpetuated and carried forward into the
Constitution through 92(14)” (Hauser, 1979: 1032).
While the administration was strictly local, the laws being administered were not. The provinces were applying criminal law primarily
derived from English common law. This meant that “criminal law” would
not have been considered entirely under local control at the time of
Confederation, since it was largely the product of judicial decisions
and authorities that evolved over centuries in English courtrooms. To
the extent criminal law was based on English statutes, these too were
largely adopted by the colonies, even if the penalties were mitigated
over time.2 This is a sharply different context from the domestically
controlled, statute-based criminal law with which Canadians would
soon become familiar (Brown, 1989). While the Criminal Code of Canada
was not enacted until 1892 – making it one of the earliest criminal law
codifications in Anglo-American history – Sir John A. Macdonald saw a
uniform criminal law as an essential unifying force to undergird his “new
nationality.” He celebrated the fact that every Canadian “belonging to
what province he may, or going to any other part of the Confederation,
knows what his rights are in that respect, and what punishment will
be if an offender against the criminal laws of the land” (Waite, 2006:
25). Creating this uniform law would necessarily be the domain of the
federal Parliament and was seen not as an encroachment on provincial
autonomy, but rather a needed reform of the English system.
Uniformity in criminal law also meant that individual liberty would
likely be better protected on the enlarged national stage. Conversely, local
administration could be more lenient in its application of the federal
law, but without the ability to define criminal behaviour itself, it could
never be harsher than what the federal law allowed. Similarly, the federal
Parliament could deem behaviour criminal by including it in the Code, but
it could not directly prosecute offenders without local actors assenting to
its application. From the perspective of the individual Canadian to whom
it applies, there must be concordance between the proscribed criminal
behaviour, as defined by the federal Parliament, and the appropriate
administration by provincial governments; this gives individual liberty
an additional check before it is threatened by criminal sanction.
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Maintaining this functionalism requires some sense of what is meant
by “criminal law” and what is meant by its “administration.” The former
question has preoccupied much of the federalism jurisprudence in this
area. The classic Canadian legal definition states that criminal law is “(1)
a prohibition; (2) backed by a penalty; (3) with a criminal law purpose”
(AHRA Reference, 2010: para. 35). A vast majority of laws could easily meet
the first two requirements, leaving the third requirement – the criminal
law purpose – to do all the heavy lifting. In the Margarine Reference (1949:
50), Justice Rand helpfully supplied his oft-repeated, inclusive list of
criminal law purposes: “Public peace, order, security, health, morality.”
Rand’s formulation of what constitutes a valid criminal purpose proved
too charitable; each of the listed purposes could be construed as subsuming entire powers of the provinces (the inclusion of “health” alone
raises this concern).
As Morris Manning (2002) describes, the jurisprudence stemming from
section 91(27) is largely animated by one concern: what is the “outer
limit” of what might be considered “criminal law”? The JCPC struggled
to determine whether questionably criminal federal legislation could be
justified using the power. In the Board of Commerce case (1922), Viscount
Haldane attempted to limit 91(27) to instances “where the subject matter
is one which by its very nature belongs to the domain of criminal jurisprudence.” Despite the tautological nature of his definition, Haldane’s
formulation reflects an intuition that there is something special about
“criminal” policies that might distinguish them from federal powers. Less
than a decade later in the Proprietary Articles Trade Association case, Lord
Atkin was adamant that this distinction could not hold (“The criminal
quality of an act cannot be discerned by intuition”) and instead held
that there was only one standard: “Is the act prohibited by penal consequences?” (P.A.T.A., 1931: 9). Lord Atkin’s approach was problematic for
at least two reasons: (1) it essentially allowed the federal government to
claim anything was criminal simply by criminalizing it (attaching those
“penal consequences”), and (2) since the provinces also have the power
in 92(15) to impose any “Fine, Penalty, or Imprisonment,” it is unclear
how penal consequences alone could distinguish the national power. As
one commentator suggests, “just as Haldane’s definition was too narrow,
Lord Atkin’s has proven to be too wide” (Friedland, 1984: 53).
The difficulty of finding appropriate limits for section 91(27) continued as the Supreme Court assumed its role as Canada’s final court
Criminal Justice and Criminal Law
of appeal. The court has favoured a broad, permissive interpretation of
the power that has allowed the federal Parliament to legislate criminal
law for health reasons (RJR-MacDonald [1995] upholding the Tobacco Act
as intra vires), to achieve environmental objectives (R. v. Hydro-Québec
[1997] upholding the Canadian Environmental Protection Act), and to
protect the “economic life of the public” (Goodyear Tire v. R. [1956]
upholding the Combines Investigation Act). It also includes the power to
dismantle “cooperative federalism” schemes (in this case, the repealed
long gun registry) and destroy any data without sharing it with provincial
partners (Quebec v. Canada, 2015). The scope of the federal power has
been wide enough to raise the concern that the criminal law power is
becoming a “proxy” for the “national concerns” element of the peace,
order, and good government clause (Baier, 2006: 141; Snow, 2018: 61–2).
The court has occasionally limited the use of section 91(27) when the
federal government is deemed to have intervened too deeply in areas of
provincial regulation (as it did with some sections of the Assisted Human
Reproduction Act [2010]) or when it attempted to make the breach of
provincial law a criminal offence (Boggs v. R., 1981).
The focus on potential federal overreach using section 91(27) has
obscured the question of the “exclusivity” of the federal power when
the matter is plainly criminal, and this doctrinal confusion has allowed
provinces to enact statutes that supplement or extend criminal law
(Baker, 2014). It is now common for provinces and municipalities
(using delegated provincial authority) to add supplementary penalties
for criminal behaviour that is already prohibited by the Criminal Code.
The City of Edmonton, for example, passed a bylaw penalizing “public
fighting,” an easier-to-prove, fine-attaching alternative to the Criminal
Code’s assault provisions (Keshane, 2011). Similar laws and bylaws have
permitted duplication of Criminal Code provisions related to fraud (Eurosport Auto, 2003), obscenity (The Adult Entertainment Association, 2007),
protection orders (Fairchuk, 2003), victim surcharges (Wucherer, 2005),
and a provincial sex offender registry (Dyck, 2008) (see also Baker, 2014:
281–2, and Friedland, 1984: 56).
These provincial-level enactments were legitimated by the Supreme
Court’s decision in Chatterjee (2009), where Ontario’s Civil Remedies Act
(CRA) was challenged as an unjustified intrusion into federal criminal
law. The CRA allowed provinces to seize property that was likely to have
been used in criminal activity. Stopped by police for a valid traffic offence,
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Robin Chatterjee had a difficult time explaining the $29,000 in cash and
drug production equipment in his car, despite the fact that no actual
drugs were found. Without the drugs themselves, it was unlikely that
Chatterjee could be successfully prosecuted under the federal Controlled
Drugs and Substances Act since the Crown would be required to prove
beyond a reasonable doubt that Chatterjee was dealing in drugs. Under
the much lower “civil standard” of proof for the provincial law, however,
it only needed to be established that Chatterjee was “more likely than
not” to have been involved in the drug trade. The implication of the CRA
is staggering: it essentially duplicates every federal criminal offence at
the provincial level and allows for a lesser standard of proof to impose
penalties that are penal in nature. It does so even though the federal
Criminal Code itself provides for confiscation of property, but only after
a conviction is bestowed.
For the court, however, this was simply a valid exercise of the province’s
section 92(13) power over “property,” since, after all, the consequence
was merely a confiscation of property and not imprisonment. It is true
that a violation will not directly lead to incarceration, but it would be a
mistake to minimize the consequences of property confiscation. Chatterjee might recover from his loss, but what about the loss of a house that
is alleged to have been part of a grow-op? Moreover, research has shown
that debt exacerbated by fines can contribute to a spiralling context
of criminality that is difficult to escape (Greene, 2019). Despite those
concerns, the court found the CRA to be intra vires since its “dominant
purpose” is “to make crime in general unprofitable, to capture resources
tainted by crime so as to make them unavailable to fund future crime
and to help compensate private individuals and public institutions for
the costs of past crime” (para. 4). In this view, a legitimate objective of
the province is to “suppress crime” (para. 15) and it may use its powers –
section 92(13) and the section 92(16) power over local matters – to do
so. This ruling is consistent with the “dominant tide” of Canadian federalism jurisprudence, which is generous in recognizing the jurisdiction
of both levels of governments and endorses “a fair amount of interplay
and indeed overlap between federal and provincial powers” (OPSEU,
1987: para. 27).
This jurisdictional generosity has some peculiar consequences for
Canadian criminal justice policy. In addition to undermining the criminal standard of proof by replacing it with the civil standard, it provides
Criminal Justice and Criminal Law
a federalism work-around for any norm of criminal justice that is perceived as onerous to the state. Indeed, “public fighting” bylaws, such as
in Edmonton, are designed to be “more efficient” since they avoid the
paperwork necessary for a criminal charge of assault (Keshane, 2010:
para. 32). While the Charter applies to all acts of government, including
provincial laws and municipal bylaws, its key criminal due process provisions only apply upon arrest (section 10) or when a charge is brought
(section 11). For this reason, “provincial criminal law” is appealing to
authorities seeking criminal law enforcement with fewer criminal law
protections. This outcome is often favoured by both levels of government,
which helps explain why the federal government would intervene in cases
like Chatterjee to support provincial laws that infringe upon the exclusivity
of federal power. In a 2013 discussion paper, the federal Department
of Justice suggested downloading some crimes to the provincial level to
allow for “the assurance of lower penalties or no time in jail in exchange
for reduced protection under the Charter” (Kari, 2013). The exchange
of lesser penalties for reduced due process rights is problematic since
police are likely to use the easier-to-administer provincial offences for
cases where they might have otherwise issued “warnings,” resulting in
more convictions, a greater proportion of which, given the lower standard
of proof, may be made in error.
Allowing the provinces to legislate de facto criminal law also transforms the concept of “decriminalization,” since the criminal prohibition is likely to be replaced by provincial regulation. For example, the
regulatory space created by the 2018 legalization of marijuana – federal
law amending the Controlled Drugs and Substances Act – was preemptively
filled by ten different schemes of varying levels of restriction. The provincial power to legislate for the administration of justice can further
undermine “decriminalization” by allowing provincial authorities to
persecute those exercising newfound liberties. The decriminalization
of homosexuality in 1969, for example, was followed by a decades-long
campaign of harassment by provincial- and municipal-level police against
LBGTQ communities (Hooper, 2019).
There are limits on provinces legislating in the area of criminal law. In
particular, the province’s law cannot be explicitly “criminal” in its “pith
and substance.” However, in practice, the Supreme Court has only rarely
invalidated provincial laws and municipal bylaws on the grounds that
they are in essence criminal law. The exceptions include Calgary’s street
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prostitution bylaw struck down in Westendorp (1983) and Nova Scotia’s
abortion regulation invalidated in Morgentaler (1993). In the former,
Justice Laskin ruled a municipality is not able “to usurp exclusive federal
legislative power” and noted that if this type of bylaw was permitted then
a municipality could also “seek to punish assaults that take place on city
streets,” a then-absurd result that would materialize with the endorsement
of Edmonton’s “public fighting” bylaw years later. In Morgentaler, Justice
Sopinka overturned Nova Scotia’s attempt to use aggressive regulation to
effectively outlaw abortion in defiance of its decriminalization five years
earlier (in the more famous 1988 Morgentaler decision) as an invasion of
the field of criminal law. “The guiding principle,” Sopinka wrote, “is that
the province may not invade the criminal field by attempting to stiffen,
supplement or replace the criminal law ... or to fill perceived defects
or gaps therein” (para. 55). This guidance has been largely ignored in
the jurisprudence that affirms provincial criminal law, and it is hard to
imagine laws like Ontario’s Civil Remedies Act or Edmonton’s bylaw as
anything but attempts to “supplement” the criminal law or “fill perceived
defects or gaps therein.”
Lawyer Asher Honickman (2017) suggests that we need to return to
the “words” of the Constitution Act, 1867 and its “exclusivity principle.”
Whatever the merits of a return to “watertight compartments” for other
areas of divided jurisdiction, the criminal law powers have a special claim
to being treated more rigorously. While some overlap in jurisdiction is
unavoidable – road safety, for example, invites both a provincial and a
federal role (O’Grady v. Sparling, 1960) – it is also true that the “criminal”
element must continue to be exclusively federal (so, for example, it is
not open to the province to include a “vehicular murder” provision in
their Highway Traffic Act). It is not an easy balance to maintain, but it is
essential to the functional approach required by the constitutional text.
On the other side of the ledger, the “exclusive” provincial power in
section 92(14) over administration appears as porous as the power to
legislate criminal law. Here the balance is unsettled by federal encroachments on administrative matters like the power to prosecute. Since its
enactment in 1892, the Criminal Code of Canada required all criminal
prosecutions to be undertaken by the “Attorney General of a province.”
This changed in 1969 when section 2 of the Code was amended to allow for the Attorney General of Canada to prosecute “with respect to
proceedings instituted at the instance of the Government of Canada.”
Criminal Justice and Criminal Law
While this assertion of federal authority led to a series of contentious
constitutional challenges decided by the Supreme Court in the late 1970s
and early 1980s (Hauser, 1979; Wetmore, 1983; C.N., 1983; see Baker, 2017:
434–7), the authority of the federal government to prosecute offences
is now well established. In addition to drug crimes, federal prosecutors
are statutorily assigned the authority to conduct terrorism prosecutions
and immigration-related proceedings.
The bulk of Criminal Code prosecutions continue to be conducted
by provincial Crowns, but under the currently prevailing constitutional
understanding, the provinces could decline to prosecute, or the federal
government could strip them of this responsibility (Baker, 2017; Wright,
2019). No federal government has been so bold as to assume carriage of
all Criminal Code violations, if only for budgetary reasons since it would
“upload” the substantial costs of prosecution for little reward. Peter Hogg
notes that “there seems to be no informed sentiment in favour of a federal takeover of criminal law enforcement, and it would be strenuously
resisted by the provinces,” leaving him to conclude that such a takeover
“is adequately deterred by political forces” (1997: 19–18).
So, does it matter at all which level of government prosecutes criminal
offences? In addition to unbalancing the functional separation between
criminal law and its administration, federal prosecutions also complicate
trial procedures, especially with respect to drug offences. Often committed in conjunction with other Criminal Code charges (particularly assault,
theft, conspiracy, and organized crime offences), drug charges can be
resolved by separate, parallel processes (wasting judicial resources and
an additional burden for the accused). However, it is better to combine
them in a single prosecution, especially where the issues are complex.
In a combined prosecution, prosecutors at both levels co-operate (with
considerable deference to the earned expertise in drug matters that
the federal service has garnered) and a letter delegating all authority
to a single prosecutor can remedy any concern. While judicial review
of these arrangements often stress that any loss of accountability can
be mitigated by the provincial Attorney General’s power to alter the
agreement at any time (“He keeps ultimate control over this criminal
prosecution” [Luz, 1988: para. 22]), there is no evidence that any ongoing scrutiny is actually performed. These arrangements continue to be
subject to occasional challenges on constitutional grounds, but usually
unsuccessfully (Trang, 2001). To make matters even more complicated,
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in Quebec, federal prosecutors only prosecute drug charges laid by the
RCMP and not those laid by provincial police. In sum, the deviation that
allows for federal prosecution of criminal law introduces an additional
level of complexity – and confusion – that requires informal adaptations
and arrangements. A similar tendency is even more evident in the division of policing power.
EFFECTIVENESS AND THE POLICING POWERS
Policing is perhaps the quintessential aspect of criminal justice administration. In bureaucratic terms, the police might be considered “front-line
service providers.” As such, section 92(14) should make the provinces
exclusive lawmakers for policing matters. But only two province-wide
police services – the Ontario Provincial Police established in 1909 and
the Sûreté du Québec established in 1870 – are currently operating.3
There are also a variety of municipal forces, some of which predate
Confederation, that are authorized by both section 92(14) and section
92(8) (“Municipal Institutions in the Province”). But this account misses
a major player in Canadian policing: the Royal Canadian Mounted Police
(RCMP). Not only is the red serge of the RCMP a near-universally recognized symbol of Canadian policing, but the federal service has broad
jurisdiction across the country: it provides national policing services and
local policing in eight of the ten provinces, all three territories, and over
150 municipalities. There are many communities in rural Canada where
the RCMP might be the only police service. Given that there is no explicit
constitutional authority for a federal role in policing, the RCMP’s dominant role in Canadian policing demonstrates that practical necessity can
exert a controlling force over the niceties of constitutional federalism.
The RCMP originates from two separate forces that were intended to
perform limited, specialized roles. In the wake of federal parliamentarian
D’Arcy McGee’s assassination in 1868, personal and institutional security
on Parliament Hill became a priority. Prime Minister Macdonald’s answer
was the Dominion Police, a Canadian analogue to the US “Secret Service,”
but expanded to perform security services for other federal undertakings,
like the Halifax Naval Shipyards. With a clear connection to securing
and protecting federal matters, it is hard to see the Dominion Police as
much of an infringement on the provinces’ section 92(14) power, but
Criminal Justice and Criminal Law
that did not stop some, like Liberal Opposition Leader Edward Blake,
from objecting to the existence of a federal police force on constitutional grounds and worrying that any such police unit might “give rise
to a constant source of jarring with local governments” (Debates, May
18, 1868). The second constituent force was the North-West Mounted
Police (NWMP), created by the federal government in 1873 to establish
and maintain order in the territories (where, by definition, there was no
provincial government). The NWMP was not the typical police service
that one might find in a settled community, but rather a quasi-military
unit charged with additional police and judicial functions. The NWMP
travelled over 1000 kilometres in 1874 as part of the “March West,” essentially a roll-out of federal authority over portions of the country that
lacked any colonial government. A full accounting of this aspect of the
NWMP’s role – and particularly its impact on the Indigenous peoples – is
complex and beyond the scope of this chapter, but it would have been
seen as unavoidably federal and not an infringement on any provincial
power of policing.
The RCMP’s transformation into a truly national police force was largely
by circumstance and not by design. Soon after they were established, the
Dominion Police began to take on more policing roles – like the new
science of fingerprinting – to provide assistance to other forces. The
NWMP became both the local police for the areas settled by the March
West (until the western provinces were established, a process complete
by 1905) and a federal military arm that could be used both domestically
(against Riel and the rebellions) and internationally (deployed to the
Boer War in South Africa). When the NWMP was used to quell labour
unrest in the first decades of the twentieth century, it attracted considerable controversy and opposition. Mackenzie King promised that the
force would no longer be used in this fashion and, in 1920, combined
the NWMP with the Dominion Police to form the RCMP. It came with
an uncertain mandate: if the RCMP was not going to be used for labour
disruptions or other objects of federal concern, what would it do? In
1922 Progressive Leader T.A. Crerar introduced a motion to restrict the
force to operating exclusively in the northern territories (i.e., not in the
provinces) and to correct the constitutional anomaly of federal policing
(MacLeod, 1994: 46–7). Mackenzie King’s minister of the militia, George
Graham, responded that “speaking technically, on absolutely legal or
constitutional grounds,” Crerar was “absolutely right that the provinces
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ought to look after the maintaining of order within their several territories” but “in working out the affairs, particularly of a new country, we
are not always safe in adhering to the letter of the constitution” (Debates,
April 10, 1922: 831). Graham continued by simply accepting that the
Constitution would have to yield to the usefulness of a federal force:
“sometimes we have to violate almost the letter of the law, in order to be
practical” (Debates, April 10, 1922: 831; MacLeod, 1994: 47).
Controversy over the RCMP’s constitutional status finally abated when
it became clear that the provinces could no longer afford to provide
policing services during the crippling economics of the Great Depression. In 1932, when provincial police forces in Manitoba, Saskatchewan,
Alberta, New Brunswick, Nova Scotia, and Prince Edward Island folded,
they were replaced by divisions of the RCMP. A seventh provincial police
force, the British Columbia Provincial Police, was replaced by a division
of the RCMP in 1950. Regardless of their “exclusive” authority to legislate
for the administration of justice, provinces simply could not bear the
practical costs of policing.
In this respect, the RCMP could provide the economy of scale that
would lower the overall cost of policing to the provinces. Uniforms, for
example, could be bought more cheaply on a greater scale than they
could be for even relatively big provincial forces.4 The mutually agreeable solution was for the federal government to provide policing service
more cheaply than an independent provincial force. Under contractual
agreements between the federal government and each of the provinces,
the RCMP provide policing services at both the provincial level and
for municipalities in the province without their own force. The terms
of these contracts have been subject to considerable controversy and
political negotiation (Lunney, 2012), but an additional federal subsidy
of 10 to 30 per cent has made contracting virtually irresistible for many
communities (McClearn, Freeze, and Dhillon, 2018).
In addition to the financial price to be paid, there is also an added
cost of contract policing in terms of accountability. Government direction of police is controversial in the best of circumstances; Beare and
Murray (2007: 3) refer to the “widely accepted, if constitutionally shaky,
theory that governments give policy direction to the police but cannot
interfere in operational matters.” However, accountability is surely exacerbated by the additional confusion engendered by contract policing.
The recent Wet’suwet’en protests against the Coastal GasLink pipeline
Criminal Justice and Criminal Law
demonstrate the problem. Since the RCMP were attempting to enforce
an injunction (requested by Coastal GasLink) and the regulation of this
pipeline was properly within BC’s jurisdiction, the RCMP were acting in
their capacity as a provincial police force (and thus beyond any possible
federal direction). With protests taking place across the nation and federal works (like the railways) obstructed, pressure mounted in February
2020 for federal action involving what appears to many Canadians as our
“national” police force. While governments of all levels should always
proceed with great caution in directing police action, it is understandable why Canadians would look to their national leaders to address what
seemed like an issue for the RCMP.
Moreover, when policing matters do go awry, federalism in these
“contracting” provinces adds an extra level of complexity, as the tragic
events that led to the death of Robert Dziekanski illustrate. Dziekanski,
a newly landed immigrant from Poland who spoke no English, had been
detained at Customs at Vancouver International Airport for over nine
hours before being seen acting erratically in the International Reception Lounge. A physical confrontation with four RCMP officers – and
including two discharges of TASER weapons against him – was found
to have contributed to Dziekanski’s death in the early morning hours
of October 14, 2007. In light of the questions concerning the RCMP’s
actions and policies in the matter, the BC Government appointed a
Commission of Inquiry, led by Justice Thomas Braidwood, to investigate
the matter. Earlier jurisprudence (Scowby v. Glendinning [1986] and
Starr v. Houlden [1990]) established that provincial inquiries of this sort
could not be a “substitute for an investigation and preliminary inquiry
into specific individuals in respect of specific criminal offences,” but
rather should be “aimed at investigating, studying and recommending
changes for the better government of their citizens” (Starr: para. 40).
With a policing force (the RCMP) beyond the province’s jurisdiction,
the recommendations of the inquiry would not only have to be aimed
at future reforms (and not criminal or disciplinary charges) but also
require the federal government’s acquiescence (see Lunney, 2012:
445–6). Braidwood recommended an Independent Investigations
Office (IIO) to investigate any incidents where a “person has died or
suffered serious harm as a result of the actions of a police officer,” essentially importing the Special Investigations Unit (SIU) that Ontario
established in 1990. In order to follow this recommendation, the BC
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Government amended its own Police Act (as Ontario did in 1990 to its
Police Services Act), but then had to take the additional step of reaching an agreement with the RCMP to have the IIO apply to the federal
force. The RCMP and the IIO entered into a Memorandum of Understanding to this effect in 2012. However, it is worth asking whether the
added complexity of the federal dimension inhibits or further delays
accountability measures that are often difficult to establish under even
the best conditions. In other contract police jurisdictions, units similar
to the SIU and IIO are still only able to address issues with municipal
police and may not consider RCMP conduct (four provinces – half of
the contracting provinces – do not have provincial police accountability measures that apply to the RCMP; for more information on the
variations across the provinces, see Parent and Parent, 2018: 200–30).
They may simply be awaiting their own tragedy to prompt this sensible
reform, but the federalism aspect is likely an additional obstacle to
greater accountability.
In addition to contract policing, the RCMP has continued to develop
expertise in policing functions that are more effectively done at the
national level, essentially undertaking roles similar to those performed
by the Federal Bureau of Investigation in the United States. Crimes
that have an international scope (human trafficking, for example) and
policing matters that often transcend provincial boundaries (organized
crime investigations, and criminal intelligence matters generally) are
appropriate subjects for a national police agency. There has been general acceptance of the RCMP taking on these roles – which they play in
both contracting and non-contracting jurisdictions – and accumulating
expertise in these critical areas. In some cases, however, the RCMP’s role
duplicates provincial policing. The Ontario Provincial Police established
Canada’s first sex offender registry, with the RCMP later following with
a national registry that, despite having the obvious advantage of being
more comprehensive, is considered inferior to the Ontario one (Friscolanti, 2008). If federalism allows for the provinces to be “laboratories of
democracy” (as Justice Brandeis once described), then the sex offender
registry is a good example of a federal scheme that might not even exist
without earlier sub-unit experimentation. On the other hand, the duplication in Ontario might be now considered wasteful and inconvenient,
but the application of both registries to Ontarians has been upheld
against constitutional challenges (Dyck, 2008).
Criminal Justice and Criminal Law
Some suggest that the RCMP burden of contract policing has hampered the force’s effectiveness in its national policing role. Ken Hansen
(2018) points to an “organizational schizophrenia” where local policing
detracts from the RCMP’s focus “on the complex defence and security
threats confronting Canada.” Former RCMP Commissioner Paul Kennedy
recommends that we embrace the RCMP as a truly “national police force
that deals with complex crime” (Quan, 2019) and let provincial forces
manage local policing matters. For the immediate future, however, it is
unlikely that the RCMP will shed the local dimensions that, after almost
ninety years, are now well entrenched.
LEGITIMACY
To a large extent, Canadians have adopted Macdonald’s vision of criminal
justice as a nation-wide, unifying force, with the expectation that the law
in Victoria should be the same as it is in St. John’s. Indeed, provincial
variation that results from different applications of section 92(14) is
sometimes seen as illegitimate. There has been controversy, for example,
over the discrepancy between the three provinces that employ “charge
screening” by Crown Attorneys and the other provinces that leave that
decision exclusively with police (Penney, Rondinelli, and Stribupoulos,
2011: 446). Another example is the wide variety of provincial rules
and practices regarding bail that persist even despite the single shared
“law” on bail found in the Criminal Code (Antic, 2017: para. 65). Some
provinces require “sureties,” others do not; some provinces overuse bail
conditions, others less so; some provinces deal with bail issues swiftly,
others are paralyzed by a “culture of adjournment” (Webster, 2015). In
a recent case, the court has found that “[d]espite the fact that pre-trial
detention is governed by federal law, there has been widespread, and
systemic, divergence in the approach taken to 90-day detention reviews
across Canada” (Myers, 2019: para. 14). Such variation is clearly the result
of different provincial policies and practices regarding the “administration of justice,” and is rightly seen as problematic from the standpoint
of the accused. The Supreme Court has encouraged greater uniformity
by providing additional guidance on the proper statutory interpretation
of the Code and through greater enforcement of the Charter’s guarantee
of reasonable bail (section 11(e)). The Charter and the Code can exert a
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centralizing force on criminal justice, but given the wide variety of provincial practices, it can often amount to little more than “whack-a-mole,”
especially since the remedies for these Charter violations are often left
again to provincial determination.
Despite the complexities introduced by federalism, Canadians have
considerable confidence in their criminal justice system. In a 2013
survey, 76 per cent of Canadians had a great deal or some confidence
in the police and, in a 2009 survey, 93 per cent were satisfied with their
personal safety from crime (Canada, 2017). While there is wide variation
of confidence in different criminal justice actors, the overall confidence
Canadians have in their criminal justice system is higher than in other
western jurisdictions (Re-inventing Criminal Justice, 2014: 5). While no one
would deny there are dysfunctions – and perhaps some of them relate
to the federal structure – most Canadians accept the legitimacy of the
criminal law and its administration.
What may be true of Canadians in aggregate is not necessarily the case
for particular communities, where confidence in the administration of
justice has eroded because of a deterioration in the relationship between
the community and criminal justice actors. For example, 54 per cent of
black Torontonians believe the police do a poor job at treating them
fairly (but 85 per cent still feel the police do an average or better job at
ensuring safety) (Black Experience Project, 2017: 49). Police shootings
and use-of-force controversies can deplete this confidence dramatically
and, at least tangentially, federalism may further impair already-difficult
investigations and measures of accountability. For the most part, however, and with one major exception, these problems, while pressing and
substantial, are not strongly related to federalism matters.
Federalism might play a larger role in determining the legitimacy of
the criminal justice system in the eyes of Indigenous Canadians. The
final stage of the criminal justice process – sentencing and corrections –
certainly demonstrates a systemic problem of overrepresentation. Although they make up 4 per cent of Canada’s population, Indigenous
Canadians constitute 23.2 per cent of the federal inmate population.
The incarceration rate for Indigenous adults is approximately ten times
higher than it is for other Canadians (OCI, 2013). That discriminatory
outcome alone would be sufficient for Indigenous Canadians to question
the quality of Canadian justice, but it is only one aspect of an overall
system that seems consistently tilted against them. At the beginning
Criminal Justice and Criminal Law
of the criminal justice process – policing – the stories of injustice are
long-standing and well known. The federal role for the RCMP was
promoted in 1927 as having “peculiar facilities for dealing with the
Indian population” because it discharged its duties in this area “with
efficiency and sympathy” (MacLeod, 1994: 52). However, any current
assessment of the RCMP’s performance would have to take account
of its role in Canada’s shameful residential schools – for which the
RCMP has made an official apology – and its ineffectiveness (at best)
in addressing the many cases now being identified by the Missing and
Murdered Indigenous Women Inquiry. It is little wonder that many of
today’s Indigenous communities would refuse to accept the RCMP as
a “neutral” arbiter for managing protests against pipelines and other
matters of concern. Although the role of the RCMP in past mistreatment of Indigenous peoples is clearly a vital concern for policing in
Canada, it is also difficult to see it solely as a function of federalism.
After all, controversies about the policing of Indigenous Canadians
can be found at all levels of government: the provincial OPP’s role in
Dudley George’s death at Ipperwash, the provincial Sûreté du Québec’s
troubling behaviour revealed by the Viens Commission, and the municipal Saskatoon Police’s “Starlight Tours” are just three notorious
examples. The solution may lie with the self-governing police forces
that are increasingly found in Indigenous communities, but they are
often just as under-resourced as other services on reserves. But, to the
extent those Indigenous police forces further complicate Canada’s already fragmented policing scheme and raise constitutional questions,
they could surely be justified on the “practical” grounds we extend to
other policing work-arounds.
An injustice to Indigenous peoples that might be more clearly
connected to criminal justice federalism is their underrepresentation
on juries. Here, the federal power to legislate for Indigenous peoples
and their property (section 91(24)) may contribute to their further
neglect by the largely provincial administration of justice. For example,
Ontario jury rolls (from which juries at trial are drawn) are primarily
sourced by municipal enumerations under the Assessment Act. Without
other jury selection measures, enumeration lists would entirely omit
residents of reserves. In places like Kenora, Ontario, selecting juries
from municipal enumeration lists can lead to dramatic underrepresentation: while 30 to 36 per cent of the population lives on a reserve,
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only 10 per cent were on the jury roll (Iacobucci, 2013: para. 133).
Although the provincial Juries Act obligates the local sheriff “to obtain
the names of the inhabitants of the reserve from any record available,” in practice this task has been left to various provincial officials,
including county court staff (Iacobucci, 2013: para. 136). It does not
take much imagination to connect this fragmented local approach to
systematic underreporting. This shortcoming was partially remedied
by the availability of lists that were maintained by the then Indian and
Northern Affairs Canada (INAC)5 and made available to the Provincial
Jury Centre under the federal Access to Information Act (Iacobucci, 2013:
para. 137). In 2001, INAC advised the Ontario Ministry of the Attorney
General that they would no longer provide these lists because sharing
this personal information was prohibited under privacy regulations
(Iacobucci, 2013: para. 141). Ontario continued to use the 2000 INAC
lists even as they became increasingly outdated (Iacobucci, 2013: para.
142). It was not until 2011, when a series of controversies related to
Indigenous underrepresentation on juries prompted the Iacobucci
Report, that serious efforts to remedy this problem began, and not until
2019 that Ontario shifted to using OHIP information to source its jury
rolls. (Other provinces use health card information for this purpose,
and Iacobucci recommended it for Ontario. Although clearly a much
needed reform, this method still likely underrepresents Indigenous
Canadians who use health facilities that do not require a provincial
health card). While federalism is by no means the only or even most
prominent factor in the underrepresentation of Indigenous peoples on
Canada’s juries – other systemic forms of discrimination are probably
stronger drivers – it likely contributes to the maladministration, since
provincial systems by default ignore them and special efforts must
be made to have these “federal citizens” included. Unlike the bail
system, where variation could be tamed by the uniform application
of the Charter, the Supreme Court in Kokopenace decided there was no
constitutional right to a representative jury for “societal groups” (2015:
para. 65). Since the jury serves as “the conscience of the community,
as the ultimate protection against oppressive laws and oppressive law
enforcement ... and ought to enhance the legitimacy of the criminal
justice system” (Kokopenace, 2015: para. 220), the exclusion of Indigenous Canadians is appalling but sadly reflective of their treatment
throughout the entire system.
Criminal Justice and Criminal Law
CONCLUSION
There are additional dimensions of Canadian criminal justice federalism
than those discussed herein; they include, for example, the division of
correctional powers in sections 91(28) and 92(6) and the federal dimensions of criminal courts. However, the controversies and features described
above should be sufficient evidence that criminal justice is one of the
more arcane areas of Canadian federalism. Its complexity might explain
why political scientists have only rarely given it in-depth treatment (Smith
[1994] is one of the few) and why legal scholars have typically discussed
federalism and criminal justice in separate silos (Friedland [1984] is
a notable exception). The unusual functional alignment of powers in
criminal justice alone makes it challenging to study, since comparisons
with other powers are difficult. And yet the criminal justice powers must
not be ignored. They are central to state power and arguably the most
important powers that can be exercised directly against citizens, often
with life-changing consequences.
When it comes to performance, effectiveness, and legitimacy, Canada’s criminal justice federalism earns mixed grades. Its performance in
securing the functionalism explicit in the constitutional text is imperfect
at best. Permitting both levels of government to extend their criminal
justice policies beyond their own “watertight compartments,” as commonplace in virtually every other area of Canadian federalism, obscures the
functional approach. Despite the increasingly blurry boundaries, it still
remains possible to identify a rough federal framework where criminal
law is made by the national Parliament and administered by the provinces.
With respect to effectiveness, the role of “practical” accommodations
in overcoming doctrinal obstacles cannot be overstated. The federal
structure of Canadian policing proves that flexible pragmatism will trump
doctrinal dogmatism. That ability to meet expectations – regardless of
the federal conditions – helps explain why Canadians are generally satisfied with their criminal justice system. At the same time, federalism is
also a minor contributing factor in delegitimizing the system in the eyes
of Indigenous Canadians. At the most abstract level, Canadian criminal
justice federalism privileges constitutional pragmatism over principle,
function over form, and general legitimacy over specific injustices. As
such, it may have more in common with other areas of Canadian federalism than initially suggested.
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NOTES
1 The United States Constitution, which serves as an inspiration for some
other elements of Canada’s Constitution, and the Australian Constitution,
which otherwise follows a number of other Canadian assignments of power,
both formally leave criminal justice to the sub-unit state level.
2 The complexities in each pre-Confederation colony are detailed in Girard,
Phillips, and Brown, 2019: 275–80, 543–50.
3 A potential third – the Royal Newfoundland Constabulary – only services
metropolitan areas in that province.
4 McClearn, Freeze, and Dhillon (2019) also note that RCMP salaries are
lower compared to other services and RCMP staff models provide fewer
police per capita than other forces. Not all of these “economies” are necessarily benign.
5 This federal ministry was renamed Aboriginal and Northern Development
Canada in 2011 and then changed to Indigenous and Northern Affairs
Canada in 2015.
GLOSSARY
administration of justice That which is necessary to implement and
enforce the substance of criminal law; usually encompassing the police,
prosecutors, and the courts. This term is contested, but generally
understood as permitting provincial control over the instruments of justice
and how they are operationalized in the province.
codification The process of translating unwritten, often dispersed principles
and rules into a written, systematized law. The Criminal Code of Canada, a
federal statute, codified criminal laws that were previously found in English
legal texts, judicial decisions, and sporadic statutes.
criminal law The category of law that deals with those who commit
criminal offences. “Crime” is a notoriously difficult word to define since
it may include all acts or omissions that the state identifies as a crime
(a “positivist” definition), but that account is in tension with a more
“naturalistic” definition that restricts it to acts or omissions that are
inherently wrong or evil in some way. In criminal law, this tension is often
described using the Latin terms malum prohibitum (wrong because it is
prohibited) and malum in se (wrong in itself). The former has an empirical
simplicity, but the latter has a significant normative force that cannot be
ignored.
functionalism An approach to the federal division of power that emphasizes
a power’s purpose rather than its subject matter. Instead of simply
permitting the exercise of power in a given area, functionalism requires
that power be exercised in accordance with the fulfillment of a purpose
or mode of operation. Canadian criminal justice is divided functionally
Criminal Justice and Criminal Law
between the federal government that legislates criminal law and the
provinces that administer it.
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Friscolanti, M. 2008. “There’s a Problem with Canada’s Sex Offender
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Greene, S.A. 2019. “A Theory of Poverty: Legal Immobility.” Washington
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Hansen, K. 2018. “The Problem at the Root of the RCMP’s Dysfunctional
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Iacobucci, F. 2013. First Nations Representation on Ontario Juries: Report of the
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Lunney, R.F. 2012. “Galloping Off in All Directions: An Analysis of the New
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RJR-MacDonald Inc. v. Canada (Attorney General), [1995] 3 S.C.R.
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CHAPTER SIX
Federalism, Political Parties, and the
Burden of National Unity: Still Making
Federalism Do the Heavy Lifting?
Herman Bakvis and A. Brian Tanguay
Political parties perform a number of essential functions in liberal democracies: organizing electoral choices for citizens, representing interests,
channelling political participation, and recruiting decision-makers for
government are among the most important (King, 1969; Covell, 1991).
In federal systems, parties are frequently called upon to perform another
task, namely, to unify the nation. In Canada, broad-based brokerage
parties have long played a crucial nation-building role, constituting what
David Smith called the “sinews of a healthy federalism” (1985: 1). From
Confederation to the Diefenbaker landslide of 1958, and despite the
repeated emergence of regional protest parties from 1921 onward, the
two main national parties continued to play this pivotal role. However,
they have had less success since the late 1950s as voters in the western
provinces, in particular, have chafed under a series of governments –
those of Pierre Trudeau, Brian Mulroney, Jean Chrétien, and, more
recently, Justin Trudeau – seemingly dominated by central Canada. The
election in 1993 of a Liberal government with close to two-thirds of its
seats drawn from Ontario only served to heighten this perception of a
central Canadian bias. The rise of the Bloc Québécois in Quebec and
the Reform Party of Canada in the west constituted strong evidence
that the party system had become both regionalized and fragmented.
In the early twenty-first century, there were further changes. The
Reform and Progressive Conservative parties consolidated into a single
Conservative Party of Canada, and won a minority government in 2006.
Federalism, Political Parties, and the Burden of National Unity
The Bloc Québécois declined and by 2015 lost its official party status.
The NDP had a surprising success in the 2011 election, winning 103
seats (more than half of them from Quebec) and forming the Official
Opposition. And in 2015, the Liberal Party under Justin Trudeau defeated
the majority Conservative government of Stephen Harper, forming its
own majority. Then in 2019 the party system reverted back to a Liberal
minority government with the Conservatives in second place and the NDP
holding the balance of power. Thus, in the space of a little over a decade
the party system appears to have shifted from one-party dominance to
fragmentation to something akin to the two-party-plus system last seen
in the 1980s. Could this new state of affairs also mean that parties may
once again constitute the “sinews of a healthy federalism”?
This chapter poses three questions: Is there a renewed prospect of
parties playing a more active role in carrying the burden of national
unity, particularly now that we have two national parties and a less fragmented system? What can we reasonably expect of the two main parties
as national integrators? And, by extension, is the knitting function of
political parties in federal systems, as displayed in the 1960s and 1970s,
once again relevant? The first part of the chapter examines some mechanisms through which parties perform “knitting” functions and where
they appear to fall short. Parts two and three discuss how the party
system has performed in the past, from its putative decline in the final
decades of the twentieth century to its possible revival more recently.
We then briefly examine in succession three factors that have at times
helped offset the centrifugal tendencies of the party system: intrastate
federalism, in particular the role of regional caucuses in parliament
and ministers; the role of minority governments in shaping the federal–
provincial agenda; and the mobility of political actors – both elected and
appointed – between the provincial and federal levels of government.
The concluding section addresses the performance, effectiveness, and
legitimacy of the party system in relation to the Canadian federation by
reconsidering the role that we expect parties to play in federal systems.
A PARTIES-BASED THEORY OF FEDERALISM
As Campbell Sharman (1994) notes, there are three aspects to a
“parties-based theory of federalism,” beginning with William Riker’s
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concept of “the federal bargain” (Riker, 1964). The first of these is the
degree of partisan symmetry–asymmetry in a federation, which Riker
argued determined the nature of the federal bargain and whether the
federation was centralized or decentralized. A symmetrical party system,
with the same parties operating at the national and state or provincial
levels, would lead to a more centralized federation, especially if the link
between the state and national parties was strong. A strong federal–provincial/state linkage was indicated if a party had a strong presence at
both state and national levels, if the two levels shared many members in
common, and if local elected officials typically moved up to the national
level through the medium of the party. Most of Riker’s work was based
on evidence from the United States, where the party system is in many
ways more flexible and open than its Canadian counterpart.
The second aspect of parties-based federalism is the intrastate dimension: the representation of local and regional interests directly in national
governance. The thinking here is that parties facilitate the representation
of local and regional interests in national political institutions by providing
conduits not only for communication but for flows of power, influence,
and, above all, people: elected officials from the local and provincial/state
arenas who move up to the national arena while maintaining their links
with the former. This pattern has several advantages. Politicians starting
their careers at the provincial level and aspiring to higher office at the
national level know they must not appear too parochial: they must keep
broader national perspectives in mind, and national ambitions reduce
politicians’ inclination to focus purely on local issues. At the same time,
politicians at the national level who have local and regional experience
under their belts are likely to be more understanding of the issues faced
by local and regional governments (Barrie and Gibbins, 1989). Finally,
regional governments and parties can help national governments perform
better by serving as talent pools from which national parties can recruit
candidates for national office who have actual government experience.
Examining the degree of alignment between provincial and federal
levels of Canadian parties in partisan support, party ideology, nominating procedures, and financial linkages, Donald Smiley argued that on
Riker’s integrated versus confederal dimension “the Canadian party
system is significantly more confederal than that of any other federation
with which I am familiar” (1987: 117). He concluded that there was a
disjunction between the federal and provincial party systems; for all
Federalism, Political Parties, and the Burden of National Unity
intents and purposes the two party systems operated in two separate
realms (see also Dyck, 1996). At the same time, Smiley and Watts (1985),
in their classic book on intrastate vs. interstate federalism, argued that the
federal cabinet, the most important manifestation of party government
under the Westminster model, remains the only significant intrastate
institution: that is, the only institution within the government of Canada
capable of representing regional interests. Since the parties remain the
primary source for the recruitment of cabinet ministers, they remain an
important part of the equation, if only by default.
The third dimension of parties consists of the structure of party
systems and the norms governing competition between them. William
Chandler (1987) identified three types of party system: single-party
majority; multiparty with one party dominant; and coalition, where no
single party has a majority and two or more parties constituting a majority
of parliamentary seats form a coalition in order to make government
work. The importance of these distinctions, according to Chandler, lies in
the type of competition and relations between the parties. In the singleparty majority system, Chandler claims, highly adversarial relations are
often the norm, especially in parliamentary systems. Multiparty with one
party dominant systems can also be highly adversarial, but are less so when
the dominant party has a rather narrow base. Coalition-style systems are
the least likely to be adversarial. For Chandler, the single-party majority
system is the most problematic for federalism because adversarial norms
are likely to undermine the collaborative norms necessary for the smooth
functioning of the federation. The parties under this model would likely
exacerbate rather than alleviate conflict between the national government
and the constituent units. Chandler’s point – that the combativeness between parties is essentially transplanted to the federal–provincial arena
when “federal and parliamentary traditions are combined within one
regime” (1987: 156) – may help explain conflict between federal and
provincial governments. Carty and Wolinetz (2004), also focusing on the
“coalition” model, concede that Canadian parties have long eschewed
inter-party coalitions of the type typically found in European systems;
yet “their leaders regularly actively engage in bargaining and accommodative coalition-style politics in the federal–provincial decision-making
arena” (Carty and Wolinetz, 2004: 67–8). They suggest that competitive
behaviour at the level of parties is not necessarily transplanted directly
into the federal–provincial arena.
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Although the Canadian party system falls short on the three dimensions noted above, we would argue that it does help to link regions to
the centre and promote collaboration, though not necessarily in ways
consistent with the standard theories of parties-based federalism. In
particular we note the somewhat neglected role of party professionals,
especially political staff, in linking federal and provincial governments
and their agendas. Furthermore, we believe the “knitting function” should
not be the only function on which we expect parties to perform well.
CANADA’S PARTY SYSTEM FROM 1867 TO 1993:
THE TRIUMPH OF REGIONALISM
Since Canada’s birth as a nation, regionalism has played a prominent
role in federal politics. Until the middle of the First World War, however,
these regional tensions were effectively contained within a competitive
two-party system in which the governing party – the Conservatives, largely
under John A. Macdonald, from 1867 to 1896 and the Liberals under
Wilfrid Laurier from 1896 to 1911 – forged a winning electoral coalition
based on solid pluralities (often outright majorities) of the vote in the
two most populous provinces, Ontario and Quebec. Together these
two provinces accounted for between 60 and 75 per cent of the seats in
the House of Commons, and no party was able to win national office
without attracting the support of a solid core of moderate nationalist
voters in Quebec. This pattern was not broken until the election of the
pro-conscription Unionist government in 1917, which saw Unionist
Liberals, mainly outside of Quebec, join with the Conservatives. It wasn’t
until the Diefenbaker landslide of 1958 that a single-party government
was able to form a majority government without having to depend on
representation from Quebec.
The compromises needed to make Canada a viable political and
economic entity – fostering industrialization behind high tariff barriers,
opening up the west to settlement, and providing the Maritimes with
their own railroad and favourable freight rates, for example – smoothed
over the fundamental divisions within the country (see chapter 8 on
the economic union). But regional economic grievances, coupled with
rapid industrialization and urbanization in the early part of the twentieth
century, shattered the two-party system and led to the development of a
Federalism, Political Parties, and the Burden of National Unity
second national party system (English, 1977; Carty, 1988). Between 1921
and 1925 the balance of power was held by the Progressives, the first in
a long line of regional protest parties – including the Co-operative Commonwealth Federation (CCF) and Social Credit in the 1930s – challenging
the dominant parties’ monopoly on representation. Although these
newer minor parties did not necessarily hold the balance of power, they
nonetheless articulated the economic, political, and cultural grievances
of particular regions and social classes within Confederation (Mallory,
1954; Gagnon and Tanguay, 1996).
The two most successful prime ministers in this second party system,
Mackenzie King and Louis St. Laurent, contained the challenge to the
established political and economic order posed by the regional protest
parties. Both party leaders – but King in particular – were astute practitioners of the art of brokerage politics, the pragmatic cobbling together
of party programs designed to appeal to a broad coalition of diverse
interests. King, for instance, limited the effectiveness of the Progressives
as the voice of agrarian protest by buying off some of the movement’s
leaders (most notably T.A. Crerar) with cabinet posts. By the late 1920s
the Progressives were a spent force in federal politics.
King and St. Laurent also moderated regional conflict within the party
system by stocking their respective cabinets with influential regional
chieftains – men like J.G. (Jimmy) Gardiner (former premier of Saskatchewan), C.D. Howe (north-western Ontario), and Ernest Lapointe
(Quebec). These figures gave direct representation to broader provincial
and regional interests in the Canadian cabinet. Howe, who as minister
variously of transport, munitions and supply, and reconstruction was best
known for his prowess on the national stage, nonetheless ensured that
north-western Ontario was well taken care of. King frequently heeded
the advice of these ministers on regional matters and was particularly
dependent on Lapointe for counsel on virtually all matters relating to
Quebec. This brokerage system of party politics was far from complete,
however, since some provinces, such as Alberta, were simply frozen out
of the arrangement. The system generally worked – in large part because
the ministers in question were able to deliver votes and seats at election
time. Two changes were afoot, however. First, while the patronage system
declined following the Civil Service Reform Act of 1918, it was replaced
in good part by the pork barrel in the form of large-scale government
contracts awarded to favoured regions (Noel, 2001). The new regional
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barons allowed the Liberal Party’s connections with the constituencies
to atrophy (Whitaker, 1977). Second, in the post-war period regional
brokering was largely displaced by the “pan-Canadian” approach of John
Diefenbaker and, later, Pierre Elliott Trudeau (Smith, 1985). The arrival
of television in the mid-1950s sharpened the focus on national leaders
and helped make regional power brokers less critical in the conduct of
election campaigns and delivery of the vote.
The electoral defeats suffered by the federal Liberals in 1957 and
1958 laid the groundwork for this third, “pan-Canadian” system. It was
less accommodating of regional interests than its two predecessors. The
policies pursued by each successive prime minister were shaped by a
centralizing vision of the country, even if some leaders (Diefenbaker)
were more sensitive to regional concerns than others (Trudeau). Diefenbaker’s concept of “One Canada” and his Bill of Rights drew attention
to the formal equality of all citizens and “appealed to Canadians as
Canadians regardless of where they lived or what language they spoke”
(Smith, 1985: 27). Lester B. Pearson’s national medicare program, the
Canada Pension Plan, and the Royal Commission on Bilingualism and
Biculturalism, along with Trudeau’s Official Languages Act, National Energy Program (NEP), and Charter of Rights and Freedoms were even more
centralizing in nature. Trudeau’s pan-Canadian policies in many ways
failed to unite the country, leaving a significant proportion of Quebec
feeling betrayed and creating animosity towards Ottawa in many other
regions (McRoberts, 1997). Official bilingualism and the National Energy
Program antagonized the western provinces, and although Trudeau’s
constitutional reforms may have struck a responsive chord in some parts
of English Canada, they alienated Quebec and provided fertile soil for
the later growth of the sovereignist movement.
The pan-Canadian thrust of federal economic and social policy from
1957 to 1984 was paralleled by the development of an increasingly
regionalized party system. The two main parties drew the bulk of their
electoral support from one or two regional strongholds, as did the CCF–
NDP. None of these parties was actually a national party in the sense of
enjoying solid cross-country support. Except in 1968, the Liberals won
elections mainly because of their pre-eminence in Quebec, where they
typically won between 75 and 99 per cent of the available seats. However,
the Liberals were virtually shut out in the west: in 1980 they won only
2.5 per cent of the region’s seats; their western MPs accounted for 1.4 per
Federalism, Political Parties, and the Burden of National Unity
cent of the governing caucus (see Appendix 1). The Liberals’ woes in the
west were mirrored by the Conservatives’ failure to make any electoral
headway in Quebec. In 1979 Joe Clark formed a minority government
with only 1.5 per cent of his caucus from Quebec (see Appendix 1).
This regional fragmentation was exaggerated by Canada’s first-pastthe-post electoral system. For example, even though the Progressive
Conservatives managed to win at least 13 per cent of the popular vote in
Quebec in the five elections held between 1968 and 1980, this electoral
support consistently translated into two or three seats at most (Tanguay,
1999). The problems thereby created were compounded by conscious
party electoral strategy. Party officials tended to direct the bulk of their
limited organizational and financial resources to those regions in which
they stood the best chance of winning. After its crushing defeat in 1958
by the Diefenbaker landslide win, the Liberal Party undertook a number
of reforms. It centralized its party structures, recruited new candidates,
modelled its campaign techniques on American practices (improved
use of television and opinion polling, for example), and shifted its
electoral appeal to the urban ridings in British Columbia, Ontario, and
Quebec, more or less conceding rural voters to the populist Diefenbaker
(Wearing, 1981).
Thus it is commonplace to depict the evolution of the Canadian party
system in linear fashion – from patronage to brokerage to pan-Canadianism
and then into a spiral of ever increasing regionalization – and to see the
Mackenzie King period in particular as the heyday of a cohesive Canadian
federation brought together through a well-integrated Liberal Party. Yet
this depiction is not entirely accurate. First, the integration was far from
complete. As R.K. Carty (2002: 726) has noted, success in bringing all
regions into the fold can be a dangerous thing: major crises affecting
the Canadian party system “have typically arisen when an overreaching
national party collapsed under the strain of trying to accommodate
the conflicting demands of too many interests gathered into a political
omnibus.” Carty points to the eventual collapse of the all-encompassing
coalitions constructed by Robert Borden, John Diefenbaker, and Brian
Mulroney as a warning that “successful brokerage parties ... have to be
careful not to actually catch all the interests” (726). The Mackenzie King
coalition was successful precisely because it was more limited in scope.
In brief, the construction of all-encompassing coalitions within national
parties was a rare occurrence and often fatal over time.
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The Mulroney government also illustrates that change was far from
linear. The cabinet formed in 1984 was a throwback to an earlier era,
centred on ministers with a strong presence in key regions: John Crosbie from Newfoundland, who dominated the Atlantic region; Donald
Mazankowski from Alberta; and (for a while) Lucien Bouchard as Mulroney’s Quebec lieutenant. Furthermore, Mulroney’s style was more reminiscent of Mackenzie King than of Diefenbaker or Trudeau. Even during
the Trudeau period, however, regional representation in cabinet – the
intrastate dimension – was far from absent (Bakvis, 1991). Though mere
shadows of the old regional barons under King and St. Laurent, regional
ministers continued to perform, and arguably still perform, important
representational functions. After the Liberals suffered near-defeat in the
federal election of 1972, for example, the party resurrected the role of
“political ministers,” one for each province, and gave them responsibility
for allocating pork-barrel type funding as well as patronage and party
organizational matters in their respective provinces.
In addition to dealing with party matters, however, these new-style
regional ministers were also critical conduits for provincial governments.
In the Maritimes, Trudeau-era figures such as Romeo Leblanc and Allan
J. McEachen interacted on a regular basis with the premiers of New
Brunswick and Nova Scotia, respectively. In effect this interaction came
through necessity. Many of the projects promoted by political ministers
(and their colleagues) – new roads, bridges, educational institutions,
and the like – fall under provincial jurisdiction. Persuading a provincial
government to construct a new bridge in a regional minister’s federal
riding, for example, usually involved some kind of quid pro quo, such
as federal funding for a project high on the list of provincial priorities.
FROM CHRÉTIEN TO HARPER TO TRUDEAU: FROM
ONE-PARTY DOMINANCE TO HYPER-REGIONALISM
TO TWO-AND-A-HALF PARTY SYSTEM
The 1993 election was a watershed for the Canadian party system. The
collapse of the Progressive Conservative government was unprecedented
in Canadian electoral history. The rise of the Reform Party in the west
and the Bloc Québécois in Quebec, and the fact that the Liberals drew
the bulk of their seats from Ontario, with only spotty representation
Federalism, Political Parties, and the Burden of National Unity
from other regions of the country, suggested that the regionalization
of the party system had entered a new and dangerous phase. While the
Liberals could claim representation from all regions of the country, most
of their nineteen Quebec seats came from Montreal ridings with heavy
concentrations of anglophones and non-francophone minorities; the
BQ, overwhelmingly, had become the voice of francophone Quebec.
As well, the Reform Party was clearly the first choice of voters in the
two most disaffected western provinces, Alberta and British Columbia.
The Parti Québécois returned to power in Quebec City in 1994, and
when it held the second referendum in fifteen years in the fall of 1995, the
No side won with only the slimmest of margins. After the referendum, the
Chrétien government governed much as previous Liberal governments
had: from the centre, finding informal ways to accommodate Quebec’s
demands. Especially after Chrétien’s third victory in 2000, when the
Liberals made gains in Quebec at the expense of the Bloc, it appeared
that Canada’s “government party” had successfully revived its traditional
formula and was now poised to extend its benign dictatorship (Simpson,
2001) well into the twenty-first century (Tanguay, 2003).
There were some crucial differences from the past, however. The
regional coalitions under King, St. Laurent, and Mulroney comprised
three components: Quebec, Ontario, and the west (usually a single
province such as Alberta or Saskatchewan). In the Chrétien era, for
the first time Ontario became the Liberals’ primary stronghold. The
principal partisan vehicles from Quebec and the west represented not
a competing national party but two distinct regional parties (Reform in
the west and the nationalist Bloc in Quebec). There were three other
features serving to undermine the capacity of the Liberal Party to act as
a broker of regional interests.
First, the Liberals’ total dominance in Ontario, and in turn the
domination of the parliamentary party by the Ontario Liberal caucus,
illustrated Chandler’s thesis that party competition in a single-party
majority (i.e., Westminster) system can exacerbate conflict in a federal
system. The 100-plus members of the Ontario federal Liberal caucus
took it on themselves to do battle with the controversial Conservative
provincial government of Mike Harris. Second, a dominant party facing
a weak or fragmented opposition is almost certain to develop pockets of
corruption. In the Liberal case the corruption manifested itself in what
became known as the sponsorship scandal. It involved inflated contracts
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for government advertising, primarily in Quebec, and with some of the
money attached to these contracts being kicked back to members of the
federal Liberal Party.
In the election of January 2006, the Conservatives broke through in
Ontario and won ten seats in Quebec, forming a minority government
and demonstrating that it was still possible for a national party other than
the Liberals to gain at least a partial foothold in the province of Quebec.
There were some other noteworthy features to the new Conservative
minority government. Seven of Harper’s twenty-seven ministers had
served in provincial cabinets – one of the highest proportions ever, not
seen since the days of Macdonald and Laurier. In addition to bringing
some of their provincial sensibilities to the cabinet table, these ministers
also brought the new government hands-on and recent experience in
elected office. This feature is clearly consistent with the Riker model of
an integrated party system, in which personnel moving from the regional
to the national level bring with them a number of positive attributes. It
is also a feature that has been largely absent from the Canadian party
system (Smiley, 1987; Barrie and Gibbins, 1989). Also notable was the
presence in cabinet of no fewer than five representatives from Quebec,
including Lawrence Cannon, who had served in the Liberal cabinet of
Robert Bourassa, and Josée Verner, who was also closely associated with
the Bourassa government. Half (14) of Harper’s ministers came from
Ontario and Quebec, a proportion that reflected the weight of central
Canada electorally and in the federal system, and the Conservatives’
desire to consolidate their electoral gains in those two provinces. The
electoral result of 2006 seemed to offer the Conservatives an opportunity
to both broaden their base and make further inroads into those key
provinces. Subsequent developments, however, prevented the Conservatives from capitalizing on their 2006 results. The 2008 election brought
to a standstill the Conservatives’ foray in Quebec and their longer-term
strategy of building a sufficiently large base in that province to form a
majority government. While they retained ten seats in Quebec, they
failed to make their hoped-for breakthrough into the voter-rich suburbs
around Montreal.
The election of 2011 was in some ways as dramatic as the 1993 election. The Conservatives lost five of their ten Quebec seats but gained
an overall majority, with a significant twist: a majority government
without Quebec as the crucial deciding factor. The seats the Harper
Federalism, Political Parties, and the Burden of National Unity
government obtained outside of Quebec were sufficient to ensure its
majority. The collapse of the Liberals in Ontario was not necessarily
a surprise, but the drubbing suffered by the Bloc Québécois and the
meteoric rise of the NDP in Quebec were. In addition to obtaining
103 seats overall, more than half of the NDP’s tally came from Quebec,
until then a graveyard for the social democratic party’s electoral hopes.
With the majority Conservative government and the NDP as Official
Opposition together constituting over 87 per cent of the seats in the
House, the system appeared, in a single election, to have reverted back
to something akin to the two-and-a-half party system of years gone by,
only with the positions of the NDP and the Liberals reversed. In the
subsequent elections in 2015 and 2019 the Liberals regained their
traditional central position with a majority government and a minority government, respectively, with the NDP being relegated to fourth
place in 2019 by a resurgent Bloc Québécois, losing all save one seat
in Quebec.
REGIONAL CAUCUSES AND REGIONAL MINISTERS
The regional caucuses of the parties constitute another dimension of
intrastate activity. All parties with more than one MP per province or
region have a regional caucus, which tends to be dominated by the
regional or political minister (see Hilderman and Thomas, 2013, for
a discussion of the role and significance of regional and sub-regional
caucuses in the federal parties). Representational activities within regional caucuses tend to take place under the cloak of caucus secrecy
(Thomas, 1985). As a result – even though it is a fundamental principle
of political representation that politicians must be seen to be working
in the interests of their constituents – the efforts of MPs and ministers
on behalf of their provinces will often not be known or visible to the
public. Even so, party discipline and caucus secrecy have not prevented
either ministers or MPs from publicly voicing concerns if they feel
important provincial interests are at stake. John Crosbie, the Atlantic
regional minister in the Mulroney cabinet, famously rebuked the prime
minister and extracted a public apology from the deputy prime minister over a proposed Canada–France fisheries treaty that, in the eyes
of the Newfoundland MP and the government of his province, would
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have compromised the cod stocks and other species off Newfoundland
(Crosbie, 1997: 261–6). And in the fall of 2010, when BHP Billiton
made a takeover bid for Saskatchewan-based Potash Corporation, the
thirteen government MPs from Saskatchewan made known that they
were very nervous about having to explain a possible decision to approve
the hostile takeover to their constituents (Chase and McCarthy, 2010).
In the Justin Trudeau government, the role of both regional ministers
and regional caucuses has been much less evident. Even more so than
the Harper and Chrétien governments, the Trudeau government has
relied on what Donald Savoie (1999), in connection with the Chrétien
government, has referred to as the art of “governing from the centre.”
Its agenda, emphasizing Indigenous rights, women’s rights, and climate
change, both cuts across and challenges more traditional agendas where
the recognition and economic well-being of different provinces and
regions are often the main concern.
Thus, the basic system of regional ministers and caucuses has evolved
and become attenuated under both Stephen Harper and Justin Trudeau.
Yet, regional representation still has some meaning. A governing party
whose regional representation in Parliament is uneven can compensate
with a more regionally balanced cabinet. Appendix 1 presents data on
regional representation in both Parliament and cabinet since 1867. Note
that where regional representation is lacking in Parliament, the difference
is almost always compensated for in cabinet. In 2011, while Quebec provided only 3 per cent of the Conservatives’ seats in Parliament (5 out of
166), just over 10 per cent of Harper’s ministers came from that province.
The distribution of cabinet positions in the Liberal government elected
in 2015 was also consistent with past practice, certainly with respect to
numbers and percentages. However, in the case of Atlantic Canada, the
MPs appointed to the cabinets were relatively junior and assigned to
less important portfolios. Nearly all long-serving Atlantic Liberal MPs
were overlooked in the formation of the 2015 cabinet. After the 2019
general election, Justin Trudeau sought to compensate for the Liberals’
lack of representation from the west – the party was shut out in Alberta
and Saskatchewan, and just over 10 per cent of the caucus came from
the four western provinces and the territories (see Appendix 1) – by
appointing a special representative for the Prairies outside of cabinet
to act as the political antennae for the region. Thus, the quality and
impact of regional representation can vary considerably, depending on
Federalism, Political Parties, and the Burden of National Unity
the prime minister and ministers in question and simply the availability
of elected MPs from the region in question.
MINORITY GOVERNMENT
Minority governments raise the prospect that substantial issues of a
federal–provincial nature will be taken up, discussed, and perhaps even
resolved among political parties rather than in the executive federalism
arena (e.g., Baier, Bakvis, and Brown, 2005). They also raise the hope
that regional voices are able to express themselves directly and openly
through regionally based parties, rather than be subsumed in traditional
brokerage-style national parties, and that accommodation can occur
in the context of open debate in Parliament and parliamentary committees rather than through traditional elite accommodation either in
the federal–provincial arena or within traditional parties. The Liberal
minority government of Lester Pearson (1963–8) laid the basis for key
social programs such as the Canada-Quebec Pension Plan (C/QPP) and
medicare, something that would likely not have occurred without the
active support by and pressure from the NDP in Parliament (Russell,
2008). From the perspective of federal–provincial relations in the social
policy field, this era was truly transformative.
For those who hoped for similar changes during the extended period of minority government from 2004 to 2011, the results would have
been disappointing. The NDP did persuade the short-lived minority
government under Paul Martin to put more money into certain federal–
provincial programs, such as post-secondary education. However, under
the Harper minority government (2006–11) no such leverage was available.
Instead this government relied more on the relentless use of attack ads
and related techniques to put the opposition parties on the defensive and
at a strategic disadvantage (Martin, 2010). At the same time, the Michael
Ignatieff-led Liberals did succeed in getting the Conservative government
to commit to a stimulus package during the financial crisis of 2009.
The election once again of a minority government in 2019, this time
under the Liberals with the NDP and the Bloc Québécois holding the
balance of power, may well see a repeat of the 1963–8 era that featured
an ­accelerated federal–provincial social policy agenda highlighted
by the launch of medicare and the Canada Pension Plan. It was a
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development made possible by a strong push from the NDP, which then
held the balance of power.
MOBILITY AND PARTISAN ALIGNMENT
Central to the Riker model of how parties serve the cause of federal
integration is the idea of partisan alignment between the national and
local levels and the upward mobility of elected officials through the
party from the local to the national level. Among other things, national–
provincial/territorial partisan alignment and mobility help foster informal
linkages, trust, and understanding between the two levels.
As Smiley (1987) notes, the Canadian system has never fared very well
in this regard. Barrie and Gibbins observe “that career mobility from
provincial to national office is the exception rather than the rule” (1989:
138) and that mobility has declined over time. As noted earlier, however,
the election of the Harper government in 2006 saw a number of former
Progressive Conservative ministers of the Harris government move to Ottawa and enter the Harper cabinet. Still, even during the Mackenzie King
era, the number of provincial figures moving to Ottawa was actually quite
limited. In 2019, this trajectory played out in reverse, as a former member
of the Harper cabinet, Jason Kenney, became premier of Alberta. There
is also some interparty mobility. Individuals closely associated with the
Liberal government of Robert Bourassa in Quebec entered the Harper
cabinet. Jean Charest’s transformation from leader of the federal Progressive Conservative party to leader of the Quebec Liberal Party and then
premier of Quebec can be seen as a successful move in the other direction.
Thus, the low overall mobility between provincial and federal parliaments and the weak links between federal and provincial parties have
not prevented close interaction between individual ministers in the
federal and provincial governments in the past. Even if their attention
is often focused on what Thomas (1985) calls allocational issues, the
more astute ministers will take their regional role seriously and use it to
convey broader regional concerns directly into cabinet. Meanwhile, other
ministers and their staffs, as well as the prime minister, will often consult
regional ministers to get a sense of the way various issues might play out
in their particular regions or provinces. In brief, while it can be argued
that the Canadian federation would perform better if the career path of
Federalism, Political Parties, and the Burden of National Unity
federal politicians were to incorporate a stint in a provincial legislature,
and ideally as a member of the same party, the Canadian federation and
party system have been able to overcome this obstacle to some extent.
At the same time, simply having the same party in power at both the
federal and provincial levels is no guarantee that relations will be closer,
friendlier, or more effective. The pitched battles between Lester Pearson
and Premier Ross Thatcher of Saskatchewan, or Mackenzie King and
Mitch Hepburn of Ontario – all of them Liberals – are legendary. Robert Bourassa, as the Liberal premier of Quebec, supported Progressive
Conservative Prime Minister Brian Mulroney in the 1988 federal election
campaign, to the chagrin of federal Liberal leader John Turner. And
much more recently, a common membership in the NDP family did not
prevent the NDP governments of BC and Alberta from taking opposite
positions on the Trans Mountain pipeline in a bitter and highly public
dispute compounded by the federal NDP leader taking the side of BC.
These examples suggest that common partisan ties are not likely to be
helpful when it comes to bridging major divisions between governments;
conversely, partisan differences are not likely to be a major hindrance
when it comes to forging partnerships when there is a common interest. It also suggests that the Carty and Wolinetz (2004) coalition model
is only half right. Although party differences found in provincial and
federal legislatures rarely enter the federal–provincial arena, adversarial
norms – a common feature of Canadian politics generally – often do,
pitching even governments of the same partisan stripe against each
other. A new variation on this theme was introduced in 2019: the federal
Liberal–Conservative split on the carbon tax is now being replicated at
the provincial level, with freshly elected Conservative provincial governments, all opposed to the carbon tax, taking their opposition directly
into the federal–provincial arena. The 2019 federal election also saw
the unprecedented spectacle of the Conservative premier of Alberta
directly intervening in the battle by actively campaigning against the
Liberals in a number of key Ontario constituencies. Interestingly, Progressive Conservative Premier Blaine Higgs of New Brunswick, himself a
former executive in the oil industry, acknowledged that the re-election
of Justin Trudeau’s Liberals meant that carbon pricing was a fact of life,
and that his province would accordingly seek to devise a carbon tax of
its own (Poitras, 2019). All this, nonetheless, suggests that the partisan
dimension is in fact becoming more important.
153
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Herman Bakvis and A. Brian Tanguay
There is a further aspect worth discussing. Work based on the Riker
model focuses on the movement of elected officials from the state/provincial level to higher levels of government. The more movement there is
between the two levels, the greater the degree of integration. However, this
focus ignores the role played by unelected officials, both public servants
and political staff. In Canada there is a long history of such individuals
moving from one government or level to another, particularly when
there is a change in government. In the 1960s there was a major exodus
of officials from Saskatchewan after the defeat of the NDP government,
including key figures such as A.W. Johnson and Tommy Shoyama. Both
ended up as senior officials in the Department of Finance in Ottawa where
they helped shape and implement medicare. The past decade has seen a
further variation on the mobility phenomenon: the movement of senior
political staff from the provincial to the federal level and vice versa. The
most notable example was the move of a number of key staffers of the
Liberal government in Ontario under Dalton McGuinty (2003–13) to
Ottawa in 2015 where two of them came to occupy the two most senior
positions (chief-of-staff and principal secretary) in the office of Prime
Minister Justin Trudeau. One of the signature achievements of the 2015–19
Trudeau government was the federal–provincial agreement on the C/
QPP expansion in which the Liberal government of Ontario played a
key role in pressuring not only Ottawa but also the other provinces. It
is likely that close collaboration between senior political staffers in both
governments helped bring the negotiations to a successful conclusion.
PERFORMANCE, EFFECTIVENESS, AND LEGITIMACY
Before turning to our three thematic criteria, let us briefly review the
main points so far. First, the party system of the past may not always,
and indeed may never, have performed the role attributed to it. The
party omnibus was far from all-encompassing, and when all regions of
the country are represented within a single major party, the results are
almost always calamitous, as Carty (2002) has argued. Party government
appeared to work best when it took the form of a minimum winning
coalition with two or three anchors in critical regions of the country.
In the absence of an elected or provincially appointed second chamber,
and with an electoral system that routinely produces wide discrepancies
Federalism, Political Parties, and the Burden of National Unity
between popular votes and seats, the institution that makes the system
work has always been the federal cabinet. Regional representation in
cabinet was the critical link in the eras of both Macdonald and King.
When a governing party’s regional representation in Parliament is un­
even, that imbalance can be compensated for in cabinet. At a minimum
it would be unwise to assume there was a period when parties played a
more critical role in linking regions to the centre. Federal and provincial
party systems were already bifurcated in the 1920s and 1930s, ostensibly
the heyday of regional brokerage, and parties in general have always been
limited in terms of the regional interests they accommodate at any one
time. In short, it may be unrealistic to use the past either as a standard
by which to judge the current party system or as a model we might wish
to recreate in order to relieve the present system of executive federalism
of some of the burden of national unity. It might be that the Canadian
party system was never all that critical to the functioning of federalism;
the Canadian federation survived despite the limited integrative capacity
of Canadian parties.
In applying the three assessment criteria we should include not only
the integrative dimension of parties but also the extent to which they help
foster flexibility and responsiveness. These three elements are related;
for instance, integrative capacity may be improved when the party system
demonstrates flexibility. Also, these criteria should not apply solely or
even primarily to the goal of integration. The fact that the provinces, and
in particular Ontario and Quebec, often elect parties at the provincial
level with a partisan stripe different from that of the federal government
can be seen as contributing to the ability of the Canadian federal system
to facilitate the pursuit of different, even competing, agendas, which is
after all what federalism is all about. In other words, allowing for different aspirations may well contribute to increasing the legitimacy of the
system rather than detracting from it.
Certainly, the different federal and provincial electoral arenas
allow citizens to signal to each other, to their government, and to other
governments – both federal and provincial – their thoughts and intentions.
Quebec offers a fine illustration. For most of Canadian electoral history,
its voters supported the Liberals or the Conservatives in federal elections –
until 1993 when they decided to support a party, the Bloc Québécois,
working outside of the two traditional governing parties. Then in 2011
this support shifted dramatically to the NDP. Support for the NDP proved
155
156
Herman Bakvis and A. Brian Tanguay
short-lived, however, as its seat tally dropped dramatically in the 2015
election down to sixteen from fifty-eight and then down to a single seat
in 2019. The implication is that Quebec voters saw the NDP as somewhat
akin to a parking lot: a temporary transition place after tiring of their
affair with the Bloc before deciding on whether to rekindle their interest
in it. By 2019, a good portion of these voters had indeed returned to the
Bloc, helping to elect thirty-two Bloc members (up from four in 2015),
while slightly more drove off with the Liberals, electing thirty-five of them.
The upsurge in Bloc support can be explained in part as the result of a
backlash against the negative sentiment outside of Quebec over Bill 21,
Quebec’s secularization bill that bans the wearing of religious symbols by
provincial civil servants, legislation that enjoys strong support from most
francophones in Quebec. It could also be that in 2019 Quebec voters
decided to hedge their bets by sending to Ottawa both a contingent of
Bloc MPs, who would articulate and reinforce the nationalist message
already being conveyed by the governing party in Quebec (the CAQ),
and an equally strong contingent of Liberals, who would be able to
represent them directly in the federal government. In any event, in a
public opinion poll taken shortly after the election asking respondents
how pleased they were with its outcome, Quebeckers appeared to be the
most pleased, with 67.6 per cent saying they were pleased or somewhat
pleased versus 59 per cent for the country as a whole and 33.8 per cent
of those on the prairies (Nanos, 2019).
In brief, elections and their outcomes can be seen as part and parcel
of the federal fabric of this country where voters both signal their happiness or unhappiness with their governments and foreshadow major
shifts that are in the offing (Johnston and Cutler, 2003). More than sixty
years ago, Frank Underhill speculated that Canadian voters balanced
one-party government at the federal level through “some instinctive,
subconscious mental process” by electing governments of a different
partisan complexion at the provincial level ([1955] 1961: 237). This
proposition was quickly dismissed as overly simplistic (Scarrow, 1960),
but some more recent research has found some empirical support for
the idea (Erickson and Filippov, 2001). What was particularly intriguing
in the 2019 election results is that the Liberals elected approximately
seventy MPs in Ontario ridings that only sixteen months previously
elected Progressive Conservatives to represent them in Queen’s Park
(federal and provincial ridings share the same boundaries in Ontario).
Federalism, Political Parties, and the Burden of National Unity
CONCLUSION
Is it realistic to expect the party system to do the heavy lifting when it
comes to the integration of the Canadian federation? If so, how effective
has the party system been in this task? In this chapter, one of our arguments is that the integrative capacity of parties was always limited, and
to claim that at one point in our history there was a golden age where
the party system played a much more critical role in national unity is
misleading. The regionalization and fragmentation in the party system
that have occurred on and off over the years likely contributed to, as well
as reflected, deep fissures in the federation. At the same time, having all
regions represented within the governing party’s parliamentary caucus
as a result was not necessarily conducive to greater national unity, as
illustrated by what followed after the 1958 and 1984 landslides. Rather,
the more effective governing regimes tended to be where the party was
anchored in two or perhaps three key provinces, a format that provided
greater flexibility and made managing caucus expectations much easier.
Furthermore, in discussing the performance and effectiveness of
parties in a federal context one needs to keep in mind that integration
and national unity should not be the only objectives. Having dissimilar
parties at the federal and provincial levels can in fact be a positive force,
helping to maintain a balance of power between the centre and the
constituent units. This feature is all the more important in light of the
inherent tendency of Westminster systems to concentrate power at the
centre (Savoie, 1999). Having strong governments at the provincial level
of a different ideological stripe can be seen as a desirable component in
a parliamentary system where checks on the executive tend to be weak.
Finally, the models used to examine the role of parties and party
systems need to be rethought. The original Riker (1964) model, based
almost exclusively on the American system, assumes a simple two-party
system where the key variables are the degree of partisan alignment
or misalignment between the state and federal levels and the mobility
of elected officials from local to national circles. We have noted that
there are further dimensions and nuances to political parties operating
within a federal system that need to be taken into account. In Canada,
where the BC Liberal Party, for example, is much closer to the federal
Conservative Party than to the federal Liberal Party (both in terms of
voting support and personnel), formal party labels are not that reliable,
157
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Herman Bakvis and A. Brian Tanguay
if not outright misleading as a guide to linkages between the federal
parties and their putative provincial counterparts. We also noted that
within political parties the key figures are not just the politicians but
also advisors, pollsters, and party-friendly policy experts, and how the
movement of these personnel and their networks can be seen as a major
factor in facilitating co-operation between levels of government. The
shift of key political staff from the Ontario Liberal government to the
Trudeau government in 2015 and later a similar movement of former
Harper government political staff to the Ontario Ford government in
2018 are but two recent examples. The role of elections, and in particular
the balance theory, in which it is argued that citizens will support a party
at the provincial level opposite that of the party in power at the federal
level, merits renewed interest. What limited evidence there is on this
theory is mixed, which is all the more reason why it should be examined
more closely, particularly because if it is borne out it would constitute an
important part of our overall system of checks and balances.
In brief, the role of parties and party systems in federations should
be seen not just as a mechanism for national integration but also as an
important means for ensuring a balance of power within the federation
and as part of a system of countervailing powers. If we assess the performance and effectiveness, and also the legitimacy, of the present party
system within this broader framework, it may well lead us to conclude
that it has acquitted itself reasonably well.
Governing partya
LIBERAL-CONSERVATIVE
CONSERVATIVE
LIBERAL
CONSERVATIVE
CONSERVATIVE
CONSERVATIVE
CONSERVATIVE
LIBERAL
LIBERAL
LIBERAL
LIBERAL
CONSERVATIVE
UNIONIST
Liberal
Conservative
LIBERAL
CONSERVATIVE
LIBERAL
LIBERAL
LIBERAL
LIBERAL
General
election
1867
1872
1874
1878
1882
1887
1891
1896
1900
1904
1908
1911
1917
1921
1925
1926
1930
1935
1940
1945
1949
–
7.1 (7)
1.5 (2)
5.1 (7)
6.5 (9)
10.3 (13)
11.1 (13)
7.6 (9)
7.7 (10)
14.6 (20)
13.5 (18)
13.6 (18)
36.0 (54)
5.2 (6)
18.4 (21)
21.4 (25)
22.6 (31)
20.3 (35)
23.9 (43)
15.6 (19)
22.0 (42)
Westb
47.0 (47)
38.4 (38)
47.8 (65)
44.6 (62)
40.3 (56)
43.7 (55)
38.9 (46)
36.9 (44)
27.7 (36)
27.7 (38)
27.8 (37)
54.6 (72)
48.0 (72)
17.2 (20)
58.8 (67)
18.8 (22)
43.1 (59)
32.6 (56)
31.1 (56)
27.9 (34)
28.8 (55)
Ont.
45.0 (45)
39.4 (39)
25.7 (35)
33.8 (47)
36.7 (51)
26.2 (33)
23.7 (28)
41.2 (49)
44.6 (58)
38.7 (53)
39.1 (52)
19.7 (26)
2.0 (3)
56.0 (65)
2.6 (3)
52.1 (61)
17.5 (24)
32.6 (56)
34.4 (62)
40.9 (50)
35.6 (68)
Que.
8.0 (8)
15.2 (15)
25.0 (34)
16.5 (23)
16.5 (23)
19.8 (25)
26.3 (31)
14.3 (17)
20.0 (26)
19.0 (26)
19.6 (26)
12.1 (16)
14.0 (21)
21.6 (25)
20.2 (23)
7.7 (9)
16.8 (23)
14.5 (25)
10.6 (19)
15.6 (19)
13.6 (26)
Atl.
% of Seats from (# of Seats)
13
13
14
14
14
15
14
14
16
16
14
18
22
19
14
18
19
16
18
20
21
Totalc
Cabinet
–
7.7 (1)
–
–
–
–
7.1 (1)
7.1 (1)
6.3 (1)
12.5 (2)
14.3 (2)
22.2 (4)
27.3 (6)
15.8 (3)
21.4 (3)
27.8 (5)
21.1 (4)
25.0 (4)
27.8 (5)
20.0 (4)
19.0 (4)
West
38.5 (5)
38.5 (5)
35.7 (5)
35.7 (5)
42.9 (6)
33.3 (5)
35.7 (5)
28.6 (4)
37.5 (6)
37.5 (6)
35.7 (5)
38.9 (7)
40.9 (9)
31.6 (6)
14.3 (2)
22.2 (4)
36.8 (7)
25.0 (4)
27.8 (5)
35.0 (7)
33.3 (7)
Ont.
30.8 (4)
23.1 (3)
28.6 (4)
28.6 (4)
28.6 (4)
33.3 (5)
28.6 (4)
35.7 (5)
31.3 (5)
31.3 (5)
28.6 (4)
27.8 (5)
18.2 (4)
31.6 (6)
57.1 (8)
38.9 (7)
26.3 (5)
31.3 (5)
27.8 (5)
30.0 (6)
28.6 (6)
Que.
(Continued)
30.8 (4)
30.8 (4)
35.7 (5)
35.7 (5)
28.6 (4)
33.3 (5)
28.6 (4)
28.6 (4)
25.1 (4)
18.8 (3)
21.4 (3)
11.1 (2)
13.6 (3)
21.1 (4)
7.1 (1)
11.1 (2)
15.8 (3)
18.7 (3)
16.6 (3)
15.0 (3)
19.0 (4)
Atl.
% of Cabinet Positions from
(# of Cabinet Positions)
These data were originally compiled by Shannon Wells in 2004 and subsequently updated by the authors in 2011 and 2019.
Financial support provided by the Social Sciences and Humanities Research Council is gratefully acknowledged.
APPENDIX 1: REGIONAL REPRESENTATION IN GOVERNMENT CAUCUS AND
FEDERAL CABINET
LIBERAL
Progressive Conservative
PROGRESSIVE CONSERVATIVE
Progressive Conservative
Liberal
Liberal
LIBERAL
Liberal
LIBERAL
Progressive Conservative
LIBERAL
PROGRESSIVE CONSERVATIVE
PROGRESSIVE CONSERVATIVE
LIBERAL
LIBERAL
LIBERAL
Liberal
Conservative
Conservative
CONSERVATIVE
LIBERAL
Liberal
1953
1957
1958
1962
1963
1965
1968
1972
1974
1979
1980
1984
1988
1993
1997
2000
2004
2006
2008
2011
2015
2019
15.9 (27)
20.3 (23)
31.6 (66)
42.2 (49)
7.8 (10)
6.9 (9)
18.2 (28)
6.4 (7)
9.2 (13)
43.4 (59)
1.4 (2)
28.9 (61)
28.4 (48)
16.4 (29)
11.0 (17)
9.4 (16)
11.9 (16)
53.2 (66)
48.2 (69)
44.6 (74)
17.4 (32)
10.8 (17)
Westb
29.4 (50)
54.0 (61)
32.5 (68)
30.2 (35)
39.8 (51)
38.9 (51)
40.9 (63)
33.0 (36)
39.0 (55)
41.9 (57)
35.4 (52)
31.8 (67)
27.2 (46)
55.4 (98)
65.2 (101)
58.5 (100)
55.2 (74)
31.4 (39)
35.7 (51)
44.0 (73)
43.5 (80)
50.3 (79)
Ont.
38.8 (66)
7.1 (8)
23.9 (50)
12.1 (14)
36.7 (47)
42.7 (56)
36.4 (56)
51.4 (56)
42.6 (60)
1.5 (2)
50.3 (74)
27.5 (58)
37.3 (63)
10.7 (19)
16.7 (26)
21.1 (36)
15.6 (21)
8.0 (10)
7.7 (11)
3.0 (5)
21.7 (40)
22.3 (35)
Que.
15.9 (27)
18.6 (21)
12.0 (25)
15.5 (18)
15.6 (20)
11.5 (15)
4.5 (7)
9.2 (10)
9.2 (13)
13.2 (18)
12.9 (19)
11.8 (25)
7.1 (12)
17.5 (31)
7.1 (11)
11.1 (19)
17.1 (23)
7.3 (9)
7.7 (11)
8.4 (14)
17.4 (32)
16.6 (26)
Atl.
% of Seats from (# of Seats)
20
22
23
21
26
26
29
30
29
30
33
40
33
23
28
28
38
27
38
39
31
37
Totalc
Cabinet
25.0 (5)
36.4 (8)
30.4 (7)
33.3 (7)
15.4 (4)
11.5 (3)
20.7 (6)
13.3 (4)
13.8 (4)
30.0 (9)
12.1 (4)
32.5 (13)
24.2 (8)
21.7 (5)
17.6 (5)
17.6 (5)
23.6 (9)
40.7 (11)
42.1 (16)
38.5 (15)
29.0 (9)
13.5 (5)
West
30.0 (6)
31.8 (7)
30.4 (7)
33.3 (7)
38.4 (10)
34.6 (9)
34.5 (10)
40.0 (12)
34.5 (10)
40.0 (12)
36.4 (12)
27.5 (11)
33.3 (11)
43.5 (10)
42.9 (12)
42.9 (12)
39.4 (15)
33.3 (9)
31.6 (12)
38.5 (15)
35.5 (11)
45.9 (17)
Ont.
30.0 (6)
13.6 (3)
21.8 (5)
19.0 (4)
30.8 (8)
34.6 (9)
34.5 (10)
33.3 (10)
37.9 (11)
13.3 (4)
36.4 (12)
27.5 (11)
30.3 (10)
21.7 (5)
25.0 (7)
25.0 (7)
21.0 (8)
18.5 (5)
13.1 (5)
10.3 (4)
22.6 (7)
29.7 (11)
Que.
15.0 (3)
18.2 (4)
17.4 (4)
14.3 (3)
15.4 (4)
11.5 (3)
10.3 (3)
13.3 (4)
13.8 (4)
16.7 (5)
15.1 (5)
12.5 (5)
12.1 (4)
13.1 (3)
14.3 (4)
14.3 (4)
15.7 (6)
11.1 (3)
10.5 (4)
12.8 (5)
12.9 (4)
10.8 (4)
Atl.
% of Cabinet Positions from
(# of Cabinet Positions)
Source: Guide to Canadian Ministries since Confederation (Canada: Privy Council Office, 2009); Senators and Members – Historical
Information (Canada: Library of Parliament, 2006); The Canadian Ministry (Canada: Privy Council). https://www.ourcommons.ca/Members/en
/ministries?ministry=29&province=all&gender=all&lastName=all. Accessed May 18, 2011, November 4, 2015, and November 8, 2019.
a
Upper-case = majority government; lower-case = minority government.
b
“West” includes NWT, Yukon, and Nunavut.
c
Size of cabinet for the year of each general election includes changes occurring up to and including 31 December of that year (i.e., includes
the last ministerial shuffles for each portfolio but does not include portfolios terminated in that year).
Governing partya
General
election
APPENDIX 1 (CONTINUED)
Federalism, Political Parties, and the Burden of National Unity
GLOSSARY
brokerage party Brokerage parties seek to forge broad-based electoral
coalitions, bringing together voters from different social classes, religious
groups, and regions. They appeal to voters primarily on the basis of
leadership, style, and patronage and have exhibited a large degree of
ideological flexibility.
first-past-the-post electoral system Also known as the single-member,
simple plurality electoral system, this “winner-take-all” form of voting is
the electoral system currently in use for federal and provincial elections
in Canada. Voters vote for a single candidate in a given riding or
constituency; the candidate receiving the most votes (but not necessarily a
majority) in the riding wins.
government party Whitaker (1977) coined the term “government party”
to describe the Liberal Party of Canada that, by the 1950s, had in many
respects merged with the federal government apparatus. The term “natural
governing party” is also sometimes used.
intrastate vs. interstate federalism Cairns (1979) and Smiley and Watts
(1985) have distinguished between two basic methods of accommodating
regional (or subnational) interests in a federal system. The institutions
of interstate federalism, such as first ministers’ conferences, allow the
two levels of government to meet face-to-face, whereas the institutions of
intrastate federalism, such as the Senate (as it was originally designed),
cabinet, and cabinet committees, afford the provinces a voice within the
central government itself.
Reform Party of Canada Founded in the fall of 1987 with the slogan “The
West Wants In,” the Reform Party of Canada was an important expression
of western alienation from the federal party system, the ideological vehicle
of a potent form of right-wing populism, and one of the most successful
minor parties in the country’s political history. Under the leadership of
Preston Manning, Reform won fifty-two seats in the 1993 general election
and sixty seats in 1997, making it the Official Opposition. In 2000, it
transformed itself into the Canadian Reform Conservative Alliance (better
known as the Canadian Alliance) and then in 2004 merged with the
Progressive Conservative Party to create the Conservative Party.
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Bakvis, 63–127. Toronto: Dundurn Press.
Crosbie, John. 1997. No Holds Barred: My Life In Politics. Toronto: McClelland
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CHAPTER SEVEN
Intergovernmental Relations in a
Complex Federation
Robert Schertzer
The Canadian federation is extremely complex. This complexity stems,
partly, from the dizzying array of legal, political, and policy layers that
come with dividing power between multiple orders of government.
Understanding who does what – which government is ultimately responsible for a policy issue and what they have done on that file – is
notoriously difficult in Canada (Simmons and Graefe, 2013). This lack of
jurisdictional clarity is a defining feature of debates between federal and
provincial politicians on critical files such as the environment, natural
resources, and healthcare.
The complexity of Canadian federalism also reflects the significant
diversity and differences that exist among Canadians. Canada is among
the most diverse countries in the world. Approximately five million
people have immigrated to Canada in the last twenty years (IRCC,
2016; CIC, 2006). The views of recent migrants toward the federation
tend to differ from those who have lived in Canada longer – generally
showing more support for the federal government over ties to their
provincial governments (Bilodeau, White, and Nevitte, 2010). There
are also the longer-standing regional differences across Canada: Westerners, Ontarians, Quebeckers, Easterners, and Northerners perceive of
themselves as different political communities and have some differing
political and policy preferences (Cochrane and Perrella, 2012; Elkins
and Simeon, 1980). This diversity is also related to the real economic
and labour-market differences across the country (see chapter 8), as
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debates over the extraction of natural resources and the implementation of carbon taxing (see chapter 14) aptly demonstrate. One of the
fundamental features of the Canadian political culture is that there are
cleavages between different areas of the country (Henderson, 2004;
Wiseman, 2007). You only need to ask Canadians whether Quebec is a
distinct society, whether the federation is working for western Canadians,
or whether we should build new pipelines to transport oil to tidewater
to see these fault lines.
This chapter focuses on how this complexity impacts intergovernmental relations (IGR) and our assessment of its performance, effectiveness,
and legitimacy. It focuses on one particularly important element of
complexity in Canadian federalism that tends to encapsulate the many
layers noted above: the different visions of what the Canadian federation
is and ought to be that permeate politics. It then lays out the different
ways that governments have (and have not) worked together, and how
these patterns of IGR have shifted over time. Finally, it discusses how
this complexity – the differing ideas about the nature of the federation
and the legacies of past approaches to IGR – have shaped more recent
IGR during the tenures of prime ministers Stephen Harper and Justin
Trudeau. This review of recent IGR makes clear that the nature of relations and the ability to collaborate are increasingly contingent on a
number of factors, with agreement among the actors involved on their
roles and how to work together being particularly critical.
FEDERALISM, FEDERATION, AND
INTERGOVERNMENTAL RELATIONS
Before discussing the different federal visions in Canada, it is important
to distinguish among a few core concepts, notably federalism, federation,
and IGR. These concepts are often problematically conflated. Federation
and federalism are used interchangeably. IGR is generally ill defined and
seen as the natural byproduct of a federal system of government, when
in fact federations have many mechanisms to manage the tension between central and sub-state governments. By defining these concepts
we are better able to appreciate their complexity; understand how this
complexity impacts IGR in practice; and, thus, assess their performance,
effectiveness, and legitimacy.
Intergovernmental Relations in a Complex Federation
Federalism
Federalism can be understood in two ways. First, federalism is an ideology
(King, 1982; Watts, 1998). It is largely a normative position directed at
mobilizing political action – an argument for how things ought to be –
with a specific goal of promoting a particular way of organizing government. In short, federalism promotes the value of shared and self-rule
between two or more orders of government (Watts, 1998: 120; McGarry
and O’Leary, 2007: 180; King, 1982). In this way, we can understand
federalism as an ideology similar to other worldviews like liberalism,
communism, or nationalism.
Second, federalism is also used as a descriptive term. Federalism can
be used to describe systems of government based on federal principles.
In this way, federalism is a “theoretical and operational concept” (Elazar,
1987: 38). This is a common tendency in Canada, where we often refer
to “Canadian federalism” when discussing the entire system of government. Accordingly, federalism can be used to describe processes and
dynamics in a federation – for example, the decentralization of power
and responsibilities to provincial governments, though increasingly this
type of decentralization is termed “federalization” (Paquet, 2014).
Federations
A federation is a specific type of institutional arrangement – a particular
way to organize government. Federations belong to a broader set of federal
political systems – such as unions, like the European Union – where the
overarching principle is one of self-rule and shared rule (Watts, 1998; Elazar,
1987; see Broschek, chapter 2 in this volume). Federations share four
common characteristics that set them apart from other ways of organizing government: (1) they have at least two orders of government (for
example, a federal and provincial order); (2) they have a written constitution, wherein the roles and responsibilities of the orders of government
are outlined; (3) they have a formal dispute arbitration mechanism to
settle disagreements between the orders of government – usually this is
through courts of law and particularly an apex court, like the Supreme
Court of Canada; and (4) they have institutions and processes to allow
the orders of government to communicate and work together (see Watts,
1998, 2008). Beyond these features, federations vary considerably in the
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extent to which they are centralist or decentralist, in their underlying
sociological diversity (whether they have national minority communities,
like Quebec, that mobilize for autonomy or not), and whether they are
democratic or not.
We can understand federations, then, as deliberate policy choices – as
the implementation of a specific set of institutional mechanisms to achieve
the goal of shared and self-rule (Hueglin and Fenna, 2006: 28). But we
can also see federations as a kind of compromise – federations are often
the result of different political actors finding ways to balance a desire
for political unity with the realities of diversity. The latter was the case in
Canada. The Canadian division of powers between federal and provincial
governments was a compromise between the founders who wanted a more
centralized form of government (notably John A. Macdonald) and those
who wanted more autonomy for the provinces (notably George-Étienne
Cartier) (Ajzenstat et al., 1999). Similarly, federations are often “inherited,” shaped by the pre-existing institutional structures at the time of
their founding. In Canada’s case, these inherited features included a
number of agreements, treaties, and constitutional decrees that regulated
relations between the English, French, and Indigenous peoples prior to
1867 (Russell, 2017; Simeon, 2013: 287; Smiley, 1987).
Intergovernmental Relations
IGR is a deceptively complex concept. On the one hand, it simply refers
to the relationship – the interactions – between different governments in
a country to share information and make decisions. In this sense, IGR can
be compared to diplomacy on the international stage (Simeon, 2006). As
Bakvis and Skogstad discuss in the introduction, these relations primarily
take place between senior elected and unelected government officials
in what is often called “executive federalism.” On the other hand, IGR
has various aspects: its tone shifts in line with different ideas about how
relations should be carried out (e.g., as conflictual or co-operative); it
is conducted in numerous forums (e.g., formal and informal processes
and institutions); it takes place vertically (e.g., federal–provincial) and
horizontally (e.g., between provinces); it has many different actors
(e.g., two or more governments represented through officials, ministers, first ministers, but also non-governmental actors); and it can have
many different outcomes (e.g., from nothing, to handshakes, to signed
Intergovernmental Relations in a Complex Federation
agreements, to constitutional amendments). The focus in this chapter
is the federal–provincial–territorial dimension of IGR. (See chapter 15
for an assessment of Crown–Indigenous relations.)
Perhaps because of this complexity, while there are many different studies
of how we conduct IGR in Canada, what explains the different patterns of
IGR, and what its impact has been on politics and policy (see, for example,
Cameron and Simeon, 2002; Inwood, Johns, and O’Reilly, 2011; Skogstad
and Bakvis, chapter 17, in this volume), clear definitions are notoriously
difficult to find (Alcantara, Broschek, and Nelles, 2016). Indeed, it is at
times hard to see IGR as anything but executive federalism – the two concepts in Canada are often synonymous. Similarly, distinguishing between
IGR and multi-level governance can be difficult: whereas IGR generally
involves government actors, is more hierarchical, and is relatively closed
to outsiders, multi-level governance tends to involve multiple government
and non-government actors across a range of levels to develop and implement policy (Alcantara, Broschek, and Nelles, 2016: 39).
Nevertheless, building on this long line of work, we can define IGR as the
set of norms, institutions, and outputs related to government interaction in
a federation (Schertzer, 2015; Schertzer, McDougall, and Skogstad, 2018;
Simmons and Graefe, 2013). The norms of IGR refer to the shared ideas
and principles about how governments ought to interact. These norms
can relate to both how governments should work together (the working
rules) and the objectives of interaction (the substantive outcomes). The
institutions of IGR refer to the different processes and venues that allow
actors to engage with one another. These institutions – the mechanisms of
IGR – can be formal or informal, vertical or horizontal, and include two or
more governments. The outputs of IGR refer to the results of interaction.
These results are shaped by the norms and institutions that informed the
method of interaction – varying from little evidence of contact to jointly
negotiated agreements and policies. These three elements of IGR help us
describe its complexity in practice, explain what drives different approaches
to IGR, and assess their impact on Canadian politics and policy.
CANADA’S COMPETING FEDERAL VISIONS
In Canada, there are many different federalisms.1 People from across
the country hold divergent ideas about the very nature of the federation
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and how it ought to be organized. These points of view reflect competing ideas about how the institutional makeup of the federation should
reflect its underlying sociological nature. They are often called “federal
visions” or “diametrically opposed concepts, norms and values” about
the nature of the federation “based on different underlying definitions
of political identity” (Rocher and Smith, 2003: 22).
These federal visions are not just theories: they have informed political mobilization throughout Canadian history and still do so today.
The institutional features of shared and self-rule in Canada have been
shaped by these federal visions over time (Rocher and Smith, 2003: 37;
Black, 1975; Schertzer, 2016; Russell, 2017). This relationship between
the changing institutional features of the Canadian federation and the
competing federalisms points to one of the key attributes of the federal
visions: they are both purported descriptions of what the federation is
and ideal models of what it ought to be (Black, 1975: 2–3, 7). While there
are many different views on the nature of the Canadian federation, there
are three main perspectives: the pan-Canadian, provincial equality, and
multinational federal visions.
Pan-Canadian Vision
The pan-Canadian vision has a long history, going through a number of
iterations since Canada’s founding, with Prime Minister Pierre Trudeau –
and to a lesser extent his son, Prime Minister Justin Trudeau – embodying
the most recent versions (Rocher and Smith, 2003: 34). At the heart of
this vision is a view of Canada as one bilingual, multicultural pan-state
nation (Rocher and Smith, 2003: 34–7; McRoberts, 2001: 703–7). Building
on this view of the sociological foundations of Canada, the subscribers to
this vision place particular emphasis on the role of the federal government in the lives of Canadians. The vision thus promotes a centralized
federation, where the provinces are administrative territories that are
clearly subordinate to the federal government. It also frames mechanisms
of shared rule, like the federal cabinet, Senate, and Supreme Court, as
national institutions that represent Canada’s pluralism.
To support their position, subscribers to the pan-Canadian vision
point to the extensive powers granted to the federal government in
the Constitution Act, 1867 (particularly unlimited taxing and spending
powers and the reserve and disallowance powers). They also point to
Intergovernmental Relations in a Complex Federation
the process of patriating, and the substance of, the Constitution Act,
1982 and the defeat of the Meech Lake and Charlottetown Accords as
demonstrating the power of the perspective (Rocher and Smith, 2003:
34–7). Today, this vision is most clearly expressed through support for
Canada-wide programs such as universal healthcare and Prime Minister
Justin Trudeau’s national carbon tax.
Provincial Equality Vision
The provincial equality vision also has roots in the nineteenth century,
stressing that Canada is the result of a “compact” among four autonomous
colonies in 1867 (Rocher and Smith, 2003: 23; Russell, 2004: 48–52).
This vision frames the provinces as the primary political community of
belonging. Its subscribers thus see the Canadian polity as a collection
of provincial identities – with the Canadian nation being based upon
recognition of the equal diversity of its constitutive elements (Rocher
and Smith, 2003: 24–6). This view of political identity informs a view
of the federal government as the sum of its provincial parts. From this
perspective, the federation should be decentralized, with an equal distribution of powers and status to provinces, since the original compact
of the federation is seen as taking place between equal partners (Rocher
and Smith, 2003: 23–6). In a related manner, the institutions of shared
rule in Ottawa are understood from this perspective as venues to equally
represent the regional diversity of the country.
The supporters of this vision point to the political process of adopting
the Constitution Act, 1867 (e.g., framing this as a compact between four
equal partners), and the subsequent provincial rights movement following
Confederation as evidence of its historical validity (Russell, 2004: chap.
4). The promoters of the provincial equality model also reference the
more recent unanimity clauses in the constitutional amending formula,
the Federal–Provincial Internal Trade Agreement (1994), the Social
Union Framework (1999), and the Calgary Declaration (1999) as more
contemporary examples of the vision’s impact on Canadian federalism
(Rocher and Smith, 2003: 25–7). Today, the provincial equality vision
generally is expressed through resistance to the idea that Quebec is
distinct among the provinces, and calls (often from those in the western
provinces) for fairness in how federal programs like equalization and
program funding are rolled out.
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Multinational Vision
The multinational vision originally stressed the binational character of
Canada as a key driver for establishing a federal system of government.
The Anglo-Franco dynamic remains a key aspect of Canadian politics –
with the two solitudes still a powerful idea that influences both the practice and the study of politics; however, over time, this perspective has
moved beyond an exclusive focus on Quebec and the Rest of Canada to
incorporate Indigenous peoples (Rocher and Smith, 2003: 28–33; McRoberts, 2001; Russell, 2017). The core of this vision is that the Canadian
federation was the result of a compact among three founding peoples,
which continues to define the core elements of Canada as three separate
sociological nations: English Canada, the Québécois, and Indigenous
peoples (Russell, 2017; Resnick, 1994; Schertzer and Woods, 2011). From
this view of the sociological underpinnings of Canada, the multinational
vision sees subnational jurisdictions as either ethno-national (Quebec,
Nunavut, and Indigenous self-governing communities) or territorial/
administrative units (the remaining provinces) (Kymlicka, 1998: chap.
10). Because of this variety in the basis of the subnational units – and
because the majority of provinces are territorially based – the subscribers
to this vision accept that power can and should be distributed asymmetrically between units (Kymlicka, 1998: 139; McRoberts, 2001: 711). In a
related manner, the view that the federation resulted from a compact
among multiple national groups leads subscribers to ideally see the institutions of shared rule in the federal government as venues to protect
and represent the interests of these national minority communities.
The promoters of the binational, now multinational, vision often point
to the federation as a compromise between anglophones and francophones as the foundation for its validity. They cite, for example, the Great
Coalition between anglophone and francophone leaders in the Province
of Canada and the implementation of federalism to accommodate the
francophone nation (Russell, 2004: 18–33). Further evidence is the
practice of a Quebec “veto” over the rounds of constitutional negotiation
from “Fulton-Favreau” to “Victoria” in the 1960s and 1970s (Russell,
2004: chap. 6). Central to this vision is the emergence of asymmetrical
arrangements for Quebec in the Canadian federation, particularly in
areas such as immigration policy (see chapter 13). Multinationalists
also draw attention to a number of more recent developments to argue
Intergovernmental Relations in a Complex Federation
that their model ought to be the governing paradigm for contemporary
federal design in Canada. Notably, they highlight the rise of Indigenous
nationalism and the Assembly of First Nations in the mid-twentieth
century in response to assimilationist policies. They also reference the
central government’s move towards recognition of national diversity as
a basis for asymmetry from the 1990s: examples are the Meech Lake and
Charlottetown Accords, the 2004 first ministers’ meeting on the Future of
Health Care, and the recognition of Quebec as a distinct society through
motions in Parliament in 1999 and as a nation in 2006. Prime Minister
Justin Trudeau’s consistent adoption of a nation-to-nation framing of
the relationship between Canada and Indigenous peoples has further
solidified this vision of the federation.
While these three federal visions capture important differences in how
people understand the nature of the federation, nuance is lost when we
create taxonomies like this one. For example, there are other important
perspectives on the federation. Rocher and Smith (2003) have argued
that a fourth federal vision – a rights-based vision – emphasizes how the
Charter of Rights and Freedoms has undercut the importance of provincial
identities and governments, creating a single political community of
“Charter Canadians” that primarily associates with the federal government. Similarly, while people may accept that Canada comprises multiple
national communities, they do not always then advocate or accept that
the federation should be decentralized and allow for asymmetrical powers
and responsibilities. Prime Minister Justin Trudeau has been a strong
supporter of a nation-to-nation relationship with Indigenous peoples,
while also implementing several clearly pan-Canadian environmental
and social policies that have centralized elements of the federation.
Nevertheless, these three visions usefully aggregate the main competing
waypoints for how people across Canada and the actors within the system
understand what the federation is and what it ought to be.
This complexity in how people view the federation – both its underlying
sociological foundations and its institutional structure – is an important
factor shaping IGR in Canada. It is certainly not the only factor. There are
many things that impact the dynamics of IGR: the party–political affiliation
and ideological stance of the political actors involved (see chapters 6 and
14), legacies from past decisions and conflicts, the importance of the policy
file to a particular government’s mandate and electoral prospects, and
the material costs and implications for different policy options, to name
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only a few. But the underlying ideas that the public and political actors
hold about the nature of the federation are among the most important
of these factors, for two reasons. First, the three federal visions outlined
here represent diametrically opposed views on the very social foundations
of Canada and what is expected from its federal institutions. Throughout
Canadian history, political actors holding these opposing positions have
clashed when discussing, debating, and negotiating key policies and
changes to the federation. These opposing positions and the related
conflict have necessitated considerable IGR and driven how IGR took
place. They were at the heart of the long-running conflict preceding and
following the 1982 constitutional amendments. Second, when political
actors across federal and provincial/territorial governments share similar views on the nature of the federation, they are more likely to engage
in productive IGR and work together towards some shared policy goal.
For example, a shared vision for universal healthcare and a social safety
net was central to the establishment of the welfare state in Canada (see
chapters 11 and 12 in this volume). Regardless of whether IGR is more
conflictual or co-operative, these underlying ideas about the nature of
the federation shape relations. To better understand these shifts in IGR,
it helps to look at how relations have changed over time in Canada.
THE SHIFTING NATURE OF IGR IN CANADA:
THE TURN TOWARD COLLABORATION AND THE
INCREASINGLY CONTINGENT NATURE
OF RELATIONS
IGR is one of the central pillars of Canadian government (Simeon and
Nugent, 2012: 59).2 The nature and tenor of IGR between federal, provincial, and territorial governments – how it is conducted and what it
achieves – has shifted considerably over time. One of the central themes
of the work on Canadian IGR is that there are few formal, constitutionally entrenched institutions that govern the relationship between the
federal and provincial governments (Bolleyer, 2009: chap. 3). Accordingly, IGR in Canada has been shaped to an extent by the willingness
of the federal, provincial, municipal, and Indigenous actors to engage
one another and the strategic calculations of those involved (Cameron
and Simeon, 2002: 65). Clearly the ideological and partisan factors of
Intergovernmental Relations in a Complex Federation
the actors involved play into this willingness (see chapters 6 and 14). At
the same time, this continuity in the foundations of IGR in Canada (a
relative lack of constitutionalized IGR and a history of relations shaped
by the willingness of actors to engage one another) has been punctuated
at points by significant changes in how IGR is practiced and what it has
achieved (Broschek, 2010).
Providing a taxonomy of these periods of continuity and change has
been a major preoccupation for Canadian political scientists (see Simeon,
2002; Cameron and Simeon, 2002; Bickerton, 2010). As the next section
shows, drawing clear lines between periods of IGR is difficult. The vast
scope of policy fields where the federal, provincial, municipal, and Indigenous governments interact means that there is no one method or tenor
to relations, and the impact of previous decisions and negotiations means
that broader trends and the specific desires of key actors (like prime ministers) do not always deliver a shift in how IGR takes place (Bickerton, 2010;
Skogstad and Bakvis, chapter 17, in this volume). Despite this fluidity, there
is also a general consensus that there are a few identifiable periods where
the overall tenor and approach to IGR has shifted throughout Canadian
history (see Simeon and Robinson, 2004; chapter 1 in this volume). We
can add an additional layer of specificity to this classification of periods
by elaborating upon the different norms, institutions, and outcomes of
IGR that defined the relationship (see Table 7.1).
In chapter 1 of this volume, Bakvis and Skogstad provide an overview
of the first four periods of IGR noted above. We can add a fifth period
to this list – one where the tenor of relations is more contingent on a
number of factors. This most recent period, from roughly 2006 forward,
has seen the established norms and processes of collaborative IGR
challenged in different ways from both federal and provincial actors,
resulting in oscillations between collaborative and conflictual relations in
very short spans of time. Whether this period is a completely new era of
IGR, or a shift in how collaborative IGR is more contingent on the views
of the actors carrying out relations, remains to be seen. But, given the
changes that we have seen in recent IGR under prime ministers Harper
and Trudeau, it is worth carving this period out from what came before
to reflect on this point. Indeed, as the next section discusses, despite
their opposing approaches to IGR, both Harper and Trudeau faced a
complex set of factors that pulled them towards an approach that was
more contingent on the legacies of past agreements, competing ideas
175
Contingent
Collaborative
Conflictual
Co-operative
Classical
Approach
Established views on shared and
exclusive roles and methods
of working together
increasingly challenged by
various factors (electoral,
ideological, legacies, issue
and policy area, etc.)
Independent orders exercising
authority within areas of
exclusive (“watertight”)
jurisdiction
Increasing coordination given
recognition of overlapping
jurisdiction in select areas (social
union), but federal government
retains a leadership role
Significant interaction driven by
mandates to protect interests
of competing constituencies
(national/provincial/Indigenous)
Increasing multilateral
negotiations recognizing
equal, interdependent orders
with shared responsibility in
many policy areas
Norms (Procedural and
Substantive)
Multilateral, bilateral, or
unilateral IGR reflects
understanding of ideal
working rules and
substantive view of
respective roles in a policy
field (or lack of shared views)
Multilateral, co-chaired first
ministers’/ministerial/
officials’ forums
First ministers’ meetings;
Supreme Court cases
First ministers’ and ministerial
meetings; federal spending
power key to establishing
national programs
Constitution Act, 1867 (s. 91/92);
Court cases (JCPC)
Institutions
Non-constitutional, framework
agreements and vision
statements with associated
bilateral agreements for each
province (across a range of
policy sectors)
Multilateral or bilateral (nonconstitutional) agreements
across many policy areas;
increasing federal and
provincial unilateral action on
key files
Supreme Court decisions and
constitutional amendment –
Constitution Act, 1982
Formal agreements and
constitutional amendment –
building social union through
expansion of welfare state
Expanding provincial autonomy
in areas like property and civil
rights (via JCPC)
Outputs
Table 7.1. Overview of Dominant Approaches to IGR in Canada (1867 to present)
2006–
1990s–2006
1970s–1980s
1940s–1960s
1867–1930s
Period
Intergovernmental Relations in a Complex Federation
about the nature of federalism, and the related willingness of others to
accept their approach. However, before turning to this recent IGR and
how the complexity of Canadian federalism has shaped relations, it is
helpful to first discuss the collaborative model. Most argue this approach
has been the dominant one since the mid-1990s, and so elaborating on
its core attributes here can help us assess whether we are seeing a shift
away from this approach and how it has shaped recent IGR.
Collaborative IGR is largely defined by a set of shared norms on how
to carry out IGR and related perspectives on the nature of the federation.
Underpinning this approach is thus a shared view of the nature of the
federation that accepts the two orders of government as joint owners over
a number of policy fields (Cameron and Simeon, 2002: 48, 54; Lazar,
2006: 28–9). Similarly, while the federal and provincial governments
may not be equal in all respects, those that adopt this approach largely
accept that even where governments technically hold exclusive responsibility for a policy area under the Constitution, actions they take will
undoubtedly affect the interest of the other order. These underlying views
of the nature of the federation inform a set of working rules that stress
that intergovernmental co-operation is vital to effective and legitimate
policy development. These procedural norms emphasize the need to
include other orders of government in discussing the goals and designs
of policies that may impact their interests – often also seeking input from
stakeholders, interest groups, and non-governmental organizations that
also may be impacted (Cameron and Simeon, 2002: 64).
The institutions and processes of collaborative IGR reflect these norms:
multilateral forums that include the federal government and all provinces
(sometimes with the participation of Quebec, though not always) are a
key venue for this form of IGR. These forums tend to have a federal–
provincial co-chair model and a mandate to carry out joint policy development and decision-making through free and fair negotiations (Cameron
and Simeon, 2002: 61–3). Outcomes indicative of the collaborative approach
reflect these underlying norms and institutional process (Simmons and
Graefe, 2013: 30–2), showing a demonstrable commitment to reaching
agreements that balance federal (national) objectives with the more
specific (regional) interests of the provinces involved (Schertzer, 2015).
These outcomes thus often include some national vision or policy goal
that all governments agree to, which is then tailored to the interests of
each province through subsequent bilateral agreements.
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There are many detailed accounts of the shift towards a more collaborative approach to IGR. They cite examples starting in the mid-1990s
that demonstrated a shift towards norms of shared federal–provincial
ownership, the adoption of multilateral institutions, and outputs that
sought to balance federal and provincial interests in a number of policy
sectors. In brief, collaborative IGR is generally seen as emerging with
the Agreement on Internal Trade (AIT) in 1994. This first milestone was
followed by an extension of the approach to other key policy sectors:
the labour market, with active supports in the form of Labour Market
Development Agreements in 1996; international trade, with increasing
involvement of the provinces in negotiations from 1995 forward (Skogstad,
2008); the environment, with the Canada-Wide Accord on Environmental
Harmonization in 1998; the Social Union Framework Agreement (SUFA)
in 1999; healthcare, with an agreement on a common federal–provincial
vision in 2000, followed by the Health Care Accord in 2004; and the
establishment of the interprovincial Council of the Federation in 2003
(see Cameron and Simeon, 2002: 55–64).
Whether IGR in this period was truly collaborative is debated (Simmons and Graefe, 2013). For some, the changes to IGR starting in the
mid-1990s were less about collaboration and more about the federal
government downloading responsibilities to the provinces to cut its own
budget (for an overview, see Brown, Bakvis, and Baier, 2019: 127–34).
However, a wider view shows a clear change from the more conflictual
relations of the 1970s and 1980s (Cameron and Simeon, 2002). And, as
argued elsewhere and the next section reinforces, even if relations are
predominately “collaborative,” at any given time different approaches
to IGR are clearly observable across the wide set of policy fields wherein
governments engage one another (Skogstad and Bakvis, chapter 17, in
this volume; Schertzer, McDougall, and Skogstad, 2018).
RECENT IGR UNDER HARPER AND TRUDEAU:
INCREASINGLY CONTINGENT ON COMPETING
IDEAS AND LEGACIES OF PAST APPROACHES
Collaborative IGR, firmly established by the early 2000s as the dominant
approach, was explicitly challenged by the election of Prime Minister
Harper in 2006. Harper did not share the same views of the federation
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that underpinned previous collaboration: he did not recognize that both
orders of government had shared and overlapping jurisdiction across
a large number of policy fields, or that multilateral federal–provincial
negotiation was required to manage this overlap. Instead, Harper came to
power preaching the virtues of a new “open federalism,” which was based
on a much different view of the nature of the federation and the roles
of both orders of government in the lives of Canadians (Harper, 2005).
Open federalism was a doctrine based on respecting the exclusive
jurisdiction of the two orders of government, as laid out in the constitutional division of powers (CPC, 2006: 42). The importance of respecting
provincial autonomy was central to his view. This recognition took concrete form through a promise to stop employing the federal spending
power to encroach on areas of provincial constitutional jurisdiction
and to address the fiscal imbalance. This focus on exclusive jurisdiction
indicated that open federalism, in Harper’s own words, “is not entirely
new,” and in fact shares much with the classical model noted above
(Harper, 2004; Banting, 2006: 80). But the view still had a place for
intergovernmental interaction. Harper (2005) clearly expressed from
the outset that his vision of federalism included “co-operating with the
provinces in the exercise of their legitimate constitutional jurisdiction”
and facilitating their input into the formulation of federal policy where
it affected provincial interests. There was even a promise for a Charter
of Open Federalism to help govern intergovernmental co-operation
(CPC, 2006), but it never materialized.
The more classical approach to IGR at the heart of open federalism
was clearly observable in high-profile decisions and policy actions taken
by the federal government under Harper’s leadership. It was a central
theme – applied in tandem with addressing the fiscal imbalance – in the
first two budgets of the Harper era. The 2006 budget documentation
laid out a series of principles that sought to establish an economic union that untangled the federal and provincial governments, mainly by
pulling back the use of the federal spending power in areas of provincial
jurisdiction and promising to transfer funds to allow provinces to fulfill
their role in the federation (Harmes, 2007: 420–2). These promises
were followed up with reforms to the federal transfers to provinces,
moving towards largely unconditional grants and per capita funding
models combined with an increase in the equalization program, paired
with unilateral changes to healthcare funding in 2011 (Canada, 2007;
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Fox, 2007; Boessenkool and Speer, 2015; Dunn, 2016: 4). Perhaps the
clearest signal of Harper’s preference for the more classical approach to
IGR was his disdain for public, multilateral meetings with his provincial
and territorial counterparts. In stark contrast to past PMs, Harper only
held two multilateral first ministers’ meetings during his entire tenure.
At the same time, we cannot frame Harper’s time in office as one
where the two orders of government worked in isolation from one another, never meeting to discuss policy issues. Indeed, despite Harper’s
personal lack of multilateral engagement, he is reported to have had
over 250 bilateral (one-on-one) meetings or calls with his provincial
counterparts between 2006 and 2012 alone (Dunn, 2016: 8). Perhaps
even more telling, multilateral meetings between federal, provincial,
and territorial ministers and deputy ministers were also very common
during his time in office: there were an average of twenty-two multilateral
meetings taking place between federal and provincial ministers each year
between 2006 and 2015 (and an average of thirty meetings of deputy
ministers) (Dunn, 2016: 9).
In several key policy areas multilateral collaboration was actually the
primary approach to IGR during Harper’s time in office (Schertzer,
McDougall, and Skogstad, 2018). In 2012, for example, the federal and
provincial governments established the first-ever common vision for the
immigration system, with an associated action plan to deliver on their
joint objectives; they followed this up by working closely to significantly
reform the selection of economic migrants through the Express Entry
system (Schertzer, 2015). Similarly, the federal and provincial governments signed two multilateral framework agreements, with supplementary bilateral agreements for individual provinces, that outlined their
shared goals in the agriculture sector (one in 2008 and one in 2013);
these agreements built on pre-existing policy goals that were aimed at
opening up the agriculture sector to a free-market approach and to
clarify how the federal and provincial governments would share the
cost of supporting farmers (Skogstad, 2008: chap. 3). And, even in one
instance where the federal government abandoned its earlier promises
to stay out of provincial jurisdiction and made a unilateral decision to
reform funding to support labour market training, multilateral collaboration ended up being a key factor in managing federal–provincial
conflict. In 2013 the federal government announced that it was going
to unilaterally change how it would support the retraining of workers
Intergovernmental Relations in a Complex Federation
who lost their jobs: it wanted to shift away from transferring money to
provinces to deliver labour market training services to a model that
would give support directly to workers (with employers, the federal and
provincial governments each splitting the cost for a new Canada Job
Grant) (Hayes, 2014). Traditionally, provinces have taken the lead role
in retraining workers, and this announcement caught them off guard.
They mobilized and used long-standing multilateral IGR institutions to
push the federal government to back off from its initial position and to
drop its plan. The result was a multilateral framework agreement that
ultimately recognized the lead role of the provinces in the policy area.
Much like Harper before him, Justin Trudeau came to power in 2015
seeking to break from how his predecessor conducted IGR. Unlike
Harper, his stated preference was to collaborate with provinces, territories, Indigenous peoples, and municipalities. Coordinated federal–
provincial action was central to many of the promises in the 2015 Liberal
platform (e.g., action on climate change, investing in infrastructure and
public transport, funding healthcare and prescription drugs). In the
eighty-eight-page platform, provinces and territories were mentioned
over fifty times (Liberal Party of Canada, 2015) – most of the time with
qualifiers such as “work with” or “collaborate” (Dunn, 2016). In this
respect, one of the central themes of Trudeau’s campaign was to avoid
unilateral action and instead develop public policy with provinces and
territories as partners.
Similarly, Trudeau was clear that he wanted a more collaborative relationship with Indigenous peoples (see chapter 15). The 2015 Liberal
platform promised a “renewed relationship” with Indigenous peoples
and to engage them in a “nation-to-nation” process of negotiation on a
host of issues like housing, health, and education; it also committed to
an inquiry into missing and murdered Indigenous women and girls and
to implement the recommendations from the Truth and Reconciliation
Commission (Liberal Party of Canada, 2015: 46–8). The adoption of a
nation-to-nation framing for the Indigenous–Canada relationship was a
particularly noteworthy break from previous federal leaders: it signalled
that Trudeau was open to working with Indigenous peoples as equals
“based on a recognition of rights, respect, co-operation and partnership”
(Trudeau, 2015b; Laforest and Dubois, 2017).
These early signals indicated that Trudeau’s vision of federalism
diverged significantly from Harper. Trudeau promised to govern in a
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way that respected “the spirit of federalism” (Trudeau, 2015a). His early
discourse gave an impression that he saw the federation as a system where
the provinces, territories, Indigenous peoples, and municipalities were
all partners with the federal government (Laforest and Dubois, 2017).
The upshot of this view is that such a partnership requires collaboration
to achieve meaningful progress on many critical files.
After winning power, Trudeau’s first year in office reinforced that
the process and substance of IGR would largely follow a collaborative
model. His mandate letters for the federal cabinet directed ministers
to work closely and collaboratively with the provinces and Indigenous
peoples (see Dunn, 2016). He held three first ministers’ meetings within
a twelve-month period, even inviting premiers to join him at the international Paris Climate Conference. A number of multilaterally negotiated
federal–provincial–territorial agreements were signed. They included a
plan in June 2016 to enhance benefits under the Canada Pension Plan.
In March 2016 the Vancouver Declaration was signed, and in December 2016 the Pan-Canadian Framework on Clean Growth and Climate
Change to reduce greenhouse gas emissions was signed by all provinces
and territories except Saskatchewan (see chapter 14 in this volume).
These developments demonstrated adherence to a view of the federation
where the two orders were equal partners, using multilateral institutions
of IGR to discuss and negotiate policies that sought to balance national
objectives with regional needs.
However, looking beyond the headlines and considering the entire
mandate of Trudeau’s first term as prime minster shows that IGR was
not all sunny ways: despite the rhetoric and early signs, his vision of federalism included a strong federal role that made it difficult to sustain a
collaborative relationship with provinces and Indigenous peoples. Across
the first four years of Trudeau’s time in office there was considerable
conflict with provinces and unilateral federal action.
This conflictual IGR was most evident on the energy and environment
file. The initial multilateral approach where provinces would lead by levy­
ing a carbon tax in line with national targets crumbled. Five provinces
(Alberta, Saskatchewan, Manitoba, Ontario, and New Brunswick) pulled
out of the original deal, and in response the federal government imposed
its own levy in those provinces. Ontario and Saskatchewan challenged
the constitutionality of a federally imposed carbon tax in court, with the
support of other provinces. Some of these provinces began to shift their
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position following the 2019 federal election – New Brunswick Premier
Blaine Higgs indicated the province would adopt a carbon pricing plan,
and Alberta announced a revised carbon pricing plan – but the court
challenges continued. Nevertheless, the initial multilateral consensus of
the Vancouver Declaration on the roles and responsibilities of the orders
of government was replaced by conflict over who has the right to set
the price on carbon and unilateral federal action to enforce a national
objective against the wishes of many provinces.
Similar shifts from a seeming consensus on the roles and responsibilities of the two orders towards greater conflict and unilateralism
marked the 2015–19 period. This shift is evident in the revitalization
of the federal spending power, for example. In healthcare funding,
rather than follow the model of the multilaterally negotiated framework
agreement of 2004 under Prime Minister Martin, Trudeau’s government
opted to increase funding beyond the main transfer through a series of
bilaterally negotiated agreements that abided by nationally established
standards to reinforce a federal role in the field (Marchildon, 2016;
Canada, 2017; see also chapter 12 in this volume). Through its infrastructure plan, the federal government is seeking to shape provincial
spending to better align with “national priorities,” while also creating
a de facto urban policy that bypasses them to focus on its key areas of
concern (notably public transit and green infrastructure) (Canada,
2018; Bradford, 2018). These actions have been met with considerable
resistance by many provinces.
The federal–provincial conflict that has materialized over Trudeau’s
mandate could be easily attributed to partisan politics. When Trudeau
was elected in 2015, Liberal premiers governed in seven provinces, and
there was only one strongly conservative premier in office (Brad Wall
in Saskatchewan). By 2019, six conservative premiers were elected, only
three Liberal premiers remained, and there was one NDP premier.
These more conservative premiers picked a number of public fights
with Trudeau, including on the carbon tax (Ford in Ontario), the need
to approve the federally owned Trans Mountain pipeline and to reform
equalization (Kenney in Alberta), and the management of asylum seekers
and immigration (Legault in Quebec and Ford in Ontario), among other
topics. (For further discussion of these intergovernmental conflicts, see
chapter 14 on the carbon tax, chapter 10 on equalization, and chapter
13 on immigration.)
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However, the conflictual IGR and unilateral federal action that
marked the later half of Trudeau’s first four years in office were about
more than just partisan politics and ideological divides. The conflicts
also reflected an underlying disagreement between the key actors on
how the federation should function and the federal government’s role
within it. Trudeau’s approach to federalism always included a strong
federal government. The flexibility given to provinces to implement their
own carbon tax was premised on a federal backstop from the beginning.
The promised increases in healthcare and infrastructure spending were
aimed at reinforcing national priorities. So, while there were early indications of wanting to work with the provinces to realize their priorities,
Trudeau’s federal government was also seeking to do it on its own terms.
Over time the federal view became difficult to reconcile with the views
of provincial governments and actors on how things like regulating the
environment, funding healthcare, and building infrastructure should
function in their jurisdictions. And, nearer the end of Trudeau’s first
term, powerful actors (Jason Kenney, Doug Ford, and François Legault)
with clear views of their own provincial roles emerged and increasingly
challenged the prime minister.
ASSESSING THE PERFORMANCE, EFFECTIVENESS,
AND LEGITIMACY OF RECENT IGR
The overview of past and recent IGR in this chapter highlights the
complexity of Canadian federalism. It shows us that there are multiple,
competing ideas about how the federation should be organized, and
how it should function. It also shows how the dominant approaches to
conducting IGR in Canada have shifted over time – from an initial period
of minimal interaction, to co-operation, to conflict, to collaboration, and
more recently to this collaboration being increasingly contingent on
the actors involved sharing similar views of their roles in the federation.
Despite these large-scale shifts in the broader dynamics of IGR, when
we consider more recent relations we can also see how at any given time
multiple approaches to IGR are taking place simultaneously. Despite the
desire of Prime Minister Harper to reduce intergovernmental contact in
line with his doctrine of open federalism, we can also find evidence of
collaboration in various policy fields. Similarly, despite Prime Minister
Intergovernmental Relations in a Complex Federation
Trudeau’s desire for collaborative relations with the provinces and Indigenous peoples, his first four years in office were marked by considerable
and increasing conflict. These different but sometimes simultaneous
facets of Canadian federalism and IGR mean that how we assess their
performance, effectiveness, and legitimacy often depends on where we
sit in the federation, our own ideas about the nature of Canadian federalism, and how we think IGR ought to be conducted.
From this position, a few insights emerge about IGR during the tenure of Prime Minister Harper. On first blush, we can assess Harper’s
approach to IGR as clearly privileging performance and effectiveness
over legitimacy. His preference was for the federal and provincial governments to stick to their own lanes, reducing contact to make things
work. He was also not afraid to use unilateral action to advance policy
objectives. The unilateral changes to healthcare funding and equalization and attempts to reform key institutions like the Senate exemplified
this more classical approach to IGR. But these actions often came at
the cost of regular engagement with provinces, territories, Indigenous
peoples, and municipalities when developing and implementing policy.
For some, the legitimacy generated from co-operation and negotiation
is more important than achieving results. Well-performing and effective
IGR is sometimes as much about the process as the outcome. But, as
noted above, there were also clear examples of multilateral collaboration on important files like immigration, agriculture, and the labour
market during Harper’s tenure. This leaves a decidedly mixed assessment of IGR over this period: there were policy areas where IGR was
marked by unilateralism and little engagement, and others where past
approaches and converging ideas about the roles and responsibilities of
the governments led to significant multilateral negotiation. IGR under
Harper could thus be characterized as “not necessarily collaboration,
but collaboration if necessary.”
In contrast, during the first four years of Prime Minister Justin Trudeau
IGR could be seen as the polar opposite in many respects. Given his early
rhetoric and actions, one could be tempted to say that IGR during Trudeau
privileged legitimacy over performance and effectiveness. Trudeau was
clear and provided early examples that his government would work closely
with the provinces, territories, Indigenous peoples, and municipalities:
he would govern by – or even as – consultation. Working with provinces
to negotiate multilateral agreements on key files like public pensions
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and the environment seemed to mark a considerable break from the
decade under Harper. But, despite the legitimacy such negotiations can
generate, they also make it difficult to come to agreements given the
many different players at the table with sometimes competing interests.
Over time, these tensions and the differing ideas among the key players
in the federation on their respective roles led to increasing conflict.
The crumbling of a federal–provincial consensus on the carbon taxing
scheme, criticism for the lack of progress on advancing reconciliation
with Indigenous peoples, disagreement over pipelines, conflict over the
approach to funding healthcare, and the management of the asylum
seeker file are only a few examples of the shifting tide of IGR between
2015 and 2019. Again, this leads to a mixed assessment of IGR under
Trudeau: early signs that multilateral negotiation could perform well to
produce both effective and legitimate policy gave way to conflict, and
examples of unilateral action through the federal taxing and spending
powers produced policies challenged by many of the provinces. In this
respect, IGR under Trudeau has largely been marked as “collaboration,
but with significant strings attached.”
This multifaceted assessment of recent relations leads to two broader
insights into IGR in Canada. The first is that prime ministers and other
actors do not always get the IGR they want. This has been noted before
(see Bickerton, 2010), but the last fifteen years have only reinforced
this point. The complexity of the Canadian federation – the differing
interests of the players involved, the competing ideas of their respective
roles and how IGR should be conducted, combined with a long legacy
of past relations – shapes how IGR is carried out. It also means that at
any given time, despite the preferences of powerful actors, relations
can take many different forms, from limited, to conflictual, to highly
collaborative. Today we find ourselves in a period where the tenor of
relations and the ability to collaborate are highly contingent on a complex set of factors, with agreement among the actors involved on their
roles and how to work together being particularly critical. The second
insight is that the nature of Canadian federalism creates a paradox. The
complexity of Canada’s social and political landscape, combined with
the lack of formal institutions of IGR and relatively weak shared rule
mechanisms, make IGR crucial to managing this complexity. At the same
time, these conditions also make IGR extremely difficult. The Canadian
federation needs IGR, but its inherent complexity makes carrying out
Intergovernmental Relations in a Complex Federation
IGR in a way that performs well and is simultaneously effective and
legitimate a challenge.
NOTES
1 This section draws from Schertzer (2016: chap. 1).
2 This section draws from elements of Schertzer (2018); Schertzer,
McDougall, and Skogstad (2018).
GLOSSARY
multi-level governance Refers to the involvement of not just multiple
governments but also non-governmental actors in the development and
implementation of policy.
multinational vision of the Canadian federation Views the Canadian
federation as a compact among three separate founding, sociological
nations: English Canada, the Québécois, and Indigenous peoples. The
subscribers to this vision accept that power can and should be distributed
asymmetrically between units. The institutions of shared rule in the federal
government are seen as venues to protect and represent the interests of
the national minority communities.
norms Shared ideas and principles that prescribe particular activities or ways
of organizing society. They are often said to have both a regulating and a
regularizing effect on the behaviour of people.
open federalism Coined by Prime Minister Harper to describe his
approach to federalism. It entailed a commitment to respect the exclusive
constitutional jurisdiction of the provinces, and to avoid use of the
federal spending power to encroach on areas of provincial constitutional
jurisdiction. Harper stated open federalism did not rule out the
Government of Canada co-operating with the provinces and included
provincial input into the formulation of federal policy when provincial
interests were affected.
pan-Canadian vision of the federation Views Canada as a single bilingual
and multicultural nation in which the federal government should play a
predominant role in the lives of Canadians. Institutions of shared rule,
like the federal cabinet, Senate, and Supreme Court, are viewed as national
institutions that represent Canada’s pluralism.
provincial equality vision of the federation Frames the provinces as the
primary political community to which Canadians belong, and believes the
federation should be decentralized, with provinces having equal power
and status. The institutions of shared rule in Ottawa are understood as
venues to equally represent the regional diversity of the country.
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Francois Rocher and Miriam Smith, 21–44. Peterborough, ON: Broadview.
Russell, Peter. 2004. Constitutional Odyssey: Can Canadians Become a Sovereign
People? Toronto: University of Toronto Press.
———. 2017. Canada’s Odyssey: A Country Based on Incomplete Conquests.
Toronto: University of Toronto Press.
Schertzer, Robert. 2015. “Intergovernmental Relations in Canada’s
Immigration System: From Bilateralism towards Multilateral
Collaboration.” Canadian Journal of Political Science 48, no. 2: 383–412.
https://doi.org/10.1017/S000842391500027X.
———. 2016. The Judicial Role in a Diverse Federation: Lessons from the Supreme
Court of Canada. Toronto: University of Toronto Press.
———. 2018. “Collaborative Federalism and the Role of the Supreme Court
of Canada.” In Policy Change, Courts, and the Canadian Constitution, edited by
Emmett Macfarlane, 103–24. Toronto: University of Toronto Press.
Schertzer, Robert, Andrew McDougall, and Grace Skogstad. 2018.
“Multilateral Collaboration in Canadian Intergovernmental Relations:
The Role of Procedural and Reciprocal Norms.” Publius: The Journal of
Federalism 48, no. 4: 636–63. https://doi.org/10.1093/publius/pjx066.
Schertzer, Robert, and Eric Taylor Woods. 2011. “Beyond Multinational
Canada.” Commonwealth and Comparative Politics 49, no. 2: 196–222. https://
doi.org/10.1080/14662043.2011.564473.
Simeon, Richard. 2002. Political Scientists and the Study of Federalism in
Canada: Seven Decades of Scholarly Engagement. Kingston, ON: Institute of
Intergovernmental Relations.
———. 2006. Federal-Provincial Diplomacy: The Making of Recent Policy in Canada;
with a New Preface and Postscript. Toronto: University of Toronto Press.
———. 2013. “Reflections on a Federalist Life.” In The Global Promise of
Federalism, edited by Grace Skogstad, David Cameron, Martin Papillon, and
Keith Banting, 279–93. Toronto: University of Toronto Press.
Simeon, Richard, and Amy Nugent. 2012. “Parliamentary Canada and
Intergovernmental Canada: Exploring the Tensions.” In Canadian
Federalism: Performance, Effectiveness and Legitimacy, edited by Herman Bakvis
Intergovernmental Relations in a Complex Federation
and Grace Skogstad, 59–78. 3rd ed. Don Mills, ON: Oxford University
Press.
Simeon, Richard, and Ian Robinson. 2004. “The Dynamics of Canadian
Federalism.” In Canadian Politics, edited by James Bickerton and Alain
Gagnon, 101–26. Peterborough, ON: Broadview.
Simmons, Julie, and Peter Graefe. 2013. “Assessing the Collaboration That
Was Collaborative Federalism 1996–2006.” Canadian Political Science Review
27, no. 1: 25–36.
Skogstad, Grace. 2008. “Canadian Federalism, International Trade and
Regional Market Integration in an Era of Complex Sovereignty.” In
Canadian Federalism: Performance, Effectiveness and Legitimacy, edited by
Herman Bakvis and Grace Skogstad, 223–45. 2nd ed. Toronto: Oxford
University Press.
Smiley, Donald V. 1987. The Federal Condition in Canada. Toronto: McGraw-Hill
Ryerson.
Trudeau, Justin. 2015a. “Letter to the Premier of Quebec from Liberal Party
of Canada Leader Justin Trudeau.” Ottawa.
———. 2015b. “Statement by the Prime Minister of Canada Following the
Swearing-in of the 29th Ministry.” Ottawa.
Watts, Ronald L. 1998. “Federalism, Federal Political Systems, and
Federations.” Annual Review of Political Science 1, no. 1: 117–37. https://
doi.org/10.1146/annurev.polisci.1.1.117.
———. 2008. Comparing Federal Systems. 3rd ed. Kingston, ON: McGill-Queen’s
University Press.
Wiseman, Nelson. 2007. In Search of Canadian Political Culture. Vancouver:
University of British Columbia Press.
191
PART TWO
The Social and Economic Union
CHAPTER EIGHT
Federalism and Canada’s Economic
Union
Grace Skogstad and Matt Wilder
Economic nation-building was a major rationale for Confederation.
Faced with the task of forging an economic union out of different regional economies, there is ample evidence that Canadian governments
have succeeded in creating a functioning economic union in Canada.
Canadians share a common currency and monetary policy, as well as
common policies with respect to external economic relations. Other
policies that significantly affect the economic union, such as taxation, are
coordinated across the two orders of government. Nonetheless, Canada’s
internal economic union remains incomplete insofar as uncoordinated
federal and provincial government policies impede the interprovincial circulation of goods, labour, capital, and services. There are also
chronic complaints in some provincial quarters about the willingness
of the federal government to balance fairly the competing interests of
different provincial and regional economies. Moreover, the increasing
integration of provincial/regional economies into North American and
global supply chains raises questions about the capacity of Canadian
governments to pursue made-in-Canada national and regional economic
development policies.
The objective of this chapter is to address the role of Canada’s federal
system in maintaining and enhancing Canada’s economic union. It is
important at the outset to emphasize that Canada’s federal system is
one factor among others that affects the nature of Canada’s economic
union. Moreover, the effects of federal institutions and practices interact
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with other factors, most notably the regional structure of the Canadian
economy. If it is thus difficult to isolate the independent effects of Canada’s federal system on the nature of the Canadian economic union, it is
nonetheless still possible to offer some insights into how the constitutional
division of powers and their exercise by governments within Canada’s
federation have shaped the performance, effectiveness, and legitimacy
of Canada’s economic union.
The first section of the chapter begins by distinguishing among different types of economic associations. It then describes the allocation
of constitutional powers in Canada with respect to the construction and
functioning of Canada’s economic union. This section documents the
sole jurisdiction of the government of Canada to establish a customs
union and to exercise the most important powers with respect to creating a monetary union. It also clarifies that both orders of government
have important and overlapping jurisdictional levers when it comes to
promoting individual firms, economic sectors, and provincial/regional
economic development goals.
The second section of the chapter provides an historical overview of
how governments have exercised the jurisdictional powers and fiscal
and regulatory policy instruments to pursue economic development
goals. These analyses demarcate governments’ shifting roles over time:
a predominant role for the Canadian government in the economic union through to the 1960s; intervention by both federal and provincial
governments during the 1970s through to the mid-1980s; a transition
in the early 1990s away from direct state intervention to assisting firms
and industries in the market economy; and an emphasis on government
support under the auspices of cultivating the “knowledge economy” from
the late 1990s to the present.
This second section affirms that the division of powers in Canada’s Constitution, in interaction with the regional structure of Canada’s economy,
has played an important role in the functioning of Canada’s economic
union. Distinct provincial economic structures have tested the capacity of
the federal government to devise economic policies that are perceived as
fair by all provinces/regions. Lacking intrastate forums within the government of Canada for representing their regional development ambitions,
provinces have been empowered by Canada’s federal Constitution to act
on their perceptions of unfair treatment by Ottawa. Since the 1960s, several provinces have exercised their considerable jurisdiction to develop
Federalism and Canada’s Economic Union
their provincial economies to the benefit of local industries at the expense
of their neighbouring provinces. Although the resulting disruptions to
the internal market have created tensions within the federation, governments have lacked incentives to minimize interprovincial economic
barriers, including by harmonizing their economic development policies.
In recent decades, however, structural shifts in the form of economic
globalization and the emergence of the knowledge-based economy
appear to have created incentives for Canadian federal governments to
reorient their economic development policies towards more regionally
neutral policies. These same external pressures also appear to be giving
provinces incentives to commit to eliminating or harmonizing those of
their policies that impede the full functioning of the Canadian internal
economic union.
The third section of the chapter summarizes and offers conclusions
on the extent to which federalism is implicated in the performance,
effectiveness, and legitimacy of the Canadian economic union. In terms
of performance, the general pattern is one of weak or non-existent
coordination of governmental economic policies, even while there are
examples of intergovernmental co-operation and collaboration. In terms
of effectiveness, objective economic indicators indicate a well-functioning
albeit incomplete economic union. Just how serious interprovincial barriers to the internal market are is a matter of conflicting evidence and
debate. Assessments of the legitimacy of federal economic development
policies are, nonetheless, marred by perceptions, especially in western
Canada, of discriminatory treatment.
CANADA’S CONSTITUTION AND THE CANADIAN
ECONOMIC UNION
To determine the nature of Canada’s economic union, and how it has
been affected by Canada’s federal system, it is useful to distinguish
different forms of economic association. A customs union exists, such
as in Canada, when the entities within it adopt common policies with
respect to external economic relations; for example, common tariffs on
imports. A common market, such as the European Union (EU), is an
association within which goods, capital, services, and labour move freely,
without being subject to fiscal or regulatory barriers posed by constituent
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members. A common market that has a single currency and a central
bank to manage the currency is described as a monetary union; the
member states of the EU that constitute the Eurozone are an example.
As distinguished from a common market, a complete economic union
entails deliberate efforts to transform separate economic entities into a
single economic space via common or harmonized policies affecting the
development and management of the economy. In addition to policies
with respect to external and internal trade, a number of other policies
are also thereby implicated in the creation and preservation of an economic union. They include monetary policy; fiscal policies (taxation,
fiscal transfers); infrastructural policies such as for transportation and
communications; financial services and securities regulation; and sectoral
policies such as for industry, agriculture, natural resource, and energy
development (Canada, 1980; Norrie, Simeon, and Krasnick, 1986: 293).
By way of example, the EU, despite its considerable efforts, fails to qualify
as a complete economic union because of its inability to harmonize the
full breadth of these policies.
The allocation of powers with respect to the economic union in the
1867 Constitution Act was heavily influenced by the geopolitical context
within which Confederation occurred. The British North American
(BNA) colonies that joined politically to form Canada relied upon
export markets to purchase their products (principally cod, wheat, and
agricultural commodities but also some manufactured goods). When
the preferential access these colonies enjoyed to Great Britain ended
in the mid-1800s, the solution was a reciprocity agreement with the
United States. Between 1854 and 1866, Canadian goods entered the US
tariff-free. The end of reciprocity required the united province of Canada
and the other BNA colonies (Nova Scotia, New Brunswick, and PEI) to
find an alternate market. Defence considerations also reinforced these
incentives for an interprovincial union. With the end of the US civil
war in 1865, Canada faced a large army on its southern border: a threat
that was magnified by the rhetoric of US politicians to expand into the
prairie west. Creating a common economic space within Canada – one
that joined central Canada to the Maritimes and the west – was a means
to further both economic and political/defence goals.
Given this context, not surprisingly, the Constitution Act, 1867 (formerly
the BNA Act, 1867) gave the government of Canada significant jurisdictional powers to create a common Canadian economic space. It acquired
Federalism and Canada’s Economic Union
jurisdiction over trade and commerce in section 91(2) – a power that
the courts subsequently interpreted to include both external and interprovincial trade. Federal jurisdiction does not extend to intraprovincial
trade; the latter is a matter for the provinces. Its additional jurisdiction
over customs and excise laws (section 122) and any mode or system of
taxation in section 91(3) gave the federal government the authority to
create a customs union, including by imposing tariffs on imported goods.
The government of Canada also acquired the jurisdiction to create
a monetary union and manage monetary policy (whose objective is
to preserve the value of money by keeping inflation low, stable, and
predictable). The federal government obtained exclusive authority
over currency and coinage (section 91(14)); banking, incorporation of
banks, and the issuance of paper money (section 91(15)); savings banks
(91(16)); interest (91(19)); legal tender (91(20)); and authority to borrow money on the public credit (91(4)). Provinces cannot establish a
separate money system or currency controls. Canadian monetary policy
is conducted independently by the Bank of Canada, which, since 1991
under renewable agreements with the government of Canada, aims for
an inflation target of 2 per cent. Provinces cannot establish banks; the
largest financial services (federally chartered banks) are thus regulated
by the government of Canada. However, provinces have over the years
incorporated trust companies, credit unions, and insurance companies that
also receive deposits and lend money (section 92(11)).1 The government
of Canada’s authority over financial institutions is also limited by the right
of provinces and territories to regulate the securities industry; that is,
firms that raise capital in the form of debt (bonds) or equity (stocks) on
stock exchanges. Nor can the government of Canada control provincial
governments’ borrowing; they have the right to borrow money on the
sole credit of the province (section 92(3)) and run budgetary deficits.
The intent at Confederation was to create a common market. Section
121 of the 1867 Constitution Act stated: “All Articles of the Growth, Produce
and Manufacture of any one of the Provinces shall, from and after the
Union, be admitted free into each of the other Provinces.” Judicial review
has subsequently confirmed section 121 precludes provinces from levying
tariffs or import quotas on goods from another province.2 It does not,
however, impose an absolute free trade regime within Canada. As most
recently ruled in the 2018 R. v. Comeau case, section 121 permits provinces
to pass laws that have the incidental effect of impeding the passage of
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goods over interprovincial borders, providing the law’s main purpose is
not to prevent the entry of goods from other provinces. Section 121, ruled
the Supreme Court of Canada, has to be read in conjunction with sections
91 and 92. Of relevance to interpreting section 121 are section 92(13),
which gives the province the right to legislate with respect to “property
and civil rights within the province,” and section 92(16), which gives the
province the right to legislate on “generally all matters of a merely local
or private nature in the province.” Moreover, insofar as section 121 makes
no reference to the free movement of services, capital, enterprises, or
persons, provincial governments can implement non-tariff barriers that
restrict their internal free movement. The result, as discussed later in
this chapter, is an incomplete internal Canadian market.
Besides its allocation of the legal powers that affect Canada’s customs
union and internal common market, Canada’s Constitution has affected
the powers of both orders of government to develop and manage the Canadian economy. Both federal and provincial governments are equipped
with considerable fiscal (taxing and spending) resources to engage in
economic development (see chapter 10). The federal government can
raise taxes by any mode (section 91(3)) and spend the monies so raised
as it sees fit, including on matters that fall within provincial jurisdiction.
Provinces have the ability to raise direct taxes (92(2)) and manage the
crown lands they own (92(5)). As discussed further below, for provinces
with abundant natural resources, the provinces’ right to manage and
receive royalties from their resources like forests, hydro power, oil, natural gas, and mineral deposits adds up to appreciable revenue sources.
In sum, Canada’s Constitution equips both orders of government with
regulatory and financial powers and resources to promote economic development. Structural factors – like Canada’s comparatively small population,
extensive geography, and a resource-based economy dependent upon export
markets – have made Canadian governments reluctant to allow market
forces alone to determine the structure of the Canadian economy and its
development and growth (Tupper, 1986: 354). The focus in this chapter is
on the economic policies of governments that fall into the category of industrial policy, that is, efforts to encourage particular industries and regions to
innovate, adjust, and capture economies of scale; to increase employment;
to reduce economic vulnerability in the face of falling prices and reduced
demand; and to improve the standard of living of Canadians (Leslie, 1987:
187).3 The two orders of government share a number of policy instruments
Federalism and Canada’s Economic Union
Figure 8.1. Share of Provincial GDP by Industry, 2018
100
90
SHARE OF GDP (%)
80
70
60
50
40
30
20
10
0
NFL
PEI
NS
NB
QC
Energy and mining
ON
MB
SK
AB
BC
YK
NWT
NU
Agriculture, forestry, fishing, and hunting
Manufacturing
Services
Source: Authors’ calculations based on Statistics Canada Table 36-10-0400-01,
“Gross Domestic Product (GDP) at Basic Prices, by Industry, Provinces and
Territories, Percentage Share.”
to deploy in pursuit of industrial policy, namely fiscal instruments in the
form of subsidies and tax incentives; direct delivery of goods and services
through government-owned enterprises; regulations and incentives that
nudge economic actors to behave in ways consistent with government goals;
policies that facilitate information exchange and coordination among
economic actors; export and marketing assistance; and regulations that
can protect and privilege Canadian businesses vis-à-vis foreign competition.
Figure 8.1 provides a profile of current provincial economies, demonstrating the extent to which their gross domestic product (GDP) is derived from different industries. It shows the far greater significance of
the energy and mining sectors to Newfoundland and Labrador, Alberta,
Saskatchewan, and the Northwest Territories as compared to other provinces and territories. Compared to other provinces, Ontario and Nova
Scotia are more reliant on service sectors, and Quebec on manufacturing.
Differences in provincial economies are long-standing. Since Confederation, Canadian provinces/regions have varied, often significantly, in the
extent to which their economic fortunes have depended on agriculture,
forestry, fishing and hunting, manufacturing, and energy and mining.
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Not surprisingly, then, federal efforts at economic development policy
have frequently faced the challenge of reconciling the disparate interests
of different provinces/regions. Intergovernmental conflict has ensued
amidst charges of federal policy providing benefits to one region at the
expense of the economic well-being of another. Illustrative examples are
the National Policy and the National Energy Program, discussed below.
Provincial industrial policies aimed at promoting local industries are also
susceptible to the same charge of discrimination – and hence, a source
of interprovincial conflict.
The next section of the chapter provides an historic overview of the
different regulatory and financial policy instruments used by federal
and provincial governments to promote economic development, and
the extent to which their largely uncoordinated efforts have engendered
intergovernmental conflict.
FEDERAL DOMINANCE: CONFEDERATION
TO THE 1970s
In the post-Confederation period, the federal government assumed
leadership in constructing a national economy. The 1879 National Policy represented a deliberate effort to use federal jurisdictional powers
to create an internal Canadian market. It imposed tariffs on imported
manufactured goods, thereby protecting Canadian manufacturers from
foreign competition in the Canadian market. The federal government
used its authority over interprovincial transport to finance and regulate
the construction of interprovincial railways to the Maritimes and western Canada, and its authority over immigration policy to settle prairie
Canada in the late 1800s and early 1900s. Together, tariffs, national
railways, and a populated western Canada created the basis for an
east–west trading system.
The National Policy was widely viewed as discriminatory in western
Canada and the Maritimes, where it was perceived as benefitting central
Canada at their expense (Gibbins, 2007). The tariff protected domestic
manufacturers, wherever located in Canada, while its costs were borne
by consumers. Although both the manufacturing sector and most consumers were located mainly in central Canada, consumers in central
Canada could still be seen to benefit from the tariff because of the
Federalism and Canada’s Economic Union
knock-on effects of manufacturing activity. The situation was different
for the primary producers in western and Maritime Canada whose major markets were external. Not just their consumer costs, but also their
production costs were driven up by higher priced input goods, like
farm machinery, as a result of the federally imposed tariff (Leslie, 1987:
113). It is thus not surprising that the legacy of the National Policy was
to undermine the credibility of the federal government to represent the
economic aspirations of regions other than central Canada (Atkinson
and Coleman, 1989: 65).
Besides tariffs on costly imports like farm machinery, other aspects of
federal economic development policy also created perceptions of western
regional discrimination. A major bone of contention was that, contrary
to the situation of other provinces, the governments of Manitoba, Saskatchewan, and Alberta did not acquire ownership of their Crown lands
and natural resources when they became provinces. The government of
Canada had retained ownership of prairie Crown lands on the grounds
that it needed the funds from the Crown lands to finance prairie settlement and railway building. The transfer of their Crown lands and natural
resources to the three prairie provinces in 1930, states Leslie (1987: 4),
“symbolically closed” the National Policy.
Notwithstanding its role as the major architect of the Canadian economic union, the federal government has never been the only order of
government to promote economic development. It shares its authority
to do so with the provinces/territories. Beginning in the nineteenth
century, Ontario, for example, used its ownership of provincial Crown
lands and resources to promote the mining, forestry, and hydroelectricity
sectors within the province (Nelles, 1974). At various times, the courts
have checked Ottawa’s economic development efforts. Most notably, its
effort during the 1930s Great Depression to create a national marketing
scheme for crops and other agricultural products – in order to enhance
the competitiveness of Canadian farmers vis-à-vis domestic and foreign
buyers – was struck down by the Judicial Committee of the Privy Council
as an intrusion into provincial jurisdiction over intraprovincial marketing
(see chapter 4).
The federal government continued to assume the dominant role
in developing the economy through to the late 1960s. As chapter 10
on fiscal federalism discusses, the centralization of fiscal policy that
began during the Second World War continued in the post-war period.
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Keynesian policies were adopted to smooth out the inherent instability
of a market economy that was heavily dependent on the export of unprocessed primary products (Leslie, 1987: 5). The government of Canada’s
direct aid to industry increased over the 1960s, as it gave incentives to
industry to locate in the slow-growth regions of Quebec and the four
Atlantic provinces of Newfoundland and Labrador, Nova Scotia, New
Brunswick, and Prince Edward Island. Although Ottawa usually developed these regional development programs on its own, at times Ottawa
has co-operated with provinces in managing them (Norrie, Simeon, and
Krasnick, 1986: 297; Bakvis, 1991).
ACTIVIST FEDERAL AND PROVINCIAL
GOVERNMENTS: 1970s–MID-1980s
Both orders of government underwent an important transition in
their role in economic development via industrial policies in the 1970s
(Haddow, 2008). Nationalist governments in Quebec, and subsequently
other provincial governments, revved up their efforts to develop their
local economies by providing grants, loans, tax allowances, and other
incentives to local industries. Governments in Alberta and Saskatchewan, highly dependent upon extractive resources, pursued policies
to spin off new industries from their fossil fuel and potash sectors
(Richards and Pratt, 1979). In addition to seeking greater control
over and credit for the economic development activities it engaged
in under agreements with provinces, the federal Liberal government
led by Prime Minister Pierre Trudeau also became more interventionist in promoting structural changes in the economy. Using fiscal
policy (taxation, spending) and by restricting foreign investment, the
Trudeau government aimed at positioning Canadian manufacturers
to withstand foreign competition in the domestic market and expand
their exports of higher value, processed goods (Leslie, 1987: 8–9).
Both federal and provincial governments also established public
(government-owned) enterprises to produce and deliver goods and
services (Laux and Molot, 1988). These different federal and provincial
initiatives were usually taken unilaterally, and without coordination
with other governments (Tupper, 1986: 375; Leslie, 1987: 187; Simeon
and Robinson, 1990: chap. 10).
Federalism and Canada’s Economic Union
However, there were notable instances of federal and provincial
co-operation. In the early 1970s, the federal government pooled its legal authority over interprovincial and export marketing with provincial
governments’ rights to regulate marketing within their province in order
to establish national systems of supply management in the dairy, poultry,
and egg sectors. Supply management limited the domestic production of
these commodities to domestic demand, regulated these commodities’
prices, and protected Canadian producers of these commodities from
foreign competition (Skogstad, 1987, 2008).
The development and pricing of oil and gas resources brought the
Pierre Trudeau Liberal government into sharp conflict with Newfoundland and Labrador (Blake, 2015) and the western Canadian provinces
of Saskatchewan and Alberta (Simeon and Robinson, 1990: 236–49).
Tensions reached the boiling point when the Pierre Trudeau government
implemented the National Energy Program (NEP) in 1980. It imposed
new taxes on the oil and gas industry – thereby increasing the revenues
of the federal government – as well as controls on oil and gas prices. The
latter were seen to serve the interests of industrial and other consumers located mainly in central Canada. The NEP also sought to increase
federal control over oil and gas exploration by providing incentives
for exploration and development in northern Canada and on federal
Crown lands. The federally owned Crown corporation, Petro Canada,
acquired a 25 per cent interest in all Canada Lands discoveries. Alberta
and Saskatchewan, heavily dependent on oil and gas revenues, viewed
the NEP as a direct attack on their jurisdiction over the development of
their natural resources, as well as a discriminatory policy that favoured
central Canada at their expense. The NEP was widely blamed for undermining investment in oil and gas exploration and development in
provinces. The intergovernmental conflict and threat to Canadian unity
triggered by the NEP were resolved by changes in federal government
policy (deregulating domestic oil prices) and the affirmation of provinces’ jurisdiction over their non-renewable resources in section 92A of
the 1982 Constitution Act.4 Notwithstanding this important constitutional
victory, the NEP continues to cast a long and dark shadow over intergovernmental relations between Alberta and Liberal governments in Ottawa.
Provincial dissatisfaction with centralized decision-making at the
federal level has also been attributed to the 1984 restructuring of the
federal Department of Regional Industrial Expansion (DRIE), formerly
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the Department of Regional Economic Expansion (DREE). The new
framework witnessed the creation of several regional ministries to serve
western Canada, the Atlantic Region, northern Ontario, Quebec, and –
following the 2008 recession – southern Ontario (see further, below). Yet,
as noted by Conteh (2013), federal regional development expenditures
were, until recently, dwarfed by their provincial counterparts.
1990–2000: FROM INTERVENTIONIST TO
MARKET-ORIENTED ECONOMIC DEVELOPMENT
Major changes occurred in the 1990s concerning the management of
the Canadian economy, a catalyst for which was the report of the Royal
Commission on the Economic Union and Development Prospects for
Canada (also known as the Macdonald Commission). Convened by the
Trudeau Liberal administration in Ottawa in 1982 to assess, among other
things, economic governance in Canada, the commission’s report to
the Mulroney Progressive Conservative government in 1985 favoured
non-intervention in the market and free trade with the United States. The
ideas underlying the commission’s position were strongly influenced by
monetarist economic theory and the problem of persistent inflation that
characterized the 1970s and 1980s. In a rejection of classical Keynesianism,
which justifies government intervention to achieve full employment, the
commission endorsed the concept of the non-accelerating inflation rate
of unemployment (NAIRU), which tolerates a rate of unemployment
(about 8 per cent, at the time) that keeps inflation in check (Macdonald
et al., 1985: 276).
Although provincial administrations were divided on the free trade
issue, most governments in Canada (and the rest of the world) were
experiencing fiscal crises by the early 1990s. Indeed, for many governments the state of affairs was such that they could no longer afford to
borrow money to fund government programs (MacKinnon, 2003). Most
governments were therefore pre-empted from taking or resuming an
activist stance on economic matters. Those that did, like the Ontario
NDP government under Bob Rae, did not fare especially well politically
or economically (Bradford, 2003). The problem was that the global
economy in the early 1990s was undergoing major restructuring, with
traditional manufacturing industries relocating to developing countries
Federalism and Canada’s Economic Union
where labour costs were much lower. In many cases, governments that
tried to resist the trend incurred costs only to delay the inevitable (Blais,
1986).
The free trade agenda and fiscal crisis of the state also ushered in a
wave of privatization. On one hand, many governments in Canada were
eager to relinquish inefficient and unprofitable state-owned enterprises
in exchange for quick cash. On the other, the principles of free trade and
the general ethos of liberalization held that economic affairs are generally
best left to market actors. Thus, consistent with trends elsewhere in developed countries, Canadian and provincial governments have privatized or
dismantled many, but not all, of their state-owned enterprises (Bird, 2015).
With respect to the economic union, trade agreements have strengthened north–south and global trade ties and weakened east–west linkages.
Canada’s regions are more loosely connected to one another in terms
of their sources of prosperity; most provinces export more to international markets than they do to other provinces (Statistics Canada, 2018).
Accordingly, devising policies for a national Canadian economy on the
premise of economic linkages that mutually benefit its constituent political (provincial) units has become ever more problematic.
Despite the growing importance of international markets to most
Canadian provinces, the government of Canada has not retreated from
economic development/adjustment. It funds economic development
agencies in all regions of Canada: the Western Economic Diversification
Fund in western Canada; the Federal Economic Development Initiative
for Northern Ontario (FEDNor); the Atlantic Canada Opportunities
Agency (ACOA); the Canadian Northern Economic Development Agency
(CanNor) in the three territories; and, since 2009, the Federal Economic
Development Agency for Southern Ontario (FedDev). It directs funding
to creating the infrastructure of a nation-wide knowledge-based economy:
increasing funding for research-granting agencies and research and development (R&D) in innovative industrial sectors, such as agriculture and
food, digital technology, and clean (green) technologies (Bakvis, 2008;
Haddow, 2008: 232; Philipps et al., 2018; Philipps and Hertes, 2019). As
indicated by Figures 8.2 and 8.3, although the extent to which the federal
government subsidizes economic activity has diminished steadily since
the 1970s, it continues to inject several billion dollars into the Canadian
economy every year. The 2019–20 budget also indicates a strong federal
commitment to economic development.5
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Figure 8.2. Federal and Provincial Subsidies, 1975–2018
20
18
16
12
10
8
6
4
2
Federal
17
15
20
13
20
11
20
09
20
07
20
05
20
03
20
01
20
99
20
97
19
95
19
93
19
91
19
89
19
87
19
85
19
83
19
81
19
79
19
77
19
19
75
0
19
BILLIONS ($)
14
Provincial
Source: Authors’ calculations based on Statistics Canada Table 36-10-0477-01,
“Revenue, Expenditure and Budgetary Balance - General Governments.”
Inflation adjusted, 2018 Canadian dollars. Provincial series includes all provinces,
excludes territories.
2000–PRESENT: INDIRECT INTERVENTION AND THE
KNOWLEDGE ECONOMY
While the liberalization agenda was no doubt forcefully pursued in the
late 1980s and early 1990s, its underlying ideas never reached hegemonic status. Indeed, by 2000, the so-called “Washington consensus” that
favoured market-based policies had unravelled as economists and policymakers became attentive to market failures that hinder ­innovation –
namely, non-appropriable knowledge spill-overs and imperfect markets
for skills development (Stiglitz, 1998; Williamson, 2000). Canadian
governments thus adopted, and in some sense overstepped, OECD
recommendations to cultivate the knowledge economy by way of indirect interventions (OECD, 1999). Consequently, the post-2000 era has
Federalism and Canada’s Economic Union
Figure 8.3. Comparison of Expenditures through Economic
Development Ministries
5
BILLIONS ($)
4
3
2
1
0
1989
1999
2019
1989
Federal
1999
2019
Ontario
Operating
1989
1999
2019
Quebec
Transfers
Source: Authors’ calculations based on budget estimates. Inflation adjusted,
2018 Canadian dollars.
witnessed a significant increase in the use of non-tariff barriers – such
as subsidies, government procurement, and tax incentives – many of
which are not directed to knowledge-based or innovative industries.
Whereas Figures 8.2 and 8.3 display cash expenditures, Lester (2018)
calculates that, with tax measures and Crown corporation activity included, federal subsidies amounted to $14.0 billion while those of the
four largest provinces (BC, Alberta, Ontario, and Quebec) reached
$14.6 billion in 2014–15.
While it is arguable that subsidizing industry under the pretence of
correcting market failures is a guise used to justify protectionism, Figure 8.4
offers some support for the contention that federal commitments to
funding research have rebounded after a lull in the 1990s. On the other
hand, the fact that current amounts scarcely exceed the previous peak in
the early 1990s means that the question of whether rhetoric surrounding
the knowledge economy matches government action remains.
Policy initiatives to render Canadian enterprises – and the economy
as a whole – more competitive do not appear to be any better coordinated with provincial governments than in the past. At the same time,
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Grace Skogstad and Matt Wilder
Figure 8.4. Federal Expenditure on Research and Scholarship Grants,
1972–2018
1.4
1.2
0.8
0.6
0.4
0.2
72
19
74
19
76
19
78
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
0.0
19
BILLIONS ($)
1.0
Source: Statistics Canada Table: 36-10-0477-01, “Revenue, Expenditure and
Budgetary Balance - General Governments.” Inflation adjusted, 2018 Canadian
dollars.
they produce less overt conflict between Ottawa and the provinces
(Haddow, 2008: 231). There are, nonetheless, examples of intergovernmental co-operation and collaboration in quest of adjusting and
protecting Canadian industries from the ups and downs of the global
economy. Housing, transportation and infrastructure, labour market
training, and, especially, agriculture are all examples. In agriculture,
governments at both orders have worked together since the early 1990s
to design cost-shared programs to help Canadian farmers manage their
income and business risks (Skogstad, 2008: chap. 3). The formula
they have struck on in this area of concurrent jurisdiction entails
an overarching multilateral framework that defines a set of shared
goals and programs for all provinces. It is accompanied by bilateral
agreements specific to individual provinces and territories under
which the latter have flexibility to design and implement programs
tailored to the distinct needs and goals of their local agri-food sectors
(Schertzer, McDougall, and Skogstad, 2018). Yet another example of
intergovernmental co-operation was the coordinated response of the
Federalism and Canada’s Economic Union
governments of Canada, Ontario, and Quebec to bail out the two auto
manufacturers, Chrysler and GM, during the 2008 economic recession
(Constantelos, 2014).
The auto bailout is a potent reminder of how the federal government’s
exercise of its fiscal powers continues to be important to regional economic
development. Its exercise of its exclusive regulatory powers also remains
significant to regional development. In 2010, the Harper government
indicated to BHP Billiton that it would back the Saskatchewan government’s opposition to its hostile bid to acquire the Potash Corporation
of Saskatchewan. BHP Billiton subsequently withdrew its bid. Besides
its exclusive powers to regulate foreign investment, the government of
Canada also affects the economic development of provinces by virtue of
its management of the Canadian–American relationship, including on
trade issues (see chapter 9), and, as discussed further below, by virtue
of its legal authority to approve (or not) oil and gas pipelines that cross
provincial or national borders.
As mentioned above, provincial governments continue to be fully engaged in industrial policy on behalf of local industries. Resource-dependent
provinces like Alberta use the full array of their policy instruments –
advantageous tax, royalty, and regulatory regimes – to support their oil
and gas sector (Urquhart, 2018). Yet, provinces’ economic building goals,
too, face the legal and political constraints of federalism – as Alberta’s
efforts to export its bitumen (from the oil sands) to extra-provincial markets and consumers illustrate. The proposed Northern Gateway pipeline
project to ship Alberta bitumen out of Kitimat, British Columbia, was
first approved by the Harper Conservative federal government in 2014
only to be rejected by the Justin Trudeau Liberal government in 2015.
The minority BC NDP government of Premier John Horgan (2017–),
reliant on the support of the Green Party for its legislative proposals,
has opposed the twinning of the Trans Mountain pipeline. A proposed
Energy East pipeline to transport diluted bitumen from Alberta and Saskatchewan to refineries and ports in New Brunswick was abandoned by
TransCanada.6 By early 2020, the Federal Court of Canada had given its
approval to the Trans Mountain pipeline, purchased by the Government
of Canada in 2018 in an effort to salvage the project. Still, Indigenous
peoples’ opposition to the pipeline continued to raise questions about
the pipeline’s timely completion.
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SUMMARY AND DISCUSSION
A wide range of government policies affect the performance of the
Canadian economy. It is, accordingly, important to refer to other chapters
of this book to arrive at a full judgment of how federalism has affected
the performance, effectiveness, and legitimacy of the Canadian economic
union. The focus of this chapter has been narrower: an examination of
how federal governments, and to some extent provincial governments,
have exercised their jurisdictional powers to further national and regional
economic development goals. As the overview has revealed, Canadian
governments have not been averse historically to producing goods and
services themselves, via state/public enterprises or Crown corporations.
However, for the most part, governments have been loath to interfere
with the autonomy of individual firms; accordingly, their economic development policies have been geared to supporting private economic
actors, including by assisting them to adjust to changes in the external
political economy (Atkinson and Coleman, 1989).
How have Canadian governments fared against the benchmarks
used in this text to measure performance? Have federal principles
been upheld in the sense that jurisdictional powers of governments are
respected? The answer to this question is “yes”; governments have been
able to exercise their constitutional authority with respect to economic
development free of unilateral action by the other order of government.
Are federal institutions – formal and informal – present and working
in the sense of providing forums “conducive to negotiation, consultation, or simply an exchange of information” (Dupré, 1985)? Here the
answer is “no.” Provinces have lacked an intrastate forum within which
to articulate their interests inside the government of Canada. Although
provinces were initially willing to allow the federal government to take
the lead in establishing nation-wide policies, once they intervened more
actively to promote the development of their local economies, the need
arose for coordination of government actions. Provinces have created
regional, as well as multilateral, forums (the Annual Premiers Council
succeeded by the Council of the Federation) within which to address
cross-provincial boundary issues. However, their effectiveness appears to
be limited to producing voluntary, non-binding agreements (Simmons,
2017).7 Intergovernmental forums that bring federal, provincial, and
territorial governments together to coordinate economic development
Federalism and Canada’s Economic Union
and adjustment policies have been lacking. The result is that provinces
and the federal government have largely acted in an uncoordinated
fashion, with little accountability to one another.
As Norrie, Simeon, and Krasnick (1986: 295) observe, “there is a
fundamental tension with federalism that will underlie all specific efforts at policy harmonization.” The reason is that federal systems are
created to enable their constituent units to exercise jurisdiction over
the policy spheres important to preserving the very diversity that ruled
out a unitary form of government in the first place. Policy harmonization through coordinated action is perceived as necessary, though,
when constituent units’ jurisdiction extends beyond policy spheres in
which diversity is valued over uniformity. Even when harmonization
is perceived to be desirable, the challenge remains of balancing the
gains (in efficiency, effectiveness) from coordination with sensitivity to
regional/provincial concerns. When provincial economic structures
vary considerably, as they do in Canada, common economic policies will
also have differential regional effects, with some provinces perceiving
gains from them and others, losses (Norrie, Simeon, and Krasnick,
1986). The need to balance unity and diversity goals in economic adjustment policies leads Haddow (2008) to argue for the constitutional
status quo: that is, neither centralizing policies controlled by Ottawa
nor devolution to provinces, insofar as the latter would serve only the
interests of larger and more affluent provinces but not smaller and
poorer provinces.
How have Canada’s federal institutions fared when it comes to the
effectiveness of their public policies and programs? That is, are substantive problems being dealt with? And are policies efficient in marshalling resources, allowing for asymmetry as warranted, and enabling
international commitments to be met? There is no single answer to the
effectiveness question. Some point to evidence of a well-functioning
Canadian economy, citing, for example, the fact that Canada’s financial
institutions proved robust during the 2007–8 Great Recession and that
Canada enjoys one of the highest standards of living in the world. The
latter can obviously be attributed not just to domestic policies but to
liberalizing trade agreements pursued by Canadian governments (see
chapter 9). Trade agreements, particularly NAFTA, have integrated a
diverse range of Canadian producers and products into regional supply
chains, even while they have not made us exceptionally dependent, by
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Grace Skogstad and Matt Wilder
comparative standards, on a single (US, in the case of Canada) market
(Beaulieu and Song, 2015).
In contrast to such macro-level indicators of economic performance,
others emphasize the economic costs and inefficiencies that result from
barriers to the interprovincial movement of goods, services, capital, and
labour (Standing Senate Committee on Banking, Trade and Commerce,
2016; Canadian Chamber of Commerce, 2018). The federal government is responsible for some of these barriers, as the Macdonald Royal
Commission (1985) observed, citing the federal government’s regional
development agencies, its regionally tailored unemployment insurance
programs (see chapter 11 in this text), and supply management as
examples of federal barriers to the common economic union. Several
barriers are the result, however, of provinces’ active use of their jurisdictional powers to promote local industries and residents. As early as
1980, a position paper by the government of Canada highlighted the
economic costs of provincial procurement policies that gave preference
to provincially produced goods and services, local hiring restrictions and
professional licensing requirements that differed across provinces and so
impeded labour mobility, and provincial restrictions on out-of-province
investment and takeover bids that impeded the free movement of capital
across provinces (Canada, 1980).
Recent estimates of the economic costs of these barriers differ.
Critics say unharmonized regulatory policies cost industry as much as
$50 billion annually (Standing Senate Committee on Banking, Trade and
Commerce, 2016; Canadian Chamber of Commerce, 2018). Others argue
the figure is much lower, and, moreover, that it is entirely appropriate in
a federal system for provinces to vary in their approaches to such things
as environmental protection, regional economic development, public
services, and consumer protection (Sinclair, 2017).8 Canada’s bilingual
character and the dominance of the French language in Quebec also
explain and justify the persistence of internal trade barriers in Canada
relative to Australia, another federal system (Smith and Mann, 2015).
Efforts of provincial, territorial, and federal governments to co-operate
to reduce and eliminate barriers to the free movement of goods, persons,
services, and investment date back to the voluntary 1995 Agreement on
Internal Trade (AIT). In 2016, the four western Canadian provinces
bound themselves to reducing non-tariff (regulatory) barriers in the
New West Partnership (Kukucha, 2015). Nonetheless, by 2015 Canada
Federalism and Canada’s Economic Union
had made significantly less progress in eliminating internal trade barriers
over three decades than had Australia (Smith and Mann, 2015). The
most recent display of the willingness of governments at the two orders
to remove and/or reconcile policies that currently discriminate in their
treatment of workers, goods, services, and investment is the Canadian
Free Trade Agreement (CFTA). It replaced the AIT when it entered into
force in July 2017. Under the CFTA, governments agree to not provide
more favourable treatment to goods, services, investments, and workers
from their own province or territory than is accorded to other Canadian jurisdictions (Canadian Free Trade Agreement, 2018). The CFTA
nonetheless lists a total of 144 specific exemptions, including in energy
sectors, natural resource development, and trade in alcoholic beverages.9
The CFTA comes in the wake of Canada’s entering into a Comprehensive Economic and Trade Agreement with the European Union.
Some of its provisions, including the access of EU firms to public (government) procurement of goods and services, fall into provincial areas
of jurisdiction. The international trade agreement has thus increased
the incentives for Canadian governments to remove and/or harmonize
remaining impediments to interprovincial movement of goods, labour,
capital, and services. To the extent such policy harmonization occurs,
intergovernmental tensions within the Canadian economic union can
be expected to be reduced, albeit not eliminated entirely.
Finally, how do different Canadians evaluate the legitimacy of the
governing arrangements for the economic union and the outcomes
they produce? Evaluations of legitimacy revolve overwhelmingly around
perceptions of the fairness of federal economic development policies.
Even while “a credible grand ‘balance sheet’” of the range of federal
economic policies may defy systematic analysis (Norrie, Simeon, and
Krasnick, 1986: 323), there can be little doubt that perceptions of unfairness and regional discrimination, particularly in western Canada,
surround federal economic development policies.
Whether these perceptions pose a threat to the Canadian economic
union itself is unclear. An online survey conducted in December 2018–
January 2019 of 5,732 Canadians found that a strong majority of Canadians (nine in ten) agree that workers in Canada should have the right to
move to another province or territory, while only three in ten say their
province or territorial government should be allowed to favour local
businesses by preventing businesses from elsewhere in Canada selling
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Grace Skogstad and Matt Wilder
their products in their province or territory (Environics Institute for
Survey Research, 2019). More than half, as well, want their provincial
or territorial government to try to find a balance between its economic
interest and that of other parts of Canada even if it means compromising
on some of the policies that might be best for them.
However, Albertans are an outlier in terms of these sentiments. Fully
45 per cent of them believe the province should put the provincial interest first even if it weakens the economies of other parts of Canada.
Moreover, Alberta is the only province in which a majority (55 per cent)
favours each province/territory making its own policy (Environics Institute
for Survey Research, 2019). The extent to which Albertans share these
sentiments is likely heightened by the economic distress experienced by
many residents of the province in the wake of the global downturn in
oil prices after 2014, and their frustration with obstacles to approval for
pipelines to transport the province’s bitumen through other provinces
and to tidewater. However, the Alberta sentiments undoubtedly also reflect
an enduring perception that the province has been chronically unfairly
treated by federal governments dependent upon vote-rich central Canada.
If the government of Canada has had difficulty – as it has – in devising policies that do not appear to discriminate against one or more
regions of the country, does that mean there should be no federal role
in regional economic development? The answer to this question must
be “no.” Ottawa abdicating a role in regional economic development
would not serve the needs of the smaller and less wealthy provinces and
regions of the country, whose firms and citizens often need assistance
beyond what their provincial governments can afford when it comes to
adjusting to technological and other challenges that affect their competitiveness. At the same time, however, given their expertise regarding
the functioning of their local economies, it is important for provincial
governments to maintain a role in regional economic development. As
such, further collaboration of governments at the two orders is desirable.
NOTES
1 These provincially incorporated financial institutions do not need to
maintain reserves (money on hand) with the Bank of Canada, to which
Federalism and Canada’s Economic Union
2
3
4
5
6
7
8
9
the government of Canada has delegated the right to adjust interest rates.
Accordingly, the Bank of Canada’s authority over monetary policy, which
depends upon its ability to affect lending practices by changing reserves, is
weakened when these near banks comprise more than a small share of total
banking (Norrie, Simeon, and Krasnick, 1986: 303).
Manitoba (A.G.) v. Manitoba Egg and Poultry Association (the Manitoba Egg
Reference) [1971] S.C.R. 689.
Blais (1986: 4) defines industrial policy as “the set of selective measures
adopted by the state to alter industry organization.”
It affirmed exclusive provincial jurisdiction over exploration for nonrenewable natural resources and over the development, conservation, and
management of all resources, including electric power. Section 92(A) also
gave the provinces concurrent power over trade in natural resources, subject to federal paramountcy, and the right to levy indirect taxes on nonrenewable natural resources and electricity.
Although the Superclusters program has attracted more attention than
any other, the Strategic Innovation Fund receives the plurality of program
dollars paid out by the Ministry of Innovation, Science and Economic Development. Major investments involve industrial research and development
in food processing and health diagnostic technology.
While TransCanada cited economic reasons, political opposition to the
pipeline, including from the premier of Quebec, explains why the government of Canada did not attempt to rescue the pipeline as it did by purchasing Trans Mountain.
An exception is the role the Council of the Federation played in securing
agreement among provinces to engage with the government of Canada in
the negotiation of a free trade agreement with the European Union.
Sinclair (2017) states that most empirical studies find the costs of internal
trade barriers range from 0.05 per cent to 0.10 per cent of GDP.
Examples of items on which governments agree to work towards reconciliation/harmonization can be found at https://www.cfta-alec.ca/wp-content/
uploads/2019/06/RCT-2019-2020-Workplan-List-of-Measures-Final-May29-2019.pdf.
GLOSSARY
Crown corporation An enterprise wholly owned by a federal or provincial
government. The extent to which Crown corporations operate
independently of government oversight is laid out in the legislation that
establishes them.
global supply chains Also called value chains, they are the network of
firms involved in producing a good or service through to the consumer.
Goods produced in global supply chains have inputs from firms located in
different countries.
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Grace Skogstad and Matt Wilder
interprovincial economic barriers Also called interprovincial trade barriers,
they are any policies that have the effect of impeding the free flow of
goods, services, labour, and money across provinces.
Keynesianism The theory that governments should maintain demand
for goods and maintain employment by using their monetary and fiscal
policies.
knowledge-based economy Emphasizes the importance of scientific
knowledge, research, and information/computer-based technologies as a
source of economic competitiveness through innovation.
liberalization Changes that move towards a market economy by relying more
on prices to clear markets, and reducing government policies that control
the economic activities of private firms.
market economy An economy in which most economic decisions are
taken by the use of markets, rather than, as in a planned economy, by
governments. In a market economy, private firms compete freely (with
minimal government restrictions) and prices for goods and services are
determined by supply and demand.
monetarist economic theory An economic theory that states that the
supply of money in an economy is the main determinant of economic
performance. Accordingly, lowering interest rates is considered the
appropriate means of stimulating the economy, while raising interest rates
is considered the appropriate means of combating inflation.
NAFTA Under the North American Free Trade Agreement (1994–),
Canada, the United States, and Mexico agreed to the progressive reduction
of most barriers to trade and investment between their countries.
National Energy Program (NEP) The initiative by Liberal Prime Minister
Pierre Trudeau to secure a larger share of federal revenues from the
oil sector, increase Canadian ownership of the oil industry, and reduce
Canadian dependence on imported foreign oil through greater Canadian
self-sufficiency. It embittered relations between the government of Canada
and the western oil-producing provinces, especially Alberta.
National Policy Refers to the government of Canada’s effort to construct a
nation-wide economy through the use of tariffs on imported goods, the
construction of an interprovincial railway, and attracting immigrants to
populate western Canada.
policy harmonization Refers to rendering the policies of different
jurisdictions more similar. Harmonization can occur with respect to policy
objectives or specific rules and regulations prescribing how activities are to
be carried out.
protectionism The belief that restricting international trade is desirable
in order to reach goals such as preventing unemployment, promoting
particular kinds of industrial development, affecting the distribution of
incomes within a country, and/or improving a country’s terms of trade.
Federalism and Canada’s Economic Union
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CHAPTER NINE
International Trade and the
Evolution of Canadian Federalism
Christopher J. Kukucha
The role of provincial and territorial governments in Canada’s foreign
trade policy has been affected by system-wide constitutional and international factors, with consequences for the effectiveness and legitimacy of
intergovernmental relations. Constitutional and international considerations serve as both catalysts and deterrents for sub-federal involvement
in this area of Canadian federalism. Under the British North America
Act, Canada’s international relations were limited to implementing
treaties negotiated by Great Britain. The result was that foreign policy
was absent from Canadian intergovernmental relations, especially in
trade where agreements focused on tariffs, a federal responsibility. In
the 1970s, however, international rules and norms moved into domestic
policy space, creating a need for greater federal–provincial consultation
to successfully negotiate and implement new rules-based obligations.
The intergovernmental process peaked with direct provincial and territorial participation in negotiations for the Canada–European Union
Comprehensive Economic and Trade Agreement (CETA), although this
precedent was not repeated for later treaties. Throughout, all levels of
government worked collaboratively to effectively pursue offensive and
defensive interests in the final agreements, albeit with some tensions
regarding regional, sectoral, and normative trade issues. The incremental nature of this evolving process, however, reflects patterns of policy
continuity, as opposed to a new institutional or ideational phase in Canadian federalism. Further, issues of compliance remain problematic,
International Trade and the Evolution of Canadian Federalism
given a history of international trade and investment disputes focusing
on provincial practices, as well as an unwillingness by some provinces to
comply with panel rulings or reimburse Ottawa for awarded damages.
Finally, this area of Canadian federalism suffers from deficits in legitimacy. Yes, sectoral, provincial, and regional concerns are represented,
but civil society groups and Indigenous peoples do not have meaningful
impact on policy outcomes.
SYSTEM FACTORS – CONSTITUTIONAL ISSUES AND
AN EVOLVING INTERNATIONAL TRADE REGIME
In some cases, system-wide factors reflect differing approaches to intergovernmental relations, such as Stephen Harper’s “open federalism”
or Justin Trudeau’s early reliance on federal–provincial conferences.
Other examples include the role and impact of Indigenous peoples or
the importance of environmental programs, pipelines, or other joint
social programs. This chapter does not discount the relevance of these
considerations but instead focuses on domestic constitutional issues and
the emergence of a post-war international trade regime, as these two
factors have the most relevance for international trade and the evolution
of Canadian federalism.
Constitutionally, Canadian provincial and territorial governments have
a degree of international legitimacy not granted to sub-federal actors in
other federations. In the BNA Act, there is limited reference to foreign
relations given Canada’s early status as a colony. As a result, clarification
of powers for international trade occurred with precedents outlined by
the Judicial Committee of the Privy Council (JCPC) and the Supreme
Court of Canada – related to treaty making; trade and commerce; peace,
order, and good government (POGG); and the criminal law power. These
judicial decisions affirmed federal control over the negotiation and implementation of foreign trade and environmental agreements. Federal
control was further reinforced by provisions of international law, such as
the Vienna Convention on the Law of Treaties and federal-state clauses
in the General Agreement on Tariffs and Trade (GATT), established in
1948, and the Canada–US Free Trade Agreement (CUSFTA), which came
into effect in 1989. At the same time, however, many of the Canadian
courts’ decisions determined the right of Canadian provinces, and by
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extension territorial governments, to intervene on international matters
with relevance to sub-federal jurisdiction (Paquin, 2013; Kukucha, 2005).
Initially, however, early trade agreements did not intrude into areas of
sub-federal jurisdiction. Following the Second World War the goal was
to adopt Keynesian principles of state intervention using the GATT to
dismantle protectionist wartime economies and reduce tariffs in areas
of comparative advantage. Member states, however, also continued to
protect specific defensive interests by maintaining tariffs in politically
and economically sensitive sectors. These “first-generation” trade agreements dominated the GATT until the 1960s when the Kennedy Round
negotiated its first non-tariff anti-dumping code. The subsequent Tokyo
Round, while continuing to focus on tariffs, also expanded rules-based
codes to include technical barriers, import licensing, subsidies, countervailing measures, and customs valuation. Although member states had
the option of signing on to these codes, what critics called “GATT à la
carte,” governments now faced increasingly complex trade negotiations
(Hart, 1998).
The transition from first-generation to second-generation agreements
represented a significant development in the management of international trade. Tariff-based relationships had guided the actions of states
for centuries, but the emergence of a rules-based system, especially
one focusing on “behind the border” issues and positive lists, was an
important evolution of the broader regime. This change occurred as
tariffs became less useful for moderating trade distortions. Technology,
improved production and shipping practices, increasingly interdependent
markets and supply chains, and the political will of Western allies seeking
to embed a liberal economic order during the Cold War also played a
role. By the 1990s, the Uruguay Round had expanded early GATT codes
to include new rules-based language in several areas, such as services
and procurement, including the first use of negative and hybrid lists. In
most cases, the World Trade Organization (WTO), which replaced the
GATT in 1995, and other regional agreements, such as the 1994 North
American Free Trade Agreement (NAFTA) among Canada, the United
States, and Mexico, also established “legally scrubbed” benchmark treaty
language that served as templates for subsequent negotiations, which
again intruded into areas of domestic and sub-federal jurisdiction.
Recent developments, however, suggest that second-generation agreements may be in a period of transition due to a loss of US leadership,
International Trade and the Evolution of Canadian Federalism
tensions with China, divergent priorities of developed and developing
economies, the dominance of state-owned enterprises, and weak commitments to existing regime norms. The European Union (EU), one
of the world’s strongest regional economies, has also struggled with
depressed currencies, the ongoing Brexit dilemma, and extended negotiations with like-minded countries, such as CETA. It is too early to
predict if these changes represent the potential stagnation or end of
the “second-generation” era, but they do suggest that a return to the
ambitious rules-based progress that occurred during the Uruguay Round
and in other subsequent agreements is unlikely.
Others, however, argue that this potential transition opens political
and economic space for socially progressive “third-generation” trade
agreements. The current Trudeau Liberal government, for example, has
attempted to forward a Progressive Trade Agenda, prioritizing labour,
environmental, gender, Indigenous peoples, human rights, and sustainable development issues (Madner, 2017). This idea was first articulated
during CETA negotiations by Canada’s then minister of foreign affairs,
Chrystia Freeland, who referred to Canada as a “progressive” country
with “progressive” values in an attempt to ease European concerns over
a proposed Investment Court System (Lilly, 2018). In subsequent years,
the Trudeau government reaffirmed its commitment to its Progressive
Trade Agenda without explicitly defining specific objectives. However,
it is generally accepted that the agenda prioritizes social justice issues
as well as other “new” areas of trade, although not to the detriment
of labour, the environment, gender, or other human rights concerns
(Stephens, 2018: 3).
All of these developments create challenges for federal, provincial, and
territorial governments in Canada. In the first-generation era, international trade negotiations focused on tariffs, which limited matters under
consideration to areas of federal jurisdiction. With second-generation
commitments, however, officials at all levels of government were forced
to gain expertise on a range of new issues, as well as on compliance
matters related to international disputes and domestic policy initiatives.
If existing regime norms continue to be threatened, it is possible that
system priorities will shift from negotiations and rule-making and towards protectionism, trade wars, and ongoing disputes and matters of
compliance. If progressive trade issues usher in a new “third generation”
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of agreements, this will also force practitioners to develop capacity on
numerous complex social issues (Kukucha, 2016).
INCREMENTAL INTERGOVERNMENTALISM –
INSTITUTIONS, PROCESSES, AND RESULTS
Of specific interest is how, if at all, these systemic factors impact the
workability of Canadian federalism in matters of foreign trade policy.
Initially, federal–provincial consultation occurred as part of the Canadian
Trade and Tariffs Committee, which was later supplemented with a Canadian Coordinator for Trade Negotiations (CCTN). Federal–provincial
engagement further increased during the Canada–US FTA negotiations,
which extended contact beyond CCTN practices, usually in the form of
monthly meetings with provincial officials. Following the implementation of CUSFTA, the CCTN became the Committee for the Free Trade
Agreement (CFTA), with representation from all ten provinces but not
territorial governments. Ottawa also established a series of consultative
committees with various provincial departments to address sectoral
concerns and ongoing trade irritants. In the early stages of NAFTA negotiations, an additional forum was added in the form of the Committee
for North American Free Trade Negotiations (CNAFTN). The CNAFTN
represented a new level of co-operation between Ottawa and the provinces. Provincial governments received copies of draft proposals tabled
by the US and Mexico as well as information on a number of specific
sectoral issues. On several occasions, the provinces also had access to
material not yet reviewed by cabinet (Doern and Tomlin, 1991: 128–30;
Kukucha, 2008: 51–5).
Today, regularized intergovernmental contact occurs within the
Federal, Provincial, Territorial Committee on Trade (C-Trade), which
replaced CNAFTN. This group meets four times annually and provides a forum for officials from all levels of government to exchange
information related to international trade and negotiations. Draft
documents are also shared and, for the most part, provinces and
territories are encouraged to provide feedback and guidance on proposals. Although some provinces expressed concern with C-Trade in
the past, especially in relation to information sharing and input, it is
now accepted as a highly valuable mechanism of intergovernmental
International Trade and the Evolution of Canadian Federalism
relations. C-Trade is also supplemented with additional discussions
between Ottawa, the provinces, and the territories on regulatory
reforms, international trade disputes, and the negotiation of Mutual
Reciprocal Agreements.
In some cases, Ottawa also allowed limited provincial participation
in pre-CETA negotiations with specific relevance to sub-federal jurisdiction, such as NAFTA’s Side Deals, the North American Agreement on
Environmental Cooperation, and the North American Agreement on
Labour Cooperation. Canada’s negotiation of the New World Wine Accord, which established the World Wine Trade Group in 2001, adopted
similar patterns of engagement, as did the 2003 Canada–EU agreement
on labelling and market access for wine (Kukucha, 2008: 98–101).
Despite these changes, it is important to stress that the expansion
of sub-federal consultation and participation during this period represented an incremental evolution, or what Grace Skogstad has called a
degree of “path dependency,” or policy continuity, to intergovernmental
relations in this area of Canadian federalism. Ottawa remained in full
control of international negotiations, including new rules-based issues
such as dispute settlement, services, subsidies, and competition policy.
Evolving sub-federal involvement also did not move beyond functional
cross-border relations in forums such as the Pacific NorthWest Economic
Region, as well as the practice of executive federalism adopted in other
policy areas. For the most part, the provinces received more information,
but still had no formalized role in the formulation of Canadian foreign
trade policy (Skogstad, 2012: 205–10).
CETA, however, was different, with the direct participation of Canadian sub-federal governments in negotiations. Requests for heightened
sub-federal involvement, however, did not come from provincial or territorial governments, but rather EU officials concerned about the failure
of the 2006 Canada–EU Trade and Investment Enhancement Agreement
and previous trade disputes regarding sub-federal compliance, especially
for alcohol and beef. The EU, however, did not want provinces and
territories at the table. It wanted only sub-federal commitments, which,
as one official pointed out, “is not the same thing.”1 Ultimately, it was
Stephen Harper who offered the direct participation of provincial and
territorial governments, consistent with his support for “open federalism.”
The formal confirmation of this sub-federal role came from the Council
of the Federation in 2009 and included a pledge to ensure international
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commitments applicable to Canadian provinces and territories. Initially,
Newfoundland and Labrador decided to engage only as observers but
fully joined negotiations in March 2011. For the EU, potential economic
gains and guarantees of Canadian sub-federal compliance were more
important than the format of negotiations (Skogstad, 2012: 209–10).
As CETA negotiations unfolded, provincial and territorial representatives were limited to tables relevant to sub-federal jurisdiction, such as
services, procurement, monopolies, technical barriers to trade, investment, labour and environmental issues, and state-owned enterprises
(Paquin, 2013). Direct provincial and territorial participation was also
regulated in formal sessions with federal officials negotiating for the
government of Canada. In fact, provincial and territorial representatives
could only talk if asked to do so by the Canadian negotiator at the table,
and this was not a frequent occurrence (Skogstad, 2012: 210). Further,
this process created a level of awkwardness that did not exist in previous
negotiations, with two to three European representatives sitting across
from twenty to thirty “Team Canada” members. Even finding a facility
for negotiations was problematic and expensive.2 As a result, a pattern
began to emerge, where a preliminary meeting, referred to as “the show,”
would occur where all European, federal, provincial, and territorial
representatives would gather and engage in dialogue and note taking.
Later, a smaller meeting occurred, where more explicit negotiations took
place, often without sub-federal representation. Eventually, provinces
and territories were removed from all tables in the late stages of talks,
and instead were briefed on a daily basis.3 In the words of one official,
“by the end, it was similar to typical federal–provincial participation that
occurred prior to CETA.”4
Regardless, CETA represented another incremental evolution of intergovernmental relations. Information sharing between federal, provincial,
and territorial officials was extensive, with all levels of government collaboratively posting information in a number of formats, including the
Canada Gazette. Canada’s chief negotiator, Steve Verheul, also met with
provincial and territorial officials on the eve of talks and at the end of each
day of formal negotiations. In total, provinces and territories would often
have up to sixty representatives attending these formal rounds. Extensive
consultation also took place before and after face-to-face talks in both
C-Trade and on an ad hoc, as needed, basis (Verheul, 2010). One positive
outcome was increased consensus within the Canadian delegation, as
International Trade and the Evolution of Canadian Federalism
federal officials worked closely with provincial and territorial counterparts.
When needed, Canada could also call for a “time-out” in talks, walk down
the hall, and come back with a “pan-Canadian” position.5 Perhaps more
importantly, the CETA process, and the conciliatory role of Canada’s
chief negotiator, created a new level of “trust-ties” between all federal
and sub-federal Canadian negotiators (Poirier, Saunders, and Kincaid,
2015: 465; Cairney, 2012: 73; Lysenko and Schwartz, 2015: 19–20).6 As
one observer noted, the provinces and territories were “not driving trade
policy” but it was very difficult for Ottawa to say no when specific concerns
were identified (Kukucha, 2016).7 As another official suggested, the “new
normal” emerging from CETA was not direct sub-federal participation
but rather improved communication, transparency, and co-operation,
diminishing provincial and territorial demands for a greater role.8
CETA also provided opportunities for provinces and territories to
initiate partnerships with other participants. The easiest linkages were
horizontal, with other sub-federal governments. For the first time provincial and territorial trade officials were physically in the same location
during negotiations, often with extended breaks that allowed for unprecedented levels of direct interaction. Some provinces, especially Quebec,
also pursued transnational contacts outside of the formal negotiations.
Quebec’s chief negotiator, Pierre Marc Johnson, for example, arranged
a number of one-on-one meetings with Mauro Petriccione, the EU chief
negotiator (Paquin, 2013: 551). Other provinces and territories instead
chose to invest efforts into building closer ties with Canadian negotiators,
given that federal officials would be presenting Canada’s final positions on
issues vital to sub-federal interests. This strategy was often implemented
in conjunction with developing horizontal linkages with other provinces.9
Not surprisingly, there were also tensions between Ottawa and sub-­
federal representatives during CETA. Federal officials often complained
of “exorbitant asks” by provincial and territorial bureaucrats, linked to
a perceived deficit in knowledge regarding the form and practice of
international negotiations. Sub-federal representatives also expressed
concerns related to the amount of information made available, often
using the term “information dump,” to describe struggles in processing
and analyzing the volume of information provided by Ottawa. Officials
from both levels of government were often frustrated with the partisan
nature of information from the Prime Minister’s Office, citing economic
projections with little basis in reality.10 Finally, the lack of convergence
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between provinces on all aspects of CETA meant that Ottawa never faced
pressure from a pan-Canadian sub-federal negotiating front, limiting
provincial and territorial co-operation to specific sectoral negotiations
with easily identifiable commonalities.11
As CETA unfolded, Canada also initiated bilateral discussions with
India, participated in Trans-Pacific Partnership (TPP) negotiations, and
concluded a trade agreement with Korea. Interestingly, there was no
consistent role for Canadian sub-federal governments in these cases,
and none reflected the CETA model. For India, the Indian government
rejected any direct sub-federal role from the outset, given that most
negotiated issues fell under federal jurisdiction. Another factor was the
small Indian delegation, typically three people, which narrowed the range
of topics to be engaged but also raised questions of “optics” if provincial and territorial negotiators vastly outnumbered those participating
from India. Finally, the difficulty and expense in getting provincial and
territorial delegations to Delhi was a further deterrent.12
The TPP and subsequent Comprehensive and Progressive Trans-Pacific
Partnership (CPTPP), however, had a more ambitious agenda. As expected, the provinces and territories were engaged by federal negotiators
but in all cases were not directly “in the room” as in CETA. Provincial
and territorial representatives, however, typically received daily updates
during ministerial meetings and formal negotiations. Ottawa also encouraged the attendance of provinces and territories at negotiating sessions
and ministerial meetings. As such, sub-federal officials were generally
satisfied with the TTP/CTPP consultative process.13 Full participation,
comparable to CETA, was not a reality, especially due to the logistics and
costs of getting provincial and territorial officials overseas at the same
time. As always, intergovernmental engagement continued, but on an
ad hoc basis dependent on the issues being negotiated at any given time
(Kukucha, 2016; Paquin and Marquis, 2019).
The renegotiation of NAFTA, however, represented a different process
than CETA, India, or the TPP/CTPP. First, it was the renegotiation of
an older and well-entrenched trilateral trade agreement, which meant
that government officials and sectoral interests had to “relearn” the technical language of the original NAFTA text, as well as specific offensive
and defensive interests as they applied in a twenty-first-century context.
The speed and politicization of the negotiations was also a challenge,
exacerbated by Freeland’s prominent role in the media, presidential
International Trade and the Evolution of Canadian Federalism
elections in Mexico, mid-term Congressional elections in the United
States, provincial elections in Quebec and Ontario, and threats from
President Trump to terminate NAFTA. These considerations also placed
provincial and territorial trade officials under a high level of political
scrutiny from premiers and cabinet members. According to one bureaucrat, conversations during CETA would occur every month with the
assistant deputy minister, but with NAFTA “calls were almost daily at the
deputy minister level or higher.”14
As in other trade negotiations, the “new-NAFTA” also highlighted a
number of opportunities for Canadian sub-federal governments. Quebec’s
Ministry of International Relations created trade and economic “fact sheets”
for thirty different US states, which officials and business groups used in
lobbying and outreach campaigns aimed at state governors and members
of Congress.15 In other cases, provincial officials worked closely on sectoral
issues, sharing workloads on agenda items, although always prioritizing
offensive and defensive interests. This included institutional engagement
in conjunction with the 2017 Council of the Federation meeting in Alberta as well as during the NAFTA round held in Montreal (Paquin and
Marquis, 2019). There was also a high level of collegiality between federal,
provincial, and territorial officials, with an extension of the “gold standard”
of intergovernmental relations during CETA facilitated by Verheul, who
maintained a lead role in the NAFTA negotiations.16 Other provinces,
however, were less enthusiastic, noting close consultation but not to CETA
levels, especially given the different federal personalities involved in NAFTA
and the absence of long periods of time together in European capitals.17
The new NAFTA also created barriers for sub-federal involvement.
The content of negotiations, for example, often excluded provincial
and territorial jurisdiction or adopted benchmark language from other
agreements. Unlike previous agreements, the Canadian Embassy in
Washington played a significant role in briefings and preparation for negotiations. Finally, NAFTA unfolded in staggered stages, with inconsistent
sub-federal engagement and consultation in Washington and Ottawa,
especially when talks shifted to bilateral negotiations between Mexico
and the US, leaving some provinces and territories to feel “somewhat
marginalized.” This was exacerbated in the end stages of talks leading to
the final US–Mexico–Canada agreement (USMCA), which were ad hoc
and lacked the regular schedules of earlier rounds.18 By the end, opinions
varied, with some provinces, such as Ontario, relatively pleased with the
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“Team Canada” approach, while others, such as Quebec, suggested it
was a low point in post-CETA consultation (Paquin and Marquis, 2019).
These developments do not preclude a return to the CETA model of
participation in the future, to at least some degree. As one representative
suggested, this will likely be decided on a case-by-case basis. New negotiations with a significant trading partner, such as China, could create
the political and economic will to engage expansive and new sub-federal
issues. Others, however, have cited the potential negative impact of
western alienation in the aftermath of the 2019 federal election and the
Liberals’ failure to elect any MPs from Alberta or Saskatchewan. Since
a China agreement is not currently on the horizon, and sub-federal
trade officials have an established working relationship with Freeland,
Trudeau’s new deputy prime minister and minister of intergovernmental
affairs, federal–provincial consultation in this policy area will continue
to evolve incrementally, without altering existing best practices within
Canadian federalism.19 As such, the institutional process of intergovernmental relations will maintain a level of policy continuity, at least in
the foreseeable future.
It is also clear that evaluating policy processes solely in an institutional
context, which dominates studies of Canadian federalism, provides limited
insight. As Skogstad and Schmidt (2011) have pointed out, ideational
considerations, adopted in the international relations and comparative
political economy literature, are also relevant. Specifically, do national
and transnational ideas and discourses reinforce past practices by acting
as “cognitive locks,” or instead as catalysts for “unlocking” embedded
narratives and practices, creating innovation in both process and outcome? Although Peta (2018) has argued that iterative international trade
consultations have created embedded narratives creating a form of de
facto institutionalization of federal–provincial relations, the evidence
presented in this discussion suggests otherwise.
EFFECTIVENESS: POLICY OUTCOMES AS RELATED
TO INTERNATIONAL TRADE AGREEMENTS AND
DISPUTES
As with process issues, evaluations of policy outcomes in Canadian
federalism are typically measured in domestic institutional terms. In
International Trade and the Evolution of Canadian Federalism
this case, however, international objectives driven by system factors also
offer considerable insight. Specifically, the protection and advancement
of offensive and defensive sub-federal interests, as evident in the final
technical language of foreign trade agreements, allows for an evaluation
of the impact of provincial and territorial governments since provincial/
territorial positions must be articulated to federal officials who then take
them forward, or not, as part of broader Canadian negotiating positions.
An examination of recent trade agreements suggests considerable
sub-federal effectiveness in this policy area.
The 2014 Canada–Korea Free Trade Agreement, for example, reflects
several sub-federal priorities. In terms of tariff reductions, a number of offensive goals were attained. Overall, South Korea agreed to remove duties
from 98.2 per cent of its tariff lines on Canadian products, and Canada
committed to remove 97.8 per cent of duties on its tariff lines. Broken down
on a provincial/territorial basis, these cuts include fish and seafood products
(British Columbia and Atlantic Canada); forestry and value–added wood
products (BC and Ontario); metals and minerals, including aluminum and
nickel (BC, Ontario, and Quebec); the aerospace industry (Manitoba and
Quebec); chemicals and plastics, medical equipment, and fertilizer (Ontario, Saskatchewan, and Quebec); and wheat, pork, beef, and natural gas
(Alberta, Saskatchewan, and Manitoba) (Government of Canada, 2014).
Similar defensive interests are identifiable in the Canada–Korea Agreement with the exclusion of sensitive sectors and the adoption of already
existing benchmark language in others. Provincial purchasing, pricing,
and distribution practices for alcohol are excluded, and protection for
the terms “Canadian whisky” and “Canadian rye whisky” is provided. The
accord also applies much of the already existing WTO Agreement on
the Application of Sanitary and Phytosanitary Measures (SPS) as well as
the WTO’s Agreement on Technical Barriers to Trade. Further, access
to service providers is consistent with terms under already existing US
and European agreements, both of which followed the WTO’s General
Agreement on Trade in Services (GATS). As always, Canada excluded
natural resources and “public services” such as health, public education,
and other social services. Finally, provincial, territorial, and municipal
procurement projects were not included in the Canada–Korea agreement
(Government of Canada, 2014: 27–45).
With CETA, Canada and the EU agreed to eliminate over 98.5 per
cent of tariff lines, although existing barriers were already low, limiting
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offensive opportunities for Canadian provinces and territories. A key
gain for Alberta and other prairie provinces was beef, pork, and wheat.
Under CETA, Canada gained duty-free access for 45,838 tons of exports
in carcass weight equivalent (CWE), of which 30,838 tons is fresh beef.
This is in addition to the 4,162 tons of CWE access awarded to Canada
as part of the EU beef hormone dispute. A total of 75,000 tons CWE of
Canadian pork will also now enter the EU duty-free, with low and medium quality wheat limits rising to 100,000 tons, up from 38,853 prior
to CETA (European Commission, 2014).
Other offensive market access priorities, however, are more difficult
to evaluate, given trade-offs that occurred during broader CETA negotiations. Rules of origin, for example, are a challenge as Canada and
the EU have different standards in a number of sectors. In cases such as
automobiles (Ontario) and fish (Atlantic Canada and British Columbia),
Canadian products have difficulty meeting EU rules of origin guidelines.
The sub-federal compromise sought and attained by Canadian negotiators
was to obtain “rules of origin derogations” allowing access for goods to a
certain level that would not have to comply with EU regulations. For fish,
this included important coastal exports of fish fillets, lobsters, salmon,
herring, and sardines. Up to 100,000 Canadian passenger vehicles also
received derogation for EU entry. The result, therefore, was improved
sub-federal market access, although not always reflected in direct tariff
cuts (European Commission, 2014).
Procurement also represented varying degrees of sub-federal offensive
and defensive priorities. CETA, for example, allows for unprecedented
access to EU suppliers for procurement projects of the federal government,
provincial governments, Crown corporations, utilities, municipalities,
academic institutions, school boards, and publicly funded health and
social services entities. Not only are provinces included, but also the depth
of liberalization has become significantly broader with access to utilities
procurement (although not absolute), which represents approximately
$1 billion annually in the Canadian market (Kukucha, 2015a). Provincial
and territorial mass transit contracts are also part of the final agreement.
Sub-federal willingness to include these sectors was based on a perceived
comparative advantage for some provinces, especially with hydroelectric
power in Quebec, British Columbia, and Manitoba. The significance
of these developments was mitigated, however, by exclusions related to
healthcare, security and policing, and public-private partnerships for
International Trade and the Evolution of Canadian Federalism
services and utilities. In most cases, procurement bidding thresholds
also did not exceed existing commitments in the WTO’s General Procurement Agreement and Buy American Agreements (Collins, 2015).
Other sub-federal defensive interests are also evident when examining
CETA’s final legal text. For dairy products, CETA allows for higher imports
of EU cheese (accounting for approximately 2 per cent of Canada’s milk
production), but other technical language does not dramatically extend
agricultural obligations beyond existing WTO and NAFTA commitments.
The practices of provincial liquor boards related to listing, quotas, and
purchasing, previously the focus of a number of Canada–EU disputes,
also remain largely intact. In addition, the accord adopts similar WTO
language on technical barriers and sanitary and phytosanitary measures,
including the Canada–EU Veterinary Agreement, both of which are sensitive to provincial areas of jurisdiction (Government of Canada, 2013:
7–13). Finally, sub-federal defensive priorities are evident with services.
CETA adopts a negative list but its annexes do not move well beyond
already existing “GATS-plus” models, such as the Canada–Korea Free
Trade Agreement. This includes labour mobility and existing limitations
on licensing and qualification requirements, although the agreement
does point to the possibility of future liberalization in occupations where
parties have similar objectives. It should also be noted that several EU
documents publicly recognized the need to address Canadian, provincial, and territorial concerns related to sensitive sectors (European
Commission, 2014).
Similar trends are evident when examining the USMCA, known as
the Canada–United States–Mexico Agreement (CUSMA) in Canada. For
example, supply management – which imposes high tariffs on imports
of dairy products, eggs, and poultry – was not eliminated, and Ottawa
made it clear that compensation would be provided for losses by Canadian producers. New access to Canadian and American dairy markets
was negotiated, but the reciprocal 3.6 per cent increase only slightly
deviated from pre-existing benchmarks of 3.25 per cent granted under
CETA and the CPTPP. CUSMA provisions related to automobiles also
reflected Canadian interest in maintaining deeply embedded North
American supply chains in this sector, especially Canada’s proposal to tie
rules of origin to wages of US $16 an hour, with the intent of maintaining manufacturing jobs. Further, dispute settlement reflected Canadian
and sub-federal priorities, especially the “red line” Canada drew on
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maintaining NAFTA’s Chapter 19 panels, which played an important
role in previous trade challenges, such as softwood lumber. NAFTA’s
Chapter 11 investment panels were removed, but this was not a loss for
Canadian negotiators given the large number of claims in recent years,
many of which challenged provincial and territorial practices and policies
(Morrow, McKenna, and Nolen, 2018).
Finally, CUSMA provides some insight on the Trudeau government’s
new Progressive Trade Agenda. CUSMA, for example, introduced new
language related to a wide range of environmental concerns such as
the ozone layer, ship pollution, air quality, marine litter, and corporate
social responsibility. The Labour chapter in CUSMA adopted a number of already established International Labour Organization (ILO)
standards but also explicitly prioritized gender considerations including
LGBTQ rights related to gender identity and sexual orientation in Article 23.9 (Discrimination). Article 23.12.5 further highlighted the need
for co-operation on issues such as equal pay for equal work, child care,
and nursing mothers. Having said that, enforcement mechanisms for
both chapters in CUSMA do not move beyond provisions in the original
NAFTA. Consultative processes and dispute panels are available for complainants but there are no financial penalties for rulings (Government
of Canada, 2018). Within Canadian federalism, there is also no unified
commitment to Progressive Trade Agenda issues across provinces and
territories. Not surprisingly, NDP governments tend to be more open
to normative trade issues, but not always. The then Liberal government
of Ontario also expressed trust in federal negotiators on Progressive
Trade Agenda issues, while Quebec was less enthusiastic, especially with
the possibility of including Indigenous rights on environmental issues
(Paquin and Marquis, 2019). Quebec, with the support of Alberta, however,
was successful in maintaining NAFTA’s Commission on Environmental
Cooperation (CEC), located in Montreal, despite pressures from both
Mexico and the US.20
Canadian federalism, therefore, facilitates the pursuit of sub-federal
objectives in the negotiation of trade agreements. Another key measure,
however, is whether it serves as an effective mechanism for the implementation of international commitments, especially as evident with
international disputes. One of the earliest trade disputes centred on
alcohol. Historically, Canadian provinces maintained monopolies or near
monopolies on the sale of alcoholic beverages. Provincial liquor control
International Trade and the Evolution of Canadian Federalism
boards carefully regulated the sale and importation of all alcohol, with
a special emphasis on wine and beer, in order to protect local producers
and raise government revenue. As such, foreign imports were subject to
a range of measures including high federal tariffs but also sub-federal
price mark-ups and quotas. An early dispute between Canada and the
European Community (EC) was tied to a 1979 Statement of Intent
signed by Canadian provinces to limit these practices. The EC, however,
argued that Ontario’s marketing practices violated this agreement. The
matter was eventually submitted to a GATT dispute panel, which sided
with the EC in October of 1987. Subsequent discussions on alcohol
were held with Europe over the next two decades. More recently, the
United States also filed a WTO complaint against British Columbia
for measures related to the supply of wine in grocery stores. The US
dispute, focusing on Article III:4 of the GATT (national treatment), was
subsequently joined by Australia, New Zealand, and Argentina, and is
currently in the WTO dispute panel process. In a related development,
Australia launched its own 2018 complaint related to the sale of wine in
grocery stores in BC, Ontario, Quebec, and Nova Scotia (World Trade
Organization, 2019).
International trade disputes have also targeted provincial procurement
practices. In 2009 Ontario passed its Green Energy and Green Economy Act,
which was tied to the province’s Feed-in Tariff (FIT) program requiring
a percentage of Ontario goods or labour for any awarded contracts. The
following year Japan launched a WTO challenge, arguing that domestic
content rules violated numerous sections of the previous GATT framework as well as the WTO’s Agreement on Subsidies and Countervailing
Measures and its Agreement on Trade Related Investment Measures
(TRIMs). The European Union and the United States soon joined consultations related to this challenge, and the EU launched its own formal
complaint against Ontario’s FIT program in 2011. In December 2012
the WTO replied to both complaints in a single ruling finding Ontario’s
practices in violation of Article 2.1 of the TRIMs and Article III:4 of the
GATT (1994). Subsequent Canadian appeals were rejected, and after
several mutually agreed upon extensions Canada announced it had complied with the WTO’s findings in June 2014. Specifically, Ontario ended
local requirements on large renewal energy procurement contracts and
lowered similar provisions on smaller wind and solar electricity contracts
awarded as part of the ongoing FIT program. Japan and the EU continue
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Christopher J. Kukucha
to monitor Ontario’s procurement practices in this sector (Timmins,
Wagner, and Sahadev, 2013; World Trade Organization, 2015).
A number of provincial policies have also been targeted under the
investment provisions of NAFTA’s Chapter 11. In 2010 the international
forest company Abitibi-Bowater launched a $500 million challenge related
to Newfoundland and Labrador’s decision to expropriate the company’s
water and timber rights and its hydroelectric holdings in the province,
without compensation, after announcing its decision to close its final
mill in Grand Falls-Windsor. In an effort to avoid a lengthy Chapter 11
dispute, the federal government agreed to pay a $130 million settlement
to Abitibi. To date this award has not been repaid by the government
of Newfoundland and Labrador. In another complaint, US-based Windstream Energy successfully challenged provisions of Ontario’s FIT program
related to various wind projects and received $475 million in damages
from the Canadian government. These costs were fully reimbursed to
Ottawa by Ontario. Another $66 million in damages was awarded to
Mobil Investments Inc. regarding its challenge of regulatory performance
requirements in Newfoundland and Labrador. Finally, Bilcon challenged
an environmental review process related to a basalt quarry and marine
terminal project in Nova Scotia, with the Delaware company claiming
$500 million in damages. The panel also ruled against Canada, and the
final award of damages was yet to be determined in early 2020.
Four other NAFTA Chapter 11 challenges also focus on provincial
practices. Lone Pine Resources, ongoing in mid-2019, involves an American
company that was blocked from exploring oil and gas projects in Quebec
due to Bill 18 suspending all exploration in that sector in 2011. Two recent victories for Canada include Mesa Power Group in which Ottawa was
awarded $2.9 million in damages regarding a dispute over ownership
of four Ontario wind farms. In British Columbia, Mercer International
unsuccessfully claimed that the BC Utilities Commission, the province’s
Ministry of Energy and Mines, and the Crown Corporation BC Hydro
all failed to develop a consistent policy of treatment for pulp mills and
related facilities with self-generated power capacity. This resulted in an
award of $9 million, although Mercer has requested a Supplementary
Decision. These cases are in addition to another unsuccessful challenge,
Centurion Health, that centred on provincial regulatory provisions in BC
that delayed a private surgical services facility, focusing on cosmetic and
general surgery in Vancouver (Government of Canada, 2019).
International Trade and the Evolution of Canadian Federalism
These GATT, NAFTA, and WTO disputes are important for three
reasons. First, they demonstrate Ottawa’s commitment to the evolving
norms of this regime both in terms of the dispute process and in the
central government’s deference to panel decisions, even in the face of
sub-federal resistance. Second, these cases have, at times, established
guidelines for future government policy, at both levels of government,
as well as for other negotiated settlements. Further, these disputes and
rulings can also serve as a “preventative regulatory regime” causing
governments to reconsider policy options. During the 2003 provincial
election in New Brunswick, for example, the high cost of automobile
insurance was a key campaign issue, but Premier Bernard Lord’s Conservative government abandoned it, fearful of the province’s exposure under
NAFTA’s Chapter 11. Ontario backed away from legislation mandating
blank cigarette packaging in 1995 for similar reasons (Kukucha, 2008:
193–7; Physicians for Smoke-Free Canada, 2008).
Questions of sub-federal effectiveness related to implementation, as
well as the potential stagnation of second-generation rules-based trade
agreements, have also caused some provincial bureaucracies to re-­evaluate
internal organizational structures, with an emphasis on compliance,
notably in the form of advising governments on international commitments, as well as litigation and trade disputes. During CETA, for example,
Quebec and British Columbia eliminated internal and international
trade distinctions for provincial officials. The CUSMA and Bombardier
disputes also sparked a reorganization of responsibilities in Québec’s
Politique Commerciale Division in the Ministère de l’Économie de la
Science et de l’Innovation. One branch, Accords Commerciaux, is now
responsible for the negotiation of international trade agreements, but
a second, Litiges Commerciaux, was created to focus on trade disputes.
Officials in BC’s Trade Policy and Negotiations branch (Ministry of Jobs,
Trade and Technology) have also expanded job requirements, with
representatives developing individual expertise on specific internal and
international trade issues, disputes, and outreach. Other provinces are
also considering using in-depth knowledge of tariff schedules to assist
sub-federal business interests in cost savings associated with cheaper imports for production. It is important to note, however, that several other
provincial governments continue to organize officials on the basis of
internal and international trade responsibilities, with compliance issues
typically falling to line departments, such as energy and agriculture.21
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Christopher J. Kukucha
Despite these changes, the incremental evolution of intergovernmental relations in this policy area does raise questions regarding the need
for a formalized institutional role for sub-federal governments in trade
negotiations. Some analysts, such as Anthony VanDuzer and Melanie
Mallet (2016), have called for agreements to promote provincial/territorial compliance in implementing trade deals that touch on their areas
of jurisdiction. On a similar note, Patrick Fafard and Patrick Leblond
(2013) have suggested a greater role for non-governmental commercial
interests in negotiations to ensure coordinated trade-offs during bargaining. Quebec, unlike other Canadian sub-federal governments, has
an implementation procedure for international agreements requiring
new laws, regulations, or financial obligations. This process, however,
only occurs after ratification by the government of Canada, limiting
the province to simply accepting or rejecting agreements, a possibility
Quebec is considering with the CUSMA (Paquin and Marquis, 2019).
While there are valid arguments to formally institutionalize sub-federal
governments into the negotiation, ratification, and implementation of
international trade commitments, it is unlikely in the current climate
of Canadian federalism, as this discussion suggests (VanDuzer, 2013).
LEGITIMACY: PROVINCE, REGION, SECTORAL
GROUPS, AND CIVIL SOCIETY
Historically, Canadian non-governmental actors linked to international
trade represented Canada’s corporate and business interests, usually in
the form of sectoral organizations, such as the Canadian Cattlemen’s
Association, or as umbrella groups representing numerous sectors, such
as the Business Council of Canada. Advocacy think tanks, such as the
Fraser Institute and C.D. Howe Institute, also exist in Canada, prioritizing
free markets, limited regulation, and other pro-business issues (Abelson,
1995a, 1995b). Today, deep linkages and networks exist between all
sectoral, umbrella, and think tank organizations, enabling ongoing and
organized conversations reinforcing neo-liberal narratives and priorities
(Carroll and Shaw, 2001). The role of diaspora communities in Canada
has also influenced Canadian foreign trade relations, especially in the
pursuit of specific trade agreements such as with India and the Canada–
Ukraine Free Trade Agreement (CUFTA) (Carment and Landry, 2015).
International Trade and the Evolution of Canadian Federalism
For the most part, however, these groups focus their advocacy efforts on
the federal level of government.
In contrast, “critical” societal groups are fewer and often less organized. Contemporary civil society groups, such as the Canadian Centre
for Policy Alternatives and the Council of Canadians, emerged during
the 1980s as part of a wave of mobilization around CUSFTA and NAFTA,
as did the Pro-Canada Network, a coalition of these and other groups.
Although their advocacy efforts focused on Ottawa, these groups did
impact the political discourse and platforms of New Democratic parties
at all levels of government (Macdonald and Ayres, 2016: 338). During
the past decade, these groups also pursued the expansion of existing
pan-Canadian and transnational linkages. The Council of Canadians
and the Canadian Centre for Policy Alternatives, for example, played
a role in establishing the Trade Justice Network in 2010, consisting of
environmental, social justice, and Indigenous groups challenging a lack
of dialogue and transparency related to CETA. The Trade Justice Network would later expand to include several Canadian municipalities and
a range of similar like-minded societal groups in Europe (Trew, 2013).
Civil society organizations’ activity at the sub-federal level in Canada, however, varies in scope and impact from region to region. In
Ontario, most societal engagement focuses on contentious issues,
such as services or trade and the environment. Pressure, however, is
not usually directed at the Ministry of Economic Development and
Growth (MEDG), which is responsible for foreign trade policy, but
at other line departments such as the Ministry of Environment and
Climate Change (water) and the Ministry of Education (services).
In some cases, MEDG will meet with civil society groups, such as the
CCPA, but these interests do not define provincial negotiating positions (Kukucha, 2015b).
Quebec, on the other hand, has a corporatist tradition that does
not exist in other provinces, with a high degree of labour involvement
and non-governmental engagement. Unlike other provinces, Quebec
civil society also benefits from “peak associations” such as the larger
trade unions or the Fédération des Femmes du Québec, which draw
together groups with similar interests (Montpetit, 2003). In matters
of foreign trade policy, however, contact is again typically made with
line departments and information is then passed to other relevant
officials within the provincial bureaucracy. In response to pressure
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Christopher J. Kukucha
from civil society before and after the OAS Summit of the Americas in
Quebec City, the Parti Québécois (PQ) also created a formal panel, the
Quebec Observatory on Globalization, in the fall of 2001, although it
failed to produce any meaningful engagement. Jean Charest’s Liberal
government ended these efforts, relying instead on specialized think
tanks and university groups for its non-governmental input (Kukucha,
2015b). The current Quebec government also continues to prioritize
relations with universities, which have developed a series of co-operative partnerships across the province, facilitated by groups such as
the Bureau de coopération interuniversitaire, especially in Montreal
and Quebec City.22
As in Quebec, British Columbia has a long legacy of societal engagement
with labour, environmental groups, and First Nations. Environmental
issues in BC gained prominence during NDP governments in the 1990s,
as did consultation with First Nations due to judicial land claims and the
Nisga’a Treaty, although these groups did not have a significant interest
in foreign trade policy (Hoberg, 2001: 24–7). Labour, on the other hand,
has influenced BC positions, such as the province’s decision to adopt
observer-only status during the original NAFTA negotiations and its stance
on WTO labour standards and services. Not surprisingly the relevance
of societal groups declined during the Liberal governments of Gordon
Campbell and Christy Clark, with the exception of several proposed
pipeline projects (Kukucha, 2015b). This changed, however, under the
current John Horgan NDP government, which has prioritized outreach
to First Nations and women’s groups, as well as other underrepresented
interests, on international trade concerns, especially in lower-wage sectors
such as the service industry.23
For the most part, societal activity in other provinces mirrors realities in Ontario and BC. In Manitoba access to government typically
depends on the party in power, with Conservatives favouring agriculture and business and the NDP focusing on organized labour. In other
provinces, such as Saskatchewan, provincial interaction with societal
groups, especially in the area of international trade, is dominated by
industry associations and limited to a small range of line departments. In
Atlantic Canada, consultation with industry occurs within a small range
of departments and contact typically takes place within larger federal
consultations. Not surprisingly, many of these industry groups are tied
to the region’s resource-based economy, especially fisheries, offshore oil,
International Trade and the Evolution of Canadian Federalism
and hydroelectricity. Historically, there are close ties between merchants
and political elites, especially in Newfoundland and Labrador, but these
ties have declined as competing sectoral and labour associations have
emerged (Kukucha, 2015b).
Canadian civil society organizations engaged provinces and territories
during CETA and TTP/CPTPP negotiations. As early as 2008, the COC
initiated a sub-federal communication campaign focusing on international trade. NDP governments in Manitoba and Nova Scotia were also
targeted, as were governments in Ontario and Quebec given concerns
related to procurement, supply management, and liquor distribution
boards. In Quebec, other groups, such as the Réseau Québécois sur
l’Intégration Continentale (RQIC) and union and labour organizations,
also met with provincial officials, as did the CCPA and the Trade and
Investment Research Project in Ontario. The Canadian Union of Public
Employees also commissioned a legal opinion on potential provincial
vulnerabilities related to CETA and services (Trew, 2013). For CUSMA,
BC initiated email consultation with specific interests, typically followed
by a meeting or roundtable. The province also continued to “piggyback”
on federal consultative efforts, especially those related to the new Liberal
Progressive Trade Agenda, although these efforts tended to be educational given the complexity of trade issues addressed.24
Ultimately, however, civil society groups had mixed opinions of the
effectiveness of consultations. Although some provinces were open to
meeting and receiving unsolicited reports, others were less receptive.
Quebec groups were initially optimistic about the PQ government that
replaced the Charest Liberals in 2012 but were ultimately disappointed.
Frustrated by a lack of progress with provincial officials, these groups
soon refocused efforts on consultations at the municipal level and
the Trade Justice Network. The goal also shifted from influencing
federal and provincial negotiating positions to a formal public review
of CETA, which did not occur (Trew, 2013; Kukucha, 2015b). The
Trade Justice Network remained active during the renegotiation of
NAFTA, with Canadian representation from the Council of Canadians,
Canadian Centre for Policy Alternatives, Canadian Labour Congress,
the Canadian Union of Public and General Employees, the National
Farmers Union, and the Public Service Alliance of Canada. Sub-federal
representation included the British Columbia Teachers Federation,
Quebec’s Fonds de solidarité (FTQ), and the RQIC. For the most
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Christopher J. Kukucha
part, however, these groups had limited impact owing to the speed
of the negotiations. The possible exception is labour, especially the
automotive sector, which is represented by Unifor, Canada’s largest
private-sector union.
CONCLUSION
Sub-federal involvement in the negotiation and implementation of
international trade commitments can be evaluated with measures of
system, process, effectiveness, and legitimacy. Systemically, constitutional considerations initially removed provincial and territorial
governments from this policy area, although this changed as foreign
trade commitments intruded into areas of sub-federal jurisdiction,
creating a need for broader intergovernmental relations to successfully
negotiate and implement these obligations. Sub-federal involvement
peaked with CETA negotiations but, for the most part, provinces and
territories demonstrated effectiveness in protecting their offensive
and defensive interests in the absence of formal participation in
negotiations and through differential periods of co-operation. As
such, this process of policy continuity suggests limited changes in the
institutional or ideational realities of intergovernmental relations in
matters of foreign trade policy. At the same time, however, problems
of effectiveness do exist, as evident with numerous international
trade disputes highlighting a lack of sub-federal compliance, and
selective willingness to reimburse Ottawa for damages awarded in
specific cases. As noted, this area of Canadian federalism also suffers
from deficits in legitimacy, especially related to civil society groups
and Indigenous interests.
NOTES
1
2
3
4
5
Personal interview, May 14, 2013.
Personal interview, May 14, 2013.
Personal interview, May 14, 2013.
Personal interview, March 24, 2014.
Telephone interview, April 14, 2016.
International Trade and the Evolution of Canadian Federalism
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
Personal interview, May 14, 2013.
Personal interview, March 24, 2014.
Telephone interview, April 14, 2016.
Personal interview, May 9, 2013.
Personal interview, May 14, 2013.
Personal interview, March 24, 2014.
Personal interview, March 24, 2014.
Personal interview, March 24, 2014.
Personal interview, December 6, 2018.
Personal discussion for background, March 22, 2019.
Personal interview, September 17, 2018.
Personal interview, December 6, 2018.
Personal interview, December 6, 2018.
Telephone interview, April 14, 2016.
Personal interview, September 17, 2018; Personal interview, December 6,
2018; Personal discussion for background, March 22, 2019.
Personal interview, September 17, 2018; Personal interview, December 6,
2018; Personal discussion for background, March 22, 2019.
Personal discussion for background, March 22, 2019.
Personal interview, September 17, 2018.
Personal interview, September 17, 2018.
GLOSSARY
Glossary definitions, for the most part, are paraphrased from World Trade Organization, https://www.wto.org/index.htm.
anti-dumping code A rules-based agreement negotiated during the Kennedy
and Tokyo GATT Rounds providing criteria for determinations of
dumping, injury, and imposing duties. This code was in response to trade
distortions related to dumping, a practice where firms sell goods for a lower
price in import markets than home markets, or at less than production
cost, for the purpose of gaining market share and driving out competition.
Canada–US Free Trade Agreement (CUSFTA) A trade agreement between
Canada and the USA that came into effect in January 1989 and aimed
at eliminating barriers to trade in goods and services between the two
countries over a ten-year period. It also set up procedures to resolve trade
disputes between Canada and the United States. Trade between Canada
and the USA accelerated after the agreement came into effect.
countervailing measures Retaliatory action when a government investigating
authority determines injury has been caused by imported goods benefiting
from subsidies.
customs valuation The procedure for determining the customs value of an
imported good crossing a border.
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Christopher J. Kukucha
defensive interests Efforts by trade negotiators to exclude or limit
liberalization in international commitments due to political considerations
or the lack of a perceived economic comparative advantage.
General Agreement on Tariffs and Trade (GATT) Founded to promote
international trade, it successfully concluded several rounds of multilateral
negotiations that reduced world tariffs. By 1995, when it was replaced by
the World Trade Organization, it had over 100 members.
hybrid lists Combine elements of both positive and negative lists.
import licensing A procedure where exporters must apply for a licence from
a government administrative body prior to the importation of goods.
NAFTA Chapter 11 Investment Panels A mechanism for foreign investors
in Canada, the US, and Mexico to seek financial compensation for
government policies, laws, and regulations that limit international
investment opportunities.
NAFTA Chapter 19 Panels A dispute resolution process for governments
seeking rulings on anti-dumping and countervailing cases outside of
domestic courts and other institutional mechanisms.
national treatment A core aspect of post-war international trade agreements,
seeking equal treatment for goods and services crossing borders
comparable to those of domestic interests.
negative lists Technical language in trade agreements that call for the nondiscriminatory movement of all goods and services, unless specifically
excluded in a list of reservations, annexes, or appendixes.
North American Free Trade Agreement (NAFTA) An agreement among
Canada, the United States, and Mexico to eliminate tariffs and other
barriers to trade. It protected intellectual property rights. When it came
into effect in January 1994, it superseded CUSFTA. Trade among the three
countries increased substantially in the post-NAFTA period.
offensive interests Efforts by trade negotiators to liberalize rules and
norms in international commitments due to political considerations or a
perceived economic comparative advantage.
positive lists Technical language in trade agreements that extend coverage
only for issues voluntarily included by signatories in international trade
agreements, with everything excluded that is not listed.
procurement Goods and services purchased by government agencies for
public services and other tasks where discrimination can occur due to
preferential treatment for domestic suppliers or a lack of transparency on
available contracts and bidding processes.
rules of origin Laws, regulations, and policies that determine a product’s point
of origin, typically based on a subjective measure of substantial transformation,
although governments also add other considerations to meet thresholds.
sanitary and phytosanitary measures Similar to technical barriers, SPS factors
focus on domestic regulations and laws designed to protect the health of
humans, animals, and plants.
International Trade and the Evolution of Canadian Federalism
services An increasingly dominant aspect of global trade relations defined in
the WTO’s General Agreement on Trade in Services as one of four modes
of supply: cross-border, consumption abroad, commercial presence, and
the movement of natural persons.
subsidies Government assistance to firms or individuals to reduce production
costs using various means, such as tax allowances, cash grants, or soft
loans, with the goal of increasing economic competitiveness or providing a
perceived social or political gain.
technical barriers Regulations and standards used by governments to protect
legitimate domestic interests, such as human health, safety, and the
environment, but which can also create discriminatory barriers to trade.
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www.gowlings.com/KnowledgeCentre/article.asp?pubID=2910.
Trew, Stuart. 2013. “Correcting the Democratic Deficit in the CETA
Negotiations: Civil Society Engagement in the Provinces, Municipalities,
and Europe.” International Journal 68, no. 4: 568–75. https://doi.org
/10.1177/0020702013509313.
VanDuzer, J. Anthony. 2013. “Could an Intergovernmental Agreement
Increase the Credibility of Canadian Treaty Commitments in Areas within
Provincial Jurisdiction?” International Journal 68, no. 4: 536–44. https://
doi.org/10.1177/0020702013509315.
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VanDuzer, J. Anthony, and Melanie Mallet. 2016. “Compliance with Canada’s
Trade and Investment Treaty Obligations: Addressing the Gap between
Provincial Action and Federal Responsibility.” Alberta Law Review 54, no. 1:
89–139. https://doi.org/10.29173/alr462.
Verheul, Steve. 2010. “Testimony.” House of Commons Standing Committee on
International Trade, 15 November. Ottawa: Parliament of Canada.
World Trade Organization. 2015. Canada: Measures Related to the Feed-in Tariff
Program. https://www.wto.org/english/tratop_e/dispu_e/cases_e
/ds426_e.htm.
———. 2019. Canada and the WTO. https://www.wto.org/english/thewto_e
/countries_e/canada_e.htm.
CHAPTER TEN
Fiscal Federalism: The Importance of
Balance
Douglas M. Brown
It is often said that fiscal federalism is the glue that keeps Canada together. But issues about fiscal arrangements are highly political and
controversial. Do different orders of government have the fiscal capacity
to fulfill their constitutional obligations? Does each province or region
get its fair share in transfer payments or tax allocation? What does “fair”
mean? Can the federal government afford to fund increasing transfer
costs? Who pays for redistribution to poorer provinces, and how much
redistribution should there be? Do fiscal transfers do enough to promote
national standards in programs such as healthcare? These are some of
the questions governments will face in the 2020s.
Fiscal federalism is the evolving system of financial arrangements
between the federal and provincial orders of government. It is essential
to how Canada’s federal system works. This chapter begins by outlining
the structure of Canadian fiscal federalism: constitutional powers, tax
structure and harmonization, intergovernmental transfers, and the
fiscal relations process. Then it surveys the evolution of fiscal federalism over the past sixty years, emphasizing the important role played by
fiscal relations in building Canada’s welfare state, and how the balance,
both between the two orders of government and between the values of
equity and efficiency, has shifted in the past twenty years. The chapter
concludes with a review of the issues that have been most significant in
the past few years, or anticipated in the near future, as the federation
seeks a new balance.
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Fiscal federalism also has a role to play in all three of the areas that
are the focus of this book: the performance of the federation, policy
effectiveness, and political legitimacy. First, the federation’s performance
depends in no small part on its ability to be flexible and to adapt to changing conditions. Fiscal relationships provide a key means to achieve such
change, as well as to maintain the integrity of federal principles. Second,
fiscal federalism contributes to policy effectiveness by underpinning two
key economic goals: equity and efficiency. The balance between these two
has shifted over time. Fiscal relations are also a means to more specific
policy ends involving such fields as healthcare, post-secondary education,
labour mobility, or economic development. Finally, with respect to political legitimacy, intergovernmental fiscal relations are marked by secrecy,
complexity, and, sometimes, muddled accountability; therefore, they do
lack full legitimacy. But even if the technical discussions involved in fiscal
federalism continue to take place behind closed doors, the underlying
issues are well aired in public.
THE STRUCTURE OF CANADIAN FISCAL
FEDERALISM
Fiscal relations among governments in Canada are shaped by the rules
and practices that make up the Canadian Constitution. The allocation
of expenditure and revenue functions is among the more important of
these constitutional features. But in many respects, it is fiscal federalism
that gives shape to the Constitution, not vice versa. Formal constitutional
powers would have little relevance if revenues could not be collected
and expenditures made. And Canada’s Constitution would have been
obsolete long ago if not for the flexible instruments of fiscal federalism.
For example, governments used intergovernmental fiscal arrangements
to respond to the rise of the modern welfare state – ­and more recently to
its partial retrenchment and adaptation to global economic integration.
Federal constitutions are notoriously difficult to amend, and ours is no
exception. However, fiscal arrangements change frequently and thus
provide opportunities for system-wide adaptation.
Four features of the structure of Canadian fiscal federalism are important. They are (1) the constitutional division of legislative, taxation, and
expenditure powers; (2) the evolved pattern of allocation, sharing, and
Fiscal Federalism: The Importance of Balance
harmonization of taxes; (3) the system of intergovernmental transfers
to bridge the gap between revenue and expenditure responsibilities;
and (4) the process through which fiscal arrangements are made by the
federal and provincial governments.
Constitutional Powers
The constitutional allocation of powers affects fiscal relations in the
Canadian federation in three ways. First, the Canadian Constitution
emphasizes exclusive fields of jurisdiction, as opposed to the scheme
of concurrent, or legally shared, powers typical of other federations,
more self-rule than shared rule as noted in chapter 2. Exclusivity of
jurisdiction, the hallmark of what Keith Banting in chapter 11 calls the
classic model of federalism, means that the central government has
relatively little opportunity to legislate specific conditions and funding
formulae for programs to be delivered by the provinces (Watts, 1999). In
Canada, fiscal mechanisms must respect the jurisdictional autonomy of
the provinces in major expenditure fields. This characteristic has taken
on greater significance since the mid-twentieth century because most
of the fields key to the welfare state (e.g., social assistance, healthcare,
and education) are under provincial jurisdiction. Moreover, the fiscal
transfer program called equalization is specifically designed to ensure
that all provinces have a similar fiscal capacity to exercise their autonomy, and thus reinforce their exercise of exclusive jurisdictions under
the Constitution. The requirement to provide equalization payments is
explicitly made in section 36(2) of the Constitution Act, 1982.
The second important feature of this country’s constitutional arrangements is that, unlike other federations, Canada gives the two senior levels
of government full access to the most important and most broadly based
sources of taxation. Both the federal and provincial orders of government can levy not only income taxes (personal and corporate) but also
general sales or consumption taxes, as well as payroll taxes for specific
purposes such as unemployment insurance, healthcare, and pensions.
The constituent units of other federal systems are more restricted in
their ability to pay for their expenditure responsibilities from their own
revenue sources. Thus the vertical fiscal gap (defined more fully below)
has been considerably less in Canada than in Germany or Australia,
for example. On the other hand, governments at both levels must pay
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Douglas M. Brown
attention to tax harmonization to ensure that taxpayers are not subjected
to conflicting demands and overwhelming tax burdens.
The third important feature is the constitutional allocation of what is
known as “the spending power”: the constitutional right of the federal
Parliament to spend its revenues in any field, as it sees fit. This power
has been controversial, particularly among those Canadians, especially in
Quebec, who insist on strict adherence to the principle of the provinces’
autonomy in their exclusive jurisdictions. Nonetheless, the spending power
has been the means by which the federal government has promoted a
national (pan-Canadian) approach to social programs, including direct
payments to individuals and organizations, for redistributive purposes.
The courts have upheld the spending power, so long as the granting of
money does not constitute regulation by other means. And in 1999 the
federal government and nine provinces (all but Quebec) signed the Social Union Framework Agreement, establishing some general principles
for the use of the federal spending power where provincial jurisdiction
is concerned. These rules, in general, have affected the shape not only
of such major transfers as the Canada Health Transfer (CHT) and the
Canada Social Transfer (CST) but also of new intergovernmental initiatives in the social policy field. Finally, although there is no declared
provincial “spending power” per se, the provinces have a residual power
to spend wherever they see fit, including in areas outside their formal
field of legislative power, such as the funding of international trade offices (Hogg, 1996: 151–2), providing, again, that such spending is not a
backdoor attempt to regulate a federal area of jurisdiction.
These three sets of constitutional powers – i­ n the areas of regulation,
taxation, and expenditure – h
­ ave interacted over the course of Canada’s
history to produce dramatically different responses to the needs of the day.
Tax Structure and Harmonization
As just noted, Ottawa and the provinces share the most important and
broadly based sources of revenue, including income taxes; in 2011 the
federal government took 60 per cent of personal income tax (PIT) and
62 per cent of corporate income tax (CIT) (Treff and Ort, 2013: Table
A1). In addition, all provinces except Alberta collect a retail sales tax,
and the federal government levies the Goods and Services Tax (GST),
a general consumption tax that is fully harmonized with the sales tax in
Fiscal Federalism: The Importance of Balance
some provinces (i.e., Newfoundland and Labrador, Nova Scotia, New
Brunswick, PEI, and Ontario) and nearly so in Quebec (see Bird, 2001).
Overall, federal and provincial shares of these general sales taxes in 2009
were 40 per cent and 60 per cent respectively (Treff and Ort, 2013). The
federal and provincial governments also share revenues from taxes on
gasoline and other motive fuels, as well as taxes on alcohol and tobacco.
The remaining tax sources of the federal and provincial governments
are more exclusive. Only the federal government can impose customs
and excise duties, and since the provinces own almost all the natural
resources, they levy almost all of the resource royalties and related rents.
Resource revenues have been especially important to Alberta because
of historically high prices for its large petroleum reserves, but they are
also important to a number of other provinces.
The past sixty years have seen a steady trend towards decentralization
in the overall revenue split between the federal and provincial governments. In 1950, when Ottawa exercised strong central control over
revenue generation, the federal government levied about 65 per cent of
total taxes. By 1991 this figure had declined by over one-third to 44 per
cent, and in 2018 it was 39 per cent. As Table 10.1 shows, the provinces
and territories raise the most revenues of any order of government from
their own sources (i.e., excluding grants from other governments). They
collected 48 per cent of total Canadian own-source revenues in 2018,
while local governments collected 13 per cent.
The main reason for the shift to provincial dominance in own-source
revenue was the provinces’ need for a greater share of tax revenues
to meet their spending responsibilities in areas (e.g., health) where
costs were rising much more quickly than they were in areas of federal
responsibility (e.g., defence). To help meet provinces’ revenue needs,
the federal government ceded considerable “tax room” on corporate
and personal income to the provinces in the 1950s, 1960s, and 1970s.
At the same time, tax sources – ­both big and small – ­have proliferated
at the provincial level.
In any federal system, decentralized tax allocation can erode the goals of
economic integration (i.e., the creation of a common market) by placing
different burdens on individuals and companies depending on where
they are located. Moreover, decentralized revenue generation creates a
gap between those provinces with lucrative sources of tax revenues and
those provinces whose yield from tax sources is far less. It is to address this
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Douglas M. Brown
Table 10.1. Canadian Governments – Own-Source Revenues
($ millions/%)
1991
2001
2011
2018
Federal
Prov./Terr.
Local
Total
126,868 (44.4%)
198,054 (44.6%)
229,938 (35.8%)
299,867 (38.9%)
122,493 (42.8%)
196,490 (42.8%)
315,029 (50.7%)
366,411 (47.6%)
36,475 (12.7%)
49,262 (11.1%)
83,248 (13.4%)
102,746 (13.4%)
285,836 (100%)
443,806 (100%)
621,215 (100%)
769,024 (100%)
Source: Author’s compilation drawn from Fiscal Reference Tables (Canada, 2018).
type of fiscal imbalance, or inequity, resulting from such decentralization
that equalization programs become necessary (see discussion below).
Harmonization of taxes is also important to ensure that similarly situated
taxpayers are treated similarly, and to facilitate the movement between
provinces of capital, labour, goods, and services (Brown, 2001). One of
the most successful means of ensuring harmonization has been the Tax
Collection Agreements (TCAs), under which the federal government
agrees to collect taxes on behalf of any province or territory. TCAs are
in place for federal PIT collection in all provinces and territories except
Quebec, and for CIT in all except Ontario, Alberta, and Quebec. Under these arrangements the federal government absorbs the collection
costs, and in return the provinces agree to a common definition of the
tax base and a common approach to tax enforcement and allocation.
Harmonization through unified collection is somewhat less advanced for
consumption taxes. On July 1, 2010, the two large provinces of Ontario
and British Columbia harmonized their sales tax with the federal sales
tax for the first time (to create a combined Harmonized Sales Tax, or
HST), though BC withdrew from the arrangement in 2013. Economists
claim that this harmonization contributes to more efficient business
conditions and smoother economic integration within Canada (Boadway
and Shah, 2009). In Quebec the GST is collected by the province on
behalf of the federal government, not vice versa.
Intergovernmental Transfers
Public-finance analysts refer to two kinds of fiscal relationships: vertical
and horizontal (Boadway, 2005; Anderson, 2010; Boadway and Shah,
2009). Vertical relations are those between different levels or orders of
government: not only federal–provincial or federal–territorial, but also
Fiscal Federalism: The Importance of Balance
provincial–local, federal–Indigenous, even federal–local. In all federations there is a natural gap between the central or federal government
and the constituent governments or provinces. Central governments,
by virtue of their authority over the entire country, are able to tax economic resources – ­wealth, profits, income, consumption – ­wherever
they occur. Thus from an efficiency perspective it makes sense that the
federal government has a greater fiscal capacity than the federation’s
constituent parts. States or provinces usually have neither the full legal
power nor the practical means to tax national wealth in order to fund
their expenditures.
The result is a vertical gap between federal revenues and provincial
expenditure that should be closed. There are four ways to close this
gap. The first and most common way is to transfer cash, on an annual
basis, from the federal government to the provinces. A second way is to
reallocate or transfer a share of taxes (also called tax room) from the
federal to the provincial level, which the province would then levy on
its citizens. Yet a third way is to shift an entire tax field to the provinces,
permanently reducing the federal government’s fiscal capacity. And
a fourth way is simply to transfer the spending responsibility upwards
from the provincial to the federal level. All four methods have been
used in Canada at one time or another, with cash transfers being the
most common.
A vertical fiscal imbalance (compared to a gap) is said to exist when
a province’s revenues are still not sufficient to meet its needs, even after
federal transfers are taken into account. How does one determine what
those expenditure needs are, whether provincial revenues (or the ability
to raise revenues) are in fact inadequate, and exactly how insufficient
are the federal transfers? The answers to these questions involve significant differences in interpretation and not a small amount of political
posturing. Suffice it to say that “vertical fiscal imbalance” (VFI) is a
loaded term (Lazar, St-Hilaire, and Tremblay, 2004). We return to this
issue below in the discussion of the Harper Conservative government’s
approach to fiscal federalism.
The term horizontal imbalance refers to distinctions at the provincial
or territorial level: more specifically, the differing fiscal capacities of
the various provinces and territories to fund their own expenditure responsibilities. These differences are primarily due to regional economic
disparities: differences in economic activity and accrued wealth among
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Douglas M. Brown
the constituent units – f­or example, the fact that Alberta’s economy is
richer than New Brunswick’s. In virtually all federations, some way is
found to even out these horizontal imbalances, for two reasons. One
is a matter of general equity, to ensure a measure of fiscal equality across
the country; the other has a constitutional purpose, to ensure that every
unit within the federation can manage the responsibilities allocated to it.
In some federations, such as Germany, the richer provinces make
direct payments to the poorer ones, but more commonly the federal government uses its fiscal capacity to redistribute wealth regionally, through
intergovernmental grants and, in some cases, transfers to individual persons through programs such as employment insurance. Since transfers
from the federal level are the chief means of bridging horizontal gaps,
the federal level would still need to have a larger revenue capacity than
the provinces even if, on average, provincial expenditure responsibility
and revenue capacity were evenly matched (no VFI).
Intergovernmental transfer payments are also an important means
through which the federal government can build national programs
while leaving their delivery to the provincial governments. In so doing,
the federal government can choose to require that the provinces follow
central policy objectives and program design, or it can leave those decisions to the provinces. Thus transfers come in two basic types: conditional and unconditional. Conditional transfers are payments made for
specific purposes, often to introduce new social programs with similar
entitlements across the country. Unconditional transfers have no strings
attached, but are still guided by specific formulae determining which
provinces get what proportions of funds.
Transfers from the federal government to the provinces and territories
are now largely unconditional with, it can be argued, fewer conditions
imposed on federal monies than in any other federal system. The three
largest programs, accounting for about 95 per cent of all federal transfers in recent years, are the Equalization Program, funded in 2017–18
at $18.4 billion, and the Canada Health and Social Transfers (CHT and
CST), funded in 2017–18 at $50.9 billion (see Tables 10.2 and 10.3).
The equalization program is wholly unconditional, while the CHT and
CST come with only a few general conditions. The conditions on the
CST and CHT are discussed in chapters 11 and 12, respectively. They
amount to national principles and leave considerable room for provincial interpretation.
Fiscal Federalism: The Importance of Balance
Table 10.2. Major Federal Cash Transfers to Provinces and Territories
(selected years 1992–3 to 2017–18/$ millions)a
1992–3 1997–8 2002–3
2007–8
2012–13 2017–18
Social Program Transfersb
Equalization
Territorial Funding
Formula
18,396
7,784
12,500
9,738
19,100
8,859
31,065
12,925
40,428
15,423
50,898
18,354
1,076
1,229
1,616
2,313
3,111
3,682
Total
27,256
23,467
29,575
46,303
58,962
72,934
Source: For 1992–3 to 2002–3, Canada (2006: Annex 3, Tables A3.1–A3.3); for
2007–8, Canada (2008); for 2012–13, Canada (2015); for 2017–18, Canada (2017a).
a
Dollar amounts are nominal; and reflect actual transfer amounts in the years
indicated.
b
Social program transfers, 1982–3 to 1992–3, consist of the EPF and CAP cash
transfers; since 1997–8 they consist of the CHT/CST cash transfer.
Moreover, both the CHT and CST are block grants, intended to cover
a broad range of program expenditures in areas from health to social
assistance to post-secondary education. Block grants are the amalgamation
of previously more specific cost-shared programs. Thus block grants are
transferred without reference to explicit provincial expenditures, whereas
specific program grants are matched to actual expenditures according
to a formula (e.g., 50–50). Canadian governments still maintain some
cost-shared programs, including economic and regional development
agreements and federal–provincial–municipal infrastructure agreements
(Vaillancourt, 2000). But in dollar terms they are much less important
than the big two transfers – a­ lthough the infrastructure and related conditional funding programs were increased significantly from 2008–9 to
2010–11 as a means to stimulate the economy during the major recession
(see discussion below). Canada is notable among federations for the
large percentage (about 95 per cent) of its intergovernmental transfers
that take the form of block payments.
The most unconditional of the transfer programs, equalization, is
intended to sustain the provinces’ constitutional autonomy by ensuring
that each province has the capacity to deliver comparable services at comparable rates of taxation. Initiated in 1957, equalization brings provinces
with a fiscal capacity below the national average up to a national standard.
Except indirectly, through the redistributive effects of the federal tax
system, equalization does not take funds from the richer provinces: the
latter are not equalized down to the national level, it is only the poorer
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Douglas M. Brown
Table 10.3. Major Federal Cash Transfers to Provinces and Territories
(estimated entitlements, 2018–19, $ millions)
CHT
CST
Equalization
TFF
Offshore
Accords
Total
NL
548
201
PEI
161
59
419
Nova Scotia
996
366
1,933
New Brunswick
792
291
1,874
Quebec
8,791
3,226
11,732
23,749
Ontario
14,964
5,492
963
21,420
2,037
Manitoba
1,410
518
Saskatchewan
1,224
449
750
638
(95)
3,201
2,956
3,965
1,673
Alberta
4,504
1,653
6,157
BC
5,066
1,859
6,925
Nunavut
40
15
1,579
1,637
NWT
Yukon
46
40
17
15
1,256
950
1,319
1,006
38,584
14,161
All Prov. & Terr.
18,958
3,785
(95)
75,393
Source: Author’s compilation based on tables for fiscal entitlements of each
province and territory, as found in Finance Canada website pages for Major
Transfers (Canada 2017b). http://www.fin.gc.ca/access/fedprov-eng.asp, updated
to December 2017.
provinces that are equalized up. The funds for this purpose come wholly
from the consolidated revenue fund of the federal government. The
latter is collected throughout the country and individual taxpayers in
the poorer provinces contribute, according to their income, the same
as individual taxpayers in the richer provinces. There are no direct
transfers between provincial governments. (See discussion below of the
misrepresentation by some political leaders and commentators of how
the equalization program works.)
Provincial fiscal capacity is measured using a national standard based
on tax yield from five different categories of revenue sources, an approach referred to as the “representative tax system.” Each province’s
actual fiscal capacity is measured against this standard to determine
the extent of its entitlement. Currently five of the ten provinces receive
funds to bring them up to the national standard of fiscal capacity. Unlike
equalization schemes in some other countries (e.g., Australia, South
Africa), the Canadian system is designed only to determine differences
Fiscal Federalism: The Importance of Balance
in fiscal capacity; it does not attempt to measure differences in the costs
of providing provincial services or in the need for specific program
expenditures (see Brown, 1996; Béland et al., 2017).
For a brief period in 2004–7, following a decision of Paul Martin’s
Liberal government, all of this complex determination of equalization
entitlements was essentially abandoned. Instead the federal government
made payments based on the recent past with an incremental increase
each year. That approach came under considerable criticism for departing from rational principles and a transparent formula. In 2007 Stephen
Harper’s Conservative government restored the program to a principles-based formula but, as discussed below, it revised those principles
significantly to limit the future growth of the program.
The federal government also transfers funds to the governments of
the Northwest Territories, Yukon, and Nunavut. These territorial governments are responsible for nearly the same range of expenditures as
the provinces. Yet their needs and per capita costs are greater because
of their huge land mass, northern isolation, and sparse populations; furthermore, they lack the full range of provincial taxing powers (resource
revenues are shared with the federal government) and their fiscal capacity
is much less than that of even the poorest province. Thus, the territorial
governments depend on federal transfers for the major portion of their
revenues; in fiscal year 2019–20, the Territorial Funding Formula (TFF)
and other federal transfers amounted to 85 per cent of Yukon revenues,
81 per cent for the Northwest Territories, and 80 per cent for Nunavut.
As noted, these transfers are provided mainly by the TFF; in addition,
territorial governments receive the CHT and CST, but these payments
are deducted from their TFF entitlements. From 1985 to 2004, TFF
amounts were determined according to an expenditure-based formula,
adjusted for population, which reflected the special expenditure needs
of the territories. The TFF did not escape fiscal restraint; the grants
were frozen in 1995–6, and further reduced by 5 per cent in 1996–7.
In 1998 a ceiling on future increases was imposed, and since 2004 the
actual payments have been delinked from the need-based formula. In
2017–18 the three northern territories received a combined total of
$3.6 billion from the TFF.
Finally, intergovernmental transfers play a crucial role in funding First
Nations governments (the more than 600 Indian Band Councils) and
other Indigenous governments and organizations. These governments
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Douglas M. Brown
are not part of regular fiscal federalism (federal–provincial–territorial)
arrangements, and do not receive either equalization or CHT and CST
payments. Instead, their funding comes from the federal government’s
Indigenous Services Canada (ISC) and other specific federal programs.
According to federal estimates, ISC will transfer $11.5 billion to Indigenous governments and organizations in 2019–20.
Indigenous governments differ from the other governments in the
federation constitutionally, economically, and fiscally (see chapter 15).
Some Indigenous governments have limited taxing power, but few have
much fiscal capacity (i.e., the ability to obtain revenues from economic
activity as opposed to the legal power to levy taxes), and none has the
broad-based taxing powers of the provinces. Also, the politics and policy
discussions surrounding Indigenous finances tend to take place on a
separate track and under the auspices of different executive institutions
than discussions at the federal–provincial–territorial level (Prince and
Abele, 2005).
Fiscal Relations Process
The preceding structural outline may seem bloodless and technical, but
the decision-making process through which Canadian fiscal arrangements
are made is anything but. As W.A.C. Bennett, the long-serving BC premier,
once purportedly told his fellow first ministers: “Let’s get down to the real
business of Canada and divvy up the cash.” Almost everything governments
do requires money, and it seems that there is never enough – p
­ olicy issues
and decisions very often come down to financial requirements. Thus
fiscal arrangements are at the heart not only of federal–provincial (and
provincial–municipal and federal–Indigenous) relations, but also the
budget-making process in every government. They are among the most
hotly contested issues in politics, reflecting real ideological differences
and regional interests.
Intergovernmental relations on financial matters suffer from all the
defects of other executive federalism processes – ­and more. Although
the fiscal battles between Ottawa and the provinces, and among the
provinces themselves, have become highly public, the details of fiscal
arrangements are so complex that governments leave them to a handful
of technical experts who meet in private. The resulting lack of transparency makes accountability difficult to trace – ­a characteristic often
Fiscal Federalism: The Importance of Balance
exploited by governments eager to avoid taking the blame for cutbacks
in funding or program entitlements.
Decisions about fiscal arrangements, particularly the final amounts
to be transferred to the provinces, are rarely made jointly. Rather, the
different levels of government tend to hold frequent meetings, argue
their positions, agree on some general approaches and principles, and
then leave the final decisions to each government. Consistent with this
practice (Burns, 1980; Lazar, 2000), two of the most dramatic changes
in fiscal arrangements in recent times, the introduction of the Canada
Health and Social Transfer (CHST) in 1995 and the major changes
announced in the federal budget of 2007, were made by the federal
government alone, following consultation with the provinces (Greenspan
and Wilson-Smith, 1997). Negotiations with the provinces shape the
options facing the federal government, and a decision taken against the
wishes of all the provinces can backfire politically. In the end, though,
Ottawa’s allocation of the cash is a political act, and considerations other
than the interests of the provinces can have a big say, particularly when
the money is to be directed at social programs.
Finally, the tendency to leave the big budgetary decisions to individual
governments is reinforced by two institutional features. First, both the
federal Parliament and the provincial legislatures want to protect their
power to appropriate funds every year (even if budgetary decisions are
initially made by the finance minister or the cabinet). Thus no legislature
will consent to be bound by multi-year intergovernmental agreements.
Second, Canada’s intergovernmental machinery does not function well
when it comes to taking final, substantive, and binding decisions (Painter,
1991; Brown, 2002). It is simply too cumbersome for governments to
have to agree collectively, at least on a regular basis, on financial matters.
Nonetheless, issues of accountability, transparency, and decision-making
are all of current concern to Canadian citizens and their governments.
FISCAL FEDERALISM 1950–2015: THE SHIFTING
BALANCE
Fiscal relationships in Canada are subject to frequent change, but the
changes themselves are usually incremental. Therefore, a long sweep of
time is required to understand and evaluate the effect of fiscal federalism
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in Canada. Before turning to the current issues facing fiscal relationships,
it is vital to see where we have been. Harvey Lazar wrote in 2000:
Until the late 1970s or early 1980s, Canadian fiscal federalism had
a “mission statement.” Its sense of purpose mirrored the post-war
consensus about the role that the state could play, through programs
of redistribution and macroeconomic stabilization, in building a fair
and compassionate society and a prosperous and stable economy.
[Since then] the golden age of consensus had eroded badly.... Fiscal
federalism has also lacked a strong sense of purpose. (Lazar, 2000: 4)
The post-war consensus was that fiscal policy should strike a balance
between social and regional equity on one hand, and the efficiency of
the national economy on the other. Interpersonal or social equity was
pursued through a progressive income tax system, the social security
system, and other universal social programs such as healthcare and education. Inter-regional equity was pursued through fiscal equalization,
unemployment insurance, and regional development programs.
As Banting documents in chapter 11, key aspects of the welfare state
in Canada could be delivered effectively (and constitutionally) only by
the provinces. Thus, beginning in the 1950s, the federal government
used cost-shared programs to induce provincial spending in the areas
of social assistance, vocational training, universities, social services, and
hospital and medical insurance plans, among others. And after 1957,
Ottawa began making separate payments to poorer provinces for fiscal
equalization. This era was the pinnacle of what Banting calls shared-cost
federalism.
The era of shared-cost, co-operative federalism came to an end by
1976, as economic growth and thus federal revenues slowed and the
federal government entered a period of chronic budgetary deficits that
did not end until 1998. In response to its tighter fiscal position, Ottawa
decided it would no longer match whatever the provinces spent and thus
have its spending driven by rising provincial costs and commitments.
Instead, in 1977 federal legislation combined transfers for health and
post-secondary education into a block grant called the Established
Programs Financing (EPF). And in 1990 it put a ceiling on payments to
the richer provinces from the Canada Assistance Plan (the transfer for
social assistance, i.e., welfare). As a result of these and other changes,
Fiscal Federalism: The Importance of Balance
the provinces were obliged to fund an ever-larger proportion of social
programs from their own revenues.
Federal transfers to the provinces as a share of total government
spending peaked around 1982. In that year, as part of the effort to
patriate and amend the Constitution, Canadian governments and
legislatures made a commitment to the equality of regional economic
opportunity and to the principle of equalization payments in section 36
of the Constitution Act, 1982. This constitutional commitment has been
crucial in sustaining the political commitment to equalization. As can
be seen in Table 10.2, equalization payments were spared the relentless
cuts in either the growth rate or the actual cash of intergovernmental
transfers after 1981 (see Brown, 2007).
The 1990s saw even more dramatic changes as fiscal relations in
Canada responded to economic and political upheavals. In this decade
of globalization and market liberalization, governments reformed the
welfare state to suit the more competitive international economy. All
governments eliminated their budgetary deficits and began to reduce
their accumulated debts; they balanced their budgets, and many were
eventually able to accumulate substantial surpluses. Tax reform and tax
cuts were responses to Canadian taxpayers, of whom the majority now
expected less of government and trusted government less when it came
to spending their money wisely.
The key milestone occurred in 1995 with the introduction of the
CHST as part of the federal budget and its dramatic plan to restore
federal fiscal budgetary balance. The CHST began as a way of cutting
provincial transfers; then, after 1998, it was the way for the federal government to restore those cuts. Since 2004 the government of Canada
has treated the CHST as two programs: the Canada Health Transfer and
the Canada Social Transfer (the latter being earmarked for both social
assistance and post-secondary education). The CHT and CST inherited
two sets of conditions from the CAP and EPF programs (which the
original CHST combined): that no province restrict the eligibility for
welfare of residents arriving from other provinces, and that all provinces
meet the five broad principles of the Canada Health Act (see discussion
in chapter 12 on healthcare) in the design and delivery of their health
services. The federal government invited the provinces to work with it
to develop shared principles and objectives for the new transfer. But the
most important intergovernmental discussions revolved solely around
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the money: how much there would be and how it would be allocated
among the provinces and territories.
For a decade the federal government and the provinces engaged in
a tug of war over the CHT and CST, culminating in the 2004 healthcare accord signed by all the first ministers, which largely restored
the 1995 cuts to provincial transfers (Lazar and St-Hilaire, 2004). In
the meantime, however, the provinces and territories squeezed their
budgets, especially in education and welfare programs, to pay for
ever-increasing healthcare costs. The issue of the allocation of CHST
funds across provinces was even more complicated. The historic patterns of cost-sharing under previous, pre-CHST programs treated each
province differently depending on its needs or expenditure record.
After the 1995 cuts, however, the richer provinces began demanding
equal per capita shares of the CHT and CST funds.1 The 1996 federal
budget reduced the interprovincial per capita disparity by 10 per cent
per year, cutting it in half over five years. The issue of “equal shares”
of healthcare and other federal payments have continued to vex the
federal government.
During its term in office from 2006 to 2015, the Conservative federal
government led by Prime Minister Stephen Harper sought to find a new
equilibrium between the competing pressures of equity and efficiency,
as well as between decentralization and local initiative on the one hand
and national (federal) objectives and control on the other. There were
a number of fiscal conflicts among governments, but on the whole the
scene was much calmer than in the decade of 1995–2005.
In terms of tax structure, during the Harper years the federal government significantly reduced its personal and corporate income taxes,
and also lowered the GST by two percentage points. These tax changes,
amidst new spending commitments, limited the ability of the federal
government to reduce vertical or horizontal imbalances to the extent
that some provinces may have wished. However, the Harper government
strengthened the tax collection system by bringing key provinces into
the harmonized sales tax regime and by encouraging more harmonization of corporate income tax (Canada, 2006: 70; Canada, 2007: 44).
Most notable were the agreements with Ontario and British Columbia
to harmonize their provincial retail sales taxes with the federal GST on
July 1, 2010.2 The extension of HST regimes to these two large provinces
was a major but short-lived policy achievement. In British Columbia the
Fiscal Federalism: The Importance of Balance
public continued to resist the harmonized tax and, following a referendum, the HST agreement was rescinded in 2013.
In terms of major intergovernmental transfers, the Harper government
did not introduce any new federal social programs requiring transfers,
but it did honour the 2004 accord on healthcare; put equalization and
TFF back on a more predictable, formula-driven track; and renewed
funding for cities and infrastructure (the latter accelerated significantly
by its anti-recession economic stimulus program of 2008–11).
At the beginning of Prime Minister Harper’s term in office, the terms
“fiscal balance” and “fiscal imbalance” had clearly entered the Canadian political discourse. The provinces argued that the strong federal
surplus combined with the net provincial deficit would only get worse
unless corrected (see Gagné and Stein, 2006: 62–8). Solutions proposed
to tackle the VFI included transferring all proceeds of the GST to the
provinces (Séguin, 2002); further transfer of income tax points to the
provinces (Séguin, 2002); significant increases to the CHT for healthcare (Romanow, 2002; Gagné and Stein, 2006); and increases in federal
equalization and TFF payments, even if these do not benefit all provinces
(Canada (Senate), 2002; Gagné and Stein, 2006; O’Brien, 2006a, 2006b).
While the provinces as a whole were clearly in favour of reducing the
VFI, they differed sharply on the best solution. The only unambiguous
proponent of tax transfers was Alberta. Quebec supported tax transfers
until it became clear that it could not afford them without some form
of “associated equalization”: either equalized tax points, as in 1977, or
an enhanced general equalization program. The idea of equalized tax
points was opposed by the richer provinces. The other provinces have
also been open to a combination of tax and cash solutions, and most of
them have also shared Quebec’s position regarding equalization. Ontario
took a hard line against enhanced equalization at the expense of correcting its own particular VFI.3 In sum, the point at issue was balance, with
the appropriate point of equilibrium being in the eye of the beholder.
The March 2007 budget tabled by Finance Minister Jim Flaherty made
significant strides towards fiscal balance, as the Conservative government
defined the problem. It re-engineered many aspects of the fiscal arrangements (excepting the 2004 healthcare accord). The Conservatives put
the equalization and territorial funding formulae back on a long-term,
transparent, and principled basis. It responded to concerns about fiscal
balance by broadening the standard for equalization, yielding an initial
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increase of $1 billion in entitlements. It also increased social program
spending under the CST and put that transfer on a long-term legislated
basis, as well as extending funding for municipalities from the federal
gasoline tax and for infrastructure, among others. In summary, the
Conservatives tried to maintain a relatively steady state of transfers to
social programs while seeking more fiscal balance through changes in
the equalization program. However, as a quid pro quo for the richer
provinces who do not receive equalization, it continued to accelerate the
movement in the CST and CHT formulae for equal per capita shares.
This move stripped some equalization features that had been in place
for over thirty years and pushed the system as a whole further away from
the concepts of differential need and regional redistribution.
Finally, there were a variety of hard-fought controversies related to
equalization during the Harper years that illustrate key fault lines about
fiscal federalism and wealth sharing in Canada. Although all of the recipient provinces formed a common front on the need for a better system,
the sharpest controversy surrounded the complaints of the provinces
of Newfoundland and Labrador, Nova Scotia, and Saskatchewan that
failed to benefit when equalization was clawed back because of their oil
and gas revenues. In partial response to these concerns, the Martin government had reached agreements with Nova Scotia and Newfoundland
and Labrador on protecting their revenues from offshore resources.
Other provinces, notably Ontario and Quebec, criticized these bilateral
arrangements as subverting the logic and purpose of the existing equalization program. These provinces also opposed any general measure to
enhance the equalization program, which essentially has a redistributive
or even zero-sum character to it.
The challenge facing the Harper government was to achieve an acceptable trade-off between fixing the vertical and the horizontal imbalances.
Common ground was achievable on healthcare in 2004, the main fix
on the vertical imbalance, because all provinces and territories got the
same share of a growing fiscal pie. But fixes to equalization involve, at
least to an extent, zero-sum politics. In the 2007 federal budget, Finance
Minister Flaherty hoped to restore intergovernmental harmony on the
equalization issue. But, while all provinces and territories were better
off financially, some benefited more than others. Largely by virtue of
its population size, Quebec received the lion’s share of total cash in
the improved equalization program. Ontario and Alberta benefited
Fiscal Federalism: The Importance of Balance
the most from social program transfer improvements because of the
significant policy change to make cash entitlements equal per capita.
Provinces receiving equalization payments and increasing nonrenewable
resource revenues from oil and gas – ­as did Saskatchewan, Nova Scotia,
and Newfoundland and Labrador until recently – ­lost ground as the new
principles imposed a more punitive approach.4 (See below a discussion
of the concerns of the resource recipient provinces since 2015.)
Responding to the 2008–2009 Recession
The deep recession of 2008–9 played havoc with public finances in Canada and had the potential to destabilize fiscal federalism. Indeed, the
recession was a major test of our intergovernmental and fiscal systems.
On the whole the outcomes for fiscal relations were not severe. There
remained sufficient intergovernmental coordination of macroeconomic
policy, and the recession did not fundamentally alter the intergovernmental balance of power in Canada.5
Canada’s economy is heavily integrated globally and continentally, so
the effects of the financial crisis of 2008 were felt in Canada. The decline
in international commodity prices and international trade (especially with
the USA) drove down employment, profits, investment, and, of course,
government revenues (Cross, 2010). The overall economy declined by
3.6 per cent over three quarters, the lowest drop among G-8 countries,
and unemployment rose from 5.5 per cent in late 2007 to 8.1 per cent
in late 2010, over half in the manufacturing sector. While all parts of
Canada felt the effects, the downturn was most severe in Alberta (due
in part to a sharp drop in oil prices) and in Ontario, particularly in the
automobile manufacturing sector (Cross, 2010; Canada, 2009). And of
course, the recession had an immediate impact on public finances due
to declining revenues and rising costs related to unemployment and
welfare, an overall loss of about $20 billion (TD Economics, 2009).
The federal government did most of the heavy lifting in the Canadian
response to the international crisis, such as its efforts to sustain financial
sector liquidity and to grant loans to the automobile industry. However,
it became clear very quickly that all governments would have to be involved in economic stimulus – ­the spending of funds to halt growing
unemployment and to maintain some degree of consumer demand.
Even so, when added to the $20 billion hole the recession had already
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punched into public finances, such expenditures contributed to a substantial deterioration in budget balances.
One can make three observations to summarize the impact of the recession and recovery on fiscal federalism. First, the recession reversed a
hard-won position of all governments from financial surpluses to budgetary
deficits. In August 2010 TD Economics forecast a deterioration of the
federal budgetary position in just two years from +$9.5 billion in 2007–8
to −$53.8 billion in 2009–10, and a deterioration of the net position of
all the provinces and territories from +$11.3 billion to −$26.8 billion
over the same period (TD Economics, 2010). Among the provinces,
historic debt legacies combined with the recession to produce significant
differences. Quebec’s debt was nearly 50 per cent of GDP, while Alberta
had no debt at all. Ontario was in the most serious ongoing budgetary
position (the highest annual deficit as a percentage of GDP, approaching
3.5 per cent). Nonetheless, Canada’s deficit and debt hangover from
2008–9 is among the least burdensome among OECD countries. Clearly
the difficult choices made in the 1990s contributed to a stronger fiscal
position going into the recession (IMF, 2010; TD Economics, 2010). All
governments committed to restore their budgets to a balanced position
within two to four years, but in reality most of them, including the federal
government, remained in a deficit position six years after the recession.
Second, the measures taken to restore a budgetary surplus meant
a substantial degree of program expenditure restraint at all levels – in
some respects, a return to the difficult years of the early 1990s. The axe
did not fall primarily on intergovernmental transfers, and when one
considers the extra funds put into infrastructure programs, transfers were
still increasing overall in 2010–11. The main austerity impact came a few
years later when the Harper government announced that the growth
rate in CHT payments would be capped at 3 per cent starting in 2017.
Third, and on a happier note, the recession demonstrated a generally
co-operative and functional relationship among the governments. Perhaps
because all regional economies were impacted by the downturn, there was
no evidence of discord on the overall macroeconomic stance to be taken. All
provinces undertook a similar degree of counter-cyclical budgeting in sync
with the federal position, and all participated readily in a major acceleration
of existing infrastructure programs to stimulate the construction and related
sectors. The provinces may not have been thrilled with the conditional nature
of the federal funds, but seemed to swallow their objections (Young, 2009).
Fiscal Federalism: The Importance of Balance
FISCAL FEDERALISM TODAY: FINDING A NEW
BALANCE?
Fiscal federalism issues were not at the top of the public agenda in Canada
during the first term of the Trudeau Liberal government in 2015–19.
However, as discussed below, fiscal issues have been part of the evolving
controversy over the health of the western resources economy (mainly
oil) and environmental concerns that figured prominently in the 2019
federal election.
During the period of the first Trudeau government, there were a few
new wrinkles on the tax harmonization and sharing front. Since British
Columbians voted in a referendum to reject a harmonized sales tax, the
federal government has not been pushing the harmonization agenda any
further. However, two new federal taxes implicate the provinces and territories. First is the negotiation and implementation of revenue sharing on
cannabis sales following Parliament’s legalization and the provincial roll-out
of regulated cannabis provision. Federal Finance Minister Morneau had
proposed 50–50 revenue sharing with the provinces and territories for the
proposed excise tax (levied in addition to HST/PST on cannabis sales),
but the provinces sought a bigger share due to projected cannabis-related
expenditures dealing with health, policing, and related matters. Morneau
and the provinces agreed on a 25 (federal)–75 (provincial/territorial) split
in December 2017 (see Thompson, 2018). Second was the introduction
of a carbon pricing scheme (or tax) by the federal government, effective
July 2019, and applicable in those provinces without an equivalent set of
carbon pricing measures, which were, in 2019, Ontario, Alberta, Manitoba, and New Brunswick (see also chapter 14). The tax yield from the
carbon pricing regime has been estimated at $2.63 billion in 2019–20 by
the Parliamentary Budget Office (PBO), and rising to $6 billion in four
years (PBO, 2019). Of course, the two overall issues – cannabis legalization
and climate change/carbon pricing – are central to the Justin Trudeau
government record and, with respect to the carbon tax at least, highly
divisive. Nonetheless, from a fiscal federalism perspective, neither is as
yet significant enough to have a big impact on the overall fiscal balance.
As for intergovernmental transfers, again the Trudeau government has
adopted the major policy outlines set down by the Harper government.
They have not returned to the Martin government’s destabilizing removal
of formula approaches, instead seeing the wisdom of continued stability
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through the multi-year, transparent, and formula-driven regime in place
since 2007. The main action has been in healthcare. The 2015 Liberal
platform promised to continue with a long-term accord on the Canada
Health Transfer, but with an additional focus on home care, mental health,
and prescription drugs. Meanwhile the provinces had anticipated that the
federal government would lift the cap of 3 per cent annual growth that
the Harper government had imposed on the CHT and CST, planned to
start in 2017. Within a year of the election, however, the new federal government held firm on the 3 per cent cap, angering the provinces who see
their healthcare expenditures rise much more quickly and who sought a
5.2 per cent annual increase instead (see Brown, Bakvis, and Baier, 2019:
166, fn 7). The Trudeau government eventually agreed with provinces to
exceed the cap, but not before reaching a series of individual agreements
with each province on the terms for providing additional funding. It also
increased its leverage by promising to provide $5 billion over ten years in
supplementary funding for home care and mental health.
Finally, there is equalization. In terms of outcomes there has been little
change since the Harper government. The basic parameters of the formula
for what to equalize and how to allocate funds have not changed since
2007. The result is that six provinces continue to receive entitlements,
even if Ontario is very close to the margin of being a non-recipient. And
the overall program continues to grow, reaching $19.8 billion for 2019–20.
The four provinces of British Columbia, Alberta, Saskatchewan, and
Newfoundland and Labrador do not receive funds from the program,
as a result of the formula determining that their fiscal capacity (if not
actual revenues) exceeds the national average.
Discontent with equalization has been brewing, as the three oil-­
producing provinces in particular have suffered major revenue losses
and large budgetary deficits in recent years due to lower petroleum
prices.6 They argue the equalization program should take into account
their revenue losses and compensate them for their actual budgetary
declines as opposed to theoretical fiscal capacity. Their arguments have
often been extended to suggesting that taxpayers in their provinces
do not get sufficient return on their federal taxes, sometimes implying
(falsely) that Alberta, Saskatchewan, and other non-recipient provinces
make direct payments to the recipient provinces. In June 2018 Premier
Moe of Saskatchewan called for “50–50” equalization reform, whereby half
of the existing equalization funds would be distributed on an equal per
Fiscal Federalism: The Importance of Balance
capita basis to all provinces, regardless of fiscal capacity (Baxter, 2018).
And, as part of his successful election campaign in 2019 as leader of the
United Conservative Party in Alberta, Premier Jason Kenney promised
a referendum in Alberta on equalization as a way to catalyze change to
the national system (Mertz, 2019). Thus far the other provinces have
rejected these positions. Nor has the federal government budged from
its commitment to the current formula, and indeed in 2017 it passed
legislation to extend the existing program by another five years. It remains to be seen whether the Alberta referendum proposal initiative
is intended as leverage, as some suggest, to get more favourable action
from federation partners, including Quebec, on the development of
pipelines to ease market conditions for Alberta oil sands production.
These issues have taken on more urgency since the outcome of the
October 2019 federal election, in which the Liberal government was returned with a minority, but without any seats in Alberta or Saskatchewan.
Both the campaign and its results laid bare fault-lines between parties and
regions on the interrelated issues of greenhouse gas emissions, carbon
pricing, pipelines, and declining resource prices and revenues. Premier
Kenney of Alberta, in particular, has set out new demands to the federal
government for resolving some of these issues, one of which is that the
federal government amend the rules for a little-known program of fiscal
stabilization. Under this program the federal Department of Finance
provides payments to provinces to partially overcome major year-over-year
revenue shortfalls. Kenney has pushed for expansion of the parameters of
that program so that Alberta and Saskatchewan can get a larger share of
compensation and for retroactive payments for the previous four to five
years. Significantly, this position was endorsed by all Canadian premiers
at a meeting in December 2019 (Tasker, 2019). No doubt this support
came in part because Kenney had couched the demand in terms of the
fiscal stabilization program rather than an overhaul of the equalization
program, for which there would have been no consensus.
In late 2019, the time of writing, it is too soon to know how these
particular fiscal issues will be resolved. Regardless of the outcomes in
the coming years, one can reliably predict that these and other major
economic and fiscal changes will force a degree of change in the system.
The potential change drivers include international trade patterns, including protectionism; a recession; major changes in natural resource
prices; higher interest rates or inflation; and the impact of new taxes. Any
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significant changes to the base or relative economic and fiscal positions of
the provinces will put pressure on governments to respond with reform
to their fiscal relationships. This is normal, and a medium-term degree
of flexible response helps ensure successful adaptation to change in the
federation.
EVALUATING CANADIAN FISCAL FEDERALISM
We may now come to some judgments about fiscal federalism as a whole,
as determined by the three criteria set out at the beginning of this chapter. On the performance of the federation, fiscal federalism gets good grades.
Its flexibility has enabled the system to transform gradually (though not
without conflict) from the heavily centralized framework of the 1940s to
the markedly decentralized framework of the late 1990s. The transfer
of tax points, the removal of conditions on grant programs, and the
maintenance of equalization payments have enabled more provincial
autonomy than in most other federal systems.
Since the 1950s fiscal federalism has been generally consistent with
federal principles, including respect for unity and diversity and provincial autonomy, although Quebec’s concerns about the use of the federal
spending power remains an important and occasionally serious problem.
As noted, the arrangements have shown considerable flexibility, contributing in turn to workable intergovernmental relations. The major
exception, even if it is part of the pattern, came with the unilateral cuts
of 1995, which undermined intergovernmental trust for many years
(Inwood, Johns, and O’Reilly, 2004).
The Harper government’s approach to long-term, predictable, transparent, and principled funding was consistent with federal principles
and with a more classical view of federal–provincial responsibilities. This
approach, with some relatively minor changes, has been left intact by
the Trudeau Liberals.
On policy effectiveness, the system’s remarkable flexibility is also an
asset, although judgment on outcomes depends on the beholder and
the specific policy program in question. After all, fiscal relations are
usually a means to an end, not an end in themselves. The discussions of
social program funding elsewhere in this book provide fuller answers on
policy effectiveness. As for equalization and territorial financing, there
Fiscal Federalism: The Importance of Balance
remains some debate about the economic effects of alleged dependency
on such transfers7 as well as the more recent concerns about the program’s inability to respond to fiscal downturns faced by non-recipient
provinces such as Alberta and Saskatchewan. However, both programs
have worked effectively to achieve their stated purposes of closing the
fiscal capacity gap across the provinces and territories:
Without Equalization payments, the fiscal capacity of the least well-off
province was between 58 and 68 per cent of the national average. With
Equalization, the fiscal capacity of that province was raised to between
91 and almost 100 per cent of the national average. (O’Brien, 2006a: 30)
The Territorial Funding program is also clearly effective in terms of its
simple objective to close the gap between expenditure needs and ownsource revenues, although the full adequacy of that funding has been
debatable (O’Brien, 2006b: 32–3).
The focus in the 2000s on correcting the fiscal balance does not
imply abandoning the emphasis on equity considerations. But the size
and distribution of the increased equalization payments announced
in the 2007 budget (and scaled back barely two years later) must be
measured against other changes, such as the relentless move to equal
per capita cash shares (and thus less interregional redistribution) in all
other federal transfers.
Finally, on the criterion of political legitimacy, one significant trend
in the past three decades has been the erosion of mutual trust among
the governments. As a key 2006 independent report on fiscal relations
with the provinces found, the government of Canada has too often
been perceived as a “rule-breaker, non-negotiator, [and] unapologetic
­unilateralist” – the very traits that the federal government itself condemns
in international contexts (Gagné and Stein, 2006: 90). While that report
is now over ten years old, there is no evidence to suggest that the situation
has improved. Thus, the provinces and territories continue to call for
more formal, deliberate, and predictable fiscal relations.
While it would be unfair to characterize fiscal relations under the
successive federal governments as wholly unilateral, often they have had
to impose solutions in the absence of an intergovernmental consensus.
Mutual trust has been improved in the more stable, predictable, fair, and
transparent arrangements. Also, the ten-year agreement on healthcare
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funding agreed upon in 2004 (and extended since) clearly reduced
intergovernmental conflict in that area.
A second set of legitimacy considerations relates to accountability.
Here the focus is more on citizens’ expectations than on governments’
needs, although the trend in public management to greater transparency
and simpler, more direct and quantifiable accountability structures has
permeated government agendas as well. Being notoriously complex,
fiscal federalism is not especially transparent. Yet policy effectiveness
often requires complex responses to the widely varying circumstances
across a diverse federation, and flexible rather than rigid formulas
for responding to often rapidly changing economic, social, and fiscal
conditions. In other words, good policy in this area probably should be
complex. That said, the very complexity of fiscal federalism has made it
easy for governments at both levels to avoid direct accountability, each
often blaming the other for perceived failings.
Issues of legitimacy and accountability turn in part on changing norms
of democratic input and deliberation. Some Canadians have asked why
momentous fiscal federalism issues should be decided behind closed
doors by first ministers, finance ministers, and technocrats when other
major intergovernmental policy issues seem to be more open to the
media and hence to the public. One partial answer, as noted already, is
that they are not. Most of the broad issues surrounding fiscal relations
are debated in the media and are matters for Question Period in the
House of Commons and the broader political community. Even when tied
into budgetary planning, the discussion of fiscal federalism is b
­ ecoming
more open and transparent. As we look forward to the 2020s, a broad
public debate is inevitable, one in which public opinion and electoral
support will go a long way towards determining what can and cannot
be achieved.
NOTES
1 During the inaugural year of the CHST, 1996–7, per capita entitlement
ranged from $825 for Alberta to $993 for Quebec and $1,018 for the Northwest Territories.
2 As an illustration of the difficulties in negotiating a series of bilateral deals
for tax harmonization, the terms of the agreements with BC and Ontario
Fiscal Federalism: The Importance of Balance
3
4
5
6
7
led to demands for similar funding compensation to Quebec for its harmonization in place since the 1990s.
Ontario increasingly made a special case (MacKinnon, 2005a and 2005b;
Ontario, 2006; Canada, 2006: 118–22). It claimed a chronic shortfall of at
least $23 billion (in 2005) from the federal government (notwithstanding
the still enormous net economic advantages it reaps from the Canadian
economic union; see Page, 2002).
Two new measures, both recommended by the O’Brien report of 2006,
placed brakes on fiscal improvement in these provinces. These were the
inclusion of 50 per cent of natural resource revenues in the formula for calculating fiscal capacity, and the cap on entitlements if they exceed the fiscal
capacity of a non-recipient province (i.e., Ontario). While the new policy
claims to respect the Offshore Accords signed in 2005 with the Nova Scotia
and Newfoundland and Labrador governments, the federal government
clearly sought to quarantine such bilateral arrangements by making their
continued operation more difficult.
For an overview of how Canadian federalism affects macroeconomic management, see Brown, Bakvis, and Baier (2019: 177–81).
See Béland et al. (2017: 46–8) for a brief discussion of arguments made by
Alberta and Saskatchewan leaders since 2000.
See Courchene (1995); Boessenkool (1996); PTMF (1998); Banting (1995);
Milne (1998).
GLOSSARY
block grants or transfers Programs bundling previously separate transfers
into a single large transfer, often with more general conditions attached.
conditional grants or transfers Payments made, usually on an annual
or quarterly basis, from one government to another for a specified
purpose and according to conditions normally established by legislation.
Unconditional grants or transfers are payments made, usually on an annual
or quarterly basis, from one government to another for general purposes,
without specific conditions.
equalization A federal government program designed to bring the fiscal
capacity of the poorer provinces closer to a national average so that they
can fully meet their constitutional and program spending obligations. See
also horizontal fiscal balance.
fiscal capacity The ability of a government (federal or provincial) to raise
revenues within its jurisdiction. Each government’s fiscal capacity depends
on the level and nature of economic activity, as well as the amount of
wealth and its distribution within its borders.
horizontal fiscal balance or imbalance Refers to the relative fiscal positions
among the provinces (states, etc.) in a federation. Imbalances reflect the
differing fiscal capacities of these units to carry out similar constitutional
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and program spending responsibilities. Balance is achieved by
redistributing fiscal resources to the poorer provinces. This is done in
Canada through the equalization program.
tax allocation Refers to the division of tax revenues among the jurisdictions in
which they have been generated.
tax base Refers to the part of the economy that is explicitly covered by the tax
in question.
tax harmonization Refers to the effort to make tax structure and its
implementation similar across the provinces, to ensure that individuals
and firms can move freely and do business in all parts of the federation
(i.e., the economic union). Harmonized tax structures need not be
identical, but key features such as the tax base will be identical or very
similar.
tax room Provides – usually through a transfer of percentage points of tax
share – ­“room” for the provinces to collect a greater share of a given tax
base, while the federal share is correspondingly reduced.
vertical fiscal gap Refers to a situation in which the central government’s
revenues exceed its expenditure needs and the provinces’ revenues do not
exceed theirs. In most federations the central government reduces the gap
by transferring some of its surplus to the provinces.
vertical fiscal imbalance Occurs when the vertical fiscal gap is not sufficiently
reduced by transfer payments from the federal government, and provinces
claim a chronic inability to meet their expenditure responsibilities with
their own revenues.
REFERENCES
Anderson, G. 2010. Fiscal Federalism: A Comparative Introduction. Don Mills, ON:
Oxford University Press.
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CHAPTER ELEVEN
The Three Federalisms and Change
in Social Policy
Keith G. Banting
Canadians develop their social programs in the context of a vibrant federal
state, with strong governments at both the federal and provincial levels.
While the primary factors that influence social programs emerge from
the economic and political environment, the structures of federalism
also shape the social programs that governments adopt.
The imprint of our complex federal system on social programs can
be seen most clearly by comparing the policy implications of the three
federalisms that co-exist within the country. Canada has never adopted a
single approach to federalism. Rather, we have chosen to live with three
distinct models of federalism – three federalisms in one country – each
with its own decision rules and intergovernmental processes. Social policy
reflects all three models particularly well. Throughout the history of the
Canadian welfare state, federal and provincial governments have designed
different social programs according to different intergovernmental rules
and processes. At critical historical moments, the same federal and provincial governments were shaping different social programs according
to different models of federalism, with differing policy outcomes.
Canada therefore constitutes a natural laboratory in which to analyze
the policy implications of different models of federalism. The distinctive
incentives and constraints inherent in the different models help explain
a number of puzzles about the Canadian welfare state, including the
striking contrast between the limited nature of the country’s income
security programs and the more universalist character of its healthcare.
The Three Federalisms and Change in Social Policy
Moreover, in recent decades, the three models help explain the highly
uneven impact of successive cycles of policy change – retrenchment in
the 1990s and reinvestment in the 2000s – on different social programs.
This chapter develops these themes in four sections. The first section
describes the federal–provincial division of jurisdiction in social policy
and the three models of federalism. The second section examines the
impact of the three federalisms on the construction of the welfare state
in the middle decades of the twentieth century, while the third section
examines their impact on the politics of retrenchment and then reinvestment in more recent decades. A final section pulls together the
threads of the argument.
THE THREE FEDERALISMS AND SOCIAL POLICY
In formal terms, authority over social policy is divided between the federal
and provincial governments in ways that make Canada one of the most
decentralized welfare states among OECD countries. From the outset,
the Constitution Act, 1867 gave the provinces a central role in social policy,
with specific sections granting them authority over education, hospitals,
and related charitable institutions. In addition, the courts extended the
provincial role by subsuming social policy under provincial powers over
“property and civil rights” and “matters of a local or private nature.” In
a key decision in 1937, the courts struck down a federal social insurance
program as intruding on provincial jurisdiction.
Despite the centrality of provincial jurisdiction, the federal government
also has a significant presence in social policy. Amendments to the Constitution in the middle of the twentieth century gave federal authorities
full jurisdiction over unemployment insurance and substantial jurisdiction
over contributory pensions. Federal tax powers also represent a powerful
tool of social redistribution, especially with the growing use of the tax
system to deliver social benefits such as refundable tax credits. The final
cornerstone of the federal role is the spending power. According to
constitutional convention, “the federal Parliament may spend or lend its
funds to any government or institution or individual it chooses, for any
purpose it chooses; and it may attach to any grant or loan any conditions
it chooses, including conditions it could not directly legislate” (Hogg,
2001: 6.8a). This convention has been challenged both politically and
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judicially. Nevertheless, court decisions repeatedly sustained the federal
position, and historically the spending power provided the constitutional
footing for a number of central pillars of the welfare state. It has helped
sustain federal benefits paid directly to citizens, such as child benefits, and
it provides a constitutional basis for the shared-cost programs through
which the federal government supports provincial social programs.
With federal and provincial governments both engaged in social
policy, much depends on the mechanisms through which they manage
their interdependence. It is here that the three models of federalism
emerge sharply. Each of these models posits a different set of relationships
between federal and provincial governments. Each model generates its
own decision rules, altering the range of governments in the process,
the power of different governments at the table, and the level of intergovernmental consensus required for a decision. As a result, each model
has different implications for policy outcomes.
Classical Federalism
Federal and provincial governments deliver a number of major social
programs acting independently within their own jurisdiction: unemployment benefits, child benefits, non-contributory old-age pensions at the
federal level; programs such as workers’ compensation at the provincial
level. This model involves unilateral decisions by both levels of government, with minimal efforts at coordination even when decisions at one
level have a serious impact on programs at the other level.
In the classical model, the federal and provincial governments behave
in their own domain much as unitary governments would do. Decisions
are more flexible, requiring no elaborate intergovernmental consensus,
and policy can shift dramatically with changes in the political party in
power, interest-group pressures, or public opinion. At the federal level,
policy-makers are still sensitive to different regional interests in a program such as unemployment benefits, but provincial governments have
no formal role in the decisions.
Shared-Cost Federalism
Under this model, the federal government offers financial support to
provinces that operate specific social programs that meet basic conditions
The Three Federalisms and Change in Social Policy
or broad principles established by the federal government. This instrument underpinned the development of major sectors of the welfare state,
including healthcare, post-secondary education, social assistance, and
social services. The shared-cost model generates an intermediate level
of constraint on government action. In formal terms, each government
makes separate decisions: the federal government decides when, what,
and how to support provincial programs, and each provincial government
must decide whether to accept the money and the federal terms. In practice, however, the substance of new programs tends to be hammered out
in intergovernmental negotiations. This process increases the range of
governments and political ideologies represented at the table, and opens
more channels for new ideas to enter the process. But, because there
are no formal decision rules for this process, agreements depend on a
broad intergovernmental consensus or – in some cases – acquiescence.
The pressures for consensus in this model fall between the other
two models of federalism. In comparison with joint-decision, which is
discussed next, the pressures for consensus in shared-cost federalism are
not absolute. Governments retain the right to act unilaterally, as became
clear when the federal government began to cut its financial commitments
to provincial programs in the 1990s. However, the political scope for
unilateralism is still more constrained than in the purely classical model.
As long as the two levels of government remain committed to the policy
sector, they both have stakes in the programs and are held accountable
by the electorate. Governments tend to push back politically against unilateralism at the other level, generating pressures over time for a return
to quasi-consensus decision-making. Over the decades, as a result, the
pattern has been a fluctuating cycle of co-operation, unilateralism, and
pushback, leading to uneasy co-operation, all of which inclines the sector
towards a more incremental, evolutionary pattern of policy change, with
less radical shifts than are possible in the classical model.
Joint-Decision Federalism
In the joint-decision model, the formal agreement of both levels of government is required before any action is possible. Unilateralism is not
an option here. The major example is the Canada Pension Plan, which
is operated by the federal government but can be altered only on the
basis of an intergovernmental super majority. Changes require formal
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approval by the federal government and seven provincial governments
representing two-thirds of the population of the country. This amending
formula is more demanding than the formula governing changes in most
parts of the Canadian Constitution.
As in the case of shared-cost federalism, the joint-decision model increases the range of governments and ideologies at the table. However,
the formal requirement for a strong intergovernmental majority sets the
bar especially high in terms of intergovernmental consensus and makes
policy change much more difficult. As a result, the joint-decision model
creates buffers against the shifting currents of democratic politics.
Thus, the politics of Canadian social policy provide a unique opportunity
to dissect the impact of federalism on public policy. During important
historical moments such as the 1960s, the same federal government
expanded different social programs at the same time and in the same
political context, but according to different decision rules, and the policy
outcomes differed. Similar patterns emerged during subsequent cycles
of policy change. In the late 1980s and 1990s, governments retrenched
social programs, often dramatically; in the 2000s, governments began
to reinvest in social programs, sometimes substantially. In each of these
cycles, the same governments, facing the same political pressures, made
their choices according to the different decision rules embedded in
the three federalisms. As we shall see, these rules mattered. The next
section highlights the consequences during the post-war development
of the welfare state.
THE THREE FEDERALISMS AND BUILDING THE
WELFARE STATE: 1940s–1970s
Canada constructed its welfare state between the 1940s and the mid-1970s.
As in other countries, the primary pressures for social reform came
from changes in the political economy of the country: the emergence
of an industrial economy, the steady urbanization of the population, the
unionization of the labour force, the mobilization of left-wing political
parties in the form of the CCF–NDP, and the ideological conversion of
policy elites to Keynesian economics.
In Canada, however, reformist pressures were refracted through federal institutions. The early post-war years were a period of unparalleled
The Three Federalisms and Change in Social Policy
political dominance by the federal government. The war centralized
power dramatically, bequeathing federal authorities with a highly
professional bureaucracy and – most importantly – dominance of the
primary tax fields. Over time, provincial governments, led by Quebec,
fought to recapture tax room to finance education, health, and social
services on their own terms, and federal fiscal dominance eroded steadily.
Nevertheless, in the early days Ottawa controlled the purse strings. Even
then, however, federal action was channelled along the three separate
models of federalism.
Classical Federalism and Income Transfer Programs
In comparison with the other models of federalism, the classical model
frees governing political parties to act on their own political ideologies,
policy enthusiasms, and electoral strategies. Governments certainly face
other sorts of constraints, including interest-group pressures, regional
interests, and the potential wrath of voters. However, they do not need
to establish an intergovernmental consensus for action.
The classical model structured the construction of the major federal
income security programs. Since the Liberals formed the government
continuously from 1935 until the end of the 1970s, with the exception
of a short interregnum from 1957 to 1963, income security was shaped
by the centrist orientation of the Liberal Party, which supported income transfers but on relatively modest terms. The more ambitious
social-democratic perspective of the CCF–NDP had some impact during
periods of Liberal minority government, such as 1963–8, but was decidedly a secondary influence on program design. As a result, the programs
that emerged were more limited than those developed in many other
Western democracies.
The first step came in 1941, with the introduction of unemployment
insurance (UI). By comparative standards, the Liberals’ plan was limited. It excluded workers in agriculture, fishing, and domestic service,
and all public employees; and the benefit replacement rate was set at
only 50 per cent of wages. In 1944, the federal government introduced
Family Allowances, a modest universal, flat-rate payment to all families
with children, funded from general tax revenues. Quebec objected
to the federal plan in principle, but the province had no formal role
in the process, and its attack “soon decreased as the political danger
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of fighting such a popular measure became clear” (Jean, 1992: 403;
Guest, 1997). Pensions represented the final step. The 1951 Old Age
Security (OAS) was a universal, flat-rate pension of $40 per month for
elderly individuals, funded through general tax revenues. In 1966, the
program was extended by the Guaranteed Income Supplement (GIS),
an income-tested supplement added to the OAS payment for the elderly
with low and middle incomes.
These exclusively federal programs, unencumbered by intergovernmental constraints, remained responsive to the shifting currents of
federal politics. During the post-war era, these currents flowed largely in
an expansionist direction, and federal political parties entered election
campaigns armed with promises to raise benefits. From the 1950s until
the 1980s, promises to increase pensions featured in virtually every federal
election. After its introduction in 1965, the GIS emerged as a particular
favourite in this process, and the program was repeatedly enriched in
real terms, usually just before or after an election. Similarly, the federal
government was free to expand UI on its own terms. In 1971, legislation
finally broadened the program to include all employees, increased the
replacement ratio to 66 per cent of wages, introduced extended benefits
in regions with high levels of unemployment, and covered unemployment
resulting from sickness and temporary disability. The legislation also
introduced maternity benefits. All of these changes came with remarkably little consultation with provincial governments; even the regional
features of the plan represented “the federal government’s own policy
priorities in regional development,” and “were not pressed upon Ottawa
by the provinces” (Pal, 1988: 161).
The freedom to change course was perhaps best illustrated by Family
Allowances, where Liberal governments zigzagged with abandon. In
1970, the Liberals proposed transforming the universal benefit into an
income-tested Family Income Supplement, analogous to the GIS, in order
to target resources on low-income families. However, during the 1972
election Liberal MPs encountered resistance to the idea of taking the
Family Allowance away from middle-income families, and the government
promptly changed direction after the election, maintaining the universal
program and tripling the payment, thereby restoring most of its original
purchasing power. In 1978, however, the Liberals returned to income
testing in an incremental way, introducing a refundable child tax credit,
financed in part through a reduction in the universal Family Allowance.
The Three Federalisms and Change in Social Policy
All of these shifts had major implications for provincial social assistance programs, but the provinces had no formal role in the decisions.
Shared-Cost Federalism and Health Insurance
The second model, shared-cost federalism, structured federal–­provincial
relations in the fields of healthcare, post-secondary education, and ­social
assistance. In contrast to the classical model, the shared-cost model
broadens the range of governments and ideologies influencing policies,
but in contrast to the joint-decision model, the shared-cost model does
not give a veto to any particular province. These differences in decision
rules reshuffled the opportunities and constraints facing individual governments at the table, with significant implications for the ideological
compromises that needed to be struck to develop new policies.
The impact is best illustrated by the case of health insurance. In the
early days, federalism slowed progress towards public health insurance.
In 1937, the courts struck down federal social insurance legislation
as ultra vires, and in 1945 the provinces rejected federal proposals for
post-war reconstruction that included health insurance. In the wake of
paralysis at the federal level, however, federalism created opportunities
for innovation at the provincial level, which the political left used to
establish a universal system as the leading option for the country as a
whole (Maioni, 1998). In 1947, the social-democratic CCF government
of Saskatchewan implemented universal hospital insurance, and two
other western provinces followed in quick succession. These provinces
demanded federal funding for their programs and pushed Ottawa to
build a national approach. In 1957, the federal government introduced a
universal hospital insurance program, which shared the costs of provincial
programs. All the provinces had joined it within four years.
A similar cycle extended health insurance to physician services. In
1962, the NDP government of Saskatchewan again took the lead, introducing a medicare plan, despite a bitter three-week doctors’ strike. Key
elements in the settlement that ended the strike became the starting
point for national debate: universal and comprehensive coverage, the
right of patients to choose their own doctor, and the preservation of
fee-for-service payment for physicians. The Saskatchewan experience
demonstrated that a universal approach was feasible in administrative and
political terms, giving ammunition to reformist forces in national politics.
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Conservative provincial governments mounted fierce resistance.
Governments in Ontario, Alberta, and British Columbia were committed to private coverage for the majority of the population, with public
programs limited to the “hard to insure,” such as the elderly and the
poor. However, in 1966, the federal Liberal government opted for a
universal model and passed legislation providing federal funding for
provinces operating a universal program. The conservative provincial
governments were caught in a vice. The federal proposal was popular
with their electorates; if they refused to join, their residents would still
have to pay federal taxes to support the program in other provinces. The
premier of Ontario denounced medicare as “one of the greatest frauds
that has ever been perpetrated on the people of this country” (Taylor,
1987: 375). However, Ontario lacked the veto that gave it leverage over
contributory pensions, which were being debated at precisely the same
time, as we will see below. By 1971, all provinces had universal medicare
programs in place.
In the years that followed, the federal government defended the
medicare model, resisting the growth of user fees and other forms
of private financing in core health services. During the early 1980s, a
growing number of doctors began charging patients a supplementary
fee in addition to the payment they received from the provincial medical
plan, a practice known as “extra-billing.” At the same time, a number of
provinces began to flirt with the idea of hospital fees for patients. The
federal Liberal government opposed both practices as inhibiting equal
access to healthcare. Just before the 1984 election, it passed the Canada
Health Act (CHA) to prohibit user fees and all charges at the point of
service. The CHA was opposed by all provincial governments. But it was
immensely popular with the electorate and passed unanimously in both
the House of Commons and Senate.
Shortly after, the federal government proceeded with penalties,
withholding a total of $247 million from provinces that allowed charges.
However, the real sanctions were political. Provincial electorates supported
the principles of the CHA, and they were upset when their provincial
governments were declared to be in violation of its terms. In moving to
comply, provinces faced difficult negotiations with the medical profession,
which demanded compensation for the banning of extra-billing. Ontario
endured a twenty-five-day strike by its doctors, and Saskatchewan doctors
held rotating one-day strikes. The doctors made important financial gains
The Three Federalisms and Change in Social Policy
in a number of provinces, costs that the provinces alone had to absorb. By
the late 1980s, however, all provinces were largely in compliance (Tuohy,
1994). The mid-1990s witnessed a repeat of this cycle, this time focused
on private clinics providing specialized medical services, such as cataract
surgery, and charging a “facility fee.” The federal Liberal government
challenged such fees in 1995, and provinces grudgingly moved largely
into compliance by banning them.
The same dynamics did not emerge in all shared-cost programs. For
example, the federal government never sought to establish a powerful
national framework for provincial social assistance programs. Ottawa did
provide shared-cost funding in the post-war era, and supported a major
expansion of social assistance and social services at the provincial level
(Struthers, 1994; Canada, Health and Welfare Canada, 1991). The federal
Canada Assistance Plan did require provinces to support all persons in
need, maintain appeals machinery, and not adopt residency requirements
for social assistance. Within these general constraints, however, the federal approach left lots of room for provincial programs to evolve along
distinctive trajectories, and provincial benefits went through cycles of
convergence and divergence over the years (Boychuk, 1998).
Nevertheless, federalism did play a distinctive role in the politics of
health insurance. Although jurisdictional issues delayed action in the
early years, the federal system created room for a reformist province to
implement health insurance on social democratic principles, and federal action transformed this regional initiative into a national program.
Federal–provincial interaction launched health insurance on a social
democratic trajectory that contrasts sharply with the contributory pensions developed at the same time by the same governments.
Joint-Decision Federalism and the Canada Pension Plan
Joint-decision federalism represents the third and most demanding model
of intergovernmental decision-making. The introduction of contributory
pensions in 1965 and subsequent changes to them required a super
majority, posing a high hurdle for advocates of change.
The roots of joint decision-making lie in the complexities of constitutional jurisdiction in the field of contributory pensions. The federal
government has the authority to enact contributory pensions provided
they do not displace a provincial program. When the issue arose in the
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mid-1960s, Quebec chose to operate its own plan, and a dualist pattern was
established: the Quebec Pension Plan (QPP) operates in that province,
and the Canada Pension Plan (CPP) operates generally throughout the
rest of the country. Although other provinces were content with a federally
delivered plan, they wanted control over it. A constitutional amendment
was required to include survivor and disability benefits in the plan, and
the provinces insisted on joint decision-making in return for agreeing to
the amendment. Hence the requirement that any changes be approved
by a super majority, including the federal government and two-thirds of
the provinces representing two-thirds of the population of the country.
The combination of dualism and joint decision-making creates complex
veto points. First, to avoid the administrative and political headaches that
would emerge if the two plans diverged sharply, pension planners accept
that the Canada and Quebec plans should remain broadly parallel, with
neither side making significant changes alone. Second, the formula for
provincial consent to changes in the CPP means that Ontario alone, or a
variety of possible combinations of other provinces, has a veto. In effect,
then, the CPP rules and the pressure for parallelism between CPP and
QPP create a system of multiple vetoes: Ottawa, Ontario, Quebec, or
several combinations of other provinces can all stop change.
The introduction of the C/QPP plans in the 1960s illustrates the dynamics well. The Liberal government elected in 1963 was committed to
a contributory pension plan. Many provinces preferred the private-sector
approach advocated by the Conservative government of Ontario, which
preferred to require employers above a certain size to provide occupational
pensions. However, the federal proposal was popular with voters. The
Ontario government accepted that contributory pensions of some sort
were probably inevitable, but held out for a limited plan that left ample
scope for private pensions and minimized redistribution by relating individual contributions and benefits quite closely. In contrast, the Quebec
government announced that its plan would have more generous benefit
levels and a more redistributive funding formula. A final round of secret
negotiations between Ottawa and Quebec City produced a compromise
plan, which was more expansive than Ontario initially wanted but less
redistributive than Quebec’s preferred model. The Ontario government
and the insurance industry were not happy and felt that Ottawa “had
used Quebec to turn the tables on them” (Kent, 1988: 286). However, in
the end, they accepted the need for parallelism with the Quebec plan.
The Three Federalisms and Change in Social Policy
The new CPP was a relatively modest program, more modest even
than the federal government’s initial intentions. In combination, the
OAS and the maximum C/QPP benefit replaced approximately 40 per
cent of earnings for the average wage earner, a low rate by European and
even US standards (Béland and Myles, 2005). In many other countries,
including the United States, electoral politics led to the expansion of
contributory benefits after their introduction (Derthick, 1979). In Canada,
however, multiple vetoes blocked expansion. For example, in 1975 the
Canadian Labour Congress and social groups launched a “Great Pension
Debate,” urging a doubling of CPP benefits. The federal Liberals were
initially sympathetic to some expansion, but wider provincial support was
lacking. The campaign’s momentum slowed, and the historic moment
passed. It was to take another forty years before expansion became a real
prospect again. As we have seen, electoral pressures from elderly voters
for better pensions were deflected to the GIS, a more limited program
but one that the federal government could change at will.
The contrast between pensions and health insurance is striking. The
pension architecture carefully left substantial room for the private sector
to offer private savings vehicles to the broad middle classes. In contrast,
public health insurance displaced the private insurance industry completely from core hospital and medical services. Decision rules were not
the only difference between the sectors. But they were critical.
Summary
Three models of federalism thus left their imprint on the new Canadian
welfare state. The same governments, operating in the same political
climate, developed different programs under three different sets of
rules. The classical model, avoiding as it does the need for formal intergovernmental agreement, gave full scope to the centrist politics of
successive Liberal governments in the design of major income security
programs, which emerged on relatively modest premises. In contrast, the
shared-cost model expanded the range of ideologies powerfully positioned
in the process, giving opportunities to social-democratic forces to shape
health insurance, which emerged as Canada’s most ambitious universal
program. Finally, joint decision-making, with its requirement of a super
majority, constrained the initial strength of contributory pensions and
delayed their subsequent expansion for several generations.
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THE THREE FEDERALISMS AND CYCLES OF POLICY
CHANGE: 1990s–2000s
The 1970s represented the high-water mark of the post-war welfare state.
In the decades that followed, successive political cycles led to distinct
waves of change in social programs. In the late 1980s and 1990s, governments focused on retrenchment, cutting core programs, sometimes
deeply. Retrenchment in Canada was driven by the same forces reshaping
the welfare state in other countries: the slowing of economic growth,
globalization, and the ascendency of conservative political parties and
philosophies. In the Canadian case, the fiscal problems of governments
were also critical. The ratio of public debt to GDP rose steadily: by the
mid-1990s fully 35 per cent of all federal revenues went to interest payments on federal debt, and several provinces faced problems placing
their bonds in financial markets. In this context, public opinion became
more critical of some social benefits. This was Canada’s neo-conservative
moment. The mid-1990s in particular saw deep cuts at both levels of
government, especially in unemployment benefits and social assistance.
As it turned out, the political window for dramatic retrenchment
remained open for only a few years. By the early 2000s, governments
began, hesitantly at first, to reinvest in social policy, expanding some
programs in major ways. This expansionist cycle reflected an amalgam
of factors. The federal budget had moved back into surplus by the end
of the 1990s, undercutting demands for further retrenchment. More
importantly, during the first two decades of the twenty-first century,
economic pressures unleashed by globalization, technological change,
and tax cuts generated striking levels of inequality between the rich and
the rest of the population, and a sense of economic insecurity began to
seep into the broad middle class. Political parties increasingly competed
to tap into their anxieties, and the governments they formed began to
reinvest in the social sector. Particular attention was paid to programs
benefitting the middle mass of society, including healthcare and pensions
(Banting and Myles, 2013, 2016).
The impact of these cycles of retrenchment and subsequent reinvestment varied enormously from one program to another. Some programs
were better insulated than others from the chill winds of the 1990s and
better positioned for the reinvestments of the 2000s. Once again, much
depended on the model of federalism in play.
The Three Federalisms and Change in Social Policy
Classical Federalism and Change in Income Security
Programs
Classical federalism offered no buffers against retrenchment. Federal
decision-makers were unconstrained by intergovernmental relations in
cutting benefits in their own jurisdiction. They still faced other constraints,
especially the possible anger of voters and client groups in poor regions.
However, in these politics, provincial governments were reduced to the
role of lobbyists, not decision-makers.
Pensions escaped virtually unscathed. In 1985, the Conservative government of Brian Mulroney proposed the partial de-indexation of OAS,
but backed down quickly in the face of angry elderly voters. A decade
later, the Chrétien Liberal government sought to replace the OAS and
GIS with an integrated income-tested Seniors’ Benefit, but abandoned
the idea in the face of attacks from the left by women’s groups and the
NDP and from the right by investment brokers worried about eroding
the incentive to save for retirement. The only change that survived was
a more stealthy measure to “claw back” OAS from high-income seniors
through the tax system. However, the measure affects barely 5 per cent
of the elderly.
In contrast, unemployment benefits suffered deep cuts that came
relentlessly, one slice after another. The replacement rate was reduced
from the peak of 66 per cent established in 1971 to 57 per cent in 1993,
55 per cent for some workers in 1994, and 50 per cent for repeat beneficiaries in 1996 (although offset in part for some recipients by a slightly
increased family supplement). By 1996, the replacement rate for the
now renamed employment insurance (EI) resembled that in 1940. In
addition, increasingly restrictive eligibility requirements contributed to
a dramatic decline in the proportion of unemployed individuals who
were actually receiving benefits. By the late 1990s, only about 40 per cent
of unemployed individuals were in receipt of unemployment benefits.
In many countries, proposals to reduce unemployment benefits
pit politicians against organized labour. In Canada, the most effective
opponents of cutbacks are politicians from poor regions. A ritualized
political dance was repeated many times during the years of retrenchment: successive federal governments proposed reductions; backbench
MPs from Atlantic Canada and Quebec mounted fierce resistance; and
the government had to decide whether to soften the impact in poor
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areas. If governments did not compromise, they paid a political price.
For example, in the 1997 election the Liberal Party suffered significant
losses in Atlantic Canada and eastern Quebec, in part because of its
cuts in unemployment benefits. The government learned its lesson: just
before the 2000 election, it reversed aspects of the new rules that hit
eastern Canada. Over time, the regional sensitivity of the EI program has
generated dramatic variation in the incidence of EI benefits, with twice
as many unemployed persons in Atlantic Canada receiving benefits than
in the central and western regions of Canada (Banting, 2012).
As federal finances improved in the late 1990s and early 2000s, the
balance between retrenchment and reinvestment began to shift. During
the reinvestment cycle, historic differences between political parties
re-emerged, with Liberal governments embracing wider expansionist
agendas and Conservatives combining expansionist moments with continuing retrenchment.
Families with children were favourites for all governments, but different
political parties pushed the benefits system in different directions. The
Liberal governments led by Jean Chrétien and Paul Martin consolidated
the historic Family Allowances and child tax exemptions into a single
child tax benefit, an income-tested payment delivered through the tax
system to low- and middle-income families with children. In advancing
this agenda, the Liberals initially departed from the unilateralism that
normally characterizes classical federalism, and tried to coordinate
increases in the child benefit with related changes in provincial social
assistance and social services. However, coordination proved uneven, and
such efforts quickly ran out of steam. Then in 2006, the newly elected
Conservative government of Stephen Harper pushed the income-security
system in a different direction, which reflected their distinctive approach
to child care. They introduced a Universal Child Care Benefit, a payment
for all families with young children, including families in which one
parent stayed at home to provide child care. However, in 2016, the new
Trudeau Liberal government changed course again, redesigning the
child benefit system by eliminating the Conservative’s universal benefit
and several small tax credits and introducing a much-enlarged Canada
Child Benefit, which significantly enhanced benefits for lower- and
middle-income families.
Changes in EI also reflected the party in power. The Harper Conservatives temporarily extended benefit periods during the recession of
The Three Federalisms and Change in Social Policy
2008–9. But in 2012, they returned to a more stringent policy, introducing
tougher rules governing the search for “suitable employment,” requiring
recipients to expand their job search geographically and to accept lower
wages than in the past (Banting, 2012: 27–8). Once again, the changes
were unpopular, especially in Atlantic Canada. In this case, the government did not blink, and in the 2015 federal election, the Conservatives
lost all their seats in Atlantic Canada. The Trudeau government quickly
reversed direction. They adopted a substantial array of enhancements in
EI, eliminating the Conservatives’ stricter search requirements, easing the
rules for people re-entering the workforce, reducing the waiting period
before new benefits start, allowing people to work part-time while on
claim, enhancing maternity/paternity benefits, and introducing a new
family caregiver benefit.
In short, once again, the classical model freed federal governments
from intergovernmental constraints. Policy change, especially in the
reinvestment cycle, was highly responsive to the political ideology and
electoral calculations of the party in power. Although changes in these
programs might have implications for provincial programs, provincial
governments had no formal role in the process.
Shared-Cost Federalism and Change in Healthcare
The most intense federal–provincial politics in recent years have centred
on shared-cost programs. In contrast to the free play of political choices
in the classical model, the politics of shared-cost federalism continued to
reflect the enduring interests of governments as governments. Federal
governments of all political persuasions worry about the lack of visibility
of their contributions, and provincial governments resist federal efforts
to attach conditions to new money. The overall pattern has been one of
unilateralism at the federal level, relentless pushback from the provinces,
and eventual reinvestment by the federal government. These intergovernmental dynamics have generated considerable intergovernmental
political friction. However, given the participation of both conservative
and progressive governments in the process, the shared-cost model has
probably also contributed to relative stability in the basic policy model
in the core sectors of healthcare.
The stage for greater conflict was set as far back as 1977, when block
funding was introduced in response to frustrations with the traditional
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form of cost-sharing. The federal government became concerned that
its open-ended commitment to pay half the cost of expensive provincial
programs reduced its control over its own budget. Provincial governments
complained that shared-cost programs distorted provincial priorities and
locked them into endless arguments about whether specific projects
qualified for federal support. After extensive negotiations, the two levels
agreed to shift to a block grant for health and post-secondary education,
known as the Established Programs Financing. The federal government
gained greater control over its finances and provincial governments
gained greater freedom. Although the formal conditions attached to
the federal health programs remained in place, provinces were able to
allocate federal funding as they saw fit. Indeed, there was no explicit
requirement that the funding be devoted to health and post-secondary
education.
Over time, provinces were to pay a high price for the additional flexibility, as the federal government was no longer committed to paying
half the costs of provincial programs. An early harbinger of the future
was the way in which the federal government could pose as the gallant
defender against user fees, as discussed above. Under the block grant
system, the federal treasury was not affected by changes in provincial
health expenditures and, therefore, did not bear any of the financial costs
associated with the defence of the universal approach. Federal health
ministers were therefore freer to defend the principles of universality
and equality of access. Indeed, they did so even as their colleague, the
minister of finance, was reducing transfers to the provinces.
As federal deficits grew in the 1980s and 1990s, Ottawa repeatedly
made unilateral cuts. The biggest cut came when the 1995 budget reduced the overall cash payment to provinces dramatically and replaced
Established Programs Financing with a single block transfer known as
the Canada Health and Social Transfer (which in 2004 was split into
the Canada Health Transfer and the Canada Social Transfer). These
changes, conceived in secrecy and imposed without warning, provoked
a bitter reaction among provinces and seriously eroded the legitimacy
of the federal role in their eyes. In the aftermath, the provincial governments other than Quebec pressed for a stronger set of decision rules
and a dispute resolution mechanism, an effort in effect to shift closer
to a joint-decision model. However, the federal government refused to
constrain itself in that way. As a result, the potential for unilateralism
The Three Federalisms and Change in Social Policy
is still part of shared-cost federalism in the 2000s, and the basic model
remains highly contested.
Unilateralism, however, was not the entire story. Provincial governments
were squeezed between growing health costs and declining federal transfers. They, in turn, squeezed health spending, reducing expenditures by
an average of 2 per cent each year between 1992 and 1997 (Fierlbeck,
2001). Not surprisingly, the public was upset. The provinces quickly
pushed back, mounting protracted public campaigns blaming Ottawa
for the erosion of healthcare and demanding federal reinvestment.
With the return of federal fiscal health in the late 1990s, Ottawa did
reinvest, significantly increasing its funding in 1999, 2000, 2002, and
2004. In particular, the 2004 Health Accord, which was hammered out
in intense intergovernmental negotiations, provided a major injection
of cash immediately and established a ten-year plan with a generous
annual escalator of 6 per cent for increasing the federal transfer for the
duration of the agreement. In effect, the federal cuts of the 1990s were
reversed, slice by slice.
In the shared-cost model, which political party is in power at the
federal level is less central. Indeed, there was considerable continuity
between Liberal and Conservative governments on the big decisions
about the size of the health transfer to provinces. The Martin Liberals
signed the generous ten-year accord in 2004, and the Harper Conservatives, elected to a minority government two years later, honoured
its terms. After winning a majority government in 2011, however, the
Conservatives adopted a more forceful approach in determining what
would follow the ten-year accord. Avoiding serious federal–provincial
negotiations and thereby angering the provincial governments, they simply
announced that annual increases in the health transfer would fall from
6 per cent to 3 per cent. The Conservatives did delay the termination
of the accord, and it fell to the Trudeau Liberals to finalize the future
size of the health transfer. After some initial bargaining, they too simply
opted for a 3 per cent escalator. The provinces were angry and initially
established a united front to reject the federal proposal, insisting that
the escalator had to be increased and that any additional funding should
flow through the block transfer. At that point, the Trudeau government
adopted a divide-and-conquer strategy, striking bilateral deals with willing
provinces. Over time, they managed to establish bilateral agreements
with all provinces (Marchildon, 2016).
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Which party is in power in Ottawa does matter at the margins. For
example, the Harper Conservatives were much less prone to try to steer
provincial health priorities with supplemental funding envelopes outside
of the CHT. They did honour the funding commitment, embedded in
the 2004 Health Accord, to help provinces reduce wait times for certain
surgeries. Thereafter, however, the Conservatives were unsympathetic
to the idea that the federal government should try to “buy change”
in provincial programs through supplementary funding. However, in
2015–16, the Trudeau Liberals returned to a more activist conception of
the federal role, establishing supplementary funding for mental health
services and home care. These fields were already priorities for most
provinces, but the supplementary federal money probably augmented
the resources allocated to them.
Parties also differ in the vigour with which they seek to enforce the
principles in the CHA, especially the prohibition on extra-billing and user
fees. The role of the private sector re-emerged in 2004 with the opening
of private clinics offering MRI and other diagnostic services. However, the
Harper Conservatives imposed no new penalties on provinces during their
term in office. In contrast, in 2015, the Liberal government reactivated
its historic approach, with significant deductions from the federal CHA
transfer to British Columbia and Quebec beginning in 2016–17. In both
cases, the provinces undertook action to return to compliance with the
CHA, and the federal government reimbursed them for the penalties
(Canada, 2019). The Liberal health minister has also set in motion a
wider examination of the growing role of private diagnostic services, to
culminate in 2020. This could be an intergovernmental flashpoint. In
response to the federal initiative, the new premier of Quebec announced
that “People prefer to enter the private system for certain exams – it’s
going to stay like that.... With healthcare, we have the jurisdiction. We
will manage our healthcare system the way we want. The federal government is not going to start telling us how to manage it” (Richter, 2018).
Despite the Quebec premier’s view that healthcare is an exclusively
provincial jurisdiction, shared-cost federalism has locked the two levels
of government in a mutual embrace characterized by patterns of unilateralism, pushback, and accommodation. This embrace has probably
buffered the core of healthcare from pressures for dramatic change.
The buffering effects are hardly absolute, and change remains possible.
Nevertheless, shared-cost federalism tends to incline the country towards
The Three Federalisms and Change in Social Policy
a more evolutionary process, requiring a higher level of consensus for
change in the country as a whole. The next challenge to this evolving
balance may well come from the proposal for a national pharmacare
program issued by a federal advisory council in June of 2019 (Health
Canada, 2019).
These buffering effects depend fundamentally on the commitment
of both levels of government to healthcare and the public’s expectation
that both levels should support this sector. Shared-cost funding did not
create such dynamics in other sectors of social policy that enjoy less
public support. For example, social assistance saw a straightforward
decentralization during the retrenchment cycle. In 1995, the federal
government eliminated the Canada Assistance Plan, rolling its support
for social assistance, post-secondary education, and social services, including early childhood development and child care, into the Canada
Health and Social Transfer (the Canada Social Transfer after 2004). In
addition, the 1995 changes eliminated the requirements that provincial
social assistance programs respond to all persons in need and maintain
appeals procedures. Provincial governments quickly utilized their enhanced
control. In 1996, a newly elected Conservative government in Ontario
cut benefits by 20 per cent, and benefits declined more incrementally
elsewhere (Boychuk, 2006), stabilizing at the lower levels in the 2000s
(National Council of Welfare, 2010). Eligibility for benefits also tightened. Beneficiaries were under increasing compulsion to participate in
employability programs; Ontario introduced liens on home equity; and
for several years, British Columbia imposed time limits, restricting employable people without children to two years of support in any five-year
period (Béland and Daigneault, 2015). The CAP would have prevented
all of these eligibility provisions. In effect, social assistance shifted from
shared-cost federalism to classical federalism, with considerable variation
in benefits reflecting the relative balance of conservative and progressive
political forces in each province (Haddow, 2014).
Joint-Decision Federalism and Changes in the Canada
Pension Plan
During both the retrenchment and reinvestment cycles, the consensus-driven
logic inherent in joint decision-making constrained change in the
C/QPP, protecting the program from serious retrenchment in the 1990s
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but also delaying expansionist efforts in the 2000s until a super majority
surprisingly emerged in 2016.
During the 1990s, actuarial reports raised questions about the
long-term financial status of the plans, triggering extensive political
rhetoric about unsustainability. Yet the final adjustments agreed by the
governments largely served to stabilize the program. Joint decisionmaking was not the only factor at work. The electoral sensitivity of pensions, which was so evident in the case of OAS/GIS, was undoubtedly
important here as well. Yet contributory pensions create opportunities
for subtle adjustments that are largely invisible to the electorate in the
short term but have major effects in the long term (Myles and Pierson,
2001). The fact that these opportunities were exploited primarily to
stabilize rather than weaken the program was due in part to the need
for intergovernmental consensus.
An intergovernmental review was launched in 1996 with the release
of a joint discussion paper on reform options (Canada, 1996). From
the outset, however, negotiations focused on a narrow range of options,
and radical changes were never considered seriously. The province of
Quebec announced that it would not consider solving the sustainability
issue through big benefit cuts, a position supported by NDP governments in Saskatchewan and British Columbia. In the end, the federal
and provincial governments agreed to increase contribution rates over
a ten-year period, and to invest the enhanced revenues in equities in the
hope of further strengthening the long-term funding of the plan. There
was a modest trimming of some benefits, and the two NDP governments
refused to sign the final agreement. However, governments did not even
try for more dramatic retrenchment, and the final changes largely stabilized the role of contributory pensions in the retirement income system
(Little, 2008; Béland and Myles, 2005).
In the 2000s, the political cycle turned again in an expansionist
direction. But once again, joint decision-making slowed change. New
evidence made it clear that lower-middle-income Canadians were not
saving enough for their retirement, and that private pensions and personal savings, which governments had hoped would fill the gap, were
not doing so. If anything, their role was shrinking. The response was
another drive to expand C/QPP, which unfolded in the first decade
of the 2000s. Initially, the proposal seemed to have the support of the
federal government and a majority of provinces, but Alberta adamantly
The Three Federalisms and Change in Social Policy
opposed expansion from the outset. Just before the key intergovernmental
meeting on the issue in late 2010, six provinces issued a joint statement
supporting the CPP expansion, but two other provinces joined Alberta
in opposing action. As a result, the federal finance minister “surprised
his colleagues” by abandoning “an idea that he had personally championed for six months,” citing the lack of intergovernmental consensus
(Curry and Howlett, 2010). The outcome reflected the unique decision
rules of joint-decision federalism. If CPP had been governed according
to the classical model, the federal government could have acted on its
own. If CPP had been governed by the norms established for sharedcost programs, the support of the federal government and six provinces
would have been sufficient for action. Under joint-decision federalism,
however, a super majority is required, and it was lacking.
Unexpectedly, electoral shifts a few years later suddenly produced
the elusive super majority. In 2014, the Ontario Liberals led by Kathleen
Wynne made pension reform a central plank in their provincial election
campaign and won decisively. Their government announced that if the
CPP was not expanded, it would implement an Ontario Retirement Pension Plan, which would supplement CPP for workers who do not have
a workplace pension and was more ambitious than previous proposals
for CPP expansion. The federal Conservative government of Stephen
Harper fought the plan vigorously, refusing to allow Ontario to use the
administrative structures of CPP to deliver their plan. In 2015, however,
the Trudeau Liberals swept to power at the federal level. The new government was strongly aligned with their Ontario counterparts and was
committed to an expansion of CPP that would make the Ontario plan
unnecessary. Much more surprising, however, was an electoral revolution
in Alberta, which had been governed by the Progressive Conservatives
continuously since 1971. In October 2015, the Alberta NDP won the
provincial election, removing the most determined opponent of CPP
expansion. In this unusual political moment, the intergovernmental
alignments fell into place quickly. By the summer of 2016, to the surprise
of observers accustomed to repeated failures, the federal government
and eight provinces announced an agreement to expand the CPP (Lee,
2016). They agreed to increase gradually the CPP replacement rate from
25 per cent to 33.3 per cent, and incrementally raise the payroll contributions and the maximum earnings limit as well. Quebec was one of
the two dissenting provinces, but after a public consultation within the
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province, the government decided to amend the QPP in parallel with
the CPP (Béland and Weaver, 2018).
The expansion of CPP, first advocated in the mid-1970s, finally happened. It is worth noting how fleeting the political moment was. By
early 2019, conservative governments were back in power in Ontario
and Alberta, and later in that year the Alberta government struck an
advisory panel to assess, among other things, whether Alberta should
withdraw from the Canada Pension Plan and, like Quebec, establish
its own plan.
Summary
As in the post-war era, the new politics of social policy had to flow
through the three distinctive institutional filters, which help explain
the uneven impact of retrenchment and subsequent reinvestment
on different social programs. The classical model exposed income
security programs to the changing ideologies and electoral choices
of the party in power in Ottawa, resulting in repeated changes in
direction in child benefits and unemployment benefits. In contrast,
in the field of health insurance, shared-cost federalism locked governments with different political philosophies into a cycle of unilateralism and negotiation, which over time helped buffer the basic
model of healthcare. Finally, the joint-decision model of federalism
tended to insulate contributory pensions from political pressures
for change, frustrating advocates of retrenchment in the 1990s and
blocking expansionist pressures in the 2000s until the unexpected
emergence of a fleeting super majority.
CONCLUSIONS
The Canadian federation embraces three distinct models of federalism,
each of which alters the range of governments at the table, redistributes
power among them, and requires different levels of intergovernmental
consensus for action. At important historical moments, during both the
years of expansion and the years of retrenchment, the same federal and
provincial governments operating in the same political environment
The Three Federalisms and Change in Social Policy
were shaping different programs according to different rules. The
three federalisms at work in Canada provide powerful evidence for the
proposition that political institutions and the decision rules implicit in
them matter for policy outcomes. Certainly, the three federalisms have
left their imprint on the Canadian welfare state. Because they act as institutional filters through which wider political and economic pressures
flow, it is difficult to isolate precisely their independent influence on
policy outcomes. It is, however, possible to identify the incentives and
constraints embedded in each model and determine the direction of
its influence. At a minimum, the three models of federalism remain an
essential part of explanations for the different ideological trajectories
of income security and healthcare and the uneven impact of both restructuring and reinvestment in recent decades.
Evaluating the three federalisms in light of the normative criteria
adopted in this volume – performance, effectiveness, and legitimacy –
produces a mixed report. The classical model, almost by definition,
comes closest to meeting traditional federal principles. It presumably
scores highest on issues of effectiveness in responding to regional diversities. The issue has always been whether this model establishes the
right balance between the claims of social citizenship – the belief that
all Canadians should be entitled to a comparable set of social rights and
benefits irrespective of where they live – and the belief that a federation
should enhance the scope for regional variation in social benefits. In
comparative terms, the Canadian welfare state leans towards giving
greater scope to regional variation; virtually all other federal states
among advanced democracies give more weight to the equal treatment of
citizens (Banting, 2006; Obinger, Leibfried, and Castles, 2005). Greater
regional variation results primarily because the federal government plays
a smaller role in social policy, and more programs fall in the exclusive
purview of provincial governments. But regional variation in benefits
also reflects the tendency for regionalism to creep into the design of
some federal programs. The most troublesome failure of the classical
model is undoubtedly the federal employment insurance program. A
basic rationale for central delivery of a program in any federation is to
ensure that citizens in similar circumstances are treated similarly, irrespective of where they live. By that standard, the federal unemployment
program fails spectacularly.
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At the other extreme, the joint-decision model can also be seen as
a strong version of another model of federalism. As we have seen, the
effect has been to buffer the C/QPP from the pressures for change
inherent in democratic politics. Defenders of the model might note
that over time the frustrations generated by joint decision-making have
been visited equally on advocates and opponents of the welfare state.
In the post-war decades, advocates of expansion regarded the formula
with despair; in the era of retrenchment, advocates of privatization have
faced similar disappointments; in the 2000s, the frustrations were initially
visited on expansionists until an unusual combination of electoral shifts
in 2015 led to reform, four decades after the “Great Pension Debate”
of the 1970s. Defenders of joint decision-making might also argue that
privileging stability makes sense in the field of pensions, where policies
require long-term horizons. The actual formula is undoubtedly too
exacting; there is no reason that contributory pensions should be more
difficult to change than most sections of the Constitution. Nevertheless,
the model does generate intergovernmental legitimacy, and the plans
governed by it enjoy strong public support.
Our greatest difficulties haunt the domain of shared-cost federalism. The legitimacy of this model has been under growing challenge,
particularly in healthcare. Federal intervention in healthcare is less
pervasive and less detailed in Canada than in any other advanced
federation, including the United States and Switzerland, yet its intervention generates more intergovernmental resentment (Banting
and Corbett, 2002). The country is paying a high price for the lack of
agreed federal–provincial decision rules, the ruptures of the 1990s,
and the unpredictability of federal decisions about growth in the
CHT since then.
Undoubtedly, the balance among the three models of federalism will
evolve in the future, as it has in the past. The shared-cost model may play
a smaller role in the years to come. Nevertheless, as long as Canadians
look to both levels of government to respond to the social problems they
confront, it is difficult to envisage any of the three models disappearing
completely from the world of social policy. It seems likely that pressures
for change in the Canadian welfare state will continue to flow through
three distinctive institutional filters, each with its own implications for
the future.
The Three Federalisms and Change in Social Policy
GLOSSARY
de-indexation The removal of an automatic increase in benefit levels to
compensate for the effects of inflation.
income-tested A benefit program in which the size of the payment declines
as the other income of the recipient increases. An example is the
Guaranteed Income Supplement received by low- and middle-income
elderly Canadians.
social assistance Often referred to as “welfare,” this is a benefit provided to
individuals without adequate income from all other sources. In Canada,
social assistance is provided by provincial governments (in Ontario with
the assistance of municipalities).
social insurance program A contributory program in which the eligibility
for benefit and the level of benefit depend on contributions made during
employment by the individual and their employers. Leading examples are
employment insurance and the Canada Pension Plan.
tax benefit An income-tested payment to individual beneficiaries delivered
through the taxation system. An example would be the Canada Child Benefit.
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———. 2012. “Introduction: Debating Employment Insurance.” In Making EI
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Banting, K., and S. Corbett. 2002. “Health Policy and Federalism: An
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Banting, K., and J. Myles. 2013. Inequality and the Fading of Redistributive Politics.
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———. 2016. “Framing the New Inequality: The Politics of Income
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Béland, D., and J. Myles. 2005. “Stasis Amidst Change: Canadian Pension
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———. 2006. “Slouching Toward the Bottom? Provincial Social Assistance
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C H A P T E R T W E LV E
Federalism and Universal Healthcare:
A Question of Performance and
Effectiveness
Herman Bakvis
For most Canadians, universal healthcare or medicare is one of the more
valued features of Canada’s social safety net, if not the most valued. A
2012 Environics survey found that 81 per cent of Canadians ranked
their healthcare system as the symbol very important to them as part
of their Canadian identity, ranking healthcare well above the flag, the
anthem, and the Charter of Rights and Freedoms. Healthcare also represents
the largest single expenditure item of provinces. Ranging from 30 to
46 per cent of provincial budgets, it typically dwarfs most other items
(Canadian Institute for Health Information [CIHI], 2016). Among
federal transfers to the provinces and territories, the Canada Health
Transfer (CHT) looms by far as the largest single transfer. It amounted
to $40.37 billion in 2019–20, more than double the federal transfer for
equalization ($19.84 billion) and almost three times the $14.59 billion
for the Canada Social Transfer (CST).
Yet despite the esteem in which medicare is held and the amount
spent on it by both levels of government, all is not well. As former
federal minister of health Jane Philpott (2015–17) describes it, “We
pay some of the highest costs in the world for health care and we’ve
got a middle-of-the-road health-care system” (quoted in Galloway and
Grant, 2016). Philpott was referring to a report issued by the Commonwealth Fund, a US health think tank, which ranked Canada near
the bottom on healthcare performance of eleven developed countries
(Davis et al., 2014).
Federalism and Universal Healthcare
Her statement came during a series of heated exchanges between
Ottawa and the provinces over the renewal of the healthcare accord originally struck with the provinces back in 2004 by the Paul Martin Liberal
government. The accord provided for annual increases of 6 per cent in
the CHT transfer. It was largely left in place by the Harper government
until late 2011 when then minister of finance Jim Flaherty announced
the annual rate of increase in the federal transfer would be reduced to
3 per cent starting in 2017. It was left to the Liberal government elected
in 2015 to decide whether to proceed with the planned reduction or to
negotiate a somewhat richer agreement, albeit with the hope of extracting
a commitment from the provinces for a greater degree of reform than
had hitherto occurred.
In voicing the concerns noted above, Dr. Philpott was echoing the
analyses and critiques not just by the Commonwealth Fund but several
other bodies and researchers as well. She was also very likely expressing
the deep frustration of many close observers at the seeming inability of
the Canadian federation to engage in any kind of meaningful reform
of Canadian universal healthcare even while most other systems, both
federal and unitary, have done so. It was this absence of change that led
Harvey Lazar and his colleagues (Lazar et al., 2013) to coin the term
“frozen paradigm.” Despite considerable changes in medical technologies and delivery, especially with respect to the use of prescription drugs,
the basic features of the medicare system launched more than fifty years
ago are still in place.
To what extent can the configuration of federal institutions and practices
in this area be held responsible for the “frozen” nature of the healthcare
system? In dealing with this question we will look at the constitutional
responsibilities for healthcare and the institutions and institutional dynamics involved (“performance”); the policy consequences, both outputs
and outcomes (“effectiveness”); and how the less than stellar performance of the system affects its current and future legitimacy. These three
categories – performance, effectiveness, and legitimacy – are discussed
in chapter 1. It is worth noting that while all three criteria are somewhat
subjective, the assessment is somewhat more straightforward in the case
of healthcare because there are considerable hard data. A good case can
be made that the healthcare delivered to Canadians is subpar compared
to many other advanced industrial democracies. As for performance, it
will be argued that intergovernmental relations in healthcare take the
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form of a two-level game involving a highly public multilateral process on
the one hand and a quiet bilateral process, involving mainly unelected
officials, on the other. This two-level game can be seen as responsible in
good part for keeping the paradigm in the deep freeze.
OVERVIEW: CANADA’S TEN SINGLE-PAYER HEALTH
INSURANCE SYSTEMS
Among the advanced industrial democracies with universal healthcare,
Canada and Britain are the only countries that rely on a single-payer
system to ensure universal coverage. Under this model, there is only a
single source of payments to healthcare providers, with the payer (the
government) determining the amount of the payment. The medical
provider is not allowed to receive additional payments from patients or
from other sources for what are called medically necessary services. The
single-payer system allows for a high level of control over monies spent
and reduced administrative costs. Typically, there are gaps in what the
government (the single payer) is willing to cover: non-medically necessary
medical procedures and prescription medications prescribed outside of
a hospital setting, for example. These optional services can be paid for by
non-government payers, such as private drug plans, or out of the patient’s
own pocket. The term single-payer is actually a bit of a misnomer insofar
as each provincial government constitutes a separate single payer, each
with their own list of medically necessary services. This system reflects
the fact that Canada is a federation where the provinces have primary
responsibility for healthcare delivery.
Having each province as a single payer allows for considerable variation in practices and outcomes. The Canada Health Act (1984) specifies
five principles or conditions that provincial/territorial governments
must meet in order to receive federal funding in support of healthcare:
accessibility, universality, public administration, comprehensiveness,
and portability. However, these conditions are defined in very broad
terms. Since the provinces are responsible for defining what constitutes
a medically necessary service, a concept that lies at the core of the five
principles, there can be considerable variation in both what services are
covered and what providers – physicians, for example – receive in the
way of remuneration for a particular service. The result is considerable
Federalism and Universal Healthcare
variation in the amount spent by provinces on healthcare on a per capita basis, ranging from $5,822 in Quebec to $7,256 in Newfoundland
and Labrador (CIHI, 2016: 37). There are also differences in the way
medical practitioners are regulated. In some provinces, like Ontario,
all practitioners fall under the financial remuneration scheme and in
effect must have a billing number or be paid a salary with no option for
practicing outside of the scheme. In other provinces, for example BC
and Quebec, practitioners can practice outside the scheme and directly
bill patients who then pay out of their own resources. There are also
variations in outcomes, for example, as measured with respect to wait
times for treatments (Barua and Moir, 2019; CIHI, 2019).
The greatest variation can be found in coverage for prescription drugs.
In most provinces the majority of citizens have a drug plan through their
employer, have their own private insurance plan, or simply pay out of their
own pocket. However, in Quebec everyone is required to have an insurance plan through their employer and, if that is unavailable, participate
in a government-sponsored plan. Other provinces provide coverage to
those on social assistance and to a lesser extent to those below a certain
income level or to senior citizens. All provinces have some sort of plan
to cover hugely expensive drugs for rare or highly complex diseases. But
here too there is variation, with some drugs covered in certain provinces
but not in others. A person suffering one of these diseases in one province may be fortunate to have their treatment covered while someone
else with the identical disease in another province may be out of luck.
This kind of variability in coverage is often cited as one of the flaws of
federalism. At the same time, as with differences in overall spending on
healthcare, federalism can also be seen as a positive feature that allows
provincial populations to decide what package of services best serves
their particular needs. Another positive aspect is the role of provinces
as innovators, which was certainly the case in the genesis of universal
healthcare. Beginning with universal hospital insurance in the 1940s, the
province of Saskatchewan extended coverage to physicians’ services in
1962, a model that subsequently served as a template for the country as a
whole. A Royal Commission on Health Services struck by the Progressive
Conservative government of John Diefenbaker in 1961 delivered its report in 1964 recommending the Saskatchewan model for the rest of the
country. The minority Liberal government of Lester Pearson, with strong
support from the NDP in Parliament, accepted the recommendation
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and in 1966 passed the Medical Care Act with implementation beginning
in 1968. The role played by Saskatchewan is an interesting example of
policy innovation and diffusion in a federal system. It also underscored
the challenges faced by provincial governments in being on the front line
in the delivery of healthcare: upon the launch of medicare in 1962 the
province’s doctors went on strike, leaving a bitter legacy for a number
of years thereafter (Badgley and Wolfe, 1967).
The Saskatchewan strike notwithstanding, the introduction of medicare
did not necessarily represent a sharp break with the past. Prior to the
Second World War provinces had studied the issue of health insurance
through commissions and the like. During the 1930s, Alberta and BC
actually passed health insurance legislation, although neither enacted it.
Ottawa in turn had financially supported the construction of hospitals,
public health initiatives, and professional training through shared-cost
programs since the 1940s. In 1957 the federal Hospital Insurance and
Diagnostic Services Act provided for 50/50 cost-sharing for provincial and
territorial hospital insurance plans. This legislation was in effect extended
in 1966 to cover physicians’ services. At about the same time the federal
equalization program for the have-not provinces was enriched by incorporating into the formula a wider range of provincial revenue sources
for purposes of calculating the fiscal capacity of the have-not provinces.
This new formula increased the amount of money that these provinces
could put towards healthcare, thereby increasing their capacity to match
federal funding under cost-shared programs (Simeon and Miller, 1980).
Still, the richer provinces were in a better position to take advantage of
these funding arrangements, and so inequalities between provinces in
healthcare spending capacity remained.
In 1977 cost-sharing was replaced by block-funding under an arrangement called Established Programs Financing (EPF). It provided
provinces with a fixed sum every year, based on the 1976–7 allocation
with annual adjustments for inflation. There was one additional feature:
rather than 100 per cent cash, half of the transfer would be in cash and
the other half in the form of tax points; that is, Ottawa would reduce
its personal income and corporate tax rates so that the provinces could
increase their tax rate to the equivalent of the funds that they previously
received in cash. This tax point transfer technique had already been used
by Ottawa as part of opting-out arrangements with Quebec in the 1960s.
The tax points, however, were clearly more valuable to “have” provinces
Federalism and Universal Healthcare
such as Alberta and Ontario, whose tax bases were much more lucrative.
To make the tax-transfer acceptable to the have-not provinces, the tax
points in question were “equalized” to make them more valuable with
the additional money tied directly to the equalization scheme. Additional
transitional payments were also negotiated as part of the bargaining to
get the provinces to buy in.
This shift from cost-shared to block grants and the use of tax points
became the starting point of a narrative that has played a key part in
later conflicts between Ottawa and the provinces. For many years as part
of its annual budget statements, Ottawa duly calculated the healthcare
transfers (along with those for post-secondary education) as including
the value of the tax points. The provinces in turn took into account only
the cash portion. In subsequent years they focused mainly on the fact
that while Ottawa once covered 50 per cent of healthcare costs in cash,
it was now covering only 25 per cent or less in cash. When asked about
the tax points the not atypical provincial response was “Tax points, what
tax points?”
In the following years some changes were made in the way the block
grants were labelled and structured. Initially EPF covered both healthcare
and post-secondary education (PSE) with no formal distinction between
the two, although the assumption was that the bulk of funding would be
allocated to health, consistent with the pattern of cost-shared transfers
prior to 1977. Provinces were free to spend as little or as much as they
wished of their block grants on health and PSE as long as they adhered
to the five principles. In fact, they could divert EPF monies to areas other
than health and PSE if the five conditions were met.
The initial period from 1977 to the early 1980s saw significant increases
in the EPF entitlements. The amounts were more than the provinces,
especially the have-not provinces, were anticipating, in part because of
the various transition payments and other sweeteners offered by Ottawa
to entice the provinces into participating. However, one of Ottawa’s
objectives in moving to block funding was not being met. Under EPF,
it hoped to cap the amount being transferred, something it had been
unable to do with the open-ended nature of the previous cost-sharing
regime and the requirement to match provincial funding even if it
meant contributing more than anticipated. Rather than saving, the
federal government was spending more than projected under EPF. It
is estimated that in 1982 the EPF transfer, including both the cash and
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tax point components, represented 52 per cent of eligible program
costs for health and PSE (Madore, 1997). Thus in 1982, with greater
than anticipated expenditures, Ottawa started to crank back the rate
of increases. In 1995, it actually reduced the overall transfer for health,
PSE, and the Canada Assistance Plan (CAP) and then combined the
three into a single block transfer called the Canada Health and Social
Transfer (CHST). CAP had been the last remaining sizeable cost-shared
social transfer. A number of conditions associated with the old CAP were
dropped so that provinces could now reallocate a good portion of what
used to be CAP money to health. In 2006 the CHST was divided into
two separate blocks entitled the Canada Health Transfer (CHT) and the
Canada Social Transfer (CST) for PSE and social assistance.
In 1977 there were only the five basic conditions, cast in very general
terms. The requirement for the “public administration” of healthcare
delivery, for example, even before the era of outsourcing and new public management, was rather ambiguous. The one problematic area was
extra-billing. For several years many physicians would collect a relatively
small additional fee from each patient. By the 1980s, however, in certain
specialties this extra-billing became quite substantial. By 1984 Parliament
passed the new Canada Health Act (CHA), supported by both government
and opposition parties, which included a ban on extra-billing and the
proviso that any amount of extra-billing would be clawed back from
the province’s block funding entitlement. The following decades saw
healthcare agreements between Ottawa and the provinces and territories
in 1999, 2004, and 2016–17 concerning wait-lists and the like, but above
all funding. None of these agreements altered the Canada Health Act.
It remains the last piece of federal legislation to intervene directly into
provincial healthcare responsibilities.
PERFORMANCE: INSTITUTIONS, PROCESSES, AND
FLEXIBILITY
As pointed out in chapter 11, the healthcare area is a classic example
of self-rule where the two main orders of government often proceed
on the basis of unilateral action without bothering to coordinate with
one another. Under section 92(7) of the Constitution the provinces
are responsible for and have jurisdiction over “The Establishment,
Federalism and Universal Healthcare
Maintenance, and Management of Hospitals, Asylums, Charities, and
Eleemosynary Institutions in and for the Province, other than Marine
Hospitals.” Coupled with section 92(13) on property and civil rights and
section 92(16) on matters of a merely local or private nature, these sections of the Constitution Act, 1867 have been accepted by the courts and
federal and provincial governments as providing the basis for primarily
provincial jurisdiction in this field. The federal government in turn has
depended over the years on the criminal law power (section 91(27)),
its responsibility for Indigenous people (section 91(24), “Indians, and
Lands reserved for the Indians”), and, above all, its spending power (see
Watts, 1999, and discussion in chapters 10 and 11).
Over the years the spending power has been one of the more powerful
policy instruments available to Ottawa to influence provincial policies,
not just in healthcare but in a host of social and economic policy fields.
It was used to set conditions as part of cost-shared transfers for hospital
construction and insurance in 1953 and later with medicare in 1968.
Specific conditions were largely dropped in 1977 with the arrival of EPF.
However, in 1984 Ottawa backtracked by passing the Canada Health Act;
it reinforced the principle of universal access by banning extra-billing
with the specific proviso that any such fees would be subtracted from
the provincial health transfer. But in general Ottawa was reluctant to
use such specific measures, if only because of their sensitivity to Quebec.
Instead, Ottawa’s general strategy was to try to extract commitments from
the provinces on issues like wait-list reductions by using the promise of
additional funding. The exceptions were in 1982 and 1995 when Ottawa
unilaterally reduced funding; the provinces were understandably not in
a mood to entertain such requests.
Not too long before the 1997 federal election, the Liberal government
began to restore some of the cuts made in 1995–6. That year also saw the
beginning of a pattern whereby, with the exception of the Harper government (2006–15), Ottawa reached agreements or at least understandings
with the provinces following multilateral negotiations. Starting in 1999,
as part of the social union framework (SUFA) negotiations, Ottawa and
the provinces reached a five-year accord on health funding that restored
most of the previous cuts and provided for a basic CHST floor that would
rise over time (Boismenu and Graefe, 2004). Provinces made a commitment to greater accountability and new forms of healthcare delivery.
However, notwithstanding Ottawa’s push for a more robust reporting
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regime, there were no formal requirements imposed on provinces for
reporting on results other than to their own citizens. In 2003 Ottawa
and the provinces reached agreement on a $34.8 billion healthcare
renewal accord over five years with almost half the money focused on
primary healthcare, home care, and catastrophic drug coverage (Fafard,
2013: 36). The accord included additional commitments for reporting
and the development of further performance indicators. These provisions
were consistent with the recommendations of the 2002 Commission on
the Future of Health Care in Canada (Canada, 2002, generally referred
to as the Romanow Report), which had urged that increased health
transfers be linked to greater transparency and accountability. In 2003,
the Health Council of Canada, composed of representatives appointed
by the provincial and federal governments, was created and tasked with
reporting on the implementation of the 2003 and later the 2004 accords,
including the performance indicators. Alberta and Quebec declined to
participate in the Council.
Likely the most important agreement of the decade was the 2004
Martin health accord. It featured a “10-Year Plan to Strengthen Health
Care” (Canada, 2004) with a federal commitment to boost the health
transfer to the provinces and territories annually by 6 per cent over the
ten-year period plus a Wait Times Reduction Fund of $4.5 billion over
six years. The 2004 accord was more explicit on the issue of performance
indicators with a commitment by all parties to develop specific indicators
on wait times. There was one other feature worth noting: Quebec was
given more latitude in how the additional transfers could be spent and
how the performance indicators were to be interpreted. This preferential
treatment of Quebec, agreed to not only by Ottawa but also by the other
provinces and territories, reflected the province’s unique asymmetrical
position in the healthcare field.
After the 2006 federal election the Harper government maintained
the Martin health accord, including its 6 per cent escalator. Indeed,
in the 2007 budget the Conservative government provided an extra
$612 million to help provinces implement more quickly the wait time
guarantees in the Martin accord. However, as Fafard (2013) notes, Ontario was the only province to implement anything remotely resembling
a wait time benchmark with a protocol allowing patients to complain.
The Health Council, the third-party agency ostensibly tasked with overseeing the implementation and monitoring of performance measures,
Federalism and Universal Healthcare
including those for wait times, was left in the dark as to definitions and
expectations pertaining to these guarantees. After the 2008 election it
became clear that the Harper government had little or no interest in
holding the provinces’ feet to the fire regarding wait times or even the
basic provisions in the Canada Health Act. In March 2014 the Health
Council of Canada was abolished.
One adjustment made by the Harper government, in the name of
“equality,” was to make the annual cash transfer payment to each province identical on a per capita basis. In doing so, however, it ignored
the original rationale for the differential in the per capita amounts. As
noted earlier, it had reflected in part the tax points allocation under
the original 1977 EPF arrangement, where it was recognized that these
tax points were worth more to well-off provinces and less to the fiscally
weaker provinces. These “equalized tax points” resulted in the less well-off
provinces receiving more cash in their per capita payments. With the putative disparity in the per capita health transfers eliminated, the province
of Alberta saw its payments jump by approximately 50 per cent whereas
most other provinces, and especially the smaller provinces, saw their
payments remain static (Wingrove, 2012). Since these latter provinces
had older populations and more challenging conditions, the move to
equal per capita payments effectively undermined the potential for even
a partially needs-based transfer system (Marchildon and Mou, 2014).
Although the Harper government left the 2004 Martin agreement
intact, it was a different story when it came to negotiating a successor
agreement. In fact, there were no negotiations at all as the Harper
government reverted back to unilateralism. In December 2011, during
a federal–provincial meeting of finance ministers, the federal minister
of finance handed each provincial minister an envelope containing a
summary of the amount in CHT transfers their province could count
on over the next decade. While the specific sums varied for each province, the basic message was the same: maintenance of the 6 per cent
escalator till 2016–17; thereafter it would be reduced to either 3 per
cent or the rate of increase in nominal GDP, whichever was greater. It
was also made clear that the offer was non-negotiable. The entities most
surprised at the unilateral reduction in the annual CHT increase were
not the provincial governments but the various advocacy groups seeking
to protect and enhance medicare. They were hoping to use the renewal
negotiations as an opportunity to lobby for improved federal oversight
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of medicare as well as more stringent conditions or, alternatively, for a
greater role by the private sector. The reaction from the provinces was
varied. Then Liberal premier of Ontario Dalton McGuinty stated his
willingness to accept more conditions from Ottawa if the 6 per cent was
maintained (CBC, 2012). The BC premier, Christy Clark, on the other
hand, while regretting the reduction in the escalator, noted that Ottawa
was essentially “vacating the policy field for premiers.... To me, this is
really a huge opportunity for premiers to step up and to take the reins
on health care” (quoted in Kennedy, 2012).
The opportunity to which Premier Clark alluded was the Harper
government’s willingness to ignore the various provisions of the CHA,
particularly those on extra-billing. As Harper himself noted in 2009, “I
don’t lecture the provinces publicly on how they should be running their
health care systems” (quoted in Fafard, 2013: 40). At the same time, when
it became apparent that the Harper government was unlikely to budge,
the premiers began to adjust to a new fiscal reality, both on their own
and through the Council of the Federation (CoF). One area was generic
drugs, where Canadian prices are among the highest in the world. The
CoF struck a Health Care Innovation Working Group. Chaired by the
premiers of PEI and Saskatchewan, its task was to examine generic drug
outlays as well as clinical practice, team-based healthcare, and health
human resource management initiatives with the view to achieving
better outcomes at lower costs. Their efforts led to the launch of the
“Pan-Canadian Competitive Value Price Initiative for Generic Drugs”
covering a limited number of generics, fourteen by 2015. The result has
been major reductions in what provincial plans pay for generics (i.e.,
plans funded directly by provincial governments for seniors or those
on social assistance). However, there is considerable variation from
province to province. In some but not all provinces the cap on pricing
applies to private plans as well. And some provinces, BC for example,
allow exemptions for certain generics (Lexchin, 2015).
The Justin Trudeau Liberal government assumed office in 2015
having campaigned on striking a new health accord with the provinces
that would “make home care more available, prescription drugs more
affordable, and mental health care more accessible” (Liberal Party of
Canada, 2015). The party had promised a long-term agreement on
funding and an investment of $3 billion over four years into “more and
better home care.” It also signalled an intention to help improve access to
Federalism and Universal Healthcare
prescription medications while stopping short of promising pharmacare.
It further stated that collaborative leadership and sunny ways, the factor
“missing during the Harper decade,” would be the critical ingredients
in bringing about the new accord.
Negotiations between the new federal minister of health, Jane Philpott, and her provincial counterparts proceeded on a positive note,
facilitated by the provinces’ anticipation of a more flexible and generous approach to funding by Ottawa. It became apparent, however,
that the Trudeau government’s position was actually much closer to
Harper’s 3.0 per cent escalator than the provinces’ requested 5.2 per
cent. The Trudeau government’s offer was subsequently bumped up to
3.5 per cent, coupled with additional targeted funding for home care
and mental health. Negotiations hit a low point when the premiers, at
their CoF meeting in the summer of 2016, issued statements voicing
their traditional complaint about Ottawa grossly underfunding healthcare. Quebec was particularly concerned over conditions that Ottawa
was planning to impose on the targeted funds for home care and
mental health. All provinces were firm that they were best positioned
to decide how federal health dollars should be spent. On the eve of a
meeting with her provincial counterparts in October, federal health
minister Philpott, in turn, stated that Canada had a middle-of-the-road
healthcare system for which it paid “some of the highest costs in the
world.” The prime minister himself told Le Devoir that “Canadians
expect that any new money invested in health by the federal government is actually spent on health by the provinces and not on tax cuts
or I-don’t-know-what [other] programs” (quoted in Yakabuski, 2016),
implying that provinces were redirecting federal health transfers for
other purposes. Ultimately there was no agreement. The Ontario health
minister spoke of a “declining partnership” with Ottawa, and the Quebec health minister stated that the provinces now faced an imminent
“cut of $60 billion of funding from the federal government over the
next 10 years” (Harris and Zimonjic, 2016). The latter calculation was
presumably based on the assumption of the escalator continuing at
6 per cent over that period.
The premiers failed to put the issue of healthcare on the agenda of
the first ministers’ meeting called by the prime minister to discuss the
proposed Pan-Canadian Framework on Climate Change (see chapter
14). Trudeau indicated healthcare issues would be discussed at the
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ministerial meeting of finance ministers later that month. The territories
and nine of the provinces did sign off on the communique announcing
adoption of the “Pan-Canadian Framework on Clean Growth and Climate
Change” – with the note at the end that “Saskatchewan is not adopting
the Pan-Canadian Framework” (Canada, 2016). Manitoba declined to
sign the communique, with its premier stating that his refusal was tied
explicitly to the proposed 50 per cent reduction in the healthcare transfer
escalator (Kirkup, 2016).
The promised renewed healthcare talks did take place at the December meeting of finance ministers, joined by the health ministers, where
the federal minister of finance bumped his offer of targeted funding
for home care and mental health up to $11.5 billion in addition to the
earlier announced 3.5 per cent annual escalator. This increased offer,
however, was not enough for the provinces, who termed it an unacceptable
ultimatum. The meeting ended with federal finance minister Morneau,
flanked by the federal health minister, announcing that the offer was
off the table and that the escalator would simply revert to 3 per cent as
per the original Harper government proposal with no extra targeted
funding (Tasker, 2016).
The united front presented by the provinces was not all that it seemed,
however. A few days after the December meeting, the New Brunswick minister of finance indicated her province would be interested in a bilateral
agreement (Tasker, 2016) and, indeed, three days later consummated
a deal with Ottawa. Within two months all the remaining provinces and
territories save Manitoba reached bilateral agreements as well. Then in
August of 2017 Manitoba announced it had an agreement, protesting that
it had had little choice in light of the other provinces having forsaken
the united front (CBC, 2017a).
A Two-Level Game?
The speed with which these bilateral agreements were concluded, coupled with the fact that each of the agreements was tailored to individual
provinces, suggests that detailed negotiations on these agreements had
long been underway before the collapse of the multilateral phase. In
other words, all the signs point to the presence of an ongoing two-level
game: on the one hand, the two sides cling to their narratives both in
public statements and in multilateral meetings of health and finance
Federalism and Universal Healthcare
ministers; on the other hand, officials are quietly working away on assembling detailed packages that include additional monies beyond the
3 per cent escalator allocated to areas that are of particular importance
to each province (e.g., home care, drug addiction, or mental health).
The total value of these packages is difficult to estimate since the monies
for the areas beyond those covered by the 3 per cent escalator are being
phased in at different stages with most of the funding arriving later in
the agreement rather than at the beginning. Nonetheless, the individual
agreements appear to be worth between 4.6 and 4.8 per cent, short of
the 5.2 per cent demanded by the premiers but well above the 3.0 per
cent that the Harper government had ordained. However, the additional
monies for drug addiction and the like are not considered part of the
3.0 per cent escalator under the CHT; the latter only covers costs related
to physician services, diagnostic procedures, and hospitalization.
If one measure of performance is the capacity of the system to produce
agreements and maintain communication among governments, then
the system can be said to be reasonably successful. However, as Inwood,
Johns, and O’Reilly (2011) point out, the amount of energy consumed
in getting to these agreements, which simply boil down to how much
money will be transferred to the provinces, means there is “little time
and energy for any major restructuring projects within the health sector.
And while provinces and territories argued that any restructuring of the
sector falls under their jurisdiction alone, it is not clear they have the
capacity to engage in such a large scale project” (301).
Even from the perspective of maintaining the status quo – and assuming that the status quo includes the penalties for extra-billing embedded
in the CHA – the system is woefully inadequate. The problem here is
illustrated by the 2017 bilateral healthcare agreement with Saskatchewan.
Since March of 2016 the Saskatchewan government has allowed private
clinics to provide MRIs to patients on a self-pay basis with the proviso
that the clinics would provide a “free” MRI to a patient on the public
wait-list for each sold privately (Mason, 2017). Federal health minister
Philpott, in a November 2016 letter to the Saskatchewan health minister,
stated that this practice was “bad policy” and “bad medicine” and in violation of the Canada Health Act (Star-Phoenix, 2016). The Saskatchewan
government nonetheless vowed to continue the practice. Less than two
months later Ottawa and Saskatchewan concluded a healthcare agreement
that, in addition to the 3 per cent escalator, will see additional monies
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for healthcare and mental health. Almost simultaneously the Saskatchewan government announced that it had also reached a separate deal
whereby Ottawa agreed that the province would be allowed to continue
its “twofers” MRI policy for an additional year, “giving the province time
to prove that private MRIs don’t hurt the public health-care system”
(CBC, 2017b). Three years later the province not only had its twofer
policy still in place but was actively recruiting a private clinic to expand
the service to the city of Saskatoon.
Since the bilateral agreements were struck, the federal minister of
health periodically alerts provinces of possible violations of the CHA.
Delivered in the form of public letters and in the annual reports on
the Canada Health Act published by the federal Department of Health,
these alerts do not always have the desired effect. For several years a
number of physicians across the country but particularly in BC have
been extra-billing through private clinics by charging consultation
fees and the like. Up to 2016–17 BC had been penalized by the federal
government for extra-billing, amounting to a little less than $1 million
a year, despite extra-billing entailing amounts several times that number (Tomlinson, 2017). In 2017–18 the amount penalized went up
to $15 million and in 2018–19 to $16 million, the change coinciding
with the election of an NDP government in 2017, which appears more
conscientious in reporting instances of extra-billing to Ottawa. Ottawa
is entirely dependent on the provinces for data on extra-billing; it has
no monitoring capacity of its own. In 2018 BC announced that it would
fully implement and enforce the province’s Medicare Protection Act (British
Columbia, 1996, but never implemented), which parallels the Canada
Health Act with respect to billing practices and the like. However, in
the spring of 2019 the NDP government delayed enforcement of the
act. One of the reasons was that many of the private clinics in question
were also delivering surgical services under contract with the provincial
health authorities for medicare patients. These surgical services would
have been jeopardized, since the fees received from private patients
effectively subsidized the contracts with the health authorities. In brief,
in a number of provinces at least, informal arrangements and practices
surrounding billing and extra-billing, often tolerated by governments,
have become embedded in the healthcare delivery system over time.
Serious disruptions to healthcare services would likely occur if efforts
are made to alter those practices.
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EFFECTIVENESS
Despite the public acrimony, and with the exception of the Harper
period – when there was little engagement between Ottawa and the
provinces and territories on social policy – for close to three decades the
two orders of government have generally been able come to some sort of
agreement on healthcare, on either a multilateral or a bilateral basis. If
performance is assessed in terms of the capacity to reach agreements and
maintain communication, then intergovernmental healthcare merits at
least a qualified “good” rating. Moreover, even though relations between
federal and provincial ministers are often fraught, at the level of officials
the all-important trust ties appear to be intact, as witnessed by how quickly
the bilateral agreements were put together after the multilateral phase of
the negotiations broke down in 2016. Note that the officials in question
were not just those in departments and ministries of health but also those
in finance and treasury departments, given that the ultimate concern for
governments is the amount of money that ends up being transferred.
Moving from outputs (performance) to outcomes (effectiveness),
however, the picture looks rather different. While initially the current
paradigm provided close to universal coverage, this is far from the case
today given the numerous developments in healthcare delivery, particularly with respect to the use of pharmaceuticals, the cost of which
now exceeds that for physician services. Among the top eleven OECD
countries providing universal healthcare, Canada is the only country that
lacks universal coverage for prescription drugs. Further, while Canada
ranks above the mean in terms of per capita healthcare expenditures,
it only ranks tenth out of eleven OECD countries examined by the
Commonwealth Fund (Davis et al., 2014; see also CIHI, 2016; Picard,
2017; and Tuohy, 2013) on measures such as access and quality. One of
the points stressed by the healthcare journalist André Picard (2017) is
that in Canada it is not quality of care as much as access to it that is the
culprit. Wait-lists for common surgeries and diagnostic procedures and
difficulties in finding a family physician are well-known concerns, and
subpar performance in these respects is confirmed by comparative data.
In other areas of access Canada also scores surprisingly low. For example,
with only 0.4 rural physicians per 1,000 population, it is well below the
ratio of 1.3 for the next lowest country (Germany) and the overall mean
ratio of 2.1 (Papanicolas, Woskie, and Jha, 2018: 1037).
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Two impacts of the lack of healthcare access noted earlier are (1) a
number of clinics and physicians extra-bill directly or indirectly for improved access to wait-lists, and (2) patients seek ways to bypass wait-lists,
sometimes to the extent of going abroad for medical treatment. Both
practices have become part and parcel of the healthcare delivery system
with the tacit acceptance of both levels of government. Although the fact
that the overall proportion of patients affected is relatively low and concentrated mainly in the western provinces and in certain subspecialties,
this may be cold comfort to those affected patients who pay several
thousands of dollars for medical care because they see little alternative.
Access to prescription drugs is far more complex and problematic.
The main issues are the cost of pharmaceuticals and insurance coverage, and the absence of a universal pharmacare plan.1 As noted earlier,
full or partial access to publicly funded prescription medications varies
from province to province, but overall it tends to be restricted to seniors,
the working poor, and those on social assistance. The only exception
is Quebec, where everyone is required to have insurance and a government plan is available for those lacking an employer-provided plan. Most
Canadians and their families obtain coverage through private, mainly
employer-provided plans. Approximately 20 per cent of Canadians pay
out of their own pocket for prescribed drugs. One major gap affecting
most Canadians is the cost of and access to drugs for rare, orphan diseases
where pharmaceutical companies either have developed new, highly specialized treatments or have a lock on a medication that effectively allows
them to charge monopoly prices. The area of greatest concern is the
arrival of biologics: drugs created through biological processes in living
cells for treatment of diseases such as arthritis and colitis. Biologics are
very expensive, in part due to pharmaceutical companies understandably wishing to recoup their considerable investments in them and to
maximize their pricing power.
Virtually all provinces are subsidizing biologic and orphan disease
drug costs, which can easily reach seven figures, for patients deemed to
need them. Drug companies have reached pricing agreements with most
provincial governments that in some cases include not only the drug
but also the infrastructure for delivering it to patients, such as infusion
clinics and equipment installed in doctors’ offices. These arrangements,
however, raise a host of problems. In particular, the required confidentiality of pricing agreements with respect to these drugs can stymie the
Federalism and Universal Healthcare
efforts of provinces to co-operate on bulk purchases, including via the
pan-Canadian Pharmaceutical Alliance (pCPA) formed in 2012.2 Critically, the vacuum resulting from the lack of a systematic funding regime
for these drugs means that provincial governments often end up heavily
subsidizing the infrastructure developed by these companies at a cost
much higher than if the governments simply purchased and delivered
the comparable biosimilars directly (Grant, 2018a, 2018b).
The government of Canada has jurisdiction over pharmaceuticals; its
authority over criminal law allows it to regulate the sale of drugs, medical devices, and related products through the Food and Drugs Act, the
Controlled Drugs and Substances Act, and the Criminal Code. Essentially, the
Department of Health in the government of Canada evaluates all drugs
and, once approved, regulates their sale, including pricing. Thus, the
government of Canada is responsible for drug prices, both generic and
brand-name, and thus for the fact that they tend to be much higher in
Canada than in other countries (except the United States). In 1987, the
federal government created the Patented Medicines Prices Review Board
(PMPRB) as an arms-length quasi-judicial agency, making it responsible
for setting a ceiling on prices charged for patented drugs using the listed
retail price.3 One of the key yardsticks used by the PMPRB in setting
its ceiling price is the price for the same medicine in other countries
(Canada, 2018). As of July 2020, with the aim of substantially reducing
the costs of brand-name drugs (Canada, 2019b), changes effected by the
government of Canada expand the number of comparator countries and
no longer include the two countries with the highest pharmaceutical
drug prices. Although two provinces – Ontario and Quebec – voiced
concern that these changes would hurt their provinces’ pharmaceutical
industry and reduce access to new drugs (Lampert and Martell, 2019),
other provinces, like BC, publicly welcomed the changes. The quiescence
of other provinces likely reflected the fact that since provinces bear the
major burden of funding prescription drugs, they were happy to see the
clampdown on costs.
The example of the PMPRB reducing the ceiling on pharmaceutical
pricing shows the paradigm is not completely frozen; some change is
possible. The challenge, however, will come with the national pharmacare scheme promised by the Liberals in the October 2019 federal
election campaign and subsequently announced in the Throne Speech
in November 2019. The Liberal government’s announcement also
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endorses the recommendation of the Report of the Advisory Council on
the Implementation of National Pharmacare (Canada, 2019a). Appointed
by the federal government in 2018, the advisory council recommended
the establishment of a universal, single-payer, public pharmacare system consistent with the five principles of the Canada Health Act. The
Hoskins Report (named after its chair) recommended the creation of a
single arms-length agency, reporting to both Ottawa and the provinces,
responsible for first creating a national formulary and, subsequently,
negotiating with drug manufacturers.
For their part, the provinces have long signalled their opposition to
a single, national pharmacare plan and agency. Most provinces already
have at least partial pharmacare schemes in place, and Ottawa itself has
no infrastructure at all for delivery of such a program. Furthermore,
many question whether Ottawa has the capability to build and run such
a system. At the annual Council of the Federation meeting in 2018,
premiers indicated that they reserve the right to opt out of any national
scheme that Ottawa introduces: that is, they reserve the right to run their
own plan but at the same time collect their share of the monies Ottawa
would otherwise spend on the scheme (McGregor, 2018). For Quebec, a
national plan subsuming the current Quebec plan would be a non-starter.
In December 2019 the Council of the Federation repeated its stance that
provinces should have the right to opt out of any national pharmacare
scheme. Furthermore, notwithstanding the bilateral healthcare agreements
they signed two years earlier, complete with extra funding for home care
and the like, the premiers reverted to their initial demand of 2016 that
Ottawa increase the annual healthcare transfer escalator from 3.0 per
cent to 5.2 per cent. Furthermore, the provinces have now staked out
this increase as a basic precondition for engaging in any discussions of
pharmacare (Picard, 2019).
LEGITIMACY
As noted at the outset of this chapter, Canadians rank universal medicare
at the pinnacle of those government institutions and programs they
value most highly. Public opinion polls show that a strong majority of
Canadians find that “medicare embodies Canadian values” (Lazar, 2013:
17). Thus, its very existence yields a high level of legitimacy in and of
Federalism and Universal Healthcare
itself. But one needs to be mindful of the irony recognized by Monique
Bégin, a former federal health minister, that medicare has become so
powerful a symbol as to restrict opportunities for meaningful changes.
In other words, there may be too much legitimacy for medicare’s own
good (Lazar, 2013).
To say Canadians place a high value on the idea and existence of
medicare is not to say healthcare possesses process legitimacy and output
legitimacy. Public opinion data collected over the years show varying levels
of satisfaction on both those dimensions. Mathew Mendelsohn (2002),
in a careful review of polling responses to the question “What is the most
important issue facing Canadians?” found that while healthcare as an
issue barely registered in the early 1980s, by 2000 it regularly appeared at
or near the top of “most important” issues in various polls. In 2019 polls
showed healthcare vying with the economy and climate change on the
“most important issue” question. Data over the past decade on specific
aspects of healthcare show concerns over wait-lists and access to doctors
trending upwards year over year (McGill University, 2018). These more
specific data coincide with findings that Canada compares poorly with
other countries on access and that the gap is widening. Certainly, when
it comes to output legitimacy, healthcare is well below average compared
to other policy and program areas (see chapter 17).
Process legitimacy is much more complex. The term primarily denotes
the extent to which groups and citizens feel able to participate in the
deliberations of government that shape policies in the area. In many
ways the healthcare sector has provided plenty of participation opportunities, as over the years both levels of government have organized
numerous task forces, inquiry commissions, and Royal Commissions,
which have been open to groups and citizens to submit briefs or make
an appearance at hearings. Yet in the main these commissions and
task forces have had little impact, as governments have either ignored
their recommendations or felt unable to act upon them. The renewal
of federal–provincial healthcare accords has also been an opportunity
for advocacy groups to lobby the governments involved. However, the
2011 surprise unilateral announcement on funding levels denied the
opportunity for broader citizen input.
There is considerable polarization among advocacy groups, and
this polarization is much greater than found in the population at large
(Lazar, 2013). In his review of public opinion data, Mendelsohn (2002)
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found that Canadians had a reasonably nuanced view of what they could
expect by way of reform. They were, for example, ready to see more care
delivered by private-sector providers, as long as government was still controlling and paying the fees. Advocacy groups, however, divide on this
question, tending to favour either sole public delivery or allowing private
providers to charge additional fees beyond what government pays. As
noted above, the various commissions and the resulting studies, as well
as participation by groups and citizens, have resulted in little change.
UNFREEZING THE PARADIGM?
The Canadian federation’s proclivity for self-rule rather than shared
rule (see chapter 2) is particularly evident in the healthcare field, and
the result is arguably that Canada has not been well served by its current healthcare system. Despite spending about the same amount of
money as peer countries on a per capita basis, Canada’s healthcare lags
behind other countries on a number of key indicators, particularly those
related to access. Part of the blame can be attributed to the state of Canadian federalism in this particular policy domain. Insofar as the bulk
of healthcare jurisdiction resides with the provinces and the spending
power is the only meaningful lever available to the federal government,
the federal government has relatively little capacity either to manage
the healthcare system or to shape its direction. For their part, provinces
have little incentive to move away from the status quo.
The decade of the 2010s saw two developments of significance. First
was the 2011 announcement of the reduction in the CHT escalator from
6 to 3 per cent. It led provincial governments not only to warn their
citizens about reducing their expectation regarding medical services
but also to move with greater alacrity in seeking cost reductions in the
cost of prescription medications. Second was the change in the PMPRB
regulations governing the cost of medications, and the resulting likelihood of further reductions in the cost of medications.
In the 2020s, two further possible developments are in the offing.
First is the legal challenge in the BC courts to one of the core features
of medicare: namely the ban on extra-billing in the challenge by Cambie
Surgeries Corporation against the BC Ministry of Health and the BC
Attorney General. Should the case ultimately succeed, not only in the
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BC Supreme Court but also in the Supreme Court of Canada (SCC), it
could fundamentally alter the healthcare system. In one sense the likelihood of the case succeeding is low since, in the earlier 2005 Chaoulli
case (Chaoulli v. Attorney General of Quebec), the SCC has already decided
(against) many of the issues at stake in Cambie Surgeries. On the other
hand, according to Gerald Baier (chapter 4), the courts currently appear
to be more receptive to the Charter arguments being made in the Cambie
challenge, so the case may well have some impact. The second development, the introduction of universal pharmacare, would represent a
significant expansion of what constitutes universal healthcare in Canada.
However, given the extensive provincial objections, its implementation
might take up to a decade (Picard, 2019).
Some change to healthcare policy is still possible, as illustrated by the
regulatory changes introduced by the PMPRB and the earlier creation of
the Pan-Canadian Competitive Value Price Initiative for Generic Drugs
(as well as the broader Pan-Canadian Pharmaceutical Alliance), sparked
in part by the Harper government’s reduction in the healthcare transfer
escalator. These changes are marginal but still of some value. In the case
of universal pharmacare, the next decade will likely see protracted discussions and negotiations, their outcome likely turning on three main
factors: the partisan composition of governments; the effectiveness of
the narratives deployed by the two orders of government to sway public
opinion, particularly by the federal government, which has long been
outmanoeuvred by the provinces in these respects; and how the two-level
game is played. With respect to the last, bilateral negotiations between
Ottawa and individual provinces and territories are more likely to facilitate agreement than is a multilateral negotiation, which will be played
out in good part in public, aimed at a single agreement whose terms
apply to all provinces.
The most likely outcome of a successful negotiation is unlikely to be
a single, national agency or plan. Almost certainly, Quebec will have
its own agency, with federal funding. So too will at least some of the
other provinces. A national agency could provide a coordinating role
and possibly directly serve some of the have-not provinces. The overall
savings are unlikely to be on the scale that most healthcare analysts are
expecting or hope for (e.g., Morgan et al., 2015), and the scheme will
likely fall short in other areas. But the odds are that in another ten to
fifteen years there will be publicly funded pharmaceutical coverage for
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all Canadians, at which point the healthcare system will be truly universal
even while the basic healthcare paradigm remains largely intact.
NOTES
1 On why pharmacare has been such a difficult sell politically over the years,
see Boothe (2013).
2 See Grant (2018a) for a detailed examination of the marketing of one such
biologic, Remicade (infliximab), and its marketing in Canada by its manufacturer, Janssen, including how it disregarded requests from the pCPA not
to approach provinces with side deals.
3 Prior to 1987, the federal government relied on a compulsory licencing
scheme to control drug prices, under which any manufacturer could make
and sell a copy of a patented drug but paid a proportion of the revenues to
the patent holder.
GLOSSARY
Canada Health Act Passed in 1984 by the federal Parliament, it outlines the
five principles of universal healthcare (accessibility, universality, public
administration, comprehensiveness, and portability) and sets out the
limited conditions the provinces and territories must meet in order to
receive funding through the federal Canada Health Transfer, with the
prime condition being that the recipient units are not permitted to allow
extra-billing by physicians, clinics, or hospitals for medically necessary
services.
Canada Health Transfer The annual transfer from the federal government to
the provinces and territories to support healthcare delivered by the provinces
to their citizens. It is given as a block grant with the amount calculated on
an equal per capita basis. For 2019–20 the per capita amount was $2,096.
The value of the transfer for each province can be reduced by the amount
generated by extra-billing in that province since extra-billing is not permitted
under the Canada Health Act. Previously part of the Canada Health and Social
Transfer (CHST), it became self-standing as the CHT in 2004.
medicare The common albeit informal term used in Canada to refer to
publicly funded universal healthcare. In the US, Medicare is the formal
title of publicly funded healthcare for those over sixty-five.
Patented Medicines Prices Review Board (PMPRB) Created in 1987 as
an arms-length agency, the PMPRB is responsible for setting the factory
gate price (a form of retail pricing) for patented medications. For thirtythree years the board used a yardstick based on pricing regimes in seven
Federalism and Universal Healthcare
countries including two, Switzerland and the US, which generally have the
highest prices for determining the maximum price at which a patented
drug can be sold. While drugs in Canada were priced lower than in the
US, they were still significantly higher than in most countries. In 2020 the
board moved to a yardstick based on eleven countries, a set that excluded
Switzerland and the US but now included a number of new countries with
much lower prices.
pharmacare A general term denoting a publicly funded drug plan that
would cover all citizens rather than just those who enjoy coverage through
an employer-sponsored plan or who fall into a category of citizens deemed
to be in special need, such as the elderly or those on social assistance. The
absence of such a universal public plan in Canada is seen as a major gap
and makes Canada unique amongst virtually all OECD countries where
some variant of universal pharmacare is seen as the norm.
single-payer system A model for financing healthcare that relies on having a
single entity, in Canada’s case the government, pay for medically necessary
services and procedures to the exclusion of other entities such as private
insurers. Its chief benefit is low administrative costs and a strong capacity
for controlling costs. In Canada it is seen as the cornerstone of universal
healthcare. It is not a prerequisite for universal healthcare, however; other
countries have achieved universal healthcare using means other than
single-payer. The UK is the only other country that uses a single-payer
model, though in the US a number of Democratic aspirants for the 2020
presidential nomination championed a single-payer system.
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———. 2018b. “How a Little Known Agency Reveals the Web of Influence
between Patient Advocates and Big Pharma.” Globe and Mail, December 13,
2018.
Harris, K., and P. Zimonjic. 2016. “Health Ministers Wrap Tense Talks with No
Agreement on Federal Health Funding: Ottawa Plans to Reduce Annual
Increases in Health Transfers.” CBC, October 18, 2016.
Federalism and Universal Healthcare
Inwood, G.J., C.M. Johns, and P. O’Reilly. 2011. Intergovernmental Policy
Capacity in Canada: Inside the Worlds of Finance, Environment, Trade, and
Health. Montreal: McGill-Queen’s University Press.
Kennedy, M. 2012. “Premiers Divided over Harper’s Approach to Medicare.”
National Post, January 15, 2012.
Kirkup, K. 2016. “Manitoba Refuses to Sign Climate Framework over Health
Spending Concerns.” Canadian Press, December 9, 2016.
Lampert, A., and A. Martell. 2019. “Ontario and Quebec Pushed Back Against
Ottawa Proposal to Crackdown on Drug Price.” Globe and Mail, July 30,
2019.
Lazar, H. 2013. “Why Is It So Hard to Reform Health-Care Policy in Canada?”
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edited by H. Lazar, J.N. Lavis, P-G. Forest, and J. Church, 1–21. Montreal:
McGill-Queen’s University Press.
Lazar, H., J.N. Lavis, P-G. Forest, and J. Church, eds. 2013. Paradigm Freeze:
Why Is It So Hard to Reform Health-Care Policy in Canada?. Montreal: McGillQueen’s University Press.
Lexchin, J. 2015. “Drug Pricing in Canada.” In Pharmaceutical Prices in the 21st
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McGregor, J. 2018. “Premiers Call for ‘Voluntary’ Pharmacare Program
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Globe and Mail, October 19, 2016.
CHAPTER THIRTEEN
Federalism and Immigration
in Canada
Mireille Paquet
This chapter explores how immigration is currently managed through
Canada’s federal regime.1 As one of only two concurrent jurisdictions
in the 1867 British North America Act, immigration directly and indirectly involves the federal government and the provinces. Section 95
of the original 1867 BNA Act (now the Constitution Act, 1867) states that
provincial legislatures have the power to make immigration laws as
they pertain to the province and that “the Parliament of Canada may
from Time to Time make Laws in relation ... to Immigration into all or
any of the Provinces” (Canada, 1982). In cases where provincial laws
conflict with federal law, section 95 gives preponderance to acts of the
Parliament of Canada.2
Despite being a matter of concurrent jurisdiction under the Constitution, immigration only really started to be acted on as a shared jurisdiction
in the late 1990s. This chapter discusses and documents how Canada
has moved, since the late 1990s, from a regime dominated by Ottawa to
a regime in which the federal government and the provinces are both
involved through a rich web of intergovernmental relations, institutions,
and programs. This move corresponds to a federalization process: the
emergence of new actors or the modification of the status of those that
already have institutional or political legitimacy within a federal regime.
In the case of Canada’s immigration policies, federalization is the process
through which all provinces have emerged as legitimate actors in the
governance of immigration (Paquet, 2019).
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In 2017, 286,479 international immigrants became permanent
residents of Canada (Canada, 2018). For the purpose of this chapter,
international immigration refers to the process through which individuals change their country of residence, either in the long term or in
the short term (International Organization for Migration, 2017: 15). In
Canada, the management of international immigration occurs through
border control initiatives, immigrant selection mechanisms, and naturalization procedures. It also includes several immigrant settlement
and immigrant integration policies. Immigrant integration is broadly
defined as the process through which international immigrants adapt
themselves to their new country of residence. Integration policies may
focus on short-term transitional issues for new immigrants (e.g., finding
housing), medium- and long-term issues for immigrants (e.g., getting
educational credentials recognized), and may also target host societies
(e.g., build capacity for welcoming immigrants).
Because Canada is a settler state – a country built on the permanent
settlement of international arrivals and the colonial oppression of Indigenous peoples (Stasiulis and Yuval-Davis, 1995) – successive Canadian
governments have always been quite active in recruiting newcomers
and have remained anxious about their geographic settlement patterns.
As Canada gained more independence from the United Kingdom,
the relationship between immigrant integration and national identity
became an important concern. Canadian governments became increasingly involved in the provision of immigrant integration policies and
in the promotion of Canadian citizenship for nation-building (Jenson,
1997). The result has been a pattern of rich government involvement
in immigration-related matters. This involvement operates through the
concurrent immigration jurisdiction but also through other areas of
jurisdiction such as education, healthcare, or labour market management. Several of these areas of jurisdiction are provincial but some, such
as border control, remain unquestionably federal. Thus, immigration
governance in Canada requires a considerable amount of coordination
and collaboration between orders of governments.
The next pages explore the sources of this federalized immigration
regime and the challenges and opportunities associated with contemporary immigration governance in Canada. The first section describes
the different ways in which immigration interacts with federalism in
Canada, while the second section documents existing institutions and
Federalism and Immigration in Canada
intergovernmental practices in this policy sector. The last section evaluates these federalized arrangements and their operations from the
standpoint of performance, effectiveness, and legitimacy.
IMMIGRATION AND FEDERALISM IN CANADA
As described in chapter 1, Canadian federalism is shaped by, and functions
as, a response to structural cleavages of Canadian society, political forces,
and political institutions, including the Constitution. When it comes to
the management of immigration, these structural and political factors
are especially visible. Immigration brings to the forefront the reality that
Canada is a federal society marked by social, economic, and geographic
heterogeneity (Cairns, 1977). One of the main embodiments of this diversity is the uneven distribution of international immigrants across the
country’s provinces, territories, and cities. As Table 13.1 shows, most of
the permanent international immigrants that settled in Canada in 2018
were concentrated in four provinces.
In 2018, consistent with a long-standing trend, Ontario received about
43 per cent of total permanent immigration. Quebec was the ­second-largest
destination in Canada, with 16 per cent of total newcomers settling in
the province. The same year, British Columbia’s share of immigration
was about 14 per cent, while Alberta’s was about 13 per cent. Manitoba,
Saskatchewan, Newfoundland and Labrador, as well as the Atlantic provinces received much smaller intakes. As Table 13.1 demonstrates, the
population size of different provinces varies. As a result, while the annual
immigration intake of some provinces appears small when compared
to that of Ontario or Quebec, smaller provinces often welcome a larger
share of newcomers in relation to their population base.
Provinces also receive different types of immigrants. Figure 13.1
shows the composition of each province’s immigration intake according to the three main administrative categories of the national immigration program. The economic category includes all immigration
programs in which candidates are assessed on the basis of their skills,
education, credentials, and work experience and in relation to the
demands of the Canadian labour market. The family category comprises individuals that come to Canada to join their family, spouses,
and relatives, most of the time through some form of sponsorship. The
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Mireille Paquet
Table 13.1. Permanent Immigrants in Relation to Population Size,
per Province in 20183
Total Permanent
Immigration Intake
Total Provincial
Population
Newfoundland and Labrador
Prince Edward Island
1,530
2,135
525,604
153,584
Nova Scotia
5,965
959,500
New Brunswick
4,610
770,921
Quebec
51,130
8,387,632
Ontario
137,430
14,318,545
Manitoba
15,225
1,353,403
Saskatchewan
15,510
1,162,978
Alberta
42,025
4,300,721
British Columbia
44,870
5,001,170
320,430
36,934,058
Total
Source: Canada, 2019b; Statistics Canada, 2019.
last category combines protected persons, refugees, and individuals
gaining permanent residence in Canada for humanitarian concerns.
It is important to note that these categories are far from representing the realities of immigrants settling in Canada. For example, it is
misleading to conclude that only immigrants selected through the
economic category contribute to Canada’s labour market. Moreover,
immigrants admitted to Canada under the economic class often also
comprise close family members (spouse and underage children) of
a principal applicant. Nonetheless, these categories are useful heuristics to map how provinces benefit and use particular immigration
programs differently.
As Figure 13.1 demonstrates, some provinces rely more heavily on
economic immigration than others. As explained in the next section,
for provinces like Prince Edward Island, Nova Scotia, or Saskatchewan,
attracting economic immigrants occurs mainly through provincial selection
activities, especially via the Provincial Nominee Program. Figure 13.1 also
highlights that some provinces receive more family migrants and more
vulnerable immigrants, as refugees, protected persons, and humanitarian immigrants. As these populations use services provided by provinces
through their areas of jurisdiction (e.g., healthcare or education), these
differences can have important fiscal consequences.
Federalism and Immigration in Canada
341
Figure 13.1. Proportion of Administrative Categories with the Share of
Permanent Immigrants per Province in 2018a
British Columbia
Alberta
Saskatchewan
Manitoba
Ontario
Quebec
New Brunswick
Nova Scotia
Prince Edward Island
Newfoundland and Labrador
0%
10%
Economic
20%
Family
30%
40%
50%
60%
70%
80% 90% 100%
Resettled refugee and protected pperson in Canada
Source: Canada, 2019b.
a
Excludes immigrants counted under the administrative category “All other
immigration.”
This uneven distribution reflects the overall pattern of population
distribution across Canada. It is also reinforced by dynamic processes
of internal migration, by which individuals move from one province to
another at any given point in time. Section 6 of the Canadian Charter of
Rights and Freedoms compounds this process by providing citizens and
permanent residents with mobility rights within Canada’s territory.
Anecdotal evidence suggests that international immigrants arriving in
smaller provinces and in Quebec are prone to leave their first destination
during the first three years of settlement and that most of these secondary
migrants tend to settle in Ontario (Ostrovsky, Hou, and Picot, 2008).
A majority of international immigrants enter Canada as economic
immigrants: that is, on the basis of their skills, experience, education,
and language capacity (Canada, 2018). The high proportion of economic
immigrants reflects an official policy objective of the government of
Canada of using international immigration as a resource for economic
growth. Yet, the uneven distribution of immigrants across Canada
­amplifies the differences between labour markets and economies across
the Canadian federation. While some provinces are able to benefit by
gaining a large number of potential workers, others struggle to attract
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Mireille Paquet
and retain immigrants. Moreover, the economic criteria through which
immigrants are selected do not always reflect the particular needs of
provincial or local labour markets.
International immigration thus reinforces central cleavages that exist
within Canada as a federal society. As with economic development (­Savoie,
1992), some provinces can be labelled as “have” provinces when it comes
to immigration (Ontario, British Columbia, and Quebec) while others
are definitely “have-not” provinces (Atlantic provinces). This cleavage
is compounded by the fact that demography plays a central role in
fiscal redistribution mechanisms in Canada. Thus, for some provinces,
welcoming immigrants is as much about reinforcing their economy and
their labour market as about ensuring a large enough population base
to fund their core governing functions.
Political actors play a central role in making these cleavages salient,
through their interests and ideas. Until recently, Canadian federal and
provincial governments of all parties have not been heavily polarized
when it comes to modern immigration management. Instead, their views
and policies tend to cluster around the idea that immigration is a positive
contributor to Canadian society and the economy, and to support strong
state intervention on the matter. This consensus contrasts with the type
of politics visible in the United States, Australia, and Western Europe,
where parties and governments can often be differentiated by their proand anti-immigration positions (Grande, Schwarzbözl, and Fatke, 2018).
Instead of ideology and party alignment, two other forces have shaped
modern immigration intergovernmental relations in Canada. One is
Quebec’s mobilization for increased immigration powers in recognition
of its specific linguistic realities. The other is English-speaking provinces’ demands for increased input into the management of economic
immigration.
Owing to its high fertility rate, the province of Quebec was able to
maintain a strong population base with limited international immigration until the 1960s (Pâquet, 1997). The Quiet Revolution of the 1960s
coincided with demographic changes to make immigration not only an
important lever of development for modernizing Quebec but also a site
of contention with the federal government. Indeed, for Quebec’s political
elites, immigration represented a potential threat to Quebec’s francophone character insofar as newcomers adopted English as the language
in which to live and work in the province. To address this challenge,
Federalism and Immigration in Canada
Quebec negotiated with Ottawa a series of intergovernmental agreements,
starting in 1971 (Kostov, 2008). The intergovernmental bargaining over
these issues unfolded during a period in which Ottawa was expanding
its immigrant integration programming and Quebec nationalism was
considered a threat to national unity (Jenson and Paquet, 2019). The
Canada–Quebec agreements allowed Quebec to inform potential immigrants of the francophone character of the province, to have a say in the
immigrants selected abroad by the federal government, and to become
more involved in the provision of immigration integration services.
Despite these gains, immigration powers remained part of the constitutional demands of the province of Quebec in the 1970s and 1980s
(Paquet, 2019). After the failure of the Meech Lake constitutional
accord project – which featured a clause offering every province more
opportunities to be involved in immigration – Quebec and the federal
government signed the 1991 Canada–Quebec Accord relating to Immigration and Temporary Admission of Aliens. Known as the Canada–
Quebec Immigration accord, this bilateral agreement provided Quebec
with unprecedented powers to select international immigrants (Becklumb, 2008). The agreement also made the government of Quebec
entirely responsible for the delivery of immigrant integration services
within the province of Quebec. With the goal of ensuring the provision of equivalent services across Canada and in order to compensate
Quebec, the accord also ensured financial support for Quebec’s integration programs. This financial compensation takes the form of a
transfer, attached to two conditions: (1) that Quebec’s settlement and
integration services be similar and equivalent to the ones delivered by
the federal government and (2) that Quebec’s services be accessible
to all of the immigrants who reside in the province, whether they were
selected by Ottawa, Quebec, or another province (Béchard, 2018).
The annual amount of the transfer is calculated using a sum base of
$90 million, which is multiplied by an indexing factor that takes into
account ­Quebec intake of international immigrants in relation to the
population of Canada, Quebec’s intake of non-francophone immigrants,
and the ­increase of total federal program expenditures. This generous
transfer is made unique by the fact that the Canada–Quebec Immigration
Accord stipulates that the amount given to Quebec for integration services cannot decrease. In 2018, Quebec received $490 million through
this agreement (Béchard, 2018).
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As a direct consequence of the 1991 Canada–Quebec Immigration
Accord, most immigrants to Quebec are now selected based on criteria
designed by the provincial government and settle in the province with the
help of provincial services only. The gains associated with the ­Canada–
Quebec Immigration Accord have effectively neutralized ­Quebec’s immigration demands to Ottawa and limited intergovernmental conflict
in this area since the 1990s (Paquet, 2019).
The Canada–Quebec Immigration Accord has often been criticized
as asymmetrical and, as a result, seen as unfair (Banting, 2012). Central
to these criticisms is the fact that Quebec receives more money to integrate every individual immigrant residing in the province than Ottawa
spends per capita on newcomers in the rest of the country. The tensions
over this discrepancy have become more salient at different points since
1991; it was a central point of contention just after 1991, rose on the
agenda around 2003 when Ontario started to negotiate a new immigration agreement with Ottawa, and has become an issue again with the
growing number of irregular crossings since 2015.
Criticisms have also focused on the selection powers granted to Quebec
and not to other provinces. Other provincial governments have sought
more say in immigration. Beginning in the late 1990s, English-speaking
provinces, most notably Manitoba, started to demand increased input
into Canada’s immigration program as a way to respond to local labour
market needs (Paquet, 2014; Lewis, 2010; Paquet, 2017). Their demands
rested on the idea that the federal immigrant selection program favoured
workers with skills that did not match the regional economic specificities
and needs. The federal immigration program was also criticized for
being incapable of attracting workers in less traditional destinations,
with the result of chronic labour market shortages in some provinces
(Paquet, 2014). These realities have been reinforced by the transfer of
labour market policy responsibilities to Canadian provinces starting in
the 1990s (Haddow and Klassen, 2006).
As my research on the development of provincial immigrant policies
has documented, provincial demands for greater input into Canada’s
immigration policy took the form of a modern type of province-building
(Paquet, 2019). Provincial governments claimed they were better situated
than the government of Canada to ensure economic development and
growth, and that immigration policy was a way to help them and Canada
achieve economic growth. To back these claims, provinces established
Federalism and Immigration in Canada
administrative units and departments responsible for immigration. They
also created immigration strategies and official policies. Premiers spoke of
immigration positively and were keen on arguing about the importance
of immigration for their province.
These demands led to changes in the government of Canada’s
­immigration policy that still impact immigration intergovernmental
­relations and immigration policy to this day. Provincial requests for input
into immigrant selection led to the creation of the Provincial Nominee
Program (PNP). This program allows provincial governments to select a
portion of the economic immigrants entering their province. Provinces
select immigrants on the basis of criteria they design and in relation to
their labour market needs and other regional concerns.
Since the late 1990s, PNPs operate simultaneously with federal selection
programs and the Quebec selection mechanism. This federal–provincial
overlap means that, outside of Quebec, immigrants settling in a province
may have been selected through criteria defined either by the province
or by the federal government. In 2017, 49,724 individuals entered Canada
as provincial nominees. While they represented about 30 per cent of all
of the economic immigrants into Canada that year (Canada, 2018), provincial nominees represented from 60 per cent to 96 per cent of all of the
economic immigrants coming into the “have-not” immigration provinces
of Prince Edward Island, Manitoba, Saskatchewan, New Brunswick, Newfoundland and Labrador, and Nova Scotia (Canada, 2017d). Besides the
PNP, provincial demands for more say in immigration policy have led to
changing intergovernmental practices in the form of more consultations
and more horizontal coordination between governments (Schertzer, 2015).
These political forces and societal cleavages have grounded the evolution of intergovernmental relations and federal institutions in this
policy area. Immigration was defined as a concurrent jurisdiction in
1867 in recognition of pre-Confederation settler recruitment activities
of individual British colonies (Vineberg, 1987). These activities focused
on attracting Europeans to North America and were often conducted
by agricultural departments or in collaboration with leading regional
economic actors. Incrementally, after 1867 these activities became centralized and provinces withdrew from immigration activities. Federal
leadership became the norm and was welcomed by provinces, who feared
the costs and political consequences of being involved in immigration
(Paquet, 2014). As a result, especially after the Second World War, Ottawa
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Mireille Paquet
independently developed the basis of Canada’s modern immigration
program, including the selection schemes associated with the point
system and general immigration integration programs.
Over time, however, Ottawa’s dominance in immigration has been
challenged by provinces. They demanded increased selection powers,
more clout on the definition of national immigration objectives, better
funding for immigrant integration programs, and a clear recognition of
their specific circumstances, having to do with language and with economic
development. These demands have led to a process of federalization of
immigration in Canada. As I have defined elsewhere (Paquet, 2014: 522),
federalization “corresponds to the emergence of new institutional actors
and/or to modifications to the status of actors who have a strong legitimacy
inside an institutional or federal regime.” Federalization highlights the fact
that Canadian federalism can evolve substantially in the absence of formal
institutional changes, such as constitutional reform. In the case of immigration, federalism and intergovernmental relations have been transformed
through a series of bilateral agreements but especially in relation to the evolution in the practices of both orders of government. As a result, provinces
have become central players in the governance of immigration in Canada.
FEDERALIZED IMMIGRATION GOVERNANCE
IN CANADA
The federalized regime of immigration governance in Canada rests on
the solid foundations of the Constitution. Besides section 95, the Constitution Act grants other powers related to immigration to both orders
of government. Section 91 makes the federal government responsible
for protecting Canada’s borders, for arranging quarantine, and for
naturalization. Immigrant integration, however, is not an area of jurisdiction listed in the Canadian Constitution. At the time of Confederation, integration was not considered a matter of state responsibility but,
instead, a private matter and something that could be helped through
charitable action. In practice, both orders of governments contribute
to immigration integration despite this silence. Through the areas of
jurisdiction listed in sections 92 and 93, provinces provide healthcare,
education, and social services to immigrants. At the same time, Ottawa
has made use of its spending power and non-listed powers to develop
Federalism and Immigration in Canada
Canada’s settlement and integration programs, leading the way in how
immigrants and refugees are supported in their first years in the country.
Canada’s Immigration and Refugee Protection Act
Beyond the Constitution, a majority of immigration powers and responsibilities in Canada flow from the Immigration and Refugee Protection Act
of Canada (IRPA). This law is framework legislation that provides the
Governor in Council with the authority to make regulations about immigration (Elgersma, 2015). IRPA establishes the main administrative
bodies responsible for immigration management, defines in general
terms admissibility, and sets out parameters for decision-making on issues
associated with international immigration. Provinces are mentioned more
than forty times in the law, beginning with section 3 on general objectives.
Indeed, IRPA starts by recognizing that Canada’s “immigration goals [are
to be established] by the Government of Canada in consultation with the
provinces” and that Ottawa must “work in cooperation with the provinces
to secure better recognition of the foreign credentials of permanent
residents and their more rapid integration into society” (Canada, 2001).
Other sections of IRPA also affect the intergovernmental relationship
in immigration. Among them, three are especially important. Section 8
enables Ottawa to enter into immigration agreements with provinces and
territories. Section 9 sets out the powers of provinces to select immigrants
and their granting of permanent residency by Ottawa, within the conditions of a given bilateral intergovernmental immigration agreement.
Section 10 creates an obligation for the minister responsible for immigration to consult with provinces annually. These consultations have to
do with “the number of foreign nationals in each class who will become
permanent residents each year, their distribution in Canada taking into
account regional economic and demographic requirements, and the
measures to be undertaken to facilitate their integration into Canadian
society” (Canada, 2001).
Intergovernmental Immigration Agreements
Following section 8 of IRPA, thirteen bilateral immigration agreements
are active as of 2019. These agreements clarify the roles of each order
of government for immigration management, identify specific areas of
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collaboration, and give provinces the capacity to select international
immigrants, either through a Provincial Nominee Program or through
Quebec’s unique selection powers (Canada, 2018). With the process of
federalization, bilateral agreements have spread to all provinces and
become more sophisticated. They provide provinces and territories
with more tools to engage in development through immigration while
also, in some cases, providing them with increased resources to respond
to the needs of immigrants (Seidle, 2010). Yet they are not without
considerable limits. For one thing, these agreements do not set out
the number of immigrants each province should receive and are silent
on annual PNP allocations. This means that provinces must constantly
negotiate with Ottawa about the maximum number of immigrants they
are allowed to nominate annually. These negotiations occur through
bilateral and multilateral relations as well as through regular consultations on immigration levels. In addition, with the exception of Quebec’s
1991 immigration accord, a framework agreement can be modified or
cancelled at any point by either of the governments that are party to it.4
These two features demonstrate that, despite federalization, Ottawa still
has the potential to drive policy decisions unilaterally.
Settlement and Integration Services
The biggest share of Canada’s immigration spending goes towards services
for immigrants (Canada, 2019a). Most of the country’s settlement and
integration programs are funded by the federal government, through
contribution agreements with service providers (immigrant-serving
agencies, NGOs, schools, and other public bodies). Provinces fund
immigrant integration services through their immigration departments
and through their education, social assistance, culture, and economic
development policies (Praznik and Shields, 2018).
In relation to these services, some current and past immigration agreements have had financial components. Because of Ottawa’s complete
withdrawal from immigrant integration services in Quebec following
the 1991 accord, the province of Quebec receives an annual grant from
Ottawa. The components of Quebec’s financial agreement have earlier
been discussed. Upon signature of the 2017 Canada–Ontario Immigration
Agreement, Ottawa agreed to increase the funding Ontario receives to
help integrate immigrants (Canada, 2017c). As opposed to the Quebec
Federalism and Immigration in Canada
case, however, Ontario’s funding is not part of the written agreement
and remains ad hoc.
Between 1997 and 2014, Manitoba and British Columbia were also
parties to bilateral agreements transferring to them the administration
of settlement services on their territory (Leo and August, 2009). While
these agreements were in operation, the federal government withdrew
from delivering these services and provinces received funding from
Ottawa. They administered these resources based on their local needs
and funded equivalent services through contributions agreements. In
2012, these agreements were terminated unilaterally by the federal
government (Fourot, 2018). Then citizenship, immigration, and multiculturalism minister Jason Kenney stated Ottawa’s unilateral cancellation
of the agreements was to ensure that “immigrants have access to a more
consistent level of service regardless of where they choose to settle in
Canada” (Canada, 2012). Provinces, especially Manitoba, expressed
deep frustration with this change but were not able to get the decision
reversed. This episode highlighted how former prime minister Harper’s
immigration reform agenda was often in conflict with harmonious intergovernmental relations, especially as the government moved resolutely
away from the precepts of “open federalism” (Paquet and Larios, 2018).
Intergovernmental Institutions
Prior to the early 2000s, immigration rarely featured in peak intergovernmental venues. With the exception of the peripheral discussions over
immigration as part of constitutional talks, provinces’ lack of interest in the
issue limited the need for sustained and structured relations (Vineberg,
1987). Most interactions were bilateral and often at the administrative
level. With the process of federalization, which coincided with the rise
of the issue of immigrant geographic distribution on the federal agenda
(Abu-Laban and Garber, 2005), both orders of governments started to
engage more continuously. They did so first through ad hoc meetings
of federal, provincial, and territorial ministers responsible for immigration. As provinces grew their administrative capacity and as immigration
became a more important portfolio in their jurisdiction, these meetings
became institutionalized.
In 2002, the Forum of Ministers Responsible for Immigration (FMRI)
was established. All provinces and territories participate in the FMRI,
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with Quebec acting as an observer (Forum of Ministers Responsible
for Immigration, 2019). This permanent venue includes four executive
permanent tables: the Federal, Provincial, and ­Territorial (FPT) ­ministers
table, the FPT deputy ministers table, the FPT assistant deputy minister
table, and the FPT policy and planning table. In relation to the establishment of the FMRI and following provinces’ and territories’ desire
to share their practices amongst themselves, a p
­ rovincial–­territorial
secretariat was also created around the same time. It is hosted on a
rolling basis by a different province and territory. It aims at supporting
communications among governments and at ­providing policy analysis
related to immigration. At the ministerial level, the forum has met
­annually since its creation, but meetings of other tables are reported to
be much more frequent (Schertzer, McDougall, and Skogstad, 2016).
The continued operation of the FMRI and the constant participation
of all provinces demonstrates the emergence of a “multilateral institutional structure for IGR” for immigration governance (Schertzer,
­McDougall, and Skogstad, 2016, 17). This development occurs alongside
the ­episodic appearances of immigration on the agenda of regional
bodies (such as the Conference of Western Premiers) and of the Forum
of the Federation.
A New Challenge: Irregular Border Crossings
Current intergovernmental relations in immigration are now being
tested by new migration dynamics. Since Justin Trudeau became prime
minister in 2015, the rise of irregular border crossings and the associated
growth in inland asylum claims have tested the effectiveness of existing
immigration arrangements. The migration across the US–Canadian
border shows that the unintended effects of Canada’s relationship
with the United States is a source of system-wide disruptions for federalism (Schertzer and Paquet, 2019). Following the implementation of
­anti-immigration policies in the United States, claimants have crossed the
border outside of regular ports of entry, notably via Quebec’s Roxham
Road. The pattern of crossing outside of regular ports of entry results
from the procedures set out by the Safe Third Country Agreement
(STCA) between Canada and the United States. The STCA makes
it mandatory that individuals claim asylum in the first safe country
of ­arrival and makes it impossible for individuals who landed in the
Federalism and Immigration in Canada
United States to claim asylum in Canada, and vice versa. By crossing
outside of regular ports of entry (ports, official border crossings, and
airports), individuals are able to evade this regulation. In 2017, 20,953
individuals used this method to cross the Canada–United States border;
over 90 per cent of these irregular border crossings occurred in Quebec
(Schertzer and Paquet, 2019).
Ottawa and the provinces have used existing FPT institutions and
inter-administrative networks to respond to these irregular movements.
In 2017, the federal government and Quebec also established an Ad
Hoc Intergovernmental Task Force on Irregular Migration to increase
information sharing, operational coordination, and collaborative initiatives geared to the Canadian public. Participants include the federal
ministers of public safety; immigration, refugees, and citizenship; and
national defence as well as members of Parliament for affected ridings.
The Quebec and Ontario ministers responsible for immigration and, later
on, the mayor of Toronto, were also members of the task force (­Canada,
2017a). The membership of the task force is in line with Trudeau’s
approach to federal–provincial relations, but also reflects the complex
nature of the issue at hand.
From an operational standpoint, the arrangements to deal with irregular border crossings of recent migrants have yielded strong policy
outcomes: governments have effectively managed these new arrivals and
have generally been able to maintain public trust in Canada’s immigration system. Policy outcomes are more complex to evaluate because
the process of refugee determination is complex and because little is
known about the needs of these populations. Irregular border crossings
represent a considerable stress on the federalized immigration system.
For one thing, until 2017 most provinces focused their attention on
economic immigration and were not involved in directly assisting refugee claimants. Their non-involvement can be explained by the fact that
the refugee determination process is entirely conducted by the federal
government, which also covers the perceived costs associated with refugees. The new cross-border movements have forced provinces to become
engaged in this policy subsector, even while their limited expertise and
reluctance to become involved reinforce existing legacies and power
imbalances in this subsector. These arrivals also challenge Trudeau’s
multilateral ­impulses, as only three provinces are directly affected by these
movements: Quebec, Ontario, and, to a lesser extent, Manitoba. The
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geographical concentration of the irregular border crossers reinforces
already existing imbalances in the distribution of immigration and of
immigration-related resources within the federation.
Soon after the increase in border crossings, Quebec and Ontario
­demanded that Ottawa compensate them for the costs associated
with caring for these new migrants (Valiante, 2018). In Ontario, these
­demands have contributed to tense relations with the federal government; after he was elected in June 2018, Premier Doug Ford withdrew
from collaborating with Ottawa on these issues (Benzie, 2018). While
ad hoc funding has temporarily allowed the federal government to ease
tensions, cross-border migration has made provinces more aware of not
only the benefits but also the costs associated with immigration. As a
result, ­future negotiations over fiscal federalism, especially in the case
of social spending, could become more fraught.
FEDERALIZED IMMIGRATION GOVERNANCE
IN CANADA
Performance
One of the central consequences of the process of federalization has been
to align immigration governance in Canada more with the principles
of federalism. As provinces became more interested in immigration,
they highlighted that an immigration system dominated by the federal
government failed to create a balance between unity and diversity. With
the practical recognition of provinces as full members of the federation
when it comes to immigration, Canadian intergovernmental relations
have provided new venues for the expression of diverse regional needs.
Through institutions such as the FMRI, provinces have become more
involved in setting national immigration policy goals. The creation of
programs such as the PNP, which coexist with pan-Canadian federal
immigration programs, have also provided provinces with direct levers
to address place-based challenges while also benefiting from national
programs. The emerging system and web of intergovernmental relations
have generally proven capable of producing results, from setting up
­national policy objectives (Schertzer, McDougall, and Skogstad, 2016) to
responding to a rapid intake of Syrian refugees in 2015 (Canada, 2016)
Federalism and Immigration in Canada
and providing an operational response to the new irregular arrivals from
the United States. From that general standpoint, the intergovernmental
institutions associated with the policy area are performing more effectively and have increased their capacity to produce results that take into
account the needs of all governments.
In assessing this performance, however, two caveats must be taken
into account. First is the fact that intergovernmental forums and federalization are a recent development in this policy sector, and their future
continuity is thus uncertain. As described in this chapter, provinces have
been slow to become involved in this issue. Quebec started mobilizing
for more immigration powers in the 1960s, and other provinces became
resolutely more interested in economic immigration in the late 1990s and
early 2000s. As a result, for most of Canada’s history, immigration intergovernmental relations in Canada were limited, and Ottawa developed
immigration policies following an independent model of federalism.
Under this model, consultations were sparse and coordination very limited. As described in this chapter, this model satisfied provinces and did
not create open conflicts between governments. The current pattern of
intergovernmental relations in immigration policy departs strongly from
this earlier pattern. Yet, institutionalized intergovernmental relations
remain nascent when compared to other policy areas in which Canadian
governments have interacted, fought, and collaborated for more than
150 years. Set in contrast with the political development of Canadian
federalism, the institutions, policies, and practices that resulted from
the federalization of immigration remain new and potentially open
to drastic change, based on the evolution of the interests and ideas of
political actors.
A second caveat is that current intergovernmental relations in immigration are best described as following a model of unequal coordination;
that is, they are far from being coordinated between equals. Ottawa and
the provinces generally and increasingly work together to “develop mutually acceptable policies and objectives” (Bakvis and Skogstad, chapter 1).
Yet this coordination remains limited by several imbalances between
governments that make the determination of joint policy objectives
and the application of agreed-upon standards uneven, at best. Despite
the concurrent immigration jurisdiction and the growing recognition
of provinces in federal immigration legislation and programs, Ottawa
still holds much more capacity to make and implement immigration
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policies. Constitutionally, this is the result of the paramountcy of f­ ederal
immigration legislation and a function of the other federal powers
­associated with immigration (e.g., border control). Federal power in this
area is also a consequence of Ottawa’s greater fiscal capacities, which
have allowed it to develop, finance, and manage a national immigrant
settlement program independently of provincial funding and to use the
federal spending power in immigration. This imbalance is also the result
of policy legacies. Provinces’ historical lack of interest in immigration
has meant, for the most part, that elected officials and provincial public administrations lacked knowledge and policy capacity in this policy
area. In becoming more involved in immigration, provinces have had
to rely on the expertise and the policy infrastructure of the federal
government, a dependence that has often generated unequal intergovernmental ­interactions. While provinces have tremendously increased
their political, policy, and intergovernmental capacities in this policy
area since the 1990s, they remain far from being on an equal footing
with the federal government.
These inequalities are partially expressed through competitive federalism in the area of immigration. Central to this competition is the
contest over which order of government is best positioned to defend
the interests of its political community when it comes to immigration.
As with other policy areas, Quebec and Ottawa went through an intense
period of competition between the 1960s and 1980s. In relation to the
Quiet Revolution, successive governments defended the position that
only the Quebec state could protect the French language and ensure
provincial economic and social development in relation to immigration.
This position, which led to demands for increased powers, coincided
with the heyday of federal activism in nation-building, through the
development of national social programs, cultural institutions, and
the contemporary immigration program (Jenson and Paquet, 2019).
During this period, immigration was part of Quebec’s constitutional
demands and, concurrently, the federal government resisted the idea
of an increased provincial role in this sector. This era came to an
abrupt end with the signing of the 1991 Quebec–Canada Immigration
Accord. The devolution of immigration powers to Quebec neutralized
competition between governments, with the province maximizing its
resources as well as its capacity to defend its interest and to claim credit
in this policy sector.
Federalism and Immigration in Canada
Competitive federalism has also supported the process of immigration
federalization and remained a feature of contemporary Canadian immigration
federalism. Outside of Quebec, provinces engaged in p
­ rovince-building
using immigration as a tool for economic and demographic development. Besides the development of state capacity, ­province-building has
led provincial political actors to include immigration in their platforms
and policy proposals. It has also emboldened elected officials to demand
more resources in this policy area and allowed them to claim credit for
positive immigration outcomes in their respective provinces. In this
­iteration of province-building, as opposed to the situation with Quebec,
economic development is the central point of contention, as opposed to
language. Through this competitive process, Ottawa and the provinces
fight not only over jurisdictional powers but also over credit and legitimacy in the face of the economic stakeholders of immigration in the
country (employers, large firms, economic development agencies). The
decision by the Harper government to repatriate settlement services from
Manitoba and British Columbia can also be attributed to this competitive
dynamic. Besides objectives of service harmonization, it also signalled
the Harper government’s discomfort with these provinces being the only
ones able to claim credit for helping immigrants to integrate on their
territory (Paquet, 2019).
Effectiveness
From the standpoint of federalism, current intergovernmental relations
in immigration have generated positive policy outputs. Governments
have been able to adapt to new irregular arrivals as of 2017 and avoid
a race to the bottom in the area of asylum by co-operating in an ad
hoc task force and through federal spending. Federalization and the
increased coordination of governments in this policy sector have also
led to better information sharing and given rise to new programs that
respond to local needs. Several indicators support this assessment. Governments’ continued participation in the FMRI hints at the fact that the
forum generates normative and substantive results that benefit them
(Schertzer, McDougall, and Skogstad, 2016). Provinces’ commitment to
the Provincial Nominee Program signals that the program serves their
policy objectives and yields results that are generally coherent with their
interests. A recent review by the federal Department of Immigration,
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Refugees and Citizenship concluded that the program allows provinces
to fill particular labour market needs and remains “a key component
of [their] economic and demographic strategies” (Canada, 2017d: 7).
This assessment is shared by provincial governments and by research on
the challenges of persuading immigrants to settle outside of large cities
and beyond traditional immigration provinces.
The policy outcomes of these changes remain harder to evaluate.
From the standpoint of the geographic distribution of immigrants across
Canada, there is reason to believe that increased coordination and provincial input into the system give better results. A central outcome has
been that the distribution of immigrants has shifted in Canada, with the
number of immigrants settling outside of Ontario, Quebec, and British
Columbia rising from 10 per cent in 1997 to 34 per cent in 2017 (Canada,
2018). At the same time, it remains very hard to isolate the impact of the
PNP and of particular policies on the regionalization of immigration in
Canada, let alone on patterns of secondary movement within Canada.
Yet, the support of officials and economic actors for the PNP make it
the current best solution to respond to the diversity of provincial needs
when it comes to immigration.
Focusing on the immigrants themselves, general analyses demonstrate
that provincial nominees are often slightly less educated than immigrants
selected through the skilled federal program. At the same time, because
they are selected on the basis of the needs of provincial labour markets,
provincial nominee immigrants tend to integrate more quickly into the
Canadian workforce (Canada, 2017d). Critics of the PNP have pointed
to the fact that it reinforces the already strong market-based tendencies
of Canada’s immigration program. They have also documented how
it contributes to reproducing gendered, racial, and class exclusion in
immigrant selection (Lewis, 2010; Dobrowolsky, 2011). More recently,
data show that PNPs have become a major pathway to gain temporary
resident status in Canada. In 2015, 76 per cent of the provincial nominees
admitted already had a temporary status in Canada (Canada, 2017d). This
figure indicates that provincial involvement in immigration contributes
to the establishment of a two-step immigration system in Canada.
These outcomes, openly discussed and debated in intergovernmental
relations, provide governments with a chance to learn from their own
and others’ respective experiences. While increased collaboration,
Federalism and Immigration in Canada
benchmarking, norm-setting, and information sharing are important
tools to address some of these outcomes, the idea of removing provinces
from immigration governance in Canada is not considered as a solution
to some of the negative consequences listed above. Not only would the
political costs associated with federal patriation be too high, but the
shared consensus now established about the superiority of multilateralism in immigration governance in Canada would be undermined
(Schertzer, 2015).
Legitimacy
Democratic legitimacy has always been the weak side of Canada’s immigration regime. Federal policy-making is increasingly characterized by
executive dominance, and transparency remains an issue. These trends
are reproduced in the federalized immigration regime, in which executive federalism and closed-door high-level administrative tables are the
norm. Current bilateral agreements include procedures for information
sharing and accountability, but these transactions mostly operate ­between
orders of governments (Seidle, 2010). Citizens, service providers, and
other stakeholders are excluded from decision-making venues and
often cannot access information. This lack of access and transparency
is accompanied by limited accountability of provincial governments to
their electorate when it comes to immigration spending and program
administration. While the federal government has established more
accountability mechanisms and evaluation frameworks since 2012,
their lack of transparency remains problematic. In addition, attempts at
increasing accountability are also creating intergovernmental tensions,
as demonstrated during the immigration reform frenzy of the Harper
government, when provinces perceived calls for program integrity reinforcement and evaluations processes as indirect ways to control them.
Nonetheless, the regime is increasingly legitimized when it comes to
the inherent social, political, and economic diversity of the federation.
The 1991 Canada–Quebec Immigration Accord recognizes the specific
needs of the province in this policy area. Other bilateral immigration
agreements and the PNP provide provinces with mechanisms to respond
to their particular situations, while new intergovernmental institutions
allow for the incorporation of their interests into federal policy. In the
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case of immigration, the legitimacy of federal arrangements remains
dependent on asymmetry, something that most Canadian governments
now accept. Despite growing legitimacy, however, the comparative
exclusion of other actors from intergovernmental relations remains
problematic. This is particularly the case for Canadian cities and for
minority francophone communities, which both face particular immigration challenges. Under prime ministers Stephen Harper and Justin
Trudeau, some limited advances have come on this front. The 2017
Canada–Ontario Immigration Agreement includes the city of Toronto
as a stakeholder, and Trudeau’s government has implemented the Atlantic Immigration Pilot (Canada, 2017b), which allows employers in
the region to recruit francophone migrants. Yet, these innovations are
far from making these governments and communities into full-fledged
participants in immigration intergovernmental relations.
CONCLUSION
As of 2020, immigration governance is managed through a federalized regime. Provinces and the federal governments are engaging in
policy coordination, with both orders of government defending their
interests in immigration and attempting to balance unity and diversity.
Federalization demonstrates that Canada’s federal regime is capable
of adapting to political, social, and economic change. It also shows
that the evolution of Canadian federalism is not contingent on formal
institutional changes, but more often on the evolving behaviour and
interests of political actors.
The federalized immigration regime is a good start, but it is far from
perfect. As this chapter documents, there are considerable imbalances
in immigration policy in the power, capacity, and resources of governments at the two orders. This imbalance keeps the threat of unilateral
action by Ottawa a constant shadow in intergovernmental relations. It
also reinforces other vertical and horizontal imbalances, notably fiscal
imbalances, that already structure Canadian federalism. Moreover, the
current system remains dominated by executive federalism, with immigration policy-making in Canada highly centralized in the hands of the
federal executive. So, while federalization has brought immigration
governance more in line with the federal principle, a lot more changes
Federalism and Immigration in Canada
are needed to make intergovernmental relations in this sector truly
democratic and accountable.
NOTES
1 In this chapter, territories are excluded from the discussion for two reasons. First, because while they participate in intergovernmental relations
in this policy sector, they do so in a much less intensive way than provinces.
Second, they receive only a very small portion of international immigrants
annually.
2 With the exception of conflicts over anti-Asian and racist immigration acts
in the late 1800s and early 1990s (Ryder, 1991), legal conflicts between governments in this policy area have been extremely limited.
3 In 2018, the Northwest Territories welcomed 260 permanent immigrants
whereas 30 permanent immigrants settled in Nunavut and 305 settled in
the Yukon (Canada, 2019b).
4 The Canada–Quebec Immigration Accord is distinct, insofar as it can only be
amended or cancelled if both orders of government agree to a given change.
GLOSSARY
framework legislation A general law that acts as an enabling statute for some
government authorities. Framework legislation gives the power to specific
institutions or authorities to create policies using regulations.
immigrant integration The process through which international immigrants
adapt themselves to their new country of residence.
international immigration The process through which individuals change
their country of residence, in either the long term or the short term.
internal migration The process through which individuals change their
region of residence within the same country over time.
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CHAPTER FOURTEEN
Federalism and Canadian Climate
Change Policy
Mark Winfield and Douglas Macdonald
INTRODUCTION
As a participant in the international climate change regime established
by the 1992 United Nations Framework Convention on Climate Change
(UNFCCC), Canada, like other countries, makes periodic commitments
to reduce total greenhouse gas (GHG) emissions. Were Canada to actually
keep any of those commitments, an enormous strain would be placed on
the workings of Canadian federalism. The reason is that different regions
are going down very different climate change policy tracks. Emissions
are increasing in Alberta and Saskatchewan, which together account
for close to half of total Canadian emissions, while declining elsewhere.
Alberta and Saskatchewan are implicitly saying that in order for Canada
to keep the commitment it made in Paris in 2015 to reduce emissions
to 30 per cent below the 2005 level by 2030, other provinces will have to
make the major cuts in GHG emissions which they are unwilling to make.
The portending high-stakes territorial conflict over the coming decade
will test to the limit the ability of Canadian federalism to generate effective
policy. Unfortunately, it also offers to Canadian policy-makers, yet again,
the almost irresistible temptation to miss an international commitment,
sacrificing policy effectiveness to preserve national unity.
The subject of this chapter is the workings of Canadian climate change
federalism with respect to reduction of GHG emissions (adaptation policy
is not considered) since Prime Minister Brian Mulroney made Canada’s
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first commitment to reduce GHG emissions in 1990. Climate change, like
the regulation of toxic substances, has been treated by governments as
an area of shared jurisdiction, in which both the federal and provincial
governments have constitutional authority to govern. (The court actions
by Saskatchewan and Ontario in 2018 and Alberta in 2019 to test federal
authority are discussed below.) Since both orders of government are acting in the same policy field, there is a need for them to coordinate their
activities. An even more important need for coordination, if Canada is
to achieve the 2030 target, is the necessity of reconciling the divergent
policy paths set out above.
While coordination is essential, it has not always been attempted.
There are two reasons why. The first is that during the period 2006 to
2015, the federal Conservative government of Stephen Harper had no
interest in acting itself or leading coordinated federal–provincial policy.
To the extent coordination existed, it was on a subnational, cross-border
basis, primarily through provincial participation in the Western Climate
Initiative led by California (Winfield and Macdonald, 2012; VanNijnatten,
2016). The second factor explaining a lack of full coordination is that,
even during the periods when they were working to develop coordinated
national policy, governments at both orders have also acted independently.
Provincial governments have set reduction targets without regard for
coordinated effort, and federal governments have taken independent
action; examples of the latter are the plans by the Chrétien and Martin
governments for federal regulation of industrial emissions and, more
recently, the Justin Trudeau government’s federal backstop carbon pricing
system. For these reasons, this chapter examines both coordinated and
independent government actions.
The subject of climate change necessarily also includes intergovernmental politics and policies respecting proposals to build new pipelines to
carry Alberta oil to foreign markets, which, because they cross provincial
or international borders, require regulatory approval from the federal
government. Although not an issue in the initial attempts to develop
coordinated policy, pipeline politics have bedevilled the Pan-Canadian
Framework program led by the Justin Trudeau government.
In keeping with the other chapters in this volume, the purpose here
is three-fold. First, the chapter describes the workings of Canadian climate
federalism. A second objective is to evaluate national policy-making
to date using the three criteria of performance, effectiveness, and
Federalism and Canadian Climate Change Policy
legitimacy. The third objective is to explain these outcomes, which is
done in the penultimate section by providing analysis of why Canadian
national climate change policy has followed its particular evolutionary
path since 1990.
The chapter discusses the unique nature of the climate change issue
and the context within which Canadian policy-making takes place. With
respect to the first, given the need to change the use of fossil fuels, one
must remember that climate change overlaps closely with energy policy.
The result is that the differing economic interests of the oil-and-gasproducing regions relative to other parts of the country inevitably come
into play and do so in a salient, high-stakes manner. Beyond these regional
differences, climate change is also marked by ideological differences,
with citizens and political parties on the centre-left far more likely to act
on the issue than are those on the right.
DESCRIPTION: HISTORICAL OVERVIEW
1990 TO 2019
As can be seen in Figure 14.1, total Canadian GHG emissions generally moved upward from 1990 until the onset of the recession in 2008,
dipped because of the recession, and since then have been more or less
constant, at a level well above the 2030 target of 513 megatonnes (Mt).
While the trend in overall emissions has been largely one of increase
followed by stability, the trends for emissions from different forms of
economic activity vary. Use of fossil fuels for extracting and transporting
oil and gas (27 per cent of total Canadian emissions) and transportation
(24 per cent) are the two sources that have seen increases in recent years;
other sources, such as electricity (10 per cent) and heavy industry (less
than 12 per cent), have declined (Environment and Climate Change
Canada [ECCC], 2019c: 58).
Transportation is spread approximately evenly across the country on a
per capita basis, and so all parts of the country have seen similar increases
in emissions from that source. The oil and gas industry, on the other
hand, operates only in some regions. For that reason, plus differences in
policies implemented, emissions have been increasing in some provinces
while decreasing in others in recent years. The oil-producing provinces
of Alberta and Saskatchewan have seen GHG emission increases over the
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Mark Winfield and Douglas Macdonald
Figure 14.1. Total Canadian GHG Emissions, 1990 to 2017
800
745
721 742 732
716 714 716
688
744
682 700
700
732 725
723 724
716 704
652
696
694 707
614
673
596
635
600
613
603
500
513
400
300
200
100
Source: ECCC, 2019c.
Note: 2030 Paris target = 513 Mt.
period 2005 to 2017 of 18 per cent and 14 per cent, respectively. This
compares with decreases in emissions from Ontario (22 per cent) and
Quebec (9.8 per cent) during the same period, due to a combination of
economic restructuring and policy measures such as the Ontario elimination of coal-fired electricity generation and the Quebec cap-and-trade
program (ECCC, 2019c).
Emissions from oil and gas activity are expected to continue to increase,
in part due to anticipated increases in production from the Alberta oil
sands. Oil sands emissions were estimated to be 77 Mt in 2018 (Pembina
Institute, 2018). If all the oil sands projects that have already received
regulatory approval come on line, emissions will increase to 131 Mt
(Pembina Institute, 2018). The Rachel Notley NDP government elected
in Alberta in 2015 took significant action to reduce the rate of increase
in Alberta emissions. Its measures included a carbon tax, an end to
coal-fired electricity, and a cap of 100 Mt, with exceptions, on oil sands
emissions. Those actions worked only to reduce the rate of increase in
Alberta emissions, rather than bring about a net reduction. In 2018, the
Alberta government forecast that its emissions would be higher in 2030
20
30
0
19
9
19 0
9
19 1
9
19 2
9
19 3
9
19 4
9
19 5
9
19 6
9
19 7
9
19 8
9
20 9
00
20
0
20 1
0
20 2
0
20 3
0
20 4
05
20
0
20 6
0
20 7
0
20 8
0
20 9
1
20 0
1
20 1
1
20 2
1
20 3
1
20 4
1
20 5
1
20 6
17
MEGATONNES of CO2 EQUIVALENT
709
Federalism and Canadian Climate Change Policy
than they were in 2010 (Alberta, 2018). The Jason Kenney-led United
Conservative Party, elected in April 2019, immediately scrapped the
Notley carbon tax (which, in turn, led to imposition of the federal tax);
by early 2020, the fate of the other Notley policies was not yet clear.
Nevertheless, Premier Kenney is fully committed to the long-standing
Alberta government goal of maximizing oil sands production.
In 1990, 1997, and again in 2010 the government of Canada, as it has
participated in the international climate change regime, gave commitments for reductions in total Canadian emissions. All three targets were
missed. Whether or not Canada is able to achieve the current Paris target
depends very much on whether the country continues to go down two
different policy tracks, or instead is able to use the intergovernmental
policy-making system so that all parts of the country are moving in the
same direction of declining emissions.
Failure to Develop Effective Coordinated National Policy,
1990 to 2015
In 1990, the Progressive Conservative government of Brian Mulroney,
having previously helped to put the issue on the international policy
agenda by co-hosting the 1988 “Toronto conference,” set the target of
stabilizing emissions at the 1990 level by the year 2000. It started to work
with the provinces to develop coordinated policy to achieve that goal.
That was done for the next twelve years, without use of effective policy
instruments such as law or tax. Not surprisingly, emissions continued to
increase. Throughout that period, the government of Alberta played a
veto role, lobbying against adoption of the 1990 target; lobbying in favour
of voluntary instruments; and successfully pushing for a two-year pause
after the 1997 Kyoto summit, during which governments did planning
instead of policy implementation (Macdonald, 2009).
In 2002, the Canadian government led by Liberal Prime Minister
Jean Chrétien ratified the 1997 Kyoto Protocol. The fact it did so over
the objections of Alberta and all other provinces brought the effort to
develop coordinated policy to an end. Earlier that year, Alberta and
Ottawa began to move in different policy directions. Alberta adopted a
reduction target significantly weaker than the existing national target
and initiated the policy it still follows today, of a net increase in provincial emissions, even while the country as a whole is seeking to reduce
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emissions. For its part, Ottawa gave up on working with the provinces
and started to develop independent plans to regulate industrial emissions
(Winfield and Macdonald, 2012).
Those plans for independent federal regulation were continued by
Paul Martin’s Liberal government from 2003 to 2005. The government
fell, however, in December 2005 before the regulations were put into
effect. The Conservative Harper government, in office from 2006 to
2015, then essentially ignored the issue. It made no effort either to work
with the provinces to develop coordinated policy or to implement its
own emissions-reduction policy (Toner and McKee, 2014). Instead, it
worked to harmonize Canadian federal policy with that of the US federal
government (Winfield and Macdonald, 2012). However, that alignment
lasted only until it became apparent that the Obama administration
intended to take action on industrial emissions even without new legislation from Congress.
During this period, some provinces began to independently implement effective policy. The most notable examples are the 2008 British
Columbia carbon tax, the phasing out of coal-fired electricity in Ontario
(due initially to concerns for health effects of smog, rather than climate
change), the joint Quebec–California cap-and-trade system (which Ontario joined in 2016 but then abandoned in 2018 after the Wynne Liberal
government was replaced by the Doug Ford Progressive Conservative
government), and legislated reductions from electricity generation in
Nova Scotia. As noted, the Rachel Notley NDP government reversed
Alberta climate change policy by enacting significant measures to reduce emissions. At the same time, Premier Notley, like previous Alberta
governments, lobbied for federal approval of new pipelines that would
allow continued increase in oil sands production.
By fall 2015, independent governments had been acting unilaterally
for nine years, making no attempts to develop coordinated Canadian
policy. Cross-border subnational coordination, which had seemed promising a decade earlier (Winfield and Macdonald, 2012), had not borne
fruit, other than the Quebec–California partnership. Analysis done a
few years earlier showed that the sum of the independent actions being
taken would not be sufficient to meet the 2020 target (National Round
Table on the Environment and the Economy [NRTEE], 2012), indicating that uncoordinated provincial action, with no leadership from the
federal government, cannot achieve a Canadian commitment. That
Federalism and Canadian Climate Change Policy
federal leadership reappeared, however, when Justin Trudeau’s Liberal
government was elected on October 19, 2015.
The Pan-Canadian Framework and Pipelines,
October 2015 to February 2020
The change of government in 2015 brought about a sea change in
federal–provincial climate policy. Unlike its predecessor, the new Liberal
government was committed both to acting itself on the issue and to
working with the provinces to develop coordinated policy. Furthermore,
the Alberta government, whose participation is essential for any national
program given that it is responsible for 38 per cent of Canadian emissions
(ECCC, 2019c), had moved under Premier Notley from the veto role it
had played during the national efforts of the 1990s to one supporting
coordinated national action. That support, however, came at a price:
one that would significantly complicate the intergovernmental process.
Alberta would only participate in a new national program if the Justin
Trudeau government approved a new pipeline to tidewater. Since the
late 2000s, the oil industry and successive Alberta governments have been
strongly committed to seeing new pipelines built both to the US and to
either the west or east coast of Canada, from which point oil could be
shipped to Asia or other parts of the world. The Harper government
aided those efforts, as has the Trudeau government since it was elected
in 2015, albeit with the difference that Trudeau linked his support for
pipelines to his policies to reduce Canadian greenhouse gas emissions.
The industry and Alberta’s push for new pipelines was driven by a
combination of a weakening US market, due to the increasing availability
of low-cost “fracked” oil, and opposition to pipeline expansions by the
Obama administration in the US, particularly in light of the Harper government’s climate policies. These dynamics made regulatory approvals
for new pipelines, which used to be largely invisible and almost automatic, very visible and highly politicized. The American environmental
movement, frustrated by the inability of the Obama administration to
get climate change legislation through Congress, had adopted a new
objective of stopping the Keystone XL pipeline. It had begun working
with Canadian environmentalists on a strategy of “land locking” Alberta
oil – making investment in the oil sands less attractive because of difficulties in getting the product to market (Hoberg, 2013).
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Two other factors compound the challenge faced by industry and the
government of Alberta. The first is a series of court rulings flowing from
section 35 of the Constitution Act, 1982 requiring substantive and meaningful consultation with Indigenous peoples where proposed pipelines
and other projects may affect their Aboriginal and treaty rights on treaty,
traditional, or unceded territories (Haida, 2004). At the same time, pipelines have the inherent effect of imposing costs on some and benefits
on others, since the majority of the benefits flow to Alberta industries
and governments while costs, in the form of risk from spills, are borne
by those in the other provinces through which the pipelines pass. Local
politicization of these risks led Quebec municipalities to object to the
now cancelled Energy East pipeline. It has also led to the major dispute
between British Columbia and Alberta over Kinder Morgan’s plans to
build a new line on the route of the existing Trans Mountain pipeline
from Edmonton to Burnaby on the Pacific coast.
Although Prime Minister Justin Trudeau was clearly committed to
climate change action, he had been elected on a platform of support for
both environmental protection and building some new pipelines. Prior
to the election Trudeau had publicly expressed support for Keystone XL
but not Northern Gateway and said nothing about the Kinder Morgan
expansion (Campion-Smith, 2015). Trudeau and Notley were in basic
agreement. This “balanced” approach, however, was to cause the prime
minister considerable headaches as he attempted to stitch together a
new, federal–provincial climate change policy.
That process started when the prime minister and premiers met on
November 23, 2015, immediately prior to the Paris summit. A number
of premiers then accompanied Prime Minister Trudeau and his environment minister to Paris, where they and other members of the Canadian
delegation, for the first time in many years, spoke strongly in favour of
international action. By the early spring of 2016 it had become clear that
the primary objective of the Trudeau government was to ensure that a
price was put on carbon in all parts of the country, with “price” defined
as either an explicit tax or a trading system that achieved a comparable
reduction.
The central instrument was a federal “backstop” price. Originally
planned to start at $10 a tonne in 2018, it would rise to $50 by 2022. (In
fact, the federal tax was first imposed in 2019, at $20.) Ottawa would
itself impose that price within the borders of any province that had not
Federalism and Canadian Climate Change Policy
introduced a tax or trading program. All resulting revenues would be
returned to the province in question. Whether given directly to citizens
or firms or instead to the provincial government was not specified at
the time. In 2018, it became clear the tax would be returned to citizens,
over the heads of objecting provincial governments.
The fact that the four largest provinces – BC, Alberta, Ontario, and
Quebec – already had pricing programs in place and so were only asked
to agree to the 2022 $50 price made achieving the federal pricing objective that much easier. Saskatchewan, which had no pricing program
and was relying primarily upon technological development of carbon
capture and storage to achieve future reductions, objected to the federal
proposal. So too did Nova Scotia. It had reduced its per capita emissions
by more than any other province, but without use of a carbon tax or
trading system; reductions were due to declining demand for electricity,
legislated caps on Nova Scotia Power, and a subsidy for renewable-source
electricity (Doelle, 2018).1
Federal and provincial environment ministers met on January 29,
2016, followed by a meeting of first ministers in Vancouver on March
2–3. Some premiers objected to the prime minister’s insistence that
provincial pricing be done only by means of a tax or trading program.
Faced with this resistance, the prime minister acquiesced, and as a result the meeting communiqué said that all governments would act “by
adopting a broad range of domestic measures, including carbon pricing
mechanisms, adapted to each province’s and territory’s specific circumstances” (Vancouver Declaration on Clean Growth and Climate Change, March
3, 2016). Saskatchewan and Nova Scotia interpreted this as meaning
their programs would exempt them from the federal backstop price.
It seemed that governments were working in a collaborative mode, as
equals developing national policy together.
By early fall, however, things had changed considerably, with collaboration giving way to unilateral federal action. In September, federal environment minister Catherine McKenna stated that the minus
30 per cent target, which had previously been presented as a “minimum,”
was in fact the Canadian target (Payton, 2016). On September 21, 2016,
McKenna stated that provincial action had to be in the form of a tax or
trading system (CBC News, 2016a). This was perhaps correctly perceived
by some provinces as breaking the Vancouver agreement on “carbon
pricing mechanisms.” On October 3, 2016, the prime minister formally
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announced the backstop price in the House of Commons, showing a
surprising lack of diplomatic finesse, since on that same day federal and
provincial environment ministers were meeting to develop the national
plan. The Saskatchewan, Newfoundland and Labrador, and Nova Scotia
ministers walked out of the ministers’ meeting in protest. Premier Wall
of Saskatchewan called the federal announcement a “betrayal” of the
Vancouver agreement (CBC News, 2016b). For her part, Alberta premier
Rachel Notley said publicly her province would only participate in the
national program if the federal government approved a new pipeline.
Prime Minister Trudeau gave Alberta what it wanted on November 29,
2016, when his government rejected the Northern Gateway pipeline but
approved the Kinder Morgan Trans Mountain and the Alberta-to-Wisconsin
Line 3 pipeline renewal and expansion. These pipelines would significantly
increase the quantity of oil Alberta could export daily, both to the US and
to the Pacific west coast. Although subsequently running into difficulties,
these approvals made possible the agreement reached at a first ministers’
meeting in Ottawa on December 9, 2016, when all governments except
Manitoba and Saskatchewan signed on to the Pan-Canadian Framework
on Clean Growth and Climate Change (PCF). Manitoba refused to sign
because of an unrelated dispute over healthcare spending. Saskatchewan,
which had inherited from Alberta the mantle of chief Ottawa opponent,
both refused to sign and promised to challenge the federal backstop
price in court. Nova Scotia, on the other hand, dropped its opposition,
agreed to bring in a cap-and-trade system, and signed on to the PCF
in exchange for federal agreement that it could operate its coal-fired
electricity plants past the year 2030.
Since then, Ottawa has proceeded to implement those parts of the
program that fall fully within its jurisdiction. The Trudeau government
enacted its greenhouse gas pollution pricing legislation (authorization
for the federal backstop price) as part of the 2018 federal budget. On
October 23, 2018, the prime minister announced that four provinces
(Saskatchewan, Manitoba, Ontario, and New Brunswick) had not implemented carbon pricing. Since they had not met the federal standard, the
federal tax would be applied there, with resulting revenues returned to
citizens in each province. Federal regulations on hydrochlorofluorocarbons (HFCs), substances that both deplete the ozone layer and contribute
to climate change, came into effect in October 2017, and draft federal
regulatory requirements to end coal-fired electricity generation by 2030
Federalism and Canadian Climate Change Policy
(with exemptions given to Saskatchewan and Manitoba) were published in
2018 (ECCC, 2018b: 7). Federal regulations to reduce methane emissions
from oil and gas, with provisions for provincial equivalency agreements,
were published in 2018. Consultations on development of the federal
clean fuel standard, intended to reduce the carbon intensity of liquid,
gas, and solid fuels by means of federal law, continued.
Work with the provinces in the form of shared-cost programs for projects leading to emission reductions also proceeded. By December 2018
$1.1 billion of the $1.4 billion federal funding for the PCF Low Carbon
Economy Leadership Fund had been approved (ECCC, 2018b). Joint
programs had been agreed to with eight provinces – all except Manitoba
and Saskatchewan, who having not signed the PCF were not eligible
(Government of Canada, 2019). As discussed below, Ontario under
the Doug Ford government cancelled its participation in all the federal
shared-cost programs (Government of Canada, 2018). In response, the
Trudeau government said it would look for options to provide funding to
Ontario organizations (ECCC, 2018a). In the same way, federal funding
has been supplied to bodies within the province of Saskatchewan, such
as the City of Regina, despite the provincial government’s ineligibility
(ECCC, 2019d).
The path of implementation for the PCF in other areas, however,
has not been smooth. Two major challenges have emerged. One is the
difficulties surrounding the Trans Mountain expansion pipeline: the
price of Alberta participation in the PCF. The second is the partisan,
ideological opposition to the federal backstop carbon price on the part
of Conservative premiers and the leader of the federal opposition, Conservative Party leader Andrew Scheer.
In July 2017 the NDP, led by John Horgan and supported by the
three Green Party members, replaced Christy Clark’s Liberals as the
government of British Columbia. Five years earlier, Clark’s government
had announced it would only support a new heavy-oil pipeline crossing
its territory from Alberta to the west coast if five conditions were met.
They included upgraded marine spill response capacity to be provided by
Ottawa and a “fair share” of the associated financial benefits (BC, 2012).
The tensions that BC’s conditions created with Alberta were eventually
resolved by an agreement between the two provinces signed on November
5, 2013. Under the agreement, Alberta accepted the BC conditions and
both parties agreed that BC would seek financial compensation from
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the relevant pipeline company, rather than Alberta (Alberta, 2013).
After negotiations, Kinder Morgan agreed to pay the BC government a
minimum of $25 million a year for twenty years. In exchange, the Clark
government issued regulatory approvals for the Trans Mountain line,
complementing the prior federal approval.
The NDP government, however, did not feel bound by this agreement
and, true to its election platform, announced it would try to stop construction of the new Trans Mountain line. In January 2018 the Horgan
government announced plans to introduce new legislation giving it authority to regulate increases in the quantity of heavy oil shipped through
British Columbia. The Alberta and federal governments condemned
BC’s action as being beyond the province’s jurisdiction. In late February,
Premier Horgan announced he would seek a court ruling on the constitutionality of his proposed regulations; in January 2020 he got his answer
when the Supreme Court unanimously found the British Columbia law
to be unconstitutional. In early April, Kinder Morgan announced it had
temporarily halted work on pipeline construction and would abandon
the project altogether if it did not have regulatory certainty by May 31
(Ferrerase and Mertz, 2018).
Faced with this threat of capital flight, the governments of Alberta
and Canada accepted the deadline and vowed to do what was needed
to ensure the pipeline was built. The federal and Alberta governments
entered into secret negotiations with Kinder Morgan. They culminated
in an announcement on May 29, 2018, that Ottawa had agreed to buy
the existing pipeline for $4.9 billion and planned to spend another
$7 billion to build the new line, in the hopes of then selling both to
private investors. Alberta had promised another $2 billion if needed.
On August 30, 2018, however, the Federal Court of Appeal overturned
the federal approval of the pipeline expansion, given in November 2016,
on the grounds that the National Energy Board (NEB) had not considered impacts of increased tanker traffic on endangered killer whales in
the ocean waters off British Columbia and that the federal government
consultation with Indigenous peoples had been inadequate. The Trudeau
government did not appeal the decision. Instead, it ordered the NEB to
reconsider the project application (this time with the federal government
as owner and proponent) and launched a new series of Indigenous consultations. On February 22, 2019, the NEB released its Reconsideration
Report, recommending approval. Although the report stated that the
Federalism and Canadian Climate Change Policy
Kinder Morgan project will have adverse effects on the whales, the project
was still justified in light of its economic benefits (NEB, 2019). On June
18, 2019, the Trudeau government again approved the pipeline and
shortly afterward new court actions were launched to stop it. In response,
the Federal Court of Appeal ruled that consultation with Indigenous
peoples was adequate this time, allowing construction to continue; that
decision may be appealed to the Supreme Court.
Responding to the August 30, 2018, court decision, Alberta Premier
Rachel Notley announced that her government was opting out of the PCF
“until the federal government gets its act together” (CBC News, 2018b).
Premier Notley’s announcement was interpreted as a suspension of Alberta’s participation in the PCF until new regulatory approvals for the
Trans Mountain expansion were in place and construction had started.
Premier Notley did not, however, cancel the Alberta carbon tax, which
had increased to $30 a tonne in 2018. Instead, she decreed that Alberta
would not comply with the federal backstop by increasing the Alberta
tax to $40 in 2021 and then $50 in 2022. (The federal government
deemed Alberta to be in compliance with the backstop price in 2019.)
Nor yet did Alberta withdraw from participation in PCF programs.2 For
instance, the PCF second annual report, issued in December 2018, three
months after Premier Notley’s announcement of opting out, said that
“Alberta continues ... engagement on the federal Clean Fuel Standard
development” (ECCC, 2018a: 55). It seems that the Alberta withdrawal
from the PCF, at least prior to the Alberta election in the spring of 2019,
was more rhetorical than actual.
While the Trudeau–Notley alliance between two centre-left governments
survived more or less intact, relations between the Trudeau government
and conservative provincial governments became visibly hostile. Brian
Pallister, Progressive Conservative leader in Manitoba, joined the PCF in
February 2018 and began planning to introduce carbon pricing. Pallister
then abruptly cancelled those plans later in the year (Lambert, 2018),
with the result that the federal tax was applied in that province. Scott
Moe, who had replaced Brad Wall as Saskatchewan premier, continued
that province’s vocal opposition to the federal tax. Saskatchewan’s court
action to declare the tax unconstitutional went to a hearing in February
2019. Shortly after he was elected Ontario premier on June 7, 2018, Doug
Ford cancelled the Ontario cap-and-trade program and Ontario’s participation in shared-cost programs and initiated legal action against the
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federal tax. The Saskatchewan and Ontario Courts of Appeal subsequently
found in split decisions the federal backstop carbon pricing regime to be
constitutional. Both provinces have appealed to the Supreme Court of
Canada. However, in February 2020, the Alberta Court of Appeal ruled in
favour of the province in a split decision. The Alberta minister of justice
conceded that the Supreme Court of Canada will have the final say but
asked that in the meantime the federal government stop collecting the
tax and return all monies collected so far to Alberta.
On November 29, 2018, the Ford government introduced a new climate change plan. It made no reference to a carbon tax or trading but
instead contained vague plans to use government spending to induce
industrial emission reductions. The plan scaled back the Ontario 2030
target. For his part, federal Conservative leader Andrew Scheer made
attacks on the federal backstop carbon price central to his critique of
the Trudeau government.
The Trudeau–Notley alliance ended with Jason Kenney’s election
victory in Alberta in April 2019, an event that further weakened the
PCF. During the campaign, Kenney had promised an end to Notley’s
willingness for Alberta to co-operate with the federal Liberals, as well as
cancellation of her climate policies. Like the Ford government, Premier
Kenney moved quickly to keep that promise (at least in part), eliminating
Notley’s carbon tax paid by individuals (the NDP regulations on industry
were kept in a modified form). The federal government announced its
backstop price on fuels would apply in Alberta as of January 1, 2020. In
June 2019, the Alberta government announced plans to challenge the
federal carbon price in court.
At the federal level, Conservative leader Andrew Scheer released
his climate change plan in June 2019, immediately before the election
period. Like that of the Ford government, his plan made no use of carbon pricing and was equally vague except on one point: if elected, the
Conservatives would scrap the federal carbon tax. In the October 21,
2019, election, the Conservatives won all but one of the seats in Alberta
and Saskatchewan and received the greatest number of votes. Since the
Liberals were re-elected, albeit with a minority of seats in the House of
Commons, the federal carbon tax survived.
While the tax survived, Canadian climate change policy moved to
a new level of complexity and difficulty following the election. The
Trudeau government had no choice but to increase its level of effort:
Federalism and Canadian Climate Change Policy
the Liberals had run on a platform of more effective action, almost
two-thirds of voters had supported parties promising increased action,
and the minority Liberals were dependent for support upon parties
demanding increased action. This push for greater effort, however,
collided head-on with the demands of Alberta and Saskatchewan for
both new pipelines and changes to the federal regulatory regime. Those
demands would allow increased oil and gas exports which, barring an
unprecedented technological breakthrough, would also increase GHG
emissions from those provinces. The new level of complexity arises from
premiers Kenney and Moe framing their demands as matters of national
unity. Without representation in the Liberal cabinet, ignored during
the federal campaign (since everybody knew their citizens would vote
Conservative), and with undeniable economic and job-loss wounds, the
two provincial governments drew upon a century’s worth of western
alienation and flirtation with separatism to demand a new deal, not just
for energy and climate policy, but also with respect to the equalization
program (see chapter 10) and increased provincial autonomy.
Where does all this leave the Pan-Canadian Framework program?
Given the provincial opt-outs discussed above (although after the federal
election New Brunswick brought in its own tax on fuels and so effectively
rejoined the program), it is difficult to call the PCF a “national” program.
Furthermore, with Alberta and Ontario, which together account for
about 60 per cent of Canadian GHG emissions, both opting out of the
PCF while also scaling back their climate policies, other provinces will
have to do much more. Given the unlikelihood of the latter, achieving
the Paris target becomes more remote.
Rather than a national program, the PCF is best thought of as a program relying primarily upon federal legislation and spending, with some
provincial participation but also opposition from four provinces. The
PCF represents a considerable advance over the national programs of
the 1990s, which never involved the use of effective policy instruments
such as law or tax, and also an advance over the lack of any federal
leadership by the Harper government. However, the PCF cannot be
characterized as a collaborative exercise in developing coordinated
federal–provincial policy. Instead, it is a federal program in which some
provinces have agreed to participate and others have declined. Nor does
it address the basic problem, presented at the outset of this chapter, of
rising emissions in some parts of the country and declining emissions
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elsewhere. Indeed, the PCF institutionalizes that dichotomy, by accepting
that Alberta emissions will increase through to 2030 and by being based
upon federal action to expand pipeline capacity and thereby enabling
Alberta’s emissions to increase.
In the wake of the October 21, 2019, election, only one thing can be
said with certainty: the PCF and, with it, federal climate change policy
are certain to undergo major transformations as the Trudeau Liberals
search for a pathway through the thorny maze of new, unmistakable
demands by Canadian citizens for more effective action. The issue of
climate change dominated the 2019 election in a way no environmental
issue had ever done in a previous election. Demands for effective climate
action clash with those to ameliorate western regional discontent, and
the latter has reached a level of anger not seen since Pierre Trudeau’s
hated and reviled National Energy Program.
EVALUATION
This section evaluates the workings of Canadian climate change federalism, including both coordinated and independent government actions,
since 1990.
Performance: Institutions, Processes, and Results
The first item to be examined here is consistency with federal principles:
do governments recognize the proper role and autonomy of other governments? Is there a balance between unity and diversity? By and large,
since 1990 governments developing climate policy, alone or together, have
respected the role (jurisdiction) and autonomy of other governments.
The only possible exception has been the Trudeau government’s backstop
carbon price, which is exceptionally assertive federal action. That said,
whether it violates norms of federalism is less clear. On the one hand, it
could be argued that the policy violates norms of respect for provincial
governments’ autonomy in two ways. First, it entails the government of
Canada telling a provincial government that has explicitly said it does
not want its citizens and businesses to be subjected to some form of
carbon pricing that they will indeed be subject to a carbon price. Such
action by Ottawa could be seen as unwarranted interference. Second,
Federalism and Canadian Climate Change Policy
the specific case of Nova Scotia suggests undue federal interference. As
discussed, the province had reduced its GHG emissions more than any
other province and yet was told by Ottawa that it would nevertheless
have to introduce some form of pricing. On the other hand, one could
argue that the federal backstop does not reduce autonomy because
provincial governments are still free to put in place any other climate
change policies or to altogether refrain from acting on the issue. With
respect to Nova Scotia, Ottawa allowed the province to choose its form of
carbon pricing (tax or trading systems). Moreover, national consistency
and the risk of “carbon leakage,” where economic activities move from
provinces that do price carbon to those that do not, requires that some
form of comprehensive pricing be introduced in all provinces.
There has not been a balance between unity and diversity. Since
1990, given the ineffective nature of the two 1990s national processes,
the emerging problem of provincial legal challenges to the PCF, and the
large number of autonomous provincial programs, diversity has been
the norm. Because the Conservatives, with their promise to cancel the
federal carbon tax, were not elected in 2019, the prospects for unity in
the form of carbon pricing in each jurisdiction now rests on a Supreme
Court finding that the federal tax is in fact constitutional.
Have we seen “workability”? That is, do forums exist for consultation,
negotiation, and coordination of governments? The complex intergovernmental processes of the 1990s provided many venues for consultation,
coordination, and negotiation, but these opportunities did not translate
into effective policy. During the 2003–5 period, workability prevailed
in the form of the Martin government pursuing a strategy of bilateral
engagement with the provinces individually. Since the PCF signing in
2016, there have been no further first ministers’ meetings specifically
focused on climate change (although climate and energy policy were
discussed at the December 7, 2018, FMM) or meetings of environment
ministers specifically devoted to the PCF. (Ministers meet annually under
the auspices of the Canadian Council of Ministers of the Environment.)
Instead, the multilateral process that generated the PCF has been replaced
by a series of Ottawa–provincial bilateral discussions.
Can governments produce results by agreeing on policy? Again, no
such agreement was possible during the period when no intergovernmental process was in place. Governments engaged in intergovernmental
processes have agreed on climate policy on two occasions. The first was
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during the 1990s, which saw agreements, but only for voluntary action.
The second was on December 9, 2016, when all but two governments
signed the PCF. Governments could not reach agreement in 2002, when
Ottawa launched its own unilateral policy, then ratified Kyoto in the face
of provincial resistance, and attempts at coordination came to an end.
Nor were they able to reach agreement in 2018 when some provinces
opted out of the carbon pricing system and took legal action, hoping
to have it declared unconstitutional. While agreement was reached by
signing the December 2016 PCF, the fundamental policy difference between Alberta, with its policy of steadily increasing emissions, and other
provinces implementing reduction policies was papered over.
Has Canadian climate change federalism since 1990 shown a capacity
to pull conflicting objectives into one coherent whole, thereby managing
political cleavages? The answer is no. The fossil-fuel provinces of Alberta
and Saskatchewan have moved steadily in the direction of increasing
oil and gas production, which has meant rising emissions, while other
provinces have reduced their emissions. None of the intergovernmental
processes has brought about a change in this interprovincial cleavage.
Nor has the PCF been able to address the ideological cleavage between
right-wing governments vehemently opposed to carbon pricing and
others that are successfully implementing pricing.
Has decision-making been consensual? Do rules promote accountability of governments to their citizens and to one another? The three
intergovernmental processes have relied only on consensus (that is,
unanimity) with the associated right of governments to opt out. That is,
no consideration has ever been given to such things as qualified majority
voting (to be adopted, a decision must be approved by more than 50
per cent of participants or some other formula). Even had such a system
been used for the December 2016 adoption of the PCF, absent some
effective enforcement mechanism, provinces would still have had the
ability to subsequently opt out (as Ontario did after its 2018 election).
Canada’s accountability to the international UNFCCC regime is
achieved through the requirement that, like all participating countries,
it file annual reports on progress. During the 1990s’ intergovernmental
processes, there was no reporting by governments to their citizens. The
PCF, however, has generated two annual reports on progress, in 2017
and 2018 (ECCC, 2017, 2018b). In addition, in an unprecedented move
auditors general of all jurisdictions worked together to produce a joint
Federalism and Canadian Climate Change Policy
report for Canadians in March 2018 on the collective progress being
made (or not) by governments to achieve climate change goals (Auditor
General of Canada, 2018). The accountability of governments to one
another in the PCF is diminished by the lack of regularly scheduled
meetings of first ministers and energy/environmental ministers to review
progress and plan next steps. To the extent it exists, accountability flows
only from provinces to Ottawa in the form of the federal backstop price
should provinces not act, arrangements governing shared-cost programs,
and bilateral discussions.
Effectiveness: Policy Outcomes
As discussed, the most effective policies have been those implemented by
Canadian provinces acting autonomously, without regard to what other
Canadian governments were doing. Intergovernmental processes, by
contrast, have been ineffective. The combination of autonomous provincial actions and intergovernmental processes have resulted in failure
to meet the first three national targets, and the PCF is on track to miss
the fourth, the 2030 Paris target. The federal government reported in
2019 (ECCC, 2019b) that, with both existing policies and policies still
being developed, emissions were forecast to be 19 per cent (rather than
30 per cent) below the 2005 level by 2030. Furthermore, the reductions
achieved by some provinces acting alone have been overwhelmed by
the emission increases in free-riding provinces. Canadian climate policy,
that which is intergovernmental as well as that which is unilateral, has
been ineffective because it has been unable or unwilling to address that
basic problem.
In the face of this failure, Canadian governments have used all policy
instruments available to them, including fiscal incentives, law-based
regulation, tax and cap-and-trade, public outreach and education, to
promote policies to reduce GHG emissions. They have also innovated,
most especially in the 2016 federal backstop price.
Canadian climate policy has imposed at least marginal costs upon
powerful actors. In energy extraction and production, companies are
subject to tax or trading programs. The coal industry in Alberta, while
being compensated for the decision by the Alberta government to end
coal-fired electricity generation by 2030, has still lost that market. However, generous arrangements have been made to accommodate large
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industrial emitters. An example is free allowances provided in the initial
phases of the Ontario and Quebec trading systems. The federal backstop
price imposed on industry is designed to reduce costs to trade-exposed
industries. The costs to trade-exposed industries was further reduced,
potentially to zero in many cases, by changes to the system announced
by the Trudeau government in August (McCarthy, 2018) and December 2018 (Vigliotti, 2018). This meant that industry’s share of the total
costs of the reductions brought about through federal carbon pricing
is reduced relative to the share paid by citizens though fuel purchases
(for which they receive a rebate).
Have policy outcomes allowed asymmetry where it is needed and
warranted? Certainly, climate policy since 1990 has been marked by the
basic asymmetry that is a major theme of this chapter, between regions
with rising emissions and those where emissions are falling. Is that warranted? Perhaps it is, if national unity is the major criterion applied; it is
not, when seen through the lens of policy effectiveness. This asymmetry
is the underlying explanation for the fact of policy failure to date.
Legitimacy
Polling data indicate that about half of Canadians express support for
the federal backstop price (Angus Reid, 2018). About 60 per cent of
Canadians also want governments to do more than at present to address
the climate issue (CBC News, 2018a). While presumably most Canadians
want the country to keep its international commitments, a significant
minority of them do not see action on the issue, or the particular policy
instrument of a carbon price, as being legitimate or needed.
Public opinion in Quebec is consistently the most favourable towards
government action on environment and climate change. Quebec government officials are supportive of the federal backstop price, since
it helps to address their concern that other provinces will not match
Quebec’s level of ambition, or that Quebec’s economy will be undercut
by competition from competing jurisdictions that do not price carbon
(HEC Montreal and York University, 2015).
The issue of climate policy legitimacy in the eyes of Indigenous peoples is complex and cannot be fully addressed here. Court decisions
enforcing the Crown’s duty to consult with Indigenous peoples prior to
major project approval have meant that Indigenous peoples and their
Federalism and Canadian Climate Change Policy
governments are now a new, powerful actor in the domain of climate
and energy politics. As noted, they were successful in derailing the
Trans Mountain expansion in 2018 and will certainly play a central role
in future developments respecting energy infrastructure. However, Indigenous peoples do not speak with one voice. Some benefit financially
from oil and gas exports and tend to be supportive, while others take
the opposite position.
In summary, the performance of Canadian federalism in this policy
field has generally been in keeping with federalism norms. That has
only been possible, however, by sacrificing policy effectiveness to avoid
damage to national unity. By and large, climate policy has been seen to
be legitimate, but that is because Canadians do not have an overwhelming desire for fully effective policy. That perception may shift in the face
of the increasingly evident impacts of climate change in the forms of
extreme weather events, flooding, and wildfires (ECCC, 2019a).
Two other summary points are made. First, the experience since the
signing of the PCF, with governments withdrawing because of electoral
change or a court decision, shows the basic problem of ensuring policy
continuity in a federal–provincial climate change program designed to
stretch over a considerable period. The death of the 1987 Meech Lake
Accord because governments changed is another example of the problem. The Trudeau government, for its part, never expected its carbon
pricing backstop to become the primary mechanism for implementing
carbon pricing in Canada. Indeed, until June 2018 it seemed likely that
it would only be applied, and even then only partially, in one province:
Saskatchewan.
Second, experience since 1990 on the climate file does point to one
strength of Canadian federalism. Coordinated action may not have been
effective, but the autonomy given to governments for policy experimentation and independent action has meant that total greenhouse gas emissions are not as high today as they would have been without that diversity.
EXPLANATION
Explanation is offered here of two related phenomena. The first is the
pattern of Canadian climate federalism since 1990, in terms of coordinated and independent government actions. The second is the inability
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of Canadian governments to put in place effective climate change policy
that can bring about a reduction in total Canadian emissions sufficient
to achieve a national target. In terms of the first, the pattern of Canadian
climate federalism is summarized as follows:
1990–2002
• coordinated action with Alberta veto role
2003–5
• federal unilateral action plus some bilateral
federal–provincial agreements
2006–15
• no federal action, no attempt at coordinated
action
• provinces acting independently, generating
some effective policy
• some attempts at cross-border subnational
coordination
2015–20
• federal unilateral action plus leadership of
coordinated action; weakened by provinces
opting out
How do we explain that pattern, which begins and ends with attempts to
develop coordinated policy? Presumably one explanation is that coordinated action is the default option, given that Supreme Court decisions
have confirmed that both levels of government share jurisdiction with
respect to environment. Given this starting point, the question becomes:
how do we explain the instances of divergence from coordinated action,
by both levels of government? For the provinces in the 2006–15 period,
independent action is explained by the simple fact there was no intergovernmental process available to them had they wished to work in concert
with others. Driven by their own circumstances, such as the nature of
their economies and the ideology of the governing party, they acted or
did not. Independent action by provinces during periods of coordinated
policy-making, such as adoption of provincial targets unrelated to the
national effort or the Ontario cap-and-trade cancellation, is explained
by the weak ability of the Canadian intergovernmental relations process
to bind participating governments.
An explanation of the first instance of unilateral action by Ottawa
has been provided by David Anderson, minister of environment in the
Chrétien government in the spring of 2002 when that government
decided to move from coordinated action to unilateral regulation. He
Federalism and Canadian Climate Change Policy
and the prime minister had become convinced the existing voluntary
approach was ineffective, they wanted to move to a policy instrument
closer to law-based regulation, and they sensed that the business community was also becoming frustrated by the ambiguities inherent in
the voluntary approach (Macdonald, Houle, and Patterson, 2011).
Anderson told the news media at the time that if that change of policy
instrument meant Ottawa had to work alone, without the provinces, so
be it (McCarthy, 2002).
The independent action of the Harper government – the decision
to not act on the issue itself or to lead coordinated action – can be explained by that prime minister’s view of federalism and of the climate
issue. Harper was convinced each government should act within its own
jurisdiction and had no interest in coordinated national programs in
any policy area. Nor did he believe climate change required significant
government action.
Independent action in the form of the Trudeau government’s
backstop carbon price seems also to be explained by Trudeau’s view
of federalism. Unlike Harper, he clearly does believe in coordinated
action but also believes Ottawa should play a role in establishing minimum national standards. In a pre-election speech given in Calgary
on February 6, 2015, Trudeau compared his approach to federal–
provincial climate policy to the minimum standards found in healthcare (Trudeau, 2015).
How do we explain the failure of Canadian climate policy to reduce
total emissions? A review done in 2008 of the explanations offered by
analysts for the failure of Canadian climate change policy up to that date
found four explanations: (1) the magnitude of the Canadian challenge,
flowing from geography (long distances, hot summers, and cold winters)
plus population increases; (2) political action by industry and Alberta
seeking to delay or weaken policy; (3) the related issue of differing regional economic interests; and (4) internal conflict within the federal
government between the Environment and Natural Resource departments (Macdonald, 2008). In that same year, Winfield and Macdonald
(2008) argued that Canadian federalism was able to generate at least
somewhat effective coordinated policy respecting toxic substances (using
the 1998 Environmental Harmonization Accord) but not respecting
greenhouse gas emissions because the cost of action – and associated
conflict among regions – was so much higher for the latter. Ten years
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later, those explanations are still largely valid, although the internal
federal conflict has disappeared from public view.
Contextual factors, such as Canadian geography and the high degree
of reliance upon the US as an export market, which leads Canadian
business to push for harmonization of Canadian climate policy with
that of the US, are clearly part of the explanation. Far more significant,
though, is the factor pointed to above: differing regional economic
interests flowing from the geographic location of oil and gas reserves
and associated political action. The Rachel Notley government of
Alberta introduced new climate change policy in 2015 but did not
deviate from the objective of its predecessors: wealth creation by
means of fossil fuel export, for which additional pipeline capacity is
needed. Nor yet was it willing to bring about a net reduction of Alberta
emissions prior to 2030. The two tracks of decreasing and increasing
provincial emissions, with the latter cancelling out the former, explain
the Canadian failure.
However, the explanation lies not just in action by Alberta and Saskatchewan to protect their economic interest, since the federal government
has always supported their efforts. The fact that Canada is an oil and
gas exporting nation has always influenced federal policy. The Liberal
Chrétien, Martin, and Trudeau governments have moved with varying
degrees of enthusiasm to implement climate policy themselves and to
lead a search for coordinated federal–provincial action, but never at the
expense of reducing oil and gas exports. Most recently, Justin Trudeau’s
“balanced” approach of a carbon price and a new pipeline demonstrate
his government’s willingness to accept a national program that includes
Alberta emission increases through to 2030.
The second explanation is the ideology of the governing party. As
noted, climate change has become a highly polarized issue with the
result that Liberal or NDP governments are far more likely to act than
are Conservative governments. Although they ultimately failed to implement effective measures, the Liberal Chrétien and Martin governments recognized the climate change problem and demonstrated a
willingness, either in co-operation with the provinces or acting alone,
to try to meet Canada’s international commitments. The Justin Trudeau
government has implemented a backstop carbon pricing system. The
Harper Conservatives, on the other hand, repudiated the Kyoto commitment and made no efforts at federal–provincial coordination or
Federalism and Canadian Climate Change Policy
co-operation. In fact, they were openly critical of those provinces that
acted independently. What actions they did take (vehicle emission and
fuel economy standards) were effectively forced by the actions of the
Obama administration in the US.
At the provincial level, the Alberta government brought in effective
climate policies when an NDP government ended some forty years of
Conservative rule. British Columbia moved from accepting the Trans
Mountain pipeline to opposing it because an NDP government was
elected there, while Ontario ended its cap-and-trade program and
partnership with Ottawa in the PCF because a Progressive Conservative government was elected in that province. Ideology, however, only
explains so much. As shown by the bitter conflict between the two NDP
governments of British Columbia and Alberta, the dominant factor
distinguishing provincial climate policy is differences in provincial
economies.
CONCLUSION
In addressing the challenge of climate change mitigation, Canadian
federalism has seen federal and provincial governments use both coordinated and independent policy action. Independent policy, such as the
Ontario decision to end coal-fired electricity generation, has been more
effective than coordinated policy. That said, the Pan-Canadian Framework
signed in 2016 is a more effective attempt at coordinated policy than
were any of the 1990s’ federal–provincial programs. The PCF’s future is
uncertain, however, due to conflicts over pipelines and increasing provincial opposition, particularly as a result of provincial election outcomes
in 2018 and 2019. Nor has it been able to address the basic problem of
climate policy going down two different tracks, with emission increases
in the oil-exporting provinces cancelling out reductions made elsewhere.
Indeed, the Trudeau government has enabled that two-track situation,
by introducing carbon pricing but also buying a pipeline.
By and large, coordinated climate policy has been implemented within
the norms of Canadian co-operative federalism. Norms of co-operative
federalism have prevailed because federal governments have asked almost nothing of provinces, except for Justin Trudeau’s backstop carbon
price. Working within federalism norms helps to explain the failure to
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date of Canadian climate policy. Addressing the two-track problem might
require heavy-handed federal action and certainly runs the risk of bitter,
high-stakes, regional conflict. Perhaps not surprisingly, governments
have so far shied away, preferring national peace and harmony over
policy effectiveness.
An effective federal–provincial program would bring about emission
reductions in all parts of the country and would thereby be able to meet
an international commitment such as the Paris target. Whether our
federal system can achieve such ends remains an open question.
NOTES
1 Personal communication by email from B. Haley to D. Macdonald, February 20, 2019.
2 Personal communication by email from J. Bertrand of Environment and
Climate Change Canada to D. Macdonald, December 11, 2018.
GLOSSARY
carbon price The application of a cost to each tonne of GHGs emitted.
Pricing can take two forms. The first is a carbon tax, applied on the basis of
the GHG content of a fuel. The second is in a cap-and-trade system. There,
emitters of GHGs must purchase permits authorizing emissions. Permits
are purchased from governments or other emitters through markets
established for that purpose.
greenhouse gas (GHG) Gases, such as carbon dioxide and methane, that
accumulate in the upper atmosphere. In excessive concentrations they
cause climate change.
National Energy Board (NEB) Canada’s national energy regulator, recently
re-named the Canadian Energy Regulator.
Pan-Canadian Framework on Clean Growth and Climate Change (PCF)
A December 2016 agreement among the federal government and most
provinces on approaches to meeting Canada’s GHG emission reduction
target commitments.
United Nations Framework Convention on Climate Change (UNFCCC) The
global agreement to combat climate change that underlies international
climate change negotiations and commitments.
Western Climate Initiative An initiative launched in 2007 by several US states
and Canadian provinces to coordinate approaches to fighting climate
change.
Federalism and Canadian Climate Change Policy
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by D.L. VanNijnatten, 181–96. Don Mills, ON: Oxford University Press.
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Vigliotti, M. 2018. “Feds Loosen Carbon-Price Limit for Certain Large
Polluters.” iPOLITICS, December 20, 2018. https://ipolitics.ca/2018/12
/20/feds-loosen-carbon-price-limit-for-certain-large-polluters/.
Winfield, M., and D. Macdonald. 2008. “The Harmonization Accord
and Climate Change Policy: Two Case Studies in Federal-Provincial
Environmental Policy.” In Canadian Federalism, edited by H. Bakvis and
G. Skogstad, 266–88. 2nd ed. Don Mills, ON: Oxford University Press.
———. 2012. “Federalism and Canadian Climate Change Policy.” In Canadian
Federalism, edited by H. Bakvis and G. Skogstad, 241–60. 3rd ed. Don Mills,
ON: Oxford University Press.
PART THREE
Re-imagining the Federation
CHAPTER FIFTEEN
Nation to Nation? Canadian
Federalism and Indigenous
Multi-level Governance
Martin Papillon
Through local, national, and global protests and activism, court challenges and engagement in the policy process, Indigenous peoples are
today challenging the foundations of Canadian federalism.1 It is arguably no longer possible for Canadian authorities to ignore Indigenous
claims for justice and recognition. The Indigenous rights movement
is now a global phenomenon, with the United Nations Declaration on
the Rights of Indigenous Peoples (UNDRIP) progressively imposing
itself as the new international standard against which state actions on
matters of relevance to Indigenous peoples are measured (Lightfoot,
2016; Barelli, 2016). In Canada, the 2015 final report of the Truth
and Reconciliation Commission (TRC) made a compelling case for
the interconnectedness of fundamental equity issues and the lack of
proper recognition of Indigenous peoples’ legal and political status
(TRC, 2015). It called for a fundamental overhaul of the institutions
governing Indigenous–settler relations, based on the principles set
forth in the UNDRIP and renewed ­nation-to-nation relationships. The
more recent report of the National Inquiry into Missing and M
­ urdered
Indigenous Women and Girls (NIMMIWG, 2019) similarly called on
Canada to respect its international commitments and address the
injustice gap resulting from past and ongoing colonial policies. To its
credit, the federal government under Prime Minister Justin Trudeau
recognized the importance of these developments and chose to put
reconciliation with Indigenous peoples at the top of its government
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agenda following both the 2015 and 2019 elections (PMO, 2015;
Governor General of Canada, 2019). Attempts at recasting our relationships have, at least so far, produced few tangible results (Rodon
and Papillon, 2019; King and Pasternak, 2018). Ongoing tensions in
relation to oil and gas infrastructures, including controversial pipelines crossing traditional Indigenous territories where rights and titles
remain unsettled, further contribute to a sense that reconciliation
is rather quickly pushed aside when economic interests are at play
(Starblanket and Green, 2020). That being said, the simple fact that
Indigenous issues are now so prominent on the national political
agenda is, in itself, a significant development.
Building on the conceptual framework of the present volume, this
chapter assesses the performance, effectiveness, and legitimacy of our
federal system in addressing the challenges associated with Canada’s
colonial legacy. How, and to what extent, have the institutions and processes of Canadian federalism responded to Indigenous claims for justice,
well-being equity, and recognition of their rights and political status?
Can Canadian federalism be reconciled with Indigenous peoples’ own
inherent sovereignty and make space for the type of nation-to-nation
relationships most of them strive for?
There are significant obstacles to a fundamental transformation of
the federation in light of Indigenous claims. Federalism, as a system
of self-rule and shared rule, should in principle be amenable to the
recognition of Indigenous peoples’ political status and jurisdictional
autonomy. However, deeply embedded assumptions about state sovereignty, the existing division of powers between federal and provincial
authorities, as well as institutions and practices inherited from our
colonial past have proven highly resistant to change. The diversity in
socio-economic and demographic conditions of Indigenous communities,
not to mention the particularities of each nation’s historical relationship with the Canadian state, also make any consensus on institutional
reforms difficult to achieve.
That being said, some changes have taken place over the past few
decades in the everyday dynamics of Indigenous, federal, provincial,
and territorial relations. As is often the case in Canada’s federal system,
the courts have been a major driver of these changes. The emergence
of the duty to consult and other developments related to Aboriginal title
have transformed how governments and industry actors interact with
Canadian Federalism and Indigenous Multi-level Governance
Indigenous communities in the context of land and natural resource
governance. The implementation of modern treaties and self-government
agreements is also reconfiguring intergovernmental dynamics in northern
regions of the country. Less visible but nonetheless important changes
have also taken place in the everyday dynamics of policy-making. Indigenous organizations are playing a growing, although still limited, role in
Canada’s intergovernmental system. Federal and provincial authorities
also increasingly seek to strengthen the legitimacy and effectiveness of
their policies through collaborative bilateral processes involving Indigenous organizations and governing authorities.
To be fair, these changes are more incremental than transformative
in nature. They do not alter the fundamental power structures in
Canadian federalism, nor do they recast what remains a profoundly
unequal relationship built on the legacy of colonialism. But they
have nonetheless led to the development of a complex and highly
diverse system of multi-level governance that coexists with, without
replacing, the structures and processes of Canadian federalism. This
chapter documents this emerging multi-level system of governance
and concludes with an assessment of its implications for Canadian
federalism.
INDIGENOUS PEOPLES AND CANADIAN
FEDERALISM: FACING THE LEGACY OF
COLONIALISM
Like all colonized societies, Indigenous peoples in Canada were forced
into a system of governance that was imposed by external powers, who
simply assumed sovereignty and claimed exclusive jurisdiction over
their lands and communities. In the process, they were absorbed into
the dominant settler political order without their consent. The final
reports of the Royal Commission on Aboriginal Peoples (RCAP, 1996)
and the more recent Truth and Reconciliation Commission (TRC, 2015)
document this process of internal and permanent colonization, from the
initial stage of diplomatic alliances and treaty making to the processes
of land confiscation, forced cultural assimilation, and dismantlement of
traditional forms of government. The impact of these colonial policies
is still felt today.
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A Multi-Faceted Reality
According to the 2016 Census, 1,673,785 individuals self-identify as
Indigenous people in Canada, accounting for 4.9 per cent of the total
population (Statistics Canada, 2017). Of this population group, 58 per
cent identify as a member of a First Nation (or North American Indian),
another 35 per cent self-identify as Métis, and 4 per cent as Inuit, the
three groups formally recognized under section 35(1) of the Constitution Act, 1982. Beyond these statutory distinctions, there are more than
60 Indigenous nations in Canada today (RCAP, 1996, vol. 2), each with
its own traditions, history, language, and sense of collective identity.
While they are distributed across the country, 52 per cent of individuals
who identify as members of an Indigenous group or nation live in urban
areas. Indigenous groups only form a significant proportion of the population in the northern territories and, to a lesser extent, Saskatchewan
and Manitoba (Figure 15.1). Their capacity to mobilize the traditional
institutions of majoritarian democracy outside some very specific regions
of the country is therefore limited.
Table 15.1 presents a comparative snapshot of Indigenous well-being
compared to that of all Canadians. These aggregated statistics hide significant regional and in-group variations, but they are nonetheless telling.2
The average income of Indigenous families is 28 per cent lower than the
Canadian average. While they account for only 7 per cent of all children
aged 0–4, Indigenous children account for 51.2 per cent of all foster
children in this age group. These conditions are compounded by demographic trends; the Indigenous population is younger and growing faster
than the Canadian average. A chronic housing crisis and a lack of basic
infrastructure, such as sewage and drinking water, also affect the living
conditions in many Indigenous communities.
The statutory relationship between Indigenous peoples and the Canadian state also varies. According to section 91(24) of the Constitution Act,
1867, the federal government inherited responsibility over “Indians and
the Lands reserved for the Indians.” Federal authorities have historically
interpreted this responsibility through the Indian Act, which regulates
reserved lands and establishes status rules regulating who can live on
reserves and benefit from certain federal programs and exemptions.
While most First Nations are still to this day governed under the Indian
Act, Inuit, Métis, and members of First Nations who have lost their federal
Canadian Federalism and Indigenous Multi-level Governance
Figure 15.1. Geographic Distribution of the Indigenous Population
90
80
70
60
50
40
30
20
10
es
C
m
Q
N
O
L
N
AB
BC
SK
B
M
YK
T
W
M
ar
iti
N
N
U
0
% of Indigenous people in the population
Distribution of population reporting Indigenous identity across Canada
Source: Statistics Canada (2017).
Table 15.1. Comparing the Well-being of the Indigenous and Canadian
Populations
Indigenous
Population
Overall Canadian
Population
Average age
32.1
40.9
Employment rate (aged 24–65)
63%
76%
No high school diploma (aged 24–65)
29%
12%
Crowded housing
18%
8%
Single-parent families
34%
17%
Children living below poverty threshold
38%
16%
Women victims of violence
23%
9%
Sources: Statistics Canada (2017, 2018); MacDonald and Wilson (2016).
status (non-status Indians) are not. As I discuss below, the Supreme Court
recently confirmed that federal responsibilities under section 91(24) apply
equally to all Indigenous groups, including Métis and non-status Indians
(Daniels, 2016). These statutory distinctions nonetheless continue to shape
both federal policy and political identities among Indigenous peoples.
It is also important to recognize the role of treaties in structuring
Indigenous–Crown relations. Most First Nations in Ontario and the Prairies have signed historic treaties that settled their title to the land, but
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in large swaths of British Columbia, Quebec, Atlantic Canada, and the
northern territories, no land cession treaties were signed. In the latter
regions, a number of far more complex comprehensive land claims and
self-government agreements were more recently negotiated, while the
claims of many other nations simply remain unsettled. These different
land and governance regimes create different institutional opportunities
and constraints for Indigenous peoples to engage in key policy sectors,
including land and natural resources management.
The Constraining Nature of Canadian Federalism
Clearly, there is not one single Indigenous reality to be addressed with
a single set of solutions. Indigenous peoples also face significant challenges related to the institutions of Canadian federalism themselves.
Although the Royal Proclamation of 1763 recognized the status of
Indigenous nations, no Indigenous representatives were invited to the
Charlottetown and Quebec conferences of 1864, where the legal and
political foundations of the Canadian federation were established. As
a result, they never consented, explicitly or implicitly, to the division
of authority over the land that resulted from the Constitution Act, 1867
(Russell, 2017). The institutions of Canadian federalism thus have very
little, if any, legitimacy from Indigenous peoples’ perspective. Their
exclusion from the federal partnership has very concrete implications
to this day. I briefly underscore four of them here: (1) it constrains their
aspirations for self-rule; (2) it limits their representation in the shared-rule
institutions of the federation; (3) it entrenches conflicts with provinces;
and (4) it reinforces their second-class status in terms of access to the
services and programs associated with Canadian citizenship.
First, and perhaps most significantly, while authority in a federation is
divided between orders of governments, the doctrine of state sovereignty
is still deeply entrenched in the British-inspired Canadian parliamentary
system. There is therefore paradoxically – for a federal system – no space
in the Canadian federation for the expression of political authority
outside the two constitutionally recognized orders of government.3 As
a result, from a strictly positivist constitutional perspective, Indigenous
governments’ self-rule authority can only be delegated from the federal
and provincial parliaments. This restrictive conception of sovereignty is
the source of major conflicts with Indigenous peoples, most notably in
Canadian Federalism and Indigenous Multi-level Governance
the context of land and natural resources management. It leaves limited
space for Indigenous nations to exercise what they consider their inherent
jurisdiction on the land, as politically organized peoples predating the
creation of the federation (Borrows and Coyle, 2017; Asch, 2014). As will
be discussed below, the recognition and protection of “Aboriginal and
Treaty rights” under section 35 of the Constitution Act, 1982, did instill a
new dynamic in Indigenous–federal–provincial relations, but Canadian
courts have so far been reluctant to recognize jurisdictional rights in their
interpretation of section 35. Indigenous peoples therefore have little
option but to unilaterally assert their jurisdiction or negotiate delegated
autonomy on a case-by-case basis with federal and provincial authorities.
Second, without formal status as federal partners, Indigenous peoples
also have no statutory voice in the shared-rule institutions of the Canadian federation. Indigenous organizations and governing institutions
have historically had only limited access to the important mechanisms
of “interstate federalism” associated with the growing web of intergovernmental processes and institutions that characterize the Canadian
federation. National Indigenous organizations are increasingly invited
to multilateral intergovernmental meetings, but their status remains
somewhat ad hoc and their influence in the decision-making process
limited. Part of the challenge is one of representativeness. National
Indigenous organizations like the Assembly of First Nations represent
the interests of segments of the Indigenous population, but they are not
the rights holders and title holders. Their legitimacy and authority as
governmental actors therefore remain limited.
Indigenous representation in the mechanisms associated with “intrastate
federalism” also remain to this day contingent on the political context.
There is no rule requiring minimal Indigenous representation in the
House of Commons, the Senate, or the Supreme Court. The absence of
Indigenous judges on the highest tribunal is particularly striking given
the central role of the Supreme Court in interpreting Indigenous rights
and arbitrating conflicts between those rights and federal and provincial
jurisdictions. The 2015 federal election saw an unprecedented eleven
Indigenous candidates elected to the House of Commons; this number
was reduced to ten in the 2019 election. There were another eleven Indigenous senators (out of 105) at the time of writing. The appointment
of Jody Wilson-Raybould as minister of justice in the Trudeau cabinet sent
a strong message for Indigenous representation at the executive level.
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But as she herself conceded in the aftermath of her highly mediatized
resignation from cabinet, Indigenous ministers, MPs, and senators can
only have so much influence in a majoritarian system dominated by party
discipline and cabinet solidarity (Canadian Press, 2019).
Third, the division of powers in the Canadian federation also contributes to often tense relations between Indigenous peoples and provinces.
Especially relevant in the Canadian context is provincial authority over
public lands and natural resources. Provinces have both fiscal and political incentives to maximize regional economic development through
natural resource extraction. They have historically done so without
much regard for Indigenous rights and interests, which were seen as
a matter of federal jurisdiction. In recent years, highly visible conflicts
over hydroelectric developments, mining, oil and gas, or forestry, as
well as housing developments on public lands for which the title is still
contested by an Indigenous group, have made headlines in Canadian
media. These conflicts, which often end up in court, contribute to a
high degree of mistrust between the Indigenous peoples and provincial
authorities.
Finally, and not insignificantly, Indigenous people have long been, and
continue to be, collateral victims of the competitive nature of Canadian
federalism, especially with regards to the provision of social programs
and services. Again, the conflict revolves around the interpretation of
section 91(24) of the Constitution Act, 1867. In Daniels v. Canada (2016),
the Supreme Court clarified that federal responsibilities under section
91(24) apply to all Indigenous peoples, including Métis and non-status
Indians. This declaratory judgment was significant as it potentially limits
the federal government’s practice of differentiating Indigenous peoples
based on their status for programming and funding purposes. However,
Daniels is silent on the specific content of federal responsibilities under
section 91(24) (Isaac and Hoekstra, 2019). Debates over who should do
what therefore remain as acute as before. The federal government still
considers its funding of most Indigenous programs and services to be a
matter of policy rather than a constitutional obligation. Provinces, on
the other hand, have historically been reluctant to extend their social
programs to the Indigenous population. The result is a complex maze of
policies and programs under which it is not always clear who is accountable for the funding and provision of services taken for granted by other
Canadian citizens.
Canadian Federalism and Indigenous Multi-level Governance
In healthcare, for example, First Nations, Inuit, and Métis historically access basic medicare services through their province or territory
of residence. These services are funded through federal–provincial
cost-sharing agreements, as they are for every other Canadian. However,
provinces initially refused to extend to status Indians health programs
that fall outside of the narrow definition of medicare in the Canada
Health Act (Marchildon et al., 2017). The federal government compensated by directly funding and running a range of health programs for
First Nations. These include the delivery of community-based health
programs, home care, prescription drugs, and vision and dental care,
among others. While Inuit have access to similar programs, Métis and
non-status Indians do not – a situation that is arguably no longer sustainable following Daniels. The federal government also still directly
funds and delivers some primary health services on remote reserves and
Inuit communities where provincial or territorial services are not readily
available. Similar dynamics are at play in education, child welfare, social
assistance, and many other basic services (Papillon, 2019; Blackstock,
2016). This complex policy architecture creates blurry accountability
structures and a tendency for blame shifting, sometimes with dramatic
consequences. In a scathing decision from 2016, the Canadian Human
Rights Tribunal concluded that the gap in federal services and funding
for child and family services on reserves, compared with what other Canadians receive from their provinces, amounted to a form of systemic
discrimination (First Nations Child and Family Caring Society et al., 2016).
It called for significant reinvestments in federal services, but also for better coordination among federal, provincial, territorial, and Indigenous
authorities in managing overlaps in responsibilities, including the full
implementation of Jordan’s Principle.4
In addition to lacking legitimacy as a result of Indigenous people’s
exclusion from the original federal compact, Canadian federalism has
therefore not performed well as a system of governance and is not particularly effective at addressing the numerous legacies of colonialism,
including ensuring Indigenous individuals receive the same basic services
most Canadians take for granted. In fact, the institutions and processes
of Canadian federalism have exacerbated conflicts with Indigenous
peoples and have contributed significantly to the reproduction of the
system of exclusion inherited from the colonial period. Not surprisingly,
a number of Indigenous advocates and intellectuals argue a profound
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transformation of our federation is necessary to break with colonialism
(Borrows, 2017; Henderson, 1994; Ladner, 2009).
A Renewed Nation-to-Nation Partnership?
The redefinition of Canadian federalism in order to properly recognize
the political status of Indigenous nations has been the object of many
theoretical reflections over the years. While some have argued that Indigenous peoples could form a province, the small size, territorial dispersion,
and diversity of communities make such a proposal ­impractical.5 In the
context of Indigenous–settler relations, treaty federalism (Henderson,
1994), or treaty constitutionalism (Tully, 2008; Borrows, 2017; Ladner,
2009), is generally considered the alternative to the status quo most
consistent with Indigenous visions of nation-to-nation relations. The
insistence on nation-to-nation relations stems from the principle that
Indigenous peoples were organized as political societies well before
the arrival of Europeans, who themselves recognized this fact through
the negotiation of military and economic alliances and treaties. To be
sure, those early diplomatic relations were never egalitarian in nature.
Europeans were convinced of their moral, cultural, and technological
superiority and used treaties to circumvent the military threat posed
by Indigenous nations, who at the time were numerically superior. But
these agreements were nonetheless negotiated between nations. European powers recognized the political status and authority structures
of the Indigenous peoples with whom they were negotiating (Russell,
2017). Indigenous peoples continue to this day to see treaties not as acts
of subjection but as acts of mutual recognition, constitutive of lasting
relationships between distinctive but interrelated and interdependent
nations (Borrows, 2017).
The revitalization of this original nation-to-nation relationship can
take different forms. For the Royal Commission on Aboriginal Peoples, Indigenous governments should be recognized as a third order
of government within the Canadian federation (RCAP, 1996: 215).
Others argue instead for a treaty-based confederal model under which
Indigenous governing institutions should be fully recognized for what
they are: the expression of distinct constitutional orders that today
continue to exist in parallel to Canada’s own Constitution (Borrows,
2017). While there are nuances in their respective positions, advocates
Canadian Federalism and Indigenous Multi-level Governance
of this stronger model of constitutional pluralism invite us to rethink
Canada as a double federation, governed simultaneously through
the 1867 division of powers and through the constitutional regime
established progressively through treaties between the Crown and
the original inhabitants of the land. Far from being subordinated to
the 1867 order, for its advocates treaty constitutionalism constitutes the
pillar on which the legitimacy of the Canadian state rests (Borrows,
2017; Ladner, 2009; Russell, 2017).
Treaty-based federalism and constitutional pluralism propose sophisticated approaches for recasting settler–Indigenous relations on
a nation-to-nation basis. These theoretical models nonetheless pose
numerous practical challenges. Most significantly, it is not clear how
shared-rule institutions would operate in a nation-to-nation model. While
the assumption in theories of treaty constitutionalism is that Indigenous
peoples should interact with Canada as a whole, it is simply impossible
to ignore the growing importance of relations with provinces and territories. Should every single Indigenous nation have its own bilateral
relationship with both federal and provincial governments? Would
Indigenous peoples also be represented in the existing institutions
of the federation, including federal and provincial legislatures? Who
would arbitrate conflicts of jurisdictions – the Supreme Court of Canada
or a distinct and autonomous judicial body? Moreover, as Alan Cairns
(2000) argued twenty years ago in his critique of the RCAP model, it is
not self-evident how one can reconcile a treaty-based, nation-to-nation
association with a substantive conception of shared citizenship, a necessary condition to foster a sense of solidarity and co-operation across
communities that are bound to live together in a common territory.
Finally, these models assume some degree of fiscal autonomy for Indigenous governments. As history shows, equality in status means little
without some balance in resources. To avoid the cycle of dependency on
federal transfers, Indigenous governments would require own-sources
revenues. In most cases, these revenues would come from economic
activities on the land. While provinces may be willing to pursue greater
natural resources revenue sharing with Indigenous communities, they
are very unlikely to accept a significant transfer of lands and natural
resources ownership. These obstacles are not insurmountable, but
they illustrate the challenges in moving from ethical standards to more
concrete institutional reforms.
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FROM THEORY TO PRACTICE: CHANGING
RELATIONSHIPS BETWEEN INDIGENOUS PEOPLES
AND CANADIAN FEDERALISM
Theories of treaty federalism and constitutional pluralism offer enticing
but idealized visions of a decolonized Canada. It is safe to say resistance
to such profound transformations remains strong. As shown in the first
section of this chapter, the institutional foundations and principles guiding
Canadian federalism are not particularly conducive to the recognition
of Indigenous nations as distinct sources of jurisdictional authority on
the land. Powerful and well-entrenched political and economic interests
also favour the status quo, especially within the provinces. The diversity
and complexity of Indigenous realities also mean change is more likely
to take multiple trajectories.
Faced with the slow pace of reforms and deep-seated power structures,
Indigenous peoples are no longer waiting for settler institutions to change.
They are now increasingly and sometimes unilaterally reaffirming their
decision-making authority and developing their own institutions of governance, including through the regeneration of their ancient but never
extinguished legal orders and constitutional systems (Borrows, 2019). The
situation of Indigenous peoples in Canada is also attracting increasing
international attention, thanks to Indigenous activism on the global stage
and the international resonance of the Truth and Reconciliation Commission and the more recent report of the National Inquiry on Missing
and Murdered Indigenous Women and Girls, both of which have used
the word genocide to qualify the legacy of colonialism in Canada.6 The
United Nations Special Rapporteur on the Rights of Indigenous Peoples
has repeatedly urged Canada to commit to the principles established
in the United Nations Declaration on the Rights of Indigenous Peoples
and, among others, address the well-being gap facing Indigenous peoples and the question of unsettled land claims (Anaya, 2014).
Canadian federalism and the Canadian political community more
broadly are not immune to such internal and external pressures. The
Trudeau government publicly endorsed the UNDRIP in 2016 and supported a private member’s bill that would have committed Canada to
review its laws and policies to comply with the principles established in
the Declaration.7 The 2019 Speech from the Throne, opening Canada’s
43rd Parliament, further committed the government to “take action to
Canadian Federalism and Indigenous Multi-level Governance
co-develop and introduce legislation to implement the United Nations
Declaration on the Rights of Indigenous Peoples in the first year of
the new mandate” (Governor General of Canada, 2019). To various
degrees, provincial governments are also committing to implementing
the ­UNDRIP.8 While it is too early to assess the impact of the UNDRIP
on the workings of Canadian federalism, it certainly creates a new standard against which the performance of its institutions will be measured.
This section documents how and through which channels the institutions and mechanisms of Canadian federalism are adapting to Indigenous claims for justice and growing assertiveness in establishing their
status and their jurisdictional authority. As it will become clear, none of
these developments alters the foundations and structures of Canadian
federalism. These changes are therefore best described as adaptive rather
than transformative. That being said, their cumulative impact over time
should not be neglected. Without disappearing entirely, hierarchical
systems of authority are increasingly layered with more collaborative
models of multi-level governance, under which Indigenous actors have
a growing, if not equal, role in decision-making.9 I briefly highlight
four developments that contribute to the emergence of this system
of multi-level governance: (1) the implementation of land claims and
self-government agreements; (2) the evolution of the Supreme Court’s
jurisprudence on Aboriginal and treaty rights, especially related to the
duty to consult; (3) the growing (but still relative) role of Indigenous
organizations in the machinery of intergovernmental relations; and (4)
the emergence and rapid growth of bilateral collaborative governance
processes between Indigenous organizations and federal and provincial
governments.
Modern Treaties and Self-Government Agreements
Long considered a thing of the past, treaties re-emerged in the Canadian
landscape in the aftermath of the Calder case of 1973. The Nisga’a Nation
of British Columbia went all the way to the Supreme Court to have their
governing rights on their traditional lands recognized in Canadian law.
While the Nisga’a lost their case over a technical question, a majority of
judges recognized for the first time the possibility that an Indigenous
title on the land could have survived unilateral assertion of Crown sovereignty in areas of the country where no historic treaties were negotiated.
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The James Bay and Northern Quebec Agreement, signed in 1975, was
the first in a series of negotiated agreements to address the question of
unsettled claims. At the time of writing, twenty-five Comprehensive Land
Claims Agreements (CLCAs), or modern treaties, had been negotiated
and ratified in the northern territories, British Columbia, Labrador, and
Quebec. The implementation of modern treaties has direct implications
for Canadian federalism.
Unlike their historic predecessors, modern treaties are detailed
legal documents that, among other things, establish new land tenure
regimes as well as co-governance and self-governance arrangements for
their Indigenous signatories. Modern treaties vary in scope, and their
impact on federal, provincial, and territorial authorities is not uniform.
Although early treaties mostly created administrative regimes of delegated authority, some of the more recent ones recognize both exclusive
and concurrent jurisdictions to Indigenous signatories in a number of
policy areas, such as environmental stewardship, education, child care,
culture, infrastructures, or the administration of justice. Most modern
treaties also establish co-management rules for land and natural resources
governance. While most co-management regimes are consultative only,
some afford Indigenous peoples a direct say in the decision-making
process (White, 2002; Rodon, 2003).
The implementation of land claims and self-government agreements
therefore gave rise to a vast array of structures and mechanisms for coordinating policies across levels of government. Wilson, Alcantara, and
Rodon (2020) offer a rare comparative analysis of the impact of these
multi-level governance processes and structures in three Inuit regions
governed under a modern land claims settlement: Nunavik, Nunatsiavut,
and the Inuvialuit settlement area. They conclude the capacity of Inuit
to shape policies is significant in all three regions, but it varies from one
institutional context to another and across policy sectors.
While their impact is undeniable, modern treaties remain controversial. Negotiations can drag out over decades, and some Indigenous
nations with unsettled claims simply refuse to engage in the negotiation
of modern treaties. Those who have agreed to a modern treaty are also
often struggling to have their agreement properly implemented (Fenge,
2015). Many treaty signatories end up in court defending their treaty
rights against government agencies unwilling to fulfill their part of the
deal or because of unclear divisions of responsibilities between the
Canadian Federalism and Indigenous Multi-level Governance
signatories. Part of the challenge is ideational in nature and has to do
with the purpose of these agreements. Indigenous peoples tend to see
modern treaties through the prism of nation-to-nation relations: these
agreements are political compacts that should fundamentally recast
their relationship with the state. For federal, provincial, and territorial
authorities, modern treaties are seen more prosaically as legal transactions aimed at securing access to the land for economic development
purposes. The primary objective for Canadian governments is “to obtain
certainty respecting ownership and use of lands and resources” (Aboriginal Affairs and Northern Development Canada, 2014). The federal
government has used different formulae over time to guarantee this
legal certainty, but it generally requires that Indigenous signatories
suspend or limit the exercise of their inherent rights in exchange for
the rights and benefits defined in the treaty. This approach is obviously
not consistent with a nation-to-nation vision of treaties as agreements
between co-equal sovereigns. Indigenous peoples who enter the modern
treaty process are effectively accepting a trade of their inherent authority
on the land for a more limited – although potentially significant –
recognition within the Canadian constitutional regime. Not all Indigenous
nations are willing to make that choice, especially in light of recent court
decisions that open alternative avenues for establishing their inherent
jurisdiction on the land.
Judicial Interpretation of Aboriginal and Treaty Rights
and the Duty to Consult
Courts play a central role in arbitrating conflicts in Canada’s federal
system. They also are key players in defining the parameters of relations
with Indigenous peoples. This is especially true since the recognition
of Aboriginal and treaty rights in section 35(1) of the Constitution Act,
1982. Section 35 rights operate as a constitutional shield setting partial
limits on federal and provincial authority to regulate or impact Indigenous activities inherent to their cultures and traditional practices, most
notably in the context of land, wildlife, and natural resources management. There is no space here to provide a comprehensive review of the
Aboriginal rights jurisprudence (see Wilkins, 2018). I nonetheless want
to briefly underscore three developments with particular relevance to
Canadian federalism.
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First is the progressive displacement of section 91(24) of the Constitution Act, 1867 to the profit of section 35(1) of the Constitution Act,
1982 as the primary constitutional anchor for defining relationships
between Indigenous peoples and Canadian federalism. As discussed,
section 91(24) assigns to the federal government exclusive jurisdiction
over “Indians and the Lands reserved for the Indians.” This was until
recently assumed to establish a privileged and unique relationship between the federal Crown and Indigenous peoples. With some exceptions,
provincial laws were presumed invalid when interfering with exclusive
federal jurisdiction over “Indians” under the doctrine of interjurisdictional immunity. I have already discussed the jurisdictional confusion
created by this division of powers based on status and identity rather
than policy sectors. In a series of recent decisions, the Supreme Court
has progressively displaced the centre of gravity of Indigenous–Crown
relations by limiting the reach of federal exclusivity under section
91(24) and by increasing the role and responsibilities of provinces
under section 35(1). While the court confirmed in Daniels that federal
jurisdiction under section 91(24) applies to all Indigenous peoples,
it also refused to define the scope of this responsibility. Instead, in a
number of recent cases it insisted on expanding provincial responsibilities and limiting the application of the doctrine of interjurisdictional
immunity in the context of infringement on Aboriginal and treaty
rights, notably in relation to the duty to consult (see especially Grassy
Narrows, 2014, and Tsilhqot’in, 2014). The long-term implications of this
shift away from the doctrine of interjurisdictional immunity could be
profound for Indigenous peoples, who can no longer pretend to have
an exclusive relationship with the federal Crown (Isaac and Hoekstra,
2019; Borrows, 2017).
The second jurisprudential development to underscore is the emergence of the (federal and provincial) Crown’s duty to consult and, when
necessary, to accommodate Indigenous peoples when the exercise of their
rights might be affected by a government decision or conduct (Haida,
2004). This duty to consult is having a major impact on the governance
of lands and natural resources in Canada. Indigenous peoples now have
a legal anchor to demand a greater role in the regulatory processes
associated with the authorization of resource extraction projects on
their traditional territories. Faced with the potential economic costs of
protracted legal challenges, governments and private promoters are now
Canadian Federalism and Indigenous Multi-level Governance
forced to establish an array of mechanisms to consult, accommodate, and
in some cases negotiate with Indigenous peoples over the environmental
and social impact of projects, as well as share their economic benefits
(Papillon and Rodon, 2017).
The implementation of this jurisprudential doctrine is proving
controversial and complex. The court has thus far defined the modalities of the duty to consult on a case-by-case basis, using a spectrum
approach under which the scope of the Crown’s obligation depends
on the nature of the project and its potential impact on Aboriginal
rights. This approach has created a high degree of uncertainty as
there are few criteria to clearly establish the level of required consultation and accommodation measures. Conflicts surrounding the
Trans Mountain extension pipeline illustrate the perils in minimizing
consultation with Indigenous peoples in the name of political and
economic expediency. A group of Indigenous nations successfully
challenged the federal process for approving the pipeline at the
Federal Court of Appeal. The court ultimately quashed the cabinet
authorization of the project and required a new round of more
substantive consultations with affected Indigenous communities
(Tsleil-Waututh Nation, 2018).
While the duty to consult is arguably changing the way governments
approve natural resource extraction and transportation projects in
Canada, it remains a second-best alternative for Indigenous peoples
who seek to assert their jurisdiction on the land. The Supreme Court is
very clear that Indigenous peoples do not have a veto on government
decision-making processes. The Crown (both federal and provincial)
remains ultimately responsible for the final decision (Haida, 2004:
42). The duty to consult also remains grounded in a relatively limited
conception of Indigenous participatory rights, especially compared to
the principle of free, prior, and informed consent (FPIC) emphasized
in the United Nations Declaration on the Rights of Indigenous People
(see especially articles 19 and 32).
The third key development directly concerns Indigenous jurisdictional rights on the land. In its 2014 Tsilhqot’in decision, the Supreme
Court recognized for the first time an existing Aboriginal title, that
of the Tsilhqot’in Nation, over 1,750 square kilometres of land in
central British Columbia. The Aboriginal title, the court specified, is
a proprietary right that includes ownership of surface and subsurface
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rights. From this declaration of Aboriginal title, the court added,
follows the requirement to obtain Tsilhqot’in consent to economic
activities on their lands. Again, this is not an absolute veto; the
Crown can infringe on the Aboriginal title for a “compelling and
substantial public purpose,” but this decision is arguably as close
as it gets in terms of recognizing an Indigenous jurisdiction on
the land. The possibility that other Indigenous nations could see
their title declared in court is also a game changer in areas like
British Columbia and parts of Quebec and the Atlantic provinces,
where no land cession treaties were signed. While it is subject to a
number of limitations, the declaration of title creates an additional
judicial lever for Indigenous peoples to establish their legitimacy as
decision-making actors in land and resources management. It also
offers an alternative to the lengthy and costly process of negotiating
land claim agreements.
Indigenous Participation in the Processes of Executive
Federalism
As was noted earlier, a central element compounding the limited legitimacy of Canadian federalism for Indigenous peoples has been their
exclusion, as political entities, from its institutions and processes. The
growing presence of Indigenous organizations in intergovernmental
forums is undoubtedly an important development in this respect, even
if their role remains for the moment limited and their participation
governed by rather vague rules.
The inclusion of Indigenous organizations in the mechanisms of
Canadian intergovernmental relations (IGR) is not new. It dates back
to the constitutional negotiations of the 1980s and early 1990s. Between
1983 and 1987, national Indigenous organizations were directly involved
in the intergovernmental negotiations dedicated to the definition of
­Aboriginal rights under section 35(2) of the Constitution Act, 1982. Despite
its ultimate failure, this process allowed the organizations involved to gain
legitimacy and significant experience in dealing with the intricacies of
intergovernmental negotiations. With the demise of mega-constitutional
negotiations, Indigenous organizations lost some of their leverage and
their participation in the various mechanisms of intergovernmental
relations became more sporadic.
Canadian Federalism and Indigenous Multi-level Governance
Figure 15.2. Indigenous Issues and Indigenous Participation in
Ministerial IG Forums
30
25
20
15
10
5
0
2012
2013
2014
Mention of Indigenous issue
2015
2016
2017
Indigenous participants
Source: Data collected by author with help from the Canadian Intergovernmental
Conference Secretariat.
In recent years, Indigenous organizations have become more assertive
and effective in putting Indigenous issues on the intergovernmental
agenda. This shift can be traced back to the 2005 Kelowna Accord, a
multilateral (federal–provincial–territorial–Indigenous) intergovernmental agreement proposing a five-year plan to foster socio-economic
development in Indigenous communities. While the accord was never
implemented by the newly elected Conservative government of Stephen
Harper, it created a precedent for Indigenous representation in intergovernmental forums dealing with social and economic issues.
Indigenous representation in IGR forums is now a common practice at all levels of the intergovernmental system, from administrative
meetings to political summits among elected officials. While Indigenous
participation in IGR is hard to measure, Figure 15.2 presents one way
to quantify the change in recent years. It traces the number of publicly
available intergovernmental press releases that mention Indigenous
issues and those explicitly mentioning the presence of Indigenous
representatives between 2012 and 2017. The data are only available for
certain meetings at the ministerial level, but we can confidently suggest
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the pattern is reproduced at the administrative level, where most of the
daily work of intergovernmental coordination is actually taking place
(Gauvin and Papillon, 2020).
Indigenous organizations are also active at the interprovincial level. A
one-day session between national Indigenous organizations and premiers
in advance of the annual meeting of the Council of the Federation (CoF)
has been a routine practice since 2004. Some Indigenous organizations
have been boycotting this pre-meeting in recent years, arguing they should
be considered full-fledged members of the CoF instead of simply guests
in a side meeting (Wesley, 2017). At the ministerial level, a permanent
Aboriginal Affairs Working Group was established in 2009 for Indigenous organizations and provincial officials to work on common issues.
In 2016, the federal government formally joined the group, which was
renamed the Federal-Provincial-Territorial-Indigenous Forum (FPTIF).
While it is becoming routinized, Indigenous participation in the IGR
system is still not entirely institutionalized. Nor is the impact of this participation all that clear. The status of Indigenous organizations in such
meetings is variable. Although they are sometimes full participants, they
are more often simply observers or guests with a more limited role in discussions, as is the case for the CoF. While there are exceptions, Indigenous
organizations also generally have a limited role in setting the agenda of
meetings. As such, if they are certainly more than stakeholders, they are
still not full-fledged partners in the machinery of executive federalism.
There are obvious structural challenges to a stronger Indigenous role
in IGR forums. With the multiplication of meetings comes a risk of overstretching the resources of what are relatively small organizations. But even
if resources were sufficient, there are limits to the representational capacity
and legitimacy of national Indigenous organizations. National Indigenous
organizations like the Assembly of First Nations or the Inuit Tapiriit Kanatami represent the interests of segments of the Indigenous population,
but they are not governments or nations in themselves. Their legitimacy
and authority as governing actors therefore remain limited, as does their
capacity to commit their respective membership to a particular position
or to negotiate the necessary political compromises involved in intergovernmental policy-making, especially on matters affecting the rights of their
constituents. Without changes to the structure of these organizations to
ensure their representativeness and their capacity to act on behalf of their
constituents, their role in intergovernmental forums will remain limited.
Canadian Federalism and Indigenous Multi-level Governance
Collaborative Policy-Making and Bilateral Forums
The developments discussed thus far concern fairly high-profile aspects
of the relationship between Indigenous peoples and Canadian federalism. Some fundamental, though less visible, changes are also taking
place at the level of policy-making. Faced with a growing legitimacy
deficit and increasing coordination challenges linked to the complex
web of constitutional rights, treaties, and self-governance institutions
that have emerged over time, federal, provincial, territorial, and municipal authorities increasingly engage in collaborative policy-making
with Indigenous organizations and governing authorities. These collaborative governance exercises take multiple forms. Some are trilateral
(federal–provincial/territorial–Indigenous). Some are bilateral. Some
are formalized through agreements while others are more ad hoc and
limited in time. Their scope and effectiveness also vary considerably.
While some processes lead to successful collaboration and innovative
policies, others produce little more than time-consuming meetings with
little to show for it. Producing a comprehensive and accurate portrait
of these mechanisms is an almost impossible task. I limit myself here to
the description of some recent developments at the federal level and
discuss some of the implications of growing bilateral relations between
Indigenous peoples and the provinces.10
After years of difficult relations under the Conservative government
of Stephen Harper, the Trudeau Liberals sought to instill a new collaborative culture with Indigenous peoples. In its first mandate, the Trudeau
government notably established a series of bilateral and multilateral
mechanisms to facilitate dialogue and jointly develop the new policies
and legislative initiatives associated with its reconciliation agenda. In addition to an annual cabinet meeting with key Indigenous organizations,
bilateral mechanisms were created with Inuit, Métis, and First Nations,
alongside numerous sectoral tables, including education, health, child
welfare, treaty implementation, self-government funding, and justice
reforms (CIRNA, 2018b). Eighty specific tables were also established
to negotiate new governance and funding arrangements directly with
Indigenous communities, groups, and nations (CIRNA, 2018a).
This model of collaborative policy development is certainly potentially
more consistent with a nation-to-nation view of the relationship, but the
real test remains in the Indigenous representatives’ ability to influence
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government decisions. These developments are still ongoing, but so far,
some of these discussion tables have resulted in a real policy co-development
process, including on funding for self-governing Indigenous governments
(Nicol et al., 2020), while others remain more contentious. For example,
the collaborative process to develop a Recognition and Implementation
of Indigenous Rights Framework designed to replace the existing comprehensive land claims and self-government negotiation policies was
marred by conflict and, at time of writing, remains in a stalemate (King
and Pasternak, 2018). In other cases, the federal government chose to go
ahead with policy reforms without full Indigenous support, such as with
the Indigenous languages legislation and child and family welfare reforms
adopted in 2019. While potentially innovative in their approach, the performance of these collaborative tables in creating the conditions for true
policy co-development and in addressing the most pressing issues facing
Indigenous peoples is therefore mixed at best and highly contingent. A
comprehensive comparative review would be required to assess the factors leading to their success or failure, as well as the true influence of the
Indigenous organizations that participated in these processes.
While much attention is given to policy-level collaboration at the
federal level, provinces, territories, and municipalities are also more
than ever seeking collaborative processes with Indigenous authorities.
In the case of provinces, which have long resisted the formalization of
their relationships with Indigenous peoples, the change is remarkable
and is intimately tied to the judicial developments concerning Aboriginal
and treaty rights discussed above. Until the early 2000s, only a handful
of provinces had a dedicated ministry or secretariat for relations with
Indigenous peoples. Now, all provinces and territories do. The staff
and budget for these units is variable and very much contingent on the
government of the day, but the overall pattern is towards deeper and
more systematic, if not necessarily always more constructive, engagement.
A search limited to provincial government websites reveals close
to 500 bilateral, trilateral, or multilateral political and administrative
governance agreements were negotiated with Indigenous governments
and organizations between 2000 and 2017 (Figure 15.3).11 The growth
post-2005 corresponds to judicial developments concerning the duty to
consult, which as mentioned forced provinces to systematically engage
with Indigenous peoples over land and resources management issues.
While the latter constitute by far the most prominent policy area for
Canadian Federalism and Indigenous Multi-level Governance
Figure 15.3. Indigenous–Provincial Agreements 2000–17
NUMBER OF AGREEMENTS
60
50
40
30
20
10
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
20
14
20
15
20
16
20
17
0
Source: Author’s compilation based on publicly available data from provincial
governments.
provincial–Indigenous agreements (45 per cent), other agreements
cover ­areas such as economic development (14 per cent), social policy
(10 per cent), justice (7 per cent), and infrastructure (8 per cent).
A ­significant number of “relationship” agreements (17 per cent) also
seek to define the principles guiding bilateral relations and/or establish
formal coordination channels at the political or administrative levels.
British Columbia is by far the most active province in negotiating agreements with Indigenous peoples (more than 200 in the past fifteen years).
The jury is still out on these multiple agreements and processes. Not
all are equivalent in scope, nature, and impact. Some are simply joint
statements establishing the groundwork for future arrangements, while
others create more substantial responsibilities. Even in the case of more
substantial agreements, the status of the Indigenous partner in resulting
governance arrangements and decision-making processes can vary considerably, from a relatively limited consultative role to a central position
in the decision-making process. Again, British Columbia arguably is the
most innovative jurisdiction in Canada in this respect (Hudson, 2018).
Recent agreements in the context of natural resources management
recognize the principle of Indigenous consent and commit the province
to unique forms of joint impact assessment and joint decision-making
(Curran, 2019). British Columbia also successfully collaborated with
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Indigenous organizations to develop a legislative framework committing
the province to implement the UNDRIP (British Columbia, 2019).
Like multilateral IGR, the multiplication of bilateral processes, tables,
negotiations, and follow-ups can also put a severe strain on the already limited resources of small Indigenous governments and organizations. Very few
have the capacity to negotiate, let alone ensure the implementation of all
these agreements. Anecdotal evidence in assessing the performance of these
governance mechanisms, based on a limited number of interviews, suggests
a good number of bilateral agreements are simply not implemented, thanks
to a lack of follow-up mechanisms or inadequate resources and expertise
on either side. Moreover, as with all other developments documented in
this section, bilateral and trilateral policy processes, tables, and agreements
do not, in and of themselves, change the status of Indigenous governments
within the Canadian federal system. They nevertheless constitute a relatively
effective innovation to compensate for the lack of legitimacy of classic federal institutions and mechanisms. They also allow Indigenous authorities
(at least those recognized by the Canadian state) to engage more directly
in policy development to address some pressing issues without jeopardizing
their broader jurisdictional claims. If anything, through these multi-level
agreements and processes, federal and provincial authorities de facto recognize the essential role Indigenous governments and organizations play
in ensuring the legitimacy and effectiveness of their own policy processes.
CONCLUSION: A MOSAIC OF MULTI-LEVEL
GOVERNANCE RELATIONS
The relationship between Indigenous peoples and Canadian federalism
remains uncertain and tentative. Their initial exclusion from the federal
compact still looms large today, affecting not only the legitimacy but also the
performance and effectiveness of the institutions and processes of Canadian
federalism. While it is now part of the political vernacular among politicians
and the mainstream media, the nation-to-nation or government-to-government
model advocated by a large majority of Indigenous leaders, intellectuals,
and advocates remains more theoretical than real. Multiple factors work
against a significant reform of Canadian federalism to that effect, most significantly the institutional resilience of existing practices and conceptions
of state sovereignty and governmental authority. The multi-layered political
Canadian Federalism and Indigenous Multi-level Governance
structures and profound diversity in the demographic and socio-economic
conditions of Indigenous peoples also compound these difficulties.
That being said, significant shifts have taken place in the everyday
workings of Canadian federalism. Although they remain firmly anchored in
the Canadian constitutional regime, modern treaties and self-government
agreements provide their Indigenous signatories with unprecedented
leverage to chart their own course on internal matters and develop multilevel governance capacities. The duty to consult on matters affecting
Aboriginal and treaty rights and the legal uncertainty resulting from title
claims also create new levers for Indigenous engagement in the policy
process in the context of natural resource development. The growing
participation of Indigenous organizations in the mechanisms of executive federalism is another significant development. While it raises its
own set of issues in terms of legitimacy and accountability, Indigenous
participation in executive federalism suggests a de facto recognition that
Indigenous peoples should have a say in the definition of the intergovernmental agenda of the federation. The growing use of bilateral and
multilateral collaborative policy processes at the federal and provincial
levels similarly suggests that pragmatic adjustments are being made to
make room for Indigenous agency in defining the policy agenda. Last,
but not least, the United Nations Declaration on the Rights of Indigenous Peoples is progressively becoming the new standard against which
the actions of Canadian governments are measured. While UNDRIP
implementation remains contentious in Canada, its potential to shape
our normative landscape should not be underestimated.
The cumulative effect of these changes to the institutions and processes of Canadian federalism is hard to assess. As I have noted, these
developments are so far more incremental than transformative; they do
not alter the foundations of the Canadian federal system and are unlikely
to address its fundamental lack of legitimacy from Indigenous peoples’
perspective. Are these new institutions and mechanisms performing
well in facilitating reconciliation and a more collaborative approach to
policy-making? Anecdotal evidence suggests substantive policy changes
are limited and conflicts are still significant.
Still, these developments point to an important trend: the multiplication of sites and actors engaged in Indigenous-related policy-making.
While long the sole domain of federal jurisdiction, Indigenous policy is
now a multi-actor and multi-level affair. Indigenous band councils, tribal
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councils, and self-governing bodies, as well as a vast array of local, regional,
provincial, and national Indigenous organizations, are now increasingly
engaged at various stages of the policy process. But Indigenous actors
are not alone. I have underscored the growing role of provinces in this
chapter, but territories and municipalities are also increasingly proactive
at developing their own approaches and mechanisms to facilitate relations with Indigenous people. Corporate actors in the natural resource
extraction sector are also increasingly proactive at developing private
arrangements with Indigenous communities. Indigenous governance
is becoming a much more complex and more crowded field as a result.
This emerging system of multi-level governance is far from uniform.
The political clout of Indigenous nations varies considerably according
to their demographic and geographic situation, as well as their legal and
institutional resources. There are also significant variations across policy
sectors, which I could not explore in detail here. It is therefore perhaps
more accurate to talk of a mosaic of multi-level governance relations,
each with its own institutional framework and evolving dynamics. While
these multi-level governance relations do not replace the old colonial
order with a new nation-to-nation regime, they nevertheless change, for
better or worse, how Indigenous peoples interact with the institutions
of Canadian federalism. Only time will tell whether such incremental
adaptations eventually lead to more legitimate and more constructive
relationships between the Canadian federation and Indigenous peoples.
NOTES
1 Following the recent practice in the Canadian context, the term “Indigenous
peoples” is preferred to the formally recognized term “Aboriginal peoples,”
except when referring to official policies or laws. Canada formally recognizes
three “Aboriginal” groups: Métis, Inuit, and First Nations (still often referred to as Indians). Distinctions are made between these three groups and
­between specific nations and communities whenever relevant in the text.
2 Unless otherwise specified, data in this section are from Statistics Canada
(2018).
3 According to the oft-repeated doctrine established by the Judicial Committee of the Privy Council, “whatever belongs to self-government in Canada
belongs either to the Dominion or to the provinces, within the limits of
the British North America Act” (A.G. Ontario [1912]).
Canadian Federalism and Indigenous Multi-level Governance
4 Jordan’s Principle is a child-first approach to jurisdictional disputes that requires the government of first contact to fund health and social services to
First Nations children that are normally provided to other Canadian children
and to address payment issues later. It is named after Jordan River Anderson,
a five-year-old boy from Norway House First Nation who died in a hospital while federal and provincial authorities in Manitoba argued over their
responsibilities for the costs of his home care treatments. See Blackstock
(2016).
5 The obvious exception here is Nunavut, where Inuit form a majority on a
significant territory.
6 The TRC qualifies the term, using the concept of “cultural genocide,”
while the NIMMIWG simply uses “genocide.” Without engaging in a complex debate on the appropriateness of these terms, it is safe to say they
have powerful resonance in the international context and cast Canada in
an unusual position in terms of its human rights record.
7 Bill C-262, An Act to Ensure that the Laws of Canada Are in Harmony with the
United Nations Declaration on the Rights of Indigenous Peoples, died on the
Senate’s order paper at the end of the Spring 2019 parliamentary session
following Conservative senators’ delaying tactics.
8 At the time of writing, British Columbia was the only jurisdiction to
have formally adopted the UNDRIP though legislation (British Columbia, 2019).
9 I use multi-level governance (MLG) here to describe processes and mechanisms of governance involving a variety of state and non-state actors across
jurisdictional scales (local, regional, national, etc.) engaged in joint or collaborative policy-making and policy implementation. Unlike much of the
literature on MLG, I do not assume these processes are non-hierarchical.
For more detailed conceptual discussions of MLG in the context of Indigenous–federal–provincial relations in Canada, see, among others, Papillon
(2015) and Alcantara, Broschek, and Nelles (2015).
10 For a discussion of relations with municipalities, see Alcantara and Nelles
(2016).
11 This is an approximation. Many administrative agreements are not publicly listed. The search was conducted using provincial websites, annual
reports, and estimates.
GLOSSARY
constitutional pluralism The idea that Canada’s Constitution includes
not only the 1867 and 1982 Constitution acts (and their amendments),
but also Indigenous constitutional laws and traditions that predate the
imposition of British rule. The coexistence of multiple constitutional
orders should be regulated through treaties between the Crown and
Indigenous peoples.
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duty to consult The obligation on federal and provincial governments to
consult, and, when necessary, accommodate Indigenous peoples when
the exercise of their rights might be affected by a government decision or
conduct.
free, prior, and informed consent (FPIC) As defined in the United Nations
Declaration on the Rights of Indigenous People, it commits governments
to seek (and under certain circumstances obtain) the consent of
Indigenous peoples in advance of a legislative measure or an executive
decision that may affect their rights and traditional territories. It notably
empowers Indigenous peoples to participate more actively in the decisionmaking process concerning natural resource extraction projects on their
ancestral lands.
non-status Indian A person of First Nations descent who is not registered
under the Indian Act.
Royal Proclamation of 1763 Sets out governmental arrangements for the
colonies that Britain had acquired from France and Spain with the end
of the Seven Years’ War. It also states the British Crown’s commitments
to “Indian nations or tribes” whose lands lay to the west of Quebec. It
acknowledged that Indians possessed the lands they lived on.
treaty federalism (also referred to as treaty constitutionalism) A concept that
explicitly identifies negotiated agreements between Indigenous peoples
and other sovereign actors (governments) as constitutional documents.
Treaty federalism recognizes a nation-to-nation relationship between
Indigenous peoples and Canadian provincial and federal governments.
United Nations Declaration on the Rights of Indigenous Peoples
(UNDRIP) Adopted in 2007 at the UN General Assembly, this nonbinding but highly influential declaration charts the fundamental
principles that should guide relations between states and Indigenous
peoples. It notably recognizes the right of Indigenous peoples to selfdetermination. Canada initially voted against the UNDRIP in 2007 but has
endorsed it since. At the time of writing, the Legislative Assembly of British
Columbia is the only jurisdiction in Canada to have adopted UNDRIP
implementation legislation. The Trudeau government committed to table
similar legislation in Canada’s Parliament within the first year of its second
mandate.
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CHAPTER SIXTEEN
Municipalities in the Federation
Jack Lucas and Alison Smith
INTRODUCTION
The conceptual toolbox that political scientists have assembled to explain
Canadian federal–provincial relations is like that of a high-end motorcycle mechanic: tall, deep, and full of precision instruments. Even so,
these tools need recali