Constructing Tomorrow's Federalism: New Perspectives on Canadian Governance 9780887556975, 9780887553158

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CONSTRUCTING TOMORROW'S FEDERALISM

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CONSTRUCTING TOMORROW'S FEDERALISM New Perspectives on Canadian Governance

Ian Peach, Editor

University of Manitoba Press

© The Authors, 2007 University of Manitoba Press Winnipeg, Manitoba R3T 2N2 www.umanitoba.ca/uofmpress Printed in Canada on acid-free paper by Friesens. All rights reserved. No part of this publication may be reproduced or transmitted in

any form or b ny means, or stored in a database and retrieval system, without the prior written rmission of University of Manitoba Press, or, in the case of photocopying or other reprographic copying, a licence from ACCESS COPYRIGHT (Canadian Copyright Licensing Agency), 6 Adelaide Street East, Suite 90 Toronto, Ontario M5C 1H6, www.accesscopyright.ca. Cover: Kirk Warren Text Design: Relish Design Studio Library and Archives Canada Cataloguing in Publication Constructing tomorrow's federalism : new perspectives on Canadian governance / Ian Peach, editor. Includes bibliographical references. ISBN 978-0-88755-697-5 1. Federal government - Canada. 2. Canada - Politics an government - 21st century. I. Peach, Ian, 1965JL65.C663 2007

320.471

C2007-901528-X

The publication of this book was made possible with the support of Western

Economic Diversification Canada. The University of Manitoba Press gratefully acknowledges the financial support for its publication program provided by the Government of Canada through the Book Publishing Industry Development Program (BPIDP), the Canada Council for the Arts, the Manitoba Arts Council, and the Manitoba Department of Culture, Heritage, and Tourism.

To my parents, for creating my interest in Canadian government and politics, and to all my mentors over the years for nurturing that interest. —Ian Peach

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CO ENTS preface The Honourable Roy Romanow, PC, QC

Introduction—On Governing a Dynamic Federation Ian Peach

Political Trust in the Canadian Federation Rejean Pelletier

Reconsidering Rowell-Sirois and Rethinking Canadian Federalism Robert Wardhaugh and Barry Ferguson

Limiting Fiscal Capacity? The Relationship between Transfer Payments and Social Spending in Canadian Provinces from 1988 to 2002 David McGrane

...........................,..ix 3 13 31

51

Federalism and the Reform of Central Institutions: Dealing with Asymmetry and the Democratic Deficit Gerald Baier and Herman Bakvis..........................................................................................89

Canada's North and Tomorrow's Federalism Bernard W. Funston

115

Federalism and First Nations: In Search of Space GabrielleA.Slowey

Construct g Political Spaces for Aboriginal Communities in Canada Frances Abele and Michael J. Prince.........................................

The Principle of Subsidiarity: Tradition—Practice—Relevance Thomas O. Hueglin

Appendix: Federal Asymmetry: Let Us Unleash its Potential Text of Speech Given by Benoit Pelletier

157

171 201 ...........219

Contributors

231

Bibliography

237

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P face The Honourable Roy Romanow, PC, QC

C

anadian federalism might be compared to a fast-flowing river of unseen

undercurr t shifting river-bottom sands, surface swirls, and, occasionally, choppy waves. Much of the river's dynamism lies below its surface, hidden and uncharted; it seems to be the same with the practice of federalism in Canada. Throughout our history, but especially in the last thirty years, citizens watching from the banks of the river are unable to see much of the twist and turns of its energy. They may wonder about its churning activity, but only on infrequent occasions are they able to completely observe, and therefore better

understand, what is at play. For the ac l practitioners of federalism, the task can be daunting and unpredictable. In the recent past, the two referenda in Quebec (1980 and 1995), the partially televised meetings of Canada's First Ministers, the patriation of our constitution with an entren hed charter, the public squabble over Meech Lake, and, subsequently, the public's rejection of the Charlottetown Accord are probably the most obvious examples of the complicated machinery of federalism. The products of the

events were largely shaped by closed-door negotiations.

Imperfect compromises were the result and reflected the tricky and complex task of navigating the waters of Canadian unity. Because most of the key decisions ar made out of public scrutiny by a small group of elected officials, constitutionalists and Politicians involved in these processes h e characterized them as the practice of "executive federalism." Much has b n written on the merits and demerits of this practice. The overall

X CONSTRUCTING TOMORROW'S FEDERALISM

results are not clear-cut victories for the goal of a more unified and strength-

ened Canada. The persistent failure of the Quebec National Assembly to formally ratify the original t f patriation in 1982, and the reluctance of the rest of Canada to accept the modification of the patriation pack e in either Meech Lake or Charlottetown, have left the nation with an unfinished piece of extremely important work. In fact, the public impa , coupled with the passage of the Clarity Act, seems to have even widened the gulf between Quebec and the rest of the ation. Now, important new issues have greatly expanded the agenda and added to the nation'sa burdens. Many pose daunting challenges to Canadian federalism.

Aboriginal treaty and historic rights, the demands of cities, the hugely impor-

tant issue of federal-provincial fiscal arrangements, E alization, and the emergence of the provincial-territorial Council of the Federation carry with them

major tests to Canada's federal structures and governing institutions. One might also add to this list the increasing importance of the Canadian Charter of Rights and Freedoms and its interpretation by the courts, sinc ecent decisions have reignited the debate about the proper roles of democratically elected lawmakers and the appointed judiciary. The present trend seems to point to fewer forums where governments and citizens can participate in achieving honourable and open compromise. Instead, the early decisions of the Harper prime ministership indicate preference f bilateral arr gements, with little apparent evidence of the fun mental values that underpin these deals. Looking back at my own experiences, I would argue that at the core of past and future issues that affect our nation is the task of proposing solutions based on the principle of our shared destiny as Canadians. Where is the proper balance, for exammple, between the demands of many of the provinces for

increased and unfettered access to federal funds, on the one hand, and the legitimate function of the federal government to have the fiscal tools a ilable to fashion policies and programs that speak to all Canadians, of all backgrounds, and in all regions? Sometimes, the pendulum swings to a strengthened role for

provinces and territories and then reverts back to a stronger federal government position in our nation's affairs. Quite obviously, there is no easy answer to this hugely important and difficult question. The complicated undercurrents make this a tricky and difficult enterprise, To my mind, however, one things is

PREFACE

very clear: Canada is more than the sum of its parts. This should be our bedrock philosophy. We are a richly endowed and diverse nation that must make its decisions with the nation's well-being in mind. This demands that all govern-

ments, while res ecting each other's jurisdictions, recommit themselves to the task of always pursuing the nat n's best interests. Strong national voices are needed today to guarantee we pursue our nation's values and do so in such a way that citizen know how and why these decisions are ade. Of course, this ideal will not easily be achieved. Where there is confrontation among governments, appeals must be made to our citizens to express their hopes and, thus, influence the political bodies. A citizenry committed to our polycentric and egalitarian society will reward hard decisions. The Saskatchewan Institute of Public Policy has greatly contributed to a richer understanding of the lessons to be learned from the past and the future direction to be taken. This publication is the result of a conferenc that took place at a moment in our political history when ne leadership appeared federally and within most provincial and territorial governments. It i hoped that the articles contained herein, even if sometimes contradictory, will, in a small way, contribute to a successful navigation of the river of federalism and result in a stronger identity and national purpose.

XI

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CONSTRUCTING TOMORRO S FEDERALISM

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Introducti : n Governing A Dynamic Federation Ian Peach

F

ederalism is inherently imperfect, dynamic, and even incoherent.The decisions arrived at are inevitably contingent and incomplete, because no single decision maker is provided with the authority to implement their vision of the best course for the people of the federation in all matters. In this way, though,

the divided sovereignty of federal states serves the interests of liberal democracy, possibly better than any unitary state could. Federalism is the art of accommodation taken to the level of a principle of government. The division of powers and the competing claims to democratic legitimacy in a federation mean that the state must accommodate citizens' demands to have their differences recognized and respected, but also that the sub-state political communities must accommodate citizens' demands for the capacity to act in concert, through the power of the state. Canada, as a particular manifestation of the principles of federalism with a particular history, must seek to accommodat the distinct nationa ommunity that Quebec represents, the distinct political communities that predated Confederation in Quebec and Atlantic Canada, and the distinct regional interests of eastern, central, and western Canada. All the while, it must r

ain a national community

pable of

acting on our cultural and Political distinctions from our nearest, and Poten-

tially overwhelming, neighbour, the United States. The sub-state comm

ities

are distinct in some very significant ways, even at the level of their citizens' trust in the institutions of government at both the provincial and national levels, as Rejean Pelletier points out in his paper, "Political Trust in the Canadian

4

CONSTRUCTING TOMORROW'S FEDERALISM

Federation." These differences create the conflicting loyalties and tensions that make the effective governance of the federation such a challenge. In recent years, our federation has also been challenged to accommodate the national communities of the Aboriginal peoples of Canada and the increasingly mature and powerful territories in an expanded vision of the federal state—a daunting task, without a doubt. As daunting as th task of governing the federation is, we have been able to find the accommodations that allow us to function both together and separately at the same time, albeit always in a contingent fashion and more or less effectively at different times, for nearl 140 years. We succeed because we remain conscious of the importance of accommodation and the need for balance. Thus, as Robert Wardhaugh and Barry Ferguson point out in their

contribution to this volume, even old commentaries on how to effectively govern the federation, such as the Rowell-Sirois Commission Report, have continuing relevance because of the consistent importance of accommodation and balance in the management of our federal system. Those who like to construct models to bring coherence to the messiness of reality frequently construct two models by which the tensions of federal governance can be managed and the necessary accommodations made. One model is intrastate, or institutional, federalism, in which the accommodation of the distinct interests of the distinct sub-state communities occurs within the central institutions that govern the state. The other model is interstate, or executive, federalism, in which the accommodations are made between the decision makers in the different orders of government. In reality, these models define end-points in a continuum in which intrastate and interstate mechanisms exist

in either complementary or competitive relationships. Within this continuum, Canada leans well towards interstate federalism, but exists as a interstate federation without the formal institutionalization of interstate mechanisms seen in Australia, for example. Because of the lack of institutionalization of our traditions of executive federalism, the degree to which our federal relations are dominated by coordination or unilateralism and the extent to which th

ederal or provincial governments define our political

agenda vary over time in wh

seem to be endless cycles. Yet, as David McGrane

points out in his paper, "Limiting Fiscal Capa

y? The Relationship between

INTRODUCTION

Transfer Payments and Social Spending in Canadian Provinces from 1988 to 2002," even in the face of major unilateral changes by the federal government to federal-provincial fiscal relations, which created remarkably similar problems for all provincial governments, provinces retained the capacity for independent action and distinct responses to their fiscal environment. As well, even in this period of federal unilateralism and intergovernmental conflict, the federal and provincial governments were able to undertake coordinated, joint action and create a new national child-benefit scheme that included both federal and provincial components. More importantly for how we govern ourselves, the National Child Benefit was created on the foundation of an "honourable agreement" and without the use of the traditional social program mechanism of conditional federal transfers to the provinces. Canada is firml on the interstate federalism end of the continuum, in part because

f the desire of the Upper Canadian delegates, and Sir John A.

Macdonald in particular, to provide to the central governme

the institutional

capacity to act in the national interest. Macdonald saw the American system of intrastate federalism as debilitating to the central government and dangerous

for a new Canadian nation that needed to create a common political identity, in part to defend itself from absorption by the United States. As a consequence,

our central institutions have either a poor or completely non-existent capacity to function as mechanisms of intrastate federalism. This is not to say that Canada has complacently accepted its status as an interstate federation. We have tried at nvarious times to reform our central insti-

tutions to make them more federalist and give them the capacity to help manage the federation, yet we have always failed. The most recent efforts to address these (and other ) issues, the Meech Lake and Charlottetown accoourds on consti-

tutional amendment, were failures of such epic proportions that they ended political careers, brought about the demise of the Progressive Conservative Party of Canada and the tory tradition of Sir John A. Macdonald for which that party was the spiritual home, and made talk of major constitutional reform in Canada taboo for most of a generation. It may be, as Gerald Baier and Herman Bakvis suggest in their contribution to this volume, that the tension between asymmetrical federalism and equality of the provinces, which is alive and well in the debate over the form that Canadian federalism should take in

5

6

CONSTRUCTING TOMORRO

S FEDERALISM

the future, and the prospects for perverse outcomes from efforts to enhance

democracy in our arliamentary

stitutions create significant challenges for

any reform proposals to overcome. One can even go so far as to wonder whether the challenges identified by Baier and Bakvis are such that building democrati-

cally legitimate and effective mechanisms of intrastate federalism into our central institutions is a task at which we cannot succeed. As mentioned earlier, our federation also finds itself in the position of having to accommodate an additional layer of complexity in the management of the federation, in the form of newly empowered actors, while still grappling

with the challenge of accommodating those distinct communities that have been a part of our federal governance since 1867. In the aftermath of their

exclusion from the Meech Lake Accord negotiations, the territorial governments and national representatives of Aboriginal peoples became part of Canada's national politics in the 1990s. In both cases, their involvement in national

politics was the culmination of a political development from a staus of wards of the federal government to independent agents with a desire, and a legitimate

claim, to participate in the governance of the federation. As Bernard Funston points out in his paper, "Canada's North and Tomorrow's Federalism, he territorial constitutions now make provision for directly elected legislatures in the territories and for powers that closely mirror those of the provinces. As a consequence, territorial governments are responsible for many of the same policy and intergovernmental relations issues as provincial governments. They are also parties to the relationship between emerging Aboriginal governments and other governments in the federation in the same way provinces are. These facts, and the increasing economic importance of the territorial North, make the claim for the territories' full involvement in the processes of executive federalism difficult to challenge. Yet the difficulties of managing public governments for small, widely dispersed populations, especially as the extremely large proportion of First Nations peoples in the territories establish their own governments, create their own distinct dynamics, issues, and perspec-

tives on managing the federation . Thus, cooperative federalism becomes a still more complex challenge.

INTRODUCTION

In addition, First Nations in Canada are slowly but s ly beginning to have their inherent right of self-government recognized and are exercising their authority to govern themselves in a variety of policy fields* Needless to say, as First Nations find themselves responsible for addressing policy issues and as

other governments make policy decisions that affect First Nations citizens, First Nations govern nts are also demanding a seat in our intergovernmental fora. As the contributions to this volume from Gabrielle Slowey and Frances Abele and Michael Prince indicate, making space for First Nations both to govern themselves in a responsible, democratically legitimate way and to participate in our national governance as equal partners in the federation may be the

greatest challenge that confronts Canadian federalism in the next several decades. Canada is not alone in addressing these challenges through multi-level governance arrangements. We need to remain conscious of this fact and seek to derive lessons from analogous experiences elsewhere if we are to improve the effectiveness of our own governance. The efforts Europe has made to manage the governance of a large, multinational region and, now, to become a constitu-

tional federation (or at least q i-federation) are particularly interesting, as they are a current example of an effort to construct a form of federal governance as well as an example of the difficulties of that task. Thomas Hueglin's paper, "The Principle of Subsidiarity: Tradition—Practice—Relevance," challenges Canadians to ask ourselves what value the principle of subsidiarit could have for us as a guide to man ng the conflicts and interdependencies of federal governance. So what of the future? What assumptions can we make about the influences that will affect how we construct tomorrow's federalism and about what that federalism might look like?1 Major constitutional reform seems unlikely to

succeed, even though the p

ibility of attempting it seems more likely with a

Harpeer federal government than it was a year ago. Still, our institutional

arrange nts are unlikely to change in any fundamental way. Thus, we will remain in the realm of interstate executive federalism. As well, the division of powers seems unlikely to change, other than through political arrangements

arrived at through executive federalism processes, which are likely to tend toward asymmetry. On the other hand, the critiques of the closed-door,

7

8

CONSTRUCTING TOMORROW'S FEDERALISM

anti- democratic nature of executive federalism will not go away and, thus, our intergovrnmental processes must adapt to become morelegitimate in the eyes

of the citizens on whose behalf our governments govern.

One area where we are seeing progress is in the institutionalization of our processes of executive federalism, espedially at the level of First Ministers. In 2003, the creation of the Council of the Federation formalized and added insti-

tutional capacity to the annual premiers' conference; moreover, prime ministers Paul Martin and Stephen Harper seem to have made First Ministers meetings

an element of intergovernmental politics aga

This is a positive development,

as unilateral action has been the source of intergovernmental conflict and a risk

to national unity for decades. This may never have been more so in recent history than in the Chretien era, when Canada had a prime minister who clearly felt that consultation with his fellow First Ministers was a mechanism to be used purely at his discretion, and very rarely. On the other hand, the search for cooperative federalism and the institutionalization of intergovernmental consultation raise problems for collective action; an attendant paralysis emerges when Canada must act, especially as our traditional intergovernmental decision rule is consensus. Our governments will need to address the limits of cooperation as they gain experience with using intergovernmental fora as decision-making tools. And what of the future of the country and the spectre of Quebec separatism? There has been much speculation that the federal sponsorship scandal,

born out of a desperate desire to attract Quebecers to Canada in the aftermath of the 1995 Quebec referendum, will instead buttress Quebecers' desire to rid themselves of a Canada that cannot understand their aspirations for sovereignty and believes that marketing is sufficient to keep the country united. As well, the Parti Quebecois awaits what it sees as the inevitable defeat of an unpopular Liberal government under Jean Charest in the next Quebec election

and their subsequent opportunity to hold another referendum on Quebec sovereignty. We must also wait to judge what implications the last federal election has for the role of Quebec in the federation, the strength of increasingly powerful regions in both the East and the West in our national politics, and the future of Canadian unity.

INTRODUCTION

On the other hand, the distrust of politicians and political institutions, which has been part of English Canadian political culture at least since the Mulroney era, and the absence of which has been part of what denned the "distinct society" through the 1990s, is now as strong in Quebec as elsewhere in Canada. In such an environment, having two competing centres of power, which can act as checks and balances on each other, is a far better strategy than placing all power in a single governor. As well, one must ask, as younger people increasingly are, what does it mean for a community to be "sovereign" in a globalized, interconnected world? Is the sovereignty of states now so attenuated that the very idea of political sovereignty has become meaningless ?

Tomorrow s federalism must also address the engagement of First Nations and Metis peoples in our processes of governanace in a serious way. Parallel meetings between First Ministers and national Aboriginal leaders, the approach

that the First Ministers have generally used with Aboriginal peoples, will quickly lose their political legitimacy in the eyes of Aboriginal peoples as more of them exercise their inherent right to self-government. The Charlottetown Accord negotiations in 1992 also demonstrated that Aboriginal peoples could be effective contributors to national politics, and not just in areas of direct interest to them. Yet this creates two dilemmas. First, the national Aboriginal organizations that have generally been invited to the intergovernmental table to date are not governments, but are representative organizations. First Nations and Inuit governments will increasingly demand seats bas the intergovernmental

table in their own right. The problem is that adding a delegation for each self-

governing First Nation and Inuit community risks so overloading the processes of intergovernmental consultation and cooperation that collective action becomes impossible. Thus, the aggregation of authority, and possibly the federalization of First Nations and Inuit governance, will become the quid pro quo for participation in the processes of interstate federalism. Secondly, no one has yet designed, let alone implemented, a model for the self-government of non-territorially based Aboriginal peoples, most notably Metis. Thus, the engagemant of First Nations and Inuit governments in inter-

governmental relations will downgrade the role that Metis have played in

national politics since 1992 and widen the gap among Aboriginal peoples further. More fully involving Metis in our national governance through some

9

10

CONSTRUCTING TOMORROW'S FEDERALISM

means should, therefore, be a matter of significant concern to all governments in the federation. There is no clear path to constructing tomorrow's federalism. The environ-

ment is dynamic. The challenges that our governance environment creates will

demand the best creativity and integrity of our governors, and it will not be without its tensions. This, however, is the history of Canada. Our history has

shown that federalism can be an effective vehicle for managing the dynamism of our world in the best interests of our citizens. New routes to effective governance in Canada will be speculated about, debated, and occasionally stumbled

upon as we continue to seek the just accommodation of competing definitions of"the good," in the great Canadian tradition of "muddling through." There is

honour, however, in accommodation. This book arose out of a conference entitled "Constructing Tomorrow s Federalism: New Routes to Effective Governance," organized by the Saskatchewan Institute of Public Policy and held in Regina, Saskatchewan, in March 2004. The papers contained in this volume represent only a portion of the number of presentations made at that conference, and I wish to thank both the authors and those presenters not represented here for their contribution to a stimulating and successful conference. I also want to thank the sponsors who contrib-

uted to making both the conference and this book possible: the Government of Canada, the Social Sciences and Humanities Research Council of canada, the

Government of Saskatchewan, the University of Regina, the University of Saskatchewan, the First Nations University of Canada, I'Institut francais at the

University of Regiona, the Forum of Federations, Can West Pupblications, Cameco Corporation, Molson, and Scotiabank. My colleagues on the staff of

the Saskatchewan Institute of Public Policy also have my sincere and abiding appreciation; without their dedication, drive, and commitment to excellence,

the conference would never have been the success it was. As well, I want to thank the anonymous reviewers of both the individual papers contained in this volume and of the manuscript itself for their thoughtful comments on earlier drafts of this material. Lastly, I want to thank the University of Manitoba Press and, in particular, David Carr, for agreeing to publish this work and for being so easy to work with as we moved from manuscript to book. This has been a

INTRODUCTION

journey of nearly four years from conception to completion and I appreciate the

help and support of everyone who has touched the project on the way. Ian Peach May 2006

11

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P C

ical Tru in the dian Fe eration Rejean Pelletier

ederalism is defined as a form of political organization that combines unity F and diversity, and preserves distinct identities within a broad political

entity. Diversity may be recognized in various ways. The existence of ten provinces that enjoy genuine independence in areas of jurisdiction defined by the constitution expresses the territorial diversity of the Canadian federation. Moreover, the presence of linguistic and cultural groups concentrated in a specific area and possessing their own institutions reflects the multinational diversity of the Canadian federation. The coexistence of territorial federalism and multinational federalism creates certain problems in Canada because English-speaking Canadians tend to defend the territorial model of federalism, whereas French-speaking Canadians put greater emphasis on the multinational

model.1 Still, we must recognize that, even in territorial federations based on a common vision of the nationality underlying the federal state, such as the United States, Germany, and Australia, geographic, historical, economic, and political factors have contributed to great diversity among the regions that make up the federation. This is also the case for Canada, where we have, in

addition, national minorities, defined by Will Kymlicka as "historically settled, territorially concentrated, and previously self-governing cultures whose territory has been incorporated into a larger state."2 These national minorities make Canadian diversity more complex.

14

CONSTRUCTING TOMORROW'S FEDERALISM

In this chapter,; I take this double diversity—territorial (regional) and multinational—into account in an analysis of'political trust," I shall emphasize,

first, regional and/or provincial differences (territorial federalism) and, second, differences between the majority and the Quebec national minority (multinational federalism) in their trust in governments and political institutions. In each case, I shall discuss some factors that give rise to this trust or distrust before making, in a third section, a few proposals for the future to increase overall levels of trust in governments or specifically to increase trust in processes of intergovernmental accommodation. Political Trust and Territorial Federalism Many authors have referred to the fact that citizens have lost trust not only in politicians, but also in political institutuions, such as governments, parliaments, and political parties. Ina recent book, Pippa Norris stated:"The general diag-

nosis ... confirms that there has been an erosion of public support for the core institutions of representative government, including parties and parliaments, in recent decades."3 In the same book, Miller and Listhaug wrote, "Empirical evidence dating back to the early 1970s reveals a trend toward growing distrust of government institutions in a number of countries."4 Does Canada conform to this general model identified by these and several other authors? That is the question that guides our analysis. Explanations for the erosion of trust in politicians and political institutions ar elated to a multitude of political, economic, and social factors,5 Listhaug divides the explana ns for the erosion of trust into two catego ries: long-term factors and short-term factors. Regarding long-term factors, some studies emphasize the emergence of new values that pose a challenge to hierarchical authorities; others cite increasing expectations that governments cannot meet (the overload hypothesis); and still others stress the media's growing criticism and cynicism regarding institutions. As for short-term factors, certain studies link the loss of trust in governments to adverse economic conditions, whereas others insist on the probity and integrity of political leaders. To check all these factors is beyond the scope of this chapter. Instead, I would like to point out certain explanatory variables that are more specific to a

POLITICAL TRUST IN THE CANADIAN FEDERATION

federal system and are not usually taken into account by the above authors. The findings presented here are data from the last three Canadian Election Studies (1993,1997, 2000) and from a phone survey of a representative sample of the Canadian population that Leger Marketing conducted for the author in December 2003 (N .= 1500). If federalism is an expression of diversity within unity, we can expect this diversity to be reflected in peoples trust in the federal government and federal institutions. In other words, even if a common vision of nationality underlies a federal state, it does not imply a shared vision of government and political institutions. This is particularly true of the Canadian federation, with its strong feelings of regionalism and regional alienation, especially in Quebec and the West. I therefore expect to find significant differences between regions of Canada in trust in the federal government and the provincial governments; trust in one's provincial government may differ from that accorded the federal government. I also expect this trust to be related to "regional alienation," defined as citizens' perceptions that the federal government does not treat their province as

well as it does the other provinces. Such a feeling of alienation should give rise

to less trust in the federal government and, by extension, in central institutions generally. The data presented by different scholars show that political trust has been declining in Canada for several years, but that the trend is not irreversible. On the one hand, it seems clear that trust in government has declined substantially since the 1960s in Canada, the United States, and other countries.6 On the other hand, this downward trend has been interspersed with periods of growth in trust, followed by a further decline. These variations seem to be related to cyclical events, especially to pronounced dissatisfaction with certain governments. A new government can help increase trust, as was the case in Canada when the government changed in 1993. Table 1 shows clearly that trust in the federal government, like trust in the provincial governments, rose everywhere in Canada from 1993 to 2003, although the level of trust is not as high as it was in the 1960s.

15

16

CONSTRUCTING TOMORROW'S FEDERALISM

Table 1 TRUST OR CONFIDENCE IN GOVERNMENTS BY REGION

REGION

CONFIDENCE IN THE FEDERAL GOVERNMENT GOVERNMENT

Atlantic Quebec Ontario Prairies BC Total (mean)

1993 1.34 1.18 1.19 1.17 1.12 1.19

1997 1.29 1.24 1.45 1.28 1.32 1.32

2000 1.49 1.39 1.54 1.21 1.38 1.41

2003 1.62 1.43 1.50 1.40 1.32 1.45

CONFIDENCE IN THE PROVINCIAL GOVERNMENT

1993 1.32 1.27 0.89 1.31 1.06 1.18

1997 1.20 1.33 1.37 1.58 1.17 1.36

2000 1.45 1.47 1.39 1.59 0.97 1.41

2003 1.65 1.36 1.46 1.76 1.22 1.47

Entries are the mean score on a scale ranging from 3 (a great deal of confidence) to 0 (none at all), the midpoint being 1.5. Source: Canadian Election Studies ( 1993, 1997, 200 ) and leger Marketing (2003).

Table 1 also shows that the level of trust, as was expected, varies greatly from one region of Canada to another; it is higher in the Atlantic provinces and Ontario than it is in Quebec, the Prairie provinces, and British Columbia, It is also important to note the substantial differences in the level of trust in the federal government and the provincial governments. The citizens of the Atlantic provinces and, above all, Ontario and British Columbia have developed greater trust in the federal government than in their provincial governments. The reverse is true in Quebec and, above all, on the Prairies, These results are, no doubt, related to the individuals who held government positions at various times in the 1990s, which led to significant variations from region to region. They are also the expression of regionalism defined as attachment to a region,

which is a common feature of federations. When we compare the two levels of government in the Canadian federation, we can draw an interesting conclusion based on aregression analysis: trust

engenders or feeds trust. In other words, there is a strong positive relationship between trust in one's provincial government and trust in the federal government. The more citizens trust their provincial government, the more they trust the federal government, and vice versa (see Table 2). This conclusion holds true

for Quebec as well as for the rest of Canada (results not presented here). Thus there is a store, or reservoir, of trust that operates on both levels of government

POLITICAL TRUST IN THE CANADIAN FEDERATION

in the Canadian federation. It is important to build up this reservoir of trust, which benefits both orders of government (we shall return to this point later). This has, of course, major implications for the classic intergovernmental strategy of trying to foster distrust in the other level of government. By undermining trust in the other level of government, one does not necessarily increase trust in one's own government, although most governments seem to think that is the case. We can also add that, taking into account the devaluation of government in general that has occurred in the last twenty years, it is not surprising to find that trust in one order of government reinforced trust in the other during a time when all governments were under assault.7 Table 2 REGRESSION ANALYSIS CONFIDENCE IN THE FEDERAL GOVERNMENT

CANADA

B

WALD

0.010

0.001

Ontario

0.101

0.120

Prairies

-0.195

0.243

Alberta

-0.595*

2.838

Atlantic

BC 0.332 Gender Education Age

French Other languages More cynicism

0.943 3.735 3.921 3.236

-0.288* 0.320** -0.271* 0.113

0.158

9.922

0.746*** -0.172

Less cynicism

0.896***

Better treatment

-0.108

Worse treatment

0.821

11.218 0.190

-0.924***

31.031

Central institutions

1.676***

96.881

Provincial government

1.716***

124.348

N

1171

X2

472.184

Pseudo-R2 *** p-value < 0.01; ** p-value < 0.05; * p-value < 0.10 Source: Leger Marketing (2003)

0.447

17

18

CONSTRUCTING TOMORROW'S FEDERALISM

The data presented in Table 2 also lead to a second conclusion similar to the first. There is a strong positive relation between trust in central institutions (the army, the Supreme Court, and the federal public service) and trust in the federal government. Citizens may pass clear judgement on individual institutions, with the result that trust may vary from one institution to another. For example, they place greater trust in the army and the Supreme Court than in the federal public service. Still, trust in these i stitutions as a group reinforces trust in the federal government. But trust is always higher for central institutions as a group than for the government alone ( data not shown here ). It should

also be noted that trust in the federal public service is, to a considerable extent, related to trust in the federal government. A third conclusion can be drawn from the regression analysis. As expected, regional alienation contributes to the erosion of trust in the federal government. When people are asked whether the federal government treats their province better or worse than the other provinces, we see that trust in the federal government is far weaker if people believe their province is treated worse than the others (still, half the people believe the federal government treats their province about the same way as it does the other provinces). Regional alienation is, therefore, an important factor that contributes to the erosion of trust in the central government; it may also lead to pronounced conflict among the provinces in the Canadian federation. For example, western Canada believes the federal government gives better treatment to Ontario and Quebec. Thus, regional alienation creates a serious and multifaceted governance problem for the Canadian federation. This regional alienation results in a fairly clear-cut division in the Canadian federation. Since 1993, trust in the federal government has been lower than the Canadian average in three large regions (Quebec, the Prairies, and British Columbia) and higher (with one exception) in the two other regions (the Atlantic provinces and Ontario). The one is a region with considerable need for federal assistance and the other is the very heart of Canada (see Table 1). In addition, the Prairies offset this low level of trust in the federal government with greater trust in their provincial governments (it is true, however, that the very high degree of trust in the Klein government in Alberta contributes to this general trend on the Prairies). Such a situation may have a double

POLITICAL TRUST IN THE CANADIAN FEDERATION 19

effect: a negative effect, in that it may increase tension vis-a-vis the federal authorities and place more pressure on Canadian federalism; and a positive effect, in that a high level of trust in provincial governments may, over the long term, increase trust in the federal government, since trust in the one level begets trust in the other, as we have seen. We can also draw a fourth conclusion that is not unexpected: cynicism is closely related to trust. A lower degree of cynicism regarding politicians and political institutions is strongly related to greater trust in the federal government. This cynicism was measured by responses to a series of four questions to the effect that elected officials soon lose touch with the people, politicians are ready to lie to get elected, governments don't care much about what the people think, and all federal political parties are very similar. Responses to these four items are highly intercorrelated, forming a reliable scale (Cronbach's alpha = 0.71). This cynicism is more pronounced on the Prairies and in Quebec than it is in Ontario, which shows that it may be related to regional alienation that is felt more strongly in certain regions, especially on the Prairies, than in others. If trust feeds trust, we also see that regional alienation and cynicism can feed off each other and both can engender distrust of political institutions. This problem is serious, especially for a federal state. That is why we concur with the conclusion drawn by Russell Dalton in a recent study: "Rather than a transient phenomenon or merely linked to distrust of incumbents, public scepticism has at least partially generalized to political institutions and thus may be a continuing feature of contemporary democratic politics."8 Of course, skepticism is not exactly the same thing as cynicism, but it may be related to it. In short, although trust in the federal government has declined a great deal since the 1960s, it has be rising since the 1993 election. But this trust varies from region to region—t t is, an outcome of territorial diversity. Moreover, we see variations in trust in the federal government and the provincial governments: trust is higher for the federal government in certain regions and higher for the provincial governments in others. These results may be based on cyclical factors and reflect the loss of trust in holders of offices of authority as well as in the institutions themselves.

20

CONSTRUCTING TOMORROW'S FEDERALISM

Political Trust and Multinational Federalism Kymlicka defines a national minority, as we have seen earlier, as "historically settled, territorially concentrated, and previously self-governing cultures whose territory has become incorporated into a larger state"9 Taking up this definition, we can clearly identify Quebecers as a nation or, more precisely, as a national minority in Canada, Such groups also clude Aboriginal peoples in Canada,the Puerto Ricans and American Indians in the United States, and the

Flemish, Catalans, Saami, and Basques in Europe,10 Moreover, Anthony D, Smith underlines the importance of the presence of "others"—be it real or symbolic—in the formation of a national identity,11 We identify ourselves by what we have in common with other members of our group (language, culture, and so on) and by what we don't share with nonmembers. The distinction between "us" and "them" refers to the sense of belonging to a group, reinforced by the group's presence in a given territory. In this essay, we consider the feeling of belonging to a group to be the basis of national identity. Some of the French-speaking Quebecers, who, within the Canadian federation, form a national minority, may have a strong national identity, whereas others may have multiple identities. In other words, some will define themselves as Quebecers only, whereas others will define themselves as Quebecers and Canadians, and still others as Canadian only. I therefore expect that those who have a strong Quebec identity will have less trust in the federal government and greater trust in their provincial government.

We shall measure this national identity in two ways. First, we shall separate Quebec's francophones from anglophones in the rest of Canada: this distinction, based on a linguistic criterion (belonging to a group), refers to the definition of a national minority within Canada. Second, we shall use the way French-speaking Quebecers define themselves, either as Quebecers only (single identity) or as Quebecers and Canadians (double identity). Using this definition, we shall find a more or less strong national identity, as the case may be, which should have an effect on trust in political institutions. Table 3 shows that the level of trust in the federal government is higher among Canada's English-speaking majority outside Quebec than it is among the French-speaking minority in Quebec. Conversely, confidence in its provincial government is also higher among the French-speaking minority in Quebec than

POLITICAL TRUST IN THE CANADIAN FEDERATION

is confidence in the federal government, with 2003 being the exception. These results conform to our hypothesis. Quebec's national minority places greater trust in its own government than it does in the federal government, possibly because this minority forms the majority in Quebec. It can therefore exercise stronger control over its government, which can then respond to its aspirations more effectively. In 2003, however, the level of trust in the federal and provincial .governments among the French-speaking minority in Quebec was about the same, which may be due to a cyclical factor related to the high level of dissatisfaction with Jean Charest's new Liberal government. Moreover, in 2003, the level of trust in the provincial governments was lower in Quebec than outside Quebec, probably for the same reason. Table 3 CONFIDENCE IN GOVERNMENTS BY LANGUAGE

CONFIDENCE IN

THE FEDERAL GOVERNMENT

CONFIDENCE IN THE PROVINCIAL GOVERNMENT

1993

1997

2000

2003

1993

1997

2000

2003

French Quebec English Canada (outside Quebec)

1.17 1.17

1.17 1.36

1.34 1.42

1.33 1.42

1.31 1.11

1.41 1.38

1.49 1.40

1.32 1.47

Mean difference

0.00 -0.19*** -0.08

-0.09

0.20*** 0.03

0.09 -0.15**

*** P < 0.01 ; * * p < 0.05 ;*p< 0.10 Sources: Canadian Election Studies (1993,1997, 2000) and Leger Marketing (2003)

Quebec's French-speaking minority pl es greater trust in its own government, which may offset the effects of its distrust in the othe evel of government. In this sense, the presence of a federal state in Canada ay mitigate the effects of distrust by permitting various levels of trust and allegiance related to the federation's territorial divisions. If citizens feel they are less well represented on the central level or less favoured by its policies, they may redirect their trust toward the other level, which they can control more effectively and which they feel represents them more effectively, especially when they form a majority. It is true, however, that this distrust, taken to the extreme, may aggravate tensions within the Canadian federation and make it more difficult to govern the country or even cause it to come apart.

21

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CONSTRUCTING TOMORROW'S FEDERALISM

In our opinion, this tension should be stronger if we use a sense of Quebec

identity to gauge it, rather than taki g into account only a linguistic criterion, as we have just done. The way citizens define themselves should have a significant impact on their trust in government. Therefore, I expect that those who define themselves solely as Quebecers will have less trust in the federal govern-

ment and more trust in their provincial/national government than those who have a doubley identity. With respect to identity, or the way one onedefines defines oneself, oneself, we cannot make make

comparisons with previous years because this question was not asked in the surveys done at the time of federal elections. The exception is in 2000, when the survey used a modified version that precludes a true comparison. The data in Table 4, therefore, come from a survey conducted for the author by Leger Marketing in December 2003. Table 4 shows that, contrary to expectations, those who define themselves solely as Quebecers do not have more trust in their provincial government than in the federal government. Moreover, they place significantly less trust in Quebec's provincial government than do those with a double identity (Quebec and Canadian). In addition, this second group has more trust in the federal government than we expected. The results, therefore, largely invalidate our hypothesis. Table 4 CONFIDENCE IN GOVERNMENTS BY IDENTITY (%) CONFIDENCE IN GOVERNMENTS

PROVINCIAL GOVERNMENT

FEDERAL GOVERNMENT

MEAN DIFFERENCE

Quebecers only

25.94

26.90

-1.04

N

92

49.43

Double identity

N Mean difference

221

-23.49***

93 55.69 220 -28.79***

-6.26*

*** p < 0.01 ; * * p < 0.05 ;*p< 0.10 Source: Leger Marketing (2003)

There may be two reasons for this low level of trust on the part of those who define themselves as Quebecers only. Some of them may be dissatisfied

POLITICAL TRUST IN THE CANADIAN FEDERATION

with the current Charest government, like the six out of ten Quebecers who expressed disapproval with his government in a survey published in April 2004. Moreover, this group, which has a strong Quebec identity, is not necessarily ready to support a federalist provincial government that has done little thus far to distinguish itself from the central government and has still not obtained significant increases in transfer payments from the federal level. In other words, it has not succeeded in correcting a portion of the fiscal imbalance that Quebec's political authorities have been complaining about for several years. The double dissatisfaction in Quebec—internal as well as external, as regards relations with the federal government—results in a very low degree of trust in both levels of government. To summarize, the identity factor may have a negative impact on the legitimacy of political authorities and institutions, and b extension on the stability of a federation. In the case of Canada, trust in both levels of government is very weak among those who define themselves above all as Quebecers: they are probably the ones whose support for sovereignty is strongest. Those with a double identity—the largest group of respondents—generally have a fairly high level of trust in both levels of government and in federal and provincial political institutions (data not shown). They may offset the delegitimizing and destabilizing impacts of the first group as regards the federal government and its institutions. Still, although the erosion of trust in Canada on the federal and provincial levels is clear, in my opinion it is not an irreversible trend. Indeed, it has been reversed since 1993. This erosion of trust is especially true of governments, as the Canadian results presented earlier show, and it may also affect political institutions as a whole. Conversely, trust in political institutions may also increase trust in governments. It is, therefore, important to determine a few avenues for the future from the standpoint of a reversible erosion of trust.

Avenues for the Future How can trust in political institutions, especially sitting governments, be increased? As already stated, cynicism is closely related to mistrust. As Pippa Norris points out, it can affect involvement in political life, such as voter turnout, political party militancy, and civic commitment in general.12

23

24 CONSTRUCTING TOMORROW'S FEDERALISM

If people believe elected officials soon lose touch with the people, politicians are ready to lie to get elected, and governments don't care much about what people think, it is obviously difficult to inspire them to join a political party or to encourage them to vote in an election. Why bother to vote if you don't trust politicians;* According to Gary Orren,"Trust in political and other institutions is closely correlated with the public's perceptions of the ethics and morality of the institutions' leaders."13 That is why elected officials must work to restor e their image and increase their integrity and probity. They must attack corrup-

tion in all its forms: poor administration, needless spending, cronyism, and scandals, including the federal government's sponsorship scandal, recently the most obvious manifestation of this corruption. Moreover, the disputes and conflicts that often characterize intergovernmental relations tend not to increase citizens' trust in their governments. Citizens often consider such conflicts between politicians the most obvious indication that the political authorities are rapidly losing contact with them, with what they think, and with what they experience. In his action plan for democratic reform,

unched in February 2004, the

then Leader of the Government in the House of Commons and Minister

Responsible for Democratic Reform, Jacques Saada, listed three essential goals to be achieved in order to restore the public's faith in democratic institutions. The first one, according to him, is to meet exemplary standards of ethics and integrity. He added that "ethics and integrity are at the core of public confidence in the government and in the public process."14 Our data confirm this orientation. A lack of probity and integrity is related to a higher level of cynicism among citizens. More cynicism, in turn, is correlated with less trust in the federal government and, therefore, in the central institutions (that is, the Supreme Court, the army, and the federal public service). Of course, these standards of ethics and integrity also apply to provincial governments. The utmost transparency is essential in relations between political actors and the public service, in the award of contracts and in the review of appointments made by the government. The way things are done counts as much as the results. This desire for transparency must also underlie intergovernmental relations, which are usually conducted behind closed doors. Transparency must be accompanied by accountability; in other words, a commitment to render

POLITICAL TRUST IN THE CANADIAN FEDERATION 25

accounts not only to Parliament but also to the public. As Saada wrote in his

action plan, "Parliament should have the tools to hold the government to account for the good stewardship of public resources."15 Of course, this principle also applies to the provincial legislatures. Moreover, the First Ministers must regularly hold press conferences to explain their governments' broad strategic orientations and to report on their administration. Changes to methods must be accompanied by changes to institutions. At a

time when democracy is triumphant and citizens cherish democratic ideals, trust in representative democracy is declining. There is a gulf between the democratic ideal and the performance of political institutions. The problem of a democratic deficit is also found in federal-provincial relations, where key discussions are held behind closed doors and dominated by the executive (First Ministers, Cabinet ministers, and senior civil servants). Obviously, it would be counterproductive to hold such discussions in public. But citizens have to be informed of the subjects on the agenda and the results of federal-provincial negotiations, so that they can be discussed publicly. Above all, for accountability to work, a clear accountability relationship must be established between the two levels of government in the Canadian federation. As Richard Simeon points out, it is difficult to maintain accountability when responsibilities are shared and when governments are allowed to spend funds they do not have to raise.16 More specifically, when a provincial government receives from the federal government funds that are to be spent in areas under provincial jurisdiction but on specific programs already defined by Ottawa or according to pre-established conditions, it is not clear to whom the provincial government is accountable—the federal provider of funds or its own citizens. Genuine cooperation between the two levels of government cannot be sustained without a clear division of the responsibilities and the taxation capacity of each level. Pippa Norris also shows that the "winners," that is, those on the side of the party in power, have greater trust in political institutions than the "losers" do.17 In Canada, however, the electoral system is designed in such a wa hat there are usually more losers than winners (the majority party rarely receives more than 50 percent of the votes), which detracts from the public's level of trust. One outcome is the profound political alienation of western Canada, which

26

CONSTRUCTING TOMORROW'S FEDERALISM

finds itself in the losers' camp more often than among the winners. Changes to the electoral system should increase trust in governments and institutions by achieving better representation of the various regions of the country in the central government and greater alternation of political parties in power. The Liberal Party's domination of federal politics in the twentieth century is not necessarily indicative of great democratic vitality in the Canadian federation. It is understandable that the level of trust in the federal government is not high among those who support a party other than the Liberals. As Ronald Inglehart states, "value changes" are occurring in several countries, including Canada.18 Neil Nevitte, for his part, points out that deference is declining in Canada.19 Changing values give rise to citizens who are more critical, especially of traditional authorities such as governments. This affects trust in political institutions, since post-materialists—who tend to be young and well educated—want to have more say in government. Our data show that age or education, as the case may be, is correlated to trust in governments; that is, young citizens are often most critical of the way our institutions operate. But, contrary to our expectations, higher education is. correlated to higher (not lower) trust in the federal government. Still, even if the level of education completed by young people is rising, they tend to be rather cynical regarding politics and politicians, which translates into low voter turnout. We are also seeing new types of political commitment, as parties, unions, and even churches are shunned in favour of new social movements such as those dedicated to environmental protection, equality for women, and gay rights. Generally, Canada's political parties, with the exception of the more right-wing variants, have succeeded in incorporating these new values into their programs and policies, which makes it easier for them to compete with the new social movements. The problem is that not all Canadian citizens share these new values, and the result is a rift between certain regions of the country over environmental protection and gay rights. These rifts can also be found within the two main parties (Liberal and Conservative) that aspire to govern Canada. Finally, the identity factor has an important effect on trust in the federal government and its institutions. Whether we approach it on the basis of the language Quebecers speak or how they define themselves, the result is the same: Quebec identity gives rise to less trust in the federal level. This phenomenon

POLITICAL TRUST IN THE CANADIAN FEDERATION

represents a threat to the Canadian federation. Everything thus depends on the central government's ability to maintain the trust and loyalty of Quebec's national minority, which wants to be recognized as such. Non-recognition is likely to give rise to distrust and to constitute a destabilizing factor in the Canadian federation. For the time being, this destabilizing factor is offset by the large number of people with a double identity. It is thus important to recognize that this double identity is a positive, rather than negative, factor in the Canadian federation. On the whole, Canadians seem to be questioning the practice of democracy rather than its principles. For instance, if they find governments soon lose touch with the people, it is probably because they think governments should stay in touch with the population. We can conclude that Canadian governments must review their democratic practices to counter high levels of cynicism, regional alienation that is especially pronounced in the West and among the Frenchspeaking minority in Quebec, and the democratic deficit that affects political institutions and federal-provincial relations alike. In brief, governments must demonstrate greater transparency and ensure better accountability, notably by establishing clear accountability relationships among levels of government. They must also expand opportunities for involvement, rather than restricting them. These are some conditions for re-establishing confidence or trust in governments and political institutions in the Canadian federation.20 1

Will Kymlicka, Finding Our Way. Rethinking Ethnocultural Relations in Canada (Toronto: Oxford University Press, 1998), 136-38.

2

Will Kymlicka, Multicultural Citizenship (Oxford: Clarendon Press, 1995), 30.

3

Pippa Norris, "Introduction," in Pippa Norris (ed.), Critical Citizens. Global Support for Democratic Governance (New York: Oxford University Press, 1999), 21.

4

Arthur Miller and Ola Listhaug, "Political Performance and Institutional Trust," in

Norris (ed.), Critical Citizens, 204.

5

See Ola Listhaug, "The Dynamics of Trust in Politicians," in Hans-Dieter Klingemann and Dieter Fuchs (eds.), Citizens and the State (Oxford: Oxford University Press, 1995); Ola Listhuag and Matti Wiberg, "Confidence in Political and Private Institutions," in Klingemann and Fuchs (eds.), Citizens and the State; Joseph S. Nye,

27

28

CONSTRUCTING TOMORROW'S FEDERALISM

Philip D. Zelikow, and David C. King (eds.), Why People Don't Trust Government (Cambridge: Harvard University Press, 1997); Elim Papadakis, "Constituents of Confidence and Mistrust in Australian Institutions," Australian Journal of Political Science 34, 1 (1999): 75-93; Norris (ed.), Critical Citizens; Susan J. Pharr and Robert D. Putnam (eds.), Disaffected Democracies. What's Troubling the Trilateral Countries? (Princeton: Princeton University Press, 2000); Neil Nevitte (ed.), Nouvelles valeurs et gouvernance au Canada (Montreal: Les Presses de 1'Universite de Montreal, 2002). 6

See Norris (ed)., Critical Citizens; Pharr and Putnam (eds.), Disaffected Democracies; Nevitte (ed.), Nouvelles valeurs et gouvernance au Canada.

7

I would like to thank a reviewer who draws my attention to this point.

8

Russell J. Dalton, "Political Support in Advanced Industrial Democracies," in Norris (ed.), Critical Citizens, 68.

9

Kymlicka, Finding Our Way, 30.

10

Ibid.

11

Anthony D. Smith, National Identity (Reno: University of Nevada Press, 1991).

12

Pippa Norris, "Conclusions: The Growth of Critical Citizens and its Consequences," in Norris (ed.), Critical Citizens, 257.

13

Gary Orren/'Fall from Grace: The Public's Loss of Faith in Government," in Joseph S. Nye, et al., Why People Don't Trust Government (Cambridge: Harvard University Press, 1997), 92.

14

Leader of the Government in the House of Commons and Minister Responsible for Democratic Reform, Ethics, Responsibility, Accountability. An Action Plan for Democratic Reform (Ottawa: Privy Council Office, 2004), 2.

15

Ibid.

16

Richard Simeon, "Recent Trends in Federalism and Intergovernmental Relations in Canada: Lessons for the UK?" in Trevor C. Salmon and Michael Keating (eds.), The Dynamics of Decentralization. Canadian Federalism and British Devolution (Montreal: McGill-Queen's University Press, 2001), 60.

17

Norris, "Conclusions," in Norris (ed.), Critical Citizens, 229-30.

18

Ronald Inglehart, Modernization and Postmodernization: Cultural, Economic, and Political Change in 43 Societies (Princeton: Princeton University Press, 1997); Ronald Inglehart, Culture Shift in Advanced Industrial Society (Princeton: Princeton University Press, 1990).

19

Neil Nevitte, The Decline of Deference. Canadian Value Change in Cross-national Perspective (Peterborough: Broadview Press, 1996).

POLITICAL TRUST IN THE CANADIAN FEDERATION 29

20

This research was funded by the Social Sciences and Humanities Research Council in 2003 (file number 832-2002-0104), I would like to thank Jerome Couture for the tables included in this chapter.

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Reconsidering Rowell-Sirois and Rethinking Canadian Federalism Robert Wardhaugh and Barry Ferguson

I

n August 1937, in the midst of the Great Depression, the Canadian federal government established the Royal Commission on Dominion-Provincial

Relations, The economic depression was severe and state reaction ineffectual. The fiscal resources of the provinces were utterly overwhelmed, the dominionprovincial division of powers had become severely contested, and the federal system itself was in danger of collapse. In this context, the Rowell-Sirois Commission set to work on a sweeping mandate to re-examine "the economic and financial basis of Confederation and the distribution of legislative powers in the light of the economic and social developments of the last seventy years." By 1940, the commission had conducted extensive hearings in ten cities, requested submissions from the provincial governments, received further information from 427 organizations, produced 10,702 pages of evidence, commissioned twenty-eight specialized studies (that long remained the state of the art on federalism in Canada), and completed a three-volume report.1 The Rowell-Sirois Commission Report has been examined and reviewed for over half a century now and the many interpretations of the report can serve as an insightful guide to the changing evaluations, not only of the report itself, but also of the federal system and its direction and requirements in Canada. Assessments of Rowell-Sirois have tended to reflect commentators' understanding of both current problems in federal-provincial relations and the normative dimensions of federalism. These interpretations, then, which are based upon careful readings of the document, are, at least in principle, particularly interesting as

32

CONSTRUCTING TOMORROW'S FEDERALISM

guides to changing patterns of thought about public policy. Rowell-Sirois, and indeed Royal Commissions in general, capture public attention, fade away, and sometimes re-emerge as problems and ideas change over time. This paper examines the key recommendations of this major inquiry into Canada's federal system, as well as the changing interpretations of the report since 1940. In so doing, it argues that changing assessments of Rowell-Sirois, set against the substantive recommendations it made, demonstrate that the report was not only an important document on the problems of the 1930s and 1940s, but that it remains an essential place to start in the process of rethinking or remaking the Canadian federal system of governance. The use and evaluation of commissions as tools for public policy inquiries and debates have varied throughout the twentieth century. This can be seen in the sheer number of federal commissions established. Whereas during the 1910s, 1920s, and 1930s, approximately fifty commissions were called in each decade, this number declined to twenty-five to thirty per decade between the 1940s and the 1980s. By the 1990s, the use of Royal Commissions decreased significantly (only six were called) and the trend continues.2 Political scientists and historians, when they have not been busy writing reports for commissions of inquiry, have tended toward a decidedly cool reaction to the actual utility of commissions as instruments of government policy making.3 Yet the significance of specific Royal Commissions continues to be acknowledged and at least one recent political scientist, Neil Bradford, has argued at length that the major inquiries into the most significant national problems have ultimately defined their eras and framed the making of public policy, not only for a few years, but also for subsequent generations.4 As a result, inquiries such as the RowellSirois Commission, the Royal Commission on Bilingualism and Biculturalism of the 1960s, and the Royal Commission on Aboriginal Peoples of the 1990s not only frame urgent national problems but also, as Bradford argues, may be seen to have shaped the national discourse for years and sometimes decades.5 A current example is the 2001-02 Commission on the Future of Health Care in Canada, Building on Values, chaired by Roy Romanow, that has set off a continuing round of federal-provincial negotiations and national policy debates concerning the financing of medical care.

RECONSIDERING ROWELL-SIROIS

The written commentaries agreed, virtually from the release of the report, that the Rowell-Sirois Commission was extremely significant. It was hailed immediately both within and outside the nation as a major review of the problems faced by the federal government. The University of Toronto political scientist, Alexander Brady, from his perspective as a student of comparative Commonwealth government, informed Canadian historians in 1940 that the commission was "one of the most comprehensive public inquiries undertaken in the modern British Empire." Brady warned that the future of federalism was tied to the future of the liberal state, so that the enterprise of remaking the federal system was critical.6 Similarly, Columbia University political scientist Arthur W. MacMahon claimed that the continuing success of federal government in Canada was important to the well-being of all federations. He urged Americans to examine the Canadian case, remarking that "to discuss in Canada the federalism of another country, of course, is to carry to Newcastle the ashes of its own coals, so greatly are all federal systems in debt to the monumental inquiry of the Royal Commission on Dominion-Provincial Relations."7 MacMahon's colleague at Columbia, J.B. Brebner, a former Canadian and prominent historian of Britain, somewhat wryly noted that Rowell-Sirois meant "Canada thus remains the same old guinea-pig to foreign students of world affairs." But he added that "this Canada of 1937-40 is a more fertile guinea-pig," thanks to the richness of the inquiry.8 Later commentaries have been almost as positive, but by and large they have hesitated to acknowledge the continuing relevance of the Rowell-Sirois Commission Report. If often cited, the findings have been either misunderstood or undervalued in subsequent decades, "damned by loud praise" in the words of economic historian Harold Innis, a bitter early critic of Rowell-Sirois who helped frame one interpretation of the report as a piece of advocacy rather than a statement of principles.9 What is not so clear from both immediate and later evaluations is whether Rowell-Sirois was important as a statement relevant merely to the problems of its age or whether it can continue to be read for insights into how a federal system should function. The work of the Rowell-Sirois Commission, despite being set aside politically between 1941 and 1945, was not onl highly creative in its time but also

33

34

CONSTRUCTING TOMORROW'S FEDERALISM

remains a remarkable storehouse of ideas and proposals about the characteristics of the Canadian federal system. This can be seen in two ways. First, the commissioners had very different ideas about Canadian federalism and the federation from those that most politicians, bureaucrats, or scholars, past and present, have ascribed to them. Far from offering a program for centralization, as they are said to have done, they tried to absorb the experience of the 1930s and Canada's transformation from a quasi-federation dominated by Ottawa to an effective federation marked by the effective division of sovereignty and judicial adjudication of federal disputes. Second, the report itself not only set out certain new mechanisms for the federation, but also offered a program for the revitalization of federalism. In this way, the report had, in practice, absorbed that distinction between problems of federation, on one hand, and the principles of federalism, on the other. This distinction is one between discussions about the mechanisms that operate to divide jurisdiction and debates about the normative principles of government.10 Due to both these factors—its formation at the very time when Canada became a federation and its theoretical as well as practical inquiry into the problems of federal governance—the commission remains highly relevant to theorists and practitioners alike. The report itself was artfully written, subtly argued, and cautious in expression. It was and remains open to more than one reading. Its double claim—both to reallocate certain fiscal and jurisdictional functions between the two orders of government and to respect the terms of a more strict federal principle—is a clear enough indication that the report was, as its authors claimed, neither strongly centralist nor distinctly decentralist in intention. It is precisely this sort of subtlety manifested throughout its main recommendations that helps to explain why the report has been interpreted in different ways over the past sixty years and why it remains a persuasive guide to federalism. By the end of the 1930s, the roots of the problems between the Dominion and the provinces were economic, political, and constitutional in nature. The international economic crisis of the 1930s had shattered the very foundations of provincial fiscal resources, particularly for the Prairie provinces, while economic difficulties during the post-war adjustments of the 1920s had already shaken the Maritime provinces. Moreover, there were constitutional agitations throughout the 1920s and 1930s, some created by provincial governments

RECONSIDERING ROWELL-SIROIS

seeing the basic causes of their fiscal weaknesses in the federal system, others stimulated by federal governments pushing to expand the international status of the country and therefore the powers of the federal government. Other changes were caused by the judicial committee of the Privy Council's interpretation of the division of the powers and the subsequent transformation of the Canadian federal system from a highly centralized to an increasingly decentralist system. The result was a series of court decisions, Royal Commissions, and Dominion-provincial conferences throughout the two decades of the 1920s and 1930s that all seemed to point towards the need for a fundamental rethinking of how federal government worked in Canada. Five persons were appointed to the Royal Commission on DominionProvincial Relations in 1937. They included two judges—Ontario Supreme Court Chief Justice Newton Rowell and Associate Justice of the Supreme Court of Canada Thibaudeau Rinfret—Winnipeg Free Press editor John W. Dafoe, and two political scientists—Robert A. MacKay from Dalhousie University and Henry F. Angus from the University of British Columbia. Rinfret resigned early in the commission's existence due to ill-health and was replaced by Joseph Sirois, a prominent Quebec City lawyer and law professor at Laval University. The group quickly came to realize the magnitude of their task and, working—and often debating—with a very active staff of policy advisors, they produced a major examination of the Canadian federal system. During their deliberations, they were very much aware that they were not simply tinkering with the mechanics of the federation, but were proposing a rebuilding of the very machinery of federalism.11 To the commissions dominant figure, John W. Dafoe, the problems Canada faced were decidedly rooted in the history of federal government. In addition to the British North America Act, Prime Minister John A. Macdonald's National Policy of 1879 had created "impossible conditions of inequality," for most of the provinces, in the form of the tariff, the construction of the transcontinental railway, and the settlement policies of the West. The commission would only be effective if it examined the connection between past national policies and the current crisis. These fundamental historical problems could not be solved by a return to the centralist goals and tactics that originally lay behind Macdonald's National Policy. Indeed, after reading historian Donald Creighton's study of

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36 CONSTRUCTING TOMORROW'S FEDERALISM

the Confederation era that argued strongly in favour of Ottawa's historical predominance over the provinces, Dafoe was moved to offer an alternate interpretation of nineteenth-century Canadian federalism. He made the innovative claim that there were in fact two confederations and that Canada had been created twice over. The first was "the minor Confederation of the four eastern provinces in 1867" The second confederation was far more important and meant an "extension of Confederation to all of British North America," through the lengthy process from 1870 to 1905 that resulted in the formation of the provinces of Alberta, Saskatchewan, and Manitoba as veritable colonies of Ottawa. Confederation had changed Canada during the late nineteenth century from a regional to a transcontinental polity. Not the first, but the second, confederation was most germane to the problems of twentieth-century Canada.12 During most of 1939, the commissioners worked out and often debated the merits of the main fiscal recommendations that became known as Plan One. As the central piece of the commission's recommendations and the creative centre of the report itself, Plan One adhered to the central tenets of classical federalism. It was based on the simultaneous sovereignty of two orders of government, each with its own responsibilities, and a national economy that was not expected to function as a single unit. The National Policy had aimed at creating an economic union under federal predominance, but the economic ties that bound Canadians were not and could not be tied tightly enough to offset the geographical, economic, and political ties that defined the provincial and regional units of the nation. Rather than attempting national integration, therefore, Plan One aimed at dealing with the uneven distribution of government revenues and the federal division of constitutional responsibility. Just as the taxable income in the nation was unevenly distributed, so also were the burdens of the Depression, thereby intensifying the misdistribution of income. The solution that cut the Gordian knot of fiscal federalism was simple: "A National Adjustment Grant" that would "provide for balanced budgets and average standards of service in every province." This unconditional grant would shift Canadian federalism from the existing situation in which national policy had actually impeded the provinces, especially the peripheral ones, from effective government in their main areas of

RECONSIDERING ROWELL-SIROIS

responsibility. It thereby sought "to ensure to every province a real and not an illusory autonomy by guaranteeing to it, free from conditions or control, the revenues necessary to perform those functions which relate closely to its social and cultural development." The commissioners emphasized that they were proposing not just a fiscal formula to resolve specific conditions, but offering a basic reorientation of the federal system that would at last recognize the continuing viability and legitimacy of varied provincial jurisdictions. The commissioners went further than merely conceding certain rights to the provinces, arguing that the provinces, particularly the poorer ones, had actually been impeded from fulfilling their responsibilities in the social and educational fields. In these ways, the plan aimed at sustaining the "political, social, and cultural individuality of Canadian provinces."13 This emphasis on "freedom of provinces" stands in contrast to the tightly bound conditional grants program that characterized post-war versions of "cooperative federalism." The tenets of classical federalism remained the catechism of the commission. The commissioners stated in the abstract of their main recommendations that "national unity and provincial autonomy" were not "competitors for the citizens' allegiance." Indeed, they went so far as to argue that "national unity must be based on provincial autonomy." The whole point of reshaping Canadian federalism was to recognize regional differences and to reconstruct federal finance so that the "unjust" and rigid "mathematical equality between the provinces" would be swept aside, and the baleful influences of the second confederation abandoned, so that a new federal system would emerge.14 The most significant recommendations of the Rowell-Sirois Report, however, were never implemented. The report received formal consideration by the federal and provincial governments at the Dominion-provincial conference in January 1941. Ontario, Alberta, and British Columbia denounced it and refused to proceed with adoption of the main recommendations. The three provinces that rejected serious work to implement Rowell-Sirois argued that the wartime emergency was far too important to justify major change at the time. But each province had deeper objections, as well. Ontario and Alberta had been extremely unenthusiastic about the commission in the first place and were led by premiers Mitchell Hepburn in Ontario and William Aberhart in

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38 CONSTRUCTING TOMORROW'S FEDERALISM

Alberta, whose governments were hostile to the federal government of Mackenzie King. British Columbia had been somewhat more enthusiastic about revising federalism but had grown wary of changes to the functions and finances of the federation because it had become convinced that major changes would harm British Columbia's autonomy and fiscal capacity. Ottawa was hardly surprised by the refusal to proceed to implement the commission's recommendations under Plan One. But the outright rejection of the goals of the Rowell-Sirois report by Alberta and the demand by British Columbia and Ontario to defer serious examination until after the war effectively blunted its impact, to say the least, despite pleas for immediate work to restructure federal government by the other seven provincial premiers.15 Despite this result, Prime Minister King viewed the conference as a success for the Dominion because the result was the tax rental agreements and a greater federal invasion into provincial taxation spheres than the Rowell-Sirois report ever contemplated.16 Because the entire approach of the commission was virtually ignored, the recommendations did not form the basis for the interventionist state created by the end of World War II. This was a point not lost on the Winnipeg Free Press Ottawa correspondent, Grant Dexter, who noted with some bitterness in 1945 that the federal government "had abandoned the very pith and basis" of the report and reverted to the bogus "equal treatment" of conditional per-capita grants.17 Recognizing the failure of Ottawa and the provinces to adopt the concept of minimum national standards for services, Dexter concluded that "instead of getting cake they will get only crumbs."18 The reception and treatment of Rowell-Sirois can serve as a prism through which to discern central themes and problems of federal governance since 1940. This chapter concentrates on social scientific treatments, since they offer both detachment from, and considerable engagement with, the problems of federal government, characteristic of the policy scientists in Canada.19 These treatments focus on three areas: the genesis of the federal crises of the 1930s; its impact on the balance of federal and provincial powers; and its specific goals for the federal system. First, the commission has been evaluated as an analysis of the specific crises of the 1930s. Rowell-Sirois has often been treated as a splendid summary of

RECONSIDERING ROWELL-SIROIS 39

the specific fiscal problems faced by the governments of Canada. This note of numbing praise thus reduces Rowell-Sirois to an historical document interesting chiefly for mobilizing academic and public policy information about the Depression. Implicitly, then, Rowell-Sirois becomes a mere period piece. The Great Depression of the 1930s has been identified by most scholars and contemporaries as fundamental to the formation of the Royal Commission, but its origins were more complicated. Almost all participants in, and commentators on, the crisis leading to the commission identified a broad shift in the very structures of Canada by the 1930s. Even before the Rowell-Sirois Commission was created, various journalists, academics, and politicians were calling for a reconsideration of Canadian federalism. While many historians have claimed that this reconsideration emphasized constitutional change in order to realize full Dominion status, political scientists and economists at the time argued that the constitutional problem was really a governmental problem based on the absence of an economic as well as a political framework in which the two orders of government could operate effectively. Far from attempting to argue in favour of central governmental priority, many, if not all, of these social scientific commentators were addressing the fiscal limitations on the provinces and the long-standing origins of these limitations. Thus, economist Vincent Bladen, writing from the University of Toronto, and referring to several provincial inquiries into fiscal federalism, charged that "no province can be expected to accept the position of a colony to be exploited."20 Reflecting on and agreeing with the pervasive provincial sense of injustice about the federation, Queens University political scientist Norman Rogers concluded that "we are obliged to consider how far the political principles of federal government require expression in economic terms in order to realize the purpose of the pluralistic state."21 Such comments indicate that the entire basis of federal government in the 1930s had become deeply uncertain and unbalanced by the combination of court interpretation, fiscal difficulties, and economic crisis. It was no wonder that such staid observers as Vincent Bladen and Henry Angus speculated about separatist tendencies in western Australia, in Nova Scotia, and in Alberta and British Columbia.22 Rowell-Sirois emerged from an environment far more difficult and more stimulating than even a Great Depression.

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Once it was released in May 1940, the Rowell-Sirois report was evaluated for its position on the balance of power between the two orders of government. From the outset, one interpretive note was that the commission, through Plan One of fiscal reform, proposed a program of centralization. Harold Innis wrote a harshly critical account of the report, decrying its political ineptitude, its governmental naivete, and its economic caution. Innis fulminated that Plan One would be "an abuse of power" under the British North America Act, With that, Innis had set a view in motion that the Rowell-Sirois report was centralist and bureaucratic.23 Alexander Brady, Innis's colleague at Toronto, interpreted these conclusions in a positive light. He claimed that the report was actually constrained by its failure to examine whether federalism was even viable in the contemporary world. Brady claimed that "the socio-economic forces of modern industrialism tend to quicken the pace from federation to legislative union." He concluded that its recommendations would "directly and indirectly enhance federal authority."24 Brady's argument that centralization was characteristic of twentieth-century federal government was widely held from the 1940s to the 1960s. J. A. Corry, a Queen's University political scientist who worked on the commission, certainly adopted the language of historical inevitability in writing about the "inexorable" centralization of Canada. His "federal dilemma" was that "powerful forces are threatening provincial autonomy and pushing them remorselessly to enlarge the function of the federal government. At the same time, indiscriminate centralization is a perilous course likely to be attended by evils comparable in magnitude to their present distress." Although he wrote critically about the power of bureaucracy throughout the 1930s, 1940s, and 1950s, in important works on "administrative discretion," as he called it, Corry nonetheless succumbed to the argument that activist government was centralized government.25 The social science community that had emerged by the 1930s and 1940s in Canada was a small one, consisting of a few dozen academics, public servants, and business people, almost all males, and all of whom were colleagues of the principal authors and researchers for the commission. Most of the academics who first commented on Rowell-Sirois were still teaching in political economy

RECONSIDERING ROWELL-SIROIS

departments and represented that somewhat traditional orientation, while others were trained in law, political science, or, in a few cases, economics. But it was indeed a small world and their arguments and differences, at least in the 1940s and 1950s, were those of people familiar with each other. They took each others positions seriously and they were comfortable with spirited arguments.26 Oddly enough, Innis's arguments seemed to hold little sway among his social science colleagues. He did find agreement, however, among leading historians writing in the 1940s and 1950s. The Quebec nationalists historian, Robert Rumilly, virtually defined the Quebec francophone understanding opposed to these forces. He stated that "en verite, les propositions Sirois, qui sont des propositions Dafoe, enlevent aux provinces, moins des prerogatives determinees ques les resources financieres indispensables a lexercise de leurs prerogatives. Elles depouillent les provinces de 1'initiative fiscale, pur les metre, a breve ou a longue echeance, a la merci du pouvoir federal."27 An Ontario historian who long championed greater Canadian nationalism and who supported activist government, Arthur Lower, asked rhetorically in 1957, "Does not every tendency of the time—outside pressure and interior communications—drive us closer towards this unitary state?"28 There was only one answer to Lower, and it seems to have satisfied most Canadian historians ever since. Indeed, historical understanding of the Rowell-Sirois contribution to Canadian federalism has become even more frozen into a narrative of centralist state building. Only a few historians of provincial politics have strayed from the consensus line.29 Moreover, the arguments of Innis and Lower as to the direction of federalism have been echoed in the generation of English-Canadian historians writing in the heyday of constitutional conflict and federal-provincial battles during the 1970s and 1980s. Although these historians may not have shared the distrust of centralized and bureaucratic government, they tend to agree that the movement of powers and initiative in the Canadian federation was centralist. Most historians examining national politics and government, therefore, have interpreted the commission's work as a blueprint for the centralization of governmental powers and initiatives that they see as occurring during the postwar decades.30 In contrast, some of the historians working on regional politics

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and government have pointed out that the commission's main recommendations were not necessarily a plan for centralization.31 Even regional historians, however, have not separated the main thrust of the report from the subsequent tendency towards centralization that occurred from the 1940s to the 1980s, and some provincial historians have blithely assumed that Rowell-Sirois validated the centralist domination of fiscal resources and policy initiatives against which provinces like British Columbia and Quebec strenuously fought.32 By the 1960s, social scientists became more measured in their responses as they reconsidered the inevitability of centralizing tendencies in federal states. This fundamental rethinking about the direction of federalism was central to a serious reconsideration of the meaning of Rowell-Sirois. This reconsideration is the third analytical framework by which scholars evaluated the report. Most of the reconsiderations of federalism that addressed the new perplexities of cooperative federalism did not refer to Rowell-Sirois. The 1956 Royal Commission on Canada's Economic Prospects, chaired by Walter L. Gordon, substantially ignored it. Perhaps both the trends towards federal ascendancy and economic growth were simply too overwhelming in the mid-1950s to require citations from a study conceived in the old crises of the 1930s. Similarly dismissive was Quebec's 1957 Royal Commission on Constitutional Problems, chaired by Rene Tremblay. Unfortunately, the Tremblay report tended to identify Rowell-Sirois with Keynesian centralization, which it strongly opposed, despite the Tremblay report's own careful defence, often buttressed by arguments from Rowell-Sirois, for provincial rights. Later Quebec commentary on constitutional questions has simply overlooked the Rowell-Sirois Commission in developing its arguments about a more balanced federal system. Two political scientists, Donald Smiley, while teaching at UBC and later York, and Edwin Black, a British Columbian teaching at Queens, were the first to return to the Rowell-Sirois Commission. Noting decisively that it was "the most comprehensive investigation of a working federal system that has ever been made," Smiley also admitted that "the concept of provincial autonomy which is central to the commission's argument has been denied explicitly or implicitly by ... the actual developments in federal-provincial relations since the Second World War."33 Smiley argued in favour of treating the provinces as important, viable, and, above all, legitimate political units in the rethinking of federalism that was occurring.

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This argument found its fullest expression in Black's treatment of federalism. In his major study of Canadian ideas about federalism, Divided Loyalties, Black discovered five major "concepts of federalism." These concepts were to be found in the Canadian experience with federal government rather than in treatises. He argued that the Rowell-Sirois report fully illustrated the main tenets of "coordinate federalism," which itself "corresponds closely to the classical form of federal government." Besides his intellectual taxonomy, Black also explained that the coordinate, decentralist vision was based on two strong arguments: "a belief that provincial independence was necessary to protect regional particularism" and that "the local provision of health, education, and welfare services was more important to this autonomy than the regulatory aspects of government."34 Although Smiley and Black tried to resurrect the validity of Rowell-Sirois as a relevant model rather than as an outmoded study, most work on federalism done in the 1960s and 1970s remained attached to the view that Rowell-Sirois was interesting as a precursor to the post-war system of tax rentals (1945 to 1957) and equalization (1957 onward), but largely irrelevant in its particulars over the long term. These arguments take their cue from the historical reconstructions of the post-war fiscal system undertaken by bureaucrat-turnedacademic Ronald Burns, who accepted the immediate failure of Rowell-Sirois but pointed to its longer term influence.35 Although a former provincial bureaucrat in Manitoba, Burns's writing reveals little sympathy for coordinate powers to the provinces. The influential and powerful federal finance bureaucrat, Robert Bryce, produced a history of the Department of Finance that was similarly dismissive of Rowell-Sirois and presented a greater balance between federal and provincial governments. After a careful review of the fiscal crisis of the 1930s, he stated that the main proposals of the report "were not fair to the provinces, or at least to the stronger provinces ... [and] they looked backward, not forward."36 In short, Ontario was not amused and Canada had moved on. But curt dismissal was about to be trumped by enthusiastic recall. In the 1980s and early 1990s, Canadian federalism experienced both the apex of change and the depths of conflict. In this atmosphere of constitutional transformation, political conflict, and economic pessimism, Rowell-Sirois was reinterpreted yet again. Some of the studies for the Macdonald Royal Commission

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on the Canadian Economic Union cited Rowell-Sirois approvingly. Several of the research studies argued that the report had been mistakenly identified as a centralizing document when, in effect, its proposals for the National Adjustment Grant and its respect for the provincial differential delivery of social services, and even its attempt to clarify federal and provincial roles by dividing the collection of direct taxes, all represented an approach to federalism that deserved reconsideration.37 The fiscal and constitutional battles of the 1980s seemed to focus some social scientific minds on the broader problems of federalism and the approach of Rowell-Sirois was back under consideration. This reconsideration was sustained by a tantalizingly brief "commentary" on the validity of the Rowell-Sirois report by one of the Macdonald Commission members, Albert Breton. A prominent economist at the University of Toronto, Breton urged a return to the tenets of Rowell-Sirois to create a "competitive federalism" that would counter the bogus cooperation and elitist executive actions that characterized the current crisis. The "spirit" of federalism required major reform to thinking about the purposes of federal government rather than just the mechanisms of it and Rowell-Sirois was the place to begin.38 Hie apex of this reinterpretation was a 1988 study by Queen's University political scientist Peter M. Leslie, reiterating that Rowell-Sirois had indeed (if "perhaps disingenuously") supported provincial autonomy and, more importantly, created a new concept of fiscal equity. He argued that the report had actually created the conception of equalization that was enshrined in the Constitution Act, 1982. This was a critically important contribution to federalism, for, as Leslie concluded, "the commission strove to strengthen or extend national citizenship rights and obligations while also offering fiscal support for the continued vitality of regionally [provincially] distinctive communities. Its program was both nation-building and province-strengthening."39 Rowell-Sirois emerged again as not just influential in several critical areas, but also tantalizing in suggesting ways to balance the messy equations of provincial and regional discontent and central crisis that permeated the Canada of the late 1980s. But Leslie's analysis seems to have been stillborn. Reflecting the political scientific reconsideration of concepts and models of federalism undertaken by Smiley and Black, Leslie clearly indicated how the document could be a storehouse of ideas still relevant to the times. By 2002, a decade of constitutional

RECONSIDERING ROWELL-SIROIS

storm and then quiet has led those who study the contemporary state of the federation to ignore Rowell-Sirois. Still, one leading student of Canadian federalism, Richard Simeon, has pointed out that the commission was not merely a harbinger of the age of centralization. His 2002 survey of ideas about federalism in Canada nonetheless consigns the report to the crisis of the 1930s and, thus, it remains in the shadows.40 In the two decades after 1945, federal social policy interventions overwhelmed the provinces'jurisdictional boundaries. Above all, federal assistance to the provinces was provided on the basis of conditional rather than unconditional grants. Since the 1960s the provinces have pushed back against Ottawa, seeking to undo or resist the strict conditions that governed most post-war joint programs. By the end of the 1990s this tug-of-war had led to systematic reductions of federal contributions, and rigidities and dependencies constraining provincial policy options. This was not the vision of Canadian federalism offered by the Rowell-Sirois Commission. Rowell-Sirois deserves to be read today because it remains the most comprehensive Canadian interpretation of both the specific problems of federation, which are jurisdictional matters, and the broader themes of federalism, which are the principles behind federal government. Primarily, Rowell-Sirois stated clearly that the solution to Canada's public policy problems must be solved first and foremost with respect to the principles of federalism. It redefined Canada as a fully mature federation. This redefinition served and continues to serve as a powerful reminder that policy problems cannot be solved outside the federal framework. Taking Rowell-Sirois seriously would, in a sense, entrench the federal principle that there is no hierarchy of government in which provinces bow to the central government's priorities, which has seemed so often to be the premise of political discourse in Canada since 1945, There are two obvious benefits to this principle—one regarding the specific responsibilities of each level of government and the other regarding the broad relationship between state and citizens. In regard to the specific responsibilities of the two orders of government, seemingly endless debates about social policy issues such as medicare could be clarified, if not resolved, if the principle of the legitimate priority of the provinces was relearned from Rowell-Sirois. In constitutional politics, the apparently intractable tensions between nation and state

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(manifested in the Quebec-Canada conflicts) would be eased, if not fully resolved, by the recognition that citizenship serves a dual function to both provinces and the federation. Rowell-Sirois stated that the responsibilities of governments must be allocated on the basis of the fundamental definitions of the rights of citizens. Policies are required in order to meet the specific requirements of the citizenry and adjustments to the fiscal andjurisdictional divisions of the two orders of government will have to occur from time to time. The scourge of unemployment in the 1930s indicated clearly enough that only federal initiative would be effective, and even the most strident provinces agreed. As new rights emerge today, a careful consideration of which level of government is most appropriate to provide the service should be the priority. Federal governments have announced regularly since the early 1980s that they intend to promote a national daycare program. Yet this claim is made in the face of basic, long-standing constitutional divisions, considerable variation in provincial response, and the fiscal displacement federal intervention would impose on the provinces. A reading of the principles of Rowell-Sirois would caution against Ottawa's seemingly whimsical proposals to intrude into provincial policy areas. Turning to the single most intractable problem in modern Canadian politics—the place of Quebec in the federation—Rowell-Sirois has offered a missing opportunity. The broad claim the Rowell-Sirois report made about the autonomy of the provinces has never been adequately reconsidered against the distinctive goals and strong nationalism expressed in Quebec since World War II. This essay has shown that Quebec commentary has been either somewhat hostile or indifferent to the basic findings of the commission. The initial antipathy in Quebec during the 1940s may well be explained by the broad-based rejection of the report by all provinces strongly in favour of provincial rights. Subsequent and continuing disdain for Rowell-Sirois seems to be a missed opportunity among Quebec commentators. Rowell-Sirois was not a particularly nationalistic document in itself. But its articulate expression of support for the rights of the provinces and the varying, rather than uniform, characteristics of the regions and provinces means that it certainly could be read to assist a strong autonomist position from Quebec. While it does not provide encouragement for a strong nationalist movement in the province, neither does it

RECONSIDERING ROWELL-SIROIS

express a particularly strong pan-Canadian nationalism. Thus, to encourage its reconsideration as a guide to greater autonomy and even asymmetrical federalism does not strain the original meaning or the possible implications of Rowell-Sirois. The Rowell-Sirois Commission Report also shows us that thinking about federation and citizens' rights is historical and therefore subject to change. There were economic burdens that had become intolerable to the Prairies by the 1930s and there have emerged economic burdens that have become difficult for some provinces, such as Newfoundland, by the end of the twentieth century. Today, a reading of Rowell-Sirois would make it clear that "special terms" for an Atlantic province are a legitimate and even essential adjustment rather than a signal for a generalized rush to claim some cash. For each of these reasons, then, the Rowell-Sirois report represents both a theoretical and a practical guide to the formation of the goals of federation in Canada. 1

Report of the Royal Commission on Dominion-Provincial Relations (Ottawa: King's Printer, 1940,1954), vol. 3,209-11.

2

Lance W. Roberts, R. Clifton, B. Ferguson, S. Langlois, and K. Kampen, Recent Social Trends in Canada, 1960-2001 (Montreal: McGill-Queen's University Press, 2005), trend 10.1, table 3.

3

R.M. Dawson and Norman Ward, The Government of Canada, 5th ed. (Toronto: University of Toronto Press, 1973); Robert M. Fowler,"The Role of Royal Commissions," in Economic Policy Advising in Canada: Essays in Honour of John J. Deutsch (Montreal: C.D. Howe Institute, 1981), 93-104.

4

Neil Bradford, Commissioning Ideas: Canadian National Policy Innovation in Comparative Perspective (Toronto: Oxford University Press, 1998); Fowler, "The Role of Royal Commissions"; Margaret Conrad, "What's Governance Got to Do with It? Two Investigations into the State of Atlantic Canada," Acadiensis 33, 1 (2003): 87-96.

5

Neil Bradford, "Writing Public Philosophy: Canada's Royal Commissions on Everything," Journal of Canadian Studies 34,4 (2000): 136-67.

6

Alexander Brady, "Report of the Royal Commission on Dominion-Provincial Relations," Canadian Historical Review 21, 3 (1940), 245.

7

Arthur W. MacMahon, "Taking Stock of Federalism in the United States," Canadian Journal of Economics and Political Science 7, 2 (1941): 189.

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CONSTRUCTING TOMORROW'S FEDERALISM

8

J.B. Brebner, et al., "On Some Appendices to the Rowell-Sirois Report" Canadian Journal of Economics and Political Science 7,1 (1941): 70.

9

Harold Innis/'The Rowell-Sirois Report," Canadian Journal of Economics and Political Science 6,4 (1940): 564.

10

Preston King, Federalism and Federation (London: Methuen, 1982).

11

Barry Ferguson and Robert Wardhaugh, "Impossible Conditions of Inequality: John W. Dafoe, the Rowell-Sirois' Royal Commission and the Interpretation of Canadian Federalism," Canadian Historical Review 84,4 (December 2003): 551-83.

12

Cited in Ferguson and Wardhaugh, "Impossible Conditions," 569 ff.

13

Canada, Royal Commission on Dominion Provincial Relations, vol. 2,77-78.

14

Canada, Royal Commission on Dominion Provincial Relations, vol. 2, cited in Ferguson and Wardhaugh, "Impossible Conditions," 569-71, 577.

15

Canada, Dominion-Provincial Conference, Ottawa, 14-15 January 1941 (Ottawa: King's Printer, 1941).

16

Ferguson and Wardhaugh, "Impossible Conditions," 578-79.

17

Cited in ibid., 581.

18

Cited in ibid., 578.

19

Alan Brooks and Alain Gagnon, Social Scientists and Public Policy in Canada: Between Clerisy and Vanguard (Montreal: McGill-Queen's University Press, 1988); Bradford, Commissioning Ideas.

20

V.W Bladen, "The Economics of Federalism," Canadian Journal of Economics and Political Science 1, 3 (1935): 350.

21

Norman Macleod Rogers, "The Political Principles of Federalism," Canadian Journal of Economics and Political Science 1, 3 (August 1935): 347.

22

Bladen,"The Economics of Federalism"; H.F.Angus, "The Working of Confederation II, A Westerner's View," Canadian Journal of Economics and Political Science 3, 3 (1937): 345-53.

23

Innis/'The Rowell-Sirois Report."

24

Brady, "Report of the Royal Commission on Dominion-Provincial Relations,"

246-47,249.

25

J.A. Corry,"The Crisis of Federalism," Canadian Banker 48, 2 (1941): 152-63,159.

26

Barry Ferguson and Doug Owram, "Social Scientists and Public Policy from the 1920s through World War II," Journal of Canadian Studies 15, 4 (1981): 3-17; Doug Owram, The Government Generation: Canadian Intellectuals and the State 1900-1945 (Toronto: University of Toronto Press, 1986).

RECONSIDERING ROWELL-SIROIS

27

Robert Rumilly, LAutonomie Provincial (Montreal: Editions de lArbre, 1948), 123.

28

Arthur Lower, "Constitutional Trends and Federalism," in RR. Scott and A.R.M. Lower (eds.), Evolving Canadian Federalism (Durham: Duke University Press, 1958), 48.

29

John Kendle, John Bracken, a Political Biography (Toronto: University of Toronto Press, 1974); Christopher Armstrong, The Politics of Federalism: Ontario's Relations with the Federal Government, 1867-1942 (Toronto: University of Toronto Press, 1981).

30

Robert Bothwell, Ian Drummond, and John English, Canada 1900—1945: Power, Politics and Provincialism (Toronto: University of Toronto Press, 1987); J.L. Granatstein, Canada's War: the Wartime Policies of the Mackenzie King Government (Toronto: University of Toronto Press, 1975); Owram, Government Generation,

31

Armstrong, Politics of Federalism; Ramsay Cook, The Politics of John W. Dafoe and the Free Press (Toronto: University of Toronto Press, 1963); Kendle, John Bracken.

32

Robin Fisher, DujfPatullo of British Columbia (Toronto: University of Toronto Press, 1991); Paul-Andre Linteau, et al., Quebec Since 1930 (Toronto: James Lorimer, 1991).

33

Donald Smiley, "The Rowell-Sirois Report, Provincial Autonomy, and Post-War Canadian Federalism," Canadian Journal of Economics and Political Science 28, 1 (1962): 54.

34

E.R. Black, Divided Loyalties: Canadian Concepts of Federalism (Montreal: McGillQueen's University Press, 1975), 113.

35

R.M. Burns, "The Royal Commission on Dominion-Provincial Relations," in R.M. Clark (ed.), Canadian Issues: Essays in Honour of Henry F. Angus (Toronto: University of Toronto Press, 1962), 155.

36

R.B. Bryce, Maturing in Hard Times: Canada's Department of Finance through the Great Depression (Montreal: McGill-Queen's University Press, 1986), 218-19.

37

Thomas Courchene, Economic Management and the Division of Powers (Toronto: University of Toronto Press, 1986), 25; Richard Simeon and Ian Robinson, State, Society and the Development of Canadian Federalism (Toronto: University of Toronto Press, 1990), 105.

38

Canada, Report of the Royal Commission on the Economic Union and Development Prospects for Canada, vol. 3 (Ottawa: Minister of Supply and Services, 1986), 516-17.

39

Peter M. Leslie, National Citizenship and Provincial Communities, Research Paper No. 23 (Kingston: Institute of Intergovernmental Relations, 1988), 13.

40

Richard Simeon, Political Science and Federalism (Kingston: Institute of Intergovernmental Relations, Queen's University, 2002),

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Limiting Fiscal Capacity?

The Relationship between Transfer Payments and Social Spending in Canadian Provinces from 1988 to 2002 David McGrane

T

he 1990s were an interesting period in Canadian fiscal federalism. Important changes in the structure of federal-provincial fiscal arrangements coincided with a general decrease in transfer payments, followed by a stabilization of transfers at lower levels. In response, provinces scrambled to maintain their responsibilities in the areas of social programming while facing fiscal crises of their own caused by rising debt and deficits. The purpose of this chapter is to assess the impact of fluctuations in the levels of transfer payments on the social spending of Canadian provinces and to examine the relationship among social spending, transfer payments, taxation, and deficits in Canadian provinces during the 1990s. First, I briefly outline the changes to transfer payments in the 1990s, Second, I explore the relationship among taxes, transfer payments, social spending, and deficits within each province in the period from 1988 to 2002. Third, I argue that there is no simple and straightforward relationship between transfer payments and provincial social spending. I illustrate that, in several instances, social spending decreased while transfer payments rose as provincial governments used the augmentations in transfer payments to pay down their deficits and cut their taxes. Conversely, there were several instances where provinces increased their social spending despite reductions in transfer payments. In these cases, provinces were able to compensate for drops in federal transfer payments by enlarging their personal, consumption, or business taxes or by going deeper into debt. The willingness of provincial governments to maintain

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social spending in the face of declining transfer payments was strongly influenced by the time period in which they were situated and the proximity of a provincial general election. The ideology of the governing party and the province's "have" or "have not" status were not found to be significant factors in the willingness of provincial governments to maintain social spending in the face of decreasing transfer payments. Fourth, while one must take into account the ability of provincial governments to compensate for cuts to transfer payments, I argue that there remains a high level of interdependency among transfer payments, taxation, deficits, and social spending within Canadian provincial public finance, A decline in levels of federal transfer payments in the 1990s did limit the fiscal capacity of provinces to maintain their responsibilities in the area of social programs. However, provincial governments frequently made matters worse by deciding to cut taxes before social spending had been fully restored. Further, provincial governments have placed most of the recent increased funding from transfer payments from the federal government into health care. The result has been that health spending as a proportion of total social spending has steadily risen and eroded the budgets of other social programs, which remain underfunded. In my conclusion, I argue that the appropriate policy response of the federal government should be to restore transfer payments to predictable and adequate levels, and that provincial governments should find ways to undo the fiscal impact of recent reductions in business and personal income taxes in order to ensure quality social programs.

Evolution of Fiscal Federalism in the 1990s The social programs that Canadians regard as part of our identity and social fabric were mostly established in the twenty-five years after World War II. As the federal government acquired effective control over corporate and income taxes as a result of the Wartime Tax Collection Agreement, provincial governments had to accept federal control over major tax fields, even though the constitution also gave them access to these fields. The eventual result of this fiscal framework was the negotiation of cost-shared social programs sustained by a system of transfer payments in which the federal government played a key role in social policy, even though most social programs were areas of provincial jurisdiction. Transfer payments also included equalization payments to less

LIMITING FISCAL CAPACITY?

wealthy provinces to enable them to provide comparable levels of services at comparable levels of taxation. Thus, in the post-war era, transfer payments were an instrument of social policy and the federal government played a significant role in the maintenance and growth of Canada's welfare state.1 The 1990s saw several important changes to the federal government's approach to transfer payments. The 1990 federal budget imposed a freeze on established program funding and a 5 percent annual growth ceiling on Canada Assistance Plan (CAP) payments to the three "have" provinces of Alberta, British Columbia, and Ontario (the so-called "cap on CAP").2 The 1995 federal budget introduced the Canadian Health and Social Transfer (CHST), which replaced cost-shared programming with block transfers and significantly reduced the conditions imposed on the use of federal money by the provinces. Both these measures were coupled with reductions in transfer payments to the provinces. The 1999 federal budget did introduce an additional $11.5 billion in transfer payments over five years, which only partially backfilled the reductions in transfer payments throughout the 1990s. The effects of these changes in fiscal federalism in the 1990s were twofold. First, transfer payments changed from being an instrument of federal social policy to being merely a mechanism for transferring money to provinces who could run their social programs as they saw fit.3 Second, as we can see in Figure 1, due to these changes in federal-provincial fiscal arrangements, there was a general decrease in transfer payments from 1992 to 1997, followed by a stabilization of payments at lower levels from 1998 to 2002. Figure 1 FEDERAL TRANSFER PAYMENTS TO PROVINCES AS A PERCENTAGE OF NATIONAL GDP, 1989-2003

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Social Spending and Transfer Payments in Canadian Provinces from 1988 to 2002 The tables contained in the Appendix to this essay outline the changes in the taxing, social spending, deficits, and transfer payments of Canadian provinces as the percentage of their provincial GDP from 1988 to 2002.1 have decided to define the term "social spending" in quite a broad sense. Thus, the term "social spending" in the discussion below refers to an amalgamation of the Statistics Canada categories of provincial government spending in transportation and communications, health, social services, education, housing, environment, and recreation and culture. In response to a discussion paper written by Gerard Boychuk for the Commission on the Future of Health Care in Canada, which was headed by Roy Romanow, I calculated provincial health spending as a percentage of provincial GDP and included a measure of health spending as a percentage of total social spending. In his discussion paper, Boychuk contends that provincial health expenditures as a proportion of provincial GDP declined from 1992 to 1996.4 He illustrates that, while provincial health expenditures measured as a percentage of GDP increased after 1996, they still remained at lower levels than the early 1990s in the last year of his analysis, which was 2000. Further, Boychuk finds that decreases in federal transfers have meant that growth in provincial revenues is going to health care instead of other provincial programs or deficit/debt reduction. Thus, he concludes that, while provincial governments are spending less on health as a percentage of GDP than a decade ago, the proportion of their total expenditures going towards health has increased because of reductions in transfer payments from the federal government. Boychuk's findings were one of the origins of the Romanow Commissions recommendation for the federal government to increase its share of health care expenditures from 16 percent to 25 percent in order to maintain a quality, publicly funded health care system. The call to close this so-called "Romanow Gap" was soon taken up by many federal and provincial politicians as well as interest groups. Calculating health spending as a percentage of provincial GDP and comparing health spending to total social spending allowed me to examine the growth of provincial health budgets in relation to total social spending, taxation levels, deficits, and transfer payments. Moreover, this examination was

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done individually for each province, whereas Boychuk's study looked only at data for all the provinces combined. Further, my study includes the fiscal years beginning in March 2001 and 2002, whereas Boychuk's study ended by examining the fiscal year beginning in March 2000. Thus, I was able to discern if the national trends that Boychuk observed hold true for each province and what changes, if any, took place since 2000. In the section that follows, I describe my findings by province, proceeding in order from east to west. In the case of Newfoundland, the Wells Liberal government steadily increased social spending from 1989 to 1992, despite two decreases in transfer payments. The Wells/Tobin government decreased social spending from 1993 to 1995, due to two decreases in transfer payments and reductions to its deficit. In 1997, the Tobin government directed most of its large increase in transfer payments into deficit reduction, decreased personal and consumption taxes, and put very little into increased social spending. In the election year of 1998, transfer payments fell by a large amount, yet the Tobin government was able to limit decreases to social spending while providing tax relief by using money from its surplus from the year before. In 1999, the Tobin government raised social spending, despite another decrease in transfer payments, by incurring a deficit. When transfer payments fell again in 2000, the Tobin government decided to slash social spending by 2.9 percent of G DP, thereby ensuring a slim surplus. In 2001, social spending rebounded, increasing by 1.1 percent of GDP, as transfer payments stayed even. However, in 2002, social spending was reduced again by 3 percent of GDP, as transfer payments dropped by 2 percent of GDP. In terms of health spending, Newfoundland consistently increased its health spending as a percentage of GDP in the period examined, which has caused an increase in the size of the health budget relative to other social spending measures. In the case of Prince Edward Island, the Ghiz Liberal government modestly increased social spending from 1989 to 1991, despite decreases in transfer payments, by adding to its deficit and raising consumption taxes. In 1993, the Callbeck Liberal government increased social spending by an astonishing 6 percent of GDP in the face of a large decrease in transfer payments, resulting in a large deficit, in hopes of getting re-elected. Once successfully re-elected, the Callbeck Liberal government decreased social spending by an amazing

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8 percent of GDP, which, along with a large increase in transfer payments, allowed them to wipe out their deficit while providing personal income tax cuts. For the next two years, the Callbeck government continued to decrease social spending in response to a substantial shrinkage in transfer payments. It should be noted that the amount of this decline in social spending was limited by increases in the province's deficit. The Binns Conservative government increased social spending in 1997 by 0.4 percent of GDP, only to decrease it by 1.4 percent of GDP in 1998, despite substantial increases in transfer payments. It is clear that in the fiscal year of 1998, increases in transfer payments were used to eliminate Prince Edward Island s deficit. From 1999 to 2001, the Binns government moderately increased social spending while experiencing unvarying transfer payments. In 2002, the government decreased social spending in response to a large decline in transfer payments. However, as was the case in 1995 and 1996, the amount of the decrease in social spending was limited by raising the provincial deficit. Prince Edward Island increased its health spending past its early 1990s levels in the early 2000s. However, in doing so, health spending took on a much larger proportion of total social spending than was the case in the early 1990s. In Nova Scotia, from 1989 to 1991, the Buchanan/Bacon Conservative government modestly increased social spending despite decreases to transfer payments. The Cameron Conservative government then drastically increased social spending in the year leading up to an election, only to severely decrease social spending in the year of the election. In an effort to decrease its deficit, the Savage Liberal government decreased social spending every year from 1994 to 1997 (except in 1995, when social spending stayed even), despite two substantial increases in transfer payments during that time. In 1998, an election year, the Savage government used a slight increase in transfer payments and added to their deficit in order to increase social spending. In 1999, in a minority government situation, the MacLellan Liberal government maintained social spending in the face of large decreases in transfer payments. In 2000, the newly elected Hamm Conservative government severely cut social spending, despite only a slight decrease in transfer payments. The Hamm administration then only partially backfilled its social spending cuts in 2001 and 2002 because of lower transfer payments and decreased personal income taxes. Much like other

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governments examined, Nova Scotia restored its funding to health care after 1998 at the expense of other social programs, New Brunswick is a case that displays large fluctuations in both social spending and transfer payments. The McKenna Liberal government increased social spending from 1989 to 1991, with transfer payments decreasing only in the last year of their spending spree. In 1992 to 1997, the McKenna government decreased social spending every year, despite increases in transfer payments in three out of those six years. Instead of increasing social spending, the McKenna government decided to use those increases in transfer payments to cut its deficit. In 1999, an election year, the Theriault Liberal government saw a large cut in its transfer payment but was still able to increase its social spending by adding to its deficit. The Lord Conservative government drastically cut social spending in its first fiscal year in response to both a decrease in transfer payments and a desire to eliminate its deficit. The next year, the Lord government increased its social spending in response to higher transfer payments. In 2002, the Lord government moderately increased its social spending, despite a substantial drop in transfer payments, by raising its deficit. As was the case with most other provincial governments, New Brunswick decreased its health spending in the mid-1990s and has only recently restored it to early 1990s levels. However, as we can see, the increases in the health budget came at the expense of other social programs, as health spending consistently rose as a proportion of total social spending from 1999 onwards. The Quebec case depicts smaller variations in both social spending and transfer payments than the other provinces examined. It should be noted that the levels of social spending as a percentage of GDP are higher than in other provinces examined (excluding the Atlantic provinces with their relatively small economies). From 1990 to 1992, the Bourassa Liberal government increased social spending every year, while its transfer payments remained relatively stable. These increases were paid for by a moderate increase in personal and consumption taxes as well as an increase in Quebec's deficit. Despite facing reelection, the Johnson Liberal government decreased social spending in 1993 and 1994 while receiving decreased transfer payments, holding the line on taxes, and moderately increasing its deficit. The first three fiscal years of the Parti Quebecois (PQ) government from 1995 to 1997 saw decreases both in

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social spending and transfer payments, as the PQ government eliminated its deficit and did not significantly increase or decrease its taxes. Facing an election in 1998, the PQ government benefited from a large increase in transfer payments to raise its social spending without increasing its deficit. From 1999 to 2002, there were large swings in social spending by the Bouchard/Landry PQ government, which do not correspond to changes in transfer payments. Rather, it seems that increases in transfer payments in 2000 and 2002 were used to decrease deficits and lower taxes while drops in transfer payments in 1999 and 2001 were compensated by increases in deficits in order to raise social spending. While Quebec decreased health spending in the mid-1990s, it raised its health spending above early 1990s levels by 2002, resulting in a higher proportion of total social spending going to the health budget. In Ontario, the Rae New Democratic Party (NDP) government increased social spending by 2.1 percent of gross domestic product in the fiscal years of 1991 and 1992, on top of a 1.5 percent of GDP increase in social spending by the Peterson Liberal government in its final years from 1988 to 1990. Yet the large social spending increases by the Rae government were in the context of the elimination of health premiums, decreases in business taxes, unvarying consumption taxes, and minor increases in transfer payments, which ultimately resulted in two considerable deficits. From 1993 to 1995, the Rae government decreased social spending each year while experiencing minor decreases in transfer payments, personal taxes, and business taxes, as well as unchanged consumption taxes, resulting in three modest surpluses. The Harris/Eves government decreased social spending every year from 1996 to 2002 (except 1998, which was the year before an election) in order to decrease deficits and provide personal and business tax cuts, despite increases in transfer payments. In terms of health spending, the Conservative government decreased health spending from the levels it attained during the Rae NDP government, while the proportion of its health spending to social spending increased under the Harris/Eves administration. In the Manitoba case, the ideological differences between NDP and Conservative governments stand out. Social spending within the first mandate of the Filmon Conservative government from 1988 to 1992 steadily rose, as did the deficit of the province. In Filmons second and third mandates, the government

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decreased social spending for five straight years in order to cut its deficit, despite receiving increases in transfer payments twice during that time period. In 1999, in an attempt to get re-elected, the Filmon government increased its social spending, lowered personal income taxes, and eliminated its deficit using a large increase in transfer payments. The newly elected Doer NDP government increased social spending in the first two years of its mandate, in spite of a decrease in transfer payments. It did this through increases to business taxes and its deficit. In 2002, the Doer government decreased social spending, due to lower transfer payments, and by choosing to cut its personal taxes, business taxes, and deficit. As we can see, the NDP government decided to increase business taxes, and its deficit in the face of lower transfer payments, while the Conservative government decided to decrease social spending despite increases in transfer payments. In congruence with Boychuk's generalization, health spending in Manitoba as a percentage of GDP fell in the mid-1990s only to be restored to early 1990s levels in 1999, resulting in health's growing as a percentage of Manitoba's total social spending. The Saskatchewan case illustrates large fluctuations in both social spending and transfer payments. The fiscal year of 1991 saw a large increase in social spending by the Devine Conservative government in a bid to get re-elected. These increases in spending were significantly larger than transfer payments and tax revenues, resulting in an astonishing 7.7 percent of GDP increase in Saskatchewan's deficit in the Devine government's last year in office. The Devine government was followed by the Romanow NDP government, which, between 1992 and 1996, drastically decreased social spending while moderately increasing consumption and business taxes, in order to eliminate its deficit; it began to run a series of surpluses starting in 1994. It should be noted that this period of fiscal austerity corresponded not only to large decreases in transfer payments but also to cuts in personal income taxes. From 1997 to 1999, the Romanow government increased social spending and lowered personal and consumption taxes, while increasing its business taxes and enjoying two large increases to its transfer payments. From 2000 to 2002, the Romanow/Calvert governments experienced large swings in their transfer payments, which corresponded with the raising and lowering of social spending and personal and consumption taxes. However, it should be noted that in 2001 at least some of

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the increase in transfer payments went to a large decrease in business taxes, which lessened the rise in social spending that yean We can also see that health spending, which was drastically decreased by the NDP from 1992 to 1997, had not yet been brought back up to its 1990 level as of the 2002 fiscal year. Further, growth in Saskatchewan's health budget from 1999 to 2002 substantially increased the proportion of health spending in relation to total social spending, which suggests that this growth came at the expense of other social programs. In Alberta, social spending rose slightly in the last years of the Getty Conservative government, as transfer payments fell and personal income taxes increased along with the deficit. The Klein Conservative government raised social spending and lowered personal income taxes in 1992 (an election year) despite a drop in transfer payments, resulting in an increased deficit. Beginning in 1993, the Klein government decreased social spending for five straight years while facing decreased transfer payments and holding the line on tax decreases, resulting in the elimination of their deficit and a string of healthy surpluses that were used for debt reduction. In 1998 and 1999, the Klein government moderately increased social spending in response to small increases in transfer payments. In 2000, an election year, the Klein government provided large cuts in personal income and business taxes and cut social spending, while receiving slightly lower transfer payments and running a large surplus. In 2001, the government moderately increased social spending while receiving higher transfer payments and running a very small deficit. In 2002, Alberta cut social spending and raised personal and consumption taxes, thereby eliminating its deficit despite a minor decrease in transfer payments. In Alberta, health spending as a percentage of GDP was cut in the mid-1990s and was not fully restored in the early 2000s, while the proportion of health spending to other social spending steadily increased. In the case of British Columbia, the Vander Zalm/Johnston Social Credit government increased social spending in their last three years in office (1989 to 1991), despite decreases in transfer payments, resulting in a deficit. The Harcourt NDP government maintained the previous governments level of social spending in 1992 and then slightly decreased social spending over the next three fiscal

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years. Harcourt s slight decrease in social spending was accomplished along with increased business and consumption taxes, while maintaining a balanced budget and facing slightly lower transfer payments. The Clark NDP government decreased social spending in 1996 and 1997, due to its unwillingness to offset decreasing transfer payments through raising taxes or the deficit. In 1998, British Columbia increased social spending while receiving only a minor increase in transfer payments and holding the line on taxes, resulting in a deficit. In the two fiscal years after 1998, the Miller/Dosanjh government used increased transfer payments and large cuts in social spending to eliminate its deficit. Facing an election, the Dosanjh government increased social spending in the fiscal year of 2001 while decreasing personal and consumption taxes and receiving only a slight increase in transfer payments, resulting in another deficit. In 2002, the new Campbell Liberal government used increased transfer payments to reduce business and personal taxes while moderately cutting social spending and again increasing the province's deficit. The NDP raised health spending when it came into office in 1992 and reduced it only slightly during its time in office. Due to the moderate nature of the reduction of health spending as a percentage of the GDP during the mid-1990s, the proportion of health spending compared to other social spending increased by about 5 percent from 1990 to 2002, which was less than most other provinces.

The Relationship between Social Spending and Transfer Payments Based on my data, I contend that there is no simple and straightforward correlation between transfer payments and provincial social spending. My findings lend only limited support to the hypothesis that increases or decreases in transfer payments create corresponding changes in social spending. In the 140 fiscal years examined (fourteen in each province), transfer payments decreased seventy-five times, increased fifty-five times, and remained equal ten times. When transfer payments decreased, social spending also decreased in 61 percent of the cases but increased or stayed equal in 39 percent of the cases. When transfer payments increased, social spending also increased in 55 percent of the cases but decreased or stayed equal in 45 percent of the cases. When transfer payments were equal, social spending increased in 40 percent of the cases, decreased in 50 percent of the cases, and stayed equal in 10 percent of the

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cases. Due to the fact that provincial budgets are generally announced only weeks after the federal budget sets the levels of transfer payments for the upcoming year, one could suspect that cuts to transfer payments have their effect in the fiscal year after the decrease to transfer payments was made. I tested for evidence of this "lag time" in my data but a comparison of fluctuations in transfer payments with levels of social spending in the following fiscal year did not demonstrate significantly different results. There are a number of interrelated reasons for the lack of correspondence between fluctuations in transfer payments and levels of social spending. As was noted in the section above, increased transfer payments did not always lead to increased provincial social spending in the 1990s. In every province there are examples of increased transfer payments being put towards deficit reduction or tax decreases as opposed to social spending increases. Further, on more than one occasion, Alberta, Saskatchewan, and all the Atlantic provinces decreased their social spending by 1 percent of GDP more than the decrease in transfer payments. It was most frequently Conservative and Liberal governments that used transfer payments to pay down their deficits and cut taxes instead of increasing social spending. However, the Saskatchewan NDP, the Clark NDP government in British Columbia, and the PQ also used the same strategy. It would seem that the obsession with cutting deficits in the 1990s led even social democratic parties to use increases in transfer payments to reduce their deficits instead of augmenting social spending. Canada is close to unique among federal countries in giving both orders of government taxing authority over most major sources of tax revenues, such as personal and corporate income tax, consumption taxes, payroll taxes, and resource royalties.5 Using their broad taxing powers, provincial governments in the 1990s were able to compensate for decreases in transfer payments by increasing their taxing measures. Alternatively, provincial governments that were unwilling to raise taxes in order to compensate for lower transfer payments ran a deficit. The lack of effect of transfer payment fluctuations on social spending also reflects the declining importance of federal transfers as a source of revenue for provincial governments. Guy Lachapelle examined provincial social spending in Canada from 1950 to 1981 and found that the principal factor in the augmentation of provincial social spending was increased federal

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transfers.6 However, Harvey Lazar points out that, in 2001, federal cash transfers as a percentage of provincial revenues were just over half of what they were in 1961 because the federal government had increased its use of tax point transfers and provincial governments had increased their "own source" revenues.7 Thus, diminishing cash transfers combined with growth in provincial governments' own source revenues and the greater use of tax points to reduce the importance of federal cash transfers in provincial social spending in the 1990s. The declining correspondence between transfer payments and provincial social spending could continue as a trend because of the growing autonomy of provincial governments to set their own tax structures.8 Before 1997, the federal government required provinces to levy their income taxes on top of federal taxes, severely limiting the provinces' freedom to design a unique bracket structure. However, with the federal government's acceptance of the "tax on income" proposal put forth by five provinces in 1997, these provincial governments now have much more freedom to design their own bracket structure. The increased autonomy of provincial governments in designing their own income tax system may give them more flexibility to compensate for future fluctuations in federal transfer payments. Another part of the reason for the incongruence between levels of transfer payments and social spending, within "have-not" provinces at least, is that Equalization payments do not have any conditions placed on them. Further, the conditionality of non-Equalization federal transfer payments has significantly lightened in the past thirty years. The Canadian Health and Social Transfer had only two minimal conditions: that provinces imposed no restrictions on the obtaining of welfare for citizens moving from other provinces, and that the five broad principles of the Canada Health Act must be adhered to. The lack of conditions contained within the CHST confirms Hobson's and St. Hilaire's view that the federal government does not view transfer payments as a tool for social policy. Rather, the federal government uses transfer payments as a method of block funding to the provinces, which they use to deliver social programs how they wish. The increase in provincial "own source" revenue, the growing freedom of provinces to set their own tax structures, and the hands-off policy of the federal government on the delivery of social programs give provincial governments more flexibility in their budgeting than at other times in

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Canadian history. In the 1990s, this heightened fiscal flexibility of provincial governments reduced the impact of fluctuations in federal transfer payments on provincial social spending and gave provinces the ability to compensate for decreases in transfer payments. My findings also suggest two factors that intensified the willingness of governments to maintain social speriding in the face of decreasing transfer payments. The most important factor in the willingness of governments to compensate for a reduction in transfer payments and maintain social spending was that the attitude of all governments towards cutting spending shifted after 1992. In the period from 1989 to 1992, provincial governments raised social spending in eighteen of the twenty-two cases (81 percent) where transfer payments decreased. In the period from 1993 to 2002, provincial governments increased social spending in only fifteen of the fifty-five cases (27 percent) where transfer payments went down. It is obvious that, after the 1992 fiscal year, provincial governments were much less willing to raise taxes or go into deficit in order to maintain or increase social spending in the event of decreases in federal transfer payments. The second factor of importance in the willingness of provincial governments to compensate for reductions in transfer payments and maintain social spending was the proximity of a general provincial election. There were examples in eight out of ten provinces of increases in social spending in an election year or the year before an election, even though transfer payments had decreased or stayed equal.9 When transfers stayed equal or dropped in an election year or the year before an election, provincial governments still raised social spending in 41 percent of those cases. However, the strategy of raising social spending near to an election despite reductions in transfer payments often led to increased deficits, which were eliminated by cuts to social spending once the government achieved re-election or another party came to power. A number of studies have confirmed the presence of this "political business cycle" in Canada. Richard Simeon and E.R. Miller presented data showing that provincial elections increased government spending in several policy categories.10 Allan Maslove, Michael Prince, and Bruce Doern found an average increase of 4 percent in government spending as an election nears, using data from five Canadian provinces.11 DufF Spafford found empirical evidence that Canadian

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provincial government expenditures on highways increased at election time.12 In the context of Ontario and Quebec, both Foot and Gow also found evidence of increased government expenditures when elections neared.13 Andre Blais and Richard Nadeau produced evidence that total spending and deficits increased in election years in their study of Canadian provincial government expenditures from 1951 to 1981.14 In their analysis of the ratio of Canadian provincial government spending to provincial GDP in 1974 to 1995, Petry, Imbeau, Crete, and Clavet found that spending by all governments increased in election years.15 As such, I was not surprised to see this pattern confirmed in my analysis. The ideology of the governing party did not appear to be a strong factor in the willingness of governments to find ways to maintain social spending in the face of decreasing transfer payments. Like many other governments in the early 1990s, the Rae NDP government in Ontario raised social spending its first two years (1991 and 1992) despite shrinking transfer payments through adding to its deficit. However, similar to non-NDP governments, the Rae government decreased social spending in each of its remaining fiscal years (1993 to 1995) in order to reduce its deficit. The Harcourt NDP government in British Columbia decreased social spending by 0.7 percent of GDP from 1992 to 1995, which was the same amount as the decrease it experienced in transfer payments. However, the HarcouKt government's reductions to social spending were milder than those of other provinces during the same period. The subsequent Clark/ Dosanjh NDP government in British Columbia decreased social spending in every year from 1996 to 2000 (except for 1998), due to unwillingness to offset decreasing transfer payments through raising taxes or increasing their deficit. Like the Rae and Harcourt governments, the Romanow NDP government in Saskatchewan decreased social spending from 1992 to 1996 in the context of falling transfer payments and the desire to cut its deficit. Once the Romanow government had eliminated its deficit, it used large increases in transfer payments to moderately increase its social spending and provide tax cuts from 1997 to 2000. The PQ government, sometimes considered to be social democratic, only once raised its social spending when transfer payments dropped. The Doer NDP government in Manitoba moderately increased its social spending from 1999 to 2002 and lowered personal taxes while facing

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declining transfer payments, through increasing business taxes and its deficit. It is very difficult to see differences in the social spending of social democratic provincial governments (with the possible exception of the Doer government) in the face of decreasing transfer payments when compared to non-social democratic governments. One may assume that a factor in the willingness of a government to compensate for reductions in transfer payments and maintain social spending would be its status as a "have" or "have-not" province. Due to the fact that their transfer payments fluctuated less and transfer payments constituted a smaller portion of their social spending, "have" provinces should have been able to more easily compensate for reductions in transfer payments than "have-not" provinces.16 My study indicated that in 22 percent of the cases within"have" provinces when transfer payments decreased, social spending went up. However, in 54 percent of the cases within "have-not" provinces when transfer payments declined, social spending increased. Therefore, "have-not" provinces actually illustrated a better ability to compensate for reductions in transfer payments and increase social spending than did "have" provinces. Further, the magnitude of the decrease in transfer Payments had little effect on the willingness of governments to increase

social spending. In 42 percent of the cases where transfer payments decreased by more than 0.5 percent of GDP, social spending was maintained or increased, whereas in 40 percent of cases where transfer payments dropped by less than 0.5 percent of GDP, social spending was maintained or increased.

Limiting Fiscal Capacity? Despite gains in fiscal flexibility by provinces in the last three decades, transfer payments continue to play an important, if complex and nuanced, role in provincial budgeting. In the context of this paper, I define "fiscal capacity" as the ability of a government to fulfill its expenditure responsibilities. In the Canadian context, a provincial government's ability to fulfill its expenditure responsibilities depends on both transfer payments from the federal government and its own taxation and deficit policies. In the cases where provincial governments decreased social spending in response to decreases in transfer payments, it can be argued that the decreases in federal transfer payments limited the fiscal capacity of provincial governments in a very direct and immediate way. The

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above findings also make it clear that provinces were able to compensate for decreases in transfer payments throughout the 1990s by either raising taxes or deficits. In these cases, decreases in federal transfer payments forced provincial governments to increase their current taxes and deficits, thereby limiting their future fiscal capacity because eventually their budget would have to be balanced and the public tolerance for future tax increases would be lower. The notion of limits to fiscal capacity caused by decreased transfer payments revolves around the issue of tax and deficit "room." Decreases in transfer payments can be easily dealt with by provincial governments if they increase their taxes and/or deficits. However, there are many obstacles to increasing taxes and deficits that limit a provincial government's "room" to do so. First, the ideology of the provincial government comes into play, as some parties are ideologically opposed to increases in taxes or deficits. Second, the size of the deficit that is inherited from the previous government is an important factor. The Romanow government in Saskatchewan illustrated that, when faced with a huge deficit from a predecessor government, it is hard to further increase the deficit in order to compensate for lower transfer payments. Third, economic downturn usually causes a government to cut deficits and lower business taxes in the hopes of an economic turnaround. The Rae NDP government demonstrated this strategy. Finally, public tolerance of deficits and tax increases is also important. All provincial governments lowered their deficits and taxes in response to public opinion shifts in the 1990s.17 Beyond the notion of tax room, the performance of the provincial economy may be a wild card in determining the cause of variations in social spending, since economic cycles can create fluctuations in a provincial government's own source revenues. An economic downturn can cause lower provincial government revenues, leading to lower social spending, while an economic upswing may cause a rise in provincial government revenues, allowing for increased social spending. However, my data illustrate that extraordinarily strong economic growth does not make it more likely that a provincial government would increase social spending in the 1990s. In fact, in only 28 percent of the cases where the provincial GDP grew by more than 5 percent did social spending actually increase. Similarly, low economic growth was not necessarily accompanied by decreases in social spending. In only 32 percent of the cases

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where the provincial GDP increased by less than 2 percent did social spending decrease as well. Therefore, strong or weak economic growth was not found to be an important factor in determining a provincial government's level of social spending in the 1990s. Table 1 SPENDING AND TAXING OF ALL PROVINCES AND TERRITORIES MEASURED AS PERCENTAGE OF CANADIAN GDP YEAR

PERSONAL TAXES

CONSUMPTION TAXES

1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

5.5% 5.6% 5.9% 5.8% 5.5% 5.7% 5.5% 5.5% 5.6% 5.5% 5.6% 5.6% 5.3% 5.0% 4.8%

4.6% 4.6% 4.5% 4.6% 4.6% 4.6% 4.5% 4.5% 4.5% 4.4% 4.6% 4.5% 4.5% 4.4% 4.5%

BUSINESS TAXES

1.7% 1.8% 2.0% 1.9% 1.8% 1.9% 2.1% 2.3% 2.4% 2.6% 2.5% - 2.5% 2.6% 2.4% 2.2%

HEALTH

TRANSFER PAYMENTS

TOTAL SOCIAL SPENDING

SPENDING

4.1% 4.0% 4.0% 4.1% 4.5% 4.1% 4.1% 3.9% 3.2% 2.9% 3.2% 3.2% 3.0% 3.1% 3.1%

15.3% 15.4% 16.3% 17.8% 18.1% 17.4% 16.7% 16.1% 15.3% 14.7% 16.0% 14.9% 14.3% 14.6%. 14.4%

5.5% 5.6% 5.9% 6.5% 6.5% 6.3% 6.0% 5.9% 5.7% 5.6% 5.9% 5.9% 5.9% 6.1% 6.1%

HEALTH AS PERCENTAGE OF SOCIAL SPENDING

35.7% 36.5% 35.9% 36.4% 36.3% 36.5% 36.0% 36.4% 37.5% 38.2% 37.1% 39.4% 41.4% 42.1% 42.8%

DEFICITY/ SURPLUS

-0.7% -0.5% -1.1% -3.3% -3.5% -2.8% -1.9% -1.2% -0.7% -0.3% -1.3% 0.1% 1.1% -0.7% -0.5%

As we can see in Table 1, there is evidence of a budget cycle followed by all provinces in the 1990s. From 1989 to 1992, every province (except Alberta) increased their social spending between 1 percent and 3 percent of their provincial GDP. Indeed, in the 1989 to 1992 fiscal years, combined provincial and territorial social spending rose from 15.4 percent to 18.1 percent of Canada's GDP—an increase of 2,7 percent of GDP» However, transfer payments to provinces and territories in this time period increased by only 0.5 percent of Canada's GDP and there were only very moderate tax increases. Thus, the provincial social spending increases from 1989 to 1992 were largely financed

LIMITING FISCAL CAPACITY?

by rising deficits, as the combined provincial/territorial deficit rose by 3 percent of Canada's GDP in this time period. In the 1993 fiscal year, social spending was decreased in all Canadian provinces except Prince Edward Island, where there was an election. Combined provincial and territorial social spending dropped from 18.1 percent of Canada's GDP in 1992 to just 14.7 percent of national GDP in 1997, while the combined deficit of territories and provinces fell by 3 percent of Canada's GDP« Meanwhile, transfer payments also declined by 1.2 percent of Canada's GDP in this time period. From 1998 to 2002, there is not a clear and universal pattern of social expenditures across the provinces. In 1998, there is a sizable increase in social spending, which was the result of the higher transfer payments contained in the federal budget, an election in Quebec, and an upcoming election in Ontario. From 1999 to 2002, there is considerable variation in the levels of transfer payments and social spending within all provinces and no universal pattern is apparent. The variation in the levels of transfer payments is evidence of what Lazar calls "ad hocery" as the federal government moved back and forth between the post-war approach, in which transfers were adequate enough to finance the growth of provincial welfare states, and a more conservative approach to fiscal federalism based on the reduction of social spending levels.18 The result of federal ad hocery was "see-saw" provincial social spending as the provinces budgeted around unpredictable federal transfers. Overall, my analysis agrees with Boychuk's findings in his discussion paper done for the Romanow Commission. Boychuk found that provincial health spending as a percentage of GDP in 2000 was still below early 1990s levels. Using data from 2001 and 2002, we can now see that health spending in 2002 relative to GDP was restored to early 1990s levels in most provinces. Thus, over the last two years of my analysis, provincial health spending as a percentage of GDP almost caught up to levels before the era of fiscal restraint in the mid1990s. While health funding was nearly restored, federal transfer payments to provinces did not return to their early 1990s levels, and provincial personal and business income taxes were reduced. As a result, the reinvestment in health took place at the expense of other social programs. In every province, the proportion of health spending to total social spending increased between

69

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CONSTRUCTING TOMORROW'S FEDERALISM

5 percent to 10 percent from 1988 to 2002, Simply put, while health spending was restored to levels similar to those before the fiscal restraint of the mid1990s, other social program spending had not yet rebounded. Notwithstanding the differences among provincial cases, a common story of interdependency between transfer payments, taxation, deficits, and social spending emerged from my examination. As my findings illustrate, such interdependency is much more complex than the simple assumption that increases or decreases in transfer payments result in corresponding increases or decreases in provincial social spending. While one must recognize the ability of provincial governments to compensate for reductions in transfer payments, cuts to federal transfer payments in the 1990s did nonetheless limit the fiscal capacity of provinces to maintain their responsibilities in the area of social programs. All provinces raised social spending in the early 1990s while implementing small tax increases and facing reductions in transfer payments, resulting in sizable deficits. After 1992, all provinces entered an era of fiscal restraint in which large reductions in transfer payments, high deficits, and unwillingness to substantially increase taxes forced provincial governments to cut social spending in all areas in order to eliminate their deficits. Clearly, public intolerance for further deficit increases from 1993 to 1997 prevented provincial governments from compensating for declining transfer payments by increasing their deficits. Further, it is clear that provincial governments after 1992 were severely limited in their fiscal capacity by the massive deficits and debts inherited from previous governments. These deficits were created, at least in part, by attempts of provincial governments to compensate for declining or unvarying transfer payments from 1988 to 1992. Most provinces also moderately raised their taxes from 1989 to 1992 to compensate for decreasing transfer payments and to maintain social spending, which used up some of their room for tax increases in the mid-1990s. Thus, the federal government had placed the provinces in a difficult position from 1992 to 1997; The federal government continued to cut transfer payments at a time when provincial governments had very little room to substantially increase taxes or deficits because they had already instituted those measures to deal with lower transfer payments in the period from 1988 to 1991. To make matters worse, several provincial governments reduced taxes while fighting their deficits in the

LIMITING FISCAL CAPACITY?

mid-1990s, which only accelerated their cuts to social spending. While these provincial governments may not have had the tax room to significantly increase their taxes in order to completely avoid spending cuts, keeping taxes stable would have softened their cuts to social programs. In 1998 to 2002, transfer payments to provinces were gradually increased, but they remained at significantly lower levels than at the beginning of the 1990s. The response of provincial governments to this situation was to continue to cut personal income and business taxes and plough any social spending increases into health care funding. As Table 1 illustrates, while combined provincial and territorial consumption taxes remained stable after 1999, personal income taxes were cut by 0.8 percent of provincial GDP from 1999 to 2003 and business taxes were reduced by 0.4 percent of GDP from 2000 to 2002. Thus, provincial governments followed a period of fiscal restraint and cuts to social programs with reductions to personal income and business taxes from 1999 to 2002. The combination of stabilized transfer payments at lower levels and reduced tax revenues has resulted in the restoration of health care funding to previous levels at the expense of other social programs, which remained underfunded as of 2002. Conclusion: Policy Responses Provincial governments are now in a new fiscal crisis. Health care is demanding continued reinvestment, non-health social spending should be restored to early 1990s levels, transfer payments remain at historically low levels, revenues from personal income tax and business taxes have been reduced, and there is no public appetite for running deficits. The lesson that should be taken from the period from 1988 to 2002 is that cuts to Canada's welfare state are the fault of both the federal and provincial governments. Despite the ability to compensate, unilateral federal reductions in transfer payments did limit the fiscal capacity of Canadian provincial governments to maintain their responsibilities in the area of social programs in the 1990s. However, several provinces unnecessarily enlarged cuts to social spending in the mid-1990s by implementing tax reductions while trying to pay down their deficits. Further, once provincial governments eliminated their deficits and received increased transfer payments after 1998, they used the supplementary revenue to increase health spending and

71

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CONSTRUCTING TOMORROW'S FEDERALISM

cut business and personal taxes even further, while leaving other social programs underfunded. The more responsible policy response would have been to increase social spending evenly across all program areas and not rush into decreasing taxes at a time when social spending had not yet been restored to adequate levels. If Canada's social programs are to be maintained and improved, provincial governments will have to find ways to undo the revenue impact of recent personal and business tax cuts. The solution of the Liberal government in Ontario in their 2004 budget was essentially to raise personal taxes through the reintroduction of health premiums and to increase consumption taxes. However, it remains an open question as to whether other provincial governments will follow the Ontario government in raising taxes to maintain social programs and what form such future tax increases will take. For its part, the federal government must find a way to make transfer payments more predictable and adequate in order to be a responsible partner in Canada's federal fiscal framework. There are several ways in which this could be done. St. Hilaire and Hobson suggest following the recommendations of the National Council of Welfare, which are: (1) the abolition of the CHST and its replacement by four new "cash only" arrangements for health, post-secondary education, welfare, and social services; (2) legislation to prevent "arbitrary and unilateral" fluctuations in transfer payments; and (3) guarantees that provincial governments will respect minimum national standards in these areas.19 Splitting up the CHST into four parts may avoid the cannibalization of other social programs by health spending. In its 2003 budget, the federal government announced that the CHST would be separated into two transfers called the Canadian Health Transfer (CHT) and the Canadian Social Transfer (CST) on 1 April 2004 in order to increase "accountability."20 The splitting up of the CHST was definitely a move in the right direction. However, the CST is still a block grant and the provinces are not obliged to spend it in any targeted manner, with the exception of parts of it that must go to child care and early childhood development. The new CST should be split up into separate accounts dealing with child care, post-secondary education, and social assistance so that the federal government may target spending in these specific areas and ensure that all Canadians equally benefit from future advancements to Canada's

LIMITING FISCAL CAPACITY?

welfare state. Moreover, minimum national standards attached to federal spending in each of these broad areas would ensure that all Canadians have access to quality social programs and that they are not penalized due to their place of residence. Such standards should be negotiated either bilaterally or multilaterally with the provinces rather than being imposed upon them. There have been recent examples of federal and provincial governments agreeing to minimum standards or common objectives in areas such as housing, the child tax benefit, or official language minority education. While the recent health accord signed by the federal government and the provinces at the September 2004 First Ministers' meeting did provide increased and stable health care funding, the accord had very minimal national objectives attached to it and did nothing to address the crisis of underfunding in nonhealth-related social programs. The provinces could have used the minority position of the federal government to push for more funding for social services, child care, and post-secondary education, much as they did with health. However, health is obviously the political priority of premiers in their dealings with Ottawa and this was illustrated by the dominance of the health file at the September 2004 meeting. The health accord also made it clear that there is no enthusiasm among the provinces for national standards in the area of health or any other policy area. While the stance of Quebec and Alberta in this regard was not surprising, the NDP governments in Saskatchewan and Manitoba were also resistant to the concept of national standards at the First Ministers' meeting. In the area of child care, between April and November 2005, the federal Liberal government signed bilateral deals with every province that set federal contributions to provincial daycare programs until 2010 and contained varying

standards of the so-called QUAD principles (quality, universality, accessibility, and early childhood development). For instance, the agreements with Manitoba and Saskatchewan forbade government funding to for-profit child care, while the agreements signed with other provinces did not have this provision. In some ways, these deals represented a type of "one-off" fiscal federalism in which each province negotiates its own level of funding and its own version of national standards with the federal government. The willingness of the federal government to accept such minimal standards in the areas of health and child care (or no standards at all, in the case of Quebec) illustrates that it will not be

73

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CONSTRUCTING TOMORROW'S FEDERALISM

attempting to go back to a post-war type of cost-shared fiscal arrangement in which the federal government exercised significant control over social policy within provincial jurisdiction. The election of the Conservatives in early 2006 has definitely cemented the federal government's tendency to shy away from demanding that provinces follow any sort of national standards. One of the consequences of the Harper government's abolition of the Liberals' bilateral daycare deals was that it eliminated the possibility of federal-provincial cost-shared programs under nominal national standards in the area of child care. Instead, the Harper government has decided to abolish the involvement of public institutions within child care in favour of taxable allowances for each child under the age of six, paid by the federal government directly to parents. After scrapping the child care deals, the likely direction of the new Harper government within the area of fiscal federalism will be to increase health transfers to provincial governments in exchange for an agreement on wait-time guarantees for certain procedures. The Harper government could then claim that such a large increase in health transfers eliminates the fiscal imbalance that is of so much concern to Quebec and several other provinces. With no appetite among provincial governments for national standards and a new Conservative government in Ottawa, it is clear that we will not see the establishment of national objectives in joint federal-provincial social policy areas in the near future. The new Conservative government has a classical view of federalism in which each level of government sticks to its own jurisdiction. In terms of social policy, the Harper government will act as a conveyor belt to transfer money to provinces to allow them to innovate and experiment as they please with social programming while it concentrates on more exclusively federal jurisdictions, such as foreign affairs, defense, international trade, the criminal code, and reducing the Goods and Services Tax. As for Equalization, it is evident that payment levels should also be made more predictable and adequate. The adequacy of Equalization could be gauged by moving to needs-based criteria, as Douglas Brown and Anwar Shaw have argued.21 A movement away from the five-province standard may also be a good step forward. William Watson recently pointed out that, due to the fiveprovince standard, provinces received an additional $2 billion for health in the

LIMITING FISCAL CAPACITY?

2004-05 federal budget while losing $2.3 billion in Equalization because of the effect of slow economic growth in Ontario.22 The Equalization framework announced by the federal government in October 2004 was a step forward in providing stability and protection against decreases in the total amount available for Equalization over the next ten years. However, how this new funding will be divided up among the provinces remains to be seen, as an expert panel set up by the new framework has yet to report. Given the recent Equalization deals with Nova Scotia and Newfoundland, questions over the inclusion of non-renewable resource revenues will have to figure prominently in the report, as will the maintenance or elimination of the five-province standard. In their election platform, the Conservatives promised to maintain the projected growth rate of Equalization and ensure that non-renewable natural resource revenue is removed from the Equalization formula. Whether the Harper government will live up to these promises remains to be seen. At the conference that produced this book, Paul Kershaw argued that, given the cuts in transfer payments by the federal government in the 1990s, Ottawa should be considered a poor and unreliable partner in fiscal federalism.23 Thus, he recommends that tax points within the CST be transferred to the provinces so that "they will be better positioned in terms of funding levels and predictability to innovate with social programming in order to address socio-economic, programmatic and demographic pressures that ail contemporary welfare states,"24 However, I would argue that giving the provinces tax points instead of increases to cash transfers will only allow provincial governments to use the extra tax room to cut taxes instead of increasing social spending.25 Direct federal spending is equally as problematic as giving the provinces increased tax points. New direct federal social programs such as the Millennium Scholarships, Canadian Research Chairs, the Canada Foundation for Innovation, and the probable federal per-child taxable allowance provide high visibility for the federal government but, as Hobson and St. Hilaire argue, they "are inconsistent with the role that each government has come to play in these areas of social policy and it creates significant gaps in our social safety net'.'26 Further, Thomas Courchene argues, recent direct federal initiatives in post-secondary education and cities are in areas that were traditionally within provincial jurisdiction.27 Tom Mclntosh contends that new direct federal spending illustrates that the federal

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CONSTRUCTING TOMORROW'S FEDERALISM

government has an inability to act collaboratively with provinces and that it "must take into account the primary responsibility" of provinces in these areas.28 Instead of intruding on provincial jurisdiction, the federal government should play a role in social policy to ensure a quality welfare state for every Canadian and avoid a patchwork welfare state that is inconsistent across provinces. Based on the evidence presented in this paper, it is my argument that only reliable and adequate cash transfers with minimum national standards attached to them will allow the federal government to play a constructive role in social policy and ensure that provincial governments will be able to maintain quality social programs.

Appendix: Taxing and Spending as Percentage of GDP in Canadian Provinces (East to West) In the tables below, I have used the same categories as Statistics Canada but have grouped these categories together in a manner congenial to our analysis. I grouped together the Statistics Canada categories of personal income taxes and health and drug insurance premiums under the category of "Personal Taxes." I have also combined the Statistics Canada categories of corporate income taxes, mining and logging taxes, capital taxes, payroll taxes, and natural resources taxes and licences under the category of "Business Taxes." The Statistics Canada categories of general-purpose transfers from other government subsectors and specific-purpose transfers from other government subsectors were combined into the category of "Transfer Payments." The Statistics Canada categories of transportation and communications, health, social services, education, housing, environment, and recreation and culture have been amalgamated into the category of "Social Spending." As mentioned in the text, health spending has been disaggregated from social spending and presented as both a percentage of provincial GDP and a percentage of total provincial social spending. The Statistics Canada categories of consumption taxes and deficit/surplus were not grouped with any other measurements.

LIMITING FISCAL CAPACITY? 77

The years used in the tables indicate the beginning of a fiscal year. Therefore, "1988" represents the time period from 1 April 1988 to 31 March 1989.1 have highlighted in bold type the fiscal years in which there were provincial general elections and added the governing party of the province at the start of the fiscal year when the budgeting would have taken place. For instance, there was a provincial general election in Saskatchewan on 21 October 1991 in which the Progressive Conservatives were replaced in government by the NDP* Thus, the budgeting in Saskatchewan for the fiscal year of 1991 (31 March 1991 to 31 March 1992) is attributed to a Progressive Conservative government even though the NDP won the provincial election of October 1991. The abbreviations for governing political parties are as follows: Liberals (Lib), New Democratic Party (NDP), Progressive Conservative (PC), Parti Quebecois (PQ), and Social Credit (SC). All data were drawn from Statistics Canada's CANSIM 11.29. Table 1 NEWFOUNDLAND - TAXING AND SPENDING AS PERCENTAGE OF PROVINCIAL GDP (Election Year in Bold) YEAR

PERSONAL TAXES

CONSUMPTION TAXES

BUSINESS TAXES

TRANSFER PAYMENTS

TOTAL SOCIAL SPENDING

HEALTH SPENDING

HEALTH AS PERCENTAGE OF SOCIAL SPENDING

DEFICIT/ SURPLUS

Lib 1988

4.2%

8.4%

0.7%

15.9%

23.2%

7.1%

30.6%

-0.9%

Lib 1989

4.5%

8.6%

0.7%

23.7%

7.1%

30.1%

0.1%

Lib 1990

4.9%

8.4%

0.9%

16.3% 15.6%

25.3%

7.7%

Lib 1991

4.9%

8.6%

1.1%

15.2%

24.8%

7.5%

30.4%

-2.5%

• 30.6% -1.8%

Lib 1992

5.0%

8.6%

1.1%

16.1%

26.3%

7.9%

30.1%

-3.3%

Lib 1993

5.2%

8.6%

1.1%

15.4%

25.2%

7.6%

30.0%

-1.4%

Lib 1994

4.6%

8.7%

1.3%

16.4%

24.8%

7.4%

29.9%

-0.2%

Lib 1995

5.2%

8.5%

1.4%

14.9%

23.9%

7.2%

30.3%

0.3%

Lib 1996

5.9%

8.5%

1.5%

14.8%

24.1%

7.4%

30.8%

-0.1%

Lib 1997

5.2%

7.4%

1.5%

19.0%

24.6%

8.1%

32.8%

3.6%

Lib 1998

4.9%

7.2%

1.5%

16.1%

24.4%

9.1%

37.2%

0.9%

Lib 1999

5.0%

7.0%

1.4%

13.9%

24.8%

8.7%

35.2%

-1.0%

Lib 2000

4.6%

6.3%

1.2%

12.5%

21.9%

8.2%

37.2%

-0.9%

Lib 2001

4.3%

6.5%

1.0%

12.3%

23.0%

8.9%

38.9%

-2.1%

Lib 2002

4.1%

6.1%

1.2%

10.3%

20.1%

8.0%

39.9%

-0.6%

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CONSTRUCTING TOMORROW'S FEDERALISM

Table 2 PRINCE EDWARD ISLAND - TAXING AND SPENDING AS PERCENTAGE OF PROVINCIAL GDP (Election Year in Bold) YEAR

PERSONAL TAXES

CONSUMPTION TAXES

BUSINESS TAXES

TRANSFER PAYMENTS

TOTAL SOCIAL SPENDING

HEALTH SPENDING

HEALTH AS PERCENTAGE OF SOCIAL SPENDING

DEFICIT/ SURPLUS

Lib 1988

4.6%

6.8%

1.0%

15.3%

23.2%

7.1%

30.6%

-0.7%

Lib 1989

4.8%

6.7%

0.8%

15.0%

23.5%

7.1%

30.4%

-1.2%

Lib 1990

4.7%

7.1%

0.6%

14.8%

23.7%

7.2%

30.5%

-1.2%

Lib 1991

4.7%

7.0%

0.8%

13.7%

24.2%

7.4%

30.4%

-2.5%

Lib 1992

4.2%

7.0%

0.5%

13.3%

24.1%

7.3%

30.3%

-3.5%

Lib 1993

4.7%

7.0%

0.7%

11.6%

30.1%

9.1%

30.4%

-10.0%

Lib 1994

4.2%

7.3%

0.9%

13.5%

22.1%

7.0%

31.7%

0.4%

Lib 1995

4.5%

7.5%

0.8%

11.9%

21.5%

6.7%

31.1%

-0.1%

Lib 1996

4.6%

7.3%

0.8%

10.4%

20.5%

6.5%

31.6%

-1.5%

PC 1997

4.9%

7.2%

0.9%

10.8%

21.0%

8.0%

38.3%

-1.0%

PC 1998

4.3%

7.0%

0.9%

12.1%

20.5%

7.7%

37.6%

0.2%

PC 1999

5.1%

7.2%

0.6%

12.0%

20.4%

7.6%

37.5%

0.9%

PC 2000

4.2%

7.1%

1.1%

12.1%

20.4%

7.6%

37.5%

-0.9%

PC 2001

4.5%

7.1%

0.8%

12.2%

20.8%

8.1%

39.1%

-0.6%

PC 2002

4.7%

7.0%

0.9%

10.2%

20.4%

8.3%

40.6%

-0.8%

LIMITING FISCAL CAPACITY?

Table 3 NOVA SCOTIA - TAXING AND SPENDING AS PERCENTAGE OF PROVINCIAL GDP (Election Year in Bold) YEAR

PERSONAL TAXES

CONSUMPTION TAXES

PC 1988

4.8%

6.1%

1.1%

9.9%

18.6%

7.1%

38.2%

-1.6%

PC 1989

4.9%

6.1%

0.9%

9.8%

19.2%

7.3%

38.3%

-4.1%

BUSINESS TAXES

TRANSFER PAYMENTS

TOTAL SOCIAL SPENDING

HEALTH SPENDING

HEALTH AS PERCENTAGE OF SOCIAL SPENDING

DEFICIT/ SURPLUS

PC 1990

5.4%

6.1%

0.7%

9.8%

19.1%

7.5%

39.4%

-1.8%

PC 1991

5.4%

5.8%

0.4%

9.3%

19.2%

7.7%

39.9%

-2.3%

PC 1992

4.8%

6.0%

0.5%

9.1%

21.3%

8.2%

38.5%

-5.0%

PC 1993

5.0%

6.3%

0.5%

8.9%

18.9%

7.3%

38.6%

-2.8%

Lib 1994

4.7%

6.5%

0.7%

10.5%

18.7%

7.1%

38.1%

-0.8%

Lib 1995

4.7%

6.5%

0.5%

10.4%

18.7%

7.4%

39.8%

-0.8%

Lib 1996

5.2%

6.6%

0.8%

9.4%

17.9%

7.1%

39.9%

0.5%

Lib 1997

5.0%

6.3%

0.9%

9.8%

17.6%

• 7.6%

43.4%

0.7%

Lib 1998

4.9%

6.1%

0.9%

9.9%

17.9%

7.7%

42.9%

0.2%

Lib 1999

5.4%

5.9%

1.0%

8.6%

17.9%

8.0%

44.8%

-0.3%

PC 2000

5.4%

5.7%

1.0%

8.6%

16.4%

7.4%

44.8%

1.3%

PC 2001

5,0%

5.8%

1.4%

8.0%

16.9%

7.5%

44.5%

-0.2%

PC 2002

5.2%

6.1%

1.2%

7.3%

17.0%

7.8%

45.8%

0.2%

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CONSTRUCTING TOMORROW'S FEDERALISM

Table 4 NEW BRUNSWICK - TAXING AND SPENDING AS PERCENTAGE OF PROVINCIAL GDP (Election Year in Bold) YEAR

PERSONAL TAXES

Lib 1988

4.4%

6.9%

Lib 1989

4.6%

Lib 1990

5.0%

Lib 1991 Lib 1992

CONSUMPTION TAXES

BUSINESS TAXES

TRANSFER PAYMENTS

TOTAL SOCIAL SPENDING

HEALTH SPENDING

HEALTH AS PERCENTAGE OF SOCIAL SPENDING

1.0%

10.9%

20.8%

7.2%

34.7%

-0.4%

7.1%

1.0%

11.1%

21.4%

7.6%

35.5%

-0.2%

7.0%

0.7%

11.1%

22.6%

8.0%

35.2%

-1.4%

5.0%

6.8%

0.8%

10.6%

23.2%

8.1%

34.8%

-2.9%

4.5%

6.6%

0.4%

12.4%

23.0%

8.1%

35.3%

-1.8%

DEFICIT/ SURPLUS

Lib 1993

5.0%

6.7%

0.7%

10.3%

22.2%

7.6%

34.5%

-1.7%

Lib 1994

4.6%

6.7%

1.1%

10.6%

21.3%

7.6%

.35.5%

-1.0%

Lib 1995

4.8%

6.7%

0.8%

9.9%

20.3%

7.1%

35.1%

-0.3%

Lib 1996

5.0%

6.6%

1.5%

9.1%

20.0%

7.1%

35.7%

0.3%

Lib 1997

4.8%

5.7%

1.5%

9.9%

19.8%

7.0%

35.5%

0.1%

Lib 1998

4.4%

5.6%

0.9%

12.1%

20.1%

7.2%

35.8%

0.7%

Lib 1999

4.7%

5.3%

1.0%

10.0%

21.0%

7.2%

34.2%

-1.8%

PC 2000

4.5%

5.4%

1.1%

8.9%

18.9%

7.1%

37.7%

-0.1%

PC 2001

4.5%

5.3%

1.1%

10.1%

19.8%

7.7%

38.8%

-0.2%

PC 2002

4.4%

5.7%

1.1%

9.4%

20.1%

8.0%

39.7%

-0.8%

LIMITING FISCAL CAPACITY?

Table 5 QUEBEC - TAXING AND SPENDING AS PERCENTAGE OF PROVINCIAL GDP (Election Year in Bold) YEAR

PERSONAL TAXES

Lib 1988 Lib 1989

CONSUMPTION TAXES

BUSINESS TAXES

TRANSFER PAYMENTS

7.3%

5.4%

2.6%

4.9%

18.8%

5.6%

29.6%

-1.9%

7.3%

5.3%

2.9%

4.9%

18.4%

5.7%

31.0%

-1.2%

6.1%

31.2%

-2.2%

TOTAL SOCIAL SPENDING

HEALTH SPENDING

HEALTH AS PERCENTAGE OF SOCIAL SPENDING

DEFICIT/ SURPLUS

Lib 1990

7.9%

5.3%

2.9%

4.8%

19.4%

Lib 1991

8.1%

5.7%

3.0%

4.7%

20.7%

6.5%

31.4%

-3.2%

5.5%

3.1%

5.4%

21.2%

6.5%

30.8%

-3.7%

Lib 1992

7.8%

Lib 1993

7.9%

5.0%

3.2%

5.2%

20.7%

6.6%

31.6%

-3.5%

Lib 1994

7.7%

4.7%

3.3%

5.0%

20.2%

6.3%

31.4%

-3.7%

PQ 1995

7.6%

4.8%

3.6%

5.1%

19.4%

6.1%

31.5%

-2.1%

PQ 1996

7.7%

4.6%

3.8%

4.3%

18.7%

5.9%

31.4%

-2.1%

PQ 1997

7.9%

4.7%

3.9%

3.7%

17.4%

6.1%

34.9%

-1.3%

PQ1998

8.3%

5.2%

3.9%

4.8%

18.0%

6.2%

34.3%

0.2%

PQ 1999

8.2%

5.0%

3.9%

4.0%

18.1%

6.9%

38.0%

-0.5%

PQ 2000

8.2%

5.1%

3.9%

4.2%

17.5%

6.8%

38.6%

0.4%

PQ 2001

7.6%

5.1%

3.6%

3.9%

18.1%

7.1%

39.2%

-1.3%

PQ 2002

7.3%

5.3%

3.4%

3.9%

17.7%

6.9%

38.9%

-0.9%

81

82

CONSTRUCTING TOMORROW'S FEDERALISM

Table 6 ONTARIO - TAXING AND SPENDING AS PERCENTAGE OF PROVINCIAL GDP (Election Year in Bold) YEAR

Lib 1988 Lib 1989 Lib 1990 NDP 1991 NDP 1992 NDP 1993 NDP 1994 NDP 1995 PC 1996 PC 1997 PC 1998 PC 1999 PC 2000

PC 2001 PC 2002

PERSONAL TAXES

CONSUMPTION TAXES

BUSINESS TAXES

TRANSFER PAYMENTS

5.4% 5.5% 5.6% 5.0% 4.9% 5.2% 4.9% 5.1% 5.1% 4.9% 4.7% 4.6% 4.6% 4.4% 4.1%

4.6% 4.5% 4.4% 4.3% 4.3% 4.4% 4.5% 4.4% 4.5% 4.5% 4.6% 4.6% 4.6% 4.6% 4.6%

1.6% 1.8% 2.2% 2.0% 1.7% 1.9% 2.1% 2.3% 2.4% 2.7% 2.7% 2.7% 2.8% 2.4% 2.3%

2.1% 2.1% 2.2% 2.3% 2.8% 2.6% 2.6% 2.4% 1.8% 1.4% 1.3% 1.6% 1.5% 1.6% 1.9%

TOTAL SOCIAL SPENDING

12.6% 12.8% 14.0% 15.9% 16.1% 15.4% 14.7% 14.3% 13.2% 12.7% 13.2% 12.3% 12.1% 11.8% 11.7%

HEALTH SPENDING

5.1% 5.3% 5.6% 6.3% 6.4% 6.1% 5.8% 5.7% 5.6% 5.3% 5.3% 5.2% 5.5% 5.4% 5.4%

HEALTH AS PERCENTAGE OF SOCIAL SPENDING

DEFICIT/ SURPLUS

40.8% 41.6% 39.8% 40.0% 39.4% 39.8% 39.3% 40.1% 42.3% 41.5% 40.0% 41.8% 45.3% 45.9% 45.8%

-0.2% 0.4% -0.8% -3.8% -4.2% -3.6% -2.9% -2.2% -1.4% -1.0% -1.2% 0.3% 0.2% -0.1% -0.1%

LIMITING FISCAL CAPACITY?

Table 7 MANITOBA - TAXING AND SPENDING AS PERCENTAGE OF PROVINCIAL GDP (Election Year in Bold) YEAR

PERSONAL TAXES

CONSUMPTION TAXES

BUSINESS TAXES

TRANSFER PAYMENTS

•

TOTAL SOCIAL SPENDING

HEALTH SPENDING

HEALTH AS PERCENTAGE OF SOCIAL SPENDING

DEFICIT/ SURPLUS

PC 1988

4.8%

5.1%

2.8%

7.4%

16.5%

6.3%

38.3%

0.2%

PC 1989

4.6%

5.0%

2.4%

7.5%

16.8%

6.4%

38.3%

-1.0%

PC 1990

4.9%

4.8%

1.7%

7.6%

17.3%

6.6%

38.3%

-1.1%

PC 1991

5.2%

4.8%

1.7%

8.3%

18.1%

7.1%

39.2%

-1.4%

PC 1992

4.6%

5.0%

1.8%

7.7%

18.5%

7.1%

38.4%

-2.1%

PC 1993

5.1%

5.5%

1.7%

7.2%

18.1%

7.1%

39.0%

-1.8%

PC 1994

4.7%

5.6%

1.7%

7.8%

17.3%

6.8%

39.1%

0.5%

PC 1995

5.0%

5.7%

1.9%

7.4%

16.9%

6.7%

39.7%

1.0%

PC 1996

5.1%

5.3%

2.0%

6.3%

16.5%

6.8%

41.3%

0.3%

PC 1997

5.0%

5.4%

1.9%

6.6%

15.7%

5.8%

37.2%

0.4%

PC 1998

6.0%

5.4%

1.9%

5.3%

15.9%

6.4%

39.8%

0.4%

PC 1999

5.2%

5.3%

2.2%

7.0%

16.6%

6.9%

41.7%

0.0%

NDP2000

5.3%

5.1%

2.6%

6.4%

16.7%

7.1%

42.5%

0.7%

NDP2001

4.9%

5.1%

2.0%

6.6%

17.1%

7.4%

43.6%

, -0.4%

NDP 2002

4.7%

5.0%

1.6%

6.4%

16.7%

7.3%

43.5%

0.1%

83

84

CONSTRUCTING TOMORROW'S FEDERALISM

Table 8

SASKATCHEWAN - TAXING AND SPENDING AS PERCENTAGE OF PROVINCIAL GDP (Election Year in Bold) YEAR

PERSONAL TAXES

CONSUMPTION TAXES

BUSINESS TAXES

TRANSFER PAYMENTS

TOTAL SOCIAL SPENDING

HEALTH SPENDING

HEALTH AS PERCENTAGE OF SOCIAL SPENDING

PC 1988

4.5%

4.8%

1.4%

6.1%

16.9%

6.0%

35.7%

-2.6%

PC 1989

4.5%

4.7%

1.3%

6.9%

16.9%

6.3%

37.4%

-2.5%

PC 1990

4.6%

4.5%

1.2%

7.1%

16.8%

6.4%

38.0%

-1.0%

PC 1991

4.8%

5.0%

1.2%

7.9%

20.0%

8.1%

40.5%

-8.6%

NDP 1992

5.1%

5.3%

1.4%

7.6%

16.9%

6.6%

39.3%

-0.8%

NDP 1993

4.7%

5.6%

1.7%

5.6%

16.7%

6.1%

36.3%

-3.9%

NDP 1994

4.3%

5.4%

1.9%

6.1%

15.0%

5.7%

38.2%

0.5%

NDP 1995

4.2%

5.9%

2.3%

3.9%

14.1%

5.3%

37.9%

0.3%

NDP 1996

4.4%

4.8%

2.2%

2.9%

13.0%

5.1%

38.8%

1.2%

DEFICIT/ SURPLUS

NDP 1997

4.6%

5.7%

2.3%

2.3%

13:7%

5.1%

37.6%

1.0%

NDP 1998

4.9%

5.5%

2.1%

3.7%

14.3%

5.4%

37.9%

0.9%

NDP 1999

4.7%

4.0%

2.6%

5.0%

14.5%

5.6%

38.9%

0.4%

NDP 2000

3.7%

6.8%

3.0%

3.1%

14.1%

5.6%

40.0%

3.4%

NDP 2001 NDP 2002

3.6%

4.9%

2.3%

4.5%

14.8%

6.0%

40.5%

-1.3%

4.1%

5.1%

2.4%

3.0%

14.6%

6.2%

42.3%

0.3%

LIMITING FISCAL CAPACITY?

Table 9 ALBERTA - TAXING AND SPENDING AS PERCENTAGE OF PROVINCIAL GDP (Election Year in Bold) YEAR

PERSONAL TAXES

CONSUMPTION TAXES

BUSINESS TAXES

TRANSFER PAYMENTS

TOTAL SOCIAL SPENDING

HEALTH SPENDING

HEALTH AS PERCENTAGE OF SOCIAL SPENDING

PC 1988

3.6%

1.6%

1.0%

3.3%

14.8%

4.7%

31.6%

-2.4%

DEFICIT/ SURPLUS

PC 1989

4.2%

1.5%

1.1%

2.8%

14.9%

4.8%

32.5%

-2.8%

PC 1990

4.3%

1.7%

1.3%

3.2%

14.7%

4.8%

32.9%

-1.4%

PC 1991

4.7%

1.9%

1.2%

2.9%

15.0%

5.4%

35.8%

-2.9%

PC 1992

4.3%

1.9%

1.0%

3.3%

15.3%

5.7%

37.0%

-4.2%

PC 1993

4.3%

2.0%

1.2%

2.6%

13.6%

5.1%

37.6%

-1.6%

PC 1994

4.1%

2.0%

1.4%

2.2%

13.0%

4.5%

34.7%

1.0%

PC 1995

4.1%

2.1%

1.6%

1.9%

11.9%

4.1%

34.6%

1.2%

PC 1996

4.1%

2.0%

1.6%

1.4%

11.3%

4.0%

35.4%

2.6%

PC 1997

4.2%

2.0%

1.9%

1.1%

11.2%

4.0%

35.6%

2.6%

PC 1998

4.9%

2.0%

1.7%

1.2%

11.5%

4.2%

36.6%

1.1%

PC 1999

4.9%

1.9%

1.2%

1.5%

12.0%

4.4%

36.3%

2.2%

PC 2000

3.5%

1.7%

1.6%

1.3%

10.8%

4.1%

38.0%

5.5%

PC 2001

3.5%

1.7%

1.7%

1.5%

11.2%

4.3%

37.8%

-0.3%

PC 2002

3.9%

1.9%

1.5%

1.4%

10.8%

4.5%

41.8%

1.2%

85

86

CONSTRUCTING TOMORROW'S FEDERALISM

Table 10 BRITISH COLUMBIA - TAXING AND SPENDING AS PERCENTAGE OF PROVINCIAL GDP (Election Year in Bold) YEAR

SC 1988

PERSONAL TAXES

CONSUMPTION TAXES

5.2%

4.5%

BUSINESS TAXES

TRANSFER PAYMENTS

1.0%

TOTAL SOCIAL SPENDING

HEALTH SPENDING

3.1%

14.7%

5.8%

39.6%

HEALTH AS PERCENTAGE OF SOCIAL SPENDING

DEFICIT/ SURPLUS

1.7%

SC 1989

5.4%

4.7%

1.0%

2.8%

15.4%

6.0%

39.0%

1.0%

SC 1990

6.1%

4.6%

0.8%

2.6%

16.4%

6.1%

36.9%

0.1%

SC1991

6.2%

4.6%

0.7%

2.7%

18.2%

6.6%

36.2%

-2.3%

NDP 1992

5.5%

4.6%

1.0%

3.0%

18.2%

7.0%

38.5%

-1.7%

NDP 1993

6.1%

5.1%

1.2%

2.5%

17.9%

6.8%

38.1%

-0.2%

NDP 1994

5.5%

5.1%

1.5%

2.5%

17.9%

6.7%

37.7%

-0.1%

NDP 1995

5.6%

4.9%

1.7%

2.3%

17.5%

6.6%

37.9%

0.0%

NDP 1996

5.7%

4.9%

1.7%

1.9%

17.3%

6.7%

39.0%

-0.3%

NDP 1997

5.5%

4.9%

1.4%

1.8%

16.8%

6.6%

39.4%

-0.1%

NDP 1998

5.5%

4.9%

1.4%

2.0%

19.9%

8.4%

42.3%

-4.1%

NDP 1999

5.7%

5.0%

1.2%

2.4%

17.5%

6.9%

39.2%

-1.1%

NDP 2000

5.4%

4.8%

1.3%

2.4%

16.6%

6.9%

41.6%

0.2%

NDP 2001

4.8%

4.6%

1.6%

2.4%

18.0%

7.8%

43.1%

-2.5%

Lib 2002

4.4%

4.7%

0.7%

2.8%

17.9%

8.0%

44.9%

-3.3%

1

Paul A.R, Hobson and France St. Hilaire/'The Evolution of Federal-Provincial Fiscal Arrangements," in Harvey Lazar (ed,), Canada: The State of the Federation 1999/2000—Toward a New Mission Statement for Canadian Federalism (Kingston: McGill-Queen's University Press, 2000), 159-88, see esp. 162.

2

Ibid., 167.

3

Ibid., 160.

4

Gerard Boychuk, The Changing Political and Economic Environment of Health Care in Canada (Commission on the Future of Health Care in Canada), http://< www.hc-sc.gc.ca/english/pdf/ romanow/pdfs/l_Boychuk_E.pdf. >

5

Harvey Lazar, "In Search of a New Mission Statement," in Lazar (ed.), State of the Federation, 8.

6

Guy Lachapelle, "La crossiance de 1'Etat providence dans les provinces canadiennes (1950 - 1981). Analyse des determinants," in Jean Crete, Louis Imbeau, and Guy Lachapelle (eds.), Politique provinciates comparee (Sainte-Foy, Quebec: Presses de 1'Universite Laval, 1994), 115-48.

LIMITING FISCAL CAPACITY?

7

Harvey Lazar/'The Social Union Framework Agreement," in Lazar (ed.), State of the Federation, 130.

8

For discussion of changes to federal-provincial tax arrangements in the 1990s, see Geoffery Hale, "The Tax on Income and the Growing Decentralization of Canada's Personal Income Tax System," in Lazar (ed.), State of the Federation, 235—62.

9

Saskatchewan and Quebec were the only provinces that did not display this characteristic. Examples from other provinces are as follows: Manitoba (1999), New Brunswick (1992, 2000), Nova Scotia (2000), Prince Edward Island (1990,1994), Newfoundland (1997, 2000), Ontario (1992), Alberta (1990), British Columbia (1990,1999).

10

Richard Simeon and E.R. Miller, "Regional Variations in Public Policy," in David Elkins and Richard Simeon (eds.), Small Worlds: Provinces and Parties in Canadian Political Life (Toronto: Methuen, 1980).

11

Allan Maslove, Michael Prince, and Bruce Doern, Federal and Provincial Budgeting (Toronto: University of Toronto Press, 1985).

12

Duff Spafford," Highway Employment and Provincial Elections," Canadian Journal of Political Science 14 (1981): 318-27.

13

James Gow, Historic de {'administration quebecoise, 1867-1970 (Montreal: Presse de 1'Universite de Montreal, 1985); D.K. Foot, Provincial Public Finance in Ontario: An Empirical Analysis of the Last 25 Years (Toronto: University of Toronto Press, 1979).

14

Andre Blais and Richard Nadeau, "The Electoral Budget Cycle," Public Choice 74 (1992): 389-403.

15

Francois Petry, Louis Imbeau,Jean Crete, and Michel Clavet, "Electoral and Partisan Cycles in the Canadian Provinces," Canadian Journal of Political Science 23 (1999): 273-92.

16

In the"have" provinces of British Columbia, Alberta, and Ontario, transfer payments in the 1990s ranged from 1 percent to 3 percent of GDP, whereas, Saskatchewan and Manitoba's transfer payments ranged from 2.3 percent of GDP to 8 percent of GDP, and Quebec's transfer payments ranged from 3.7 percent to 5.2 percent of its GDP. In the Atlantic provinces, transfer payments ranged from 8 percent to 16.5 percent of GDP. The transfer payments of "have" provinces also fluctuated much less than those of "have not" provinces in the period examined. There were only two occasions when the transfer payments of the three "have" provinces increased or decreased more than 0.5 percent of the GDP. Conversely, "have not" provinces frequently experienced fluctuations in their transfer payments of between 0.5 percent and 2 percent of GDP.

17

See Michael Ornstein and Michael Stevenson, Politics and Ideology in Canada: Elites and Public Opinion in the Transformation of the Welfare State (Kingston: McGillQueen's University Press, 1999).

87

88

CONSTRUCTING TOMORROW'S FEDERALISM

18

Lazar,"In Search of a New Mission Statement," 28.

19

Hobson and St. Hilaire, "The Evolution of Federal-Provincial Fiscal Arrangements," 182.

20

Department of Finance, The 2003 Budget Speech, 16,

21

Douglas Brown, Equalization on the Basis of Need in Canada (Kingston: Institute of Intergovernmental Relations, 1996); Anwar Shah, "A Fiscal Need Approach to Equalization," Canadian Public Policy 22, 2 (1996): 99-115.

22

William Watson, "More Health Care, Less Equalization: Ottawa's Sleight-of-Hand Surplus,"Policy Options (April 2004): 18-21.

23

Paul Kershaw, "What's the Point of a Permissive Federal Spending Power?" in Constructing Tomorrow's Federalism (Regina: Saskatchewan Institute of Public Policy and Centre for Research and Information on Canada, 2004).

24

Ibid, 25.

25

Norrie and Wilson have also convincingly argued against the transfer of tax points in Kenneth Norrie and L.S. Wilson, "On Re-balancing Canadian Fiscal Federalism," in Lazar (ed.), State of the Federation, 79-98.

26

Hobson and St. Hilaire, "The Evolution of Federal-Provincial Fiscal Arrangements," 160.

27

Thomas Courchene, "Hourglass Federalism—How the Feds Got the Provinces to Run Out of Money in a Decade of Liberal Budgets," Policy Options (April 2004).

28

Tom Mclntosh, "Charade: Federal Social Spending and the Myth of Collaborative Federalism," in Constructing Tomorrow's Federalism (Regina: Saskatchewan Institute of Public Policy and Centre for Research and Information on Canada, 2004), 27.

29

The data for provincial government spending, taxing, deficit/surplus and transfer payments was taken from CANSIM II table 3850002, entitled "Federal and Provincial General Government Revenue and Expenditure, for Fiscal Year Ending March 31." The data for provincial GDP was taken from CANSIM II table 3840001, entitled "Gross Domestic Product (Income Based)." Within this table, I used the measurements of GDP at market prices. Since GDP is measured January to December and government expenditures and revenues are measured from March to March, I have used the GDP year that represents the greatest portion of the fiscal year examined. For example, government revenue and expenditure for the fiscal year of 31 March 1988 to 31 March 1989 was calculated as a percentage of the GDP of January 1988 to December 1988.

Federalism and the Reform of Central Institutions: Dealing with Asymmetry and the Democratic Deficit Gerald Baier and Herman Bakvis n addressing the topic of federalism and reform of central institutions, our paper focusses on the subtheme of "new routes to effective governance." In promoting the reform of the federal elements of Canada's central institutions, most people have in mind two kinds of reforms: first, the introduction of some variant of "intrastate federalism,"1 namely institutions and mechanisms that would bring the direct representation of provincial/regional interests into institutions such as the House of Commons, Senate, the bureaucracy, and judiciary. Proponents argue that having local, regional, and provincial interests, however defined, directly represented in central institutions will make for a less conflictual and more collaborative federalism. The reduction in conflict would be accomplished by reducing the need for direct interactions between federal and provincial governments. The second type of proposed reform is aimed at the democratic deficit in intergovernmental relations.2 Canadian executive federalism, the dominant mode of intergovernmental interaction, is seen as closed, elitist, unrepresentative, and inaccessible to ordinary citizens and groups. Whether through reforms that would open up the intergovernmental process, or changes in federal and provincial legislatures that would subject federal-provincial agreements to legislative review and oversight, it is felt that change is necessary in order to bring the practices of intergovernmental relations in line with modern democratic expectations.

90

CONSTRUCTING TOMORROW'S FEDERALISM

We see our task as one of charting the terrain that any new routes towards

some new form of intrastate federalism will need to traverse. We identify two such terrains, or dilemmas, as we label them here: asymmetrical federalism and the democratic deficit. These dilemmas arise in both executive federalism and the federal Parliament. We discuss how both practices in, and pressures emanating from, these two concerns will shape, or be confounded by, reforms of central institutions and with what consequences. By central institutions, we have in mind primarily the House of Commons, but also the Senate, the Cabinet, and the public service. By reforms, we have in mind both formal and informal changes. The adoption of a new electoral system for the House of Commons is one such formal reform; an elected Senate is another; while procedural rules governing party discipline and the role of committees in the House of Commons would be examples of more informal changes. We will argue that, while some reforms may reduce the democratic deficit in federalism or enhance the potential for asymmetrical federalism, the opposite is also a distinct possibility. We begin by providing a brief overview of the two core concepts. In the case of asymmetrical federalism, which addresses primarily, though not exclusively, Quebec's unique position in confederation, we focus on current formulations, drawing mostly on Roger Gibbins's concept of "9-1-1" federalism3 and Alain Noel's notion of "federalism with a footnote."4 With respect to the democratic deficit, we review the recent debate on this topic as well as some of the work on the European Union, where the term originated. In our paper we suggest that opportunities for incorporating and formalizing asymmetrical federalism into central institutions are limited, and efforts to do so highly problematic. Essentially, the current asymmetrical features of Canadian federalism are largely in the realm of convention and informal practice—many of them reflecting traditional forms of elite accommodation—and are difficult to institutionalize. On the other hand, dealing with the democratic deficit in executive federalism by focussing on elected legislatures is more productive than focussing on executive federalism per se. At the same time, reforms, such as giving legislatures and individual legislators more power, may undermine informal asymmetrical practices and increase federal-provincial conflict over jurisdictional issues. This conflict is likely to come about because of increased pressure and desire on the part of federal Members of Parliament

FEDERALISM AND THE REFORM OF CENTRAL INSTITUTIONS 91

to use the leverage and scope of the federal spending power beyond its current and already broad limits. This is likely to happen even as the current prime minister disavows any new use of the federal spending power.5 By making the federal government less executive-centric, such reforms may enhance Ottawa's legitimacy while at the same time constraining the capacity of the executive to negotiate with their provincial counterparts. However, drawing on Robert Putnam's theory of two-level games,6 we suggest that such changes may alter the practice of executive federalism, perhaps even unintentionally helping a prime minister to increase his or her negotiating power vis-a-vis the provinces. In discussing the problems associated with the two dilemmas, it is not our intention to argue that reform of central institutions is impossible or undesirable. We will argue, however, that reforms will have to be limited and strategic. Reform of the electoral system for the House of Commons or the transition to an elected (but not necessarily "equal") Senate might be the best means of protecting important elements of Quebec's unique identity, while at the same time improving the transparency of, and democratic control over, the processes of executive federalism.

Asymmetrical Federalism The asymmetrical character of Canadian federalism has long been recognized, either as a fact of French-English duality,7 or endorsed as the way to retain a "two-nations" vision of Canada that preserves the unique linguistic and cultural character of Quebec. While analysts such as David Milne have pointed out that all provinces differ in terms of population and economic well-being, as well as in cultural, legal, or political characteristics,8 the term "asymmetry" is generally thought to apply to Quebec's position in Confederation. The issue of making provision for Quebec's unique position in the constitution, or even simply referring to that fact, was a major preoccupation during debates about both the Meech Lake and Charlottetown accords. Furthermore, it was in the Charlottetown Accord that a provision was made to freeze Quebec's proportion of seats in the House of Commons at 25 percent, regardless of future declines in Quebec's population, as a way of giving special protection to Quebec's position in that body.

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Subsequent to the failure of the Charlottetown Accord, no efforts have been made to revive discussion on the constitution, let alone specific provisions for recognizing Quebec's unique position. Nonetheless, Quebec's asymmetry has continued to evolve, and has done so in a manner that suggests that the gap between de facto and de jure asymmetry continues to widen.9 That is, on a de facto basis, Quebec continues to assert its unique identity, which is in turn reflected in a variety of political arrangements, but not in formal constitutional terms. Equally important, both Ottawa and the other provinces have tacitly and, to a degree, actively accepted this state of affairs. Roger Gibbins10 and Alain Noel11 differ as to whether these recent developments are positive or negative, but they both point to the triangular relationship among Ottawa, Quebec, and the remaining provinces and territories, especially since the Social Union Framework Agreement (SUFA) of 1999. According to Gibbins, since the Quebec referendum of 1995, "Jean Chretien has fundamentally re-written Quebec's relationship with the rest of Canada, and he has done so in line with longstanding nationalist ideologies in Quebec."12 He cites the'lending" of Parliaments veto over constitutional change to Quebec so that now no constitutional change can take place without Quebec's consent. In addition, the Calgary declaration of 1997 provided "muted" support of Quebec's distinctiveness by the provincial and territorial leaders. The key development, however, is SUFA, which more than anything else affirms what Gibbins refers to as "9-1-1 federalism": Ottawa and the other provinces, minus Quebec, reach agreement on the matters at issue; then Ottawa reaches a separate agreement or understanding with Quebec as to which aspects of this federal-provincial agreement would be harmonized or be applicable to that province, although there is no obligation or financial penalties to encourage Quebec to participate or alter its programs. In the case of SUFA, Gibbins notes that for Quebec, it would have been pointless, even counterproductive, to sign on to the agreement.13 Alain Noel is much less sanguine about Quebec's position in confederation in light of recent developments such as SUFA. His reference to "collaborative federalism—with a footnote" underscores his view that Quebec has effectively become marginalized under current practices. Indeed, he also feels that S UFA is likely to undermine provincial autonomy as a whole. He notes, for example,

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that Ottawa, relying on the federal spending power, is now more "likely to promote income and tax-based policies aimed at individuals ... at the expense of community-based and service-oriented options."14 In brief, Noel feels that, yes, Quebec is treated differently under the current federalism regime, but as a footnote, not with elevated special status. The 2004 health care accord was a departure from the 9-1-1 pattern, as the Government of Quebec was an active participant from the beginning of the process. The result, however, is consistent with the pattern. The accord is accompanied by an appendix or codicil recognizing the principle of asymmetry and the exclusion of Quebec from the collective monitoring of the goals and standards laid out in the accord, while at the same time committing the Quebec government to support of those goals. The net effect of the codicil, as in S UFA, is an expression of general support for the goals of the overall accord, but with the added assertion of the Government of Quebec's autonomy and intention to set all specific standards and measurements on its own. Both 9-1-1 and footnote federalism are perhaps a little more nuanced than Gibbins and Noel make them out to be. Again, referring to SI/FA, the initial discussions were orchestrated by, and restricted to, the provinces themselves in the aftermath of Ottawa's launching of program review in the mid-1990s. Quebec was a major participant in these discussions. It was only at a late stage that Quebec, sensing that some of, or perhaps even all, the other provinces were willing to compromise on issues like spending power, struck off on its own, leaving the remaining nine provinces to negotiate a deal with Ottawa. Thus, as a process, it appears the initial pattern is 10-1 federalism that at a certain point morphs into a more triangular 9-1-1 structure. Furthermore, in the initial stage involving all ten provinces, there are a number of dynamics in play, with Quebec and Alberta in particular working together to push the envelope with respect to proposals that radically restrict Ottawa's use of spending power, for example. Some of these same dynamics may be at work currently in the new Council of the Federation, again with Quebec and Alberta leading the way. At a certain point, a number of the provinces receiving equalization may become reluctant, fearing a reduction in federal transfer payments, at which point Quebec may decide once more to go it alone.

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Another point worth noting are the informal or unstated customs underpinning 9-1-1/footnote federalism, norms that can be construed as reflective of an older model of elite accommodation. This model, also referred to as'consociational democracy," is based on the notion that elites from opposing factions or groups in society are capable of reaching accommodation in the face of dissensus at the societal level.15 In other words, contrary to the wishes or sentiments of their own followers, leaders will strike agreements, often quietly, in order to preserve the overall stability of the system. It has been argued by a number of analysts that, at least until about thirty years ago, elite accommodation was crucial both in the striking of the original confederation package and in maintaining the stability of the federation over time.16 It has been further argued that these consociational practices began to break down in the 1960s when certain elites, those from Quebec in particular, were no longer willing to reach accommodation and when, with the increasing scrutiny from the mass media and a more perceptive and critical citizen body, it became increasingly difficult for elites to strike deals in secret or to arrive at mutually acceptable bargains that later would have to be sold to their respective citizen bodies. Certainly the experiences of Meech Lake and, especially, Charlottetown, where elites conceded to a direct referendum process for the ratification, seemed to suggest an end to elite accommodation in Canada. Once citizens had experienced the elixir of direct democracy, there appeared to be no way that executive federalism could ever revert to its secretive ways.17 Yet S UFA suggests in a number of ways that elite accommodation is still alive. Not only was there no referendum to conclude the process, but also a number of the actors, primarily First Nations representatives who were at the table during Charlottetown, were notably absent from negotiations on the document. Public interest groups, such as the Council of Canadians, had very little leverage in the process. In contrast, the 1997 Calgary Declaration, limited, to be sure, in its support of special status for Quebec, nonetheless provided some support for Quebec's position. At that time, nine premiers were willing to make a gesture of conciliation to Quebec, even with a Parti Quebecois government in power. There was also tacit acceptance by both Ottawa and the other provinces of an agreement to disagree over principles, without Quebec's being financially disadvantaged (leaving aside for the moment the longer term implications

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sketched by Noel, among others). All in all, there is evidence that elements of traditional executive federalism, that is, elite accommodation, are still in place, helping to maintain perhaps not the stability but certainly the functioning of the federation. Evidence of this quiet form of elite accommodation can be found in other areas. In 1991 David Milne proposed "concurrency with provincial paramountcy" (CPP) as a way of finessing the demand that Quebec be given the opportunity to assert its unique identity in a variety of policy fields.18 The existence of separate Canada and Quebec pension plans was seen as a useful template to be applied to other areas. The assumption was that Quebec would be the province making primary use of this feature, but that it would be open to all provinces in theory. This feature was never constitutionalized, but Ottawa and the provinces have nonetheless behaved as if it were. The creation of separate Canadian and Quebec agencies for managing Canada's blood supply can be seen as among the more recent examples of the acceptance of Quebec's distinctiveness, albeit again at a de facto level. Quebec's distinct parental benefits regime also appears to fall in this category, though the province has (unsuccessfully) challenged the federal role in this field.19 The current structure and dynamics of asymmetrical federalism as sketched above apply mainly to the federal-provincial arena—meetings of First Ministers and the like. Given the interstate nature of Canadian federalism, central institutions are less critical, but not unimportant, to the working of asymmetrical federalism. The Quebec fact is reflected in the bilingual character of Parliament and the public service. In the latter case, bilingualism has been mainly a function of the Official Languages Act. The intention of the act has been to ensure the representation of Canada's two official languages, not Quebec or the two groups as linguistic or distinct cultural communities. As McRoberts has argued, under Trudeau the aim of the legislation was to reduce Quebec's claim to being the primary guardian and progenitor of the French language in Canada, not to enhance Quebec's position in the federation.20 Quebec's unique legal system—that is, its civil code—is reflected in federal legislation requiring that at least three of the nine Supreme Court justices be appointed from Quebec. It is in three bodies, however—Cabinet, the House of Commons, and the Senate—where the intrastate element would be most important. David Smith

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notes that the Senate was originally envisioned "as part of the protective armament awarded French-speaking Canadians living in what was to become Quebec in exchange for acceptance of the federal union."21 However, even prior to Confederation, it was evident that the Senate would never serve the function of representing regional or provincial interests directly in Parliament, primarily by virtue of the appointing power being exercised directly by Ottawa. Neither has it served the purpose of providing additional leverage to Quebec, even with representation skewed in its favour, again because of the Senates overall ineffectiveness. Instead, as Christopher Dunkin pointed out back in 1865, "the Cabinet here must discharge all that kind of function, which in the United States is performed, in the Federal sense, by the Senate."22 Thus, beginning in 1867, more by default than anything else, regional representation has been a significant feature of the Canadian Cabinet. And, within the context of regional representation, the figure who has largely stood out above the rest was the prime minister's Quebec lieutenant. Ranging from George-Etienne Carrier to Ernest Lapointe to Marc Lalonde to Alfonso Gagliano, these figures have performed the function of Quebec representation in different ways. Prime Minister Harper acknowledged both the importance of the role and the need for it to be held by a trusted hand in the appointment of his unelected campaign strategist in Quebec, Michael Fortier, whom he first had to appoint as a Senator. At times Quebec lieutenants have significantly shaped federal policy vis-a-vis Quebec, as well as serving the cause of elite accommodation. In more recent times, their role has been focussed almost exclusively on managing the party machine and the patronage network associated with it, at the expense of the broader representational function. With respect to both representation and accommodation, these functions have been performed within Cabinet, where the normal rules of confidentiality apply. While the Quebec lieutenant also has a very public role, it is within the confines of Cabinet or dealings with the prime minister that understandings are reached on matters affecting Quebec. The House of Commons also provides scope for the representation of regional interests. There are two dimensions here: the electoral system, that is, the manner in which votes are translated into seats in the different regions, and the parliamentary parties. The two are linked in the sense that the electoral

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system can skew regional representation within both government and opposition parliamentary parties. Thus, while the Liberals received 51.5 percent of the vote in Ontario, reaping them 100 of the 103 available seats, this result meant that the 48.5 percent of Ontario voters who cast ballots for other parties were effectively left unrepresented within the opposition parties. The distortions resulting from Canada's single-member plurality electoral system (SMP) are well known. In the case of Quebec, it has been noted that voters in that province have traditionally been more cohesive in their voting, that is, to engage in block voting and, further, to do so in support of the government party,23 with the result that, historically, Quebec has tended to be overrepresented in the governing party. At times that overrepresentation has meant that MPs from Quebec constituted over 50 percent of the government caucus, as happened in the 1980 election. The combination of ultimate seat outcomes and the dynamics associated with vote swings means that relatively small shifts in the overall vote in a province can spell a major shift in seats. The potential for these kinds of shifts creates incentives for parties to pour more resources, and make stronger commitments, in the affected regions. Overall, while critics of SMP have often decried the distorting effects of SMP, it can be argued that the electoral system provides increased leverage in the national political system for Quebec citizens. That is,"SMP allows a regionally concentrated minority ample means to send to the legislature a block of representatives having a distinct and well-defined point of view and to have that block more likely than not play a decisive role in central government decision-making."24 Within the parliamentary parties, and particularly the government party, it has been argued that Quebec has been well represented. Bakvis and Macpherson argue this is the case, not only in terms of numbers but also in how Quebec MPs have used this numerical overrepresentation:"Historically, it has been the independent character of the Quebec contingent within the governing party, coupled with a capacity for organization and cohesion, adept use of parliamentary institutions and linkages with key Quebec ministers in Cabinet, that has allowed Quebec representatives to be more influential over government policies than their numbers alone would suggest."25 To summarize at this point, asymmetrical federalism is alive and well, though the gap between de facto and de jure asymmetry is growing. The notion

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of 9-1-1 or footnote federalism may still capture the current state of the relationship among Quebec, Ottawa, and the other provinces quite well, although there are likely more subtleties underpinning these relationships than meets the eye; and one of these subtleties relates to the continuing importance of elite accommodation in providing at least tacit support for this form of federalism conferring a unique status on Quebec. While the "open federalism" of Prime Minister Harper is still reasonably unspecified, the signing of an agreement to allow Quebec direct representation in UNESCO certainly meets the definition of asymmetry. There is continuing evidence of the role of certain central institutions, namely Cabinet and the parliamentary parties, in the accommodation and promotion of Quebec interests. The SMP electoral system appears to be a critical component in this. Western Canadian observers might even object to the effectiveness of these mechanisms as unduly distorting Quebec's power in the federation and diminishing perspectives from Alberta or British Columbia, even when the governing party has a strong share of MPs from those provinces. The point to be made at this stage is that all these elements are at risk, should serious reforms of Parliament and Cabinet be undertaken.

Federalism and the Democratic Deficit To the extent that the concept of a "democratic deficit" has been articulated in Canada, it has usually been used to refer to some fundamental disconnect between electors and the elected. A first-past-the-post electoral system, limited party choice at election time, strong party discipline in the legislatures, the relative insignificance of representative institutions like Parliament or, more specifically, the inability of backbench Members of Parliament to contribute meaningfully to governing, are the symptoms usually cited as evidence of the democratic deficit. Globe and Mail columnist Jeffrey Simpson has identified all these structural variables as leading to, in the words of his most recent book's title, a Friendly Dictatorship.26 Former Prime Minister Martin, in an effort to distance himself from the prior Liberal regime, pledged publicly to introduce incremental parliamentary reforms to address at least some of these concerns. Electoral reform is not presently a part of this agenda, but is being considered with varying levels of enthusiasm and commitment in some of the provinces. The democratic deficit, as it is presented to the general public, at least, is understood as a problem of political parties, elections, or of Parliament and its operation.

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Donald Savoie has been a leading chronicler of this general phenomenon, and presents a nuanced account of where the problem lies. His core thesis is that central Cabinet agencies such as the Privy Council Office and the Prime Minister's Office, all of which are dominated by the prime minister, have in turn captured the policy-making apparatus of the Canadian state. Party discipline is the major culprit, relegating the Cabinet and Parliament to the status of observers, rubber-stamping the decisions of the centre made up of the prime minister and his closest advisors, along with politicised senior civil servants.27 Given the faithful replication of the Canadian version of the Westminster model at the provincial level, the centralization found in the federal government generally holds in provincial capitals as well. With the potential for oneparty dominance at the provincial level, the phenomenon has arguably even been worse in the provinces. To the extent that federalism enters Savoie's analysis, it is presented as one of the few checks on the power of the centre. Within provincial governments, strong executives preside over substantial jurisdictional concerns, such as health care and education, effectively operating as one of the few checks on the ability of the prime minister and the centre of the federal government to do as they please. In other words, the extent of the democratic deficit at the federal level is contingent upon the scope of the federal government's activities. Given the relative decentralization of the Canadian federal systern, federal institutions are only responsible for a share of the Canadian state's activities. Likewise, the multitude of agreements, contacts, and negotiations going on between federal line departments and their provincial counterparts often leaves the "centre" in the dark. According to Savoie, the Privy Council Office recognizes that it has less of a handle on federal-provincial relations than it might like. Day-to-day relations with the provinces are left to the departments; the centre micromanages federalism issues only when they reach crisis proportions or become the focus of intense media scrutiny.28 Federalism is, however, a two-headed beast in Savoie's account. The ease with which the prime minister and premiers can discuss matters and shift policy directions is a further illustration of the power of the centre. Savoie provides numerous illustrations of prime ministers and premiers reaching informal agreements over the telephone, on the golf course, or in government

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jets during foreign trade missions. As an illustration of the power of the centre, once those kinds of agreements have been reached, the machinery of government is generally charged with making things happen. If the prime minister and a premier agree to new funding for highways, the Treasury Board will be charged with making it so, and Parliament and the Cabinet have little role in the decision making. The dominance of the prime minister as the ultimate spokesperson in intergovernmental relations concentrates power in the office, even if federalism is at times a check on the monopoly of power that the centre seeks within the federal government. Despite this limited recognition of the role of federalism in the overall democratic deficit, our earlier point still holds. In the popular imagination, the democratic deficit is not generally associated with federalism. The institutions of federalism and intergovernmental relations have largely escaped the kind of popular scrutiny to which Parliament and political parties have been subjected, with only occasional exceptions. While political scientists and other observers have long lamented the sorry state of democratic norms in the institutions of intergovernmental relations, the present public debate on the democratic deficit has failed to direct much of its attention to the institutions and processes of federalism, and its practitioners probably could not be happier. Intergovernmental relations in Canada remain dominated by executive federalism. Donald Smiley, who all but invented the term, was relentlessly critical of executive federalism's unrepresentativeness, the low level of citizen participation it promoted, and the preference of actors for secretive meetings and negotiations. Those features tended to keep the agenda of executive federalism focussed on the immediate concerns of governments, rather than publics, and decrease the transparency of decision making. Even with the Social Union Framework Agreement's (SUFA) pledge to increase transparency and accountability, the norm in most intergovernmental relations has been to operate under the radar of even the attentive public. Executive federalism has grown substantially over the years and has even institutionalized itself in particular sectors. There are standing councils of ministers in many of the most important intergovernmental sectors and the premiers meet regularly as a group and in regional subgroups. Officials and senior public servants also meet regularly and conduct much of the coordinating and collaborating functions necessary to manage the

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overlap of jurisdiction and programs that are a defining characteristic of the Canadian welfare state. While there is now evidence that, in at least some intergovernmental sectors, broader consultations with stakeholders take place,29 the decision-making apparatus of executive federalism still clearly favours governmental actors. The renovated annual premiers' conference, now named the Council of the Federation, has done little to change the monopoly on discretionary power held by the premiers. Richard Simeon and David Cameron have continued in the Smiley tradition to alert us to the democratic deficit that appears to be an ingrained feature of executive federalism.30 While they acknowledge that much has changed about the shape of intergovernmental relations since Smiley's time, little has changed in a democratic sense. Intergovernmental relations, in their view, have moved past the cooperative phase into one of collaboration where governments jointly set policy goals and make the arrangements necessary for their implementation. While this transformation has some advantages for the provinces, as it puts them on a more equal footing with the federal government, for one, it does little to change the democratic pedigree of the process. Simeon and Cameron point to the increasing opaqueness of intergovernmental fiscal arrangements and the lack of opportunities for citizens to engage the intergovernmental policy-making machinery as evidence for this continuing deficit.31 The terminology of fiscal arrangements, not to mention their complexity, makes it difficult for voters to know who to blame when they think important sectors like health care or post-secondary education are underfunded.32 Individual governments can always be held accountable at the ballot box, but citizens have no way to keep the intergovernmental system accountable. The preference of collaborative federalism for non-constitutional changes and informal agreements further weakens opportunities for even indirect citizen efforts to call governments to account. Efforts to renew the federation in the post-Charlottetown Accord era have focussed on staying away from the quagmire of constitutional change. Collaborative federalism finds its expression in communiques and ambiguous promises to do things differently, but with little or no change to existing jurisdiction or legislation. This has meant that legal guarantees and procedures are a less viable option for governments hoping to keep each other accountable for their agreements or for citizens to

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patrol the intergovernmental consensus.33 The Agreement on Internal Trade, which came into effect in the summer of 1995 and in many respects is the paradigmatic accomplishment of collaborative federalism, provides little in the way of formal procedures for governments to ensure their compliance and puts up considerable hurdles to enforcement by individuals.34 Simeon and Cameron are not without optimism. Even if commitments to greater transparency and accountability are presently just lip service, such promises have a way of coming back to haunt governments. The SUFA's requirement for a comprehensive evaluation brings some accountability into the collaborative process. In addition, in some sectors the infrastructure of intergovernmental collaboration has certainly provided greater opportunity for citizen access via roundtables and consultations. Once the door is opened on such kinds of input, it would seem difficult for governments to go back to nonconsultative processes. Simeon and Cameron also point to the potential of a greater legislative role in patrolling intergovernmental relations as a source of some hope for dealing with the democratic deficit. Whether parliamentary reforms of the type currently being contemplated might realize that potential is discussed after a reconsideration of asymmetry in the context of parliamentary reform.

Asymmetry and Parliamentary Reform In most discussions of asymmetry and constitutional and institutional reform, little attention is paid to central institutions. The most comprehensive analysis of the topic by David Milne35 lists representation in second chambers, restrictions on representation in Parliament generally, and special voting rules as the sorts of things that can be done to incorporate asymmetry into central institutions. Overrepresentation relative to population or equal representation of seats with differences in the population of units will both result in asymmetry in a second chamber. Currently, in the Canadian Senate, Quebec is overrepresented relative to Ontario and the West. A new Senate with "equal representation" would see this "positive" asymmetry altered to a negative asymmetry, with much reduced representation. At times, special voting rules have been proposed where, for example, Quebec senators would have veto power on matters regarding language or other matters of importance to Quebec. The most recent

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example of a constitutional proposal to incorporate asymmetry into central institutions was in the Charlottetown Accord, with the guarantee that Quebec would always have 25 percent of seats in the House of Commons regardless of population in the future. At the time, it was seen as a,way of compensating Quebec for the loss of influence in an equal and reformed Senate. It was not generally seen as one of the stronger features of the accord, even within Quebec. The other examples of asymmetry cited by Milne in connection with central institutions are in the realm of federal policies and programs: regional economic development programs that benefit only certain regions, variable shared-cost financing, and the Atlantic accords on the offshore oil and gas resource revenues. These are similar to what Milne terms constitutional asymmetry in practice. In thinking of formal institutional and/or constitutional changes that would incorporate more explicitly the Quebec fact into central institutions, one is confronted by the broader dilemma: outside of Quebec, there is very limited support for constitutional asymmetry of any kind. At the same time, there likely is broad-based support for intrastate arrangements, such as an elected Senate. Support also seems to be growing for changes to the electoral system, as a way of improving representation, though not necessarily territorially based representation. Given the current political climate, there appears to be ample support for House of Commons reforms that would increase the power of MPs vis-a-vis the executive. The question then becomes what is the likely impact of such reforms on asymmetry as it presently exists. In dealing with this question, it might be best to start at the point where asymmetry is practised—more specifically, the arenas where Quebec has clout. Cabinet is where, historically, most of Quebec's influence has been exercised, followed by the government caucus and, within that caucus, the Quebec caucus. Reforms to the way that parliamentary bodies work stand to affect this form of representation. First, in the case of Senate reform, any changes in the direction of "equal" representation, or even bringing representation from western Canada in line with the remaining provinces, will lead to numerically less representation in that body. More critical is whether a reformed Senate would be an elected body and, if it was elected, what powers it would possess. It is generally thought that a new elected Senate would have powers that are more restrictive than the wide (but essentially unused) legislative powers granted the current body.

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Nonetheless, the legitimacy that would be accorded any elected Senate would make it very difficult for a government to bypass or ignore. A further question concerns whether senators would be allowed to hold ministerial portfolios and enter Cabinet, Under the Australian model (and the model recommended by the Macdonald Commission in 1985) they would; under the old Triple-E Senate proposal they would not. If senators are seen as legitimate, elected representatives of the regions but are precluded from sitting in the Cabinet, this could well lead to the erosion of Cabinet authority and the diminution of regional ministers. The Canadian Senate, would, in effect, become more like its US counterpart. Enhanced regional representation in the Senate would come at the expense of regional representation in Cabinet. Given the fact that any reformed and elected Senate will see reduced numerical representation from Quebec, an argument could be made that Quebec's unique representation within Cabinet will likely come under pressure. This representation is also likely to come under pressure from other sources. As the Harper government continues to contemplate parliamentary reforms such as reduced party discipline and a greater role for parliamentary committees, including the vetting of prime ministerial appointments, it may become more difficult for the government caucus to quietly reach behind-the-scenes accommodation on issues crucial to Quebec. The Quebec caucus, generally much better organized and cohesive than other regional caucuses, was able in the past to operate in that fashion largely because of the practice and traditions of caucus secrecy and party discipline.36 The weakening of party discipline and the subsequent erosion of caucus secrecy and unity that may accompany parliamentary reform will make it more difficult for any Quebec caucus to behave in a cohesive manner and for the overall caucus to engage in the kind of accommodative behaviour vis-a-vis Quebec that characterized both the Trudeau and Mulroney periods. Increased transparency brings the quiet, national-unity compromises of the past out of the dark and into the brighter glare of public scrutiny. Whether those accommodations can survive that level of public attention, is unclear.

FEDERALISM AND THE REFORM OF CENTRAL INSTITUTIONS

One of the more significant influences on the Quebec caucus has been its relative size, which was a function of the delivery of Quebec seats to the governing party through block voting. Over the past decade, Ontario has been the primary beneficiary of the SMP's propensity to magnify the number of seats of the party with the largest vote share, particularly when voting support approaches 50 percent. Even in the current Harper minority, in which government MPs from Quebec are relatively rare, Quebec is overrepresented in Cabinet. Proportional representation, or some variation thereof, would likely see a diminution in the number of Quebec seats aligned behind a single party and greater diversity in views—and parties—represented from that province. Such a state of affairs would likely have its benefits, but it could also reduce the capacity of Quebec to speak with a single voice and reduce the potential for the government's Quebec caucus to exercise influence in the way it did under Trudeau and Mulroney and earlier. There does not seem much that can realistically be done to enhance or institutionalize asymmetry in central institutions. Reforms to the Senate will likely move that body away from any asymmetrical representation and in the direction of affirming provincial equality.37 The more meaningful asymmetrical features that do exist in Cabinet and in caucus are dependent on practice and tradition, not law. They are also dependent on the traditional norms of Cabinet and caucus secrecy and the availability of hierarchical command and control systems as exemplified by the tool of party discipline. These norms are coming increasingly under attack. Within Cabinet and caucus, and in the arena of executive federalism, the erosion of these norms make the practice of elite accommodation more difficult. To be sure, elite accommodation is perhaps not as critical to federalism and the acceptance of de facto special status as it was forty years ago, but we would argue it is still relevant to a degree and helps explain the acceptance of 9-1-I/footnote federalism by present-day political elites.

Federalism, the Democratic Deficit, and Parliamentary Reform Evaluation of recently proposed parliamentary reforms has focussed on how well the reforms will live up to the promise of repairing Parliament's democratic deficit.38 Little comment has focussed on what kind of change to the dynamics of federalism will result if parliamentarians start to exercise a more

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powerful role* Parliamentarians' increased involvement in the approval of appointments to the judiciary and to boards and commissions is unlikely to have any substantial effect on intergovernmental machinery. However, if party discipline is relaxed in the House and if committees start to play a more public and meaningful role in managing the trade- offs of the legislative process, the dynamics of federalism may certainly change. On the surface, electoral and legislative reforms at both the federal and provincial levels would seem to spell worry for the comfortable practitioners of executive federalism. The confident assurance that the handiwork of executive federalism and First Ministers' meetings will receive obedient legislative assent will certainly wither. Without compliant, disciplined legislators to follow the lead of First Ministers and their cabinets, intergovernmental bargaining will certainly become more complicated. Reforms to Parliament's legislative processes will increase the scrutiny applied to intergovernmental relations. Simeon and Cameron have suggested the need to renew "legislative federalism" by increasing the opportunities for legislators to review the products of executive bargaining.39 They also conceive of legislative federalism as providing the opportunity for legislators from multiple jurisdictions to get together to share ideas and experiences. The National Conference of State Legislatures in the United States provides numerous opportunities for legislators to learn from each other's experiences and research when drafting and debating new public policies. The Government of Ontario (not individual MPs) has, in fact, been a dues-paying member of the conference, with access to its policy databases and officials attending its regular meetings, A similar Canadian organization might be conceived, should provincial legislators find themselves with greater ability to initiate or influence public policy through the legislative process. Greater legislative oversight of intergovernmental compromises through a designated committee on intergovernmental relations or on a sector-by-sector basis by standing committees would do a great deal to pull back some of the veil that presently shrouds executive federalism. Ministers and officials having to win the support of legislators who have had the opportunity to become more acclimatized to the language and landscape of the relevant intergovernmental infrastructure in any particular field may find themselves working harder to secure the support of their federal colleagues than the support of their

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provincial counterparts. Conceivably, legislators could take on regional or provincial advocacy roles, attempting to ensure that intergovernmental compromises are good for their riding, province, or region of the country. Provincial executives, who have so long monopolized the role of provincial representation, might find themselves competing for the hearts and minds of provincial constituencies with articulate parliamentarians who see a career for themselves as regional champions. David Docherty's surveys of Members of Parliament in 1993 and 1996 shows that MPs (particularly new MPs) already rank high among their duties "protecting the interests of their constituency" when decisions are made in Ottawa. This is despite the public's belief that helping individuals in the constituency should be an MPs first duty.40 Research on the European Parliament and the attitudes of Members of the European Parliament (MEPs) toward their representative roles gives some indication of how a more empowered federal legislature in Canada might operate. The "democratic deficit" as a term actually comes from the European context. The kinds of compromises and policy making common to executive federalism have been occurring at the European level since the 1950s, with only a slow development of representative democratic institutions at the union-wide level. However, as the European Unions institutions continue to expand and evolve, the European Parliament is increasingly seen as a federal legislature.41 Given the heated debate concerning European representation and the still controversial status of moves toward greater union, one would assume that MEPs take their national representational role seriously. Alternatively, given that running for the European Parliament already implies some support for the cause of union, MEPs might be inclined to be excessively centrist, won over to some form of "Eurothink." Considerable research has been done on the role orientations of MEPs that might give us some clues as to how a more invigorated Canadian Parliament might approach the federal representative roles. Roger Scully has challenged the notion that MEPs "go native" upon being elected to the transnational body. Being elected an MEP, he claims, does little to push individuals into a pro-integrationist (in federal terms, centralist) position. More important, he finds, is the context of the national politics out of which candidates and candidates' party programs emerge. The practical consequence of his finding, he argues, is that the European Parliament is less a tool

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for socialization than conventional wisdom would have it. Scully writes, "The strongly pro-integration position of the European Parliament could, in time, come to be seen not as something that is inevitable and unchanging but as the rather conditional consequence of essentially domestic political factors."42 Further research by Scully suggests that MEPs believe they have "important responsibilities towards multiple constituencies'" and that individual perceptions of roles are as important as any contextual (i.e., domestic or partisan) or institutional variables in shaping the approach that an MEP takes toward their representative function.43 Thus there is no guarantee that parliamentarians will take on an exclusively "national" persona. Apart from oversight, parliamentary reform in Canada promises greater opportunities for individual MPs to initiate legislation and public policy. The zeal of legislators to do so should not be underestimated. The literature on Canadian federalism has long cautioned us to remember that elected politicians will not take long to fill the roles offered to them by institutional rules and incentives. Alan Cairns s classic piece, "The Governments and Societies of Canadian Federalism," put forth the assertion that governments with jurisdictional room would soon begin the work of province building.44 A similar logic could be applied to newly empowered MPs. With the opportunity to have greater input into public policy, MPs are unlikely to carefully assess the niceties of the federal-provincial jurisdictional map before proceeding. The American Congress is an instructive example here. Once set free from the restrictions on federal legislative activity imposed by the Supreme Court in the early days of the Roosevelt New Deal, Congress embarked upon an ambitious program of legislation with very few concessions to constitutional jurisdiction. The commerce power provided the camouflage necessary for Congress to enter into fields as varied as gun control in public schools and the regulation of labour in municipal transit authorities. The federal spending power, long a controversial tool in Canadian intergovernmental relations, might become even more of a concern in a more democratized Canadian Parliament. It would seem to provide sufficient justification for MPs to legislate in areas long considered provincial responsibility.

FEDERALISM AND THE REFORM OF CENTRAL INSTITUTIONS

Conclusion In conceptualizing reform of central institutions with the view to rendering them more consistent with federal principles, or with the objective of improving the state of the Canadian federation, proponents usually have two types of reforms in mind: the first, some kind of intrastate solution that would see more direct regional or provincial representation in central institutions; and, the second, reforms that would make executive federalism more democratic—both more accessible and more accountable. In contemplating such reforms, however, there are two issues that must be taken into account: the asymmetrical nature of Canadian federalism, centred principally around Quebec's unique position; and the putative democratic deficit, which applies not just to executive federalism but also to parliamentary institutions. With respect to asymmetrical federalism, we make two points. First, there is very little public appetite, certainly outside Quebec, for formalizing or building asymmetrical features into institutions. Those asymmetrical features that currently exist, such as in Cabinet and the government parliamentary caucus, are largely based on practice, not law, constitutional or otherwise. Second, existing proposals for enhancing intrastate federalism, such as a Triple E Senate, tend to be premised on provincial equality, not asymmetry. With respect to reforms of Parliament, in many ways these are consistent with rendering federalism more democratic. Improving legislative oversight and increasing the number and sources of countervailing powers to act as a check, at least on the federal executive in its relations with the provinces, would improve matters both from an accountability perspective and from the perspective of reforming federalism from the outside in. It should also be noted that some of the more popular intrastate reforms, such as a Triple-E Senate, featuring popular election as a basis for senatorial selection, are also consistent with moves to curing the democratic deficit. (In contrast, a Senate composed of provincial government appointees would be inconsistent with current democratic norms; such a proposal, while popular twenty-five years ago, is currently not on the agenda).

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There are a number of implications for Canadian federalism, however, stemming from any number of the proposals for dealing with the democratic deficit within parliamentary bodies. They can be briefly summarized as follows. +

Increasing the emphasis on openness and improved transparency will likely erode some of the remaining, but still crucial, practices associated with elite accommodation, practices underpinning implicit understandings associated with 9-1-1 federalism and Quebec's representation in bodies such as the federal Cabinet.

+

Newly independent and empowered legislators, now less constrained by party discipline, for example, will feel a powerful urge to get involved in provincial jurisdiction, more so than before, relying, in the main, on federal spending power,

*

Such an increased reliance on spending power will increase tension with Quebec, as well as with provincial governments as a whole.

+

+

A more democratic Parliament will also make life more difficult for the prime minister; specifically, parliamentary committees or a recalcitrant caucus may limit the prime minister's capacity to exercise authority and flexibility at First Ministers' conferences, making it more difficult to reach agreements. At the same time, with more democratic central institutions, there is potential for increasing Ottawa's legitimacy, as Canadians identify more readily with Ottawa as the protector and promoter of their interests, as opposed to seeing the national capital as synonymous with ministers and bureaucrats.

*

Increased legitimacy is not a certainty, however.

*

While it is easy to conjure up an image of diligent M Ps using their independence wisely and looking after the interests of constituents and Canadians generally, there is also a potential dark side: ward-heeling, blame avoidance, lack of electoral competition, and lower turnout in Parliament.

+

Gridlock within the House of Commons or between the House and Cabinet may also alienate Canadians or increase their already high levels of disenchantment with politics.

FEDERALISM AND THE REFORM OF CENTRAL INSTITUTIONS

+

Finally, drawing on Putnam's two-level game model, there is a possibility that democratic reforms may actually strengthen the hand of the prime minister vis-a-vis the provinces, primarily by using parliamentary constraints as leverage when bargaining with provincial First Ministers.

The above summary indicates that there are a number of different directions that the reform of central institutions may take Canadian executive federalism. Each of these different outcomes will have different implications for the already shaky legitimacy of executive federalism, but they are also likely to undermine some of its most necessary advantages. By and large, the reforms being contemplated, both intrastate and democratic, in most instances will have a negative impact on asymmetrical federalism. Democratic reforms may lead to increased conflict between Ottawa and the provinces. In the long run, they may enhance Ottawa's legitimacy and thereby strengthen Ottawa's authority. The outcome of any of these reforms is, in turn, contingent on other factors. What our analysis suggests is that those contemplating reform, whether with the view to improving the state of Canadian federalism or simply the nature of democracy in the Canadian Parliament, will have to be strategic in thinking through the implications and choose their reforms very carefully. 1

D.V. Smiley and R.L. Watts, Intrastate Federalism in Canada (Toronto: University of Toronto Press, 1985).

2

R. Simeon and D. Cameron, "Intergovernmental Relations and Democracy," in H. Bakvis and G. Skogstad (eds.), Canadian Federalism: Performance, Effectiveness and Legitimacy (Don Mills: Oxford University Press, 2002).

3

R. Gibbins,"Taking Stock: Canadian Federalism and Its Constitutional Framework," in L. Pal (ed.), How Ottawa Spends, 1999-2000 (Toronto: Oxford University Press, 1999); Roger Gibbins, "Shifting Sands: Exploring the Political Foundations of SUFA," Policy Matters 2 (July 2001).

4

Alain Noel, "Collaborative Federalism—with a Footnote," Policy Options 21 (2000): 44-46; Alain Noel, "Power and Purpose in Intergovernmental Relations," Policy Matters 2 (2001): 1-26.

5

Stephen Harper, "Prime Minister Harper Outlines his Governments Priorities and Open Federalism Approach," speech delivered to the Board of Trade of Metropolitan Montreal, 20 April 2006.

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6

Robert D. Putnam, "Diplomacy and Domestic Politics: The Logic of Two-Level Games"International Organization 41 (1988): 427-60.

7

Edwin R. Black, Divided Loyalties: Canadian Concepts of Federalism (Montreal: McGill-Queens, 1975); D.V. Smiley, The Federal Condition in Canada (Toronto: McGraw-Hill Ryerson, 1987).

8

David Milne, "Equality or Asymmetry: Why Choose?" in R.L. Watts and D.M. Brown (eds.), Options for a New Canada (Toronto: University of Toronto Press, 1991).

9

A. G. Gagnon andj. Garcea, "Quebec and the Pursuit of Special Status," in R. Oiling and M. Westmacott (eds.), Perspectives on Canadian Federalism (Scarborough: Prentice-Hall, 1988).

10

Gibbins, "Taking Stock."

11

Noel, "Collaborative Federalism—with a Footnote."

12

Gibbins, "Shifting Sands," 216.

13

Ibid., 217.

14

Noel, "Collaborative Federalism—with a Footnote," 46.

15

Arend Lijphart, Democracy in Plural Societies: A Comparative Exploration (New Haven: Yale University Press, 1977).

16

Kenneth McRae/'Consociationalism and the Canadian Political System," in Kenneth McRae, ed., Consociational Democracy: Political Accommodation in Segmented Societies (Toronto: McClelland and Stewart, 1974).

17

Kathie Brock, "The End of Executive Federalism," in F. Rocher and M. Smith (eds.), New Trends in Canadian Federalism (Peterborough: Broadview, 1995).

18

Milne, "Equality or Asymmetry: Why Choose?"

19

Reference re Employment Insurance Act (Can.) 2005 SCC 56.

20

K. McRoberts, "Living with Dualism and Multiculturalism," in Rocher and Smith (eds.), New Trends in Canadian Federalism,

21

David E. Smith, The Canadian Senate in Bicameral Perspective (Toronto: University of Toronto Press, 2003), 97.

22

Quoted in Herman Bakvis, Regional Ministers: Power and Influence in the Canadian Cabinet (Toronto: University of Toronto Press, 1991), vi.

23

Herman Bakvis and Laura G. Macpherson, "Quebec Block Voting and the Canadian Electoral System," Canadian Journal of Political Science 28,4 (1995): 659-92.

24

Ibid., 687.

25

Ibid., 685.

FEDERALISM AND THE REFORM OF CENTRAL INSTITUTIONS

26

Jeffrey Simpson, The Friendly Dictatorship (Toronto: McClelland and Stewart, 2001).

27

Donald Savoie, Governing from the Centre: The Concentration of Power in Canadian Politics (Toronto: University of Toronto Press, 1999); Donald J, Savoie, Breaking the Bargain: Public Servants, Ministers and Parliament (Toronto: University of Toronto Press, 2003).

28

Savoie, Governing from the Centre, 153,

29

Herman Bakvis and Grace Skogstad, "Canadian Federalism: Performance, Effectiveness, and Legitimacy," in Bakvis and Skogstad (eds.), Canadian Federalism; Simeon and Cameron, "Intergovernmental Relations and Democracy"; Mark Winfield, "Environmental Policy and Federalism," in Bakvis and Skogstad (eds.), Canadian Federalism.

30

David Cameron and Richard Simeon, "Intergovernmental Relations and Democratic Citizenship," in E.G. Peters and DJ. Savoie (eds.), Governance in the Twenty-first Century: Revitalizing the Public Service (Montreal: McGill-Queen's University Press, 2000); Simeon and Cameron, "Intergovernmental Relations and Democratic Citizenship."

31

Simeon and Cameron, "Intergovernmental Relations and Democracy," 88.

32

Ibid., 286.

33

Gerald Baier, "Judicial Review and Federalism," in Bakvis and Skogstad (eds,), Canadian Federalism.

34

Robert Howse, "Between Anarchy and the Rule of Law: Dispute Settlement and Related Mechanisms in the Agreement on Internal Trade," in M. Trebilcock and D. Schwanen (eds.), Getting There: An Assessment of the Agreement on Internal Trade (Toronto: C.D. Howe, 1995).

35

Milne, "Equality or Asymmetry: Why Choose?"

36

Bakvis, Regional Ministers.

37

Smith, The Canadian Senate in Bicameral Perspective.

38

Peter Aucoin and Lori Turnbull, "The Democratic Deficit: Paul Martin and Parliamentary Reform," Canadian Public Administration 46,4 (2004): 427-49.

39

Simeon and Cameron, "Intergovernmental Relations and Democratic Citizenship,"

40

David Docherty, Mr. Smith Goes to Ottawa: Life in the House of Commons (Vancouver: University of British Columbia Press, 1997), 191-92.

41

John Pinder, "Steps Towards a Federal European Parliament," International Spectator35,1 (2000).

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42

Roger Scully, "Going Native? Institutional and Partisan Loyalty in the European Parliament," in B. Steunenberg and J. Thomassen (eds.), The European Parliament: Moving towards Democracy in the EU (Oxford: Rowman and Littlefield, 2002), 131.

43

Roger Scully and David M. Farrell/'MEPs as Representatives: Individual and Institutional Roles," Journal of Common Market Studies 41, 2 (2003): 269-88. Alan Cairns, "The Governments and Societies of Canadian Federalism," Canadian Journal of Political Science 10,4 (1977): 695-725.

Canada's North and Tomorrow's Federalism Bernard W, Funston Before the government came it was like a calm day all the time....

T

—Davidee, Rankin Inlet1

echnically speaking, governance in the territorial North has been, and continues to be, anomalous within the Canadian federal system. The distinctiveness of northern governance is particularly clear when measured against the generally accepted notion that "in a federation, sovereignty is shared among two or more orders of government according to a stated division of powers. Within their own spheres of power, each order has the capacity to legislate rules that govern the relevant populace, without reference to the legislative regimes of other governments "2 As a result of these anomalies, papers on the North generally have to dedicate an inordinate amount of space to laying the foundations for any analysis. This paper is no different in that regard. The descriptive material that follows will help illustrate why testing assumptions and assertions about federalism and democratic governance is particularly relevant in relation to the North, The primary focus is on the post-World War II period. Most recently, land claims and self-government agreements have added a level of variation and complexity for anyone attempting to discern exactly what theory of government is at play in the North. There are ongoing contests for legitimacy among governance models within the region, with the consequent stability issues such contests engender.

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CONSTRUCTING TOMORROW'S FEDERALISM.

In any discussion about emerging trends and issues in the territorial North, a few preliminary points must be stressed. First, each of the three northern territories presents a distinct set of issues and challenges, and the differences among each of the three territories must not be underestimated. Second, the trends and issues summarized below must be considered in the context of, and with careful attention to, important details in the relevant agreements and legislation. Third, the territorial North is in a state of flux. Institutions, processes, and relationships are still evolving. Fourth, for the most part, the changes in the North are on paper and have yet to be fully implemented. Implementation will be a complicated and potentially acrimonious field for intergovernmental relations in coming years.3 The Constitutional Context The preamble to the Constitution Act, 1867 says that the provinces are "federally united" to form Canada. Our federal system is one in which each province has exclusive authority over most of the local affairs of the province and its residents. The national government, usually referred to as the federal government, is responsible for the country as a whole and generally for matters that cross provincial and territorial boundaries. In 1864 and 1866, when the Fathers of Confederation were drafting resolutions that would lead to a union of British North American colonies, they included in article 2 of the resolutions a provision for the eventual admission of British Columbia, Prince Edward Island, and the "North-Western" Territories (later called the Northwest Territories). There is some geographical uncertainty as to exactly which tracts of land the North-Western Territories comprised at the time. Section 146 of the Constitution Act, 1867, enacted by the United Kingdom Parliament in 1867, was the legal rendering of article 2 of the resolutions. It provided, among other things, that upon the request of the Canadian Parliament, the Queen could "admit Ruperts Land and the North-Western Territory, or either of them, into the Union by Order in Council." Rupert's Land was a vast trading area comprising the drainage basin of Hudson Bay and James Bay, which had been granted by royal charter to the Hudson's Bay Company in 1670. Under this royal charter, the company had held control and governance of these lands until they were sold back to the

CANADA'S NORTH AND TOMORROW'S FEDERALISM

British Crown in 1869 for purposes of transfer to Canada. In 1870, the Rupert's Land and North-Western Territory Order,4 which is now part of the Constitution of Canada,5 transferred these lands from Britain to Canada. In 1880, the remainder of British possessions and territories adjacent to Canada were transferred to Canada by a second Ordef-in-CounciL The lands covered by this transfer6 included the Arctic islands and parts of the Yukon. Therefore, by 1880 the territories of Canada comprised all lands and waters in present-day Northwest Territories, Nunavut, and Yukon, as well as Alberta, Saskatchewan, and most of the lands and waters in what are now Manitoba, Ontario, and Quebec.7 In 1869, before the territories were transferred to Canada, the Canadian Parliament enacted the Temporary Government of Rupert's Land Act8 to provide for a rudimentary form of government in this vast region. In 1870, immediately after the transfer, the Canadian Parliament created Manitoba,9 at that time a tiny province centred on the present-day city of Winnipeg. However, this enactment raised doubts as to the Canadian Parliament's constitutional authority for creating new provinces. To dispel any further doubts, the British Parliament passed the British North America Act, 1871 (renamed the Constitution Act, 1871) to make it clear that the Canadian Parliament could create new provinces in the territories and had exclusive authority to provide for the "administration, peace, order and good government of any territory not for the time being included in any province."10 In 1886, the British Parliament passed what is now called the Constitution Act, 1886, to empower the Canadian Parliament to provide for representation of the territories in the Senate and the House of Commons. The Constitution Act, 1871 is still the constitutional source of authority for the acts Parliament has passed to provide for government in the territories. Otherwise, the constitution acts say almost nothing about territorial government. The Canadian Charter of Rights and Freedoms guarantees certain democratic rights to Canadian citizens. Section 3 says that every citizen has a right to vote in an election of members of a "legislative assembly" and to be qualified for membership therein. Section 30 of the Charter makes it clear that the expression "legislative assembly" includes "the appropriate legislative authority" of the Yukon Territory and Northwest Territories. There is no reference to

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Nunavut (which did not exist in 1982) but the assumption is that the courts would read the new territory into the section. At present, there are three distinct territories in Canada: the Northwest Territories (NWT), Yukon, and Nunavut. The existing government models for the territories evolved from The North-West Territories Act, 1875,u which was frequently amended as immigration to the west and north led to the creation of institutions of representative and responsible government. Yukon was carved out of the Northwest Territories and established as a separate territory by Parliament in 1898. Nunavut was established by Parliament as a result of a commitment by the federal government contained in article 4 of the landclaim agreement12 signed with the Inuit of the Northwest Territories on 25 May 1993. On 10 June 1993, Parliament passed the Nunavut Act13 to divide the Northwest Territories into two new territories, effective 1 April 1999. Federalism and the North during the Past Fifty Years: Pragmatism v. Rights Canadian historian W.L. Morton once wrote: "No scheme of Canadian historiography yet advanced is wholly satisfactory because none as yet takes account of the North."14 The same can be said for the role of northern territories in the study of Canadian federalism. The territorial North was largely ignored in the context of Canadian federalism until well after World War II. For example, the "revised and enlarged" edition of J.A. Corry's Democratic Government and Politics,1^ published in 1951 in the Canadian Government Series, does not even list the Northwest Territories or Yukon in the index, and makes no mention of them. George W. Browns high school text, entitled Building the Canadian Nation, first published in 1942 and completely revised in 1958, contains a section under the heading "The Problem of Governing the Northwest Territories," which takes the reader from 1869 to 1905. Yukon is not listed in the index. Yukon has been a separate geographical and political entity within Canada since 1898—seven years longer than Alberta and Saskatchewan.16 Initially, the territory had a commissioner and a federally appointed, six-member legislative council. In 1902, Yukon elected its first federal Member of Parliament. By 1903, the legislative council had expanded to ten members, five of whom were locally elected. Since 1909, Yukon legislative councils have been comprised

CANADA'S NORTH AND TOMORROW'S FEDERALISM

completely of elected members.17 However, given declines in gold revenues and

the Yukon population, in 1918 Parliament enacted an amendment to the Yukon Act that authorized the federal government to abolish the council. At the first decennial census in 1901, the population stood at 27,210, down from the peak of about 40,000 in 1899, and, by 1918, had further declined to 4000. While not actually abolished, the council was reduced to three members in 1919.18 By 1941, the Yukon population was 4914.19The Aboriginal population was estimated at between 1500 and 2000. Even today, despite the boom in activity following World War II, the Yukon population has still not returned to the levels of the gold rush in 1898.20 However, in 1951, the Yukon Act was amended to increase the legislative council to five members (there are now eighteen elected members). The following year, the capital city of the Yukon was moved from Dawson City to Whitehorse.21 By contrast, according to the 1951 census, the population of the Northwest Territories was 16,004. Aboriginal peoples accounted for 10,660. The nonAboriginal population was 5344. In that same year, the Northwest Territories Act22 was amended to provide for elective representation. The council, as it was then called, was increased to eight members from five, but five of these "representatives" continued to be appointed by the federal Cabinet. The remaining three represented the constituencies of Mackenzie South, Mackenzie North, and Mackenzie West (there are now nineteen elected members). Ottawa was the seat of government. The total estimated land and water area of the Northwest Territories was then 1,304,903 square miles. Nunavut did not yet exist. These arid statistics leave unstated the significant fact that a Canadian living anywhere in the vast area of the eastern Northwest Territories could not vote in any local, territorial, or federal election. Not only was responsible government non-existent in the Northwest Territories at that time, representative government was only just beginning to get a toehold. In 1966 the Carrothers Commission23 declared in its report on the development of government in the Northwest Territories that the form of government was "in effect a colonial form of government, based .,. not on universal suffrage but on enfranchisement within regions where it is considered that the right to vote could, as a matter of practical reality, be exercised."

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Maintenance and enforcement of law and order throughout the Northwest Territories were the responsibility of the Royal Canadian Mounted Police (RCMP). Twenty-eight detachments were sprinkled at strategic locations throughout the Northwest Territories, the majority consisting of two regular members and one Aboriginal special constable.24 The federal Minister of Justice acted as the Attorney General of the Northwest Territories and headed up the department that administered the policy of the RCMP.25 The Supreme Court of the Northwest Territories, which had been "continued" by the North-West Territories Act of 1886, was dissolved in 1905 when Alberta and Saskatchewan became provinces. After 1905, commissioned officers of the RCMP had been ex officio justices of the peace and the RCMP commissioner had the jurisdiction, powers, and authority of a stipendiary magistrate.26 In the 1950s, the RCMP commissioner was also a member of the council, the legislative arm of government in the Northwest Territories.27 The RCMP guardrooms were the jails for the Territories and the commanding officers acted as the wardens.28 Such was the state of affairs in the Northwest Territories when Stuart Garson, the federal Minister of Justice, called Jack Sissons in Lethbridge, Alberta, in 1955 to see if he would sit as the first and only judge of a reconstituted superior court in Yellowknife, to be known as the Territorial Court. Sissons recounts in his memoirs:"The Territories were run with less democracy than the Canadian provinces in British colonial days.... It was a bureaucratic dream, and when the territorial court was established on July 1, 1955, the 'bright boys' in Ottawa thought they would improve on the dream by having one of their civil service club appointed judge."29 Sissons s memoirs are littered with references to his battles with the "bright boys" in Ottawa. Sissons had heard rumours that the creation of the Territorial Court (after 1972 called the Supreme Court of the Northwest Territories) was seen as an opportunity to establish a precedent for the appointment of civil servants to the judiciary, and a list of seven civil service lawyers had been submitted, from which a selection was to be made.30 Mr. Justice Ernie Wilson in Edmonton encouraged Sissons to accept the appointment "to keep those civil service boys from usurping the job."31

CANADA'S NORTH AND TOMORROW'S FEDERALISM

Very quickly the Sissons court became identified with Aboriginal rights.32 This set the stage for a contest of wills between the court and Ottawa, which was to last into the 1970s and culminated in the remarkable events involving Mr. Justice Morrow during the hearing of the Paulette case33 in 1973. In the 1950s and 1960s, Aboriginal law was not a recognized area of practice or discourse. Most textbooks referred to St. Catharine's Milling Case and not much else. The case law revolved mainly around the Indian Act, section 91(24) of the Constitution Act, 1867, and the application of various hunting and fishing laws in the context of treaty promises. However, the practical circumstances in the Northwest Territories during much of the Sissons court between 1955 and 1966 led to situations that, by today's standards, are almost unthinkable. For example, in 1963, an Inuit hunter, Koonungnak, was convicted and fined $200 by a Justice of the Peace for hunting musk ox, contrary to the game ordinance. During this proceeding, an RCMP constable, who was an ex officio game warden, acted as both informant and prosecutor.34 The Justice of the Peace who heard the case was a game warden and area administrator for the Department of Northern Affairs,35 The accused was compelled to give evidence while also being deprived of the .right to retain and instruct counsel. He had no independent interpreter and was forced to seek assistance from the court's interpreter. He was not instructed as to his right to call witnesses, to present a defence, or to appeal.36 Perhaps there is no better illustration of the subordinate nature of the territories during these years than the conduct of the federal government in the Paulette case. At issue in the case, among other things, was whether the Supreme Court of the Northwest Territories had jurisdiction to hear a matter involving certain Aboriginal chiefs who, on behalf of their people, sought to file a caveat based on Aboriginal title on a vast tract of unpatented Crown lands in the Northwest Territories. Mr. Justice Morrow, who had succeeded Sissons on the bench in 1966, heard the case. In his memoirs, Morrow revealed the deep personal and professional turmoil he felt during the Paulette case in 1973: On June 5th I heard a rumour that the government was considering applying to the Federal Court for a writ of prohibition against me. The following day I became convinced that this was the situation, and so I drafted a letter to the Honourable Otto Lang, the Attorney

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General of Canada.... I read my letter to him over the phone, suggesting that the contemplated step could easily have constitutional repercussions and that the native people would neither understand nor forgive what was being done to them. Lang's reply was that he, Jean Chretien, and others had discussed these aspects of the case and decided to proceed anyway.37 Morrow's letter to Minister Lang, dated 7 June 1973, was blunt: To most people it will appear as the act of the Federal Government using its own' court to pound down the superior court of the Territories because the department lawyers do not agree with what the local court is doing.... This must surely be the first time in the history of Canadian jurisprudence when one court of equal rank will be appearing to snatch' a case from another court of equal rank.38 The federal Crown's application for a writ of prohibition was launched in the federal court that same day. Mr. Justice Morrow's decision in Paulette was released on 6 September 1973, and, on 12 September, a Yellowknife newspaper, the News of the North, reported: There is no need at all to hesitate in calling his decision 'historic' for that is what it is, no matter how the appeals will go. For the first time in Canadian legal history, a superior court justice was directly attacked by the federal government while the case was in progress, and that alone suffices to make the case 'historic', although in a negative way But in a more positive sense, Judge Morrows decision is also historic. For it establishes, legally, that aboriginal rights of the N.W.T. native people did not die with Treaties 8 and 11, but still stand. The evidence to that effect was simply overwhelming, even though Judge Morrow put it more carefully.39 The Sissons and Morrow courts had been at the forefront in recognizing Aboriginal rights in the 1960s and 1970s. It is undeniable that some of the momentum towards changes in federal policy was initiated by cases such as Sikyea and Paulette. In the result, neither decision at the time was seen as a watershed, but each in its own way signalled a new level of awareness of underlying

CANADA'S NORTH AND TOMORROW'S FEDERALISM

weaknesses in law and policy as they pertained to Aboriginal peoples in Canada, and particularly in the territories. How do these colourful legal battles in the territorial North relate to the challenge of constructing tomorrow's federalism? These very political battles between the early Northwest Territories courts and remote government officials in Ottawa engaged some of the difficult legal, political, and governance issues that will continue to challenge Canadian governments and courts as the principles of Canadian federalism are applied and adapted in the North. New governance models in the North could be a source of either pride or frustration for Canada, depending on our abilities to make practical sense of ambitious and theoretical approaches. The North has been a Petri dish of experimentation and it is the courts that are increasingly at the nexus of theory and reality. The rapid, parallel march of Aboriginal self-determination and territorial political evolution began in earnest in the 1970s in both the Northwest Territories and Yukon, and continues to the present. A few highlights will suffice. +

In 1974, the federal government adopted a Comprehensive Land Claims Policy and began negotiations with Dene and Metis peoples in the Mackenzie Valley, the Inuvialuit in the Delta-Beaufort Sea region, the Inuit of Nunavut, and the First Nations of Yukon. * In 1975, the Legislative Assembly of the Northwest Territories became a fully elected body, although still dominated by the federally appointed commissioner, and devolution to the territorial government of provincialtype program and service responsibilities accelerated. * In 1977, the Berger Inquiry reported on its historic Mackenzie Valley Pipeline Inquiry and recommended a moratorium on oil and gas development in order to give time to settle Aboriginal land claims. + In 1979, the Honourable Jake Epp, Minister of Indian Affairs and Northern Development, wrote the "Epp Letter," which recognized a higher political status for Yukon and held out the prospect of development of Yukon towards provincehood.40 + In 1980, Bud Drury, the Special Representative of the Prime Minister on Constitutional Development in the Northwest Territories, reported on options for responsible government in the territory.

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On the national stage, the federal government, after seeking to unilaterally patriate the Constitution, acquiesced to the need to negotiate with the provinces (but not the territories) following the Supreme Court of Canada's opinion in the Patriation Reference. In 1982, the Canadian Constitution was patriated, and section 35 of the Constitution Act, 1982 recognized and affirmed the Aboriginal and treaty rights of the Aboriginal peoples of Canada. Also included were new constitutional amending formulae that purported41 to change the rules for creation of new provinces in the territories. In 1985, formal letters were issued by the federal minister to the Northwest Territories commissioner under the authority of the Northwest Territories Act to institute important changes towards full, responsible government. By 1990, territorial governments had been admitted to most intergovernmental processes as independent actors (previously they had been members of federal delegations), and the Supreme Court of Canada had amended its rules of procedure to allow territorial ministers of justice to intervene as of right in constitutional cases. In 1992, the territorial governments participated in constitutional negotiations leading to the Charlottetown Agreement (the agreement was subsequently repudiated by referenda). By 1995, the Government of Canada had released its policy on negotiating the inherent right of Aboriginal self-government42 (self-government agreements have been concluded in a number of regions of Yukon and in the Tlicho region of the Northwest Territories; negotiation processes initiated under this policy are ongoing in other regions of these territories). In 1999, Nunavut was formally established as a political jurisdiction within the federation. In 2002, Yukon concluded a Devolution Transfer Agreement43 in relation to natural resources and amendments made to modernize the Yukon Act to reflect the institutions of responsible government, which had been in place for many years. On 1 April 2003, the Yukon assumed responsibility for most public lands, waters, forests, and mineral resources, as well as for environmental assessment.44

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However, by far the most significant development in the territories has been the settlement of Aboriginal land and self-government claims. There will surely be a range of fundamental new questions in relation to democratic, collective, and individual rights, conflict of laws, intergovernmental relations, and governance emerging from the settlement and implementation of Aboriginal land claims and self-government agreements in the North. These issues exist within the larger framework of Canadian federalism and engage such issues as national unity, equalization, asymmetrical federalism, health care, education, competitiveness, and so on. However, extensive policy research and analysis of the North's significance in this context have yet to be undertaken. So, despite the declaration contained in Government of Canada drafts of a new northern strategy that "Canada is a northern nation,"45 the significance of the North in tomorrow's federalism and the implications that new northern models of governance will hold for the federation are not particularly clear. Federalism and the North Today Territorial Constitutions Today, federal statutes (the Northwest Territories Act,46 Yukon Act,47 and Nunavut Act48) are the principal documents that establish the territorial constitutions. However, they are not part of the "Constitution of Canada," as that phrase is defined by section 52(2) of the Constitution Act, 1982, Therefore, the territorial constitutions are not entrenched and can be amended directly or indirectly by ordinary acts of Parliament without invoking any of the formal amending formulae contained in the Constitution Act, 1982. Furthermore, the constitutional fabric in the territories has been significantly altered since 1995, when the federal government released its policy for negotiating self-government arrangements with the Aboriginal peoples of Canada. As described later in this paper, existing land claims and self-government agreements in Yukon, Northwest Territories, and Nunavut, and other agreements currently being negotiated, will change the community, regional, and territorial models for institutions and governance in some interesting ways. The Northwest Territories Act, Yukon Act, and Nunavut Act establish legislative bodies for the territories and devolve to them a range of powers that closely

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follow provincial legislative powers assigned by section 92 of the Constitution Act, 1867. Territorial legislatures, while patterned after provincial legislatures, do not have exclusive legislative powers. As a matter of constitutional law, Parliament has ultimate authority over all matters in the territorial North. In form and content, the Northwest Territories Act now differs from the more modern Yukon Act and Nunavut Act. These latter acts have eliminated some provisions that are unusual to find in a constitution, such as the provisions dealing with reindeer, intoxicants, mentally disordered persons, and neglected children. Also eliminated from the Yukon Act and Nunavut Act are the provisions of the Northwest Territories Act that say that every person who contravenes the act is guilty of an offence and liable to fine or imprisonment.49 Parliaments power to amend or even repeal the territorial constitutions appears, at first glance, to be unfettered. However, section 3 of the Charter of Rights and Freedoms guarantees the existence of a "legislative assembly," and section 32(l)(a) indicates that Parliament and the Government of Canada are bound to apply Charter principles in respect of all their dealings in relation 'to the Yukon Territory and Northwest Territories (again, Nunavut is not mentioned because it did not exist in 1982). In the case of Nunavut, some commentators argue that because the federal governments commitment to pass the Nunavut Act is contained in the Inuit land-claim agreement, a modern treaty with constitutional protection under section 35 of the Constitution Act, 1982, the existence of this territory may be protected as a treaty right. While section 4.1.3 of article 4 of the Inuit landclaim agreement provides that nothing in the actual legislation creating Nunavut is intended to be a treaty right, the linkage between the Nunavut Act and the land-claim agreement might afford a level of protection from unilateral or arbitrary repeal by Parliament. Territorial Legislative Powers While the Constitution Act, 1871 gives Parliament exclusive authority over the administration, pence, order, and good government of the territories, Parliament has devolved the day-to-day responsibility for governing the territories to the territorial legislatures and governments under the Northwest Territories Act, Yukon Act, and Nunavut Act. Section 16 of the Northwest Territories Act says

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"the Commissioner in Council may, subject to this Act and any other Act of Parliament, make ordinances for the government of the Territory in relation to the following classes of subjects" (emphasis added; twenty-two enumerated heads of power follow). The Nunavut Act imposes similar limitations on the legislature's law-making powers. However, by contrast the new Yukon Act uses the following construction in sections 18(1) and 26, respectively: "the Legislature may make laws in relation to the following classes of subjects in respect of Yukon" (enumerated heads of power follow), and "in the event of a conflict between a law of the Legislature and a federal enactment, the federal enactment prevails to the extent of the conflict." The classes of subjects devolved to the territories are patterned on the provincial powers set out in section 92 of the Constitution Act, 1867. However, four omissions from the territorial list of powers are noteworthy. +

Provinces have power to amend their own constitutions. Territorial legislatures have no such power.

*

Sections 109 and 92(5) of the Constitution Act, 1867 give provinces ownership and legislative authority, respectively, in relation to provincial public lands and the natural resources associated with them. By comparison, most public lands in all three territories are still owned by the federal Crown50 and are ultimately under exclusive federal legislative authority. In the Northwest Territories and Nunavut, a relatively small percentage of the surface of public lands is under the administration and legislative control of the territorial governments, and they have the beneficial use and revenues from these lands. As a result of the Devolution Transfer Agreement51 between the Yukon government and the federal government, and the enactment of a new, modernized Yukon Act in 2002, Yukon is the first territory to have received a substantive devolution of administration and control in respect of surface and subsurface natural resources in relation to public lands in the territory. However, this control is still subject to a range of "take-back" provisions set out in the Yukon Act that allow Ottawa to take back lands and resources in certain specified circumstances.

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*

Provincial jurisdiction in respect of natural resources in the province, including electricity, non-renewable resources, and forest resources, were clarified and augmented in 1982 by a constitutional amendment. No similar legislative powers have yet been fully devolved to Nunavut. The Northwest Territories received some jurisdiction for forestry resources by a federal Order-in-Council in 1986, The new Yukon Act (2002) contains some lawmaking powers analogous to these provincial powers. * Under section 92(3) of the Constitution Act, 1867, provinces can legislate for "the borrowing of money on the sole credit of the province." The comparable provisions in the territorial constitutions empower the territories only to legislate for borrowing or lending or investing surplus territorial monies and stipulate that no money may be borrowed without the approval of the federal Cabinet.

One notable addition to the territorial constitutions not found in provincial constitutions are provisions that "entrench" territorial legislation providing for official languages in the territory. While language legislation was originally passed by the territorial legislatures, amendments to the Yukon Act and Northwest Territories Act by Parliament prevent these legislatures from amending their own legislation unless they first obtain approval through a resolution of Parliament. Territorial amendments that enhance the rights or services relating to official territorial languages are an exception to the requirement. In the case of the Northwest Territories, for example, English, French, and six Aboriginal languages are the official languages of the territory. Aboriginal Land Claims and Self-Government Agreements As stated earlier, Aboriginal land claims and self-government agreements h e added a level of variation and complexity for anyone attempting to discern exactly what theory of government is at play in the North. The expression "land-claim agreements" is really a misnomer because these agreements transcend mere land issues. Also, there is a tendency to refer to land-claim and self-government agreements as "final agreements." This perhaps reflects a vain hope that Aboriginal issues are finally resolved once an agreement is reached. More appropriately, they should be called "beginning agreements," because

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these documents are intended to initiate new relationships, new institutions, and new dynamics within the federation. Modern Aboriginal land-claim agreements and self-government agreements can be seen to be evolving, integral parts of the territorial (and Canadian) constitutions. The land-claim agreements, for example, recognize and affirm a wide range of rights in relation to lands and resources, including management of these matters. The agreements create "institutions of public government" and various administrative bodies that appear to have protection under the Constitution of Canada, given the status of these agreements as treaties under section 35 of the Constitution Act, 1982, The provisions of these modern-day treaties, in many cases, are paramount in situations where a federal or territorial law is in conflict with an Aboriginal land-claim agreement. More recently, self-government agreements have been negotiated and these agreements contain a range of governance models and processes intended to implement Aboriginal self-government rights. Therefore, one cannot examine territorial government in Canada without taking into account the Aboriginal and treaty rights protected by section 35 of the Constitution Act, 1982, Most of the geographical area of the territories is or has been under claim by Aboriginal peoples. Constitutionally protected landclaim agreements within the meaning of section 35(3) of the Constitution Act, 1982 have been concluded with the Inuit in Nunavut, and the Inuvialuit, Gwich'in, Sahtu Dene and Metis, and Dogrib (Tlicho) in the Northwest Territories, and are in progress with other Aboriginal peoples in the western Northwest Territories. The Tlicho Agreement (2003) is the first combined land-claim and self-government agreement in the Northwest Territories. In addition, some treaty peoples are negotiating the fulfillment of treaties 8 and 11, which were signed in 1899 and 1921, respectively. In Yukon, fourteen First Nations concluded an Umbrella Final Agreement52 in May 1993 to resolve land claims and protect certain Aboriginal rights, A majority of Yukon First Nations (eight of fourteen)53 have also concluded self-government agreements that are now being implemented.54 The details of the relevant agreements are too complex to examine here, but it is clear that these modern treaties will have significant implications for the institutional, administrative, political, and constitutional future of the territories, and,

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potentially, Canada. Already, land-claim and self-government agreements have created institutions and governance arrangements that appear to have a constitutional status independent of either federal or territorial governments, and that also appear to have a higher constitutional status than the institutions created by or under the Northwest Territories Act, Yukon Act, and Nunavut Act. These "institutions of public government" are noteworthy: they guarantee Aboriginal participation in decision making on a wide range of resource management and environmental bodies. However, in the Northwest Territories, in particular, the distinctions between "Aboriginal self-government" and "public government" are blurring. As the legislative assembly's Special Committee on Implementation of S elfGovernment points out: These phrases suggest clear distinctions that will not likely be reflected in practice. In our view, this terminology tends to imply separate realities or watertight compartments. From our work to date, we have concluded that governments in the NWT will not be easily categorized as "Aboriginal" or "public". The governance systems that will be established as a result of self-government agreements will probably not fit neatly into one box or the other. For example, the territorial government in Nunavut is sometimes called an expression of Aboriginal self-government, but in the NWT the territorial government is usually referred to as the public government. The draft Gwich'in and Inuvialuit Self-government Agreement in Principle, and the Tlicho Agreement are products of self-government negotiations but will provide mechanisms to deliver programs and services to all residents in many situations. The Deh Cho First Nations Framework Agreement states that a Deh Cho government will be a "public government" based upon Deh Cho First Nations laws and customs and other Canadian laws and customs.55 In summary, territorial government in Canada has recently been undergoing rapid and fundamental change, particularly since the late 1970s. The new Nunavut territorial government will evolve in the context of implementation of the Inuit comprehensive land-claims agreement ratified in 1993. In the Northwest Territories, significant land-claim and self-government agreements are

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still under negotiation, while others are currently being implemented. In Yukon, as in Nunavut and the Northwest Territories, implementing the inherent right of Aboriginal self-government will be a challenging aspect of territorial development in the years ahead. Protecting self-government agreements as treaties under section 35 of the Constitution Act, 1982 has been the expectation over the years. The primary questions are precisely what is being protected and how will Aboriginal governments interrelate with existing governmental systems? In the North, intergovernmental relations are becoming increasingly crowded. The matrix of interrelationships likely to generate issues looks something like this: Aboriginal governments

Aboriginal governments

Aboriginal governments

Aboriginal individuals

Aboriginal governments

Aboriginal non-governmental organizations

Aboriginal governments

"Institutions of public government" under claims

Aboriginal governments

Non-Aboriginal individuals

Aboriginal governments

Federal government

Aboriginal individuals

Federal government

Aboriginal NCOS

Federal government

Aboriginal governments

Territorial governments

Aboriginal individuals

Territorial governments

Aboriginal NCOS

Territorial governments

Aboriginal governments

Regional/community governments

Aboriginal individuals

Regional/community governments

Aboriginal NCOS

Regional/community

Aboriginal governments

Provincial governments

Aboriginal governments

International bodies

Aboriginal NCOS

International bodies

governments

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Furthermore, the issues themselves extend well beyond hunting, trapping, and fishing. The courts will be called upon to navigate the fine balances between law and politics, culture and context, federalism and colonialism, and rights and responsibilities. (It is noteworthy, however, that agreements such as the Tlicho Agreement, recently ratified by federal legislation, also contain provisions that deal with the "Jurisdiction of Courts"). Although the issues will not fall into watertight compartments, five potential categories are outlined in the following pages. 1. Legislative jurisdiction and conflict of laws. Law-making authority is recognized in Aboriginal self-government agreements, but the structural, procedural, and operational dimensions will require additional practical efforts. For example, sections 14(76) and 14(77) of the Inuvialuit Final Agreement (1984) provide an early illustration of the sorts of issues that can arise. Section 14(76) empowers Inuvialuit Hunters and Trappers committees to "make by-laws, subject to the laws of general application, governing the exercise of the Inuvialuit rights to harvest." However, the agreement contains no clear process for how these bylaws should be prepared and published. Given that such bylaws could affect Inuvialuit rights, this was something of an oversight. To complicate matters further, section 14(77) of the agreement provides that "by-laws made under paragraph 76(f) shall be enforceable under the Wildlife Ordinance of the Northwest Territories."56 The act of Parliament ratifying the Inuvialuit agreement, the Western Arctic (Inuvialuit) Claims Settlement Act, provides in section 4 that "where there is any inconsistency or conflict between this' Act or the Agreement and the provisions of any other law applying to the Territory, this Act or the Agreement prevails to the extent of the inconsistency or conflict." Thus, these bylaw provisions cannot simply be ignored. The mechanics of this leap, from bylaw creation to enforcement under a statute of the legislative assembly, created some quandaries for game officers. How would they know when a bylaw was made? What if the language was Inuvialuit rather than English and French? If the bylaw had never been published, how was a defendant to be deemed to know the law? Matters were eventually worked out after the fact through some practical arrangements, thankfully before any person charged with violating such a bylaw appeared

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before the courts. Provisions of self-government agreements signal a fundamental change in the relationships between the law makers in the legislative assembly and those in communities and regions,57 2. Status issues. As the number of self-government agreements increases, the contest for legitimacy, which has always been a significant element in the evolution of territorial government, can be expected to move in new directions (for example, the status of the legislative assembly and the Government of the Northwest Territories still arises from time to time in cases before the court, as it did in the Morin and Roberts cases).58 Most land-claim agreements and selfgovernment agreements contain some provision to link them to section 35 of the Constitution Act, 1982.59 At some point, the courts will be asked to determine what these sorts of provisions mean. More to the point, what do they mean in relation to the status of institutions and governments they establish:1 Self-government is arguably a system carrying out a governing process through an identifiable set of institutions. Without getting into the intricacies of any particular agreement, does it muddy the issues to protect self-government agreements as land-claim agreements under a rights-based provision of the constitution? For example, what do we make of constitutionally protected selfgovernment agreements that might create hybrid self-government arrangements that have so-called "public government" elements? The Deh Cho First Nations Framework Agreement states that a Deh Cho government will be a "public government" based upon Deh Cho First Nations laws and customs and other Canadian laws and customs. What are the implications of giving constitutional protection to a form of public government through section 35 that refers only to Aboriginal peoples and Aboriginal and treaty rights? 3. Interpretative issues. Land claims and some self-government agreements are modern-day treaties. Among the objectives of these documents is the establishment of practical systems of government to fulfill the needs and aspirations of Aboriginal people in communities and regions. They have to be taken seriously. Some provisions will raise interpretative challenges for any court. For example, agreements usually contain provisions pertaining to the management of socio-economic impacts of development in the relevant settlement area. The Gwich'in Comprehensive Land Claim Agreement requires "government"60 economic development programs in the settlement area to "take such measures

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as it considers reasonable, in light of its fiscal responsibility and economic objectives" to maintain and strengthen the traditional Gwich'in economy, and promote economic self-sufficiency. The agreement further defines "impact on the environment" to include: "effects on air, land and water quality, on wildlife and wildlife harvesting, on the social and cultural environment and on heritage resources."61 For purposes of land-use planning, "special attention shall be devoted to ... protecting and promoting the existing and future social, cultural and economic well-being of the Gwich'in,"62 Any environmental impact reviews dealing with development "shall have regard to .... the protection of the existing and future economic, social and cultural well-being of the residents and communities in the GSA"63 (emphasis added). In the context of the current debates about judicial activism, some commentators have observed that courts are in a difficult spot when faced with, for example, the ambiguities of the Charter of Rights and Freedoms: in short, despite the critics yearning for a simpler and more professional age, there is no purely technical and non-political way to engage in a principled mode of adjudication. This is especially true of the Charter, Not only is what amounts to 'freedom' and equality' the stuff of fierce ideological debate (and how one relates to the other), but how such values are to be enforced within section Is such reasonable limits as can be demonstrably justified in a free and democratic society' merely invites judges to wade even deeper into the political waters. Adjudication necessarily involves political choice.64 In the field of Aboriginal rights, land-claim agreements, and self-government agreements, this is doubly true. Equally challenging is the possible expectation, raised by the Doucet case,65 that the court will play a supervisory role when dealing with the sorts of provisions described above. 4. Rights issues arising from the competition among rights-holders who have relationships with multiple governments. Today, the courts in Canada regularly deal with determinations as to whether there is a right protected or recognized by the Charter or section 35, and if so, whether it has been unduly infringed by legislation or various forms of government action. However, in years to come, the rights cases in the North promise to be more complex. Multiple levels of government will be making laws in concurrent fields of jurisdiction or in

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situations where there is a displacement of existing laws. The pith and substance of such laws might not always fall into clearly discernible Aboriginal and nonAboriginal compartments. An illustration of the overlying legal and constitutional ambiguities can be found in the interplay of the Charter of Rights and Freedoms and the Rights of the Aboriginal Peoples of Canada in section 35 of the Constitution Act, 1982. The first point to be recognized is that most self-government agreements will likely contain a provision similar to the one in the Tlicho Agreement that states: "the Canadian Charter of Rights and Freedoms applies to the Tlicho Government in respect of all matters within its authority"66 As noted above, the agreement is a land-claim agreement within the meaning of section 35 of the Constitution Act, 1982 that provides, inter alia: 35. (1) The existing aboriginal and treaty rights of the aboriginal peoples of Canada are hereby recognized and affirmed. (3) For greater certainty, in subsection (1) "treaty rights" includes rights that now exist by way of land claims agreements or may be so acquired. (4) Notwithstanding any other provision of this Act, the aboriginal and treaty rights referred to in subsection (1) are guaranteed equally to male and female persons. At first blush, the application of the Charter to an Aboriginal government (constituted under a treaty that is recognized and affirmed by section 35) is probably intended to provide Aboriginal individuals with recourse against their Aboriginal governments in the event of an infringement of a Charter right by that Aboriginal government. Or perhaps it is to protect non-Aboriginals who might fall under the jurisdiction of an Aboriginal government. Or perhaps it is both. But what is the impact of section 25 of the Charter where the issue involves an Aboriginal government or a contest between alleged Charter rights and Aboriginal rights? Section 25 provides: The guarantee in this Charter of certain rights and freedoms shall not be construed so as to abrogate or derogate from any aboriginal, treaty or other rights or freedoms that pertain to the aboriginal peoples of Canada including

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(a) any rights or freedoms that have been recognized by the Royal Proclamation of October 7,1763; and (b) any rights or freedoms that now exist by way of land claims agreements or may be so acquired. If an Aboriginal person claims infringement of a Charter right by an Aboriginal government, can section 25 operate as an override where the Aboriginal government is exercising its authority under a self-government agreement that is protected by section 35? How will the section 1 justification operate in the context of Aboriginal government actions? Is there a class of Aboriginal governmental actions that might be sanctioned by section 25, even if they do not meet the test of a reasonable limit in "a free and democratic society"? How should the courts interpret the democratic rights guarantees in section 3 in relation to an Aboriginal government, particularly in situations where Aboriginal governments are carrying out "public" functions? The essential question might be, "What is a right to self-government' and how does it differ from the guarantee of democratic rights under section 3 ?" Finally, there is the evolving issue of Metis rights. The Powley case67 sets the stage for some interesting issues in the North. The court transposed "the test for addressing Indian assertions of Aboriginal rights laid out in R. v. Van der Peet68 to the determination of Metis Aboriginal rights by modifying the timing requirement from a time prior to contact with Europeans to a time preceding the establishment of effective European control."69 One commentator has noted that "the Court left open the possibility that ... First Nation members may be able to assert Metis Aboriginal rights in addition to or instead of treaty rights."70 The imagination can generate other questions and issues, some of which might be far more relevant than the ones posed above. The balancing of all the various rights will not be resolved by a Jesuitical reading of the constitutional texts and the detailed self-government agreements. It will be an ongoing process that can be expected to impose limits on some rights so that other rights can coexist.

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5. Federalism and intergovernmental issues, including lines of responsibility and accountability and representation atfederal-provincial-territorial meetings. Some examples from the Northwest Territories might help illustrate some of the emerging complexities in this area* Local and regional government bodies in the Northwest Territories have historically been created, and have powers delegated to them, by legislation enacted in the legislative assembly (bands may exercise bylaw making powers under the federal Indian Act}. Not only are local or regional laws subject to territorial legislation, courts in Canada have generally taken a restrictive interpretation of the scope of powers delegated to local or regional governments.71 Under some self-government agreements, community governments will now be established by territorial legislation based on a framework set out in the self-government agreement. This is the case in section 8.1.1. of the Tlicho Agreement: "the Tlicho community governments of Behchoko, Whati, Gameti and Wekweeti must be established by territorial legislation" (a framework for the legislation is then set out in the agreement). But there are restrictions on the ability of the Government of the Northwest Territories to amend this legislation in the future. As section 8.1.6 reads, "the Government of the Northwest Territories shall obtain the consent of the Tlicho Government before introducing any bill to amend the legislation referred to in 8.1.1." The process for obtaining and validating "consent" is not spelled out in the agreement. Alternatively, the status and existence of community governments might flow directly from the self-government agreement itself in some situations. This appears to be the approach taken in the Beaufort-Delta self-government process with the Inuvialuit and Gwich'in; however, negotiations have not yet produced a final agreement. Once such a self-government agreement comes into effect, the assembly may have limited legislative authority over the structure and powers of these communities. In order to make way for the new community structures and powers, some existing communities established under laws of the legislative assembly would be dissolved.72 This would create a unique situation within the federation: the Northwest Territories would be the only jurisdiction where some community governments were not, for practical purposes, creatures of the legislature.

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Another interesting trend in the Northwest Territories is the negotiation of self-government agreements that recognize "concurrent" law-making powers. This means that the community and regional governments established by selfgovernment agreements might have overlapping jurisdiction with the legislatures on a number of matters.73 (By comparison, self-government agreements with First Nations in Yukon employ a displacement model that is described in more detail later in this paper.) Again, this creates interesting precedents within the federation: the Northwest Territories and Yukon are the first places in Canada where some community governments have concurrent and paramount jurisdiction in relation to the legislature in respect of certain matters. The purpose of the above examples is not to raise "boogey men" in relation to Aboriginal self-government or Aboriginal rights. Choices were made to recognize Aboriginal rights as far back as the Royal Proclamation of 1763 and Canada will require practical and rational approaches to live up to the values that have been established. Searching for Norms and Mechanisms to Secure Legitimacy and Stability Although territorial status is an unusual state of purgatory in a federal system, by the 1980s, provincehood appeared to have become a somewhat passe objective. Already mentioned is the fact that the Constitution Act, 1982 radically changed the legal landscape for provincehood on two fronts. On the one hand, the provinces appear to have become formal and active players in the process of creating new provinces. Gordon Robertson, in his monograph entitled Northern Provinces: A Mistaken Goal, concludes: that "sections 42(l)(f) and 38(1) of the Constitution Act 1982, provide'black ball' rules as effective as any club could want. They will be used with a hard eye in the interest of the present members." 74 On the other hand, the Aboriginal rights provisions in section 35 of the Constitution Act, 1982 prepared the ground for a concerted drive towards a political rights agenda for Aboriginal residents of the territories. Since the advent of the federal government s Aboriginal self-government policy in 1995, Aboriginal peoples in the three territories have moved the processes of governance in new directions. Even if provincehood were still possible, would the typical provincial model equally suit Yukon, the Northwest Territories, and

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Nunavut? In Yukon and Northwest Territories, the self-government arrangements negotiated to date, and others still ongoing, would seem to preclude this. Perhaps the most poignant question emerging from the territorial North today is "What are the next logical steps in territorial political and constitutional evolution?" If not provincehood, then what? This question is difficult to answer. What do territorial residents want? Do Ottawa and the existing provinces look forward to, or support, provincehood for the three territories? If so, how are we to account for the emerging systems of Aboriginal self-government in the Yukon and Northwest Territories? In addition, the new amending formulae established by the Constitution Act, 1982 appear to leave it up to Ottawa and the provinces to make the final decisions, regardless of what the territorial population might think. A "traditional," but not necessarily valid, demand of Quebec has been that it should have a veto in relation to the creation of any new provinces. The Situation in the Northwest Territories In 2003, a special committee of the Legislative Assembly of the Northwest Territories tabled a report on the implications that self-government negotiations and agreements could have for so-called "public government" in the Northwest Territories.75 The committee identified five broad trends and issues that are of particular interest in the context of constructing tomorrow s federalism. The three trends the committee considered to be major drivers of change were: (1) the new status and powers of communities; (2) concurrency of law-making powers between the legislative assembly and Aboriginal self-government institutions; and (3) formal consultation requirements imposed on all levels of governments. These trends, in turn, were expected to generate two important ongoing issues: the practical need for close coordination among governments; and the premium that will be placed on good relations among governments in order to foster cooperation. The committee called these trends and issues "the Five C's," but in fact there was a sixth overarching consideration that was also identified: "capacity." The report contains a clear recognition that all levels of government in the Northwest Territories will have to address questions of fiscal and human capacity in order to meet the expectations and requirements emerging from land claims and self-government agreements.

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The report states: These trends and issues signal fundamental changes to many aspects of the way the Legislative Assembly and GNWT [Government of the Northwest Territories] now do things, including: * law-making + policy-making + government decision-making * government operations, including program and service delivery + human resources management + land and resources management * financial management including budgeting and appropriations * raising revenues through taxation and other means + spending on capital spending for facilities and other assets + lines of accountability, and * intergovernmental relations. Responsibilities for law-making and for the delivery of several programs and services will change. Self government agreements often involve systems for delivery of programs and services to all residents. The people we will hold accountable will consequently change. Governments will be required to consult more with each other and to coordinate and cooperate in their activities. Therefore, there will be fundamental changes in the relationships among the community, regional and territorial levels of government.76 The committee reached the conclusion that, in the Northwest Territories, it will be necessary to reconsider the distinctions that are often made between "Aboriginal self-government" and "public government." The Northwest Territories is comprised of small, close-knit communities and regions. The self-government negotiations are leading to agreements in which all residents are likely to be affected one way or another. It is difficult to judge at this stage whether such innovations are a positive or negative development. However, it seems clear that, unlike any other jurisdiction in Canada, except perhaps the Yukon, the Northwest Territories might have many community governments that are, in effect, constitutionally entrenched, or at least shielded from the legislative jurisdiction of the territorial legislature.

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Elsewhere in Canada, municipalities have, for some time, been claiming recognition in the Canadian constitution as a separate level of government. In the Northwest Territories and Yukon, this actually appears to be well on its way. The committee also examined the law-making powers of these new forms of community government. In general, self-government negotiations and agreements in the Northwest Territories contemplate concurrent law-making powers. Therefore, community and regional governments established by selfgovernment agreements could have overlapping jurisdiction with the legislative assembly on a significant range of matters. The fields of jurisdiction open for negotiation cover most of the typical provincial/territorial powers. The committee noted that once self-government agreements are in effect, there could potentially be overlapping jurisdiction and responsibilities among institutions at the community, regional, and territorial levels* As to which law would be paramount in any given situation, the committee explained: "Selfgovernment agreements contain provisions that set out a range of such rules. There is no single rule that will cover every circumstance."77 The Northwest Territories has never really been a typical provincial-type jurisdiction. Nevertheless, it would appear from this analysis that the implications for legislators and policy makers at all levels of government in the Northwest Territories could be considerable. According to the committee, among the significant changes that can be fairly anticipated from this trend are: +

new responsibilities for programs and services at the community and regional levels; + new lines of accountability for these programs and services; * new mandatory consultations and interactions among governments; * new structures and processes for the Government of the Northwest Territories and legislative assembly; + new procedures and processes for conducting intergovernmental relations; and • • • 7R * new expectations among citizens. In addition, financial capacity is almost certainly to be a critical factor in the exercise of law-making powers by all levels of government. While a devolution agreement on lands and natural resources is being implemented in the Yukon,

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no such agreement has yet been concluded in the Northwest Territories or Nunavut. Devolution talks are ongoing among the federal government, the Government of Northwest Territories, and Aboriginal peoples. However, since the early 1990s, perhaps a compelling reason for Ottawa politicians and officials to "go slow" is the prospect of large revenue flows to federal coffers as a result of diamond mines and oil and gas development in the Northwest Territories. Although the language today would be couched in gentler terms, the Carrothers Commission report in 1966 gave voice to a view that continues to prevail in some quarters: "It is not conceivable that the central government would convey title to the minerals and petroleum reserves of one-third of the land mass of Canada to a government of less that 0.2% of the total Canadian population, three fifths of whom are indigenous peoples, who ... are at the present time politically unsophisticated and economically depressed."79 Indeed, media reports confirm that federal officials are well aware of the potential revenue flows from the Northwest Territories. As the National Post reported, "providing the infrastructure to ensure prosperous diamond and oil ventures will also boost Canada's Gross Domestic Product by $53-billion and bring in $10-billion in taxes and royalties in the next 15 to 20 years, according to documents obtained by the National Post under the Access to Information Act. 'With proper investments ... the North could become an economic powerhouse,' according to the Department of Indian and Northern Affairs Canada."80 By contrast, self-government agreements have been devolving greater powers and responsibilities to northern governments in relation to some or all of the so-called "social envelope" programs. These include such matters as health, education, social services, and social housing. These programs tend to be very expensive, particularly in the North. In most Canadian provinces, it is the social envelope programs that account for the lion's share of provincial spending. Surely this is a compelling argument for transferring the levers of economic development to northern governments rather than retaining them in Ottawa. Given capacity issues alone, the success of any new institutions and systems in the Northwest Territories will be dependent on the formal and informal relationships that exist between and among the various levels of governments. However, there is another factor that places a premium on cooperation:

CANADA'S NORTH AND TOMORROW'S FEDERALISM

numerous formal consultation requirements are being imposed on northern governments at the territorial, regional, and community levels. The range of matters requiring consultation is quite extensive and this will likely necessitate formal and informal intergovernmental mechanisms to ensure compliance. Indeed, land-claim and self-government agreements have begun to define the term "consultation." A typical definition sets out formal requirements such as the following: "consultation" means (a) the provision, to the person or group to be consulted, of notice of a matter to be decided in sufficient form and detail to allow that person or group to prepare its views on the matter; (b) the provision of a reasonable period of time in which the person or group to be consulted may prepare its views on the matter, and provision of an opportunity to present such views to the person or group obliged to consult; and (c) full and fair consideration by the person or group obliged to consult of any views presented.81 The Northwest Territories special committee observed in its report: Obligations to consult that are imposed on both the GNWT and self' governments carry with them formal requirements for notification, information exchange and dialogue. In practice, these obligations will likely require governments to find formal and informal mechanisms to coordinate a range of activities including planning, policy-making, law-making, programs and service delivery, and enforcement.... The mechanisms, time and resources to manage all these formal consultation processes could be considerable once all self-government agreements are in force. Unlike many current consultation processes which are discretionary on the part of the GNWT, the consultation provisions of self-government agreements will potentially have more political and legal force. A failure to meet the requirements could be a breach of a constitutionally-protected agreement.82

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Recalling that there might eventually be seven or more separate selfgovernment agreements in the Northwest Territories covering virtually the whole territory, the committee observed that all governments will have to determine what levels of time and resources should be dedicated to consultations; how multiple or overlapping consultation processes should be managed; how conflicting input can be reconciled; and how, ultimately, the input from consultations should be integrated into each governments policy making and law making: "responsibility for planning and preparing for the implementation of self-government does not fall upon the GNWT and the Legislative Assembly alone. The federal government and Aboriginal governments are partners in this process and we encourage early attention to enhancing existing forums, and to promoting and establishing new forums, where appropriate, to ensure ongoing dialogue on implementation issues."83 In summary, coordination and cooperation among governments will be essential to ensure efficient and effective governance, to reduce overlap and duplication, to achieve the best program and service delivery for all Northwest Territories residents, and to ensure that lines of accountability are clear. Such coordination and cooperation will have to be orchestrated in a political environment where several governments may be "competing" for human and financial resources, as well as for legitimacy. In this environment of concurrent jurisdiction, northerners will likely hold a range of views as to which northern government is the proper decision maker on any given issue of the day. Yukon The situation in Yukon is equally complex but distinctly different from that of the Northwest Territories. As described above, most Yukon First Nations have now settled their land claims and also have self-government agreements in place. However, an important element of the self-government agreements in Yukon, which distinguishes them from the agreements in the Northwest Territories, is the adoption of what some commentators call a "displacement model" in relation to certain legislative fields. Rather than a concurrency model, First Nation governments may occupy certain legislative fields and displace the Yukon legislatures laws. The federal Yukon First Nation Self-government Act states:

CANADA'S NORTH AND TOMORROW'S FEDERALISM

19. (1) To the extent that a Yukon enactment and a law enacted by a first nation make provision for the same matter, the Yukon enactment does not apply to the first nation, to its citizens or in respect of its settlement land. (2) Subsection (1) does not affect the application of any Yukon enactment relating to taxation. (3) Where, in the opinion of the Yukon Government, subsection (1) renders a Yukon enactment partially inapplicable and thereby unreasonably alters the character of the Yukon law, or makes it unduly difficult to administer the Yukon enactment in relation to a first nation named in Schedule II, its citizens or its settlement land, the Yukon Government may order that the Yukon enactment ceases to apply in whole or in part to the first nation, to its citizens or in respect of its settlement land. In our federal system, where the courts now seem consistently to reject a rigid approach to legislative jurisdiction,84 this is a significant variation that will have to be taken into account in coming years in the context of intergovernmental relations relating to the Yukon. It is noteworthy that a displacement model is also being explored in negotiations with the Federation of Saskatchewan Indians; the merits of this approach have been described in a paper by Ian Peach and Merrilee Rasmussen.85 Nunavut Nunavut was established in 1999 as a requirement of the Inuit land-claim agreement. An important dynamic in the future of Nunavut will be the relationship between the primary Inuit land-claim authority, Nunavut Tunngavik Incorporated, and the Nunavut government. In terms of governance models, Nunavut has scattered its ministries and departments throughout numerous small communities across its vast territory. In a territory where transportation and communication infrastructure is limited and expensive, this strategy involves some serious practical challenges for the Nunavut government. However, Nunavut is one of the first governments in the world to be building its institutions from the ground up around a backbone of new information and communication technologies, which could potentially make it a leader in e-governance.

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The creation of Nunavut initially captured public imagination in Canada and abroad, but the focus has gradually shifted back to issues of cost and capacity, Nunavut's dependence on transfers from Ottawa is well known. In a column in the Globe and Mail in February 2004, James Eetoolook, president of Nunavut Tunngavik Inc., a land-claim body established to oversee implementation of the Inuit land-claim agreement, urged that "those charged with turning the government's good intentions on relations with aboriginal people into reality should pay close attention to today's Auditor General's report."86 However, the auditor general's report to which he referred unleashed the sponsorship scandal involving hundreds of millions of dollars funnelled into Quebec advertising firms. Few commentators paid much attention to the chapters of the report that were critical of land-claim implementation processes. Eetoolook expresses the Inuit hope that the Department of Indian Affairs and Northern Development "be given new marching orders to begin applying modern economic and social planning to the land-claims process—or that the job ... at last be given to an agency that can."87 The Circumpolar Affairs and the International Dimension Aside from the internal dynamics of the emerging governments in the three territories, there is abundant evidence that other nations (e.g., USA and China) are increasingly paying closer attention to circumpolar and related international affairs. There is certainly a record of Canadian achievement, which includes leadership in the formation of the Arctic Council, ratification of international instruments to control transboundary contaminants, ocean and wildlife research programs, and more recently bringing greater international focus on the human dimensions of the circumpolar Arctic. However, Canada needs to become more serious about maintaining its momentum as a leader in these fields. A glance at media reports and commentary suggests that Arctic research and science are adrift. Sovereignty and security responses appear to be ad hoc.88 Canada's atrophied defence capacity and limited coast guard capacity make coherent Arctic operations difficult. The prospect of a relatively ice-free Arctic, which is predicted in some global warming scenarios within the next fifty years, ushers in a host of changes for Canada on its northern flank.89 How should Canada prepare, for example, to deal with regulation and monitoring of Arctic

CANADA'S NORTH AND TOMORROW'S FEDERALISM

shipping;90 defence and security issues; environmental regulation and enforcement; Arctic coast guard and search and rescue capacity; Arctic fishing and other ocean issues; offshore oil and gas and mining; changes to habitats that threaten wildlife; the potential collapse of traditional northern economies; climate change impacts on land and sea infrastructure; threats to coastal communities from rising sea levels; new health issues caused by pest-borne infectious diseases; possible pressures for fresh-water exports; and so on? There are occasional signs that Canada is beginning to take the North more seriously. In the throne speech in October 2004, the Martin government declared: A region of particular challenge and opportunity is Canada's North— a vast area of unique cultural and ecological significance. The Government will develop, in cooperation with its territorial partners, Aboriginal people and other northern residents, the first-ever comprehensive strategy for the North. This northern strategy will foster sustainable economic and human development; protect the northern environment and Canada's sovereignty and security; and promote cooperation with the international circumpolar community.91 The federal government conducted a series of consultative sessions with northern stakeholders and began the process of developing a strategy paper that would outline a range of priorities and actions relating to the North. The federal government also recently conducted an evaluation of its policy statement released in 2000, entitled The Northern Dimension of Canada's Foreign Policy (NDFP).92 This policy statement recognized that "a sense of northernness has long been central to the Canadian identity, but the North has historically played a relatively small and episodic part in Canadian foreign policy."93 However, it also recognized that "our future security and prosperity are closely linked with our ability to manage complex northern issues."94 For now the federal government has decided to maintain the basic objectives set out in the NDFP.

The Next Fifty Years: Constructing Tomorrow's Federalism Fifty years from now the impacts of climate change could make the North a very different place from what it is today. The recent Impacts of a Warming Arctic—Arctic Climate Impact Assessment 95 considers that a relatively ice-free

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Northwest Passage is possible within the next few decades. International interest in the circumpolar North is growing. The North is already perceived as more accessible. An influx of population and the opening of northern sea routes are realistic possibilities. Canada is at a turning point in relation to the North. Canada thinks of itself as a leader in northern and Arctic affairs, but, like so many areas of endeavour, a perceptible atmosphere of drift seems to have characterized our efforts over the past few years. Other Arctic states appear to have clearer goals and better-denned interests in the circumpolar arena. Tiny Iceland, for example, managed to achieve and perhaps surpass its ambitious agenda during its chairmanship of the Arctic Council (2002 to 2004), By comparison, Canada seems to have fewer and fewer significant deliverables. To suggest that the Government of Canada and northern governments are doing nothing in the North would, of course, be a serious mistake. In fact, there are numerous laudable and forward-thinking programs and initiatives that have been put into place; however, activities tend to be ad hoc and disassociated from any clear strategy or vision. As one federal official candidly quipped in a private conversation: "We know where we've been in the North, but we haven't a clue where we are going." Consequently, there is little or no sense of accumulated achievements based on clear long-term goals and objectives. As mentioned earlier, a major northern strategic initiative was launched in December 2004 by the minority Liberal government of Paul Martin. However, the initiative seemed to lose momentum and no final product was made public before the Martin government was eventually replaced by a minority Conservative government in January 2006. A number of pressing issues require a rethinking of our national interest in the North and more focussed policy development, strategic planning, and substantive actions to respond to what is happening in the Canadian and circumpolar North. At the local level, a burgeoning and youthful population in the North is placing high demands on local economies in terms of health care, housing, child care, education, and employment opportunities. Climate change, energy security, sovereignty, resource development, ecosystem conservation, air and ocean transport—these are only some of the issues challenging the North, and they are also mainstream issues for Canada in our national and international relations. These issues include:

CANADA'S NORTH AND TOMORROW'S FEDERALISM

»

* *

*

*

*

+

*

How will the new governance models being negotiated in the North affect federal-provincial-territorial relations and governance structures throughout Canada? Where does an increasingly accessible North fit into Canada's thinking about the circumpolar and larger international affairs ? Is there a coherent and integrated plan or strategy for carrying out ongoing responsibilities for core federal functions such as upholding Canadian sovereignty and security? Is there a comprehensive and cogent plan for the Government of Canada to meet its ongoing obligations and responsibilities for Aboriginal peoples in the North, in keeping with fiduciary relationships, legal and constitutional responsibilities, and, where applicable, land-claim and self-government agreements? Is Canada prepared to dedicate the necessary resources to play a decisive leadership role in circumpolar and international relations that directly affect the North, and, more particularly, integrate the North into a broader foreign policy that takes into account Canada's place in the world in the twenty-first century? Is the Government of Canada, in concert with the relevant territorial, provincial, and Aboriginal governments, willing to do its part to build and enhance the capacities of northern individuals, institutions, and infrastructure so that, to the greatest extent possible, economic, political, and social decisions affecting the North are made in the North? Is the Government of Canada prepared to exert the discipline necessary to avoid ad hoc initiatives and to make strategic investments to get better value for Canada and for northerners, and to better integrate the region into Canada's national policies and programs? How will Ottawa respond to changing circumstances that cry out for new federal-territorial political and financial relations?

The territories are currently high-cost regions that are net beneficiaries of federal transfers, but the Northwest Territories, at least, stands a good chance of becoming a "have" jurisdiction in the very near future. Diamond mines and oil and gas development could have this result. Natural resource developments

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in Nunavut and Yukon also have some potential to significantly reduce dependence on Ottawa. In order for the Government of Canada to integrate northern perspectives and issues into the development of our national and international policies and strategies, it must be committed to work with northern governments—Aboriginal, territorial, and provincial—to begin to appreciate the role the North could have in defining Canada, and Canada's place in the world, in the twenty-first century, In 1965—66, when the Carrothers Commission was examining the development of government in the Northwest Territories, the prevailing assumption was that territories would, by incremental steps, arrive at provincehood. The new amending formulae in the Constitution Act, 1982 and the advent of Aboriginal self-government agreements appear to have sidetracked, if not foreclosed, that option, A future for Yukon, Northwest Territories, and Nunavut as perpetual territories administered in accordance with federal priorities flies in the face of Canada's international pride in its Aboriginal policies and the Canadian brand of federalism. However, the question still remains: What's next for the North ? 1

Davidee, personal communication with author, Rankin Inlet, NWT, 1985.

2

Ian Peach and Merrilee Rasmussen,"Federalism and the First Nations: Making Space for First Nations' Self-determination in the Federal Inherent Right Policy," Commonwealth Law Bulletin 31 (2005): 10.

3

See, for example, chapters 8 and 9 of the Auditor General's Report, February 2004.

4

Reproduced in B.W. Funston and E. Meehan (eds.), Canada's Constitutional Documents Consolidated (Toronto: Carswell, 1994), 233.

5

See item 3 of the schedule to the Constitution Act, 1982.

6

See the Adjacent Territories Order, 31 July 1880, listed as item 8 of the schedule to the Constitution Act, 1982.

7

See Norman Nicholson, The Boundaries of the Canadian Confederation (Waterloo: Macmillan, 1979).

8

S.C. 1869, c. 3.

9

Manitoba Act, 1870 (Can.) 33 Viet., c. 3.

10

See ss. 2 and 4, respectively, Constitution Act, 1871, 34-35 Viet. c. 28 (UK).

11

S.C. 1875, c. 49; now called the Northwest Territories Act, R.S.C. 1985, c. N-27.

CANADA'S NORTH AND TOMORROW'S FEDERALISM

12

Agreement between the Inuit of the Nunavut Settlement Area and Her Majesty the Queen in Right of Canada (Tungavik Federation of Nunavut and Canada, DIAND, 1993), 23.

13

S.C.1993,c.28.

14

Morton, W.L. "The'North' in Canadian Historiography," in Transactions of the Royal Society of Canada, vol. 4, no. 8 (1970), 31.

15

J.A, Corry, Democratic Government in Politics, 2nd ed. (Toronto: University of Toronto Press, 1951),

16

Source:

17

Ibid.

18

Ibid.

19

Morris Zaslow, The Opening of the Canadian North 1870-1914 (Toronto: McClelland and Stewart, 1971), 143.

20

Ibid.

21

Ibid.

22

R.S.C. 1952, c. 331,s.8(l).

23

Canada, Report of the Advisory Commission on the Development of Government in the Northwest Territories, vol. 1 (Ottawa: Queen's Printer, 1966), 105.

24

Canada, Dept. of Resources and Development, Administration of the Northwest Territories (Ottawa: Queens Printer, 1953), 18.

25

Ibid.

26

Ibid.

27

Ibid.

28

Ibid.

29

Ibid., 59.

30

Ibid., 15.

31

Ibid., 14.

32

See, for example, R. v, Sikyea [1964] 43 DLR (2d) 150.

33

Re Paulette (1973) 42 DLR (3d) 8 (NWTSC).

34

Jack Sissons, Judge of the Far North (Toronto: McClelland and Stewart, 1968), 173.

35

Ibid.

36

Ibid.

151

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37

William G. Morrow, Northern Justice: The Memoirs of Mr, Justice William G. Morrow, ed. W.H. Morrow (Toronto: Osgoode Society for Canadian Legal History and Legal Archives Society of Alberta, 1995), 161,

38

Ibid., 162.

39

Morrow, 177.

40

See Kirk Cameron and Graham Gomme, The Yukon's Constitutional Foundations, vol. II, A Compendium of Documents relating to the Constitutional Development of the Yukon Territory (Claredge: Yukon, 1991), 159. A detailed chronology of Yukon's constitutional development is contained in Steven Smyth, The Yukon's Constitutional Foundations, vol. 1, The Yukon Chronology (1897—1999) (Whitehorse: Claredge Press, 1999).

41

Interpretations of s. 42(l)(f) generally overlook the fact that the Constitution Act, 1982 reaffirms the Constitution Act, 1871, which authorizes Parliament alone to establish new provinces in the Territories. For a discussion of this point, see Peter Hogg, Constitutional Law of Canada, 3rd ed. (Toronto: Carswell, 1992), 80.

42

Canada, Aboriginal Self-Government: The Government of Canada's Approach to Implementation of the Inherent Right and the Negotiation of Aboriginal Self-Government (Ottawa: Government of Canada, 1995), 3. "The Government of Canada recognizes the inherent right of self-government as an existing Aboriginal right under section 35 of the Constitution Act, 1982."

43

Government of Canada and Yukon Government, Yukon Northern Affairs Program Devolution Transfer Agreement (Ottawa: Dept. of Indian Affairs and Northern Development [DIAND], 2001) [ISBN 0-662-31258-9].

44

Source:

45

Government of Canada, "Seizing Canada's Northern Advantage: The Northern Strategy," unpublished draft.

46

R.S.C 1985, c. N-27 as am.

47

S.C.2002,c.7asam.

48

S.C 1993, c. 28 as am.

49

See s, 60 of the NWT Act.

50

See, for example, s. 44(1) of the NWT Act.

51

Government of Canada and Yukon Government, Yukon Northern Affairs Program Devolution Transfer Agreement (Ottawa: DIAND, 2001) [ISBN 0-662-31258-9].

52

Umbrella Final Agreement between the Government of Canada, the Council for Yukon Indians and the Government of the Yukon, May 29, 1993 (Ottawa, DIAND, 1993).

CANADA'S NORTH AND TOMORROW'S FEDERALISM

53

Vuntut Gwitchin First Nation (1993); First Nation of the Nacho Nyak Dun (1993); Champagne and Aishihik First Nations (1993); Teslin Tlingit Council (1993); Selkirk First Nation (1997); Little Salmon/Carmacks First Nation (1997); Trondek Hwechin First Nation (formerly Dawson First Nation) (1998); Ta'an Kwach'an Council (2002),

54

Source:

55

Legislative Assembly of the Northwest Territories, Special Committee on Implementation of Self-Government and the Sunset Clause, The Circle of Self-Government: Report of the Special Committee on The Implementation of Self-Government and the Sunset Clause, tabled 6 June 2003, pp. 1-2.

56

The Western Arctic (Inuvialuit) Final Agreement (1984) s. 14(77).

57

See Legislative Assembly of the NWT, The Circle of Self-Government, 16. B. Funston was the writer/facilitator to this committee.

58

See, for example, Roberts v. Commissioner of the NWT et at, 2002 NWTSC 68; R. v. Northwest Territories, (1995) 1 W.W.R. 17; Morin v. Crawford (1999), 14 Admin. L.R. (3d) 287.

59

See Sahtu Dene and Metis Comprehensive Land Claim Agreement (1993), vol. 1, s. 3.1.1; and Tlicho Agreement (2003), s. 2.1.1.

60

This is a denned term in the agreement.

61

Gwich'in Comprehensive Land Claim Agreement, vol. 1, s. 2.

62

Ibid., vol. 1, s. 24 (4).

63

Ibid., vol. 1, s. 24 (3).

64

See Allan C. Hutchinson, Judges and Politics: An Essay from Canada, (2004) 25 SCLR (2d) 269, p. 274 - 75.

65

Doucet-Boudreau v. Nova Scotia (Min of Education) (2003), 3 SCR 3. The Supreme Court of Canada upheld the judgement of the trial judge wherein he retained jurisdiction to hear reports on the government's conduct of his finding that they had to supply "best efforts" to provide French-language school facilities and programs.

66

Tlicho Agreement, s. 2.15.1.

67

R. v. Powley (2003) SCC 43.

68

[1996] 2 SCR 507.

69

Lori Sterling and Peter Lemmond, R. v, Powley: Building a Foundation for the Constitutional Recognition of Metis Aboriginal Rights, (2004) 24 SCLR (2d) 243, p. 244.

70

Ibid., 246.

71

Legislative Assembly of the NWT, The Circle of Self-Government, 16.

72

Ibid., 17.

153

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CONSTRUCTING TOMORROW'S FEDERALISM

73

Ibid., 18.

74

Gordon Robertson, Northern Provinces: A Mistaken Goal (Montreal: Institute for Research on Public Policy, 1985), 37.

75

Mr. Funston was the principal author/facilitator for this committee,

76

Legislative Assembly of the NWT, The Circle of Self-Government, 11.

77

Ibid., 19-20.

78

Ibid., 21.

79

Canada, Report of the Advisory Commission on the Development of Government in the Northwest Territories, 148.

80

Allan Woods, "Development Seen as Key to Wealth, Sovereignty," National Post, 17 March 2004.

81

See Article 1.1.1 of the Land Claims and Self-government Agreement among the Tlicho First Nation as Represented by the Dogrib Treaty 11 Council and the Government of the Northwest Territories and the Government of Canada (initialled on 04 September 2002 and given effect by the Tlicho Land Claims and Self-Government Act, S.C. 2005, c. 1 [Assented to 15 February 2005]).

82

Legislative Assembly of the NWT, The Circle of Self-Government, 23-24.

83

Ibid., 31.

84

In The Labour Conventions Reference [1937] A.C. 326, Lord Atkin referred to "watertight compartments which are essential parts of the original structure." However, the constitution is now more generally seen, in the words of Lord Sankey, as "a living tree capable of growth and expansion within its natural limits." Lord Sankey s view has been quoted with approval in several recent cases. See Peter Hogg, Constitutional Law of Canada, 3rd ed. (Toronto: Carswell, 1992), 414 n. 210.

85

The Saskatchewan negotiations are discussed in Peach and Rasmussen, "Federalism and the First Nations."

86

James Eetoolook/'The Lost Promise of Nunavut," Globe and Mail, 10 February 2004, p.A21.

87

Ibid.

88

See, for example, Andrea Mandel-Campbell/'Who Controls the Arctic," The Walrus (December 2004): 54-61.

89

See Impacts of a Warming Arctic—Arctic Climate Impact Assessment (Cambridge: Cambridge University Press, 2004).

90

See, for example, Institute of the North, et al, Arctic Marine Transport Workshop, 28-30 September 2004 (Alaska: Northern Printing, 2004).

CANADA'S NORTH AND TOMORROW'S FEDERALISM

91

Canada, Speech from the Throne to Open the First Session of the Thirty-Eighth Parliament of Canada, 5 October 2004 (Ottawa: Queen's Printer, 2004).

92

Canada, Foreign Affairs, The Northern Dimension of Canada's Foreign Policy (Ottawa: DFAIT Communications Branch, 2000).

93

Ibid., 2.

94

Ibid,, 2.

95

See Impacts of a Warming Arctic.

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Federalism and First Nations: In Search of Space Gabrielle A. Slowey

I

n November 2003, the Government of Canada, under the leadership of Prime Minister Martin, expressed plans to renew Canadian federalism and address outstanding issues pertaining to First Nations self-government.1 Tellingly, these two priorities were treated as separate and not interconnected. By separating out these two issues, it appeared the federal focus was not on reconciling the place of First Nations people within the federation, but on the resolution of residual matters. Yet, First Nations people have turned increasingly to treaties (both old and new) as the basis upon which to negotiate a new relationship with the state and root their self-determination.2 This raises an important question: do treaties entitle First Nations people to a place at the federal table? And, if so, is there space for First Nations governments? Drawing upon the conceptual framework of treaty federalism, this paper3 argues that treaties have not altered the policy-making norms of intergovernmental relations as expressed through the traditional forums of executive federalism, such as First Ministers' conferences. Instead, treaties (both modern and historic) have led to the realization of numerous asymmetrical intergovernmental agreements. Recent examples include the industry-government-First Nation agreement negotiated by the Treaty 8 umbrella group, the Athabasca Tribal Council, or the Paix des Braves signed by the James Bay Cree, negotiated between different First Nations governments (or their aggregate representatives) and federal/provincial/territorial orders of government. These intergovernmental agreements do not, however, represent treaty federalism because

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CONSTRUCTING TOMORROW'S FEDERALISM

they do not recognize First Nations as possessing powers as governments operating on a level equal to the federal and provincial or territorial governments. Instead, they reiterate the reality of trying to fit "Indian" governments into the current federal-provincial-territorial system (as governments akin to municipalities with special needs). Thus, they do not represent a significant step towards achieving the end goal of decolonization of state-First Nations relations intrinsic to treaty federalism. Treaty Federalism: The Conceptual Framework for a Renewed Relationship First Nations treaties "constitute one of the central pillars of the Canadian constitutional order" and bestow upon First Nations people certain rights and privileges.4 Treaty entitlements range from the assignment of land rights to provisions for the development of programs and policies pertaining to the delivery of social services, justice, policing, and community and economic development that are essential to the practice and realization of self-determination. They provide a foundation for First Nations governments to govern. But, as Abele and Prince explain, "Canada's evolving First Nations governments are [just] one expression of First Nations and treaty rights."5 Another expression of First Nations and treaty rights is "treaty federalism." What is treaty federalism? According to Youngblood Henderson, treaties are the basis for a new relationship, one he terms treaty federalism.6 A concept that represents the ideal state-First Nations relationship, treaty federalism is defined as "an existing and constitutional concept and mechanism [designed] to allow First Nations peoples to take over their affairs and destiny."7 Its premise, one strongly endorsed by the Royal Commission on Aboriginal Peoples (RC AP), is that treaties establish the basic links between First Nations peoples and the Crown. Representing a conceptual framework that can be used to accommodate peoples and their governments within the existing constitutional order, through the development of new, federal-type relationships, treaty federalism proposes that First Nations governments be viewed explicitly as a third order of government and that, consequently, their views be taken into account when it comes to addressing issues of mutual concern. It is primarily a theoretical construct that sets out a normative course of action aimed at the decolonization of

FEDERALISM AND FIRST NATIONS

relations between First Nations peoples and the Canadian state in the pursuit of social justice. Treaty federalism is as essential to decolonization of the First Nations-state relationship as self-government itself. Indeed, the two concepts are interlinked, as treaty federalism is predicated upon a government-to-government relationship. Put differently, as First Nations people gain effective control over different policy areas, they require a place at the intergovernmental negotiating table. Therefore, self-government, like treaty federalism, represents an expression of treaties, in that treaties are rooted in mutual recognition and nationhood. Although, in some cases, self-government is not rooted in treaty (and this is not just the case for some First Nations but also for other Aboriginal groups like the Metis and Inuit), for those First Nations that do possess a treaty, it provides one way to secure the necessary authority, resources, and jurisdiction required to design and deliver public services, like education and health care, within their communities.8 As Ladner writes, treaties affirm "the right of each nation to govern without interference within their own realms of influence within the shared territory,"9 Even for those First Nations without treaties, they provide a principled conceptual framework for the exercise of the Aboriginal inherent right to self-government. To that end, treaties pave the way for political accommodation of new and developing First Nations governments. However, they also provide the basis for their inclusion in constitutional and federal processes. Although considered from a theoretical perspective, treaty federalism as the ideal remains critical since it embodies the original spirit of the treaties; that is, in which First Nations governments are not subsumed under other orders of government but are in some way equal to them. The concept of treaty federalism holds the solution for many of the problems that First Nations face today through restructuring and decolonizing the First Nations/non-First Nations relationship.10 Such a change is necessary if only because, as Abele explains, the health and fairness of the relationship between First Nations people and Canada affect all Canadians. Abele suggests that it is not simply a matter of getting along or mutual accommodation. It is also a matter of reconciling outstanding conflicts between First Nations people and the state. This reconciliation is critical because, "in public policy terms, the relationship between First Nations people and the Government of Canada

159

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shapes the capacity of the federal government [and the provinces] to regulate land and resource use, to promote economic development, and also to address many other important economic issues that are critical to the position of Canada in the global marketplace."11 Given the potential positive public policy outcomes of a renewed and restructured relationship between First Nations and government, treaty federalism is essential because, as Cosentino suggests, it provides the "means for envisioning contemporary intergovernmental mechanisms to deal with common interests and conflicts as they occur."12 In terms of its operation, White proposes that there exists an important, practical dimension to treaty federalism. He writes that it is ultimately about "sharing jurisdiction and authority, multi-level governance capable of melding very different cultural perspectives and socio-political priorities, and [the] practical accommodation of First Nations and Euro-Canadian needs and traditions."13 It does not require a restructuring of federalism as it builds on an existing understanding of federal governance; rather, it simply necessitates the honouring of constitutional responsibilities by the state.14 In theory, therefore, treaties entitle First Nations to a place at the federal table and treaty federalism provides a practical way for this to occur. But the question then becomes, is there space for First Nations governments at the federalism table? In search for an answer to this question, this chapter evaluates the significance of intergovernmental agreements upon the wider structures of governance and assesses their impact on the operation of Canadian federalism.

Federalism and First Nations: Exclusion from First Minister Relations If decolonization a la treaty federalism reflects an important political agenda, to what extent is it consistent with the current shape of state-First Nations relations;1 That is, to what extent are First Nations engaged in government-togovernment(-to-government) relationships:* Although First Nations groups participated in the formative constitutional discussions that ultimately led to the patriation of the constitution in 1982, they were left out of subsequent discussions during the Meech Lake Accord. Soon thereafter, in formulating the Charlottetown Accord, First Nations groups once again enjoyed status as full participants in high-level discussions. Yet, even though First Nations peoples

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were invited to the federalism table in the era of constitutional renewal, since that time, First Nations voices in the federal process have been conspicuously absent,15 This is because Canadian federalism remains centred on federalprovincial-territorial relations and this power grid provides little, if any, space for First Nations governments to participate.16 Consequently, First Nations governments have been marginalized, frustrating their efforts to effect change within the existing constitutional order. For example, in 1999, only seven years after the demise of the Charlottetown Accord, federal-provincial-territorial leaders met to negotiate a new relationship in a number of social policy areas. At that time, despite the support by a majority of Canadian premiers (those of Ontario, British Columbia, Alberta, Saskatchewan, Manitoba, and Nova Scotia, as well as territorial premiers), and despite their previous participation, the Social Union Framework Agreement (SI/FA) was negotiated and concluded without the participation of First Nations groups (or Quebec).17 First Nations leaders had interpreted provincial support for First Nations participation as meaning they would have a seat at the government-to-government, federal-provincial-territorial negotiating table.18 In reality, however, the provinces were committed only to giving "consideration to proposals by First Nations organizations to strengthen their involvement in the process," and even this was contingent on Ottawa's approval.19 In the end, as Dacks explains, "the Prime Minister rejected the idea of continuing First Nations participation in first ministers' meetings because he was convinced that their presence would only complicate the task of improving the unsatisfactory tone and productivity of those meetings."20 Dacks argues that the lack of First Nations participation in S UFA discussions represented the diminution of the position of First Nations peoples as partners in Canadian federalism from that which they held at the beginning of the 1990s. In February 2003, First Nations leaders were once again excluded from executive-level discussions, this time at a meeting of the prime minister and the premiers, to forge a new agreement on health care, an issue that profoundly affects them. At the time, Assembly of First Nations Chief Matthew CoonCome expressed his frustration, proclaiming that First Nations people were the people who would most benefit from health-care reform in Canada but who were most noticeably absent from the federal-provincial-territorial negotiating table.

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He explained that "the Prime Minister recently said that since today's meeting was a 'first minister's conference,' only first ministers would be there. With respect, Mr. Chretien, this excuse is fatuous. If there are no seats at the table for First Nations leaders, that's because—in keeping with tired, colonial and discredited past conceptions of Canadian federalism—you deliberately set the table to exclude us,"21 Coon-Come's observation makes reference to the fact that First Nation exclusion from federal-provincial-territorial negotiations is not simply the outcome of an exogenous power grid that blocks out First Nations governments and their representatives, but is also a consequence of colonial attitudes that box them in and that are responsible for creating the exclusionary structure. It is in large part the federal government's insistence on maintaining the current colonial environment that keeps Canadian federalism stuck in a time warp and laden with colonial attitudes that prevent First Nations participation in executive federalism. Attitudes of colonialism and paternalism thus remain the critical barriers to opening up space at the federal-provincial-territorial table for First Nations governments. To achieve the decolonization vision inherent in treaty federalism, traditional attitudes about the role of the federal government as protector or guardian of First Nations people must change. To some extent this shift is beginning to occur. For instance, at the time of the federal-provincial-territorial discussions on health-care reform, Shirley Douglas, former chair of the Canadian Health Coalition, warned, "If they're [First Nations leaders] not at the table, who is going to discuss the lamentable, tragic and well-documented circumstances of First Nations health care?"22 Even former Health Minister Anne McLellan is said to have been "committed to delivering the message to the Prime Minister, loud and clear, that there should be full participation of the First Nations organizations at the First Ministers' Conference on Health."23 What these statements suggest is a growing awareness that First Nations groups must be included in First Ministers' negotiations to ensure their input on important policy matters that affect them, as the federal government has failed them. Further, they should become involved not only as a people or group of citizens, but also as governments with jurisdictional interests, since decisions about jurisdictional disputes, trade and international treaties, the exercise of

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constitutional powers, and the consolidation of neo-liberal practices all profoundly affect First Nations governments and those they represent.24 Put differently, it is increasingly difficult and false to try to separate out those issues that are of interest to federal-provincial-territorial governments and those that are of concern to First Nations governments, given the massive overlap of interests that require intergovernmental collaboration.

Federalism and First Nations: Intergovernmental ism and the Status Quo Despite the inability to penetrate the traditional federal-provincial-territorial executive arena in recent years, there has been a burgeoning of ad hoc, groupspecific intergovernmental agreements that bring First Nations governments together with other orders of government (sometimes one or more) to address different issues in different regions. Typically, these intergovernmental agreements are negotiated and signed among the federal, provincial, or territorial governments and First Nations organizations that represent an aggregate of First Nations governments and communities, such as the Grand Council of the Cree, the Athabasca Tribal Council, Treaty 8, Federation of Saskatchewan Indian Nations, and so forth. They generally centre on First Nations control, management, and participation in resource development. They formalize plans to provide funding for capacity building. They foster an environment of economic growth that is inclusive of First Nations interests and create opportunities for economic development. They outline government support and commitment to the development of resources, tourism, and training. They even involve First Nations in the development of policies that affect their communities. In essence, they are about governance, not the reconfiguration of stateFirst Nations relations. To demonstrate how these agreements fail to achieve the goals embodied in treaty federalism, this chapter now briefly considers two cases in which First Nations organizations, representing a number of First Nations governments in resource-rich areas, entered into agreements with other levels of government and how these agreements did not alter their position within the Canadian federation.

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Case 1: The Athabasca Tribal Council/Industry Working Group (1999) The First Nations of North Eastern Alberta are members of Treaty 8, an historic treaty signed in 1899 between First Nations and the Crown. The area is comprised of Cree and Dene peoples, and the ground is rich in oil, even if it is mired in sand. In fact, the oil sands, located immediately north of Fort McMurray, represent one of the most lucrative oil deposits in North America. In 1988, just as oil sands development was shifting into high gear, the different First Nations groups in this region (the Athabasca Chipewyan First Nation, Chipewyan Prairie First Nation, Fort McKay First Nation, Fort McMurray No. 468 First Nation, and Mikisew Cree First Nation, representing a combined total of more than 2500 Native Cree and Chipewyan/Dene people) came together to form the Athabasca Tribal Council (ATC). In large part, the aggregation of these groups under the umbrella of the ATC arose out of their mutual desire to manage the issues related to the impact of industrial development and maximize their opportunities to benefit from it. These interests were also shared by local industry groups and different levels of government, as expressed through the successful completion of the Industry-Working Agreement (1999) and All Parties Core Agreement (2002). The desire to create First Nations economies and opportunities for employment were reasons given as to why the federal and provincial governments were willing to enter into a tripartite agreement with the ATC* Government at all levels welcomed the opportunity to work with the ATC and help it secure ongoing social and economic benefits from the development occurring. Working to strengthen First Nations governance and build strong, self-reliant communities, on 5 March 1999, the ATC entered into the first of a series of renewable agreements with nine (and subsequently more) of the major resource development companies in the area. Later that same year, on 4 August, a memorandum of understanding was signed among the ATC and federal, provincial, and municipal levels of government. These agreements focussed on the long-term benefits of resource development, the environment, and training, as well as the development of infrastructure and capacity building for First Nations people. More specifically, they were designed to (1) develop community capacity; (2) identify community and regional issues and opportunities, and resolve those issues that pertain to industrial development and opportunities; and (3) work

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with the ATC on the development of strategies to obtain government support for addressing outstanding First Nation issues. What is significant about these agreements is the extent to which the ATC was successful in negotiating new economic arrangements with different groups and orders of government. According to former Indian Affairs Minister Robert Nault, "These kinds of partnerships are essential to First Nations [governments] in order to build a strong future"25 But even though the rhetoric suggests partnerships, the ATC agreement did not represent the transformation of state-First Nations relations in any meaningful way. That is, it did not include any recognition or acknowledgement of ATC First Nations governments as equal partners in Confederation. Instead, there was the further entrenchment of the ATC First Nations governments within the existing framework. Consequently, the ATC agreements do not represent the decolonization of First Nation-state relations, but, instead, centre on their normalization. Case 2: La Paix des Braves (2002) In 1975, the James Bay Cree (JBC) entered into a land-claim agreement with the federal and provincial government that became known as the James Bay Northern Quebec Agreement. At the time, they were criticized for allowing the Quebec government to participate in the negotiations. However, as Quebec was in charge of many of the social programs that were important to the JBC, they found it necessary to include them in the agreement. In the years following, relations between the JBC and the federal and provincial governments became strained, as they were involved in a series of court cases through which the JBC hoped to have the terms of the agreement fulfilled. There came a time when the Quebec government invited the JBC leader, Ted Moses, to the table in a goodwill gesture to try to resolve their differences. Together they arrived at a new agreement, known as the Paix des Braves. What brought the government of Quebec and the JBC together was mutual economic interest. The Quebec government of Bernard Landry was interested in developing more hydroelectric sites; the JBC were interested in participating in the regional economy, essentially premised on resource development projects, and generating employment for their youth. However, what is of significance is the extent to which Cree leaders now view this agreement as one between equal partners. They explain that it represents a peace between two

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parties historically at odds with one another. They argue that it is the result of a new partnership, one between the Quebec nation and the Cree nation, over the sharing of benefits accrued from development on their traditional territories.26 In their eyes, the Paix de Braves is based on the recognition of a nationto-nation relationship and the affirmation that First Nations governments are, in fact, one of three orders of government. Again, even though the rhetoric of the agreements suggests partnerships, the fact remains that neither this agreement (the Paix de Braves) nor the ATC All Party Core Agreement are made among governments as equals. These agreements are strictly about establishing economic relationships, based on mutual interests, and stabilizing state-First Nations relations. Even though bringing First Nations governments to the table with other levels of government to establish these economic arrangements may represent an important step forward for First Nations in the region by providing them a voice, they do not translate into a renewed relationship between the state and First Nations. Although federal, provincial, and territorial governments are involved in a number of intergovernmental agreements across Canada, the compulsion to enter into asymmetrical agreements is not evenly experienced across the country. There is more action in the northern, resource-rich areas where First Nations governments represent a potential threat to mineral and resource development.To some extent, what the ATC andjBC agreements, both highly visible and prominent within their own regions, reflect is simply the extent to which pressure for Canadian resources are still driving First Nations-provincial-territorial-federal relations.27 Viewed in this light, it is possible to understand why asymmetrical agreements that promote regional-specific solutions to social and economic inequalities (i.e., poverty and unemployment) are appealing. As Canada remains a capitalist nation, with its economy (and, in particular, regional economies) still reliant on staple production, governments at all levels have a vested interest in working with First Nations governments to ensure a stable investment climate. The benefit of the agreements for these First Nations, however, is limited to the recognition that their governments and their representatives must be consulted. Meaningful participation at the highest levels, along with recognition of, and accommodation for, First Nations autonomy within existing parameters of Canadian federalism, remains elusive.

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Instead of setting a place for First Nations governments at the federal table, structural and systemic barriers perpetuate the exclusion of First Nations and their governments. Hence, one must not overstate the significance of intergovernmental agreements because, even though different levels of governments and industry groups are working with First Nations governments and their representatives across Canada, these agreements are not tantamount to treaty federalism.

Conclusion In essence, the lack of treaty federalism confirms the fact that the Canadian state is not yet ready to affirm fully the distinctiveness of First Nations or their governments at the executive levels of the federation.28 As a result, important issues crucial to the decolonization of state-First Nations relations remain outstanding. As this chapter has demonstrated, the federal government instead continues to enjoy its paradoxical role as protector of the status quo and promoter of First Nations self-government, all the while providing for stable economic growth and unfettered resource development. Although treaties have yet to provide First Nations governments with the ability to influence central processes of Canadian federalism, like the politics regarding Kyoto, medicare funding, or the Social Union Framework Agreement, they have led to the development of asymmetrical agreements important to First Nations and governments (federal, provincial, and/or territorial) alike. However, what has been demonstrated is that treaty federalism represents a normative goal and describes a political agenda more than it reflects the current operation of Canadian federalism. Despite the fact that federalism provides opportunities for innovation and experimentation, what these agreements reveal is the extent to which government, at all levels, can respond effectively to the needs of previously marginalized societies, when these societies discover their power (e.g., to disrupt economic development), while also preserving federalism's status quo.29 In other words, as long as there is room within the current framework to satisfy the needs of First Nations governments, there is no need to experiment further or renegotiate First Nations government status, even though it is evident many issues exist that are intergovernmental in nature and hence mandate a rethinking of not only how governments operate but also

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how they interact. In spite of the perceived progress to date, most First Nations groups aspire to a day when the federal government, the provinces, the territorial leaders, and the leaders of their governments gather together as equals at the federalism table to address issues of mutual concern. As it has taken almost thirty years for the provincial government of Quebec to negotiate with the James Bay Cree on a nation-to-nation level, it will likely be some time before this version of federalism moves from being a dream to becoming reality. 1

At that time, Paul Martin promised Canada's premiers and territorial leaders a larger role in shaping the country's national policies and, subsequently, in the Speech from the Throne, he promised to boost educational opportunities and off-reserve services for First Nations peoples, as well as work towards more self-government deals. See "Martin, Premiers begin'new era'with pledge," (17 November 2003).

2

Because Canada is a federal state, the very concept of "the state" conflates levels of government, national and provincial/territorial. That their roles are separate is important to understand. At the same time, that their goals overlap is also important to understand since provinces like Alberta and Ontario and the federal government have, in recent years, adopted a similar stance, focussed on creating an economic climate conductive to investment by reducing their regulatory regimes. Hence, despite their independent roles, it is useful to draw on the notion of the state to encapsulate the way in which demands in the economy transform the government-society relationship. Self-determination is best understood as a combination of political self-government and economic self-sufficiency. As a legal concept, Gina Cosentino writes that treaties are the"basis upon which Indigenous peoples assert their claims for cultural autonomy and revival which includes, among other things, a just resolution of the (mis)appropriation of their lands, and state recognition of the political, economic and cultural rights^ flowing from prior occupancy and territorial sovereignty of many parts of pre-European contact North America." See Gina Cosentino,"Treaty Federalism: Challenging Disciplinary Boundaries, Bridging Praxis, Theory, Research and Critical Pedagogy in Canadian Political Science," in Camille A. Nelson and Charmaine A. Nelson (eds.), Racism Eh? RACISM EH? A Critical Inter-Disciplinary Anthology of Race and Racism in Canada (Toronto: Captus Press, 2004).

3

The author respectfully acknowledges and thanks Ian Peach for his support for this piece and the constructive comments provided by the anonymous reviewers.

4

Frances Abele and Michael J. Prince,"First Nations Governance and Canadian Federalism: A To-Do List for Canada," in Francois Rocher and Miriam Smith (eds.), New Trends in Canadian Federalism, 2nd ed. (Peterborough: Broadview Press, 2003), 135.

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5

See Frances Abele and Michael J. Prince, Counselfor Canadian Federalism: First Nations Governments and the Council of the Federation (Kingston: Institute of Intergovernmental Relations, and Montreal: Institute for Research on Public Policy, 2003), 1.

6

James Tully uses the term "treaty constitutionalism" to refer to what others call "treaty federalism." See James Tully, Strange Multiplicity: Constitutionalism in an Age of Diversity (Cambridge: Cambridge University Press, 1995).

7

James [Sakej] Youngblood Henderson, "Empowering Treaty Federalism," Saskatchewan Law Review 58 (1994): 326.

8

For the most part, self-government negotiations have been primarily directed at First Nations. Metis have been excluded from discussions and the approach for the Inuit of northern Canada has been the creation of Nunavut as a form of self-government. The Inuit of northern Quebec (Nunavik) are signatories to the James Bay and Northern Quebec Agreement of 1971, which led to greater autonomy for most of the Nunavik region.

9

Kiera Ladner, "Treaty Federalism: An Indigenous Vision of Canadian Federalisms," in Rocher and Smith (eds.), New Trends in Canadian Federalism, 185.

10

Ibid., 189.

11

Frances Abele, Katherine A. Graham, and Allan Maslove, "Negotiating Canada: Changes in First Nations Policy over the Last Thirty Years," in Leslie Pal (ed.), How Ottawa Spends: 1999-2000 (Don Mills: Oxford University Press, 1999), 251.

12

Cosentino, "Treaty Federalism."

13

Graham White, "Treaty Federalism in Northern Canada: First Nations-Government Land Claims Boards," Publius 32, 3 (2002): 93.

14

Ibid.

15

See Gurston Dacks/'The Social Union Framework Agreement and the Role of First Nations Peoples in Canadian Federalism," American Review of Canadian Studies 31, 1-2 (2001): 301-15. Peggy J. Blair, "A Review of the Social Union Framework Agreement and Its Implications on the Metis Nation" (B. Morse and Associates Consultants Ltd., March 2002); Native Women's Association of Canada,"Position Paper: The Social Union Framework Agreement" (March 2002); Congress of First Nations Peoples, "A Three-Year Review of the Social Union Framework Agreement" (March 2002); and Assembly of First Nations, "SUFA Recommendations Made by National First Nations Organizations" (March 2002), All these reports can be found at < www.socialunion.gc.ca. >

16

RadhaJhappan,"The Federal-Provincial Power-grid and First Nations Self-Government," in Rocher and Smith (eds.), New Trends in Canadian Federalism, 155-86.

17

Congress of First Nations Peoples,"A Three-Year Review of the Social Union Framework Agreement," 1.

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18

David Roberts, "Premiers Agree to Mull Native Role in Social-Union Talks," Globe and Mail 23 March 1999, p. A4.

19

Ibid.

20

Dacks/'The Social Union Framework Agreement," 307.

21

Matthew Coon-Come, "Mr. Chretien, You've Deliberately Excluded the First Nations," Globe and Mail, 4 February 2003, p. A17.

22

Ibid.

23

Assembly of First Nations, "First Nations Leaders Must Participate in First Ministers Conference on Health," (9 January 2003).

24

Joyce Green, "Decolonization and Recolonization in Canada," in Wallace Clement and Leah Vosko (eds.), Changing Canada: Political Economy as Transformation (Montreal and Kingston: McGill-Queen's University Press, 2003), 59.

25

Quoted in ibid.

26

Brian Craik, director of federal relations, Grand Council of the Cree, personal interview with author, Ottawa, ON, 14 November 2003.

27

Arguably, there exist other forces driving First Nations policy that include constitutional and legal obligations [s. 91(24) and s. 35], as well as international considerations/pressures.

28

Paul Rynard,'" Welcome In, but Check Your Rights at the Door': The James Bay and

Nisga'a Agreements in Canada," Canadian Journal of Political Science 33, 2 (2000): 211-44.

29

Richard Simeon and Katherine Swinton, "Introduction: Rethinking Federalism in a Changing World," in Karen Knop, Sylvia Ostry, Richard Simeon, and Katherine Swinton (eds.), Rethinking Federalism: Citizens, Markets, and Governments in a Changing World (Vancouver: University of British Columbia Press, 1995), 9.

Constructing Political Spaces for Aboriginal Communities in Canada Frances Abele and Michael J. Prince It is clear to the Commission that if Aboriginal peoples are to exercise their self-governing powers within the context of Canada's federal system, then federal and provincial governments must make room for this to happen. Instead of being divided among two orders of government, government powers will have to be divided among three orders. This is a major change, and one that will require goodwill, flexibility, co-operation, imagination and courage on the part of all concerned.1

C

anada's political map has been changed fundamentally by the activism of indigenous people—the constitution altered, new political jurisdictions created, and many new institutional practices developed and revised. While some architectural design still is to be done (notably in British Columbia, but elsewhere too), an equally important task now is to realize the dreams that have been embodied in the architects' drawings. This will be a multifaceted process. Canadians' "imagined Canada" has not caught up to the work of the architects—and it may not until the engineers, and the carpenters, electricians, plumbers, and other tradespeople, arrive. Rolling up our sleeves in this spirit, we consider current constitutional and intergovernmental arrangements in the context of very recent changes and

possible future relations between Aboriginal peoples and the federal, provincial/ territorial, and urban governments. To what extent may we observe the construction of a political space—in institutions and in our shared political imagination—in which Aboriginal self-determination may be expressed and flourish:1

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Our strategy in this chapter (which is part of a longer research program) is to review some official perspectives on the ways in which the federal system ought to be adjusting to these changes. Then, we describe some differing examples of important changes to Canadian governance that have been instituted during the last decade as a result of the renegotiation of Aboriginal-Canada relations that is underway. In a third step, we examine the available signs of how the Paul Martin government approached these same questions, and how the Stephen Harper government may approach them. Finally, in conclusion, we offer suggestions about outstanding puzzles and areas in which, in the words of the Royal Commission on Aboriginal Peoples, further'goodwill, flexibility, co-operation and courage" are required—while acknowledging that few people would see these characteristics as strong features of the Canadian federal system. While we cannot here consider all these important changes in AboriginalCanada relations, by way of illustrating the dimensions of the task before us, we will discuss four principal and diverse arenas of change: the British Columbia treaty process and Canada's inherent right policy; the Nisga'a treaty; the many ways in which the people of Nunavut are trying to shape their government and public service so that it reflects not only the Westminster model but also indigenous traditions and practices; and the particular circumstances and prospects of the over half of indigenous people who live in Canadian cities. These examples are from among many possibilities;2 they are sufficient, we hope, to illustrate the variety and the complexity of the institutional changes underway. The examples also serve to illustrate how significant are the details of administration and implementation, the practical arrangements, and the continuous refinement of these, after the large principles have been agreed to and the treaties signed. What efforts are underway to visualize a new place for the evolving Aboriginal governments within federalism? We will discuss three successive approaches to this question: the vision of the final report of the Royal Commission on Aboriginal Peoples; the federal response to the final report, as announced in Gathering Strength; and the early indications of how the Harper Conservative government is handling this question and policy field. To help assess what space has been made, and appears to be emerging, for Aboriginal communities in Canadian federalism, we consider recent ideas and

CONSTRUCTING POLITICAL SPACES

developments in relation to the three levels at which the institutions and processes of federalism operate. These are: the "high politics" of constitutional reforms, judicial rulings, and federal-provincial relations; mid-range politics of fiscal arrangements and political accords; and administrative politics of "onthe-ground" program management and service provision within communities. Our thesis in this chapter is that in response to the claims of Aboriginal communities over the past thirty years or more, developments at all three levels of federalism are contributing to the adaptation of Canada's federation. However, the achievements of new political spaces within federalism are episodic in occurrence, mixed in their results, and varied across the different groups of Aboriginal peoples.3 At present, the federal government's approach to Aboriginal-Canada relations appears attendant to all key groups (Inuit, Metis, First Nations, and off-reserve Aboriginal peoples). Yet, Harper's policy style seems cautious with respect to high politics of constitutional space for self-government, entailing some tinkering with federal government structures and modest enhanced investments in certain programs, such as health care. Both the Martin Liberals' and Harper Conservatives' preferred focal point is on what we call an "urban intergovernmental service approach" to Aboriginal peoples, an essentially administrative approach to both intergovernmental and Aboriginal-Canada relationships. Intergovernmental Visions The 1996 final report of the Royal Commission on Aboriginal Peoples (RC AP) appeared in the wake of the 1995 Quebec referendum crisis to an irritable minister of Indian Affairs and a distracted Cabinet preoccupied with national unity and deficit reduction. It did not improve the report's reception by the Chretien Liberals that the commission had been appointed to solve immediate problems created by the Mulroney Progressive Conservative Cabinet (a failure to establish institutions for Aboriginal-Canada elite accommodation after the defeat of the Charlottetown Accord, and the subsequent crises at Gustafson Lake, British Columbia, on the Peigan Reserve in southern Alberta concerning the dam on the Old Man River, and the perhaps more famous confrontation at Kanesetake/Oka).

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The RCAP reports monumental redrafting of all aspects of the history and future of Aboriginal-Canada relations received a restrained official federal response, substantially only in a single document, released a year after the commissions report was submitted and made public. The federal response is entitled Gathering Strength, It was named after Volume 3 of the commission's final report, which discusses social policy, the family, health and healing, housing, education, and arts and heritage. This seemed to signal that the focus of the federal response would not be on revision of a mutually acceptable and agreed-upon conception of the country and its history (Looking Forward, Looking Back, Volume 1) or on Restructuring the [political and economic] Relationship (the huge, two-part Volume 2). Ignored were the deeper RCAP recommendations and the more important symbolic ones, in favour of substantive policy areas in which service delivery is central. But, on the other hand, there is acknowledgement of past wrongs in the statement of reconciliation that accompanied the release of Gathering Strength, and the "nation-to-nation" principle that formed the foundation for the RCAP vision of the future found some muted expression in a more open federal approach to treaty making and newer models of policy development turning on the concept of "partnership." These measures certainly do not amount to a wholehearted launch of the RCAP's recommended paradigm shift, but they do represent, at least, a course correction worth notice.4 The commission identified the following "essential themes that underpin our recommendations and can assure the rebuilding of Aboriginal life in Canada":5 First, Aboriginal nations have to be reconstituted. The Commission recognizes that circumstances vary widely. It speaks directly to the situations of First Nations band governments that are "usually too small for effective self-government", to Metis who have "limited" political recognition, and to Inuit who have launched a distinctive process of governance reform that was already underway in the early 1990s."We propose a process through which Aboriginal communities join together in new institutions to seek recognition of their status as modern nations." Second, a process must be established for the assumption of powers by Aboriginal nations.

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175 175

The Commission envisioned the "assumption of powers" as a staged process, first involving the exercise of "core power" on their present territory, and in due course negotiating "full Aboriginal jurisdiction on an expanded land base," Third, there must be a fundamental reallocation of lands and resources. While respecting the interests of non-Aboriginal Canadians, the Commission identified the requirement for redress of lands appropriated "in the first rush of settlement" and "continuing with the erosion of reserves, the elimination of hunting and fishing rights, and interference with other traditional uses of lands and resource." Fourth, Aboriginal people need education and crucial skills for governance and economic self-reliance. Finally, economic development must be addressed if the poverty and despondence of lives defined by unemployment and welfare are to change. Clearly, the first three of these "themes" have significant implications for the federal system, though exactly what the consequences are is not self-evident. In the rest of the report, it is possible to find a number of suggestions and comments about the redesign of the federal system, which we have tried to distil below. It is plain, though, that the commission did not provide a detailed blueprint of the way forward in this regard, but, rather, a basket of roughly compatible observations and suggestions. This is, no doubt, a consequence of the complexity of the problem (as we have illustrated in the preceding section with our various examples) and also a reflection of the commission's recognition that their report was commenting upon a dynamic and complex process of political development—some matters cannot be specified in advance, because choices remained to be made and would be made only as part of the ongoing, collectively engaging political process. In the vision of the Royal Commission on Aboriginal Peoples: *

The treaty relationship is the fundamental basis for the future relation between Aboriginal collectivities and the Canadian polity.

+

Once a treaty was negotiated or revived, the mechanics of the relationship could be defined in the context of "government-to-government" relations.

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*

The most likely overall realization of these changes would require the establishment of a third order of government in'Canada.

*

Government-to-government relations would involve relations between Aboriginal governments and the federal government, but, equally, between Aboriginal governments and provincial governments (since federal and provincial governments share a fiduciary responsibility to Aboriginal peoples) and also equally among Aboriginal governments themselves.

*

Additional changes to federalism might well be required, such as the creation of a new Aboriginal "house" in the legislative branch.

Gathering Strength; Subsequent Federal (In)Action Gathering Strength contains the following responses to the elements of the RCAP final report that bear on the structure of the federation. On treaties: "The federal government believes that treaties—both historical and modern—and the relationship they represent provide a basis for developing a strengthened and forward-looking partnership with Aboriginal people."6 On the responsibilities of the levels of government: "The distribution of responsibilities and powers in our federation means that shared objectives for addressing Aboriginal issues can only be achieved if all levels of government work co-operatively with each other and with Aboriginal people. We need to move beyond debate and disagreements over jurisdictions and responsibilities and employ alternative approaches that support a partnership."7 On restructuring federal institutions: "The Government of Canada agrees with the underlying view that policy development and implementation, and the delivery of programs and services should reflect the new relationship. We are open to further discussions on the departmental and institutional arrangements that could improve existing systems."8 On "developing a new fiscal relationship": The implementation of more multi-year funding arrangements for First Nations is mentioned by RC AP, as is the establishment "in several provinces" of'joint fiscalrelations tables ... to facilitate the development of mechanisms for financial government-to-government transfer systems."9

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To us, these amount to a carefully moderated but not dismissive response to the most fundamental recommendations of the Royal Commission. The provisions on fiscal reform fall far short of creating anything like parity of principles between provincial and territorial governments and Aboriginal governments, but they might be seen to be a small step in that direction. If this was the verbal and symbolic response, it is necessary also to examine where fiscal and other effort was channelled. Since the release of Gathering Strength, the federal government has continued modern treaty negotiations, concluding two major treaty negotiations (Nisga'a and Tlicho) and two additional self-government agreements pursuant to the Umbrella Final Agreement in Yukon. Two new territories were created in which there are continued efforts to realize Aboriginal self-determination. Other legislative initiatives with respect to First Nations governance were undertaken, including the now abandoned First Nations Governance Act. In the area of programming, large programs in such areas as Aboriginal labour force development and child welfare were elaborated, incorporating a significant degree of administration through "partnership" and contracting out to Aboriginal-controlled organizations.

Canadian Federalism for Aboriginal Peoples: Recent Trends The four examples of Aboriginal governance mentioned earlier provide some guidance for understanding the ways in which intergovernmental relations are transforming by the negotiated specification and implementation of Aboriginal peoples' inherent right of self-government. Evidently, there is no single path. Rather, regional or situational-specific measures are being proposed or implemented to take into account the particular circumstances of different collectivities of indigenous peoples, as they work to improve their positions within the federal system. Modern Treaty-Making: The British Columbia Treaty Process and Canada's Inherent Right Policy In 1992, federal and British Columbia provincial authorities, and the First Nations Summit (an umbrella organization of First Nations and tribal councils), agreed to create the British Columbia Treaty Commission. The commission began its operations in December 1993, and, by December 1995, had both a provincial and a federal statutory basis.10

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The treaty commission is an independent body with three main responsibilities: facilitating the treaty negotiation process; providing public information and therefore raising public awareness and, it is hoped, understanding of the reasons for treaty making; and providing loans to First Nations for funding treaty process-related activities. The three parties at the negotiating tables are representatives for the First Nations, Canada, and British Columbia. Behind these parties is a host of "third parties" and related advisory structures directly associated with the treaty process, comprising the larger policy community. The provincial and federal governments have each organized their affairs concerning negotiations. The provincial Cabinet articulates province-wide treaty negotiation mandates as well as treaty-specific mandates, both giving policy direction to negotiators. One fundamental policy position, for example, has been that even after treaties are concluded, provincial laws of a general application will apply uniformly across the province unless specifically varied by a particular treaty.11 Federal negotiators are governed by a policy enunciated in 1995, The Government of Canada's Approach to Implementation of the Inherent Right and the Negotiation of Aboriginal Self-Government. In this document, the federal government declared its recognition of the inherent right to self-government as an existing Aboriginal right, found in section 35 of the Constitution Act, 1982, as well as in treaties, and in the Crown's fiduciary relationship with treaty First Nations. Explicitly excluding the right of indigenous nations to secession, the policy asserts that "the Aboriginal peoples of Canada have the right to govern themselves in relation to matters that are internal to their communities, integral to their unique cultures, identities, traditions, languages and institutions, and with respect to their special relationship to their land and their resources." On the contrary, "Implementation of self-government should enhance the participation of Aboriginal peoples in the Canadian federation, and ensure that Aboriginal peoples and their governments do not exist in isolation, separate and apart from the rest of Canadian society."12 To help ensure this integration, three categories of subject matters are identified: «•

matters that the federal government would see as the exclusive or primary jurisdiction of Aboriginal governments;

+

matters on which the federal government is prepared to negotiate some measure of Aboriginal jurisdiction or authority, but primary law-making

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powers would remain with the federal or provincial governments, as the case may be, and the federal or provincial laws would prevail in the event of *

a conflict with Aboriginal laws; and matters dealing with Canadian sovereignty, defence, and external relations and other national-interest powers, which are not open to negotiations, although, in specific cases, administrative arrangements might be considered.13 These federal parameters provide some guidance on the question of how

Aboriginal governments will ultimately be built into the federal system, delivering, in a sense, a starting list for the ultimate distribution of powers. Individual future agreements will necessarily reflect local needs and specific circumstances and, over time, will elaborate and modify this starting position. Two new agreements have been negotiated since the enunciation of the federal policy, the first of these being the Nisga'a Treaty. Nisga'a: Establishing a Third Order of Government The Nisga'a Treaty is the first modern-day treaty ratified in the province of British Columbia.14 The treaty, negotiated prior to and then parallel to the British Columbia treaty process, among the Nisga'a authorities, the federal government, and the provincial government, enshrines a form of Aboriginal federalism, in which the two orders of government—the Nisga'a Lisims (central) government and the Nisga'a village governments—are separate and distinct legal entities, with each order having some jurisdictional powers for law making, among other authorities. A variant of the equalization principle, a cornerstone of modern Canadian fiscal federalism recognized in the Constitution Act, 1982, is enshrined in the fiscal arrangements with the Nisga'a. Three other important principles underlie the Nisga'a treaty. First, the Indian Act no longer applies. Nisga'a lands are no longer reserves within the' meaning of the Indian Act, Instead, they are Nisga'a land owned communally by the Nisga'a nation with title vested in the Nisga'a central government. Second, the treaty is comprehensive, in that all potential jurisdictions are included, and it is constitutional, in that the rights therein receive protection under section 35 of the Constitution Act, 1982. Third, the federal and provincial constitutional division of powers remains intact, although with room created for Nisga'a jurisdiction. As a Nisga'a government official explains:15

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Under the Nisga'a Final Agreement, Nisga'a Government has no exclusive jurisdiction, Nisga'a jurisdiction is always concurrent with federal or provincial jurisdiction. This means that for every Nisga'a law there is the possibility, if not the likelihood, that there is a federal or provincial law that deals with the same subject matter. Therefore it is necessary to include a rule that determines which law prevails if there is an inconsistency or conflict. Generally, Nisga'a laws prevail when those laws deal with matters that are internal to the Nisga'a Nation, integral to their distinct culture or essential to the operation of their government or the exercise of their other treaty rights. In some cases, Nisga'a laws must comply with provincial standards in order to be valid. If those standards are met or exceeded, then Nisga'a laws prevail. In other cases, Canada, British Columbia and the Nisga'a Nation agreed that, while Nisga'a Government should have the authority to make laws, if there is a conflict, federal or provincial laws should prevail. Finally, there are many subject matters over which Nisga'a Government has no jurisdiction. Under the Nisga'a Final Agreement, signed by all three parties, there are twenty-one subject matters in which Nisga'a laws can prevail and thirteen subject matters listed in which federal or provincial laws prevail. The Canadian Charter of Rights and Freedoms also applies to Nisga'a government, "bearing in mind the free and democratic nature of Nisga'a Government,"16 The right to self-government is given concrete meaning in the Nisga'a treaty, recognised as inherently deriving from the Aboriginal people themselves, and affirmed by section 35 of the Constitution Act, 1982. Constructing political space thus requires negotiating and agreeing on jurisdictional subject matters and the proper relationship among laws between a First Nation and the federal and provincial Crown in Canada. Whereas for the federal Parliament and provincial legislatures, most subject matters of powers are assigned exclusively to one order or the other, "the Nisga'a agreed to concurrent or shared jurisdiction. But in respect of internal matters, this necessitated rules to prevent Nisga'a laws from being overridden by any number of federal or provincial laws enacted for general application. And these rules also provide the Nisga'a protection against a future—or hopefully not

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present—federal or provincial government who might wish to interfere without justification in these internal matters,"17 The Nisga'a agreement, in effect, "nests" a concrete expression of the inherent right to self-government within Canadian federalism. There is an emergent articulation of an Aboriginal paramountcy doctrine: valid Nisga'a laws protecting such matters as culture and language or health services and education within Nisga'a lands will render inoperative any inconsistent federal or provincial laws to the extent of the inconsistency. This means that in the case of conflicting legislation, in certain specified subject matters, between the Nisga'a government and federal or provincial legislation, the Nisga'a laws would prevail. It is not the case, then, as some critics have suggested, that Nisga'a law will render invalid any federal or provincial law.18 Over time, Nisga'a government administrators will shape their institutions in the context of this jurisdictional division of powers. There is likely to be intergovernmental jousting and negotiation on the fine points; and, should litigation become necessary, a body of jurisprudence will provide guidance in interpreting the division of powers. TTiis process will unfold over decades, as experience with federal-provincial relations would suggest. As the Nisga'a government is knit into the federal system in a fashion similar to that now operating for provincial and territorial governments, meaning and force will be given in practice to the concept of a third order of government. Nunavut: Making a Public Government an Aboriginal Government As they were negotiating their modern treaty, the Inuit of Nunavut considered options for self-government, and, in contrast to the Nisga'a approach, they chose the "public government" model—a model of self-government that is not ethnically exclusive. That is to say, the Government of Nunavut presides over all the people of Nunavut, regardless of their ethnicity, but provides meaningful self-determination because the population of the territory—the electorate and the clientele of the government—is overwhelmingly Inuit. The territory of Nunavut, established April 1999, is an artefact of the 1992 Nunavut Agreement, which committed the federal government to the establishment of the new territory of Nunavut. It is a living example of a change to the architecture of the federation—the creation of space—as a consequence of an

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indigenous political movement. The Nunavut Agreement also contains provisions concerning land and compensation funding similar to those negotiated by the Nisga'a and other parties to modern treaties. These are administered by an independent, Inuit-controlled, non-governmental organization, Nunavut Tunngavik Inc. There are probably two reasons for the decision by Inuit to realize selfgovernment, or, perhaps more accurately, self-determination, through the "public government" model.19 First, observing treaty negotiations that involved them and those elsewhere, they realized that ethnically exclusive Inuit territories would be very small relative to the areas of land required by the resources upon which Inuit depend to meet the basic needs of life. Within the territorial limits of Nunavut (which is one-fifth of Canada's total area), they aim to protect the wildlife and water by exercising regulatory control over all activity on these vast lands. Inuit chose partial control over vast areas in favour of nearly complete control over very small areas. A second important factor was that Inuit form 85 percent of the population of the territory—a source of demographic confidence that, given a democratic purchase on the institutions of territorial governance, the majority would be able to shape a hybrid form that was appropriate to Canadian federalism and equally an expression of Canadian democratic institutions and the indigenous culture of Nunavut. Several years after the establishment of Nunavut,20 all involved recognize that meaningful adaptation and incorporation of Inuit cultural norms in the institutions of Nunavut's government remains an enormous challenge. This challenge can be conceptualized as double-sided—as at once "internal" and "external." The internal dimension deals with creating a form of government that serves the needs of the residents of Nunavut while reflecting the basic elements of Inuit values and way of life. The architects of Nunavut and the first Nunavut government put in place a number of measures intended to assist in the process of adapting the Nunavut bureaucracy so that it would better reflect the culture and social norms of the majority Inuit population.21 Among these: * The Nunavut agreement establishes that Inuit should be employed in the public sector in the same proportion as they are found in the general population.

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The Cabinet has endorsed Inuit Qaujimajatuqangit—known as IQ by nonInuktitut speakers. This is a policy that the bureaucracy will run on principles consonant with the highest values of Inuit society. * The Government of Nunavut has been decentralized to ten communities, in order to bring the government closer to the people and more fairly distribute public-sector employment opportunities. * A specific department of government has been created, the Department of Culture, Language, Elders, and Youth, charged with cultivation and promotion of IQ and of the use of Inuktitut in the bureaucracy.22 +

The internal challenge is formidable, that of adapting the workings and structure of the bureaucracy of Nunavut towards the goals of the original Nunavut agreement for Inuit self-determination, and, as the brief list of major measures above suggests, also a multifaceted and long-term project. The task is complicated further by what we call the external challenge: how to maintain this focus while working successfully within the Canadian federal system to keep Nunavut afloat fiscally and as a participant in federal-provincial-territorial policy deliberations. Nunavut is the newest and also one of the smallest Canadian jurisdictions, with only about 11,000 voters (out of a total and exceptionally young population of about 30,000). The Government of Nunavut public service is very small; there are currently eight ministers, many carrying double and triple areas of responsibility. For these ministers and their small staffs, just preparing for and attending the many intergovernmental meetings entailed by these responsibilities is a major challenge—-as is exercising significant influence in discussions with the much larger and more experienced provincial and territorial governments.23 We shall next consider the intergovernmental implications of the circumstances of urban Aboriginal people—a case rooted in circumstances almost diametrically opposed to those of the Inuit, Where Inuit live in a relatively homogeneous society with a state through which to express self-determination, far from the population-dense south and on a land base with the potential to produce the food and employment they need, urban Aboriginal people live in an extremely heterogeneous population, among Aboriginal people from many nations and many non-Aboriginal people, generally without an obvious "state" through which to express their politics and, certainly, in the populous

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"centre" of the country. How can their right to self-government be supported by changes to the federal system? Urban Aboriginal Intergovernmental Experiences Experiences of Aboriginal peoples in urban Canada are complex, diverse, and evolving, and remain strongly contested. These encounters, both past and present, include forceful displacement from urban areas as a result of colonization; cultural displacement and assimilation into mainstream society; and the economic exclusion and social marginalization of Aboriginal peoples in many places. Some more positive experiences can be identified as well. These are discussed in an emerging literature pointing to urban centres as places for personal advancement, opportunity, and quality of life, and as spaces for growing Aboriginal identities and exercising a degree of self-determination by Aboriginal communities.24 We believe that significant populations of Aboriginal people living in the cities consider their place of residence not particularly salient to the exercise of their right of Aboriginal self-government. Individual people who have this perspective maintain a connection with their nations home territory, and there exercise collective self-government. As urban residents, they participate in community institutions and local politics much as do other city dwellers. But there are other Aboriginal people living in the cities whose connection with a territorial homeland may be quite attenuated by family circumstance or just the passage of time. For them, the city is the home base and the relevant location for Aboriginal self-government. It is with respect, perhaps mainly, to people in this latter position, that Newhouse and Peters conclude that "these [urban] communities have developed an infrastructure of institutions and organizations over the last two decades in particular, are desirous of maintaining a distinct Aboriginal cultural identity, willing and desirous of participating as Aboriginal peoples in the social and economic life in cities and urban areas, and working hard to ensure their members can do so."25 In spite of discrimination and racism, and much hardship and suffering, they see urban Aboriginal peoples as demonstrating"determination and strength" along with "an institutional capacity to effectively deal with many of the challenges facing them,"

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Elsewhere, Newhouse has written of the "huge network" of urban Aboriginal organizations in Canadian cities addressing various needs of a growing urban Aboriginal population.26 In addition to Indian and Metis friendship centres, which Newhouse calls "the key nodes in the web of Aboriginal urban institutions,"27 are community clubs, economic development organizations, health societies, housing cooperatives, small businesses, and a host of socialservice agencies dealing with child and youth care, corrections and justice, athletics and recreation, language training and cultural support, and advisory bodies to municipal councils.28 From this analysis conies a vision of self-government that we call the "urban intergovernmental service approach" to Aboriginal peoples living in Canadian cities. This urban intergovernmental model includes the following prescriptive and descriptive elements: *

+

+ *

+

+

that the federal and provincial orders of government put to the side their jurisdictional disputes over which order is responsible for off-reserve Aboriginal peoples; that, instead, the two orders of government accept shared responsibility for Aboriginal peoples living in cities and towns and thus cooperate with each other on urban Aboriginal policy; that, in turn, urban Aboriginal peoples develop integrated and consistent voices to represent their interests in policy processes; that federal, provincial/territorial, and municipal governments and urban Aboriginal organizations work together, perhaps with a lead role by Ottawa, in developing and delivering comprehensive multilateral policies, services, and programs; that the focus is, and continues to be, on meeting the service-related problems, needs, and aspirations of urban Aboriginal peoples and communities; and that further research will broaden the knowledge base for policy and decision-making for urban Aboriginal experiences and issues.29

Newhouse and Peters endorse this urban intergovernmental approach, contending that "public policy approaches to urban Aboriginal peoples must recognize the institutional infrastructure that has emerged ... and build key

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roles for them throughout the policy development, implementation and review processes. Denning the issues ought to be done jointly, with Aboriginal, municipal, provincial, and federal institutions."30 Considered in terms of tomorrow s federalism and new routes to governance, what can we say about this approach? Overall, we believe the intergovernmental service approach is a vitally necessary response to many of the pressing contemporary issues facing many Aboriginal peoples and communities, but, by itself, is insufficient in constructing authentic political spaces for Aboriginal peoples. Therefore, this approach must be informed by a greater awareness of constitutionalism as well as organizational legitimacy and capacity. Our concerns about the urban intergovernmental model can be briefly listed: 1. The"high politics" of treaty and land rights and the negotiation of claims—in short, the constitutional space for Aboriginal governments—are largely ignored, as is the relationship between urban Aboriginal service organizations and Aboriginal governments or national Aboriginal political organizations. 2. The approach is "on-the-ground" administrative federalism and local politics, oriented principally to service delivery and the funding of particular programs in towns and cities. This is perhaps appropriate for non-status Indians and Metis, a large majority of whom live in urban areas, though less so for registered and treaty Indians, most of whom live on reserves and in rural areas.31 3. It risks promoting an integrationist (some might say assimilationist) vision of Aboriginal peoples as a melting pot of individuals and groups "chasing the urban dream" like other Canadians. 4. Policy development and program administration are depicted in a noticeably rational and managerial manner. Further research and knowledge development are understandably called for, but seem presented as the key missing ingredients to effective action on urban Aboriginal issues. The creed of the "new public management" informs this literature more than the idea of inherent rights of self-governance. The primary intended outcome of joint work between governments and urban Aboriginal agencies is improved policies and programs; that is, harmonized administrative categories, more integrated delivery systems, and greater sharing of information.32 The urban

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Aboriginal organizations identified and promoted are service agencies and friendship centres, examples of self-management and self-control of programs, rather than governments.33 5. The underlying model of political change is consensual and optimistic. A consensual and optimistic model is not undesirable per se, but does seem manifestly naive politically, given the diversities among Aboriginal identities and histories, and the long-standing entrenched positions of governments in Canada over jurisdictional responsibilities and obligations. 6. The model is also troubling given that relatively little attention is devoted to indigenous cultural aspects of policy and programming or to the issues of oppression that continue to characterize Aboriginal circumstances in Canada: exploitation, marginalization, racism, powerlessness, cultural imperialism, and violence.34 Policy and program decisions that ignore indigenous ways of knowing and doing are assimilative and invariably will be unresponsive and ineffective.35 Setting aside matters of constitutional jurisdiction is far from a straightforward option. In a sense, this "watertight compartments" conception of federalism builds on a belief (or hope?) that governments can share responsibility for urban Aboriginal issues, and will do so, without this in any important way having an effect on the question of constitutional powers as regards Aboriginal peoples between the federal and provincial ships of state. The apparent pragmatism of cooperative federalism seeks to prevail over the legalism of classical federalism.36 Shifting Federal Agendas and Governing Styles on Aboriginal Policy We turn now to examine how the Martin Liberal government did, and how the Harper Conservative government may, approach relations between Aboriginal peoples and the federal, provincial/territorial, and urban governments. Here again, we are looking at the construction of political spaces in which Aboriginal self-determination may take effect.

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Paul Martin's Aboriginal Agenda Paul Martin's relatively short-lived tenure as prime minister was often unfocussed and lacking sustained attention to key strategic priorities. The policy area of Aboriginal issues, however, is one in which Martin did apply consistent governmental attention, personal leadership, and federal resources.37 There were signs here of a new approach to matters of Aboriginal-Canada relations, with a mixture of symbolism and substance, action and promise: the scrapping of Bill C-7; the First Nations Governance Act; the "cleansing ceremony" performed by an indigenous elder at the swearing-in ceremony of Martin as prime minister; the formation of a First Nations-controlled research institute on governance; the creation of a new Cabinet committee on Aboriginal issues, chaired by Martin; the initiative to bring Aboriginal representatives into the deliberations of a parliamentary standing committee; the pledge to more meaningfully include urban-based Aboriginal peoples in public-policy development; and the Canada-Aboriginal Peoples Roundtable held in April 2004.38The roundtable launched a series of sectoral "policy tables," organized by the Privy Council Office. The policy roundtables, on such themes as health (Ottawa, November 2004), lifelong learning (Winnipeg, November 2004), housing (Ottawa, November 2004), economic opportunities (Ottawa, December 2004), negotiations (Calgary, January 2005), and accountability (Ottawa, January 2005), engaged relevant federal officials and representatives of First Nations, Inuit, and Metis communities.39 Naturally, some of the Martin Liberal plans on Aboriginal issues were initiatives and intentions already underway or previously announced by the Chretien government. Examples include the Aboriginal Head Start programs, the Urban Aboriginal Strategy, and the treaty processes. Martin's approach promised to differ from his predecessor's in tackling the needs of Aboriginal peoples living in Canada's cities and metropolitan areas. The Chretien government had proposed several pieces of legislation to overhaul the relationship between the federal government and band governments, including the First Nations Governance Act and the Specific Claims Resolution Act. The first of these drew considerable public controversy and the Martin government dropped it.

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The Kelowna Accord on Aboriginal Issues In November 2005, First Ministers and national Aboriginal leaders met in Kelowna, British Columbia, as a follow-up to their September 2004 special meeting on health issues, chaired by Martin. After two days of speeches and discussions, the Kelowna meetings produced a document aimed at improving the quality of life for Aboriginal peoples of Canada. Dubbed the Kelowna Accord, it represents a political commitment by governments and Aboriginal organizations to close the gaps, over a ten-year period, in health, education, and housing, and to promote further economic opportunities for both on-and offreserve Indians and the Inuit and Metis peoples. To monitor and assess prog^ress, the accord speaks of establishing'agreed-upon culturally-relevant indictors and targets" at the national level for the areas of education, housing, and health, with more specific measures and targets set at the regional and sub-regional levels across the country. The accord also devotes considerable attention to strengthening relationships between each of the distinctive Aboriginal peoples of Canada and the federal, provincial, and territorial governments. Then Prime Minister Martin committed $5.1 billion in new federal funds to the ten-year plan. Furthermore, just days before the Kelowna summit, the Martin government announced a federal settlement of $2.1 billion in reparations to former students (and their children) of the residential schools. No corresponding specific financial pledges by the provinces or territories accompanied the Kelowna Accord. Within a week of the accord, the Martin government was defeated in the House of Commons and, in the ensuing national general election, the fate of the Kelowna Accord and related Aboriginal policy matters were issues of debate among the federal political parties and national Aboriginal organizations. In a letter to the chief of the Congress of Aboriginal Peoples, which represents off-reserve Aboriginal peoples, Stephen Harper wrote that "the Conservative Party of Canada believes the ratio for funding [of] on-reserve and off-reserve programs and services should reflect the needs expressed by aboriginal communities. We believe there needs to be a realignment of federal aboriginal expenditures."40 During the election campaign, the Congress of Aboriginal Peoples officially endorsed the Conservative Party, the only national Aboriginal organization to do so.

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The Harper Government's Approach to Aboriginal Issues A Harper government, according to their party platform, accepts the targets agreed upon in the Kelowna Accord and will work with First Ministers and national Aboriginal leaders in achieving the targets. No mention appears, though, of the financial investments or the timelines for enunciating national indicators and outcome measures. More than about money, the Kelowna Accord represented a political space for Aboriginal-Canada relations. As the Grand Council Chief of the Anishinabek Nation in Ontario observes: "The most important aspect of November's first ministers meeting in Kelowna was not $5-billion in federal commitments to improve aboriginal indicators in health, education and housing, and economic development opportunities.... The real breakthrough was that aboriginal leaders sat around the Kelowna table on a natioh-to-nation basis with Canada's federal and provincial Premiers to have their opinions heard about what is best for their citizens and communities. This should not be a landmark event—but in a country still afflicted by colonialism, it is."41 As well as a political space itself as an event, the Kelowna Accord promised the formation of various institutional arrangements that would expand executive federalism by structuring greater formal relationships between Canadian governments and Aboriginal leaders. The accord planned for the creation of a First Nations Multilateral Forum, an Inuit Multilateral Forum, and a Metis Nation Multilateral Forum, each of which would be convened annually at the ministerial level to facilitate discussions and to inform annual First Ministers' meetings as well.42 Furthermore, the accord envisaged the creation of First Nations education systems and First Nations school-governing bodies outside the public education systems. To date, it is unknown whether the Harper Conservatives support this macro-level political and service-based institution building. Declared Conservative plans on Aboriginal issues as outlined in their 2006 party platform include: *

supporting "the development of individual property ownership on reserves, to encourage lending for private housing and businesses";

*

allowing Aboriginal parents to choose the schooling they want for their children, with funding following the students;

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*

replacing the Indian Act with "a modernized legislative framework which provides for devolution of full legal and democratic responsibility to aboriginal Canadians for their own affairs within the Constitution";

+

pursuing settlement of all outstanding comprehensive claims;

+

resolving the backlog of specific claims;

*

expediting settlement of residential school claims; and,

*

giving recognition and real compensation to Aboriginal veterans of World War II. Additionally, Harper is on record that the Conservatives support a First

Nations governance law, along the lines of the one developed by former Indian Affairs Minister Nault and then axed by Prime Minister Martin, to enhance the accountability of band leaders to their members with independent audit procedures, dispute-resolution mechanisms, and new election rules. Across these promises, we can see particular ideas at play. The preferred discourse is accountability, responsibility, and self-reliance, rather than the inherent right to govern and self-determination. One notion is administrative and legal in orientation, and concerns expediting processes for settling claims, disputes, and lawsuits within the context of the constitution and the Charter of Rights and Freedoms, with a view to balancing the interests of Aboriginal peoples with those of governments, industry, and non-Aboriginal Canadians. Of course, this is simpler to say than to solve. Second, the image of First Nations governments that flows from the Conservative plan is one with delegated powers from federal legislation. Harper has raised the idea, for instance, of encouraging band councils to collect the Goods and Services Tax on reserves, which the federal government would later return in full to bands, with matching funds as an incentive to participate in tax collection. The funds could then augment services and programs for band members.43 A third theme with social development overtones is about improving the quality of life of individuals and communities, while a fourth is decidedly market-based in outlook, wishing to extend individual choices in education and in private ownership of property on First Nation reserves. It is true that the Martin Liberals expressed a willingness to support home ownership and more

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market-based housing, but they also situated these options within a larger continuum of initiatives that included emergency shelters, transitional housing, and social housing. Harper's Minister of Indian Affairs and Northern Development, Jim Prentice, is a lawyer with special expertise in property rights as well as a former commissioner of the Indian Specific Claims Commission of Canada. On the Conservatives' initial Aboriginal policy plans, the Globe and Mail commented: "None of this is guaranteed to work. The plight of natives is a complex problem that has defied the efforts of many governments. Some of the Tory ideas are already being tried.... [Others are] easier said than done. Even so, the Tory approach is refreshing. The emphasis on helping natives in cities, where half of them live, is especially welcome. With help, natives who move from isolated reserves to the cities should have a better chance of entering society's mainstream and leaving behind the reserve's culture of dependency."44 In this vision, there seems precious little political space for robust Aboriginal governments, for revitalized indigenous cultures, or for energized treaty negotiations. The vision indicates relentless assimilation into mainstream society instead of respectful acknowledgement of the distinct identities and rights of the First Peoples in what we now call Canada. With Harper's preference to govern through focussed, concrete, and incremental results (in contrast to the "transformational change" hyperbole and policy priority drift of Martin's governing style), the political space most likely to be promoted is what we have called the "administrative politics" of on-theground program management and service delivery within communities. In this context, the Harper Conservatives' first initiative in Indian Affairs was an action plan for improving drinking-water systems on reserves, which includes addressing on a priority basis the most serious water quality problems in twenty-one First Nations communities (with another 170 at high risk); creating national, legislated standards for the operation of treatment facilities; and establishing accountability and reporting rules for the people responsible for water quality on reserves. Similar policy plans by the Conservatives are legislated environmental health standards and modified building-code standards that apply to reserves.

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Finally, a clue about Harpers implementation strategy lies in the news that the new Federal Accountability Act, scheduled to be introduced in mid-April 2006, includes a provision that would allow the Auditor General of Canada to audit First Nations' financial records. This step is a major shift in federal orientation, introduced in a low-key way as an aspect of a broader piece of legislation.

Concluding Observations on Current Political Spaces A tripartite analytical approach permits us to make observations about the consequences of the major changes in Canada-Aboriginal relations that have occupied the contemporary age. Our premise is that the institutions and processes of federalism, and related spaces of legitimacy and accountability, operate on three levels. These are: l."high politics" of constitutional reforms, judicial rulings, and federal-provincial relations; 2. mid-range politics of fiscal arrangements and political accords; and 3. administrative politics of on-theground program management and service provision within communities. Our analysis suggests that specific prime ministerial styles tend to emphasize one of these levels more than the others. So, to return to the metaphor in our introduction, Paul Martin's approach to Aboriginal issues was analogous to the role of the architect with grand schemes, while Stephen Harper appears to be comfortable in the role of engineer, focussing on the nuts and bolts of Aboriginal policy and administration. Both leaders recognized the significance of addressing urban-related dimensions of Aboriginal issues. Whatever the current governing style, activities at each level of policy and politics are contributing to the adaptation and innovation of the federation in response to the claims and aspirations of Aboriginal peoples. At the apex of high politics, the courts have been critical in affecting the role and status of Aboriginal peoples and the nature of their rights within the federation, and here there usually is direct engagement of federal or provincial governments and Aboriginal collectivities. For example, in December 2003, the British Columbia Court of Appeal overturned a trial court ruling that found the United Church of Canada 25 percent liable financially for the sexual abuse of students at a former Native residential school in Port Alberni. The Court of Appeal's unanimous decision thus made the Government of Canada 100 percent liable for any financial compensation settlements to victims of abuse in the residential school.

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The appeal judges held that the United Church, as a non-profit organization, ought not to be held financially responsible for the deeds of its employees. In February 2004, the Martin government announced its intention to appeal this decision to the Supreme Court of Canada. The federal Justice Minister, Irwin Coder, defended the decision to appeal, based on upholding certain principles, specifically, "The principle of vicarious liability of non-profit organizations for the abuse of children in their care needs to be underscored, and the fundamental principle of child protection afforded." The National Chief of the Assembly of First Nations, Phil Fontaine, expressed disappointment that the Martin government was appealing the decision, believing that "an appeal is not in the interests of fairness, justice or a timely resolution for residential schools survivors,"45 There are signs of a slowing down in the use of treaties to negotiate new constitutional spaces for indigenous peoples. A leaked early-2004 analysis by the Department of Indian Affairs and Northern Development identified a "looming tidal wave" of expenditures on compensation and new treaties, creating a large fiscal liability that must somehow be managed. In British Columbia, where the bulk of future treaty negotiation will occur, it remains the case that most First Nations have not entered into the tripartite treaty process. Some First Nations reject the process outright, seeing it perhaps as "an advanced form of control, manipulation, and assimilation."46 Some have walked away from their negotiating tables. Some other First Nations have adopted a waitand-see strategy, choosing to watch and learn from the experiences of other communities before committing, or not, to the process themselves; and some First Nations prefer to negotiate bilaterally with the province or Ottawa rather than in the multilateral context of the British Columbia treaty process. There is yet to be a treaty initiated, finalized, and ratified from the British Columbia treaty process, even though many First Nations have been engaged in negotiations with British Columbia and Canada for several years. The Nisga'a Treaty, which became law in 2000, was negotiated prior and then parallel to the British Columbia Treaty Commission process. And even that success has drawn mixed reviews from Aboriginal and non-Aboriginal leaders and communities. Contemporary difficulties in treaty negotiations in British Columbia, and, by extension, elsewhere in Canada, are due, in part, to

CONSTRUCTING POLITICAL SPACE

there being a very different understanding of the process by Aboriginal people on one side and federal and provincial governments on the other. In short, there are two competing visions of the treaty process. In terms of mid-range institutional change, progress has been slow and extremely modest. There are signs that Aboriginal, provincial, territorial, and federal officials are developing means of policy and program coordination in specific policy areas. These initiatives are promoted and animated by public servants, all of whom can see every day the need for cooperation. There is less evidence of political pressure to institutionalize these measures or to find ways to remove jurisdictional obstacles to their realization. At the micro level of on-the-ground administration and the political space of everyday living, we suspect that a similar dynamic of selective and piecemeal change is at play in program delivery. On this local and personal scale, further attention is promised by the Harper government on a number of policy fronts, including education, environmental health, water management, and housing construction and ownership, together with greater resources for urban-based Aboriginal peoples and agencies. The greater part of policy and program intentions that governments inherit, and even some new initiatives, are reactions to recent court decisions (on Metis rights, for example) and political controversies (regarding, for example, the First Nations governance bill). In the particularly uncertain and thus difficult circumstances of recent minority governments, it seems especially unlikely that there will be any bold new initiatives featured in federal Aboriginal policy making. Taken as a whole, the negotiated, step-wise evolution of Aboriginal selfgovernment is posing significant challenges to the Canadian system of intergovernmental relations. The system certainly has other pressing challenges to meet—such as finding means to formulate consistent multi-year common strategies on the larger threats to Canadian well-being (such as the weakened health care system or climate change), as well as more apparently tractable problems, such as more adequate financial arrangements for city governments. We believe that work on these deep structural and policy challenges must incorporate attention to the proper incorporation of the Aboriginal order. It is not possible to do everything at once, but it ought to be possible to remember not to erode progress in one area or one level while focussed on another.

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1

Canada, Final Report of the Royal Commission on Aboriginal Peoples (RCAP), vol. 2 (Ottawa: Supply and Services Canada), ch. 1, p. 5.

2

Other very interesting examples include the land and self-government provisions negotiated by the Tlicho Dene (Dogrib) in the Northwest Territories, the regional public government proposals made jointly by Gwich'in and Inuvialuit Treaty signatories, and the self-government agreements currently negotiated by First Nations in Quebec. An entirely separate paper, too, could examine assessments by various Aboriginal peoples and their peak organizations of the policy statements and political developments discussed here. We are also aware that space limitations have not allowed us to assess all the developments, issues, and trends as extensively as might be wished.

3

See Frances Abele, Katherine A. Graham, and Allan M. Maslove, "Negotiating Canada: Changes in Aboriginal Policy over the Last Thirty Years," in Leslie A. Pal (ed.), How Ottawa Spends 1999-2000, Shape Shifting: Canadian Governance in the 21stt Century (Toronto: Oxford University Press, 1999), 251-92; John Bird, Lorraine Land, and Murray MacAdam (eds.), Nat ion to Nation: Aboriginal Sovereignty and the Future of Canada, rev. ed. (Toronto: Irwin Publishing, 2002); Alan C. Cairns, Citizens Plus: Aboriginal Peoples and the Canadian State (Vancouver: University of British Columbia Press, 2000); Michael J. Prince and Gary Juniper, Public Power and the Public Purse: Governments, Budgets and Aboriginal Peoples in the Canadian North, report prepared for the Royal Commission on Aboriginal Peoples (Ottawa, 1995).

4

Early signs were not promising. Prime Minister Chretien refused to join his Minister of Indian Affairs, Jane Stewart, in an affirmative response to the report; as pointedly, he had refused to convene a conference of First Ministers and national Aboriginal leaders to discuss the recommendations of the Royal Commission.

5

Quotation from RCAP, vol. 5, p, 2; the points that follow are abridged from pp. 2-3, where all quotations may be found. Italics are in original.

6

RCAP, Gathering Strength, 10.

7

Ibid.

8

Ibid., 11.

9

Ibid., 19-20.

10

See also Russ LaPointe,"Provincial Visions and Treaty Making: The Experiences in Quebec and British Columbia," paper presented at the conference, "Constructing Tomorrows Federalism: New Routes to Effective Governance," Regina, Sask., March 2004; and Christopher McKee, Treaty Talks in British Columbia: Negotiating a Mutually Beneficial Future, 2nd ed. (Vancouver: University of British Columbia Press, 2000).

CONSTRUCTING POLITICAL SPACES

11

The federal government has taken a similar stance in treaty negotiations with respect to the Charter of Rights and Freedoms and the Criminal Code of Canada, among other laws. Other principles the province has identified for negotiating treaties are that the federal government's primary responsibility for treaties is maintained, and that jurisdictional certainty between First Nations and municipalities be clearly spelled out in treaties.

12

Canada, Aboriginal Self-Government, Federal Policy Guide: The Government of Canada's Approach to Implementation of the Inherent Right and the Negotiation of Aboriginal Self-Government (Ottawa: Public Works and Government Services Canada, 1995), 3-4.

13 Ibid, 5-8 14

Longer discussions of the Nisga'a form of government appear in Michael J. Prince and Frances Abele, "Funding an Aboriginal Order of Government in Canada: Recent Developments in Self-Government and Fiscal Relations," in Harvey Lazar (ed.), State of the Federation, 1999/2000: Rebalancing and Decentralizing Fiscal Federalism (Kingston: Institute of Intergovernmental Relations, Queen's University, 2000), 355—58; Frances Abele and Michael J. Prince/Aboriginal Governance and Canadian Federalism: A To-Do List for Canada," in Francois Rocher and Miriam Smith (eds.), New Trends in Canadian Federalism, 2nd ed, (Peterborough: Broadview Press, 2003), 135-65; Paul Rynard, '"Welcome In, But Check Your Rights at the Door': The James Bay and Nisga'a Agreements in Canada," Canadian Journal of Political Science 33 (2000): 2.

15

Edmond Wright, "Self-Government—The Nisga'a Experience," in Speaking Truth to Power III (Vancouver: BC Treaty Commission, 2002), 4,

16

Ibid.

17

Jim Aldridge, "Self-Government: The Nisga'a Nation Approach," in Speaking Truth to Power III (Vancouver: BC Treaty Commission, 2002), 4,

18

See Peter W Hogg, Constitutional Law of Canada (Toronto: Carswell Publishers, 2000) for more details on the general doctrine of paramountcy in Canadian constitutional law.

19

Frances Abele and Katherine Graham, Serving the Public North of 60, New Directions No. 10 (Toronto: Institute for Public Administration of Canada, 2003); Kirk Cameron and Graham White, Northern Governments in Transition: Political and Constitutional Development in the Yukon, Nunavut and the Western Northwest Territories (Montreal: Institute for Research on Public Policy, 2002); Jens Dahl, Jack Hicks, and Peter Jull (eds.), Nunavut: Inuit Regain Control of their Lands and their Lives (Copenhagen: International Work Group for Indigenous Affairs, 2000); Annis May Timpson, "The Challenges of Intergovernmental Relations for Nunavut," in Mike Murphy (ed.), Canada: The State of the Federation 2002—Reconfiguring Aboriginal-State Relations (Kingston and Montreal: McGill-Queen's University Press, 2004).

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20

The first government of Nunavut recently completed its first five-year term, and the 16 February 2004 territorial election returned a new legislature. Like the Northwest Territories, Nunavut does not have political parties at the territorial level, and so Premier Okalik was selected by a vote of newly elected members, from among their number. The premier, in turn, selects her or his Cabinet, again from the group already elected to the legislature.

21

Adaptation towards the Westminster model of parliamentary governance was unnecessary, given that the new Government of Nunavut was established on those same principles, but implementation of the Westminster model remains a challenge. It is worth noting, that the former NWT also resisted elements of the Westminster model. Although the forms (for instance, collective agreements) and some of the staff were "inherited" from the old Government of Northwest Territories, many new staff had to be recruited, and the Nunavut public sector bureaucracy is still, five years later, running at about 70 percent of a full staff. There are problems with imported workers, who are costly to bring up and house, and who often leave after a couple of years, just when the investment in bringing them north is starting to pay off; there are also problems with the remaining unemployed northerners (almost all of whom are Inuit) because of levels of education and training.

22

For example, one responsibility of the Department of Culture, Language, Elders, and Youth is the development of "standard Inuktitut" words, to be used instead of key terms that vary with regional dialects of Inuktitut, and also to develop new standard Inuiktitut words to refer to things not present in the past: CD-ROMs, cell phones, governments, etc.

23

Timpson,"The Challenges of Intergovernmental Relations for Nunavut."

24

Calvin Hanselmann, Urban Aboriginal People in Western Canada: Realities and Policies (Calgary: Canada West Foundation, 2001); Calvin Hanselmann,"Ensuring the Urban Dream: Shared Responsibility and Effective Urban Aboriginal Voices," in David Newhouse and Evelyn Peters (eds.), Not Strangers in These Parts: Urban Aboriginal Peoples (Ottawa: Policy Research Initiative, Government of Canada, 2003), 167-77; Mylene Jaccoud and Renee Brassard, "The Marginalization of Aboriginal Women in Montreal, in Newhouse and Peters (eds.), Not Strangers in These Parts, 131-45; David Newhouse, "The Development of Modern Aboriginal Societies," in R.F. Laliberte, P. Sette, J.B. Waldram, et al. (eds.), Expressions in Canadian Native Studies (Saskatoon: University Extension Press, 2000), 395-409; David R. Newhouse and Evelyn J. Peters, "Introduction," in Newhouse and Peters (eds.), Not Strangers in These Parts, 5-13; David R. Newhouse and Evelyn J. Peters, "The Way Forward," in Newhouse and Peters (eds.), Not Strangers in These Parts, 281-84; Evelyn J. Peters, "Aboriginal People in Urban Areas," in D.A. Long and O.P. Dickason (eds.), Visions of the Heart: Canadian Aboriginal Issues (Toronto: Harcourt, Brace and Company, 1996), 305-33; RCAP, vol. 4.

CONSTRUCTING POLITICAL SPACES

25

Newhouse and Peters, "Introduction," in Not Strangers in These Parts, 12.

26

David Newhouse, "The Invisible Infrastructure: Urban Aboriginal Institutions and Organizations," in Newhouse and Peters (eds.), Not Strangers in These Parts, 243-53.

27

Newhouse, "The Invisible Infrastructure," 246.

28

Calvin Hanselmann, Enhanced Urban Aboriginal Programming in Western Canada (Calgary: Canada West Foundation, 2002); Newhouse, "The Invisible Infrastructure,"

29

Hanselmann, Urban Aboriginal People in Western Canada; Hanselmann, Enhanced Urban Aboriginal Programming in Western Canada; Hanselmann, "Ensuring the Urban Dream."

30

Newhouse and Peters, "Introduction," in Not Strangers in These Parts, 13.

31

Mary Jane Norris and Stewart Clatworthy, "Aboriginal Mobility and Migration Within Urban Canada: Outcomes, Factors and Implications," in Newhouse and Peters (eds.), Not Strangers in These Parts, 54,

32

Hanselmann, "Ensuring the Urban Dream."

33

We note that the preferred terminology in this model includes communities, institutions, organizations, networks, projects, and programs, rather than governments or governing bodies, thus glossing over the issue of self-determination and inherent rights of governance.

34

Iris Marion Young, Justice and the Politics of Difference (Princeton, New Jersey: Princeton University Press, 1990).

35

Newhouse and Peters, "The Way Forward," 283.

36

Edwin R. Black, Divided Loyalties: Canadian Concepts of Federalism (Kingston and Montreal: McGill-Queen's University Press, 1975); Frances Abele and Michael J. Prince, "Alternative Futures: Aboriginal Peoples and Canadian Federalism," in Herman Bakvis and Grace Skogstad (eds.), Canadian Federalism in the New Millennium: Performance, Effectiveness and Legitimacy (Toronto: Oxford University Press, 2001), 220-37; Abele and Prince, "Aboriginal Governance and Canadian Federalism"; Michael J. Prince, "Ready or Not? Hide and Seek Politics of Canadian Federalism, the Social Union Framework Agreement, and the Role of National Aboriginal Political Organizations," in Tom Mclntosh (ed.), Building the Social Union: Perspectives, Directions and Challenges (Saskatoon: Saskatchewan Institute of Public Policy, 2002), 99-111.

37

For more details, we have examined the Martin policy style in Aboriginal issues in Frances Abele, Russell LaPointe, and Michael J. Prince, "Symbolism, Surfacing, Succession, and Substance: Martin's Aboriginal Policy Style," in G. Bruce Doern (ed.), How Ottawa Spends 2005-2006, Managing the Minority (Montreal and Kingston: McGill-Queen's University Press, 2005), 99-120,

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38

See the speech by Prime Minister Paul Martin at the Opening of the First CanadaAboriginal Peoples Roundtable, This summit included representatives from the five main national Aboriginal organizations, along with more than two dozen federal Cabinet ministers.

39

An excellent explanation of the process is available at

40

Quoted in Bill Curry, "Natives On and Off Reserves Vie over Funding Changes," The Globe and Mail, 11 March 2006, p. A8.

41

John Beaucage,"Aboriginal Relations: Is the Model Broken? No," The Globe and Mail, 17 January 2006, p. A19.

42

Thus, the First Nations Multilateral Forum would involve the federal and all provincial and territorial governments on First Nations-specific issues. The Inuit Multilateral Forum would involve the federal government and governments of Quebec, Newfoundland, and Labrador, Nunavut, and Northwest Territories. The Metis Nation Multilateral Forum would involve the federal government and the appropriate provinces given the issues concerned.

43

Curry, "Natives On and Off Reserves Vie over Funding Changes."

44

Editorial,"To Revisit Native Policy," The Globe and Mail, 17 January 2006, p. A18.

45

Kim Lunman, "Ottawa to Appeal B.C. Residential School Ruling," The Globe and, Mail, 10 February 2004, p. A12.

^Taiaiake Alfred, Peace, Power, Righteousness: An Indigenous Manifesto Oxford University Press, 1999), 19.

(Toronto:

The Principle of Subsidiarity: Tradition—Practice—Relevance Thomas O. Hueglin

M

odern federal states such as the United States or Canada were created under the assumption that the allocation of powers between the two main orders of government would be relatively easy. Both the American framers and the Fathers of Confederation spent considerably less time on the question of how to divide powers than on the composition of second chambers. Modern federal states were, for the most part, a compromise between economic modernizers, who wanted to build national economies, and cultural traditionalists, who sought to preserve local particularities of privilege and culture. Consequently, while the powers of trade and commerce went to the federal lev l of government, social and cultural policy remained in the domain of the constituent member units. The rise of the welfare state, the complexities of modern governance in general, and the superior revenue-raising capacities of federal governments in particular, have made this pattern of power division anachronistic and the main source of perpetual intergovernmental conflict and tension. The world of 1787 at Philadelphia was a simpler world than the one we live in now. The list of enumerated powers for each order of government could be brief and succinct. But even back then, the American framers felt compelled to resort to general clauses and hypothetical provisions. And in the subsequent federal constitutions of Switzerland, Canada, Germany, or Australia, the lists already tended to get longer and longer.

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In Canada as elsewhere, the debate on federal reform has remained caught within the confines of the classical federalist assumption, according to which it is possible to enumerate powers in an exhaustive way. In particular, little thought has been given to the possibility that the main problem may no longer be so much how to divide powers over entire policy fields but how to allocate different tasks within one and the same policy field. In the real world of federalism, most policy fields are occupied by two or even three levels of government, regardless of whether they were formally assigned as concurrent or not. In other words, instead of asking who should do what, a more constructive question might be who should do how much of what In this contribution, I want to draw attention to the principle of subsidiarity as a possible basis for thinking about a new way of dividing powers and policy tasks in federal systems. In 1993, the Maastricht Treaty on European Union introduced subsidiarity to the world of federalism, a seemingly new principle of federal power organization that appeared to address exactly the questions raised above. By avoiding both enumeration and allocation of powers, the principle of subsidiarity stipulated instead a presumption of power allocation at the lowest possible level, and it also provided Europe's governments with a procedural guideline on how to determine when to diverge from this presumption. According to article 3b of the Maastricht Treaty,1 now article 5 of the consolidated Union Treaty, the European Community can only take action in a concurrent policy field "if and in so far as the objectives of the proposed action cannot be sufficiently achieved by the member states and can therefore, by reason of the scale or effects of the proposed action, be better achieved by the Community." The emphasis is on if and in so far as. "If" means that in principle, the community can act in any field designated as a general community goal under the treaties. There is no specific enumeration of powers. "In so far as," on the other hand, limits the scope and dimension of community action. Even if there is a necessity for community action, by reason of the scale or effects of the proposed action, this does not mean that the community can occupy or preempt the entire field. To this effect, article 3b adds a principle of proportionality: "any action by the Community shall not go beyond what is necessary to achieve the objectives of this Treaty."

THE PRINCIPLE OF SUBSIDIARITY

Some ten years later, the principles of subsidiarity and proportionality were reaffirmed as fundamental in the treaty establishing a constitution for Europe. While the ratification of the European Constitution has, for now, failed, or at least has been put on hold,2 its endorsement of subsidiarity as the operational linchpin of European integration was not among the contentious issues. Therefore, the constitutional text can still be appreciated and analyzed as a genuine expression of the way in which divided and shared governance are organized in the European Union. In essence, the constitutional treaty continues to define the European Union as a system of multilevel governance in which different tasks are assigned on the basis of an ongoing process of necessity and efficiency evaluations under the subsidiarity provision. Insofar as the European Union is a novel form of a federal polity, recognizing union, member state, and regional levels of governance, the principle of subsidiarity constitutes an important and innovative mode of divided power management in federal systems. The purpose of this contribution is to explore the meaning of subsidiarity in both its historical and contemporary dimension as a innovative procedural device for federal governance in an age of complexity. After a brief examination of the intellectual origins of subsidiarity in the history of political and social thought, and a review of its long-standing tradition in German federal theory and practice, I will return to a closer examination of the role it plays in the political and legal practice of the European Union itself. One of the reasons why subsidiarity does not enjoy widespread attention and support is that its origins are commonly traced back to Catholic social doctrine in the 1930s, In his famous encyclical Quadragesimo Anno of 1931,3 Pope Pius XI criticized the decline of social plurality and solidarity under conditions of industrialization and' class conflict. The church feared that it would lose its traditional control over family and organized social life. Particularly in the context of the rising Fascist state in Italy, the encyclical saw organized group life threatened between individualization and statist absorption. Against this pauperization of social life, the encyclical introduced the principle of subsidiarity. It was meant to defend the autonomy of intermediate social forces. The state, the encyclical proclaimed, was to be "subsidiary" in the sense that it should strengthen the traditional structures of organized social life and not destroy or absorb them. However, there were few if any indications as

203

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to how the autonomy of intermediate groups should be preserved. The state was admonished not to absorb, but society remained organized as a hierarchy. In particular, intermediate groups were not given a right to determine for themselves the limits of legitimate state governance. Quadragesimo Anno primarily was an anti-modernist document of social conservatism.4 Yet, it did give expression to societal fears that have been voiced time and again, more recently as the dangers of an individualized risk society.5 The encyclical can, therefore, also be appreciated as a balancing act between an old order of organized social life, stabilized by its commitment to Christian solidarity, and a new world of individualization and state regulation, the selfpropelling dynamic of which could no longer be ignored. As such a balancing act, Catholic social doctrine does belong in the reservoir, not of federalist thought, but of the kind of political thought more generally focussing on the problematique of the institutional approximation of societal complexity. Subsidiarity is likewise commonly associated with the German tradition and practice of federalism. One of the leading German constitutional lawyers and close associates of Germany s long-reigning Chancellor Helmut Kohl even asserted that the insertion of the principle of subsidiarity into the Maastricht Treaty not only was a Germany victory but, because of its roots in Quadragesima Anno, an entirely Catholic victory at that.6 What is surprising, first of all, is that the German Basic Law of 1949 does not mention subsidiarity at all. It found explicit constitutional recognition only in 1992, in a reference to the European Union. The new article23 states that Germany participates in the development of the European Union, that this union is itself committed to principles of federalism and subsidiarity, and that the German Lander have certain participatory rights in the development of union policies when these affect their constitutional powers.7 Subsidiarity is, however, omnipresent in German constitutional practice. This is particularly so with regard to article 28, which guarantees the right of municipal self-administration, article 30, which states that the execution and administration of public policy tasks is a Lander right unless the Basic Law explicitly requires or allows a different allocation of tasks, and, finally, article 72, which regulates the exercise of concurrent powers. Paragraph 1 stipulates that the Lander can legislate only as long and insofar as the federal government

THE PRINCIPLE OF SUBSIDIARITY 205

has not pre-empted the field with its own legislation. Paragraph 2 then ties this right of legislative pre-emption to the necessity of establishing equitable living conditions or the preservation of general legal and economic unity. This last stipulation is probably the most contentious constitutional issue in German federalism because the federal government has used it to pre-empt just about the entire field of concurrent powers. In line with calls for a new and more competitive federalism elsewhere, and particularly occasioned by calls for a renewed federal balance after reunification, article 72 was amended in the early 1990s. Contrary to the earlier formulations, Lander legislation can be pre-empted only on the basis of an existing federal law. The federal government's mere intention to legislate is no longer sufficient. Further, in order to exercise its pre-emptive powers, the federal government is now more clearly held to demonstrate a national necessity requirement in line with the Maastricht formulation. An additional provision allows it to hand legislative powers back to the Lander once a national necessity is no longer given.8 In comparison with the great expectations of a decisive Lander victory, the outcome of the reform was rather meagre. At best, and comparable to the results of the so-called devolution revolution in the United States to date, there may be a common understanding to halt the further erosion of Lander powers. A reversal of Lander fortunes is not in sight. Not least this is so because the Lander governments themselves have a vested interest in their continued participation in, and co-determination of, federal legislation via the Bundesrat, the Upper House of the German Parliament. Indeed, the importance of the principle of subsidiarity in the German federal system can be detected here in the interplay and cooperation between the two levels of government in federal legislation. Subsidiarity deliberations mainly take place in the Mediation Committee where representatives of both legislative chambers—and hence of both levels of government—prepare the final versions of most federal legislation. They do so, typically, within the traditional parameters of German administrative federalism, whereby most federal legislation is designed as framework legislation, establishing general policy goals, the implementation, execution, and administration of which is then left to the Lander in accordance with article 30 of the Basic Law. Subsidiarity in this context will primarily pertain to the differentiation of generality and specificity within a particular policy field.

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Germany is a classical case of integrated, or, according to Canadian parlance, intrastate, federalism.9 The two levels of government cooperate in the generation of most important legislative acts. Subsidiarity provides a political guideline for this cooperation. Its importance must be seen in its deep ideological entrenchment in German federalism rather than in an immediately apparent operational or judicial applicability. Because it is so much embedded in the practice of integrated federalism, subsidiarity has remained a more or less alien concept in the context of classical dual federal systems such as the United States or Canada. This is not to say that one could not detect the relevance of subsidiarity considerations in the context of these countries'intergovernmental relations, especially when matters of power allocation are at stake. To apply subsidiarity to these systems more generally, however, would mean the introduction of a novel form of federal governance. In Canada, with its sub-constitutional reliance on pragmatic and negotiated governance agreements—such as the Social Union Framework Agreement—subsidiarity would appear a more promising concept than in the competitive and judicial environment of American federalism. Considering Germany's role as paymaster of the European Union, then, it seems at least plausible that the insertion of the principle of subsidiarity into the Maastricht Treaty was a German victory, even though Britain and Denmark were far more concerned about an ever closer union than was Germany. But was it a Catholic victory? Ever more depending on a well-functioning European marketplace, and therefore pushing hard for its further institutional entrenchment in a new union treaty, Germany's approval of the Maastricht Treaty was not, in itself, conditioned on subsidiarity as an emergency brake against a Brussels takeover. But when subsidiarity was pulled out of the hat in order to overcome widespread fears about such a takeover in other member states, the governing German conservatives probably saw it as a welcome device in pursuit of two other and interrelated policy objectives. The first of these, pushed in particular by conservative Lander governments, was to upgrade the Lander as a third tier in the European federal system. This is evidenced domestically by the reformulation of article 23 of the Basic Law. It is also in line with the usual conservative critique of German federalism as top-

THE PRINCIPLE OF SUBSIDIARITY 207

heavy and unresponsive to demands for economic flexibility. However, article 3b of the Maastricht Treaty would not mention sub-national units. Only article A of the preambular Common Provisions would state more generally that all decisions should be "taken as closely as possible to the citizen." A belated victory of sorts, perhaps, was the separate declaration of the three federal countries of the European Union—Germany, Austria, and Belgium—appended to the Amsterdam Treaty of 1997, in which the signatories expressed their understanding that application of the principle of subsidiarity would also have to keep in mind the self-governing rights of sub-national units. The other objective may have been to enshrine in the conduct of European affairs an institutionalized measure of social conservatism. Here is where subsidiarity more directly connects with Catholic social doctrine. One of the papal fears in the 1930s had been that the centralized national welfare state— Fascist or otherwise-—would erode the church's traditional grip on social life. Inherent in Quadragesimo Anno, therefore, was the admonishment that the welfare state should only intervene, subsidiarily, once the traditional elements of social welfare policy, self-help and charity, appeared exhausted. Still, in 1983, Germany's conservative Minister for Social Affairs, Herbert Blum, wrote that the right and obligation of institutional social support should commence only once individual sources of support no longer suffice.10 To what extent German conservatives were able to celebrate a Catholic victory here remains unclear. The insertion of the subsidiarity provisions into the Maastricht Treaty was as much occasioned by Danish fears that there would be too little in terms of European social policy as by—mostly British— fears that there would be too much. And while the enthusiasm of German conservatives for ever-closer union was clearly predicated on the assumption that European economic flexibility would provide a convenient bypass operation for what they saw as the clogged arteries of the German welfare state, the principle of subsidiarity could also be interpreted as a step in the opposite direction, leaving the traditional German model of a welfare economy within the prerogative of the national balance of powers. The constitutional treaty in its signed form of 2004 has not changed this overall picture. The charter, in part II, speaks of social justice and equity but insists that, to the extent that these are general objectives of European integration,

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their pursuit will be guided by the principle of subsidiarity and cannot override national social policy determination. If subsidiarity is to take on concrete meaning here, it is likely that national social forces will eventually demand the compliance of domestic social policy making with general union goals. Given the vagueness of the stated objectives, however, and the relative strength of the German welfare system in comparison with at least some other of the principal member states, notably Britain, it is hard to see how subsidiarity can become an operational platform for a European variant of social conservatism. More likely, social policy will simply continue to remain at the margins of community governance. This is not how the principal architect of Maastricht, then Commission President Jacques Delors, understood subsidiarity. Delors is a Catholic but also a socialist. Moreover, he has had affinities to a French circle of "personalists." Also dating back to the 1930s, this circle had rejected both capitalism and communism as alienating social systems, and its members had envisioned a federal European peace order constructed on the recognition of citizens as "persons" comprising both economic and social aspirations.11 Delors obviously took the subsidiarity cue from German federal practice, but there is evidence that he carefully avoided identifying its intellectual roots in Catholic social doctrine alone. After all, he had to sell subsidiarity as a universal European principle. His research team at the commission, in any case, must have been under orders to search for a broader historical and intellectual base for what he believed to be the operational rallying point for the union treaty, since, on 13 February 1992, it reported in an internal commission memorandum that the European origins of subsidiarity dated back to the 1571 synod of the Dutch Reformed churches in Emden, and to the German political theorist, Johannes Althusius,12 Before returning to the question of how subsidiarity was eventually anchored as a new leading image of governance in the European treaty system, it seems appropriate to briefly examine these two sources of early modern federalist thought. If they influenced Delors and his team, it is here that we might discover a meaning of subsidiarity that is alternative or at least complementary to the German and Catholic reading of it. During the second half of the sixteenth century, the Reformed Netherlands were under the military yoke of Catholic Spain. Many Dutch Calvinists fled to

THE PRINCIPLE OF SUBSIDIARITY

the neighbouring Protestant provinces of the German Empire. The city of Emden in the province of Eastern Frisia was the economic centre of northern Germany at the time, and its church had become the "mother church" for Dutch refugees. No longer governed by unitary Catholic hierarchy, the Dutch Reformed churches searched for cooperation and coordination. At the Emden synod, their representatives agreed and resolved that "provincial or general assemblies must not deliberate on matters already decided at a lower level ... [and that] they shall concern themselves only with such matters as pertaining to all churches generally."13 This was the operational linchpin of Calvinist federal theology that Althusius absorbed into his theory of federalism. Johannes Althusius (1557—1638)14 was a second-generation political Calvinist. As a professor of law at the university of Herborn in the Reformed territory of Nassau-Dillenburg, a European centre for the study of federal theology financed by the House of Orange, he had written his famous Political a systematic theory of politics. It justified the Dutch revolt against Spain, and it proposed a multi-level commonwealth in which particular communities would retain self-governing autonomy. In 1604, one year after the first edition of his book was published, Althusius was appointed as city syndic or chief legal and executive councillor in Emden, where he remained for the rest of his life and also served as a church elder. In order to appreciate the significance of Althusius's political theory for modern federalism, it is necessary to recall the essential contours of the great political transformation at the time. The old order had been characterized by a generally dualistic juxtaposition of rule. While kings and princes ruled with autonomy in their lands, provinces and cities within these lands likewise enjoyed certain privileges of autonomy that the superior ruler could not easily revoke. When this plural system of overlapping legal domains collapsed in the religious wars following the Reformation, the kings and princes in the larger territories adopted the new doctrine of territorial and absolute sovereignty and eventually transformed the old plurality into a new system of sovereign territorial states. It was this transformation that put into jeopardy the autonomous survival of smaller communities and religious minorities. Calvinists were under siege in the Spanish Netherlands, and the Lutheran ruler of Eastern Frisia challenged the autonomy of the Reformed city of Emden.

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Althusius responded to these challenges by constructing a political system of consecutive federalization. Each community, or, as he called it, consociation, would be composed by smaller ones from which it derived its governing powers, and each would be part of a larger one in the same way In such a system, Althusius declared, "[a ruler] exercises as much authority as has been explicitly conceded to him by the consociated members or bodies of the realm ... what has not been given to him must be considered to have been left under the control of the people or universal consociation.... The less power of those who govern, the more secure and stable government remains."16 Althusius transformed the old dualistic order in two significant ways. First, he established that all government is mandated government. Secondly, and more importantly, he employed the Reformed idea of subsidiarity as a political code or guideline whereby a process of bottom-up accountability is prescribed for the political process. This was different both from the old dualism and from the new doctrine of hierarchical sovereignty. It is also different from Catholic social doctrine. As Althusius affirmed throughout his book, the entire purpose of politics in this universal consociation, or federated community of communities, is the mutual sharing of goods, rights, and services for a useful and felicitous social life. If subsidiarity, therefore, is one side of the political coin, social solidarity is the other, an eminently political task that does not belong in the realm of private charity. German conservatives may now be inclined to overlook that this nexus between subsidiarity and solidarity has also been enshrined in the Basic Law. Article 20 determines that Germany is a federal and a social state, and article 79 affirms that these determinations are exempt from constitutional change. At ground zero after 1945, when even German conservatives would briefly flirt with the nationalization of German key industries,17 they obviously supported the constitutional vision of a new democratic Germany that would support both the economic and social aspirations in much the same way the French personalists had suggested earlier. Jacques Delors may have never given up on this vision. Now returning to the discussion of the meaning and role that the principle of subsidiarity plays in the process of European integration, it will not come as a surprise that it was not universally greeted with enthusiasm. As a contested concept, it earned more criticism than praise. If it was not outright denounced

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as a placebo for nationalist vanities on the part of some member states, it was belittled as a mere expression of political intent that in particular would not stand up in a court of law. Sure enough, at least initially, there seemed to be little common understanding as to what subsidiarity actually entailed for the practice of European governance. From Maastricht onward, however, subsidiarity slowly moved from the status of contested concept to one of leading image18 by careful and incremental steps towards clarification. The 1997 consolidated Treaty on European Union after Amsterdam not only contained a protocol on the application of the principles of subsidiarity and proportionality, but also a declaration relating to this protocol, as well as the aforementioned separate declaration by Germany, Austria, and Belgium.19 The protocol in particular stated that "the form of Community action shall be as simple as possible, consistent with satisfactory achievement of the objective of the measure and the need for effective enforcement. The Community shall legislate only to the extent necessary. Other things being equal, directives should be preferred to regulations and framework directives to detailed measures," The related declaration further specified that "the administrative implementation of Community law shall in principle be the responsibility of the Member States in accordance with their constitutional arrangements." Finally, the separate declaration by the three federal member states— Germany, Austria, and Belgium—declared that the principle of subsidiarity must also protect sub-national units from unnecessary power incursions. It stated, "It is taken for granted by the German, Austrian and Belgian governments that action by the European Community in accordance with the principle of subsidiarity not only concerns the Member States but also their entities to the extent that they have their own law-making powers conferred on them under national constitutional law." Despite these continuous efforts at imbuing subsidiarity with coherent meaning, it has, nevertheless, become established as one of the principal leading images and political guidelines for European Community action. In practice, this means that every community act can be scrutinized as to its compliance with the spirit and letter of the subsidiarity provision.

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In various recent decisions, the European Court of Justice has affirmed the political and procedural character of article 5 of the Treaty of the European Union. In particular, it has wisely abstained from making final decisions concerning the specific allocation of powers. In the 1998 United Kingdom v. Council decision, for instance, it held that: The Community institutions enjoy a margin of discretion in their choice of the means needed to achieve [the intended objective]. In such a sphere, which involves an appraisal of complex ... situations, judicial review must, in particular where the act concerned is of general application, be limited to verifying whether the relevant procedural rules have been complied with, whether the facts on which the contested choice is based have been accurately stated, and whether there has been a manifest error in the appraisal of those facts or a misuse of powers.... the lawfulness of a measure can be affected only if the measure is manifestly inappropriate ... the Court cannot substitute its assessment for that of the Council.20 The European Union, in other words, had learned to live with subsidiarity as an ongoing political process, and it was by no means unexpected when Joschka Fischer, the German foreign minister, in his famous Quo Vadis speech at Humboldt University in Berlin, 12 May 2000, identified it as the operational linchpin for a final constitutional European order.21 Fischer's speech in essence launched the European Constitutional Convention, a deliberative body composed of representatives not only of member state and union institutions, but also of the eastern European candidate countries.22 In July 2003, the convention tabled its final draft constitution for the European Union.23 Emulating more conventional constitutional documents, the final version now contains, in title III, articles 12 and 13, respectively, enumerations of exclusive and concurrent Union powers. However, in article 9, subsidiarity and proportionality are formally enshrined as fundamental principles of all union governance, which means that the exercise of concurrent powers will continue to be governed by these principles. In obvious recognition of the separate declaration by the federal member states, the reach of article 9 now also appears extended beyond the relationship of member states and the union: "Under the principle of subsidiarity, in areas

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which do not fall within its exclusive competence the Union shall act only if and insofar as the objectives of the intended action cannot be sufficiently achieved by the Member States, either at central level or at regional and local level, but can rather, by reason of the scale or effects of the proposed action, be better achieved at Union level." Moreover, under a new protocol on the involvement of national parliaments, as well as in line with the reformulated protocol on subsidiarity, all commission proposals will have to be scrutinized by other European Community institutions as well as by national parliaments. Parliaments will gain the right to offer "reasoned opinions" about the compliance of a particular measure with the principle of subsidiarity. And, very much in line with the United Kingdom v. Council decision of the European Court of Justice, the commission will be held to justify its proposal with regard to the principles of subsidiarity and proportionality. Any legislative proposal should contain a detailed statement making it possible to appraise compliance with the principles of subsidiarity and proportionality. This statement should contain some assessment of the proposal's financial impact and, in the case of a framework law, of its implications for the rules to be put in place by Member States, including, where necessary, the regional legislation. The reasons for concluding that a Union objective can be better achieved at Union level must be substantiated by qualitative and, wherever possible, quantitative indicators. The Commission shall take account of the need for any burden, whether financial or administrative, falling upon the Union, national governments, regional or local authorities, economic operators, and citizens, to be minimized and commensurate with the objective to be achieved. The extraordinary series of events leading to the adoption of the constitutional treaty can, in many ways, be compared to the drafting of the American constitution. The resulting European document, however, was drawn up by legal bureaucrats entirely lacking the genius and elegance that had guided the delegates at the Convention of Philadelphia more than two centuries earlier. In its search for compromise, it did not appear to achieve either one of its originally intended objectives: to simplify European Union law by replacing the complex labyrinth of multiple treaties, protocols, and declarations with a single constitutional document; or to provide European citizens with an intelligible text.

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This may be one of the main reasons why ratification of the constitution failed. Another and more important reason, however, was that the fate of the constitutional treaty had become intertwined with the looming prospects of Turkish membership, and a general resurgence of a more selfish and nationalist climate in European politics, not least triggered by the European division over President Bush's war in Iraq. Subsidiarity, however, is not to be blamed. In fact, one can safely assume that subsidiarity has provided the architects of the European Union, from Maastricht to the constitutional treaty, with a convenient conceptual rallying point. As a contested concept initially, it allowed the integration process to move along when consensus about an eventual final product was nowhere in sight. Once thrown into the debate, however, subsidiarity quickly established itself as the decisive constituting element in the search for a final outcome of the integration process. As a new model of federal governance, then, subsidiarity does have some obviously attractive features. It does not divide government powers but governance tasks. It assigns to the higher level of governance only what has not been or cannot be decided at the lower level. As in the German federal system, it allows general or framework legislation at the federal level while retaining the specificities of resource allocation, policy implementation, and administration for the constituent member units. Subsidiarity also hands the question of who should do what right back to the political process. The participants in this process first have to agree upon joint goals and objectives, and then they have to come up with a reasonable plan of plural policy making. The European Union has at least tried to provide this political process with a set of procedural and material criteria of evaluation on which such agreements and plans can be based. In this, subsidiarity appears to be more flexible than conventional divisions of power. It is meant to avoid the kinds of political conflicts and judicial battles that arise in conventional federal systems as the boundaries of who gets to do what become more and more blurred by the complexities of political practice. There are some obvious pitfalls, as well. It is one of the great achievements in American constitutional federalism that once the judicial verdict is in, the political battle is usually over. In the European Union, that battle may never end. Yet, one glance across the American border into neighbouring Canada is

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enough to realize that this great American constitutional achievement does not fit everyone, and that it may, in fact, fit less and less in a complex world of integration and fragmentation. If deep diversity, whether at the national, regional, or global level, appears to be an inevitable predicament for governance in the twenty-first century, the principle of subsidiarity at least provides a code of conduct and procedural guideline in the search for common ground. Another pitfall may be the inevitable reliance on negotiated agreement. Necessary decisions may be slow in coming, and, when consensus is not available, they may not be forthcoming at all But a counter-argument can be made, as well. While decision making in consensus democracies may be slow and cumbersome, the implementation process will likely be smooth once a decision has been reached and is carried by all. The opposite may be the case in majoritarian democracies. While decisions can be made quickly and efficiently, the implementation process may be hampered by continued opposition or even obstruction on the part of a dissenting minority. Again, governance in the twenty-first century may be confronted with a degree of fragmented societal heterogeneity in which the romantic assumption of a general will can no longer be sustained. It has been this assumption, however, that gave majority rule its technical legitimacy. This is, of course, the argument in favour of federalism more generally. Subsidiarity in this sense is only another logical step. American federalism is a system of compound majoritarianism. While it has modified the majority principle by two manifestations of the popular will in House and Senate, it is not a consensus democracy. Germany and, with all due hesitation regarding its continued democratic deficit, the European Union are consensus democracies to the extent that policy proposals are exposed to the subsidiarity test before they are decided by qualified majority rule. The subsidiarity test, in other words, is the precondition for the acceptance of qualified majority governance. Finally, subsidiarity, like federalism itself, is only a form of political conduct without any intrinsic value of its own. It can be used and abused. For historical reasons, it has primarily been championed by forces of social conservatism (i.e., subsidiarity without solidarity). The historical reasons have to do with the rise of the centralized Jacobin state and its abuse by the forces of the orthodox Left (i.e., solidarity without subsidiarity). As in the case of federalism itself, however,

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the principle of subsidiarity essentially is a principle of careful balance. In order to live up to its potential as a flexible and balanced form of federal governance, it needs to be championed by a new breed of "social" democrats who can give a new meaning to unity in diversity; that is, balance between subsidiarity and solidarity While the purpose of this contribution has been to discuss the principle and practice of subsidiarity in the European context as a general invitation to think about different forms of federal governance outside the box of the classical federal state, it is certainly tempting to speculate how subsidiarity might take root or at least become a guiding principle in the Canadian context. Take the contentious issue of health care, for example. On the one hand, there is the commitment to universality under the Canada Health Act. On the other hand, there are renewed efforts of several provinces to deliver health care more flexibly. As already foreshadowed by the Social Union Framework Agreement, a new and more collaborative federalism in Canada might well benefit from a more principled discussion, in terms of subsidiarity as formulated in the European context, as to how much of health care can be left to a more flexible range of provincial delivery options without sacrificing what would be supported by most Canadians as a continuing commitment to universality. Alternatively, take the recent announcement by the new Conservative government of Prime Minister Stephen Harper that constitutional changes would ultimately be necessary in order to address fiscal and other imbalances in the Canadian federal system. Those who were witnesses to earlier rounds of intergovernmental constitutional bickering might shudder at the prospects of this door's being opened again. Yet, it is possible to think, or at least hope, that adherence to the principle of subsidiarity, as conceptualized and practised in the European Union, might steer a new round of constitutional discussions in Canada away from a rights-centred approach towards a more functionalist and practical approach of task differentiation. 1 All treaties of the European Union can be accessed at

2

The text is available directly at ; on the state of the ratification process, see

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3

The English text is available at

4

See Frank Pilz and Heike Ortwein, Das politische System Deutschlands (Munchen: Oldenbourg, 1995), 329.

5

See Ulrich Beck, World Risk Society (Cambridge: Polity Press, 1999).

6

Josef Isensee, International Subsidiarity Symposion, Emden, November 2000, oral contribution to the discussion.

7

Text of the Basic Law with amendments up to 2002, in German and French, at

8

The basis for such a reversal in the distribution of powers would be federal legislation, which, in turn, would require to be passed by both legislative chambers. Such legislation could be initiated by the Bundesrat,

9

See more fully Thomas O. Hueglin and Alan Fenna, Comparative Federalism: A Comparative Perspective (Peterborough: Broadview Press, 2006).

10

Pilz and Ortwein, Das politiscbe System Deutschlands, 329.

11

See Ferdinand Kinsky/'Personalism and Federalism," in Daniel J. Elazar (ed.), Federalism as Grand Design (Lanham: University Press of America, 1987), 249-74.

12

See Ken Endo, "The Principle of Subsidiarity: From Johannes Althusius to Jacques Delors," The Hokkaido Law Review 44,6 (1994): 553-652.

13

J.F. Goeters (ed.), Die Aktern der Synode der Niederlandischen Kirchen zu Emden vom 4-13. Oktober 1571 (Neukirchen-Vluyn: Neukirchener Verlag, 1971), 79-83 (own transl.).

14

On Althusius's life and theory, see Thomas O. Hueglin, Early Modern Concepts for a Late Modern World: Althusius on Community and Federalism (Waterloo: Wilfrid Laurier University Press, 1999).

15

Johannes Althusius, Politica Methodice Digesta (1614; reprint Aalen: Scientia 1981); a slightly abridged English translation is available as Johannes Althusius, Politica (Indianapolis: Liberty Fund, 1995).

16

Althusius, Politica (1614), XIX, 7-8.

17

In the 1947 Ahlen party platform of the CDU

18

See the constructivist "discourse theory" interpretation in Thomas Diez, Neues Europa, altes Modell (Frankfurt: Haag and Herchen, 1995).

19

The texts of all treaties and protocols are available at

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20

United Kingdom of Great Britain and Northern Ireland v. Council of the European Union, Judgment of the Court (Sixth Chamber) of 19 November 1998, Case C-150/94, English text at

21

English text version available at

22

The proceedings of the convention can be looked up at

23

See note 2 above.

APPENDIX

Federal Asymmetry: Let Us Unleash its Potential Benoit Pelletier Speech given by Mr, Benoit Pelletier, Minister for the Quebec Government, during a conference entitled "Constructing Tomorrow's Federalism: New Routes to Effective Governance," organized by the Saskatchewan Institute of Public Policy, Regina, Saskatchewan, 25 March 2004

I

t is a great pleasure for me to speak to you today as part of the Constructing Tomorrow's Federalism conference. I would like to congratulate the insti-

tute for having organized an event such as this one where essential issues in governance can be discussed. This conference has come at the right time. As you well know, several of the players in intergovernmental relations have changed recently. Consequently, we find ourselves in a new, more favourable context for the advancement of the Canadian federation. We must take advantage of this situation. The Government of Quebec is resolutely committed to revitalizing our federalism. It is determined more than ever to work with all its partners in the federation to bring about a new synergy based on understanding, mutual respect, open-mindedness, and the search for compromises whenever possible and desirable. A first step was taken towards establishing this new era when the Council of the Federation, made up of the provincial and territorial premiers, was created 5 December 2003 in Charlottetown. Federations need effective mechanisms to foster intergovernmental dialogue in sectors where convergence is required between a priori divergent interests. The Council of the Federation is participating in these mechanisms. It represents a permanent tool for consensus and solidarity, which seeks to give new vitality to intergovernmental relations and to put a more constructive federative system in place. It brings together representatives from the executive branch of each province's or territory's government, and is administrative rather than

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constitutional in nature. Such an intergovernmental institution will promote the exchange of information and views, the pooling of experience and expertise, and the signing of cooperation agreements. In matters of common interest, the council will also be able to strengthen the overall position of the provinces and territories in their relations with the federal government. The aim is not to provoke sterile confrontations with the federal government but, rather, to strive for greater balance in our intergovernmental relations, and thereby work to improve these relations. I hope that the council will give the provinces a strong voice in the main decisions affecting the future of Canada and the evolution of our federal system. In this respect, the council challenges the vision of this country that sees the federal government as being the sole architect of Canada's future. Our goal is, first, to allow the provinces to reassume leadership in their own fields of jurisdiction and, secondly, to improve their relations with the federal government to ensure that their viewpoints will have more weight in matters that are of interest to both levels of government. Moreover, one of the council's functions will be to analyze all federal government actions or measures likely to have a major impact on the provinces and territories. This analysis will also extend to bills and laws passed by the Parliament of Canada. Le nouveau Conseil de la federation doit etre vu comme un instrument au service de la collaboration intergouvernementale. II vise essentiellement a permettre 1 emergence de consensus entre les provinces lorsque ceux-ci sont souhaitables et faisables. II offre au Quebec un tremplin additionnel pour faire valoir son identite propre. The creation of the council thus represents an important step. However, we must be careful not to consider this council as being the solution to all of the irritants that currently exist within the Canadian federation. Indeed, other changes will be needed to genuinely revitalize our federalism and ensure its healthy evolution. The basis of the federal system involves two levels of government, each one sovereign in its fields of jurisdiction. It thus requires a division of powers. This division must be balanced and structured by clear rules that are followed by both parties and that neither can modify at will.

APPENDIX

Though the Canadian constitution does indeed separate federal from provincial jurisdictions, we are forced to admit that there exists in Canada a discrepancy between the federal and the provincial governments in terms of the real powers that both orders effectively possess and wield. The federal powers include peace, order, and good government, the residual and declaratory powers, and the capacity to make various nominations. This gap is further accentuated by the Supreme Court of Canada's generous interpretations of certain federal jurisdictions, in particular trade and commerce, criminal law, emergencies, and the national dimension doctrine. This tendency is not unrelated to new attempts by the federal government to regulate entire sectors that have always been identified as being of provincial jurisdiction. This is true, for example, with assisted human reproduction where—above and beyond precise responsibilities related to criminal law—the federal Parliament is extending its reach to regulate the entire question, including the operations of fertility clinics and laboratories. Another example comes from the field of privacy protection: the federal government, invoking its jurisdictional responsibility in trade and commerce, has just legislated on questions which clearly fall under private law and, therefore, under Quebec civil law, and this even though Quebec already has legislation in this field. The courts, in their fundamental role as guardians of the constitution, must preserve federalism and its delicate equilibrium, and take care that their interpretations do not become the foundations of powerful centralizing tools in the hands of the federal government. Moreover, the Quebec government has, in recent years, undertaken three references where it has asked for the Quebec Court of Appeal's opinion on the constitutional validity of certain federal laws. This was notably the case with respect to the federal Personal Information Protection and Electronic Documents Act1 and the federal system of parental leaves. The imbalance affecting the division of powers in Canadian federalism has also resulted from developments that had not been anticipated by the drafters of the Canadian constitution in 1867 and that have led to, after Canada acquired its independence much later, a broad federal control, particularly in the signing of international treaties, including those dealing with matters of provincial jurisdiction. A similar result can be observed in the process—entirely

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controlled by the federal government—of appointing Supreme Court judges, who, since the abolition by the Canadian Parliament in 1949 of the appeals to London, have inherited the role of final arbitrator in constitutional disputes between the two orders of government, A healthy federalism likewise requires that each order of government have the tax resources needed for it to fully and adequately assume its responsibilities, such that no order finds itself in a situation of financial dependence vis-avis the other. However, the current financial relationship between the partners of our federation is characterized by a considerable fiscal imbalance. This problem is so important that the provinces have created a body, under the responsibility of the Council of the Federation, which is specifically dedicated to this problem, namely the Secretariat for Information and Cooperation on Fiscal Imbalance. As we all know, this fiscal imbalance stems from the ability of the Government of Canada to accumulate such large surpluses that it can fulfill its constitutional responsibilities, reduce its debt, and use the remaining funds to invade fields of provincial jurisdiction by spending its money while attaching all sorts of conditions. This is occurring at a time when most provinces are having trouble making ends meet. To justify its encroachments, the Canadian government invokes a so-called federal spending power. As the fiscal imbalance is becoming ever greater, the federal government is increasingly resorting to this justification. In return, the ever more frequent use of its alleged spending power allows the central government to justify maintaining federal taxation at current levels and, in so doing, further perpetuate the imbalance with the provinces. The federal spending power and the fiscal imbalance are thus mutually sustaining. This unlimited spending power that the federal government has accorded itself unquestionably represents a major source of malfunction in the Canadian federation. In fact, the problem here is precisely the federal governments conception of this spending power, a power that would be "in no way limited by the distribution of powers," this quotation being taken word for word from the legal proceedings of the Attorney General of Canada in the case dealing with the constitutionality of employment insurance surpluses,2 instituted by Quebec unions and currently waiting for judgement to be rendered by the Supreme

APPENDIX

Court on application for leave to appeal. With this alleged,"in-no-way-limited" federal spending power, we are not confronted merely with a broad and abusively "creative" interpretation of federal powers. Rather, it is the very relevance of the distribution of powers that is being called into question. According to the federal government's line of reasoning, it could intervene as it pleases in fields of provincial jurisdiction as long as its interventions take the form of spending, even when such spending comes with specific conditions. The advocates of this federal spending power maintain that a distinction must be made between compulsory regulation and acts of an allegedly "private" nature, such as spending, lending, or contracting, which would not be equivalent to the exercise of a normative control. According to this line of thought, compulsory regulation should be subject to the division of powers, whereas acts such as those that a private actor might technically commit would not be. By taking such actions, the federal government—pretending to act as a truly "private actor"—would not have to worry about how its measure stands up to the provisions of the constitution, as if setting up programs was not part of the State's public vocation! We would have, in a way, a partial federalism, the rules of which would apply only to certain types of well-defined government actions. I must tell you that I have never yet heard anyone propose the same public/ private distinction for the application of the Canadian Charter of Rights and Freedoms.3 How would people react if, in addition to asserting that federal spending is not subject to the division of powers, the federal government stated that its spending was not subject to the Canadian Charter of Rights and Freedoms? For example, could the federal government claim to have the right to establish a spending program seeking to offer pension benefits that would not advantage everyone equally, and this without the courts being able to review its compliance with rights guaranteed under the Charter? If not, why then should the legal scope of the Charter be different from the legal scope of the distribution of powers:1 The federal position raises other equally important questions. Given the advent of the welfare state and the fact that a large part of modern government initiatives now take the form of spending and services for the public, is it not unacceptable and illogical to think that this sphere of government activity should be exempted from the division of powers, the very foundation of our federal system:1

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What are the consequences of the federal government's approach for government accountability? Is it not essential in a federal system that the citizens be able to clearly understand which level of government is responsible for the decisions that affect them in their daily lives? I, for my part, have a great deal of difficulty in reconciling the values underlying the Canadian federation with the idea of a federal spending power that is in no way subject to the division of powers. Such a conception of things seems to me to run counter to the federal spirit and constitutionalism. The fundamental principles of our federalism deserve to be protected and sheltered from arbitrariness every bit as much as do democracy and human rights and freedoms. During the constitutional discussions that led to the 1982 patriation, the federal government made a distinction between the elements of the constitutional reform that, in its view, concerned the governments, that is the government's package containing the elements related to federalism, and the propositions allegedly concerning the Canadian population, that is the people's package containing, most notably, the Canadian Charter of Rights and Freedoms. I believe this distinction has contributed to the emergence of a view in which issues of federalism, as opposed to issues of human rights and freedoms, do not greatly concern the people and should only be resolved through essentially functional criteria. This conception must be changed. Federalism is meant to be an effective form of government. However, it also seeks other essential objectives. It fosters diversity much more strongly than do other structures of government. It likewise favours democratic participation by confiding local matters to the federated states, such as the Canadian provinces, which are closer to their population. These values are of great concern to the people, whether we be in Quebec or elsewhere in Canada. La formule federale, dans ce qu'elie a d'universel, est porteuse de valeurs. Elle permet la mise en commun de ressources, d'institutions et de potentialites. Mais le federalisme est aussi fonde sur lepanouissement des particularismes, des singularites qui le composent. Nous sommes federalistes parce que nous croyons que le Quebec est enrichi par sa participation a 1 experience canadienne tout autant que le Canada est enrichi par la specificite quebecoise.

APPENDIX

The importance of federalism has often been emphasized in the Quebec perspective. We know that, at the origins of our federation, Quebecers played a decisive role in choosing this system of government. Indeed, this is a reality that the Supreme Court of Canada underscored recently: "Federalism was a legal response to the underlying political and cultural realities that existed at Confederation and continue to exist today... The social and demographic reality of Quebec explains the existence of the province of Quebec as a political unit and indeed, was one of the essential reasons for establishing a federal structure for the Canadian union in 1867."4 Respect for federalism and the distribution of powers thus represents a particularly important issue due to Quebec's specificity. But it is also an important issue from a Canada-wide perspective. Let me say this once again: federalism holds, in the Canadian institutional architecture, just as important a place as do democracy and human rights and freedoms. We should not see federalism as an obstacle or an irritant. Democracy and human rights and freedoms, like federalism, require binding rules protected by the constitution. Would we be ready, simply for reasons of efficiency, to minimize the importance of our democratic rules and of the rights and freedoms laid down in the Canadian Charter? Whether it be a question of federalism, democracy, or human rights and freedoms, effective rules are needed to protect us from arbitrariness and the rule of force. Failing to respect federalism weakens the rule of law by undermining the authority of constitutional norms per se. We must therefore reassert the structural rules of federalism. If, over time, we find that some of these rules are difficult to apply or have become outdated, we must try to modify them rather than circumvent them. I am very conscious that, in the rest of Canada, a good number of people would like to see the federal government play an important role in many sectors, including fields that are currently of provincial jurisdiction. However, such trends in favour of a federal role cannot and should not, in themselves, justify bypassing the rules. Other avenues must be considered. Quebec's approach seeks to revitalize Canadian federalism and to ensure that it truly structures intergovernmental relations. This is a constructive objective that seeks to ensure the sustainability of our institutions.

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Much can be done in intergovernmental matters through non-constitutional means, notably through the signing of administrative agreements. But if these agreements are to genuinely contribute to federalism, they must be in keeping with the more fundamental rules. Changing these rules usually implies constitutional changes. However, it could also involve other avenues such as legislative transfers, as stipulated in section 94 of the Constitution Act, 1867,5 a possibility that we should perhaps examine further. During a conference at the University of Toronto on the theme of redistribution within the Canadian federation in which I participated, the issue of federal spending power was the subject of interesting discussions. Several participants brought up section 94 as a possible asymmetric solution that could satisfy both Quebec and the other provinces. It bears repeating that section 94 stipulates that the Canadian Parliament can adopt legislative measures, in the field of property and civil rights, intended to create uniform norms, but only in common law provinces, thus not in Quebec. Furthermore, recourse to this mechanism is subject, in each of the provinces, to the provinces consent. Section 94 could represent a practical solution in fields of provincial jurisdiction where Quebec wants to keep its autonomy whereas other provinces might prefer to have the federal government play a greater role. Everyone could benefit from this type of arrangement. On the one hand, Quebec, faced with the fact that the federal government currently allows itself to increasingly intervene in matters of provincialjurisdiction, could continue to exercise its legislative authority without any federal interference and be excluded from the application of federal laws concerning the field of property and civil rights, as prescribed by paragraph 92(13) of the 1867 act. On the other hand, the provinces in the rest of Canada might find in section 94 an interesting way of advancing standardized legislative initiatives when the will to do so exists. Certain recent federal initiatives can give us an idea of the role that section 94 could play. I am particularly thinking of the Personal Information Protection and Electronic Documents Act6 and the Assisted Human Reproduction Act,7 two initiatives I referred to earlier. These initiatives fall, for the most part, under the provincial jurisdiction over property and civil rights, and Quebec has repeatedly denounced such federal legislative encroachments.

APPENDIX

We might likewise think of the issue of parental leaves. Although Quebec wishes to establish its own system in this field, I understand that it might be otherwise in other provinces, which seem to accept the current situation. In this context, might not section 94 provide a conceivable solution by allowing the provinces that do not wish to create their own system to continue to benefit from a federal one, while allowing Quebec to move forward and develop a different system? Though section 94 has existed since 1867, it has gone largely unexamined both by experts and in Canadian constitutional practice. This path might be worthy of exploration when considering tomorrow's federalism. This leads me to say a few words about the concept of asymmetry. The federal system, like the Canadian constitution itself, does not exclude asymmetrical relations among federative partners. Section 94 provides us with a tangible proof of this. However, more than simply being compatible with the federal system, asymmetry seems to me to be desirable within the Canadian federation. We must stop being suspicious about asymmetry once and for all, and begin to realize its considerable potential. Asymmetry could, in effect, allow us to rethink federative relations by taking into account the differences between the provinces and their respective needs. And if we can easily conceive what asymmetry could bring to Quebec, I believe it could also be beneficial to the aspirations of other provinces. I would even go so far as to say that, when we take a close look at the foundations and values of our Canadian federal system, asymmetry is not simply compatible with it or desirable, but absolutely inherent to Canadian federalism. We in Quebec believe that there should be more flexibility in the way that we practise federalism in Canada. We also believe that, at the present time, all the provinces are faced with problems and challenges which must be addressed rapidly and forcefully, namely: «•

The equalization program, as one of our proudest achievements in terms of equity and wealth redistribution, must be reviewed to eliminate its inherent irritants and unnecessary complexities and to be rendered more fair.

+

Federal funding of health, post-secondary education, and social services must be increased in order to reduce the gap between past and present federal commitments.

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CONSTRUCTING TOMORROW'S FEDERALISM

*

The provinces need to adopt an inclusive approach to dealing with the issues of federal health care funding, equalization, other federal transfer payments, the limitation of the federal spending power in areas of provincial jurisdiction, and the important fiscal imbalance, issues that are intrinsically linked to each other.

*

The need for provinces to identify and determine together a common vision of how our federation should evolve and what role the provinces should play to achieve this goal.

*

The need to define and strengthen the role of all the provinces at the international level, especially when it comes to agreeing to international treaties and norms in fields that affect provinces directly, such as agriculture, natural resources, identity issues, and trade and commerce. In a not so distant future, other important issues will merit our determined

and focussed attention, issues that include: *

the role of our cities in the context of globalization;

+

the economic and social development of our First Nations;

+ *

environmental issues of particular interest and importance; and the challenges which we will have to face collectively when it comes to the aging of our respective populations, demography, and immigration. Needless to say, the right to be different and the value of diversity, as funda-

mental principles of our federation, enable us, if not oblige us, to adopt a flexible approach to the application of the federal formula. 1

Personal Information Protection and Electronic Documents Act, S.C. 2000, c. 5.

2

See Confederation des syndicats nationaux c. Canada (Procureur general), 2006 QCCA 1454; and Syndicat national des employes de {'aluminium d'Arvida inc. c. Canada (Procureur general), 2006 QCCA 1453. The lower court judgement reference is: [2003] RJ.Q. 3188 (C.S.).

3

The Canadian Charter of Rights and Freedoms, being part I of the Constitution Act, 1982 [Schedule B to the Canada Act 1982 (U.K.), 1982, c. 11].

4

Reference re Secession of Quebec, [1998] 2 S.C.R. 217, pp. 244 and 252.

APPENDIX

5

The Constitution Act, 1867 (U.K.), 30 & 31 Victoria, c. 3.

6

See note 1.

7

Assisted Human Reproduction Act, S.C. 2004, c, 2.

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Contributors FRANCES ABELE is a professor in the School of Public Policy and Administration at Carleton University, where she is past director. From 1992 to 1996, she was seconded to the research directorate of the Royal Commission on Aboriginal Peoples, where she worked on the North as well as chapters on governance and the economy. For many years, her research has focussed on northern economic and political development, Aboriginal self-government, and, more generally, citizen engagement and issues in public management. GERALD BAIER is an assistant professor of political science at the University of British Columbia. His research and teaching interests focus on Canadian federalism and the constitution. He is presently working on understanding the forms and varieties of national standards in federations. Recent publications include Courts and Federalism: Judicial Doctrine in the United States, Australia, and Canada, and "The Courts, the Division of Powers and Dispute Resolution," in Canadian Federalism: Performance Effectiveness and Legitimacy. HERMAN BAKVIS is a professor in the School of Public Administration at the University of Victoria, and a former professor and director of the School of Public Administration at Dalhousie University. His research interests include intergovernmental relations, the policy process, and government structure and organization. Major works include Canadian Federalism: Performance,

Effective-

ness and Legitimacy (forthcoming, co-edited with G. Skogstad); The Hollow Crown: Countervailing Trends in Core Executives (co-edited with P. Weller and

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R. A.W. Rhodes); Regional Ministers: Power and Influence in the Canadian Cabinet; and The Centralization-Decentralization Conundrum (with Peter Aucoin). BARRY FERGUSON is an associate dean of arts and a professor of history at the University of Manitoba. He has written Remaking Liberalism: The Intellectual Legacy of Adam Shortt, O.D. Skelton, W.C. Clark, and W.A. Mackintosh, and co-authored Recent Social Trends in Canada, 1960-2000. BERNARD W« FUNSTON was born in Fort Smith, Northwest Territories, and has extensive experience on matters pertaining to the constitution, Aboriginal rights, and governance in Canada's three territories. From 1980 to 1997, Mr. Funston was with the Government of the Northwest Territories in Yellowknife as a policy analyst (1981 and 1982), constitutional counsel (1984—85), Director of Constitutional Law (1986 to 1992), and Special Advisor on Constitutional Affairs (1992 to 1997). In 1997 Mr. Funston established Northern Canada Consulting, a small company based in Ottawa, which specializes in a range of issues relating to the Canadian North and the northern circumpolar region. THOMAS O* HUEGLIN is a professor of political science at Wilfrid Laurier University. He received his PhD from St. Gall University in Switzerland, and a post-doctoral degree (Habilitation) from Konstanz University in Germany. He has held research fellowships at the European University Institute in Florence, Italy, at the Mannheim Centre for European Social Research in Germany, and at Queen's University in Canada. His research interests are divided between the history of political thought and comparative federalism. His latest book publication is Comparative Federalism: A Systematic Inquiry, co-authored with Alan Fenna, Curtin University, Western Australia. The next book, Rethinking the History of Political Thought for the 21st Century, will appear with Broadview Press in 2008. DAVID McGRANE is a PhD candidate and contract instructor in political science at Carleton University in Ottawa. His dissertation, which is nearly complete, is a comparison of social democratic ideas and policies in Saskatchewan and Quebec in the twentieth century. He recently published an article in the International Journal of Canadian Studies examining Western alienation and attitudes towards federalism in the Saskatchewan CCF-NDP.

CONTRIBUTORS

IAN PEACH is the director of the Saskatchewan Institute of Public Policy, He has been with the Government of Saskatchewan for twelve years, holding such positions as Director of Constitutional Relations in the Department of Intergovernmental and Aboriginal Affairs, and Senior Policy Advisor in the Cabinet Planning Unit of Executive Council. In his seventeen years of government service, Mr. Peach has been involved in numerous intergovernmental negotiations, including the Charlottetown Accord, the Social Union Framework Agreement, First Nation self-government agreements, and the CanadaSaskatchewan Northern Development Accord. BENOIT PELLETIER is the Minister Responsible for Canadian Intergovernmental Affairs, Francophones within Canada, the Agreement on Internal Trade, the Reform of Democratic Institutions, and Access to Information in the Government of Quebec. Born in Quebec on January 10,1960, he received his law degree from 1'Universite Laval in 1981, his Master's degree in law from the University of Ottawa in 1989, a Doctorate in law from 1'Universite Paris I (Pantheon-Sorbonne), France, in 1996, and a Doctorate in law from 1'Universite Aix-Marseille III, France, in 2000. Prior to his election to the Quebec National Assembly in 1998 as the Member for Chapleau, he was a legal adviser to the federal Department of Justice, a professor and associate dean of law at the University of Ottawa, the author of several publications in the field of constitutional law, and a lecturer in Canada, Europe, Africa, Central America, and South America. In his first term in the Quebec National Assembly, between 1998 and 2003, he was Official Opposition critic for Canadian intergovernmental affairs and became Minister for Canadian Intergovernmental Affairs and Native Affairs upon the election of the Liberal government of Jean Charest in 2003. REJEAN PELLETIER has been a professor of political science at Laval University since 1975. A specialist in Canadian and Quebec politics, he has published numerous books and over ninety articles in journals, and edited collections on a variety of subjects, including Canadian and comparative federalism, political parties and new social movements, women and politics, Parliamentary institutions, and political trust. He has also written a study entitled "Intergovernmental Cooperation Mechanisms: Factors for Change?" for the

233

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CONSTRUCTING TOMORROW'S FEDERALISM

Commission on the Future of Health Care in Canada and such recent works as Le parlementarisme canadien (co-edited with Manon Tremblay), and Que fontdies en politique? (co-authored with Manon Tremblay). His current research relates to "La confiance politique au Canada: aux sources du declin de la confiance dans les institutions democratiques au sein d'une federation multinationale." MICHAEL J* PRINCE is Lansdowne Professor of Social Policy in the Faculty of Human and Social Development at the University of Victoria. He has been a consultant or advisor to departments and agencies of the federal government as well as to certain provincial, territorial, First Nations, and local governments, including four Royal commissions. Recent publications include "SUFA: Sea Change or Mere Ripple for Canadian Social Policy? in Forging the Canadian Social Union: SUFA and Beyond, and several essays with Frances Abele, including "Aboriginal Governance and Canadian Federalism: A To-Do List for Canada," in New Trends in Canadian Federalism. THE HONOURABLE ROY ROMANOW is currently the Senior Fellow in Public Policy in the Department of Political Studies at the University of Saskatchewan. Born, raised, and educated in Saskatoon, he graduated from the University of Saskatchewan with arts and law degrees. He was first elected to the Saskatchewan Legislature in 1967. Between 1971 and 1982, Roy Romanow served as Deputy Premier of Saskatchewan, Attorney General, and, as of 1979, Saskatchewan's first Minister of Intergovernmental Affairs. He was one of the key players in the federal-provincial negotiations that resulted in the Constitutional Accord of November 1981. In 1984, he co-authored a book on those negotiations, entitled Canada... Notwithstanding. On November 7,1987, Mr. Romanow was acclaimed Leader of the Saskatchewan New Democratic Party and became Premier of Saskatchewan on November 1,1991. He retired from politics in February 2001, and was appointed Commissioner of the Commission on the Future of Health Care in Canada by the prime minister that same year. GABRIELLE A, SLOWEY is an assistant professor in the Department of Political Science at York University. Her research interests are in Canadian politics, with a focus on indigenous development in Canada and New Zealand,

CONTRIBUTORS

neo-liberalism and globalization, public policy, federalism, land claims, selfdetermination, treaties, resource development, and Aboriginal-state relations. Her doctoral research focussed on how globalization affects Aboriginal-state relations and why it is important for treaty First Nations in search of selfdetermination. To date, she has published a number of articles and chapters on these topics and a book, Navigating Neoliberalism, forthcoming in fall, 2007. ROBERT WARDHAUGH is an assistant professor of history at the University of Western Ontario. He has written Mackenzie King and the Prairie West and is continuing to work on national politics and Prairie regional society. He and Barry Ferguson are collaborating on a book, The Rowell-Sirois Royal Commission and the Re-interpretation of Canadian Federalism.

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