How Ottawa Spends, 2007-2008: The Harper Conservatives - Climate of Change 9780773575622

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How Ottawa Spends, 2007–2008

the school of public policy and administration at Carleton University is a national center for the study of public policy and public management. The School’s Centre for Policy and Program Assessment provides research services and courses to interest groups, businesses, unions, and governments in the evaluation of public policies, programs and activities.

School of Public Policy and Administration Carleton University 10th Floor Dunton Tower 1125 Colonel By Drive Ottawa, on Canada K1S 5B6 www.carleton.ca/sppa

How Ottawa Spends, 2007–2008 The Harper Conservatives – Climate of Change Edited by

g. bruce doer n

Published for The School of Public Policy and Administration Carleton University by McGill-Queen’s University Press Montreal & Kingston • London • Ithaca

© McGill-Queen’s University Press 2007 ISBN 978-0-7735-3283-0 Legal deposit second quarter 2007 Bibliothèque nationale du Québec Printed in Canada on acid-free paper that is 100 % ancient forest free (100 % post-consumer recycled), processed chlorine free. McGill-Queen’s University Press acknowledges the support of the Canada Council for the Arts for our publishing program. We also acknowledge the financial support of the Government of Canada through the Book Publishing Industry Development Program (bpidp) for our publishing activities.

Library and Archives Canada has catalogued this publication as follows: How Ottawa spends. 1983– Imprint varies. Includes bibliographical references. Continues: How Ottawa spends your tax dollars, ISSN 0711-4990. ISSN 0822-6482 ISBN 978-0-7735-3283-0 (2007/2008 edition) 1. Canada – Appropriations and expenditures – Periodicals. I. Carleton University. School of Public Policy and Administration HJ7663.H69

354.710072'2

This book was typeset by Interscript in 10/12 Minion.

C84-030303-3

Contents

Preface vii 1 The Harper Conservatives in Power: Emissions Impossible 3 Bruce Doern

pa r t i m a c r o c h o i c e s a n d c h a l l e n g e s 2 Addressing the Fiscal Imbalance Through Asymmetrical Federalism: Dangerous Times for the Harper Government and for Canada 25 Andrew Teliszewsky and Christopher Stoney 3 La Grande Seduction: Wooing Quebec 46 Peter Graefe and Rachel Laforest 4 “Getting Down to Business” Rebuilding Canada-U.S. Relations Under the Harper Government 63 Geoffrey E. Hale 5 The Federal Accountability Act: How Ottawa Steps Backward in Monitoring Political Ethics and Integrity 87 Lori Turnbull 6 Why Ministerial Responsibility Can Still Work 105 Jonathan Malloy and Scott Millar 7 Room for Manoeuver? The Tory Agenda and Liberal Commitments 123 Carey Anne Hill and Trevor E. Lynn

vi Contents

pa r t i i s e l e c t e d p o l i c y, p o l i t i c a l a n d b u d g e ta r y r e a l m s 8 Energy Shift: Canadian Energy Policy Under the Harper Conservatives 143 Keith Brownsey 9 Patience! … Wait Time Guarantees and Conservative Health Care Policy 161 Gerard W. Boychuk 10 The Harper Government’s Universal Child Care Plan: Paradoxical or Purposeful Social Policy? 180 Michael J. Prince and Katherine Teghstsoonian 11 Federal Public Service Labour Relations: Business as Usual? 200 Timothy J. Barkiw and Gene Swimmer 12 Righting Wrongs: Locking Them Up Without Losing the Key – Tory Reforms to Crime and Punishment 220 Ian Lee 13 Public-Private Partnerships: P3 and the “Porcupine Problem” 254 Ruth Hubbard and Gilles Paquet 14 Consumer Protection Through Free Markets, Small Government, and Individual Responsibility? The Federal Approach, 1993–2007 273 Derek Ireland and Kernaghan Webb Appendix A: Canadian Political Facts and Trends 295 Appendix B: Fiscal Facts and Trends 301 Contributors 319

Preface

This is the 28th edition of How Ottawa Spends. As always, we are especially indebted to our roster of contributing academic and other expert authors from across Canada for their insights and for their willingness to contribute to public debate in Canada.1 Thanks are also due to Kimmie Huang at the School of Public Administration for her excellent research and technical support and to Joan McGilvray and her colleagues at McGill-Queen’s University Press for their always professional editorial and publishing services and expertise. None of this work would have been possible without the continuing support and scholarly stimulation provided by my colleagues at the School of Public Policy and Administration at Carleton University and in the Politics Department at Exeter University. G. Bruce Doern Ottawa, February 2007

note 1 The opinions expressed by the contributing authors to this volume are the personal views of the authors of individual chapters and do not necessarily reflect the views of the editor or of the School of Public Policy and Administration at Carleton University.

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How Ottawa Spends, 2007–2008

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1 The Harper Conservatives in Power: Emissions Impossible g. bruce doer n

The minority Harper Conservative government in 2007 finds itself scrambling to craft a now essential and urgent green climate change agenda which by its own leader’s previous views and current statements amount to a “emissions impossible” situation. The same is true for the opposition Liberal Party and its new leader, Stephane Dion, who won his party’s leadership by promising a sustainable development agenda but who also has no credible way to explain or avoid the consequences of a Chretien-Martin Liberal era in which Canada committed to Kyoto Protocol greenhouse gas emission reductions of 6 percent from 1990 levels but instead saw emissions increase by 24 percent. This is not politics or policy of the “high road” kind. Rather it is the politics of dueling partisan embarrassment. The movement of climate change issues to the centre stage of the national agenda has caught both of the main parties flat footed, albeit for different reasons. The Harper Conservative’s 2006 electiondriven five point agenda had by late 2006 been broadly achieved, except for health care wait time reductions and child care spaces (see more below). The five point agenda had been seen as yet further evidence of Harper’s tactical brilliance, and was added to his earlier evidence of political skill when he had reunited Canada’s conservatives back into one party. But tactical brilliance is not the first label that springs to mind when it came to early Conservative environmental policy. It focused on a new Clean Air in which climate change was scarcely even acknowledged. Harper had to replace his first environment minister, Rona Ambrose, but only because he could not fire himself. He was defacto from the outset his own environment minister in a super centralized government which he controlled in a very detailed way. Thereafter, early in 2007, after appointing John Baird as his new environment minister, Harper rushed through

4 Macro Choices and Challenges

several new environmental initiatives, and gradually began denying that he was a climate change denier. A form of post-Kyoto climate change agenda began to be talked about by the Tories since they argued that Canada could not possibly meet its Kyoto emission targets without massively harming the economy. For the Dion Liberals, the problem is different. Their ultimate burden is that GHG emissions had increased massively on their watch. Dion had personally garnered considerable political credit for his brief 18 month sojourn as a Martin era Minister of Environment. His learning curve was high and he eventually parlayed this into his leadership platform when he ran for and surprisingly won the Liberal leadership in December 2006 largely on a sustainable development platform. Following his leadership victory the Dion Liberals garnered a bounce upward in public opinion polls which saw them leading the Tories for a while, if only slightly. But if Harper was a “johnnie no-note” in environmental terms, Dion’s problem was that he was potentially too much of a policy “johnnie one note” … green yes, but what else? Within the context of this crucial shift, this changing climate, in the Canadian body politic, the 2007–08 edition of How Ottawa Spends examines the central question of whether the Harper agenda can credibly shift from its five priority approach in its first months in power to a broader agenda anchored in an overarching green political and policy agenda but where other policy pressures and challenges also are surfacing with different political-economic dynamics.1 For the Harper Conservatives and their opposition party competitors alike, governing priorities are, as always, more than just green ones and these are explored both in this chapter and in more detail by our contributing authors. My account in this chapter looks first at several key factors and forces that have both reshaped federal politics and policy during the Harper era’s climate of change. The second part of the chapter then sets out the Harper agenda as revealed in its first Speech from the Throne (SFT ) and its 2006 and 2007 Budgets as well as in other, mainly Prime Ministerial, statements. The agendas of the opposition parties are also referred to briefly given the need for the Tories to take into account these competing or complementary agendas in managing the minority, in particular the agenda of a Stephane Dion–led Liberal Party. I then preview the chapters in this edition and finally, in the last section, offer overall conclusions and some conjectures about national priorities, challenges and choices.

k e y fac to r s a n d f o rc e s Four key factors and forces helped shape the climate of change and will undoubtedly contribute to changed and reconfigured national spending and policy priorities. These are: the Harper Conservatives’ good initial start followed by lost momentum, the Harper leadership style; the Dion factor, and the crucial electoral terrain of Quebec politics.

5 The Harper Conservatives in Power

On taking office in January 2006, the Harper Conservatives moved in a confident and sure-handed manner to implement their five-point agenda: the Accountability Act; a one percent cut in the GST ; a child care plan (an allowance and spaces initiative); a tougher approach to crime and punishment; and a patient wait times guarantee. The Accountability Act was the Tories lead off promise and was their response to the main issue that saw them win power, the Liberal’s corruption record centered on the Sponsorship program. Each of the next three priorities were a part of the Tory effort to reach out to the hard pressed suburban middle classes. Two and a half of these three promises have also been adopted, the missing half a promise being the day care spaces part of the overall day care plan. The waiting times guarantee is the other priority not adopted, the Conservative’s 7 April 2007 declaration not withstanding. The initial Harper five point agenda has been both praised as politically and tactically astute but also criticized as “substantively dubious”.2 Some of our authors would agree with this assessment overall. The lean agenda was politically successful without doubt. However, the cut in the GST was opposed by many economists as precisely the wrong kind of tax to cut. The analysis by Lori Turnbull of the Accountability Act views it overall as a step in the wrong direction. Ian Lee’s account of Tory changes to crime and punishment is supportive of the direction of change but also points out some of the paradoxes of the Tory ideas. The chapter by Prince and Teghstsoonian on the Harper child care plan shows that despite their historical criticism, the Conservatives, have established the first new universal social program in decades. The analysis by Boychuk of wait times shows the entrenched difficulty of solving this issue but also argues that the federal Conservatives have probably been given the benefit of the doubt about this promise. As Boychuk argues Canadians know the value of “patience” regarding patient wait times. Harper was easily able to maintain the momentum of the initial agenda. He faced a Liberal Party searching for a new leader to succeed Paul Martin, and he also took decisive decisions on several key issues, including support for Israel regarding the bombing of Lebanon; extending Canada’s commitment of troops in Afghanistan; securing a deal with the Americans on the long festering softwood lumber dispute; swiftly and unexpectedly introducing and passing a House of Commons resolution which declared the Quebecois as a nation within a united Canada; and bringing an end to the tax benefits of income trusts. Each of these decisions was criticized but overall Harper garnered considerable credit for decisiveness and leadership. However, by late 2006 and early 2007, the Harper Tories began to lose momentum, much of it caused by the poorly calculated and weak environmental agenda they had hoped would be good enough but not Kyoto friendly. Combined with the Dion leadership victory bounce received by the Liberals, the Tories lost ground in opinion polls but then pulled ahead again by March 2007

6 Macro Choices and Challenges

in part by a series of announcements that amounted to about $12 billion in spending on the environment, urban transit, and farm support. As we see further below, Budget 2007 continued the Tory spending spree. The net effect until Budget 2007 was announced was that neither party could necessarily see either an electoral victory or a majority government ahead. Indeed, Harper had already earlier committed himself to the idea of fixed elections and that the next election would be in 2009. The second key element of national politics and policy is the leadership values, persona and style of Prime Minister Stephen Harper. Strongly intellectually oriented, Harper came to politics and to office with a right wing libertarian view combined with a strong preference for a much more decentralized federation. This meant that overall he has favored a federal approach which he labels as “open federalism” in which the federal government respects provincial areas of policy jurisdiction but also strongly defends, and indeed focuses on federal realms such as national defence, law and order, northern sovereignty, vigorous foreign and trade policy, and overall national economic development, including support of measures that will produce a more open internal market. His libertarian instincts tend to be ones which combine support overall for a less interventionist government but also support for human rights. These core instincts have of course had to be mellowed and adapted to the realities of actually having to govern. Thus open federalism still leaves room for strong federal involvement in areas such as education and related R & D support, infrastructure development and a related but more tentative cities agenda. In terms of overall federal public spending the Harper Tories committed themselves to levels of spending over the next five years which were virtually identical to those of the previous Martin Liberal government.3 And this was before the spring 2007 spending splurge once the Tories discovered that they too presided over a handsome budgetary surplus and could play the largesse and distributive spending game despite their ardent criticism of the Liberals for this kind of fiscal indiscipline. In terms of a governing persona and style, Harper’s first year in power reflected a strong controlling instinct which brooked little opposition within his Cabinet and which took an often belligerent stance regarding the national Ottawa-centered media while often cultivating local/regional media. Deliberate strategies were employed to get key announcements made regionally where a friendlier reception was deemed likely. Some of the initial control of his Cabinet was sensible in that few of his ministers had ever held ministerial office. Moreover, Harper was determined to show political discipline not only in the face of a minority Parliament but also to demonstrate a contrast with the often shambolic central governing of the Martin Liberal entourage. At the same time, although Harper appeared to micro-manage several higher-profile policy files from the Prime Minister’s Office, he also pushed responsibility for many other files out of

7 The Harper Conservatives in Power

the Privy Council Office, enabling a limited number of trusted ministers some independence in running their departments. The Harper style in his first year has also been fiercely partisan. His instinct in the House of Commons bear-pit, but elsewhere as well, has been to deal with criticism by going immediately into a counter-attack mode. This so-called “dark side” of the Harper leadership style was exhibited in the unprecedented (in Canadian politics) attack ads that the Tories launched against Stephane Dion early in 2007 but also in many exchanges in the House of Commons. Some of this attack mode politics was also attributed to his staff ’s contacts with both the Bush Republicans and the Australian Howard regime staffers, who were keen and often successful practitioners of these darker political arts. Some of this behavior and style can also be attributed to the carryover opposition style approach of a party long in the opposition wilderness but now ensconced in power. Some of this excess partisan attack mode is bound to abate the longer Harper is in power, not only because of his growing comfort level in wielding power but also because it is quite simply not a very sensible way of being, and appearing to be, “Prime Ministerial.” The Dion factor is the third development influencing national politics and priorities. Dion is also an intellectual leader. A former academic, he had been enticed into national politics following the near dissasterous 1995 Quebec Referendum. He then made his core political reputation through his development and stout defence of the Clarity Act, the federal law which sets out stiffer rules regarding any future secession attempts. This earned him the strong enmity of Quebec nationalists. In his subsequent career in the Chretien cabinet, he gradually earned a reputation as a minister who was tough minded and analytically well-prepared, albeit in the somewhat murkier world of intergovernmental relations which is rarely on the front lines of Parliamentary question period political exchange. Out of office and out of favor during the early months of the Martin era, he was invited in from the cold by Martin to be his minister of the Environment. As noted above, this environmental experience earned him considerable political credit, including his high visibility work as chair at the Montreal climate change convention in December 2005.4 However, little of this kind of political CV would necessarily indicate that one year later Dion would be elected the new leader of the Liberal Party. He triumphed in part because Liberal partisans wanted someone who could end the internecine war between the Chretien and Martin wings of the Liberal Party. He also won unexpectedly because the Party did not trust his main opponent, Michael Ignatieff, as a newly minted Liberal, and because Dion’s previously noted sustainable development-centred agenda resonated with Liberal Party members. The Liberals’ main challenge is that Dion is not yet well known across the country nor is his sustainable development strategy. His early post-convention approach has been to consolidate his leadership among his Parliamentary

8 Macro Choices and Challenges

colleagues, most of whom did not support him in the leadership race, and to unite the Liberal Party, the latter done mainly by giving his main rivals key front-bench jobs, including Ignatieff as deputy leader. Criticized for lack of substance on economic policy issues, Dion has subsequently sought to align himself closely with Chretien-Martin era taxation and economic development priorities. A final crucial feature of national politics and policy is the wooing of Quebec and the related dynamics of Quebec politics in the Harper Tories’ search for the seemingly elusive prize of a majority government in a possible 2007 election. As Graefe and Laforest argue in their chapter on the Quebec factor, Harper’s strategy is necessarily a two-level game, one level centred on intergovernmental statecraft and the other partisan. The statecraft level focuses on preserving the Canadian federation and enhancing national unity while still responding to Quebec’s desire to enhance its own autonomy. Strategy at this level has to outwit the dual roles of the Bloc Quebecois as a federal force and the Parti Quebecois as a separatist party, promising again if it won the next provincial election yet another referendum. The partisan level involves the practical electoral task of winning several more seats in Quebec to build on the Tory breakthrough which helped win them the 2006 election. This means taking seats from the Bloc and ensuring that the Dion-led Liberals are still associated with the old corruption charges of the 2006 election combined with an effort to show that Dion is somehow not a decisive leader. Harper’s 2006 electoral and policy strategy stressed that he would solve the fiscal imbalance problem, an issue which Quebec governments had raised for several years.5 Coupled with a Conservative preference for a much more decentralized federation, the fiscal imbalance issue found resonance in Quebec even though the actual issue of fiscal imbalance is dubious in many respects in that provinces are free to fix their own gaps between taxing and spending if they chose to do so. These policies were discussed by Harper in Quebec, much more than in the rest of Canada, a process that had begun when the Tories held their policy convention in Quebec City in March 2005. We comment further on the fiscal imbalance issue later in the chapter but there can be little doubt that the Harper promise to resolve this issue helped the Tories win seats in Quebec. This issue, more than any other, is what was riding on the concurrent timing of the 19 March Tory Budget a week before the 26 March Quebec election called by Quebec Premier Jean Charest. The Harper and Charest alliance of convenience had to deliver on the fiscal imbalance issue in part because several other Harper policies on defence, the environment, Afghanistan, and foreign policy vis a vis the U.S., were not popular with the majority of Quebec voters. As we discuss further below, the 26 March 2007 election of a Liberal Charest minority government, the sudden rise of Action Democratique du Quebec (ADQ ) and the decline of the separatist Parti Quebecois produced a decidedly mixed result for Harper and his overarching national political strategy.

9 The Harper Conservatives in Power

t h e h a r p e r c o n s e r vat i v e a g e n d a As stressed above the core of the initial Harper Conservative agenda was its five-point plan. A larger glimpse of its governing intentions were found in its election platform document, Stand Up for Canada. In last year’s How Ottawa Spends, I cast this larger agenda in relation to the question of whether the Harper agenda is “true blue” or “Liberal-lite” and concluded that overall the evidence suggested that it was more of the latter than the former, particularly in terms of public spending which, as noted earlier, more than matched the previous Martin Liberal’s five-year forward commitments.6 We now have more to go on regarding the Tories’ agenda. The key expressions of it are found in the Tories’ lead-off 2006 Speech from the Throne (SFT ), Budget 2006 and Budget 2007, all of which we profile and assess in this section. The April, 2006 Speech From the Throne The SFT gave pride of place to the core five promises already discussed above but in addition explicitly referred to other promised initiatives and themes. These included: • Senate reform through ways that would ensure that the Senate reflects democratic values; • Fiscal imbalance through fiscal arrangements which would give all governments access to the resources they need to meet their responsibilities; • Establish an “open federalism” that recognizes the unique place of a strong and vibrant Quebec in a united Canada; • Build stronger multilateral and bilateral relationships, starting with the U.S. “our best friend and trading partner; • Offer an apology for the Chinese immigration head tax; • Work toward a stronger military, better use of aid money and a “more robust” diplomatic role for Canada.7 Budget Speech 2006 Our focus in this section is on Budget Speech 2007 (see below) but Budget Speech 2006 warrants a brief prior mention. Finance Minister Jim Flaherty’s first Conservative budget was titled “Focussing on Priorities” and strummed the same SFT theme of a disciplined approach to public funds and priorities. Flaherty opened his speech by asserting that “for years, Ottawa has been overtaxing Canadians. In this budget, we deliver real tax relief for Canadians.”8 Almost $20 billion in tax relief for individual Canadians was on offer and Flaherty stressed that the budget delivers twice as much tax relief as new spending.9 Crafted mainly in the Department of Finance, the budget again reinforced the earlier five priorities but also promised major increases in defence spending

10 Macro Choices and Challenges

and lower taxes for all Canadians, partly through highly targeted but politically noticeable small tax breaks on textbooks for students, tools for apprentices in skilled trades, and for users of public transit. Again the needs of the beleaguered average Canadian and the “swing voter in the swing constituencies” of an already strategized “next” election were a key part of the calculus of Conservative agenda-setting. Taxes were also reduced for small businesses and overall regarding corporate taxation. Overall, there were 29 separate tax reductions. Fixing the fiscal imbalance was to be left to the next Budget pending further analysis and discussions with the provinces. On the spending side about $1.5 billion and $2.1 billion in increased spending was promised for 2006–2007 and 2007–2008, respectively, with the largest portion going to defence spending, security, infrastructure, and health, but also of course the core election promise of child care support and choice. A significant part of the Harper child care spending comes from reallocated monies and from cuts and cancellations of previous Liberal plans as discussed in the chapter by Prince and Teghtsoonian. Budget 2006 also contained a broad commitment to promote a more competitive and more productive Canadian economy. Moreover, within the details of Budget 2006 a short paragraph provides further Conservative views and some implementation of its election platform initiatives on “investing in research and development.”10 It begins by noting the significant federal investments in place including the Indirect Costs of Research program of $260 million per year, the $1.6 billion for the three research granting councils, and the $3.65 billion spent to date on research infrastructure via the Canada Foundation for Innovation (CFI ). In addition, the Conservatives announced that the minister of Industry would be developing a “science and technology strategy, in collaboration with the minister of Finance, that will encompass the broad range of government support for research, including knowledge infrastructure” and also that it will “undertake a review of the accountability and value for money of the granting councils’ activities.”11 Budget Speech 2007 Finance Minister James Flaherty’s second Budget tabled on 19 March 2007 contains a virtual cornucopia of spending and taxation benefits, more the former than the latter, and very much geared to helping “working families,” who “aspire to a stronger, safer and better Canada.”12 Crafted to garner a majority government in an expected 2007 election and aimed at suburban voters, especially in Ontario and Quebec, Budget 2007 is a populist document and plan that in terms of spending increases overall turns the Tories from the their first budget “Liberal-lite” hue to one that is “Liberal-brite.” Federal spending is projected to increase by $10 billion to $233 billion in 2007–08, including a 5.7 percent increase in program spending. A surplus of $3.3 billion is planned almost all of which will go to debt reduction. More specifically, among the key items, the Budget provides for:

11 The Harper Conservatives in Power

– a new child tax credit worth $310 per child for most families; – a working income tax benefit of up to $1000 a year for low income families to help get them off welfare; – an investment of $250 million per year starting in 2007–2008 to provinces for the creation of new child care spaces; – $800 million increase in annual support for post-secondary education starting in 2008–2009 and with further increases for several years thereafter. – $1.5 billion for projects to cut air pollution and greenhouse gas emissions; – a rebate of up to $2000 for buying fuel-efficient vehicles and a green levy to penalize auto manufacturers up to $4000 on inefficient vehicles; – $39 billion in additional funding over seven years to “restore fiscal balance with the provinces, territories and municipalities by providing long-term, equitable and predictable funding for shared priorities”.13 This includes a renewed equalization program with funding that provides $1.9 billion more over two years than the previous system; – a tax back guarantee which directs $1 billion a year in debt interest savings to personal income tax reductions; – an overall total of $8.2 billion in personal and business tax cuts; – $1.1 billion for workforce skills and economic infrastructure; – $819 million for defence and foreign aid.14 With regard to the biggest single spending item by far, the package to fix the so-called fiscal imbalance, Finance Minister Flaherty called it a historic plan and said that “there will be no more bickering” over the fiscal imbalance or, as he put it even more succinctly in French “c’est fini.”15 It would be difficult to find a summary statement more likely to be the opposite of the truth than the “c’est fini” assertion. Fiscal imbalances will be forever invented and claimed as the provinces play the never ending games of fiscal one-upmanship and permanent senses of inequity. Nothing was more revealing of these permanent features of fiscal federalism than the Conservatives special blessings conferred on Quebec, where $5.7 billions were on offer in Budget 2007 over the next two years, a package also aimed at helping the Charest Liberal government of Quebec win their 26 March election. Within 24 hours of receiving the funds, most aimed at improving public services, Charest announced, as the election campaign entered its final days, that almost one billion of those funds would go towards a tax reduction for Quebecers (see further discussion of the Quebec election impacts below).

a n ov e rv i ew o f t h e c h a p t e r s ANDREW TELISZEWSKY AND CHRISTOPHER STONEY examine the issue of fiscal imbalance in relation to the increased practice of asymetrical federalism by both the Martin Liberal and Harper Conservative minority governments. Using the 2004 Federal Provincial Health Accord, the 2005 Atlantic

12 Macro Choices and Challenges

Accord and the 2005 bilateral Child Care agreements, in addition to an analysis of both Liberal and Conservative rhetoric as examples, the authors illustrate the contemporary shifts in federal-provincial relations. They show that this has resulted in a patchwork quilt of programs, implemented with great variance across jurisdictions. While emboldened provincial leaders are seen as keen to exploit weakened federal leaders to secure increased federal transfers, the result becomes a lack of truly ‘national’ leadership. To make this point, a contrast and comparison is made between two ‘fairness’ campaigns launched by provincial Premiers Danny Williams (Newfoundland & Labrador) and Dalton McGuinty (Ontario), and recommendations are made regarding alternative strategies with an eye towards reducing federal – provincial tensions, in the long run. In the medium term, the authors conclude that a prolonged era of minority governance in Ottawa – and correspondingly empowered provincial capitals – will spell trouble for future implementation of ‘national’scale programs. PETER GRAEFE AND RACHEL LAFOREST examine the Conservatives multiple efforts to seduce the Quebec electorate in a strategy to secure their foothold in Quebec and form a majority government at the next election. Under the guise of “open federalism” Harper has been willing to put traditional demands of Quebec for a greater share of federal revenues on the federal policy agenda. This new open approach to intergovernmental relations follows closely on the previous Liberal government’s attempt to foster collaborative relations between the federal and Quebec governments. The first part of the chapter reviews some of the key moments in the evolution of intergovernmental relations, with a particular focus on the efforts to patch up the relationship between the federal and Quebec governments that we have observed in the past four years. The second part of the chapter then explores why, despite the important synergies they share on intergovernmental matters, the Conservatives have been apparently unable to connect further with the Quebec electorate.

explores the Harper government’s approach to the coordination and management of Canada-U.S. relations and the framing of political relationships between the two countries. Hale contends that the Harper government’s central emphasis has been to realign the tone and substance of a relationship distorted by the political theatrics and tactical evasions of the Martin government, while maintaining a substantive continuity in most major cross-border policy fields. The author conceptualizes the role of prime ministers in managing the Canada-U.S. relationship and considers elements of continuity and change in the organization and coordination of major bilateral policy functions within the federal government. The chapter also examines major developments in defence and security policies, ongoing discussions

GEOFFREY HALE

13 The Harper Conservatives in Power

under the Security and Prosperity Partnership, the negotiation of the 2006 Softwood Lumber Agreement and ongoing discussions over implementation of the Western Hemisphere Travel Initiative. LORI TURNBULL argues in her chapter that The Conflict of Interest Act, contained in the Federal Accountability Act, is a significant step backward for the federal government’s ethics regime. The chapter analyzes three of its most significant pitfalls. First, the Act is unique among ethics regulations, and not in a good way. It fails to include a “principles” section to give meaning and durability to the code’s rules for conduct. Its concentration on conflict of interest rules, as opposed to ethical principles such as honesty and integrity, will lead to the decline of ethical standards for cabinet ministers and political appointees. Second, the Act fails to prohibit real and apparent conflicts of interest, which are every bit as damaging to the public trust as “the real thing.” In this respect, the new legislation’s conflict of interest regulations are less comprehensive than those captured in the ethics codes that preceded it. Third, the new conflict of interest and ethics commissioner will be overwhelmed by a much-too-onerous workload. This will undermine the office’s ability to develop the trust relationships with parliamentarians and public officials that are essential to a successful ethics regime.

examine the traditional doctrine of ministerial accountability and conclude that it is is alive and well in Canada. Nevertheless, as seen most recently in the report of the Gomery Commission, the doctrine has been subjected to repeated critiques regarding its applicability to the current Canadian context and by extension to its overall utility in ensuring the accountability of government ministers to Parliament and ultimately to the electorate. The authors contend that the doctrine is relevant and effective. With examples drawn from the HRDC grants and contribution affair, the chapter shows the sufficiency of ministerial accountability in solving problems of government administration and in setting in place processes to prevent future errors. It also explores ill-conceived reforms that have called for accountabilities to be split between ministers and deputy ministers on policy and administrative matters, respectively. It is argued that such a dilution of the doctrine would only serve to create an overly complex and ultimately ineffective system of accountability. Recognizing that ministerial accountability, while preferable, is by no means perfect, the chapter also touches upon the Federal Accountability Act and other reforms that seek to clarify and strengthen the current system. JONATHAN MALLOY AND SCOTT MILLAR

CAREY HILL AND TREVOR LYNN’S chapter considers the implications of annual and multi-year budgeting, explaining that delegated budgetary commitments allow the government to claim credit while passing costs on to future

14 Macro Choices and Challenges

governments. Even if the future government fails to accept the commitments, they are charged with the burden of explanation. The authors analyze how governments at the federal level in Canada might delegate spending to future governments. The chapter examines this dynamic with a focus on three areas in which the previous Liberal Government made significant long-term commitments: (1) the Environment (2) the Research/Innovation Agenda and (3) the Cities Agenda. The authors’ analysis suggests that the federal government can most successfully delegate spending via agreements with the provinces and territories. In several areas, with the important exceptions of childcare, environmental policy, and the Kelowna Accord, the Martin Liberals used delegated spending effectively. By spreading program spending out over five and ten year terms, they were able to set the public policy agenda in a number of areas for the immediate future. Finally, the chapter draws attention to the Kelowna Accord as an example of an Aboriginal-federal-provincial agreement that the Martin Liberals were unsuccessful in delegating to the Conservatives despite the existence of agreements with other governments. analyses energy policy under the Harper Conservatives. He shows that the Harper government has taken a different approach to energy policy than its predecessors. It has chosen to continue liberalizing Canada’s energy markets while abandoning commitments to the Kyoto protocol, cutting funds for alternative energy research and innovation, criticizing its competitors for hindering a free market in energy, and promoting Canada as an energy superpower. There is little recognition that the current energy system may be in a period of transformation from an era of abundant, secure, and inexpensive hydrocarbon and other energy resources to a period threatened by dwindling supplies, environmental problems, inadequate and aging infrastructure, and security concerns. Instead, the Harper government has decided to model its energy policies on those of the Bush administration in the United States, ignoring its international obligations for reduced carbon emissions, discounting alternative sources of energy, and neglecting to diversify markets. While the long and difficult process of diversifying the types and sources of energy continues throughout much of the world, the Conservatives have instead decided that the Canada will rely on the “free exchange of energy products based on competitive market principles.”

KEITH BROWNSEY

examines Conservative efforts to implement wait time guarantees. While little progress has been made, even these modest efforts seem likely to seriously undermine claims that the Conservatives have a hidden health care agenda – neutralizing health care as an election issue. Ottawa has been spared entanglement in the health care imbroglio primarily as a result of developments largely outside of its own control: the decision by the Québec government to respond to the Supreme Court’s decision in the Chaoulli case

GERARD BOYCHUK

15 The Harper Conservatives in Power

with reforms that do not challenge the Canada Health Act (CHA ); the effective passing from the political scene of Alberta Premier Ralph Klein in the midst of his swansong attempt at major health funding reform; and British Columbia’s relatively surreptitious approach of professing strong support for the CHA while quietly violating it. These developments, combined with the federal government’s cautious approach, have allowed Ottawa to successfully avoid the most fundamental challenge in the field of health care which also bedevils efforts at implementing wait time guarantees – managing the significant differences in provincial preferences regarding the appropriate mix of public and private funding. MICHAEL J . PRINCE AND KATHERINE TEGHTSOONIAN

analyze the Universal Child Care Benefit (UCCB ) and related policies adopted by the Harper government that are intended to address the needs of families with young children. The analysis begins with an account of the political debates regarding child care policy that took place during the 2006 federal election campaign. It then explores the apparent paradox presented by a Conservative government embracing the principle of universality in its approach to this area of social policy. Drawing on government and party documents, legislative debate, and media coverage, the authors argue that the manner in which universality has been framed and implemented by the Conservatives has served to limit its fiscal impact, and that specific features of both the UCCB and the Child Care Spaces Initiative are consistent with key ideological commitments underpinning the Conservative agenda. These include a social conservative interest in supporting the “traditional,” heterosexual nuclear family with its gendered division of labour, as well as an economic conservative, or neoliberal, interest in privileging the private sector over government in the provision of child care services, limiting federal government spending on social programs, and reducing the influence of so-called “special interests” in the policy process. review major patterns in federal public service labour relations since 1998, in terms of salary and employment outcomes; struggles over the massive pension surplus; and shifts in the prevailing legal framework for labour relations. The analysis shows that the federal public service has experienced substantial wage catch up relative to other private and public sector unionized employee groups over this period, and that employment within the service grew by almost 25,000 employees between the years 2000–05, with variation across occupational groups. The authors also review the history of the current legal dispute arising out of the government’s decision to unilaterally expropriate the $30 billion actuarial surplus in the public service pension plan, and provide analysis suggesting that it is unlikely that the Courts will nullify the government’s actions. They also summarize the

TIM BARKIW AND GENE SWIMMER

16 Macro Choices and Challenges

major recommendations of the Fryer Committee’s report concerning legislative reforms designed to improve labour relations in the public service, and conclude that not only were these recommendations quite modest, but also that very few were actually implemented. Lastly, they review the recent record of the Conservative government and provide some conjecture as to the future path of labour relations under the Conservatives. explores Tory policies on crime and punishment. The bills introduced by the Conservatives in fulfillment of their “tackling crime” priority – one of their five priorities announced during the 2006 election campaign – are reviewed. The author examines claims by the Ministries of Justice and Public Safety that there was no “discernible evidence” that minimum mandatory or “longer sentences contribute to public safety”. Some key “law and economics” research literature is reviewed that repudiated the claims by the Justice and Public Safety ministries, suggesting that these ministries attempted to mislead incoming Conservative ministers. The article reviews empirical data from the US, California and Florida which suggests that longer sentences do contribute to the reduction of rates of violent crime. Empirical data provided by the Correctional Service of Canada is reviewed that reveals the changing profile of federal offenders from a less violent offender serving longer sentences to a more violent offender serving shorter sentences. OAG audits from the 1990s are reviewed that suggest that rehabilitation of violent offenders requires additional time. The author concludes that the policies of the Liberal Party are unwittingly conservative in ignoring rehabilitation outcomes whereas the policies of the Conservative Party are unwittingly liberal, in that the longer sentences sought ensure more extended efforts to rehabilitate.

IAN LEE

RUTH HUBBARD AND GILLES PAQUET analyze private-public-social partnerships (P3). These are hybrid arrangements (mixing private, public and social coordination rules) purported to produce better results for taxpayers. Yet to accomplish this feat, partners with quite different expectations must find ways to mobilize the mega-community, harmonize the different competencies in the phased activities, and formalize contracts that define acceptable risk sharing and fair distribution of proceeds. There has been much ideological opposition to these loose partnerships, but also legitimate criticism of such arrangements for lack of accountability, transparency and legitimacy. Lessons learned over the last decades indicate that these oppositional arguments can be effectively countered. Eight modest general propositions suggest ways to eliminate toxic pathologies and to define winning conditions for successful P3: a communication strategy to inform all stakeholders, active and creative negotiations to ensure active collaboration, clear value adding generated by the collaborative agreement, a fair sharing of risks and profit, good choice of instruments and good process design,

17 The Harper Conservatives in Power

expert and flexible management, credible continuous external evaluation, and effective dispute resolution and fail-safe mechanisms. Although there are no canonical rules ensuring automatic success for P3, a provisional framework geared to rooting out the main sources of failure may provide a useful springboard to successful P3. DEREK IRELAND AND KERNAGHAN WEBB’S

chapter traces the evolution of the federal government’s consumer policy and related regulatory functions over the past 13 years. The move from a more centralized approach to dispersion of consumer promotion responsibilities across the federal government and beyond – under the “distributed governance” model – has meant that there is no longer a visible peak institutional “home” for promotion of the consumer interest at the federal level. The only federal agency remaining with an explicit, over-arching consumer promotion mandate – the tiny (23 person) Office of Consumer Affair within Industry Canada – has been left with few policy levers at its disposal. This has led the Office to adopt a strategy that emphasizes market-based approaches, to fit within its home department’s pro-business culture. The authors find a certain degree of continuity in the federal government’s approach to consumer policy over the 13-year period under examination, despite changes in governments. This continuity could continue under the Harper government, since the distributed, neo-liberal, governance model as practiced by the Liberals would appear consistent with the current government’s policy priorities and stated preference for free markets, individual responsibility, a small, less- intrusive government and a targeted government policy agenda.

challenges and choices As the next year unfolds, six challenges and choices are likely to loom large as the Harper Tories seek to win a majority government in the face of a Dion-led Liberal Party and complex political and policy uncertainties. The six main challenges are climate change, Canada-U.S. relations and the war in Afghanistan, productivity and innovation policy, social policy, Quebec politics in the wake of the 26 March Quebec election, and the double-edged nature of the Harper strong leadership card. As we have seen, both the two main political parties face an emissions impossible situation with regard to Canada’s current Kyoto commitments. There are both political tactical issues at stake and also substantive issues regarding climate change as it moves front and centre. For the Harper Conservatives, the key approach may well be to neutralize climate change policy as a partisan issue in the next election. As Hill and Lynn and other authors show, the Conservatives first cut several previous Liberal environmental funding programs and then rushed to establish and announce many of their own versions of the same

18 Macro Choices and Challenges

kinds of initiatives once they saw that they had totally misjudged this agenda item and its importance. Given that the actual Liberal record on Kyoto emission reductions was a disaster, the Tories’ tactical goal is probably just to be able to argue that the Tory record is no worse than the Liberals but that the Tories are already planning as well for a post-Kyoto situation that is fast emerging on the global green and energy agenda, one that would, in some manner, involve the U.S., China and India. For the Dion Liberals, their early 2007 tactics centered on forcing through the House of Commons a Kyoto Implementation bill drafted as a private members bill but designed to embarrass the Tories.16 But, equally, this tactic underscores Liberal failures on Kyoto implementation. Substantively and much more importantly, both parties face the challenge of what to do about Canada’s current Kyoto commitments. There are no positives for Canada in abandoning Kyoto commitments. Loss of reputation and a lack of trust in Canada’s word would be an adverse consequence of long term political significance. A failure to deal with emission reductions directly will be seen as a lack of will to deal with an issue that Canadians regard as crucial to the health of the planet. Canada can still move to achieve emission reductions at home and can also invest in reductions abroad. The current Harper Conservative government or a future Liberal one will have to engage as well on the even larger post-Kyoto regime discussions where potentially the U.S, China, and India will be involved. It will be difficult, as the chapter by Keith Brownsey shows, for the Conservatives to keep strumming the tune of Canada as an oil sands– based global energy superpower while making a credible case for themselves as a Kyoto or post-Kyoto regime climate change implementer. A further final key feature of future green politics is the emergence of Canada’s Green Party, now led by Elizabeth May. May has seen her party rise significantly in public opinion polls and she also did well in finishing second in a Hamilton area by-election. The Green Party holds no seats in Parliament but can influence outcomes in the near-term in two ways. The first is through continued advocacy of an issue that is now at or near the top of the agenda. The second is that it could significantly affect voting splits in key urban ridings which could harm the NDP and the Liberals or also help the Harper Tories depending on how exactly the voting splits go in particular ridings. Canada-U.S relations take on a new dimension for the Harper Conservatives but with strong continued linkage to the difficult issues of terrorism and Canada’s increased involvement in the war in Afghanistan. As Geoffrey Hale’s chapter shows, the Harper government has considerably improved the tone of Canada’s relationships with the U.S. compared to the previous Martin Liberal government but in a way that does not tar Harper with President Bush’s undoubted unpopularity with the majority of Canadians. But the key change visà-vis Canada-U.S. relations is the electoral success of the Democratic Party in the November 2006 elections when U.S. voters put them in control of both the House of Representatives and the Senate. Harper will have to craft Canada’s

19 The Harper Conservatives in Power

relations with the U.S. with Congressional forces that are critical of the Bush Administration’s approaches to the war in Iraq, to global terrorism and to climate change policy. A Democratic-controlled Congress may also be more protectionist that the Republican Party in terms of trade relations. The Harper Conservatives have sought to make a muscular anti-terrorism posture their own issue vis-a vis the Liberals and also have been aggressive in successfully seeking and achieving an extension of Canada’s support for the NATO forces and the war in Afghanistan until 2009. There is little doubt that Harper believes strongly in the positions he has taken on these linked issues and their importance for Canada-U.S. relations overall, but the practical politics of them are not clear cut if he tactically tries to make them a wedge issue vis-à-vis the Dion-led Liberals. These issues may not play well in Quebec and hence not aid the Tory search for increased seats in Quebec in the next federal election. On the other hand, they will play well in Harper’s western Canadian power base and may well resonate among suburban and rural Ontario voters where some seats are also increasingly winnable for the Tories. As we have seen earlier in this chapter, the third challenge to emphasize is the issue of Canada’s underlying economic productivity and capacity to compete in the innovation age. This is a policy realm to which the previous ChretienMartin Liberal governments gave considerable emphasis and garnered some success and political credit.17 But in the Harper government’s first year in office, these key issues were simply not in sync with its five-point tactical agenda and its preference to announce and deliver programs directed at the proverbial average Canadian. Science and technology policies, innovation strategies and linked concerns about Canada’s much lower productivity compared to the United States are seen as much too elitist and too vague in their impacts on individual Canadians. This is likely to change as the Harper Conservatives continue in office. Aspects of the Tories’ interest in and approaches to this important issue have been noted in their fall 2006 economic update statement and their first two Budget speeches, particularly under their Advantage Canada package of initiatives.18 Some combination of a tax reduction strategy, the greater commercialization of federal funding of overall S & T , including university research, increased support for higher education, infrastructure support, efforts to improve the openness of Canada’s internal market, and green technologies are likely to be even more explicitly and centrally presented as the Tories main approach to the productivity and innovation file rebranded as Advantage Canada. Social policy issues and spending are also a key challenge for the Harper Conservatives. These relate to how the Tories will deal with half of their day care program where promises have not been kept, namely regarding day care spaces and supply. The long term need for such public supply is supported heavily by majority public opinion and therefore constitutes a strong underlying budgetary pressure both directly from voters and also from the provinces.

20 Macro Choices and Challenges

The health care wait times guarantee will also come into play in a more evident way than in the past year. Depending on how the Conservatives respond, these issues may still play on the underlying mistrust of the Harper government by many voters that it does not represent the underlying social values that most Canadians accept as a national given. On the other hand, if the Harper Conservatives increase social spending in areas in provincial domains to gain voting support, then what remains of their views about open federalism and their promise to reign in on the use of the federal spending power. The 26 March Quebec election results also produced a decidedly mixed situation for the Harper Conservatives and for Quebec voters. The vote produced a Liberal minority government, the first minority government in over a century, and saw the stunning rise of Mario Dumont’s Action Democratique du Quebec (ADQ ) as the main opposition party holding the balance of power.19 It also saw the evident decline of the Parti Quebecois, which slid to third place in voter preferences. The most significant underlying effect of the vote was the way it revealed the re-emergence of a conservative nationalist voice in Quebec and the way it produced a voting distribution that did not align with the federalist versus separatist splits of most Quebec elections since 1976. The 2007 vote saw more traditional left-right splits occur and these are bound to work in unpredictable ways on the larger pan-Canadian scene. For Prime Minister Stephen Harper, the election was in part a strategic failure since it did not result in the Charest Liberals victory that Harper had hoped would result from his close alliance with and support for the Liberals via new federal spending including the fiscal imbalance package. The longer term national unity impacts also do not look positive in that barely 20 percent of francophone voters voted for an unambiguously federalist party, despite the argent wooing of Quebec voters by the federal Conservatives. But in other respects, there is an important silver lining in the Quebec election results for the Tories. The rise of the ADQ showed that there is fertile ground for persuading Quebec voters to vote Tory at the next federal election. Indeed, there is a close working relationship in many ridings between Tory and ADQ front-line election workers. Last but hardly least in projections about the future is the double-edged nature of the Tories plan to play the “leadership” card. As prime minister, Stephen Harper has increasingly stressed strong and decisive leadership as perhaps the key electoral asset and a distinguishing feature between himself and his main partisan rival, Liberal leader Stephane Dion. At time of writing, Canadians seem to increasingly agree with this Conservative leadership claim, albeit with considerable doubts about the darker side of Harper’s attack-mode leadership. All such leadership claims come with the double-edged question of whether Canadians agree with the basic direction being taken by such decisiveness. If that direction is one favoring a more decentralized federalism and more autonomy for Quebec, combined with greater muscular use of federal powers assigned to the

21 The Harper Conservatives in Power

national government in foreign policy, defence, and overall economic development generated through tax cuts, then both sides of that double-edged leadership card may well yield a majority government for the Harper Conservatives. If that direction does not meet the approval of Canadians, then the leadership card will not be enough.

notes 1 Thanks and appreciation are owed to my colleagues, Michael Prince, Glen Toner, Geoffrey Hale, and Les Pal for their constructive comments on an earlier draft of this chapter. 2 Jeffrey Simpson, “The Unbearable Lightness of Harper’s Five Vows,” Globe and Mail, March 18, 2006, 5. 3 For analysis, see Bruce Doern, ed. How Ottawa Spends 2006–2007: In From the Cold – the Torie Rise and the Liberal Demise (McGill-Queen’s University Press, 2006), chapter 1. 4 See Peter Calamai, “The Struggle over Canada’s Role in the Post-Kyoto World,” in Bruce Doern, ed. Innovation, Science and Environment 2007–2008: Canadian Policies and Performance (McGill-Queen’s University Press, 2007), chapter 2. 5 See Gilles Paquet, “Fiscal Imbalance as Government Failure,” in Bruce Doern, ed. How Ottawa Spends 2004–2005: Mandate Change in the Paul Martin Era (McGillQueen’s University Press, 2004), 25–45. 6 See Doern, ed. How Ottawa Spends 2006–2007: In From the Cold – the Tory Rise and the Liberal Demise (McGill-Queen’s University Press, 2006), chapter 1. 7 Paraphrased from Office of the Prime Minister, Speech From the Throne, April 4, 2006, and Gloria Galloway, “Brief Throne Speech Hails U.S. as ‘Best Friend,’ Globe and Mail, April 5, 2006, 1. 8 Department of Finance, The Budget Speech 2006: Focussing on Priorities (Department of Finance, 2006) 3. 9 For analysis, see Conference Board of Canada, The 2006 Federal Budget: Going the Distance on Election Promises (Conference Board of Canada , May 2006. 10 Department of Finance, The Budget Plan 2006: Focussing on Priorities (Department of Finance, 2006) 84–6. 11 Ibid, 85. 12 Department of Finance, Budget Speech 2007: Aspire to a Stronger, Safer, and Better Canada (Department of Finance, March 19, 2007), 3. 13 See Department of Finance, Restoring Fiscal Balance for a Stronger Federation (Department of Finance, 2007) 1. 14 For details and discussion, see Department of Finance, The Budget in Brief 2007(Department of Finance, 2007), Globe and Mail, “Highlights of the 2007 Federal Budget,” Globe and Mail, March 19th, 2007, 1, Conference Board of Canada, The 2007 Federal Budget: We’re All Spenders Now (Conference Board of Canada, March 2007), Eric Beauchesne, “Tax Relief for Families, New Spending Highlight Something for Everyone Budget” Ottawa Citizen, March 20, 2. 15 Quoted in Beauchesne, “Tax Relief for Families …, 2.

22 Macro Choices and Challenges 16 See Mike de Souza, “House Passes Liberal Motion that Supports Kyoto,” Ottawa Citizen, February 6, 2007, 1. 17 See Bruce Doern and Jeff Kinder, Strategic Science in the Public Interest (University of Toronto Press, 2007). 18 Department of Finance, Budget Plan: Budget 2007 (Department of Finance, 2007), chapter 5. 19 Andre Picard, “Quebec Liberals barely stave off ADQ ,” Globe and Mail, March 27, 2007, 1.

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2 Addressing the Fiscal Imbalance through Asymmetrical Federalism: Dangerous Times for the Harper Government and for Canada andrew teliszewsky and christopher stoney

The Harper Conservatives, keen to be viewed as Canada’s ‘new’ government with a fresh mandate, is attempting to do as much as possible to ensure that they are viewed in a much different light than the previous Martin-Liberal regime. Campaigning and winning the last election on the much publicized ‘five priorities’, the new administration’s strategy has been to portray the image of a lean, focused government that delivers on its commitments. Late in the election campaign, and eager for a political breakthrough in Quebec, Stephen Harper added an additional commitment to his shortlist of priorities – to fix the fiscal imbalance between Ottawa and the provinces. This move was calculated to deliver as much Quebec support as possible and rewarded the Conservative party with an unexpected 10 seats in the Province. However, the political cost of these seats appears high as solving the fiscal imbalance presents one of the most challenging files on which the nascent Government will likely be judged. A speedy resolution to the issue of fiscal imbalance remains unlikely, but the steps taken by the current Harper Conservative Government, along with those taken by the previous MartinLiberals will continue to set the tone for the future of Canadian federal – provincial relations. In examining the evolving state of Canadian federalism, an understanding of the recent history of federal – provincial negotiations and agreements is critical. Starting with the political frenzy that marked the Martin-led Liberal Government, the doors were thrown open to provincial leaders to make their case for special treatment within the Confederation. Not to be outdone, in remarks made during the election campaign, Harper also adopted this approach, advocating his own brand of ‘open federalism.’1 These developments

26 Macro Choices and Challenges

signaled a shift in Ottawa’s political rhetoric, and continue a developing pattern suggesting that individual provinces can reasonably expect special treatment from the federal government. Labeled “asymmetrical federalism” this emerging trend under prime ministers’ Martin and now Harper, is loosening federal government control over spending and priorities through increased devolution to the provinces. This in turn appears to have further empowered and encouraged provincial leaders to seek greater local autonomy and, it will be argued, diluted the federal government’s ability to bring forward and implement truly national programs. To develop our thesis, the chapter examines two major federal policies, federal-provincial child care, and the urban-infrastructure agenda, as recent and topical case studies in intergovernmental relations. These two examples help us asses how effective an asymmetrical framework of ‘open’ federalism can be in terms of enabling federal governments to achieve their stated policy objectives, including the current government’s commitment to address the fiscal imbalance between the federal and provincial levels of government. This question seems particularly significant in the context of successive minority governments in Ottawa and, fuelled by Alberta’s economic boom, concern about the growing disparity between Canada’s ‘have’ and ‘have not’ provinces. Although the Harper government’s conceptualisation of ‘open’ federalism and the fiscal imbalance are still ill-defined, the chapter attempts to draw out some of the continuities with the asymmetrical approach adopted by Paul Martin, as well as some important differences in style and substance. We also consider the approaches adopted by provincial leaders in the face of changing federal-provincial relations and contrast the approaches adopted by premiers Williams and McGuinty in particular. In these ways our intention is to provide a more subtle understanding of the complex changes in Canada’s evolving federal structure and what these developments could signal for the future of Canada’s one hundred and forty year experiment with federalism.

b a c kg r o u n d a n d c o n t e x t Systemically, asymmetrical conditions exist throughout the constitutional documents which govern Canada, through program delivery and, in stark terms, through the differential dependence of the provinces on federal financial assistance. First, the Constitution Act of 1867 includes several provisions specific to individual provinces, including a bilingual legislative regime and civil law system for Quebec, unequal representation of the provinces in the Senate, and the extension of minority education rights in Ontario.2 Similarly, as other provinces joined confederation, this asymmetry continued: Alberta, Saskatchewan and Manitoba did not receive jurisdiction over natural resources until 1930; Manitoba also adopted a bilingual provincial legislative

27 Addressing Fiscal Imbalance

assembly model. Additionally, the 1982 Charter of Rights and Freedoms also includes potential elements of asymmetry in practice through the notwithstanding clause, as any provincial override would result in an unequal application of the Charter.3 Second, the application of special provisions for individual provinces can emerge through program delivery as well. Quebec administers its own pension plan, for example, while all other provinces participate in the federal government’s Canada Pension Plan (cpp) system. In the realm of Foreign policy, both New Brunswick and Quebec join Canadian representatives when participating in the international organization la Francophonie, a sociocultural network joining states of French background. The 1999 Social Union Framework accord between the federal government and the provinces which sets out the terms of social service delivery, funding and accountability arrangements is signed by all provinces except Quebec. Third, each province depends on federal transfer payments in different proportions, thus making federal arrangements either more or less important to the fiscal bottom line of the heavily dependant jurisdictions. Table 1 outlines the dependency ratio by province. It is through these three types of asymmetrical relations that the federal-provincial relations have evolved over the course of the past 140 years and serves as the baseline for our contemporary analysis. Intergovernmental discord has generally revolved around the constitutional division of powers between levels of government and the financial realities that these responsibilities dictate.4 While the constitution makes clear that the major expenditures of government today, surrounding social services delivery (health care, education, etc.) lie strictly within the domain of the provinces, the federal government has always sought to assert itself in the role of equal partner in the provision of many such services. Harvey Lazar notes that for several reasons, the federal government can no longer be considered an equal partner.5 First, the fiscal restraint and downloading that occurred in the mid-1990’s reduced the federal government’s contribution and by extension, influence over the direction of national programs, and second – perhaps more importantly, reduced the level of trust between the two levels of government, resulting in a more difficult relationship, even after the federal government had quickly returned to a position of fiscal surplus.6 Moreover, even when the federal government has proposed new program spending in the area of early childhood education and care “there has been a tendency for the federal government to mobilize public opinion in support of great Canada-wide goals but to subsequently lose some interest leaving provinces with more of the ongoing financial responsibility than they had originally bargained on. This has made Ottawa an uncertain partner for the provinces.”7 Clearly the victory of the Harper Conservatives and their subsequent cancellation of the Martin-Liberal child care accords underline this

28 Macro Choices and Challenges Table 2.1 Federal Transfers as a Percentage of Total Provincial / Territorial Revenues

Province

Dependency Ratio, 2004 (%)

Nunavut

90.20

Yukon

72.22

Northwest Territories

64.46

Prince Edward Island

37.72

Newf oundland & Labrador

36.79

New Brunswick

32.86

Nova Scotia

32.19

Manitoba

27.00

Saskatchewan

19.74

Quebec

15.01

British Columbia

13.70

Ontario

12.09

Alberta

9.69

Source: Milne, D. “Asymmetry in Canada, Past and Present.” Asymmetry Series 2005 (1) Kingston: Institute of Intergovernmental Relations.

point. The federal government, especially in its current minority-Parliament status, cannot reasonably be relied upon as a long-term funding partner. Fiscal imbalance Analysis of the fiscal situations of both levels of government suggests that structurally, the federal government collects more through tax revenues than it requires, while the provinces are structurally unable to meet the demands of social program spending. Provincial governments in Canada raise about 54% of government revenues while they amount to 68% of total government spending.8 Lazar concludes that while a vertical fiscal imbalance exists within most federations this imbalance is compounded in the Canadian context as the federal government redirects less than do others to provincial / state – level jurisdictions (Table 2 compares Canada to other federations in this context). In these ways, the so-called vertical fiscal imbalance has been woven into the constitutional division of powers and the resulting tensions reinforced by the political and social consequences of economic downturns and

29 Addressing Fiscal Imbalance Table 2.2 Central Transfers as a percent of Total

Country

% transfer to province-state level

South Africa

96.1

Spain

72.8

India

46.0

Australia

45.3

Germany

43.8

Brazil

30.0

United States

29.6

Switzerland

24.8

Canada

19.8

Source: Watts, R.L. “Autonomy or Dependence: Intergovernmental Financial Relationships in Eleven Countries.” Working Paper Series, Kingston: Institute of Intergovernmental Relations, 2005, cited in Lazar, 2005.

Program Review. Now, with a return to federal fiscal health, the framework for intergovernmental conflict in Canada has encountered a new crossroad. Recent studies and statistics have further expanded upon the depth and scale of the vertical fiscal imbalance between Ottawa and the Provinces. Shortly after the Conservatives took power, the Conference Board of Canada in assessing the fiscal capacity, expected an increase in budgetary demands and projected future economic growth estimated about $136 billion in budgetary surplus potential for the next ten years, ending 2016. That same study concluded that over the same time frame, all provinces combined were forecast to accrue a deficit of some $78 billion.9 To this end, in September 2006, the federal government posted a surplus of $13.2 billion for the 2005 – 06 fiscal year, on top of approximately $6 billion in additional expenditures after year end (for a total $19.2 billion). Projections based on the first five months of the 2006 fiscal year, released in late October 2006, show that the federal government will continue its streak of ‘unexpected surpluses’ to the tune of $7.2-billion.10 At the core of this fiscal imbalance is a disparity in government servicing requirements weighted more heavily towards the provincial level of government as responsible stewards of the social safety net. Changes in the nature of government funding, program responsibilities over time and demographic shifts as a result of an aging baby-boomer generation have lead the C.D. Howe Institute to report in the fall of 2006 that an $847 billion budget liability lies ahead for provinces and territories by 2055.11 Though estimates vary,

30 Macro Choices and Challenges

the vertical fiscal imbalance between Ottawa and the provinces is increasingly recognized as a serious problem prompting academic and political debates about how it can be resolved. Asymmetrical Federalism While most academic and popular media references cite the September 2004 First Minister’s Meeting and the subsequent Accords as the re-emergence of asymmetrical federalism in Canada, the roots of federal-provincial friction that hardened the resolve of provincial leaders finds its roots much earlier.12 The institutionalization of conflict between the two levels of government took on a greater degree of formality much earlier and is argued to be a major reason for continued discord.13 The creation of progressively more formalized institutions over the course of the past decade to manage the interprovincial file at both the federal and provincial levels has also had the effect of inserting jurisdictional tensions where they previously did not exist. Cited specifically by Simeon is the creation of both provincial and federal level Ministries of Intergovernmental Relations which cement the conflicts between levels of government on the bureaucratic end and politicize and publicize the disagreements on the partisan end. Where previously working groups of program specific cabinet ministers (for example, meetings of all health ministers) were able to gather – each implicitly advocating from their home province’s point of view, the insertion of Intergovernmental Ministries into public policy structures has had the effect of making the conflict more public and explicit.14 The culmination of this process of institutionalized conflict is the creation of the all-province Council of the Federation (cof) that serves as a yearround working group for provincial leaders and ostensibly ingrains an “usvs.-them” attitude between the provinces and the federal government. While pan-Canadian and not asymmetric in design, the cof is limited in mandate and scope, able only to pursue policy options approved by each government. Two major side effects of the creation of the cof has been a further institutionalization of inter-governmental conflict and by stopping short in its mandate, the cof has inadvertently encouraged provincial governments to bypass the pan-Canadian council and seek redress directly with the federal government, setting up the conditions necessary for increased asymmetry.15 These two factors have in short order impacted on the nature of the dialogue between levels of government in Canada. Arguably, the political event of 2004 that would have far reaching ramifications was not the election of the first minority government in a generation, but Paul Martin’s so-called “Health care fix, for a generation” that culminated in the September First Ministers meeting of that year. Two important issues emerged from this meeting: Prime Minister Martin’s willingness to

31 Addressing Fiscal Imbalance

spend fantastic sums of money and the special arrangement for Quebec. First, the $41 billion dollar investment in health care was a much higher amount than pre-meetings had indicated was on the table16 and signaled that the pm was willing to bend to the combined strength of 13 provincial and territorial leaders. Such concessions prompted Tom Kent, a former senior policy adviser to Prime Minister Pearson, to describe Martin’s approach as “sugar-daddy federalism”17 suggesting he was in danger of becoming merely the “headwaiter to the provinces.” Such observations reflect the perception that a significant shift in the balance of power between Ottawa and the provinces is underway, fuelling concerns that Paul Martin’s willingness to compromise, at almost any cost, would only serve to further embolden provincial leaders in their demands. In keeping with the dialogue on asymmetry, the Health Accord exempted Quebec from meeting any of the accountability and transparency guidelines set forth by the first ministers. Quebec had dismissed the idea of joining the other provinces in crafting mechanisms and tools to monitor health care delivery progress, simply opting-out of the national standards regime. If the remaining provincial leaders decide to adhere more strictly to their own “Calgary Declaration,” then future accords will see other provinces join Quebec in opting-out. Provinces outside Quebec agreed to set up benchmarks and systematic approaches to monitoring health care system goals and, rather than turning on Quebec, have opted for the more politically expedient strategy of advocating for similar status in the future. Given these developments, it is reasonable to conclude that the equity of national standards is at risk and, with increased utilization of asymmetrical means of achieving agreement, increases the likelihood of a ‘patchwork quilt’ approach to implementation. For example, with regards to the “fix for a generation” health accord, the first ministers may have succeeded in pacifying the demand for more health care funding, while potentially sacrificing the future ability to reach nation-wide consensus regarding program implementation and delivery. In the immediate aftermath of the Health Accord, emboldened provincial premiers found their way into the national public debate explicitly advocating on behalf of asymmetry. In the fall of 2004, Danny Williams, then recently elected premier of Newfoundland and Labrador, waged a high stakes game of political brinksmanship by demanding Ottawa make special provisions for the Atlantic Provinces with respect to off-shore oil and gas. At issue was the potential claw-back of federal equalization payments as a result of increased revenues stemming from resource exploration; potentially deterring the provinces affected from fully exploiting the under-sea reserves, and keeping them dependent on transfer payments. At one point, Williams even ordered that the provincial government buildings cease flying the national flag. After several

32 Macro Choices and Challenges

weeks of heated rhetoric, a deal was struck which essentially gave Newfoundland, as well as Nova Scotia, exactly what they were asking for. Though not receiving as much media attention at the time, Premier Hamm of Nova Scotia had been attempting to negotiate both with the previous Chrétien Liberal government and then with Prime Minister Martin regarding the off-shore oil, but it wasn’t until the extreme tactics of Danny Williams collided with the conciliatory prime minister that the deal was in fact struck. Shortly after the Atlantic Accord was signed, Ontario’s Premier Dalton McGuinty launched a campaign to reduce the vertical gap between what Ontario taxpayers ‘pay’ into the federal government and the amount that they receive in return (amounting to a claimed $23-billion dollars18). While apparently much less willing to admit defeat at the hands of yet another provincial Premier, the Martin government held firm for several weeks until finally giving in and accommodating McGuinty with a $5.1-billion dollar deal for Ontario. These case examples constitute evidence of a growing trend towards unusually excessive ‘provincial-ism’ among the nations premier’s – a behavior instigated by the federal government’s apparent willingness to compromise at all costs and thereby to single out specific provinces for special treatment.19 The looming election notwithstanding, federal compliance on this scale was not inevitable For example, addressing the concerns of the complainant leaders could have been achieved through a more cooperative, pan-Canadian approach to natural resource revenue sharing (in the case of the Atlantic accord) or readdressing the 43-year old equalization formula (in the case of Ontario’s $23-billion gap campaign). While Williams and McGuinty can each be accused of political grandstanding in order to further their respective causes, they were in effect leaning on a door opened by Martin’s asymmetrical approach to the September 2004 Health Summit. Not surprisingly, by fuelling ‘provincialist’ sentiment and expectations, asymmetrical pressures continued throughout the Martin-led Liberal minority government and show little sign of abating following the election of the Harper- led Conservative government.20 It remains uncertain what precise measures Prime Minister Stephen Harper will undertake to address the fiscal imbalance and promote open federalism. However, the government’s policies on childcare and infrastructure suggest a clear difference in approach from the one taken by the Martin-led governments and illustrate the tensions that continue to drive the evolution of Canada’s federal structures.

policy case studies Canada’s Child Care Plan The seemingly hasty introduction of the National Early Learning and Child Care initiative by Ottawa was born out of both political necessity for the

33 Addressing Fiscal Imbalance

Martin Liberals and genuine need for early-learning infrastructure. For the Liberals, the Child Care file addressed an important need that had previously been under funded or ignored, but it also presented an opportunity for a minority government distracted by the Gomery inquiry to deliver on a policy issue. As part of their election campaign, the Conservative Party promised to scrap the child-care deals in favor of what they termed ‘choice in child care’, whereby all parents would receive a direct subsidy from the federal government of $100 per month rather than investments towards day care spaces or expanded early learning facilities. In assessing the child care plan our treatment is confined to analysis of the intergovernmental mechanics and related political rhetoric, rather than an attempt to pass judgment on either Conservative or Liberal policy (see the chapter by Prince and Teghstsoonian for a more complete analysis). In comparing the agreements-in-principle struck between Ottawa and Quebec; between Ottawa and Ontario and between Ottawa and British Columbia, the asymmetrical nature becomes readily apparent. First, the agreement with Ontario requires the Provincial government to adopt four principles: quality, universally inclusive, accessible/affordable and have a “developmental” focus.21 The province also agrees to publicly report on these four principles by releasing annually the: number of spaces available in both official languages, the number of families and children receiving services, and the child-to-staff ratio (group size) of the program.22 In contrast, the agreement with Quebec requires no new public reporting and specifies that the funding “may be invested through related objectives for the well-being of families.”23 It is conceivable, therefore, that the government in Quebec city could use these funds – set aside in the child care funding envelope – for tax cuts, should they be deemed to be for the “well-being of families.” Finally, the agreement-in-principle with bc includes different criteria / principles than those which serve as benchmarks for Ontario. In this case three broad criteria are introduced, unique to bc: ‘choice/flexibility; targeted investments, and integrated services,” while the four other principles appear in reference and reporting is only required on the four original principles.24 While the federal government has attempted to impose its four main principles on each of the provinces, clearly not all are willing to accept them. Furthermore, rather than instituting a new national program what results is the establishment of a unique program built in cooperation between the federal government and the provinces that choose to sign on. As a result of the differential conditions / principles adopted by each jurisdiction and the province-by-province approach adopted by the Martin government, the ‘national’ early learning and child care regime amounted to the ‘patchwork quilt’ envisaged by Roberts.25 The Harper Conservative Party adopted a mantra of “choice in child care” by pledging to cancel the Liberal-established child care deals with

34 Macro Choices and Challenges

direct-to-parent subsidies of about $100 per child per month. While this shift in policy approach is clearly rooted in a right wing desire to scale back the extent of government involvement in citizen’s lives, it achieves, at least nominally, the ‘national standard’ that eluded the previous Liberal regime. While the elimination of the inter-governmental deals is still a work in progress (the Conservatives delayed the cancellation of the child care program funding until the 2007 fiscal year, a full year after their election), the Harper government is clearly contented to cede this policy room to the provinces. While some provinces have complained that this leaves them effectively holding the bag when it comes to continued funding for child care programs already in place, the federal government does appear intent on sticking to its policy of a reduced role in this arena. In analyzing the impact of the child care deals on the institutions of Confederation, the nature of the accords make the Liberal’s political rhetoric of child care as a national program appear hollow. In practical terms, the explicit asymmetry underpinning the Liberal approach had the impact of creating a jurisdiction-specific program regime that might have ultimately reduced the “mobility rights” of Canadians, with respect to federal government programs, had provinces continued to differ in their plans for program implementation. In the broader context, this asymmetry has set a precedent for the adoption of new federal programs that makes a return to consensus-based, pan-Canadian methods unlikely in the current climate of intergovernmental relations. Consequently, in addition to an uncertain future for the outcomes associated with this particular program, the implications for future federal government initiatives appear significant. For example, with respect to future intergovernmental negotiations, the cancellation of federal government participation in the Liberal-brokered deals by the Conservatives appears to validate the provinces view that the federal government remains an uncertain partner when it comes to programs funded by both levels of government. In this respect, Prime Minister Harper may have undermined further the trust between levels of government and this damage may well outlast his tenure as Prime Minister. In addition, the Liberals shied away from establishing a national entitlement program, along the lines of health care, even though this would have had a better chance of enduring in the face of electoral defeat than the five year deals signed in 2005. The individual ‘contracts’ with each Province were believed to be easier to establish than a new national infrastructure for early learning and child care, complete with Provincial and Territorial level consultation and cooperation. While it is understandable that the tenuous minority status of the Martin Liberals would influence the decision to take an approach that offered the path of least resistance, in terms of setting a precedent for future programs of similar national significance, the message sent by Ottawa was loud and clear: national standards will be abandoned in favor of individual treatment.

35 Addressing Fiscal Imbalance

Thus, a direct ‘contract’ style of national governance was established by the Liberals even though it reduces the national scope of federal level programs and runs counter to their traditional role as the centralizing force within Canadian politics. In addition to specific provinces facing different ‘contractual’ obligations with respect to program specific goals, targets and reporting requirements, the fact remains that specific Provinces could opt not to participate in a supposedly national program. Moreover, the chances of an individual province prolonging or delaying negotiations on their own program ‘contract’ to gain increased concessions from the federal government a more likely scenario. In this way, it can become a disincentive to be an early provincial signatory to the newest federal government program or plan. As these concerns suggest, when considering federal – provincial relations, while the asymmetrical path of least resistance can offer short term political benefits it imposes longer term costs which dramatically alter the rules of intergovernmental engagement within the Canadian federation. Infrastructure and the ‘New Deal’ Shortly after the 2000 Federal general election, Prime Minister Chrétien appointed former Toronto city councilor and newly elected Liberal mp Judy Sgro as the chairperson for a special task force on urban issues.26 The final report, tabled in the fall of 2002, prompted consultations with urban and local stakeholders such as the fcm and helped create a climate of increased sensitivity to urban issues.27 Furthermore, the creation of Infrastructure Canada as a stand alone secretariat responsible for several programs that eventually became folded into the ‘New Deal’ signaled that the federal government was preparing itself to play a role in urban affairs. At the very least, it was forming the policy and programmatic capacity to intervene in such a way.28 Two financial agreements and several governance changes during the course of the Martin minority era contributed to a refocusing of the debate surrounding the role of cities in the Canadian Federation. First, the decision to provide full gst refunds to municipalities (retroactive to February 1, 2004) amounted to an estimated $7-billion over ten years.29 Second, the Gas-tax revenue sharing with the municipalities (designed as flow through agreements with each Province) as part of the 2005 federal budget would contribute a further $5-billion over five years to local governments.30 These two funding agreements provide significant investment in Canadian municipalities and, perhaps more importantly, recognition that the municipal level of government does not have the fiscal capacity to adequately provide the services expected of them.31 In addition, two changes in the way that the federal government would interact with municipal leaders have further increased the complexity of the Canadian federal model.32 First, the announcement that representatives of

36 Macro Choices and Challenges

the municipal level of government would have direct access to the minister of Finance for a special, undefined meeting prior to the Budget can be seen as a step towards direct Federal – Municipal relationship and an attempt to side-step provincial governments.33 Significantly, the Conservative Government, and current finance minister, Jim Flaherty, have continued this trend, set by former Liberal Finance Minister Ralph Goodale. Second, the creation of a new “External Advisory Committee on Cities and Communities” chaired by former bc premier and mayor of Vancouver Mike Harcourt represents an institutionalized mechanism for increased federal – municipal dialogue.34 However, with the recently released first report by this Advisory Committee swiftly shelved by the Conservative Government the future of their recommendations and mandate remains uncertain. Nevertheless these two initiatives, one informal and the other institutional, have the potential to further increase the federal government’s political reach into an area of provincial government jurisdiction. While the federal Conservative Government has clearly retreated from the profound ‘New Deal’ rhetoric so often a hallmark of the Martin era,35 they might not be as interested in withdrawing from this policy sphere as they had in the case of the child care deals. With respect to the “Communities’ Agenda” the Conservative’s election platform differs from that of the established Liberal record in government. In particular, when it was established, the gas-tax money agreements that the former Martin Government signed with each province included the provision that all funds would be spent on upgrading transit systems in a sustainable fashion.36 Conservative plans call for a removal of this clause to allow cities to use the gas-tax money to build or repair all types of transportation related infrastructure, such as roads, bridges and highway expansion projects.37 While critics have argued this approach is less progressive in terms of sustainable development, the changes are considered relatively minor in policy terms since federal dollars will still be invested in local infrastructure projects. However, in terms of demonstrating the government’s shift towards a more open federalism these changes are significant and provide an early opportunity to assess a key component of the current government’s plan to tackle the fiscal imbalance through asymmetrical federalism. Along with funding for post-secondary education, renewal of the equalization formula, and a policy for distributing unplanned surpluses, a new framework for long-term funding for infrastructure is seen as a key means of tackling the fiscal imbalance.38 However, in the context of their commitment to ‘open federalism’ it remains to be seen if the Harper government can make arrangements with the provinces and cities that are capable of ensuring the kinds of improvements in infrastructure they would like to see, while avoiding disputes over the federal government’s role in what are, primarily, provincial and municipal matters.

37 Addressing Fiscal Imbalance

Achieving the appropriate balance between these competing demands is a difficult task made harder by a complex set of intergovernmental relationships. To begin with, the transfer of the gas tax revenues will actually require a number of specific and unique agreements with the federal government. The administration of these agreements will vary by jurisdiction (provincial/ territorial governments; municipal associations in Ontario and bc; as well as a direct federal-municipal agreement with Toronto) and, in addition, there will be no requirement for matching funds from either the provinces/territories or municipal recipients. In addition to accommodating diverse provincial governance structures, the gas tax agreements appear open to wide-ranging interpretation by provinces and municipalities. For example, the term ‘capacity building’ is an eligible project category defined as: Collaboration: building partnerships and strategic alliances; participation; and consultation and outreach; Knowledge: use of new technology; research; and monitoring and evaluation; Integration: planning, policy development and implementation (e.g., environmental management systems, life cycle assessment). (infc website, www.infrastructurecanada.ca)39

In the absence of detailed guidelines, provinces and municipalities could conceivably interpret ‘capacity building’ to justify spending in a wide range of policy areas such as human infrastructure, technological infrastructure, knowledge infrastructure, social infrastructure, health infrastructure and so on. While spending the gas tax revenues in these areas may meet the technical requirements of the agreements, it may not be the type of infrastructure spending, on roads, public transit, sewers and water distribution for example, that this federal Government had in mind when agreeing to fund the socalled infrastructure ‘gap.’ Even within a traditional infrastructure framework, a wide range of possibilities exist in relation to how the gas tax revenue is spent. For example, some municipalities may look to address the infrastructure ‘gap’ by investing in repairs and improvements to existing infrastructure, while others may choose to invest in large-scale ‘flagship’ projects that, perhaps, would not have been possible without the extra federal funding and could, in fact, add to the future costs of infrastructure maintenance.40 Furthermore, changes brought about in the level of provincial and municipal spending will vary as a result of the gas tax revenue. For example, while no matching funds are required, the federal gas tax money may provide an incentive for provincial governments and municipalities to increase their funding for local infrastructure and/or leverage private sector funding for specific projects. On the other hand, provinces and municipalities may respond to the federal grants by foregoing or limiting increases in their own

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infrastructure spending. In other words, although the option of reducing existing provincial grants and municipal expenditures appears to be foreclosed by the terms of the gas tax agreement, there could still be a substitution effect whereby provincial and municipal funding of infrastructure projects is not increased by the same amount that would otherwise have been the case in the absence of the gas tax transfers. If such a scenario were to be sustained, the net impact of the Gas Tax revenue on infrastructure spending could prove negligible. In addition to efficacy, the future scale and direction of the cities’ agenda will be heavily influenced by political factors. On the one hand, if there is a desire to expand federal involvement with municipalities in an effort to entice a greater share of urban voters, then the new regime may well build upon the Martin frameworks. If, on the other hand, the government is driven by its desire to be less intrusive in areas of provincial jurisdiction and its ideological commitments towards smaller government and open federalism, then a retreat from the established ‘cities agenda’ will be the more likely outcome. Although both options provide a conduit for addressing the fiscal imbalance, they offer fundamentally different visions of Canadian federalism and, in particular, the role Ottawa plays in shaping the country’s infrastructure policies and priorities. Contrasting the Martin and Harper Policy Approaches In spite of Prime Minister Harper’s recent reconfirmation of a commitment to “open federalism”41 Conservatives have yet to fully determine the precise route that they will take when addressing the fiscal imbalance. Nevertheless, by examining Harper’s attempts to distance his party from the position adopted by the Martin government, a clearer picture begins to emerge. First, the Harper Government’s admission of the existence of a vertical fiscal imbalance between Ottawa and the provinces stands in contrast to the MartinLiberal approach of first denying its existence and then signing over billions of dollars when pressed. When Ontario Premier Dalton McGuinty launched the $23-billion gap campaign in the winter of 2005, it was greeted with hostility from senior members of the Martin government. In a speech to the Toronto Board of Trade in the spring of 2005, then National Revenue Minister John McCallum articulated his view that the McGuinty approach was not based on sound economics and could have harmful national unity implications.42 In May of that year, Martin and McGuinty reached a five-year, $5.6 Billion agreement to increase funding from the Federal government to Ontario. In contrast to the sometimes contradictory approach adopted by the Martin government, Stephen Harper was relatively forthright when, during the winter federal election campaign, he not only recognized but promised to deal with the fiscal imbalance. As part of a strategy to gain broader support in

39 Addressing Fiscal Imbalance

Quebec, Harper’s government is now committed to finding a solution to a problem that their predecessors were keen to deny, or at least circumnavigate. Second, with a specific and overarching desire to appear focused and disciplined the Harper government has been determined to stick to its “five point” system of governance and has worked doggedly to avoid being diverted from its priorities. This is in stark contrast to the Martin government which, from the Health Accord, to the First Minister’s Meeting on Equalization, to the Atlantic Accord, to the inter-provincial child care accords, to the Kelowna Accord with First Nations, to the ‘New Deal for Cities’ seemed constantly focused on inter-governmental outreach. Harper, on the other hand, has preferred to place less public and media attention on intergovernmental relations, adopting a more low key approach to the Provinces. The “Quebec nationhood” speech apart, the intergovernmental stage has been noticeably much quieter in Canada since the 2006 federal election. While it is possible that, in comparison to the hyperactive Martin era, the current state of debate may simply represent a new normal, it appears that the Conservative Cabinet places a much lower premium on being active on the Intergovernmental front. Although this could be a luxury afforded by the Conservative’s honeymoon period in office, it does appear deliberate and for now at least seems to have lowered the intensity of the debate on all sides. However, this tempering of intergovernmental relations also appears to have created a policy vacuum as the Harper government attempts to formulate and articulate its strategy on intergovernmental relations and the fiscal imbalance. This has been filled partially by Bloc Quebequois Leader Gilles Duceppe’s politically charged demand that the federal government include $3.9 billion in more equalization funding for Quebec in the next budget or the Bloc will vote against it, possibly triggering the government’s defeat in the Commons.43 Consequently, while 2006 may come to represent the calm before the storm, the fact remains that some respite from an intense and highly charged period of inter-governmental relations may have allowed the key political actors time for sober reflection. Moreover, and again in sharp contrast to Martin, Harper appears to be using the time to grow more comfortable working with each premier first before delving into a national-level debate on potentially divisive issues such as the fiscal imbalance and is also allowing ministers to serve as public sounding boards across the country. Nevertheless, the reduced public activity on the inter-governmental scene could soon be shattered, either through increased pressure from the provinces, or more likely, the Harper government’s release of their official plan for renewing the equalization formula. In the event this occurs it remains to be seen if this period of relative calm will result in increased flexibility from national actors, or in hardened and further entrenched positions.

40 Macro Choices and Challenges

Third, as we have seen, the cancellation of the child care agreements and a less activist approach towards the “cities agenda” suggest that the Harper administration is more rigidly adhering to Constitutional division of powers between the federal and provincial levels of government. This retreat from ground previously occupied, or at least shared, by the federal government could have a mixed impact on intergovernmental relations. For example, if this trend is maintained, provinces and the public should develop a clearer understanding of the policy boundaries between the two levels of government, reducing obfuscation and facilitating longer-term planning.44 Conversely, the Provincial level of government has already been identified (by the Conference Board of Canada, C.D. Howe Institute, and others) as lacking the resources with which to address their current share of Constitutional prerogatives; thus, the federal government’s retreat without appropriately addressing concerns regarding the vertical fiscal imbalance could prove disastrous for provincial social programs.45 It remains to be seen which precise package of measures the government will take to alleviate the vertical fiscal imbalance, but initial indications suggest Harper is keen to establish a focused and open federal framework that adheres to a strict constitutional division of powers in the process. In these ways, there appears to be clear philosophical and policy differences between Stephen Harper and Paul Martin concerning the nature and conduct of intergovernmental relations in Canada. Implications of the Case Studies for the Federation While our two case studies offer some indication of what action the HarperConservative government might end up taking on the fiscal imbalance, they also reveal much about Canada’s evolving federal structures. If the neoconservative elements within the Harper administration take the lead on policy then this federal government is likely to define itself more by the limits of the constitutional division of authority than any of its predecessors. The provinces, spurned by Ottawa during the mid-1990s Program Review era when budgets were severely cut, were initially wary about signing on to a new program like Child Care without shared funding responsibility. The cancellation of these federal-provincial agreements will only further undermine the federal government’s bargaining position in the future, as they will continue to be viewed as an unsteady and mercurial source of partnership funding. If the concept of asymmetrical federalism was really defined by the Martin years, as a result of the numerous exceptions and provisions put in place during federal – provincial negotiations, Harper’s notion of “open federalism” may yet ensure its continued relevance and significance in the future of intergovernmental relations. Consequently, encouraged by provincial successes inflicted on successive minority governments in Ottawa, the provincial-first

41 Addressing Fiscal Imbalance

perspective has been gaining momentum through public relations campaigns and province-specific appeals for increased funds from Ottawa. Not surprisingly opinions are divided as to whether or not asymmetrical federalism constitutes the unraveling of the federation or provides the flexibility needed to ensure its future. Regardless of one’s position on this subject, it seems reasonable to assume that a patchwork quilt of programs across the country will expand and deepen the regional cleavages that federal governments have traditionally sought to minimize through pan-Canadian policies. Ironically, with Alberta fuelling the rising disparity in provincial wealth and resources across Canada, the need for a redistributive, pan-Canadian approach by Ottawa is arguably more pressing than ever. This view is reinforced if we consider the challenges facing Canadians – the environment, immigration, national defence, and security for example – that will require a strategic and coordinated federal response. Unfortunately, the current asymmetrical trend in Canadian inter-governmental affairs suggests that national vision and initiatives will be difficult to achieve as federal-provincial relations become increasingly parochial and combative. In this context, some of the informal and formal institutions within the Canadian federation need to be reviewed to determine if they are in fact hindering, rather than helping the cause of intergovernmental relations. Specifically, the increasingly aggressive role of so-called “Intergovernmental Affairs” ministers and ministries across Canada are potentially disruptive in that they formalize and institutionalize conflict between levels of government. A relatively recent addition – the first Intergovernmental Affairs Departments began to take hold in the early 1990’s – these departments, while responsible for coordinating provincial government activity across provincial ministries, may be causing an much greater overt politicization of the inter-governmental negotiating process. Similarly, the formalized Council of the Federation launched in 2004, while still new, may yet further entrench the ‘us versus them’ mentality of the provinces. Though clearly not the intent of these structures, the formalization, politicization and institutionalization of conflict between Ottawa and the Provinces may well have contributed significantly to recent hostilities. Given the current and expected modus operandi of intergovernmental relations, the prospects for a “zero-sum game” between federal and provincial leaders are greatly enhanced. Seen in terms of game theory, the recent playing of ‘chicken’ between provincial leaders such as Danny Williams and the federal government may ultimately create a scenario akin to the prisoner’s dilemma, in which each province and Canadians generally suffer sub-optimal outcomes as a result of an increasingly dysfunctional political system. For example, while short term deals may be won which temporarily alleviate immediate fiscal and political pressures (such as the Canada-Ontario Accord of May 2005), reduced levels of inter-governmental trust and cooperation may

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limit the ability to bring about national programs and policies from which Canadians in all provinces benefit.

c o n c lu s i o n s This chapter has examined the current direction of intergovernmental relations in Canada and identified a number of issues and concerns. In particular, we have explored the significance of “asymmetrical federalism” as applied to federal-provincial relations during the Martin era and compared this to the so-called “open” federalism expounded by the current Harper government. Although the Conservatives have still to give “open federalism” substantive meaning, the signs are that it will continue to facilitate and possibly intensify asymmetrical trends. Whereas the weakened Martin-led governments appeared to pursue provincial compromises and side deals for short-term political expediency, the Harper government seems ideologically comfortable with reducing Ottawa’s role and soon after taking office announced its planned ‘strategy’ of using federal surpluses to address the fiscal imbalance. If Harper’s relatively low-key approach to federal-provincial relations can help avoid the reactive, ad hoc images that undermined the previous Martinled governments it may well prove to be a politically shrewd move, especially if it reinforces the image of a government able to target clear, focused priorities. However, short-term political gain may come with a high price tag for Canadians as a whole, particularly if “open” federalism and greater devolvement of fiscal powers to the provinces fuels further Provincial opportunism in the form of increased demands for ‘special’ treatment by Ottawa. Ultimately, we contend that all Canadians lose if the strength, presence and credibility of the federal government is eroded, and its capacity to establish national programs, like national childcare and infrastructure renewal is reduced. While increased ‘provincialist’ sentiment may also provide short term ‘positive’ effects for individual provinces and premiers we believe that in forsaking the broader Canadian perspective, provincial leaders have missed an opportunity to enter into constructive and coordinated negotiations and debate about the fiscal imbalance. Premier McGuinty more than most, contributed to recent conflicts by arguing from an overtly Ontario-first perspective. In doing so, he lost the opportunity to speak up as a national champion for all provinces struggling to balance priorities and budgets in the face of a surplus-rich federal government and fuelled bitter and divisive competition between the Provinces. The Harper government appears committed to addressing the vertical fiscal imbalance as part of its framework for “open federalism” and we believe that a strong case can be made for this. However, we also believe that in the present political climate this process should proceed steadily and with caution and be underpinned by institutional reforms that will facilitate more

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constructive intergovernmental relations. A minority federal government confronted with an imminent election, strong asymmetrical pressures and determined and forceful premiers increasingly willing to act alone, could easily concede more power and money to the provinces than intended. The long-term consequences of this could seriously undermine the role of federal government within Canada at a time when the case for strong pan-Canadian leadership is as compelling as it has ever been.

notes 1 “Harper courts Québec; Open federalism, greater international role, end of the fiscal imbalance,” 20 December 2005 [available online] http://www.conservative.ca/1113/36638/ 2 Milne, D. 2005 “Asymmetry in Canada, Past and Present.” iirg: Asymmetry Series (1) [available online] http://www.iigr.ca/iigr.php/index.html 3 Milne, D. 2005 “Asymmetry in Canada, Past and Present.” iirg: Asymmetry Series (1) [available online] http://www.iigr.ca/iigr.php/index.html 4 Meekison, J.P., Telford, H., & Lazar, H. 2003. “The Institutions of Executive Federalism: Myths and Realities,” in Canada: The State of the Federation. Reconsidering the Institutions of Canadian Federalism, Meekison, J.P., Telford, H., & Lazar, H. (eds.). Kingston: The Institute of Intergovernmental Relations: McGill-Queen’s University Press, pp. 3–31. 5 Lazar, H. 2005. “Trust in Intergovernmental Fiscal Relations,” in Canadian Fiscal Arrangements: What Works, What Might Work Better, Harvey Lazar (ed.). (Montreal and Kingston: McGill-Queen’s Press, 2005), 3-36. 6 Telford, H. 2005. “Survivance versus Ambivalence: The Federal Dilemma in Canada.” iirg: Asymmetry Series (10) [available online] http://www.iigr.ca/iigr.php/ index.html accessed: November 2005. 7 Lazar, H. 2005. “Trust in Intergovernmental Fiscal Relations,” in Harvey Lazar (ed.), Canadian Fiscal Arrangements: What Works, What Might Work Better (Montreal and Kingston: McGill-Queen’s Press 2005), 6. 8 Ibid. 11. 9 The Conference Board of Canada. 2006. “Canadian Outlook Long-Term Economic Forecast: 2006,” March. [available online] www.conferenceboard.ca/ 10 cbc. November 15, 2006. “Ottawa runs $5.3B surplus from April to Sept.” [available online] http://www.cbc.ca/money/story/2006/11/15/ottawasurplus.html. Reuters News Service. November 23, 2006. “Canada sees 2006–07 budget surplus at C$7.2 billion” [available online] http://news.yahoo.com/s/nm/20061123/ wl_canada_nm/canada_economy_canada_surplus_col_3 11 C.D. Howe Institute. September 1999. “Recalibrating the Federal Balance.” [available online] www.cdhowe.org 12 Brown, D. 2005. “Who’s Afraid of Asymmetrical Federalism? – A Summary Discussion.” iirg: Asymmetry Series (17) [available online] http://www.iigr.ca/iigr.php/ index.html accessed: November 2005.

44 Macro Choices and Challenges 13 Simeon, R. 2002. “Federalism and Intergovernmental Relations,” in The Handbook of Canadian Public Administration. Dunn, C. (ed.) (Toronto: Oxford University Press), pp. 204–224. 14 Courchene, T.J. 2004. “Pan-Canadian Provincialism – the New Federalism and the Old Constitution,” Policy Options (November): 20-28. 15 Ibid. 24. 16 Kent, T. 2004. “Paul Martin’s Sugar-Daddy Federalism, Donating to a Favoured Cause – Health Care,” Policy Options (November): 29-34. 17 Ibid. 29. 18 For more information regarding the $23-Billion Gap campaign: http://www. strongontario.ca/ 19 Courchene, T.J. 2004. “Pan-Canadian Provincialism – the New Federalism and the Old Constitution,” Policy Options (November): 20-28. 20 cbc News “Sask. makes public push for energy deal,” Sat, 12 Nov 2005. [available online] http://www.cbc.ca/story/canada/national/2005/11/12/sask-energy051112.html 21 Canada. 2005. Agreement-in-Principle between the Government of Canada and the Government of Ontario. [available online] http://www.sdc.gc.ca/en/cs/comm/sd/ news/agreements_principle/index.shtml 22 Ibid. 23 Canada. 2005a. Agreement-in-Principle between the Government of Canada and the Government of Quebec. [available online] http://www.sdc.gc.ca/en/cs/comm/sd/ news/agreements_principle/index.shtml 24 Canada. 2005b. Agreement-in-Principle between the Government of Canada and the Government of British Columbia. [available online] http://www.sdc.gc.ca/en/cs/ comm/sd/news/agreements_principle/index.shtml 25 Roberts, J. 2005. “Asymmetrical Federalism: Magic Wand or ‘Bait-and-Switch.’” iirg: Asymmetry Series (14), [available online] http://www.iigr.ca/iigr.php/index.html 26 Sgro, J. 2002. Canada’s Urban Strategy: A Blueprint for Action (Final Report of the Prime Minister’s Caucus Task Force on Urban Issues) November. [available online] http://www.liberal.parl.gc.ca/urb/BluePrint_English.pdf 27 Federation of Canadian Municipalities (fcm). 2005. “2005 Policy Statement on Finance and Intergovernmental Arrangements.” [available online] http://www.fcm.ca/ english/policy/munfin.html/ 28 Mau, T.A. 2005. “Political Rhetoric or Genuine Leadership: An Assessment of the ‘New Deal’ for Cities.” Paper presented at the Annual Meeting of the Canadian Political Science Association, University of Western Ontario, June. 29 Infrastructure Canada. 2005. Report on Plans and Priorities (rpp 2005–2006.) [available online] http://www.infrastructure.gc.ca/publications/cp/rpp/2005/ 2005rpp_e.shtml 30 Ibid. 31 Shulman, C. 2005. “New Deal for Cities a Raw Deal for Citizens.” Canadian Student Review (Spring): 4.

45 Addressing Fiscal Imbalance 32 Courchene, T.J. 2004. “Pan-Canadian Provincialism – the New Federalism and the Old Constitution,” Policy Options (November): 20-28. Mau, T.A. 2005. “Political Rhetoric or Genuine Leadership: An Assessment of the ‘New Deal’ for Cities.” Paper presented at the Annual Meeting of the Canadian Political Science Association, University of Western Ontario, June. 33 Infrastructure Canada. 2005. Report on Plans and Priorities (rpp 2005–2006.) [available online] http://www.infrastructure.gc.ca/publications/cp/rpp/2005/ 2005rpp_e.shtml 34 Ibid. 35 Plunkett, T.J. 2004. “A Nation of Cities Awaits Paul Martin’s “New Deal” – Federal Funds for ‘Creatures of the Provinces,’” Policy Options 25. No. 2, 22. 36 Government of Canada. 2005. “Agreement in Principle: Transfer of Funds for Public Transit under the New Deal for Cities and Communities” (June 17, 2005). [available online] http://www.infrastructure.gc.ca/ndcc/agreements/pt_can_on_e.shtml/ 37 Conservative Party of Canada (cpc). 2006. “Stand up for Our Communities.” Stand Up For Canada: 2006 Federal General Election Platform. [available online] http://www.conservative.ca/ 38 Flaherty, Jim. September 28, 2006. Minister of Finance, to the Queen’s University Institute of Intergovernmental Relations Conference Fiscal Federalism and the Future of Canada Kingston, Ontario (Remarks)[available online] http://www.iigr.ca/__site/iigr/ __files/papers/PrsPaper.42c947eabc3ee.pdf/ 39 Infrastructure Canada. 2005. Report on Plans and Priorities (rpp 2005 – 2006). [available online] http://www.infrastructure.gc.ca/publications/cp/rpp/2005/ 2005rpp_e.shtml 40 The City of Ottawa’s proposed Light Rail Transit System, funded by provincial and federal money, provides a good example of this. 41 Wyatt, Nelson. November 5, 2006. (Canadian Press) “Open federalism needs all hands on deck, Harper tells provinces.” 42 cbc. April 28, 2005. “McCallum slams McGuinty over funding feud.” [available online] http://www.cbc.ca/canada/toronto/story/2005/04/28/ to-dangerousdalton0429.html 43 cbc / Canadian Press Newswire. October 21, 2006. “Duceppe says Bloc will force election if fiscal imbalance not dealt with.” [available online] http://www.cbc.ca/cp/ national/061021/n102136.html 44 McKenzie, K.J. 2005. Reflections on the Political Economy of Fiscal Federalism in Canada. C.D. Howe Institute Working Paper. [available online] www.cdhowe.org/ 45 C.D. Howe Institute. (September 1999). “Recalibrating the Federal Balance.” [available online] www.cdhowe.org

3 La Grande Seduction: Wooing Quebec peter graefe and rachel laforest

On January 23, 2006, Stephen Harper and the Conservative Party of Canada made an unexpected breakthrough in Quebec, securing ten ridings and 24.6% of the popular vote in the province. This breakthrough was largely responsible for securing the Conservative rise to power. The Conservative party shifted accordingly, and with only a minority government, Ottawa’s relationship to Quebec became a serious factor on the Conservative agenda. The object of political courtship, Quebec has been targeted in the hopes of bolstering Harper’s popularity and thereby securing a majority in the imminent federal elections. As the initiatives in his early mandate have demonstrated, Harper clearly intends to cultivate a new form of relationship with Quebec. However, it remains one wrought with complex tensions and polarities. Even as the Conservatives play to Quebec’s traditional demands for more autonomy over matters of provincial jurisdiction, more important has been the inability of the Conservatives to connect with Quebecers on matters of federal jurisdiction such as the environment, defence management, gun control, and same sex marriage. Harper will have to tread carefully on these policy matters if he is to stay in the good graces of Quebecers. In this chapter, we evaluate Harper’s success in seducing the Quebec electorate. While we briefly review some of the key moments over the past decades that left relations between the federal and Quebec governments in the deep freeze for a decade, the bulk of this chapter will focus on the two attempts to patch up this relationship that we have observed in the past four years. After all, if Stephen Harper is courting Quebec in his strategy to form a majority government, he comes directly on the heels of Paul Martin’s attempt to do the same. The final part of this chapter explores how successful

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Harper’s strategy has been to date and how it may have an impact on intergovernmental relations in Canada in the future.

w h y wo o q u e b e c ? The federal government’s strategic concern with Quebec has long been a flashpoint in the rest of the country, inciting jealousies about the “special treatment” the province receives. Yet the development of public policies and the expenditure of public monies in an attempt to gain the allegiances of Quebecers can be explained by a combination of state and partisan objectives. We will treat each in turn. Federalism and Statecraft Federalism is the political system that characterizes the relationship between the central government and the provinces. It refers to the division of powers between the federal government as central authority and the provincial governments that compose the country, such that both the federal government and the provinces have the sovereign power to legislate in those policy areas granted to them by the constitution. Federalism creates a dynamic where both the central government and the provinces are vying for the same political goal, namely the identification and allegiance of their citizens.1 In such a situation, the central government is faced with the task of maintaining some sense of pan-Canadian cohesion, identity and citizenship, since the provinces will develop their own separate conceptions of community and belonging within their fields of jurisdiction. The federal government must therefore develop a compelling understanding of a shared Canadian community either through actions in its own spheres of jurisdiction (for instance, in developing the Canadian economic union, or developing a bold and popular foreign policy), or in encouraging provinces to adopt similar policies in their own fields of jurisdiction (for instance, by imposing financial penalties on provinces who do not follow the rules laid out in the Canada Health Act). In short, the central government’s policy decisions are never simply about the immediate policy in question, but also implicitly or explicitly contribute to understandings of the political community, of what rights and responsibilities are shared by all Canadians, and of what rights vary from province to province. This question of statecraft takes particular salience in the case of Quebec. For nearly half a century, Quebec governments of all stripes have reflected a widespread nationalist belief that the Canadian political community is in some sense fundamentally binational (or, more recently, multinational), with the Quebec government representing the centre of gravity of an internal Quebec nation. This has led to twin demands, namely that Quebec’s national status be formally recognized in some manner (for instance, through

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constitutional recognition of being a distinct society), and that the central government respect the constitutional division of powers and thus Quebec’s policy autonomy.2 The federal government has thus had to juggle the issue of whether its goal of creating some form of pan-Canadian cohesion would be best achieved through attempting to ignore or subvert these demands, or through compromise or engagement with these demands. Yet regardless of strategy, maintaining the identification of Quebecers has been a prime concern of statecraft, as Quebec nationalism has remained the best organized challenge to the existence of the Canadian state in its current form. Canadian federalism demands statecraft to deal with divided jurisdiction and the unresolved national question. One means of engaging in this statecraft is intergovernmental relations, where the federal government can attempt to engage the provinces in their areas of constitutional jurisdiction so as to create some degree of pan-Canadian uniformity. In the post-Second World War period, the federal government used its preponderant control of taxation to encourage the development of Canada-wide social (e.g. hospital insurance) and physical infrastructure (e.g. trans-Canada highway). In return for paying a fixed share of provincial programme costs (often 50%), the federal government could participate in setting the agenda for the programme, and for fixing general principles and conditions for their implementation. While these measures were welcome by most provinces, others such as Quebec, and at times Ontario, viewed these moves as intrusions in areas of provincial jurisdiction.3 What resulted and has characterized Canadian federalism is a general ambiguity with respect to the respective spheres of jurisdiction between the federal government and the provincial governments. This trend has been resisted by successive Quebec governments, who see the spending power and the blurring of jurisdiction as leading to a loss of provincial autonomy, and of the policy diversity that that autonomy allows. In short, they argue that these trends are part of a Canadian nation-building project that limits the space to reproduce a Quebec nation, even though this autonomy was what won Quebec’s consent to Confederation. Since the election of the Lesage Liberal government in 1960, Quebec governments have consistently demanded that the use of the spending power be limited, and that Quebec be allowed to optout from its use with compensation. In the early and mid-1960s, the federal government appeared willing to accommodate this demand. For instance, Lester Pearson’s Liberal government granted the provinces the opportunity to opt-out of federal programmes in order to create their own, an opportunity taken up by Quebec in a number of fields, and most visibly with the creation of a Quebec Pension Plan in parallel with the Canada Pension Plan. This policy of accommodation, of creating asymmetrical arrangements, was opposed by influential actors within the federal government, particularly in the Department of Finance. Under Prime

49 La Grande Seduction: Wooing Quebec

Minister Trudeau, the federal government’s stance shifted to become one of “uniform federalism,” where the possibility of provinces opting-out became a non-starter on the grounds that it would create different senses of belonging across the country, and thus lead to the frittering away of a pan-Canadian identity and citizenship. Since then, federal strategy has wavered between these poles. Under Prime Minister Mulroney, there were two attempts to amend the constitution in a manner that would have controlled the spending power and recognized Quebec’s specificity (as being a distinct society). This accommodation of demands for autonomy and recognition largely disappeared under Prime Minister Chretien, who followed Trudeau in seeing this as a dangerous strategy. Chretien indeed stiffened the federal approach to Quebec following the near sovereignist victory in the 1995 referendum, keeping the door to constitutional revisions firmly locked, and through attempts (e.g. the 1999 Clarity Act) to make success in a future referendum look less likely, or at least less likely to lead to a new Canada-Quebec partnership).4 Chretien’s tenure nevertheless saw some changes, as his government’s aggressive deficit reduction strategy involved cutting federal transfers to provinces for health, post-secondary education and social assistance by one third. In shifting the cost of these services more squarely on to the provinces, the federal government reduced its legitimacy in setting Canada-wide programme standards or conditions, and incited the provinces to take a more concerted and oppositional stance. This has led to new federal strategies to ensure a degree of pan-Canadian policy convergence.5 In the place of conditional costshared programmes, the federal government now seeks to lead more through participating in setting the intergovernmental policy-agenda, for instance by negotiating broad framework agreements that specify problems to be addressed and that set out a menu of interventions for solving them. Quebec has refused to participate as more than an observer in several of these multilateral negotiations (for instance, on early learning and on labour market training for people with disabilities), leading to a thin de facto asymmetry.6 Partisan Politics and Quebec The concern with Quebec that flows from these questions of statecraft is complemented by partisan political factors. While Quebec’s share of seats in Parliament is slowly declining with population growth in Ontario and the West, these seats still represent close to 25% of the seats in the House of Commons. They therefore represent a significant block of seats for a party seeking to build and maintain a majority government. For the Liberals in their three majority government wins under Jean Chrétien (1993, 1997, 2000), winning the support of the Quebec electorate was important in maintaining a strong central Canadian bloc of seats. It was also important since the main competition was with the Bloc Québécois, such that the relative

50 Macro Choices and Challenges

success of the Bloc and the Liberals served as a symbol of the relative legitimacy or lack of legitimacy of the existing federal order. Given declining support and enthusiasm for the Bloc after the 2000 elections, it was felt that a renewed Liberal party under Paul Martin’s leadership might extend the Liberals hold on power indefinitely by capturing Bloc seats to compensate for expected losses to the new Conservatives in Ontario. The sponsorship scandal upset these predictions, but did not thereby reduce the importance of appealing to Quebecers, since any Liberal design on forming either a minority or majority government will require regaining lost ground in Quebec. For the Conservatives, the lesson of their past two majority governments, namely under Diefenbaker and Mulroney, was that the winning formula was to craft an alliance of “francophones and francophobes,” to take James Bickerton’s evocative phrase.7 In short, the key to forming a majority was to marry significant support from rural Ontario and the West (perhaps unfairly labelled “francophobe”) with a strong contingent of Quebec mps. As we will see below, this lesson was clearly understood by the new Conservative party in its decision to craft some platform commitments designed to accommodate certain specific demands for autonomy and recognition made by Quebec’s Liberal government.

t h e l i b e r a l char m o f f e n s i v e Yet even before the Conservatives came to power, it is possible to observe the outlines of a new federal government strategy towards Quebec tied to Paul Martin’s displacement of Chrétien as prime minister. Martin made improving federal-provincial relationships a hallmark of his leadership, and this even while still holding a minority government. In the 2004 speech from the throne, the federal government promised to “put relations with provinces and territories on a more constructive footing.”8 This is not surprising given that many of the policy areas identified as priorities of national concern (health care, children and cities) fell into provincial jurisdiction and whose implementation thus required relatively functional and harmonious federalprovincial relations. In its two years in office, the Martin government signed significant intergovernmental agreements in health care and childcare that followed the Chrétien pattern of tying funding to broad objectives and potential sites of intervention, rather than to Canada-wide conditions or standards, but differed in their treatment of Quebec. With the election of a federalist government in Quebec, the Martin government was prepared to transform these bric-à-brac and minor differences that resulted from Quebec’s nonparticipation in negotiations, into a larger philosophy of asymmetrical federalism. This could be seen in the 2004 Health Agreement, where the Quebec government did not have to follow the same reporting requirements as the

51 La Grande Seduction: Wooing Quebec

other provinces. The 2005 bilateral early learning and childcare agreement with Quebec was likewise quite different from the ones agreed to with the other provinces in terms of recognizing Quebec’s leadership. A third example was in the field of parental leaves, where the federal government supported the creation of a separate programme promoted by the provincial government by transferring the sums it saved by not having to fund leaves in Quebec through its employment insurance programme. Of course, there was never a better time to strike these deals with Quebec, with an ally like Premier Jean Charest who had come to power with plans of strengthening cooperation and integration in the federation.9 As past-leader of the federal Conservative party, Jean Charest embraced a vision of the Canadian nation as one composed of strong provinces working together. From the outset, he believed that Quebec could play not only an active role, but a strong leadership role in intergovernmental relations and was instrumental in creating a Council of the Federation. In making these deals with Charest, and investing them with the symbolism of recognizing Quebec’s difference, the Martin government hoped for gains both in terms of statecraft and partisanship. The deals increased the credibility of Charest’s government and thus undercut the sovereignist challenge, while they also aimed to expand support for the federal Liberals among Quebec nationalists who opposed the status quo but who will support a federalism that provides autonomy and recognition for Quebec. While it provided political “wins” for the Charest government, Martin’s approach to intergovernmental relations was less successful on the partisan level. It got blindsided by the sponsorship scandal. The revelation that the federal government’s response to Quebecers’ unhappiness with Canada (as shown in the 1995 referendum result) took the form of an advertising and event sponsorship campaign funded in part by their own tax dollars was bad enough. That Liberal party insiders and associated companies benefited from the programme, engaged in suspect and illegal billing practices, and funnelled public funds to partisan ends, only made things worse. Martin’s approach therefore came undone as the sponsorship scandal more than overwhelmed the political credit that came from his deals with Charest. At the same time, his attempt to woo Quebec nationalist voters was limited by his reluctance to move on the larger issues of recognizing the fiscal imbalance or increasing Quebec’s international presence. One of his opponents for the hearts of Quebecers was willing to go one better on these files.

enter harper Harper crafted and pitched his appeal to Quebec as part of a broader philosophy of “open federalism.” This philosophy was laid out in the party’s election manifesto, by the letter Harper sent to the Council of the Federation

52 Macro Choices and Challenges

during the federal election in January 2006, and in a speech delivered to the Quebec City Chamber of Commerce in December 2005.10 In a nutshell, open federalism is defined by Harper as involving greater respect for areas of provincial jurisdiction. This is to be achieved through the clarification of the respective roles and responsibilities of each order of government, through limiting the use of the federal spending power, as well as increased responsiveness to the provinces to allow them to contribute to the national dialogue. In this it is consistent with the longstanding Conservative preference for less federal involvement and more provincial diversity in social policy. It does not necessarily mean a weaker federal government, however, since it promises to build a strong national government through an emphasis on its constitutional fields of jurisdiction (defence, economic union). This vision of open federalism allowed Harper to outflank Martin on two fronts. In giving greater weight to claims of provincial jurisdiction and of the need to rein in the spending power, Harper responded to long-time Quebec demands for autonomy. In addition, this conception of jurisdiction led naturally to the view that the division of financial resources between the federal and provincial governments be redrawn to reflect each order’s responsibilities, and thus Harper could admit to the existence of a fiscal imbalance, and could commit a Conservative government to solving it. At the same time, as part of his argument about letting provinces participate more in the national dialogue and in setting Canada’s position in international negotiations, he could respond to the Quebec demand for a greater role at unesco. While a relatively minor commitment, particularly in light of existing provincial involvement in Canada’s participation in unesco, this promise also provided some slight recognition of Quebec’s difference within Canada. This was a potentially risky move in that it could have alienated Harper’s Western base, which is felt to hold to the Reform Party mantra of treating all provinces the same. However, Roger Gibbins has argued that the low visibility and low salience of the issue, coupled with the loss of interest in the Quebec question, has increased Harper’s room to manoeuvre in recreating the West-Quebec electoral alliance.11

t h e g r e at s e d u c t i o n : 2006 federal election On January 23, 2006, the Conservatives surprised many observers by making larger than expected gains in Quebec and capturing close to a quarter of the popular vote there. This represented a significant reversal of fortunes for the Conservatives who had been shut out of Quebec in 1993 and had not been able to regain footing since. Originally thought to be a two-way race in Quebec between the Liberals and the Bloc Québécois, the sponsorship scandal left Quebecers willing to consider new approaches to the federal question and to consider new players. In this context, the Conservatives were successful in

53 La Grande Seduction: Wooing Quebec

crafting an appeal more amenable to Quebecers and for breaking the divide between federalists and sovereignists, appealing to both soft nationalists and liberals. In fact, there was a palpable shift in the forms, practices and scales at which politics play out – with the federal scale taking on greater relevance for Quebecers. Clearly, part of the attraction of the Conservative Party during the campaign was that the party met a number of the demands of Quebecers. This helped Harper to tap into Quebecers’ quiescent concerns that Ottawa was not receptive to their call for more autonomy. The possibility of securing new money from the federal purse has relegitimized this space for Quebecers as a strategic avenue to affect social change. In the face of potential cash flowing from Ottawa, the Bloc Québécois, which was traditionally portrayed as the safeguard of Quebec’s interest in Ottawa, had some difficulty in positioning itself as relevant. For the first time in over a decade, the Conservatives were able to position their party as a viable alternative to overcome the status quo and as the new suitor for Quebec that paid off in terms of the election. The Conservative gains were mostly concentrated in the Quebec City region and in eastern Quebec.12 In those areas, there is a historical base of conservative support and these ridings have consistently shown higher levels of support for the Action Démocratique du Québec (adq) and the Conservative Party in previous elections. Building on this foundation, the Conservatives were strategic in presenting strong candidates such as Jean-Pierre Blackburn, an mp in the Mulroney government in the 1980s; Maxime Bernier, son of former Tory mp who had represented the Beauce area in the 1980s; Lawrence Cannon, a member of the Quebec National Assembly under the Bourassa government; and Josée Verner, an active member of Harper’s shadow government while in opposition. Steven Blaney and Jacques Gourde, two other winning candidates for the Conservative Party, were both previously active members of the adq in their respective ridings. By focusing their energies in these ridings, they were able to yield returns despite the party’s weak organizational structure in Quebec as a whole. While most of these seats were won at the expense of the Bloc Québécois, the biggest losers in Quebec were nevertheless the Liberals. The Bloc strategically opted to focus its campaign efforts on broadening its base among allophone communities in the Montreal area, and made some important gains in the Montreal and Outaouais area, defeating such Liberal star candidates as Pierre Pettigrew, Liza Frulla, Jacques Saada, Denis Paradis, and Marc Garneau. Their showing in the rest of Quebec, albeit lower than expected, was still significant with the party winning 51 seats. The Liberal Party on the other hand, was only able to secure 20.7% of the popular vote – an all time low. What is more, the Conservatives ran ahead of the Liberals in 47 of the 75 ridings in Quebec. In a province where politics has been dominated in the last decade by the sovereignist/federalist divide, the Conservatives had replaced the Liberals as the federalist alternative.

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the morning after From day one, Harper as prime minster reached out to Quebec constituents with an eye for the next elections. Banking on the hope that he can win more seats in Quebec next time, Harper clearly signalled his intent to be responsive to the Quebec electorate. He began by ensuring that he had strong Quebec representation in cabinet. He appointed five Quebecers to his cabinet. They included Michel Fortier as minister of Public Works, so as to ensure representation from the Montreal area, despite the fact that Fortier does not hold elected office.13 In the first month of his mandate, he met with Jean Charest three times and publicly sang his praises. On the 23rd of June 2006, Harper hosted a cabinet retreat in Quebec aptly timed with Quebec’s national holiday. Beyond these formalities, Harper moved quickly to fulfil some of his promises. On 5 May, 2006, he signed an historical agreement with Quebec Premier Jean Charest establishing a formal role for Quebec at the United Nations Education, Scientific and Cultural Organization (unesco). Harper also recognized the problem of fiscal imbalance between Ottawa and the provinces and promised to find a solution by the spring of 2007. While the 2006 budget paper on fiscal federalism was short on specifics, it did reflect the campaign themes of “open federalism.” It promised to sort out roles and responsibilities and to ensure that governments have access to revenues commensurate with these roles; to provide greater provincial autonomy in policy choices and experimentation; to limit the use of the federal spending power as per the 1999 Social Union Framework Agreement (sufa); and to make long-term, stable and predictable agreements on transfer payments.14 It is worth noting some slight slippage here, as a variety of measures in the 2006 budget, such as the cancellation of the federal-provincial childcare agreements and their replacement with a tax credit, did not strictly follow the sufa guidelines in terms of providing suitable notice and provincial consultation.15 These moves could be read as having initial success both at the level of partisanship and at the level of statecraft. In terms of Harper’s partisan strategy of reaching out to Quebec as a means of gaining additional seats, it was an immediate success, as his support in Quebec increased by 4 percentage points in a couple of months.16 In addition, the survey showed that over 70 percent of Quebecers were satisfied with his May 2 budget and with the accomplishments of his government to date. He also ranked high on the trust factor, with 52% trusting that he will live up to his word. Maintaining these levels of support over this period is not a minor feat for a party that had remained at around 10% in Quebec opinion polls right up to December 2005. Even Jean Charest was able to cash in on this newfound relationship. He saw his performance in the opinion polls increase for the first time in three years, placing the plq at 37% of voting intentions and the rate of satisfaction with his

55 La Grande Seduction: Wooing Quebec

government increased by 10 points from 29% to 39%.17 These partisan gains also seemed to be wins for the central government’s statecraft. This policy of very modestly accommodating Quebec’s claims to autonomy and recognition could be seen by soft nationalists to renew the chances for the reconciliation of Quebec nationalism within the federal framework, and to thus undermine parts of the sovereignist argument.18 The presentation of a motion that “the Québécois form a nation within a united Canada,” voted on 27 November 2006 represented another example of Harper’s willingness to signal a departure from the Trudeau and Chretien line of refusing formal recognition of the Quebec national fact. While this motion was a limited gesture, which was then further limited by attempts to downplay its significance, it did break a seeming taboo about recognizing Quebec as a nation, and in the process raised the possibility of changing the terms of debate around the national question. Despite these early successes, the Conservatives nevertheless face some tensions between form and substance. While Harper’s “open federalism” approach appeals to Quebecers who have long lobbied for greater respect of their autonomy in areas of provincial jurisdiction such as social and cultural policy, Harper is far from generating the same kind of enthusiasm on policy issues of federal jurisdiction such as the environment. In short, Harper has succeeded in removing some of the irritants around the non-respect of provincial jurisdiction and the non-recognition of Quebec specificity. In the process, he has encouraged Quebecers to re-engage with a Canadian project. Yet, when Quebecers look at the Conservatives’ headline policies in areas of federal jurisdiction, they seem distinctly out of touch with the structure of Quebec public opinion. This is complicated by a second tension between partisan and statecraft objectives. The federal government has a short-term interest in the re-election of the Quebec Liberal government, both in terms of keeping the sovereignist Parti Québécois out of power, and in terms of maintaining functional intergovernmental relations. At the same time, the Quebec Liberal government has enjoyed very low levels of popular support,19 such that too close an identification may hurt the Conservatives. By contrast, in cases where the Conservatives’ positions are far from the Quebec value consensus, there is every incentive for the Quebec Liberals to highlight the difference and run against Ottawa in order to shore up their credentials as a centrist party representing a Quebec consensus. Yet the Quebec Liberals cannot push this too far, since they need political “wins” on issues like unesco and the fiscal imbalance to shore up their case that they can make Canada work for Quebec. These tensions create a complex triangular relationship between the federal government, the Quebec Liberal government and the Quebec electorate. And there could be bumpy times ahead.

56 Macro Choices and Challenges

strange love triangle The triangular relationship among the Conservative federal government, the Quebec Liberal government and the Quebec electorate must be kept in mind when electoral strategies are designed. When federal government policies confront core values held by the Quebec electorate, the issue of how one defends Quebec’s values, and by extension of sovereignty, can be expected to move back up the political agenda. Indeed, one emergent strand of sovereignist argument has been that sovereignty is now more important than ever if Quebec is to promote its values on such contentious issues as war, free trade, and cultural diversity, internationally. As shown in figure 3, there are important differences in the field of national defence and foreign policy. The Canadian military presence in Afghanistan and the seemingly close relationship between Harper and Bush continue to be unpopular in Quebec. Tensions are also growing in a host of other policy fronts, from gun control to the environment to crime policy where the federal government initiatives have run up against strong countervailing sentiments in Quebec. In fact, it is increasingly hard to envisage areas where they might see their interests in similar terms. The reopening of the debate on same-sex marriage, the rejection of Kyoto Protocol commitments, and Harper’s plan to abolish the long-gun registry, are all policies which reinforce Quebec’s distinct take on issues relative to the rest of Canada. On the issue of childcare, there are fundamental divisions about the type of system they want, with the Quebec Liberals continuing to support some form of universal child care and early learning, and the federal Conservatives favouring a course of subsidizing parents’ market choices through tax credits. The cancellation of the federal-provincial childcare agreements, which would have provided Québec with $1.125b over five years, represents a windfall loss for the Quebec government, which had counted on this to help defray existing expenses in this field. The issue of gun control is particularly salient for Quebecers given the recent events at Dawson College that are reminiscent of other incidents engraved in the collective memory of Quebecers at the Ecole de Polytechnique and at Concordia University. Charest has had to come out publicly in support of maintaining the registry, in full knowledge that this will create bad press for Harper. This clash in values is not merely circumstantial. Quebecers have historically been strong supporters of an interventionist state and have viewed the political system as a mechanism to address issues of social, economic and political inequality to better the collectivity.20 Hence, they support the idea of the federal government playing a strong role in spheres of federal jurisdiction, but being non-interventionist in social and cultural spheres so that the provincial government can play an interventionist role. Harper’s implicit preference for a smaller state role stands in stark opposition to Quebecers’

57 La Grande Seduction: Wooing Quebec Figure 3.1 Values and Preferences on various policy issues 80 60 Quebec Canada

40 20 0 support for gun-control

support for military mission in Afghanistan

support for Kyoto

support for same sex marriage

clear preference for an expanded federal role in these areas. This then creates the likelihood of future conflicts between the province and the federal government on a policy register other than that of social policy. In a context of a changing economy, and the growing presence of foreign policy, these issues will take on increasing importance. Charest will be forced between conflicting Canadian and Quebec views. With upcoming elections looming in Quebec, the window of opportunity is closing quickly, and Charest will need to reassert his position and popularity in order to woo his electors. Already, he has been able to develop some centrist and green credibility in running against Harper’s stance on Kyoto and the childcare accords. Still, more gains could be made by Charest. He is being backed into a corner with Quebeckers growing increasingly dissatisfied with Harper’s policy proposals in areas of federal jurisdiction. Frustrated with Ottawa, Charest has been compelled to announce Quebec’s own plan to reduce greenhouse-gas emissions. Early in 2007 it received a $305 million federal infusion to finance it. However Quebec’s go-it-alone approach to environmental matters may further reinforce Quebec’s desire to define their own policy objectives. Canada’s Clean Air Act announced on 10 October 2006 has not done much to alleviate the concerns about the federal government’s commitment to environmental issues. Indeed, the environmental file has provided Charest a number of occasions to present himself as moderate and progressive by running against the federal government. For instance, he seized on Jean-Pierre Blackburn’s claims that the crisis in Québec’s forestry industry was caused by provincial environmental legislation to tout his concern for future generations and for sustainable resource use.21 The government also scored a “foreign policy” win at the United Nations’ conference on climate change in Nairobi, a sort of “vive le Québec vert,” where the Government of France congratulated Quebec for its efforts, while taking Canada to task for its inaction.22

58 Macro Choices and Challenges

How Harper and Charest both choose to react to the forest industry crisis will also be important. Since April 2005, the Quebec forest industry has lost more than 7000 jobs in predominantly francophone areas in the outlying provincial regions where the Conservatives and the Quebec Liberals would hope to gain more electoral support. While there were rumours that the federal government would revive the Program for Older Worker Adjustment (which the Chrétien Liberal government had shut down in 1997) to help with the significant job losses in forestry and textiles, the announced costshared programme (Targetted Initiative for Older Workers) was criticized in Quebec by the government and the unions for only providing $19m, and for excluding textile and apparel workers.23 Jean-Pierre Blackburn, minister responsible for the Economic Development of Canada agency for the Québec region, has likewise not proposed any new policy tools, preferring to let existing business creation and economic diversification programmes demonstrate what they are capable of doing.24 These broader issues have the potential to erode public support for the Conservatives. Polls are now suggesting that the Harper government is as unpopular as the Charest government with the level of dissatisfaction increasing to 56% from 50% between September and October 2006.25 The Conservatives nevertheless still continue to have strong support in the Quebec City area with 38% of voting intentions, placing them ahead of the second-place Bloc.26 There is also an obvious connexion between the chances of success of the Conservative Party and the Quebec Liberal Party given that both leaders are relying on each other to some extent in order to win the next election. Jean Charest has the ability to control the timing of the next provincial election and may wisely coordinate it with the next budget to cash in on Harper’s commitment to the fiscal imbalance issue. This may allow the Premier to build on the reaction of Quebecers to federal policy decisions. It may also foreclose any opportunity to position himself as a strong leader vis-à-vis Ottawa.

t h e o t h e r p l ay e r s The additional problem for Conservatives is that showering Quebec with attention is not costless in other areas where they must maintain and expand support, such as Ontario. Harper’s overtly friendly approach to Quebec has created tensions and driven a wedge into Ottawa’s formerly tight relationship to Ontario. These shifts in intergovernmental relations can have a significant impact on the state of the federation. It has meant provinces such as Ontario have taken a more independent and adversarial stance on the intergovernmental scene, out of fear of being sidelined. Already Premier McGuinty has openly demanded that the issue of fiscal imbalance be resolved through a financial system based on per-capita transfers of federal budget surpluses.27

59 La Grande Seduction: Wooing Quebec Figure 3.2 Voting intentions in Quebec 60 Support (%)

50 Quebec Liberal Party Parti Québécois Conservative (federal)

40 30 20 10 0 Dec-05 Jan-06 Feb-06 Mar-06 Apr-06 May-06 Jun-06 Jul-06 Aug-06

While there is always something comical in attempts by Ontario Premiers to get their citizens riled up around an “Ontario” identity, this seems to have appeared on the government’s radar. Harper has mooted the idea of solving the fiscal imbalance sometime later than promised in the 2006 budget (i.e. spring 2007), in light of significant interprovincial infighting.28 The Conservatives have also agreed to honour the $538m climate change agreement that Ontario signed with the Martin government.29 Harper’s charm offensive does not seem to be stopping the other suitors. The ndp held its 2006 Convention in Quebec City, passing a “Sherbrooke Declaration” calling for Quebec-Canada reconciliation and reasserting the party’s commitment to asymmetrical federalism. The federal Liberals likewise held their leadership convention in Quebec. The Liberal leadership candidates developed other formulas to catch Quebec’s eye and throughout the leadership campaign some even partially moved to recognize Quebec’s distinct status in Canada to the extent of using the “n-word” – recognizing that Quebec is a nation. Ultimately, the Liberal debate around Quebec’s status in Canada was preempted by Harper’s move to recognize Quebec as a nation within a united Canada in the House of Commons two weeks before the leadership convention. Nevertheless, moderating the existing Liberal party stance to broaden its base of support in Quebec may prove difficult internally. In doing so, they too run the risk of angering interests in other parts of Canada, particularly those who share the Trudeau and Chrétien strategy of not accommodating Quebec nationalism, and in retracing the fault lines of past constitutional debates. In that sense, the election of Stéphane Dion as leader of the Liberal Party is interesting. While he is the third party leader in a row from Quebec, Dion is also known to be a hardline federalist following in the Chrétien tradition. In fact, he served as Chrétien’s Minister of Intergovernmental Affairs from 1996–2003 and was instrumental in the adoption of the Clarity Act. Although he embodies a hard-line approach to Quebec’s traditional demands, his experience at the un Climate Change Conference and his championing of the Kyoto protocol

60 Macro Choices and Challenges

may help the Liberals gain back support in Quebec, or at least prevent a further bleeding of votes to the Conservatives. Finally, the Bloc is attempting to mend its support in the Quebec City region, trying to sell the economic benefits and international connections that would result from becoming the national capital of an independent Quebec.30

c o n c lu s i o n s It has long been held by analysts, that if Quebec and the rest of Canada could agree on the structure of the Canadian federation and the division of powers, then stability in terms of intergovernmental relations could be achieved. For many, the problem with the federation is not that Quebeckers want independence per se, but rather that they want more autonomy in certain areas. But what the example of the past year illustrates is that beyond these structural issues, the vision of political community and of the role of government is radically different. Intergovernmental relations are extremely complex and partisanship can only take a position so far. Underneath still lie the structural issue of how we understand the country and the place of Quebec in the federation. Finding a way to simultaneously accommodate Quebec’s preference for a noninterventionist federal government in spheres of social provision and for an interventionist and centre-left federal state in those of the environment, gun control, social values, and foreign policy, will be a central challenge to the Harper government if its route to a majority relies on staying in the good graces of Quebecers. How these tensions play out will undoubtedly have a telling effect on the future of the relationship between Ottawa and Quebec. Between partisanship and statecraft, between pleasing the Charest government and pleasing the Quebec population, between wooing Quebec and maintaining support elsewhere, the Harper government must manage numerous tensions. So far, it has not managed to gain much ground, but it has succeeded in consolidating the Conservatives’ place in Quebec for the first time in over a decade. It has also continued in Martin’s path of nudging Canadian statecraft ever so slightly closer to accommodating Québec nationalism. These are not minor accomplishments, but ultimately the forthcoming provincial and federal elections will provide the climax to this latest episode of the long-running téléroman of Quebec-Canada relations.

notes 1 Keith Banting, “Social Citizenship and Federalism: Is a Federal Welfare State a Contradiction in Terms?” in Scott L. Greer, (ed.) Territory, Democracy and Justice: Regionalism and Federalism in Western Democracies (New York: Palgrave MacMillan, 2006), pp. 44–66; Daniel Béland and André Lecours, “Sub-state nationalism and the welfare

61 La Grande Seduction: Wooing Quebec

2 3 4 5 6 7 8 9 10

11

12

13

14 15

16 17 18

state: Québec and Canadian federalism,” Nations and Nationalism 12, no. 1 (2006), pp. 77–96. Alain Noël, “General Study of the Framework Agreement,” in The Canadian Social Union Without Quebec: 8 critical analyses (Montreal: irpp, 2000). R. Watts, The Spending Power in Federal Systems: A Comparative Study. Kingston: Institute of Intergovernmental Relations, Queen’s University, 1999, p. 2. See Kenneth McRoberts, Misconceiving Canada: The Struggle for National Unity (Toronto: Oxford University Press, 1997). Gérard Boismenu and Peter Graefe, “The New Federal Toolbelt: Attempts to Rebuild Social Policy Leadership,” Canadian Public Policy 30, no.1 (2004), pp. 71–89. Peter Graefe, “The Scope and Limits of Asymmetry in Recent Social Policy Agreements,” Asymmetry series no. 10. Kingston: Institute of Intergovernmental Relations, 2005. James Bickerton, “Crime et Chatiment: Le Parti Progressiste-Conservateur du Canada entre 1984 et 1993,” Politique et sociétés 16, no.2 (Fall, 1997), pp.117–144. See Speech from the throne, February 2, 2004; available at: http://pm.gc.ca Michel Venne, “Le tandem Martin-Charest,” Le Devoir, 15 December 2003. For the letter, see www.conservative.ca/EN/1091/39077; for the speech to the Chamber of Commerce see politicsblog.ctv.ca/blog/_archives/2006/11/25/2525051.html; for the Stand up for Canada election platform, see www.conservative.ca/media/ 20060113-Platform.pdf Roger Gibbins, “Open Federalism: Thoughts from Alberta,” in Open Federalism: Interpretations, Significance (Kingston: Institute of Intergovernmental Relations, 2006), pp. 69–70. The Conservatives won ten seats in Beauce, Beauport-Limoilou, CharlesbourgHaute-Saint-Charles, Jonquière-Alma, Lévis-Bellechasse, Lotbinière-Chutes-dela-Chaudière, Louis-Hébert, Louis-Saint-Laurent, Mégantic-L’Érable, and Pontiac. Members of cabinet from Quebec are Lawrence Cannon as minister of Transport, Infrastructure and Communities, Maxime Bernier minister of Industry, Josée Verner as minister of International Co-operation and minister for la Francophonie and Official languages, and Jean-Pierre Blackburn as minister of Labour. Sylvie Boucher was also named parliamentary secretary to the prime minister. Department of Finance, Restoring Fiscal Balance in Canada (Ottawa: Department of Finance, 2006). Keith G. Banting, “Open Federalism and Canada’s Economic and Social Union: Back to the Future?” in Open Federalism: Interpretations, Significance (Kingston: Institute of Intergovernmental Relations, 2006), 81. Leger Marketing Poll, 15 May 2006. crop poll, La Presse 16 -25 Febuary 2006, Leger Marketing, http://www.legermarketing.com/eng/intprov.asp?prov=QC&l=1 See Alain Noël, “Il suffisait de presque rien: Promises and Pitfalls of Open Federalism” in Open Federalism: Interpretations, Significance (Kingston: Institute of Intergovernmental Relations, 2006), p. 35; Éric Montpetit, “Harper can satisfy Quebec,” Policy Options, March 2006, p. 46.

62 Macro Choices and Challenges 19 Gérard Boismenu, Pascale Dufour, and Denis Saint-Martin, Ambitions libérales et écueils politiques (Outremont: Athéna Éditions, 2004), ch. 4. 20 Christian Rouillard, Éric Montpetit, Isabelle Fortier, and Alain-G. Gagnon, Reengineering the State: Toward an Impoverishment of Quebec Governance (Ottawa: University of Ottawa Press, 2006), ch. 1. 21 Presse canadienne, “Charest a hâte d’affronter Boisclair,” and “Crise forestière: Blackburn critique l’obsession de l’environnement,” Le Devoir, October 16, 2006; Isabelle Rodrigue, “Les conservateurs terminent une semaine difficile avec une autre controverse,” La Presse, 20 October 2006. 22 Antoine Robitaille, “La France défend le Québec à Nairobi,” Le Devoir, November 17, 2006. 23 Presse canadienne, “Entente entre Québec et Ottawa – Montréal sera exclu de l’entente sur l’aide aux travailleurs âgés,” Le Devoir, 25 September, 2006; Robert Dutrisac, “722 millions pour sortir de la crise,” Le Devoir, October 21–22, 2006. 24 Presse canadienne, “Crise forestière.” 25 Poll conducted by crop 19–23 October, 2006. 26 Isabelle Porter, “Le Bloc lance la bataille de Québec,” Le Devoir, October 23, 2006. 27 For the Ontario government’s argument, see their website on this issue, www.strongontario.ca, recently rebranded as www.fairness.ca 28 Alec Castonguay, “Stephen Harper au Devoir – Oui à un transfert de tps,” Le Devoir, September 27, 2006. 29 Presse canadienne, “Kyoto: Seul Ontario aura l’aide d’Ottawa,” Le Devoir, October 27, 2006. 30 Porter, “Le Bloc.”

4 “Getting Down to Business” – Rebuilding Canada-U.S. Relations under the Harper Government geoffrey e. hale

1

This chapter explores the Harper government’s approach to the coordination and management of Canada-U.S. relations and the framing of political relationships between the two countries, outlining major areas of continuity and difference from its Liberal predecessors. It contends that the Harper government’s central emphasis has been to realign the tone and substance of a relationship distorted by the political theatrics and tactical evasions of the Martin government, while maintaining a substantive continuity in most major cross-border policy fields. During its first months of office, this alignment of style and substance has been reflected in five major issues and initiatives inherited from the Martin government – engagement in norad renewal, the Security and Prosperity Partnership, concerns over border security, Afghanistan and softwood lumber. The first two cases have resumed their historically low profile, while several high profile arrests under Canada’s Anti-Terrorism Act have both reflected and reinforced existing cooperation between the two countries’ major security agencies. The last two cases have been most politically controversial in Canada – triggering partisan accusations of excessive closeness between the Harper government and the Bush Administration. At the same time, the government has significantly improved the tone of bilateral relations, while focusing its priorities and taking a significantly different approach to conflict management. It has sought to lower the volume of public discourse, focusing on getting results rather than striking poses for domestic political consumption, and emphasizing shared rather than conflicting values.

64 Macro Choices and Challenges

c o n c e p t ua l i z i n g t h e c a n a d a - u s r e l at i o n s h i p Individual prime ministers play a significant role in shaping both Canadian foreign policies and Canada’s bilateral relationship with the United States. Prime ministers’ discretion may be exercised in their access to a variety of institutional tools, such as setting priorities, assigning responsibilities within cabinet and government, and by emphasizing (or de-emphasizing) particular issues. It can also be seen in the nature of their personal diplomacy, in the rhetorical tone they choose to adopt relating to foreign leaders and governments, and in determining when and how to intervene on particular policy questions – particularly when enjoying the support of a parliamentary majority.2 However, the Canada-U.S. relationship is far broader and deeper than the relationship between heads of state. Personalizing these relationships into the contacts among heads of state and government or between senior Canadian ministers and U.S. cabinet secretaries provides a superficial public gloss on the relationship for media and public consumption. At best, it provides a focal point for framing areas of cooperation or difference within the broader relationship, and for energizing bureaucratic processes within each government. Under both Chretien and Martin governments, it often reflected the tactical judgments of senior government image-makers in highlighting personal and policy differences with the Bush administration, thereby appealing to the broader streak of anti-Americanism in Canadian political culture for partisan advantage.3 These elements of the relationship may be likened to icing on a very large, multi-layered cake – packaging but also disguising its contours, offering greater or lesser visual appeal, and either blending or clashing with the cake’s contents. Just as Canada’s bilateral relationship with the United States has significant societal elements, its economic and institutional dimensions have created a complex web of interdependence that largely transcends the efforts of politicians, senior public servants, and major interest group leaders to manage it. Charles Doran has identified three major dimensions of this relationship. The “trade-commercial” dimension addresses economic and related regulatory issues. The “political-strategic” dimension involves broader issues of foreign policy priorities, defence and security collaboration, and multilateral engagement within international institutions. The “psychological-cultural” dimension is the most complex, including elite and popular attitudes and responses arising from historical dealings, similarities and differences in social and political attitudes and priorities, the fundamental asymmetries in size and power between Canada and the United States and in the respective importance of the bilateral relationship, and domestic political pressures and conflicts in each country.4 A fourth dimension to the relationship involves

65 Rebuilding Canada-U.S. Relations

the pervasive and decentralized network of administrative and institutional relationships among departments and agencies of each country’s federal government, and increasingly between provincial and state governments and among major clusters of interest groups as well.5 The progressive thickening of bureaucratic and institutional relationships both at the level of senior policy-makers and working-level officials may be influenced at the margins by political events. However, these relationships are usually driven by the need to manage common problems and challenges arising from national and sectoral interdependence. Rooted in overlapping operational responsibilities and professional outlooks, they usually take place well below the radar screens of journalists and politicians. Indeed, a central assumption of most public servants in each country is that the effectiveness of their bilateral relationships usually depends on avoiding the politicization of issues and resorting to political intervention only when needed to dislodge bureaucratic or administrative bottlenecks.6 It is unrealistic to expect such a relationship to be without frictions, any more than to expect an absence of competition and conflict over political influence and economic advantage among domestic and regional interests within each country. Balancing these competing interests and agendas often requires both governments – but particularly Canada, as the smaller country – to manage bilateral relations as part of a two-level game, combining the need to develop and maintain domestic political coalitions in support of a government’s priorities and policies with the development and maintenance of cross-border coalitions which may take different forms depending on the issues and priorities at stake. Political tensions may also arise from the very different preoccupations of each country’s foreign policies. U.S. foreign policies tend to focus on strategic issues of national security and the building of formal and informal alliances to project American power and contain strategic competitors and declared adversaries, particularly during periods of international tension. Trade policies in general, and trade relations with Canada in particular, are often treated as subsets of U.S. domestic policies – whatever the impact on Canadian sensibilities. Managing relations with the United States remains a consistent focus of Canadian foreign policy, as does the pursuit of an independent foreign policy. Some governments choose to do this by systematically distinguishing Canadian policies from Americans ones, hoping to limit or constrain the exercise of American power. Others do more selectively, in ways that complement their approach to Canada-US relations. In recent years, successive Liberal governments practiced this balancing act by working closely with the Bush administration on issues of border security while questioning its periodic forays into unilateralism and its decision to go to war in Iraq. However, tensions resulting from these decisions – and Canadian responses to them – largely derailed the Martin government’s initial

66 Macro Choices and Challenges

efforts to rebuild Canada’s political relationship with the United States. By the time of Martin’s electoral defeat in January 2006, friction between the two governments had reached a level not seen since the Diefenbaker – Kennedy conflicts of the early 1960s. These frictions have been reflected in the public opinion of both countries. Although American public opinion is typically somnolent and complacent about Canada, notwithstanding occasional scares about border security, U.S. polling data on public attitudes towards foreign countries notes a progressive decline in public attitudes towards Canada as a “friend” and ally of the United States after 2002. [See Table 1]. Similar attitudes are reflected in polls of Canadians attitudes towards the United States, particularly towards the Bush Administration. A Strategic Council poll taken early in 2006 indicated that Canadians surveyed took an increasingly distant view of the United States, 70% “fundamentally disagreeing” with its government. 7 For this reason, the change of government in January 2006 may have created opportunities to strengthen bilateral political relations. However, the deepening and thickening of institutional, bureaucratic and economic relationships from previous trade, security, defence, and other agreements – which was, if anything, reinforced by the Martin government8 – have created a framework for substantive policy continuity under the Harper government, whatever the political posturing of the previous two years of minority government.

t h e m a n y f a c e s o f pau l m a r t i n The Martin government entered office clearly intending to restore relationships with the United States bruised during the Chretien government’s later years. Martin’s initial policies sought to give a higher priority to bilateral relations while fostering public perceptions of distinctive, independent Canadian policies comparable to the historic balancing acts of most previous Canadian governments. Martin made a series of changes in institutional arrangements for managing Canada-U.S. relations upon taking office. He split the Department of Foreign Affairs and International Trade, ostensibly to distinguish between political and economic dimensions of Canada’s foreign policies – although the plan’s enabling legislation was defeated by the House of Commons in February 2005. The creation of Public Safety and Emergency Preparedness Canada (psepc) centralized political authority for most of Canada’s major security, law enforcement, and corrections agencies, as well as a new Canada Border Services Agency, paralleling several aspects of the U.S. Department of Homeland Security. A new Canada-US cabinet committee, supported by substantial resources within the Privy Council Office, was supposed to enhance political coordination of cross-border issues. The Liberals’ National Security Strategy of April 2004 offered a nuanced approach to security issues

67 Rebuilding Canada-U.S. Relations Table 4.1 U.S. Public Perceptions of Other Countries (selected)

Canada

Britain

Israel

2002

2003

2004

2005

2006

Close Ally

60

57

51

48

64

Friendly but not ally

27

27

29

37

27

Not friendly or enemy

6

10

10

12

8

Close Ally

64

74

70

74

74

Friendly but not ally

22

12

14

18

11

Not friendly or enemy

6

6

6

4

11

Close Ally

37

44

43

41

47

Friendly but not ally

28

25

26

31

28

Not friendly or enemy

22

19

20

19

20

* Figures may not add to 100 due to “not sure, refused” category. Source: Harris Interactive 2002–2006.

– acknowledging current threats of terrorism with other security issues while carefully balancing security interests with concerns for civil liberties and social cohesion within Canada. The Martin government also committed itself to expand Canada’s diplomatic representation in the U.S., along more systematic advocacy of Canadian interests in Washington and beyond the Beltway. To support this strategy and stress the priority placed on rebuilding bilateral relations, it appointed a new, high profile ambassador, former New Brunswick Premier Frank McKenna.9 However, a series of events, political missteps, and what appeared to be Martin’s own limited attention span largely undermined the effectiveness of this strategy, and led many observers in both countries to question his political judgment.10 Interviews with and public statements by federal policymakers suggest four major reasons for this deterioration in bilateral relations. The Martin Liberals’ precarious political position following the loss of their parliamentary majority in the June 2004 election made them less inclined to incur political risks in dealing with a Bush administration which remained unpopular in most parts of Canada.11 This process was reinforced by the prime minister’s own decision-making style and its impact on the operations of government. Public servants engaged in the process observed that Martin “didn’t have a focus – he had too many priorities – but he wouldn’t empower anybody else to do it.”12 Martin also sent “mixed signals” to the Americans by hinting at or extending increased cooperation in private discussions or on low profile issues while cultivating a public image of confronting the Bush administration on

68 Macro Choices and Challenges

other matters. Both factors came into play when Martin decided to reject Canadian participation in the U.S. ballistic missile defence (bmd) program in April 2005, after repeatedly signaling to the Americans (and indeed, to its own newly appointed Ambassador in Washington, Frank McKenna) that Canada would provide nominal support.13 Perhaps most critical were Liberal strategists’ tactical calculations that the government could make political gains most easily by cultivating nationalist opinion on the liberal-left by avoiding appearances of close cooperation with the Bush administration, and by increasing its rhetorical assertiveness on selected issues. As a result, American diplomats and policy-observers heavily discounted much of Martin’s rhetoric on substantive issues – for example, on the protracted softwood lumber dispute – as intended primarily for domestic consumption.14 However, the effects of the Internet have made it increasingly difficult for Canadian governments to pursue radically different communications strategies in domestic and U.S. markets without triggering push-back, either from nationalist elements in the U.S. media – such as cnn or Fox News – or from American public diplomacy in Canada. An example of these risks can be seen in Martin’s calculated decision to make Bush administration policies, particularly those relating climate change, partisan issues in the winter campaign of 2005–06. After Martin attacked Bush policies on global warming at a December 2005 conference in Montreal, US Ambassador David Wilkins made several public statements warning candidates not to fight the campaign on the basis of “anti-American” rhetoric and pointing out that greenhouse gas emissions in Canada had increased significantly faster since 2001 than those in the United States.15 Ironically, when left to function below the political radar, the Martin government initiated or extended measures that increased bilateral cooperation between the two governments on a broad range of security, defence, economic, and regulatory issues. These initiatives, developed and carried on by public servants as part of a relatively coherent bureaucratic strategy, could hardly have been more different than the Martin government’s public posturing towards the United States. The result has been a far greater degree of policy continuity during the early stages of the Harper government than might otherwise have been expected – but with significant shifts in tone and emphasis.

c a n a d a - u s r e l at i o n s u n d e r t h e h a r p e r g o v e r n m e n t : o r g a n i z at i o n a l chan g e , policy continuity The Harper government’s first year in office has signaled a mix of continuity and change in Canada’s foreign policy. Several initiatives first taken by the Martin (and Chretien) governments have been broadened and deepened.

69 Rebuilding Canada-U.S. Relations

This continuity is acknowledged by senior advisors to the current government interviewed for this chapter, one of whom comments that “at the working level, Canada-US relations were never as bad as they seemed at the political level with the last government.”16 Softwood lumber negotiations initiated by David Emerson under the Liberals led to the conclusion and implementation of a seven-year agreement on managed trade, despite sharp criticisms from some provinces and parts of the Canadian lumber industry. Working closely with U.S. domestic interest groups, Canada secured its core objective of a delay from Congress on its socalled “passport plan,” the Western Hemisphere Trade Initiative, along with potential measures to implement less-intrusive measures at the border. This relative continuity has been balanced by significant changes in the internal organization of the federal government’s management of Canada-US relations, the style and tone of bilateral relations, and the emergence of a new balance in Canada’s foreign and security policy of working with the United States in areas of shared interests and values, while increasing Canada’s capability to project its interests and values in a variety of multilateral forums. Organizational Changes, Setting Priorities As noted earlier, appointments, organizational approaches to the machinery of government, and decision-making styles are three major instruments prime ministers use to send policy signals, set priorities, and project power both inside and outside government.17 Stephen Harper has made astute and effective use of these tools of power – particularly in providing direction and a “new tone” for Canada-U.S. relations. Several of Harper’s appointments followed precedents set by Martin. When Ambassador McKenna signaled his intention to leave Washington, Harper replaced him another experienced, well-connected political and business leader – former Mulroney-era Finance and Trade Minister Michael Wilson. In a move that surprised many observers, Harper persuaded former Liberal Industry Minister David Emerson to join the government as minister of International Trade, with continued responsibilities for the trade-sensitive Pacific Gateway file and the softwood lumber dispute with the United States. The Harper government also moved promptly to reverse many of the organizational changes introduced by the Martin government to manage (and, some would argue, micromanage) various aspects of bilateral relations. Foreign Affairs and International Trade were formally reintegrated as one department.18 The Canada-US cabinet committee was rolled into a broader Foreign Affairs and National Security committee. Harper’s appointment as the new clerk of the Privy Council, Kevin Lynch, had previously served Martin as deputy minister of Finance before a stint at the imf. However, Lynch rapidly reversed most of Martin’s initiatives to

70 Macro Choices and Challenges

centralize power within the pco. Speaking to senior officials in April 2006, Lynch announced plans to revert to pco’s traditional role of providing “context, coherence, co-ordination and challenge.” “pco establishes the priorities of the government for departments and then should let departments do their jobs, based on those priorities and complemented by a rigorous challenge function. But central agencies should not micro-manage or comanage files.”19 A month later, Lynch announced the shift of seven major functions that had been carried out within the pco by the Martin government to other departments and central agencies, including. the Smart Borders Task Force (transferred to the Department of Public Safety) and the Regulatory Affairs Secretariat, responsible for regulatory cooperation under the spp (transferred to the Treasury Board Secretariat).20 However, on major domestic and foreign policy priorities, Harper appears to have maintained a firm hand on the wheel – imposing the same focused, prioritized approach to Canada-US relations as to other policy fields.21 At the Cancun Summit of March 2006, the three nafta leaders announced the appointment of the North American Competitiveness Council, a tri-national body of senior business leaders and organizations, to recommend a more focused set of priorities for the spp process initiated by Presidents Bush and Fox and Prime Minister Martin in early 2005. Ambassador Wilson made it clear to U.S. business groups early in his mandate that resolving the continuing softwood lumber dispute was his “top priority, bar none”22 – subsequently followed by securing Congressional approval for a delay in implementation of its proposed Western Hemisphere Trade Initiative (whti).23 Harper has also sent clear signals on the policies that he will use to distance his government from perceptions of being too close to the Americans and the Bush Administration – most notably, his early emphasis on maintaining Canadian sovereignty over its Arctic waters, his endorsement of the U.N. Convention on Cultural Diversity, and his decision not to reopen discussions with the Americans on Ballistic Missile Defence.24 However, the structural realities of interdependence in Canada-U.S. relations have resulted in a far higher degree of policy continuity than change during the transition from Martin to Harper governments. Policy Continuity – Border Security The fundamental asymmetry of size, power, and interdependence between Canada and the United States is a basic reality of bilateral relations for any Canadian government. Nowhere is this reality more visible than in the area of border security. As long as Canada depends on trade with the U.S. for almost one-third of its gdp – more than 10 times the comparable figure for U.S. trade with Canada relative to gdp – any government will view the avoidance of border disruptions as critical to Canada’s national interest.

71 Rebuilding Canada-U.S. Relations

This reality was demonstrated by the Chrétien government’s negotiation of the Smart Border Accord (sba) of December 2001, the later development of an integrated National Security Strategy as one of the Martin government’s first major initiatives, and in close working relations between cabinet ministers and secretaries responsible for security issues. Equally important, has been the strengthening of existing operational linkages among police, border management, immigration, and counter-terrorism organizations and their officials on both sides of the border. This pattern has continued under the Harper government. Cross-border cooperation between the rcmp and U.S. law enforcement agencies played a significant role in the arrests of 18 suspects alleged to have been plotting terrorist attacks in Canada in early June, 2006.25 When these events reinforced lingering public concerns on both sides of the border that the Canadian government might not be “doing enough to secure the border,”26 Canadian security officials met on several occasions with members of the U.S. Congress, as well as with counterparts in U.S. security agencies. Policy Continuity – The Security and Prosperity Partnership The centerpiece of the Martin government’s relationship with the Bush administration – one clearly demonstrating the former’s preference for cooperation with the Americans “below the political radar” – was the Security and Prosperity Partnership (spp). Unveiled in March 2005, it sought to identify a wide range of issues for bilateral and trilateral cooperation to link Canadian and Mexican agendas for removing economic and regulatory barriers to access to U.S. markets with a wide-range of U.S. economic and security-related concerns. A thick briefing book released in June 2005 noted almost three hundred initiatives to be pursued through a variety of sectoral and inter-departmental committees.27 The spp’s subject-matter and its low political profile were intended to avoid the necessity for direct Congressional involvement, given internal divisions over nafta, immigration and security issues within both major U.S. parties, and to facilitate the administrative preparation necessary before a more favourable political climate in each country would allow for more wide-ranging negotiations.28 The Harper government has continued to pursue the spp process – while seeking to clarify the focus of its multiple working groups. The spp’s inner logic has remained consistent from a Canadian perspective. As one senior government advisor comments, “it is sometimes useful to do things trilaterally because it doesn’t look like a U.S. show. … (Our) major challenge is how to set up a North American relationship that treats everyone equally, but acknowledges that there are differences between the two relationships”29 – particularly on politically-sensitive border issues.

72 Macro Choices and Challenges

The major distinction in the Harper government’s approach to the spp has been the Cancun summit decision to focus its activities on five major priorities: “North American competitiveness, energy security, regulatory cooperation, emergency management, and smart secure borders.”30 This approach contrasts the new government’s relatively focused agenda with the scattergun approach often taken by its predecessor. Perhaps Cancun’s most significant departure was the creation of a North American Competitiveness Council, composed of five business representatives from each of the three countries, as a way of identifying priorities for the removal of regulatory and other barriers to trilateral trade and investment among the three nafta countries.31 Unlike previous trade negotiations, the consultative process in each country is fairly narrowly based. Business groups and corporate leaders have begun to identify specific initiatives with the potential to secure some degree of trilateral consensus. However, it remains to be seen how much political capital national governments will invest in this process – particularly after the 2006 U.S. elections gave Democrats control of both houses of Congress. North American Defence, Afghanistan and International Cooperation Two other areas of general policy continuity have been North American defence and external security cooperation. The Chrétien government had signed an enhanced military cooperation agreement covering aspects of North American defence in December 2002. The intervening years saw major organizational changes in security and defence planning. The United States consolidated command of all its armed forces in North America in northcom – Northern Command – to coordinate all forms of North American defence. Canada later followed suit by creating Canada Command to oversee regional commands within Canada. Jockel and Sokolsky suggest that “Martin may have saved norad” as a result of his agreement to provide information in support of US bmd activity (again, “below the radar”) as part of its Integrated Tactical Warning and Attack Assessment function.32 However, the latter’s February 2005 decision not to participate in the U.S. bmd program, combined with the U.S. government decision to consolidate its command arrangements for northcom and norad, has left the latter’s future in doubt among some defence policy observers.33 The Martin government initiated discussions for norad renewal in 2005. Available information suggests that the agreement signed by the Harper government to extend the norad agreement “indefinitely” in May 2006 and to extend its jurisdiction to include “maritime warning” functions were largely inherited from its predecessor – although the agreement does provide for ongoing four-year joint policy reviews at the request of either government.

73 Rebuilding Canada-U.S. Relations

The Martin government announced plans for significant increases in defence spending in its 2005 budget, proposing the expansion of the Canadian forces to deal with growing commitments and the replacement of much of its antiquated equipment. The Harper government decided to accelerate and intensify these commitments in its 2006 budget – including the acquisition of both “strategic lift” aircraft to reduce the need to rent long-range aircraft from the Russians and others to deploy Canadian forces abroad, and “tactical” aircraft for deployments within Canada.34 Harper’s approach to defence policy reflects a mixture of domestic political calculations and medium-term foreign policy considerations. One of his first statements after his election in January 2006 was to assert his government’s intention to enforce Canada’s sovereignty over its Arctic waterways and islands by expanding Canada’s presence in the North – challenging the longstanding policy of the United States and several other maritime nations.35 Although the government has done relatively little in this area to date, apart from maintaining existing Arctic patrols, the prospective effects of northern resource development and global warming in expanding international shipping in Canada’s north are likely to call for expanded resources for both a maritime defence capacity and environmental regulation.36 However, the government’s commitment to increased defence spending and capacity also reflects its recognition of the need to strengthen its commitments within multilateral organizations such as nato to encourage a stronger U.S. commitment to work within multilateral organizations rather than succumbing to the temptations of unilateralism.37 Harper’s willingness to invest considerable political capital in extending Martin’s commitment to an expanded role in Afghanistan reflects both the political risks as well as the potential benefits of such an approach. His May 2006 decision to seek a Commons vote supporting the extension of Canada’s commitment of combat troops to Afghanistan through 2009 was alternately criticized for “politicizing” a potentially contentious issue – by forcing competing Liberal leadership contenders to place their positions on the record – and praised for securing formal political approval before military setbacks or rising Canadian casualties eroded public support for Canada’s commitment.38 Harper continues to frame issues of collective security in terms of Canada’s traditional commitment to multilateralism, suggesting a clear recognition of the limits of his political mandate consistently indicated by public opinion polls.39 This recognition is also visible in his carefully phrased refusals to reopen the debate over Canada’s participation in the U.S. bmd program, even after North Korea’s detonation of a nuclear device in October 2006. Responding to criticisms of the lack of a focused message capable of mobilizing public support, Harper made a concerted effort to reaffirm and clarify the government’s agenda in a series of major foreign policy speeches in September and October 2006.40 By making Afghanistan and, to a lesser

74 Macro Choices and Challenges

degree, Darfur, a litmus test for support not only of U.S. or nato policies, but of Liberal claims that the United Nations should support humanitarian interventions in wartorn countries, Harper appears to be challenging the empty pieties that so often characterized the foreign policy rhetoric of the Chretien-Martin years, while doing so – at least nominally – on the basis of Liberal principles.41 At the same time, Harper’s multilateralism appears more clearly tilted towards cooperation among liberal democratic states and less towards the accommodation of authoritarian states with aggressive foreign policies or systematic records of human rights violations than its predecessors. This approach can be seen in his government’s dealings with nato, La Francophonie, the Financial Action Task Force, the Community of Democracies and other organizations across numerous fronts: international security cooperation, regulatory actions to constrain nuclear proliferation and the financing of terrorist and criminal organizations, support for humanitarian measures, and other, less visible diplomatic initiatives. It is also visible in Harper’s less accommodating approach to chronic human rights violations by China – especially in its treatment of Canadians, including dual Chinese-Canadian citizens. However, apart from Afghanistan, the two biggest legacies of the ChrétienMartin era in Canada-U.S. relations that have challenged the political skills of the Harper government have been the resolution of the long-running dispute over softwood lumber and the ongoing engagement of Congressional proposals to tighten documentation requirements at the American border. Managing Policy Anomalies – Softwood Lumber The Harper government’s handling of the softwood lumber file demonstrates three major aspects of its approach to Canada-U.S. relations: substantive continuity with the policies of the Martin government, a sharp change in the tone and rhetoric in managing policy frictions, and a willingness to take significant political risks to facilitate the rebuilding of bilateral relations. By the fall of 2005, disputes over Canada’s softwood lumber trade with the United States had come to symbolize the dysfunctional character of political relations between the two countries. During the previous 20 years, Canadian exports had come to account for about one-third of the American lumber market between alternating cycles of “managed trade” and free trade punctuated by U.S. industry litigation against Canadian imports.42 The U.S. lumber industry sought renewed trade remedy protection after the Chretien government’s cancellation of the 1996 Softwood Lumber Agreement. The Martin government continued Ottawa’s support of litigation on several fronts – including the successful wto challenge of seven countries to the Byrd Amendment and subsequent retaliatory action.43 In response to legal challenges, the Commerce Department side-stepped a series of nafta

75 Rebuilding Canada-U.S. Relations

panel rulings – reflecting an entrenched culture of litigation aimed at extracting trade concessions from foreign countries and a wto ruling favourable to the U.S. which found that provincial stumpage policies constituted a countervailable subsidy.44 Martin became increasingly outspoken in his criticism of American protectionism and the Bush administration’s failure to respond to nafta panel rulings during 2005. However, at the same time, Canadian trade officials were quietly exploring a negotiated solution with their counterparts in Washington. And Ottawa was quietly conducting discussions with provincial governments on regulatory changes that would both satisfy U.S. negotiators and avoid future legal challenges under U.S. trade remedy laws. Canadian Ambassador Frank McKenna “confirmed the two sides were within striking distance of a deal” when the government was defeated and a general election called in November 2005.45 Harper’s assignment of the softwood file to his newly recruited Trade Minister, David Emerson, both ensured a measure of policy continuity and imparted a sense of urgency to the talks, as the embattled Emerson’s political career was clearly on the line. Ambassador Wilson – along with others interviewed for this chapter – expressed concerns that the softwood issue was coming not only to dominate the public face of bilateral relations but to distort domestic attitudes in both Canada and the United States towards nafta. Indeed, the U.S. lumber industry’s challenge to the constitutionality of nafta’s system of dispute resolution panels, while opposed by both the Bush administration and the Canadian government, threatened to explode much of nafta legal framework resolving trade disputes.46 Some participants suggested that even if legal action could, at some point, bring “Softwood iv” to a successful conclusion, the U.S. industry could be expected to launch yet another set of trade remedy actions. For the provinces and a large portion of the Canadian lumber industry, the dispute was becoming a matter of diminishing returns. For Harper himself, coming to an agreement meant “tak(ing) the subject off the table, in the sense that the American president and the Canadian prime minister can now talk about other subjects. In recent years, every time they met the conversation was dominated by softwood lumber to the detriment of reaching any other discussion.”47 Consulting closely with the three largest lumber-exporting provinces, British Columbia, Ontario, and Quebec, the government announced the principles for a “Framework Agreement” in late April 2006. The Agreement gave provinces a choice between an export tax regime (with duty-free trade when U.S. benchmark prices exceeded $ 355 per thousand cubic feet) and a mixture of lower export tax rates and regional quotas to accommodate the different economic conditions facing regional industries. (See Table 2.) Ottawa would expedite reimbursement of more than 80 percent of the $US 5.3 billion in duties previously collected to companies that signed on to the agreement, in return for terminating

76 Macro Choices and Challenges

existing legal actions against the U.S. government. The balance – about $US 1 billion – would be split between a mix of “community initiatives” and a controversial $ 500 million “signing bonus” to the U.S. lumber industry. In return, the agreement offered seven years of relative market stability, free from the threat of new trade litigation.48 The “final” agreement (sla) announced on July 1, 2006, just before Harper’s first visit to Washington, spelled out the complex process for defining and implementing the export tax regime, recognition of bc’s new forest management regime, an arms’ length provision for binding arbitration through the London Court of International Arbitration, a process for negotiating “policy exits” to limit future trade harassment, and a 23-month termination clause.49 The last provision, among other things, prompted threats of a full-scale retreat by the three largest provinces and much of the Canadian lumber industry. In late August, following hard-nosed backroom negotiations and sharp drops in U.S. housing starts and lumber prices (see Table 3), the provinces and most lumber firms reluctantly gave consent to the agreement after the Washington agreed to a series of largely cosmetic changes.50 The substance of the sla signed by the Harper government followed the broad outlines of the deal almost reached by the Martin government in November 2005. At best, the agreement reflected the former’s decision to cauterize an open wound in Canada-US relations rather than continuing to pour dozens of millions of dollars annually into seemingly endless litigation.51 At worst, it represented a victory for power politics and managed trade over Canada’s efforts o protect nafta’s rules-based system for resolving trade disputes. As a matter of strategic politics, it represented a clear, if politically risky decision to terminate a previously intractable dispute representing less than three percent of Canada-US trade to allow the government to focus on its broader priorities in bilateral relations.

c a n a d a - u s r e l at i o n s u n d e r t h e h a r pe r g ov e r n m e n t: “new government … new tone” The most significant difference between the approaches taken by the Harper and Martin governments has been one of tone rather than substance. In the two-level game of Canada-U.S. relations, the Harper government has tended to use the language of shared interests and shared principles when addressing American audiences, even when dealing with disputes between the two countries.52 With Canadian audiences, it is more likely to emphasize the necessity to “build the relationships and the capabilities” necessary to “preserve our sovereignty … protect our interests, and … project our values.”53 The new style in Canada-U.S. relations has been characterized by U.S. Ambassador David Wilkins as a greater focus on “fixing problems than fixing

77 Rebuilding Canada-U.S. Relations Table 4.2 The 2006 Softwood Lumber Agreement’s Export Tax Options

Price per thousand board feet

Option A – Export Charge (%)

Option B – Export Charge plus Volume Restraint**

Over US$355

0

0

US$336–355

5

2.5% + regional share of 34% of U.S. Consumption

US$316–335

10

3% + regional share of 32% of U.S. Consumption

US$315 or under

15

5% + regional share of 30% of U.S. Consumption

Source: Foreign Affairs and International Trade Canada (2006).

Table 4.3 Softwood Lumber Prices* Before and After the 2006 Softwood Lumber Agreement (US $) 2003

2004

2005

2006

Jan.-Feb.

286

324

401

381

Mar.-Apr.

280

407

445

368

May-June

289

441

396

340

July-Aug

317

449

370

303

Sept.-Oct.

350

409

381

285

Nov-Dec.

332

366

362

n/a

Yearly Average

311

404

387

n/a

* Framing Lumber Composite Prices Sources: Random Lengths; North American Home Builders (2006); author’s calculations.

blame”54 – and by Canadian Ambassador Michael Wilson as knowing “how to disagree without being disagreeable.”55 It stands in sharp contrast to that of the Martin government, which tended to highlight differences between the two countries to exploit public distrust of U.S. policies under the Bush Administration, while often engaging in patronizing displays of moral superiority that tended to grate on American sensibilities. However, Harper clearly signaled his expectation that the “partnership” should be a two-way street when visiting Bush in Washington in July 2006 – suggesting that “if the fight for security ends up meaning that the United States becomes more closed to its friends, then the terrorists have won. And I don’t think either of us want that.”56 Harper’s repeated references to Canada as an emerging “energy superpower” and the world’s “fifth largest energy producer” are also calculated to

78 Macro Choices and Challenges

position Canada’s interests in the United States by subtly appealing to American concerns over energy security and dependence on energy imports from politically unstable parts of the world.57 This emphasis speaks to another major difference between the Harper government’s approach to bilateral relations and that of its predecessor: its deliberate decision to engage the United States across a wide range of issues that speaks to the global range of both American and Canadian interests – addressing both the “political-strategic” and “psychological cultural” dimensions of the bilateral relationship – not just the “trade commercial” ones. This approach recalls an earlier era of Canadian diplomacy in which Canada effectively engaged U.S. interests and priorities across a broad range of issues both in Washington and in multilateral forums. The Harper government has also paid much closer attention to the niceties of personal and diplomatic relationships with President Bush and senior administration officials, avoiding undiplomatic leaks and attempting to maintain a professional, if cordial approach. However, not all of his cabinet ministers succeeded in maintaining similar message discipline – particularly Foreign Affairs Minister Peter MacKay, whose appearances with U.S. Secretary of State Condoleezza Rice have prompted extensive media comment.58 The “new tone” has contributed to a somewhat more receptive environment for Canadian diplomatic advocacy activities in dealing with Congress and the Washington media – if not always a responsive one. (See Table 1.) This shift is reflected in the Congressional decision to authorize deferred implementation of requirements for secure identification on American borders – the Western Hemisphere Travel Initiative (whti). New Tone, Old Game – Western Hemisphere Travel Initiative In the “two-level game” of cross-border politics and policy-making, the U.S. Congress plays an independent role comparable to that of Canadian provinces – greatly complicating and often blurring the “rules” of the game. Since 9/11, Americans domestic political perceptions of cross-border issues have been heavily filtered through the twin prisms of enhancing homeland security and related issues of domestic political competition. This competition takes place not only between Republicans and Democrats, but among competing factions of each party which use security issues as vehicles to pursue partisan, regional and sectoral advantage. This structural reality of U.S. domestic politics has shaped Canadian responses to Congressional efforts to tighten requirements for secure travel documents for American and foreign citizens under the Chretien, Martin and Harper governments. The whti, which passed in December 2004 as part of a much larger legislative package,59 had its most recent origins in the report of the bipartisan 9/11 Commission, which recommended that the U.S.

79 Rebuilding Canada-U.S. Relations

establish a comprehensive monitoring and record-keeping system for all persons entering and leaving the country.60 The bill removed the previous exemption for citizens of the United States, Canada, Mexico, and Bermuda to show a passport or other “secure” documentation when entering the United States. A previous measure, Section 110 of the Illegal Immigration Reform and Immigration Responsibility Act, which applied only to foreigners, had passed Congress in 1996 – only to be repealed in 2000 after heavy lobbying by Canada and U.S. border state interests. Based on the lessons of that campaign, the Martin government and the Canadian Embassy pursued a multi-track approach towards the whti, involving technical cooperation among border security officials in each country, formal diplomatic responses to U.S. rulemaking processes, extensive lobbying on Capitol Hill, and networking with U.S. business interests. These initiatives were unsuccessful for several reasons. Both the Executive Branch and Congress viewed whti as a primarily domestic issue due to its application to American citizens, not just foreigners. dhs officials, in particular, expressed resentment at Canadian efforts to influence U.S. domestic security policies – particularly given growing concerns among security officials, Congress and the media over the potential for homegrown Islamist terrorist activities and previously relaxed immigration screening procedures in both countries.61 The issue was also caught up in internal feuding at two levels: between congressional Republican and the Bush administration over illegal immigration from Mexico and Latin America, and between dhs and the State Department over administrative control of whti. As a result, U.S. policy-makers largely discounted the Martin government’s increasingly vocal criticism of whti. The Harper government’s initial response was to lower the volume of the conversation, acknowledging the Americans’ right to regulate their own borders and citizens, but quietly suggesting that they “take the time to get it right” – rather than proposing specific alternatives or focusing primarily on the proposal’s economic effects as suggested by some participants in the process.62 Ambassador Wilson repeatedly noted that the Americans did “not (have) much time to finalize and publish the implementing rule, conduct meaningful economic impact assessments, identify and develop appropriate technology; actually produce the millions upon millions of required documents; install readers and related infrastructure at border crossings, and convince people to buy the new documents.”63 Without considering such practical matters, the whti was likely to provide the illusion, rather than the reality, of increased security, while imposing significant inconveniences and costs on Americans themselves. The Canadian Embassy in Washington quietly supported a coalition of domestic U.S. interests in its lobby of Congress.64 The government’s approach – largely one of tactical maneuver rather than confrontation – also sought to take advantage of the growing gap on border

80 Macro Choices and Challenges

issues between House and Senate Republican leaders. Border state interests succeeded in persuading two senior Senators to attach several amendments to a bill financing dhs operations, requiring that department to meet several conditions before authorizing full implementation of whti.65 These techniques could delay its implementation at land border crossings until June 2009 – although administration sources have repeatedly signaled their intension of moving ahead with whti implementation. The White House, largely stayed clear of the debate, signaling its willingness to apply whatever compromise Congressional leaders could work out to accommodate Canadian concerns.66 The whti issue demonstrates both the potential capacity of Canadian governments to influence U.S. policies affecting Canada and the extent to which their effectiveness depends on the support of U.S. domestic interests, particularly on policies subject to extensive Congressional influence and control. The improved tone of bilateral relations under the Harper government may have influenced the whti process – although it does not guarantee that this delay will result in more efficient, less costly or intrusive measures along the border.

c o n c lu s i o n s The first year of the Harper government has provided opportunities for diffusing cross-border tensions and rebuilding of Canada-U.S. relations damaged by political inattention and over-confidence on both sides of the border. The Bush administration, weakened by a series of domestic and foreign policy reverses, is more open to multilateral approaches to managing foreign policy and security problems and to accommodating Canadian concerns on bilateral issues. Both factors are important to any Canadian government seeking domestic political support for its cross-border policies – but particularly one with only minority support in Parliament. The Harper government has demonstrated a willingness to take political risks by seeking accommodation with the Americans over softwood lumber, and by its medium-term commitment to the costs and casualties of propping up an Afghan government with limited domestic support against the return of a rather more unsavory alternative in the Taliban. However, the Harper government’s ability to build on its first year in office will depend on five key variables whose outcomes could well shift the conditions for bilateral relations before this book reaches its intended readers. First, domestic political dynamics will be critical in determining the extent to which the politicization of Canada-US relations defines the rest of this parliament and Harper’s eventual pursuit of re-election. The Dion-led Liberal Party will definitely affect the domestic political climate for bilateral relations, depending on the relative distance between the new Liberal

81 Rebuilding Canada-U.S. Relations

leader’s perspective of Canada’s interests and role in the world and that of the Harper government. Secondly, the ongoing level of conflict – and Canadian casualties – in Afghanistan, and the nato alliance’s capacity to project a sufficient impression of unity and progress will influence public support for Canada’s continuing commitment. A third key factor will be the persistence of the current minority parliament, and the outcome of any subsequent election. A fourth major variable – one totally beyond the government’s control – will be the extent to which U.S. housing markets and lumber prices recover in 2007 to provide an economic cushion for the Canadian lumber industry’s adjustment to the new Softwood Lumber Agreement. Finally, the 2006 U.S. elections, which resulted in Democratic majorities in both houses of Congress – may contribute to increased Congressional protectionism, reinforcing the need for both Conservatives and Liberals to seek cross-border alliances on a series of issues to avoid being side-swiped by the vagaries of U.S. domestic politics.

notes 1 The author gratefully acknowledges the support of the Canada-U.S. Fulbright Program, the University of Lethbridge and Duke University in funding the research on which this article is based, along with the feedback of the editor, numerous officials of the Department of Foreign Affairs and U.S. State Department in Ottawa and Washington, and other members of the “Canadian policy community” in the United States who consented to be interviewed as part of the author’s ongoing research into the management of cross-border relations. 2 Paul Gecelovsky, “Of Legacies and Lightning Bolts: The Prime Minister in Canadian Foreign Policy,” in Duane Bratt and Chris Kukucha, eds., Readings in Canadian Foreign Policy (Toronto: Oxford University Press, 2006), 196-205. 3 For example, see Reginald Stuart, “Canadian Anti-Americanism: Before and After 9/11.” Paper presented to Woodrow Wilson Centre, Washington, dc, 22 May, 2003; Dan Dunsky, “Canada’s Three Solitudes,” The National Interest 82 [Winter], 2005, 94-99; Don Butler, “The Politics of Bush-bashing,” The Ottawa Citizen, 17 December, 2005, 3; Robert Fulford, “Canada’s emotional necessity,” National Post, 17 December, 2005, A21; The Washington Post, “A Defeat for Anti-Americanism,” editorial, 26 January, 2006. 4 Charles F. Doran, Forgotten Partnership: U.S.-Canada Relations Today (Baltimore: Johns Hopkins University Press, 1984). 5 For example, see Dieudonné Mouafo,, “Building Cross-Border Links: A Compendium of Canada-U.S. Government Collaboration” (Ottawa: Canada School of Public Service, 2004), online at www.myschool-monecole.gc.ca/Research/publications/pdfs/ p128_e.pdf; John Higginbotham and Jeff Heynan, “Managing Through Networks: The State of Canada-U.S. Relations,” in David Carment, Fen Osler Hampson, and

82 Macro Choices and Challenges

6

7

8

9

10

11

12

13 14

15 16

17 18

19

Norman Hillmer, eds, Canada Among Nations 2004: Setting Priorities Straight (Montreal: McGill-Queen’s University Press, 2005), 123-40. Jeff Heynen and John Higginbotham, Advancing Canadian Interests in the United States: A Practical Guide for Canadian Public Officials, Action-Research Roundtable (Ottawa: Canada School of Public Service, 2004). “How do you see Canada’s relationship with the United States?” “Best friends”/”Like family” 17%; “Friends but not especially close” 46%; “Cordial but distant” 30%; “Openly hostile and unfriendly” 3%. Brian Laghi ,“Canadians turning more sour on U.S., poll finds,” The Globe and Mail, 29 March, 2006, A1. Geoffrey Hale, “Cross-Border Relations: Moving Beyond the Politics of Uncertainty?,” in G. Bruce Doern, ed., How Ottawa Spends: 2005–2006 (McGill-Queen’s University Press, 2005)121-42; Geoffrey E. Hale, “Security, Insecurity and the Politics of ‘Intermesticity’,” Canadian Foreign Policy 12:3 (2006), 31-43. See Hale, “Cross-Border Relations”; Reg Whitaker, “Made in Canada: The New Public Safety Paradigm,” in G. Bruce Doern, ed., How Ottawa Spends: 2005–2006 – Managing the Minority (Montreal-Kingston: McGill-Queen’s University Press, 2005), 77-95. Derek Burney, “Canada-U.S. Relations: Promise Pending,” in D.J. Bercuson and D. Stairs, eds, In the Canadian Interest? Assessing Canada’s International Policy Statement (Calgary: Canadian Defence and Foreign Affairs Institute, October, 2005), 13; and Allan Gotlieb, “Martin’s bush-league diplomacy,” The Globe and Mail, 26 January, 2006, A20. Anne McLellan, Comments in Roundtable: “New Leadership in U.S.-Canada Relations” (Washington, dc: Center for Strategic and International Relations, 27 June, 2006); confidential interviews, Foreign Affairs Canada. Confidential interview, Government of Canada. These comments are echoed by numerous federal civil servants interviewed as part of the author’s ongoing research into Canada-U.S. relations. Confidential interviews, Government of Canada. Shawn McCarthy, “pm links softwood dispute to energy,” The Globe and Mail, 7 October, 2005, A1; Jane Taber, “Lumber a domestic issue, expert says,” The Globe and Mail, 24 October, 2005, A10; Sheldon Alberts, “McKenna blasts his own party’s anti-U.S. rhetoric,” The Ottawa Citizen, 2 March, 2006, A1; Interviews, Department of State. Paul Wells, “He’s unbelievable!,” Macleans, 14 December, 2005; G.Butler, The Washington Post (2006), 28 January, 2006, A20. Confidential interview, Prime Minister’s Office. The distinction between political and “working level” relationships between Canadian and U.S. governments is frequently observed in interviews with Canadian government officials. Gecelovsky, “Of Legacies and Lightening Bolts.” Canada, Privy Council Office, “Cabinet Committee Mandates and Membership” (Ottawa: 6 February, 2006); online at: www.pm.gc.ca/grfx/docs/Cab_committeecomite.pdf Emphasis added. Kevin Lynch, “Remarks to the 2006 adm Forum” (Ottawa: Privy Council Office, 11 April, 2006), 3.

83 Rebuilding Canada-U.S. Relations 20 Kevin Lynch, “Reorganization of pco” (Ottawa: Privy Council, 16 May); Prime Minister’s Office (2006), “Prime Minister announces changes in the senior ranks of the Public Service” (Ottawa: 13 April, 2006). 21 Lynch, “Remarks to the 2006 adm Forum”; confidential interviews, Prime Minister’s Office, Foreign Affairs Canada. 22 Hon. Michael Wilson, “Notes for address to U.S. Chamber of Commerce” (Washington, dc: Canadian Embassy, 5 April, 2006, 14. 23 Wilson, “Notes for Address”; Hon. Michael Wilson, “Notes for Briefing … to the House International Relations Committee, Subcommittee on the Western Hemisphere,” Washington, dc (Ottawa: Foreign Affairs Canada, 25 May, 2006). 24 Doug Struck, “Harper Tells U.S. to Drop Arctic Claim,” The Washington Post, 27 January, 2006, A19; Rheal Seguin, “Harper’s rebuke catches U.S. envoy off guard,” The Globe and Mail, 28 January, 2006, A8; Rt. Hon. Stephen Harper, “Reviving Canadian leadership in the world,” speech to awards dinner of Woodrow Wilson International Center for Scholars, Calgary, ab, 5 October 2006. 25 Doug Struck, “Harper Tells U.S.,” “Canada Holds 17 In Alleged Bomb Plot,” The Washington Post, 2006, A01; Stewart Bell, “Probe had global dimension,” National Post, 5 June, 2006, A4. 26 A recent study notes that only 59 percent of Canadians and 55 percent of Americans questioned in September 2006 agreed that the “Canadian government has done enough to secure the border,” compared with 49 percent and 47 percent in 2005. Ipsos-Reid, “A Public Opinion Survey of Canadians and Americans,” prepared for Canada Institute of Woodrow Wilson Centre and Canada Institute on North American Issues (Toronto: October, 2006). 27 Canada, The Security and Prosperity Partnership of North America: Report to Leaders (Ottawa: Privy Council Office, June, 2005). 28 Confidential Interviews, Privy Council Office; Foreign Affairs Canada; U.S. Department of State, U.S. Department of Commerce. 29 Confidential Interview, government of Canada. 30 Canada, “Leaders’ final statement” (Ottawa: Prime Minister’s Office, 31 March, 2006); Harper, “Reviving Canadian Leadership.” 31 Steven Chase, “Move over politicians – it’s the ceos turn to talk,” The Globe and Mail, 22 March, 2006, B1. 32 Joseph T. Jockel and Joel J. Sokolsky, “Renewing norad – Now if not Forever,” Policy Options [July-August, 2006, 53-58. 33 Dwight N. Mason, “Time to Expand norad,” in Marcia R. Seitz-Ehler, ed., Security and Sovereignty: Renewing norad – One Nation, Two Voices (Washington, dc: Woodrow Wilson International Center for Scholars, March, 2005). 34 James Travers, “Harper settles feud over military hardware,” The Toronto Star, 25 April, 2006. 35 Bill Curry, “Who is right on Arctic sovereignty?,” The Globe and Mail, April 5, 2006, A4; Seguin (2006); Luiza Ch. Savage, “Whose Arctic is it?”, Maclean’s, 21 February, 2006.

84 Macro Choices and Challenges 36 Katherine Harding, “A show of sovereignty on top of the world,” The Globe and Mail, 18 April, 2006. 37 Sheldon Alberts, “Harper’s gift to Bush: military spending,” National Post, 6 July, 2006, A4; The Washington Times, “Bolstering Canada’s military,” Editorial, 7 July, 2006. 38 Jeffrey Simpson, “Trying to make love and war in Afghanistan,” The Globe and Mail, 7 March, 2006; David Frum, “Ignatieff finesses Afghanistan,” National Post, 23 May, 2006; Richard Gwyn, “You can’t build a nation from nothing in five years,” Embassy, 24 May,2006, 7; Bill Curry, “Layton suggests talks with Taliban,” The Globe and Mail, 1 September, 2006, A1; Chantal Hebert, “Harper has botched Afghanistan: Hébert,” The Toronto Star, 6 September, 2006, 5. 39 Ipsos-Reid (2006), assorted polls, March-September 2006. 40 Ipsos-Reid, “Canadians Assess the Performance of the Minority Conservative Government under Prime Minister Stephen Harper” (Toronto, 2 September, 2006); Lee Berthiaume, “Canada, Post 9/11,” Embassy, 6 September, 1, 2006, 14. 41 Rt. Hon. Stephen Harper, Speech to the Economic Club of New York (Ottawa: Prime Minister’s Office, 20 September, 2006); Rt. Hon. Stephen Harper, “Address to the 61st Opening Session of the United Nations” (Ottawa: Prime Minister’s Office, 21 September, 2006); Rt. Hon. Stephen Harper, “Prime Minister addresses La Francophonie summit” (Ottawa: 28 September, 2006); Andrew Cohen, While Canada Slept (Toronto: McClelland and Stewart, 2003). 42 Janaki R.R. Alavalapati and Shiv Mehrotra, “Political Economy of the Canada-U.S. Softwood Lumber Trade Dispute,” in Andrew Schmitz et al, eds., International Agricultural Trade Disputes: Case Studies in North America (Calgary: University of Calgary Press, 2005), 139-47; Michael Hart and Bill Dymond, “The Cul-de-Sac of Softwood Lumber,” Policy Options 26:9 (November, 2005), 19-27. 43 Jeanne J. Grimmett and Vivian C. Jones, “The Continued Dumping and Subsidy Offset Act (“Byrd Amendment”, crs Report for Congress rl 33045 (Washington, dc: Congressional Research Service, Library of Congress, 22 August, 2005). 44 The wto ruling was subsequently overturned on appeal, but not until August 2006 – several months after the signing of a Framework Agreement on Softwood Lumber. Warren Giles, “U.S.tariffs violated trade deal, wto says,” Financial Post, 16 August, 2006, fp4. For a discussion of the broader domestic environment for U.S. trade policies, see I.M. Destler, American Trade Politics, 4th ed. (Washington, D.C.: Institute for International Economics, 2005). 45 Confidential interviews, government of Canada, government of Alberta; Alberts (2006); Martin’s former chief of staff later wrote that “as for job No. 1, softwood lumber, the broad outlines of a deal are already on the table and only hard details are left,” quoted in Tim Murphy, “Canada calling: When it comes to U.S. relations, the Harper government should keep blandishments to a minimum and its priorities straight,” The Globe and Mail, 15 March, 2006, A17. 46 Wilson “Notes For Address,” 14; confidential interviews, Government of Canada. Emerson himself had raised this concern while still a member of the Liberal cabinet.

85 Rebuilding Canada-U.S. Relations 47 Angelo Persichilli, “With softwood past them, Harper and Bush will talk trade and security,” Embassy, 106, 14 June, 1, 2006. 48 Canada (2006), Framework Agreement on Softwood Lumber (Ottawa: Foreign Affairs and International Trade Canada, April, 2006). Option “A” is being applied in the bc interior; option “B” in most other regions of Canada. 49 Softwood Lumber Agreement between the Government of Canada and the Government of the United States of America (Ottawa, Washington: 1 July, 2006). 50 Stephen Atkinson, “The Softwood Lumber Agreement” (Montreal, bmo Capital Markets, 11 July, 2006); Steven Chase and Peter Kennedy, “Timber truce ultimatum draws fire,” The Globe and Mail, 4 August, 2006, B1; Bertrand Marotte, “Forest industry layoffs top 6,000,” The Globe and Mail, 16 August, 2006, A1; Peter Kennedy and Susan Schwab, “Letter to the Honorable David L. Emerson” (Washington, dc: Executive Office of the President, The United States Trade Representative, 12 September, 2006.) 51 Press reports estimate the total cost of legal bills for Canadian participants in the softwood lumber dispute at more than $300 million between 2002 and 2006, including $40.8 million for the federal government. “Softwood lumber dispute paid lawyers well, papers say,” The Globe and Mail, 30 October 2006, A7. 52 For example, see: Hon. Michael Wilson, “Canada and the United States: Common Values, Uncommon Partnership,” speaking notes for an address to the Canadian Association of New York (Ottawa, Foreign Affairs Canada, 15 May, 2006). 53 For example, Harper “Speech to the Economic Club,” 7. 54 Ian Bailey, “Ambassador praises Tories for ‘new era of co-operation,’” National Post, 21 September, 2006, A4. 55 Alan Freeman, “U.S. envoy Wilson predicts a ‘change in tone,’” The Globe and Mail, 14 March, 2006, A1; see also Beth Gorham (2006a), “Tories can disagree with U.S., still be friendly: Kenney,” Canadian Press, 27 January. 56 Beth Gorham, “Bush flexible on passports plans,” Canadian Press, 7 July, 2006; James Travers, “pm’s new agenda relies on Bush’s help,” The Toronto Star, 7 July, 2006, 3. 57 Rt. Hon. Stephen Harper, “Address by the Prime Minister at the Canada-uk Chamber of Commerce,” London, England (Ottawa: Prime Minister’s Office, 14 July, 2006). 58 Alan Freeman, “MacKay effusive after first lunch with Rice,” The Globe and Mail, 14 April, 2006, A1; Shawna Richer, “Rice warms to ‘cool, Atlantic breezes,’” The Globe and Mail, 13 September, 2006, A1. 59 Intelligence Reform and Terrorism Prevention Act of 2004 (Pub.Law. 108-458, 118 Stat.3638, 17 Dec. 2004), Section 7209. 60 National Commission on Terrorist Attacks on the United States, The 9/11 Commission Report (Washington, dc: 22 July, 2004), 388. 61 Confidential Interviews, U.S. Departments of State, Homeland Security. (dhs-1); Paul Koring, “Citing ‘liberal’ immigration laws, U.S. blasts Canada on terrorism,” The Globe and Mail, 5 April, 2006, A1; see also: Joshua Kurlantzick, “Canada’s Terrorism Problem,” The New Republic, 7 June, 2006, 22-33.; Arnold Beichman, “Is Canada Next?,” The Weekly Standard 11:37, 12 June, 2006; Ambassador David H. Wilkins,

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62 63 64 65 66

“Remarks to Newsmaker Breakfast, National Press Club, Ottawa” (Ottawa: U.S. Embassy, 1 November, 2006). Confidential interviews, government of Canada. Wilson, “Notes for Address,” 12. Interviews, Government of Canada, U.S. interest groups. Chris Strohm, “Homeland Security: Conferees Approve Homeland Security Appropriations Bill,” Congressional Quarterly, 26 September, 2006. Gorham, “Bush Flexible on Passport Plans.”

5 The Federal Accountability Act: How Ottawa Steps Backward in Monitoring Political Ethics and Integrity l o r i tu r n bu l l

The federal government is taking steps to get out of the ethics business. The Federal Accountability Act will mark the end of the federal government’s role in monitoring ethics and integrity for cabinet ministers and their appointees. The new Conflict of Interest Act, contained in the first part of the Federal Accountability Act, amounts to an elaborate set of conflict of interest and disclosure rules for public office holders. Ethics and integrity are about principles, not rules, but the principles that guided the Conflict of Interest and PostEmployment Code for Public Office Holders have been omitted from the new legislation that is to replace the code. This is a devastating blow to the political ethics regime in Canada and is only one of the major weaknesses in the Conflict of Interest Act. This chapter highlights the three aspects of the Act that are the most troubling. Two of these factors will contribute significantly to the decline of regulatory ethical standards for cabinet ministers and their appointees, while the third will undermine both the effectiveness and the sanctity of the ethics regimes that govern public office holders, Members of Parliament, and Senators. First, the Conflict of Interest Act does not even mention ethical principles, such as honesty, integrity, and trust. Second, the Act does not prohibit apparent or potential conflicts of interest, even though these can be as damaging to the public trust as “real” conflicts of interest. Third, the new Conflict of Interest and Ethics Commissioner will be responsible for administering both the Conflict of Interest Act for public office holders and the ethics codes in place for parliamentarians. The office is likely to be overwhelmed by the onerous administrative responsibilities under the Conflict of Interest Act, which will make it difficult to develop the trust relationships with public

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office holders and parliamentarians that are necessary to the ethics regimes’ successful operation. Before turning to these three points, it is prudent to consider research that suggests that written ethics regulations, whether statutory or not, have not proven effective at meeting their goals. These findings are relevant to any analysis of ethics regulation, but seem to escape policymakers’ attention when ethics rules are being drafted.

are written ethics codes effective? Stephen Harper’s Conservative government introduced Bill C-2, the Federal Accountability Act, in April of 2006, only ten weeks following victory at the polls in late January. The government describes the document as a collection of measures designed to improve accountability, transparency, and oversight in government, with the overall objective of “rebuilding the confidence and trust of Canadians.”1 This is the ultimate goal of any ethics regime – to maintain and enhance the public’s confidence in the integrity of political actors and institutions. In the aftermath of the “sponsorship scandal” that plagued the previous Liberal government and contributed to its electoral defeat, the new ethics package came as no surprise. In Canada and elsewhere, governments have drafted ethics rules in response to political scandals, or more specifically, in response to the public’s reaction to them, in their attempt to rebuild the public’s trust once it has been broken. Political leaders use new ethics rules, or “tighten up” old ones, in the hopes of persuading the voters that they have a genuine commitment to ethical politics and governance and that the ethical breaches that occurred under previous governments will no longer be tolerated. Prime Minister Lester Pearson wrote Canada’s first political ethics code in 1964. In a brief letter to cabinet ministers, Pearson forbade bribery and conflicts of interest, making reference to the growing public concern about corruption in government.2 More recently, former Prime Minister Paul Martin created the Conflict of Interest Code for Members of the House of Commons in response to the public’s anger over the misuse of funds under the now-defunct federal Sponsorship Program.3 While political leaders’ intentions in this regard are understandable, there is no proof so far that written ethics rules have had a positive effect on levels of public trust in the integrity of government.4 To give context to this point, consider the example of the Conflict of Interest Code for Canadian mps. The code’s main features are conflict-of-interest prohibitions and disclosure requirements. Its first section, entitled “Purposes,” spells out the following objective: “to maintain and enhance public confidence and trust in the integrity of Members as well as the respect and confidence that society places in the House of Commons as an institution.”5 Despite these aspirations, public opinion polls and survey data have indicated that levels of

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public trust have remained low, even after the code was enacted in 2004. It is not surprising that ethics codes have not reversed this trend as it appears likely that the majority of Canadians are unaware of the existence and the content of the ethics rules for elected officials.6 As long as ethics rules escape the public’s notice, their impact on the public’s trust in government will be next to nil. Although the ultimate goal of ethics rules is to enhance public confidence and trust, many ethics regulations articulate an additional goal, which is to set a “common standard” of ethics for political actors. The hope is that a pervasive culture will develop that encourages compliance with ethical guidelines. Unfortunately, the focus of ethics regimes in Canada, both past and present, has been rules, not principles. Therefore, the “common standard” referred to above encourages compliance with conflict of interest rules, not with ethical principles such as honesty and integrity. The distinction between ethics and rules is a fundamental one that is blurred by references to “ethics rules,” or ethics regimes. To be “ethical” is to make decisions in reference to principles and values, not by consulting the rulebook. If a politician complies with conflict of interest rules, it cannot be assumed automatically that she is ethical. Rules do not make people ethical. Prior to 2004, when there were no conflict of interest rules for mps, it was not the case that none of them were ethical. The fact that mps comply with the rules that apply to them now does not mean that they are more principled than they were before. It means only that they are willing to comply with the rules. Even when the rules are made more demanding, and when politicians comply with the stricter regulations, this does not mean that their personal standards of ethics have changed. Again, it means only that they are willing to follow the rules. Canada’s ethics commissioner, Bernard Shapiro, testifies that virtually all Members of Parliament comply with conflict of interest and disclosure rules,7 but compliance with rules is too low a standard to set for ethical behaviour. Political ethics is about the choice to act in the public interest at all times, even if there is no specific rule that requires it. Public officials’ compliance with conflict of interest and disclosure requirements will never be enough to convince the public that they are trustworthy. Given the disappointing track records of previous ethics codes at enhancing public trust, it is rational to assert that the new Conflict of Interest Act will be even more futile. This is not to ignore or understate the political benefits to be reaped by governments who create or strengthen ethics rules, but these tend to be short-lived. The only way that ethics regimes could enhance public trust is if they could encourage politicians to act with integrity in their performance of all of their public duties, thereby raising the standard of ethics from mere rules compliance. Given the Conflict of Interest Act’s focus on rules to the exclusion of principles, it stands no chance of rebuilding public confidence in political integrity.

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a l l ru l e s , n o p r i n c i p l e s The proposed act represents a fundamental shift in the federal conflict of interest regime for public office holders … from a values regime based on explicit principles to a rules-based regime with those rules enshrined in legislation. … Ethics is a much, much broader area than conflict of interest. Bernard Shapiro, Ethics Commissioner

The first indication that the new Conflict of Interest Act is a step backward rather than forward is its striking omission of a “Principles” section in its preamble. In this way, the Conflict of Interest Act is unique among ethics codes for politicians, which usually cite explicit principles as their foundation. For instance, the Ethics Manual for Members, Officers, and Employees of the U.S. House of Representatives recognizes ethical principles in its first chapter, entitled “General Ethical Standards”. It asks that Members “conduct themselves at all times in a manner that reflects creditably on the House” and work “earnestly and thoughtfully” for their salaries.8 The Conflict of Interest and Post-Employment Code for Public Office Holders, to be replaced by the new legislation, has in its preamble a list of principles to which cabinet ministers and political appointees are to adhere in the performance of their public duties. To outline just a few of them, Section 3 of the code includes the following clauses: (1) Public office holders shall act with honesty and uphold the highest ethical standards so that public confidence and trust in the integrity, objectivity, and impartiality of government are conserved and enhanced. (2) Public office holders have an obligation to perform their official duties and arrange their private affairs in a manner that will bear the closest public scrutiny, an obligation that is not fully discharged by simply acting within the law. (emphasis added) (3) Public office holders, in fulfilling their official duties and responsibilities, shall make decisions in the public interest and with regard to the merits of each case.9

The Conservative government’s decision not to include a “principles” section is the most troublesome aspect of the Conflict of Interest Act. For several reasons, an ethics code is incomplete without it. First of all, no set of ethics rules can be entirely comprehensive. It is impossible, when drafting a code, to imagine every possible scenario that could arise that could raise ethical questions. The inclusion of principles increases the code’s longevity and durability by making it possible for its interpreter – in the case of the new legislation, the Conflict of Interest and Ethics Commissioner – to respond to new situations and to use discretion in determining whether or not the code has been violated. A code that contains ethical principles has the capacity to adapt to

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evolving ethical standards without having to be re-written every time a new ethics question presents itself. If an ethics code is simply a straight-forward list of “thou shall nots,” there is little need to bother having a special commissioner to interpret it. It would be easy to determine, for instance, whether or not a cabinet minister’s business holdings place him in a conflict of interest. Presumably, the purpose of hiring an ethics commissioner is to have an independent authority whose role it is to sort through ethical dilemmas that raise complex questions and that have less-than-obvious solutions. A second justification for including principles in codes of conduct is to encourage adherence to a higher standard of ethics. As stated previously, rules compliance is too low a standard to set for political ethics. If the code’s standard of ethics is articulated in the form of rules, not principles, it will always run the risk of being out of sync with the public’s expectations. There have been a number of instances in Canadian politics in which an official’s behaviour struck members of the public as “unethical,” but did not actually violate a rule in the code of conduct. For instance, when mp David Emerson crossed the floor of the House of Commons in February of 2006 to become a Conservative cabinet minister, only two weeks after being elected as a Liberal, many Canadians expressed outrage at what they saw as a lack of integrity on both Emerson’s and Prime Minister Harper’s parts. However, since neither Emerson’s nor Harper’s actions violated the Rules for Conduct section of the Conflict of Interest Code for mps, the code’s standard of ethics was met, and the Ethics Commissioner had no mandate to examine the issue further. It is necessary to put a disclaimer on the importance of including principles in ethics codes: it is not enough to record the principles into the code. They must be made “enforceable.” This is to say that if the code’s interpreter finds that one of the code’s principles had been breached, this must constitute as a breach of the code in the same way that violations of the Rules for Conduct do. Currently, the Conflict of Interest Code for mps includes both rules and principles, but only the Rules for Conduct section that includes disclosure requirements and conflict of interest rules are considered part of the Ethics Commissioner’s mandate. Commissioner Shapiro has acknowledged the gap within the code between its rules and principles, and has found himself hamstrung by the discrepancy. When investigating the Emerson case mentioned above, Commissioner Shapiro acknowledged the growing public consensus that a breach of the code’s principles had occurred.10 However, because his mandate extends only to the code’s Rules for Conduct, he was not able to conclude that the code had been violated and therefore could not recommend a punishment, even if he was in agreement with the public over the breach of principle.11 Ethics Commissioner Bernard Shapiro and former federal Ethics Counsellor Howard Wilson both lament the Conflict of Interest Act’s neglect of ethical

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principles. In testimony before the Senate Committee on Legal and Constitutional Affairs, Wilson recalled that the ethics code for public office holders that had been in place during his tenure recognized ethical principles such as honesty, integrity, objectivity, and impartiality. He maintained that under that code, “there was recognition that there is higher standard that Canadians could well expect of those in government.”12 As mentioned previously, the outgoing ethics code expects public office holders to conduct their public duties and private lives in ways that will “bear the closest public scrutiny.”13 That is a much higher ethical standard than that put forward by conflict-ofinterest and disclosure rules. Some behaviors might satisfy conflict of interest rules, but still run afoul of public standards of integrity, honesty, and propriety. David Emerson’s floor-crossing illustrates the limitations of a rules-based approach to political ethics.

a p pa r e n t a n d p o l i t i c a l conflicts-of-interest The “Purposes” section of the Conflict of Interest Act cites the first objective of the legislation as the development of “clear conflict of interest and postemployment rules” for public office holders and cabinet ministers.14 Section 4 of the legislation defines the phrase “conflict of interest” in the following terms: “a public office holder is in a conflict of interest when he or she exercises an official power, duty or function that provides an opportunity to further his or her private interests or those of his or her relatives or friends or to improperly further another person’s private interests.”15 The legislation’s focus on conflicts of interest has the effect of defining political ethics in strictly financial terms. To offend the Conflict of Interest Act is to conduct one’s public duties in such a way as to further one’s private economic interests. The statute’s standard of ethics tolerates other behaviours that have proven offensive to the public’s standard. The federal government’s exclusive focus on conflict of interest, as if it is the only ethical transgression for which a public office holder should be held to account, is enough to render the Conflict of Interest Act insufficient as an ethics code. To make matters worse, the definition of “conflict of interest” given in the new legislation is tapered in comparison to the concept used in previous ethics codes. The Conflict of Interest Code for Public Office Holders prohibits real, apparent, and potential conflicts of interest. The Conflict of Interest Act, on the other hand, contains explicit prohibitions against only real conflicts of interest, even though apparent and potential ones can be every bit as damaging to the public trust as the real thing. If a “real” conflict of interest occurs when an official’s private interests are affected by his performance of public duties, or vice versa, an “apparent” conflict occurs when circumstances render it reasonable to suspect that an official is in a conflict of interest situation, even though he

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is not. The notion of prohibiting the appearance of impropriety among public office holders has been a subject of considerable debate among provincial ethics commissioners in Canada, as some of them believe that the concept is too elusive to be enforceable. However, in 1992, British Columbia’s legislature amended the Members’ Conflict of Interest Act to include a prohibition against apparent conflicts of interest. The legislation defines the concept in the following terms: “a member has an apparent conflict of interest if there is a reasonable perception, which a reasonably well informed person could properly have, that the member’s ability to exercise an official power or perform an official duty or function must have been affected by his or her private interest.”16 The Honourable E.N. (Ted) Hughes, who became the province’s Ethics Commissioner in 1990 when the legislature brought the ethics rules into effect, has argued that this clause has proven capable of enforcement, and that it carries with it a “higher standard of accountability” for public office holders.17 Because of this clause, politicians have to consider whether their actions are appropriate, but also whether the public will see them that way. An example of an apparent conflict of interest situation occurred in 2005 when federal Ethics Commissioner Bernard Shapiro was asked to investigate the actions of mp Gurmant Grewal, who had been requesting personal bonds from people who asked for his support on immigration matters. Although Commissioner Shapiro found that Grewal had not been in a real conflict of interest, as he did not cash the bonds or benefit from them personally, he found that Grewal’s actions constituted an apparent conflict of interest, especially since many people were confused about where the bond money would end up. The Conflict of Interest Code for Members of the House of Commons asks that Members arrange their affairs so that “foreseeable real and apparent conflicts of interest may be prevented from arising.”18 In Grewal’s case, Shapiro concluded that his violation of the code in this way was “mitigated”, but requested that Grewal stop the practice of asking for bonds so that the apparent conflict of interest situation would be resolved.19 The prohibition of apparent conflicts of interest is important to an ethics regime because if even if a politician is not actually benefiting personally from the performance of his public duties, the perception that he is gives fodder to political cynics who claim that all politicians are “on the take.” If the ultimate objective of ethics rules is to enhance public trust, politicians should avoid like the plague any action that could give the public a reason to question their integrity. The new Conflict of Interest Act not only fails to mention apparent conflicts of interest specifically, but the omission of a “principles” section in the code leaves its interpreter completely without recourse to respond to apparent conflicts should they occur. If the new legislation included a “principles” section with a clause asking that public office holders conduct their affairs in ways that would “bear the closest public scrutiny,” it would not be as necessary to include a specific ban on apparent conflicts of

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interest, as presumably, the code’s interpreter could read the above principle to mean that apparent conflicts of interest should be avoided. Of course, the Commissioner’s ability to do that would depend on the code’s “principles” section being put under the office’s mandate. Unfortunately, the Conflict of Interest Act includes neither a direct nor an indirect prohibition on the appearance of impropriety. A “potential” conflict of interest situation is when an official has a private economic interest that could influence him in how he performs his public duties, but a real conflict of interest has not occurred – at least, not yet.20 The new legislation does not include an explicit prohibition against potential conflicts of interest, but its definition of conflict of interest can be read in such a way as to include potential conflicts as well as real ones. According to the statute, a conflict of interest is a situation in which a public office holder exercises an official power that “provides an opportunity to further his or her private interests” (emphasis added).21 This can be read to mean that if there is an opportunity, or the potential, for a conflict of interest to occur, the public office holder could be considered in breach of the legislation, even if he or she did not take further actions to benefit his or her private interests. Ultimately, whether the code is read to include a prohibition of potential conflicts of interest will depend on how future Conflict of Interest and Ethics Commissioners interprets it.

the conflict of interest and ethics commissioner The Conflict of Interest and Ethics Commissioner’s mandate will be a daunting one. The office will administer and enforce the Conflict of Interest Act, keep a public registry of public office holders’ disclosure statements, make inquiries into alleged violations of the Conflict of Interest Act, and apply monetary penalties for noncompliance with disclosure rules. In addition, the Federal Accountability Act includes amendments to the Parliament of Canada Act that will make the new Commissioner responsible for parliamentary ethics as well. The new Commissioner will take over the responsibilities of the Ethics Commissioner for the House of Commons and the Senate Ethics Officer, which include the administration of the Conflict of Interest Code for Members of the House of Commons and the Conflict of Interest Code for Senators. Ultimately, the Commissioner will be responsible for processing the disclosure reports for every mp, Senator, and federal public office holder in Canada, as well as giving them confidential advice on ethics and investigating allegations of wrongdoing. The consolidation of ethics administration into one office presents at least two significant problems. First, the new commissioner’s workload will be overwhelming, to say the least, as it will include three distinct populations, each with its own ethics regime. House of Commons Ethics Commissioner Bernard Shapiro and former Ethics Counsellor Howard Wilson have expressed serious

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concern that this will compromise the office’s effectiveness. Second, many Senators object to the single-commissioner model, and for several reasons. If the new ethics regime were imposed on Senators against their will, they might come to resent it and the new Commissioner, which would complicate their working relationships with him. As Senate Ethics Officer Jean Fournier points out, the role of any ethics commissioner is primarily an advisory one.22 Both he and Ethics Commissioner Shapiro have spent the bulk of their time processing parliamentarians’ disclosure requirements and advising them on how to comply with the rules. Shapiro has used his investigatory powers on only six occasions in relation to the House of Commons, and Fournier has not used his at all. The Commissioner’s capacity to perform his advisory role effectively depends on whether he is able to build solid relationships of trust with his “clients” so that they feel comfortable in speaking with him about their private financial holdings. If the Senate does not welcome the new Commissioner, essential bonds of trust will certainly not come easily. Before turning to these points, I outline briefly the appointment process for the new Commissioner and the office’s mandate and functions. Section 81 of the (amended) Parliament of Canada Act states that the Governor-in-Council will appoint the Commissioner, “after consultation with the leader of every recognized party in the Senate and the House of Commons”, and with the approval of both houses of Parliament. In order to qualify as a candidate for the job, one must be: (a) a former judge of a superior court in Canada, or any court whose members are appointed under an Act of a provincial legislature; or (b) a former member of a provincial or federal board, tribunal, or commission who has expertise in either ethics, conflict of interest, financial arrangements, or professional regulation.

The Commissioner may hold office for a seven-year term and is eligible for re-appointment. The Commissioner will remain in office on “good behaviour” and may be removed for cause by the Prime Minister, on the address of the Senate and the House of Commons.23 The sections of the Parliament of Canada Act that refer to the appointment of separate ethics commissioners for the House of Commons and the Senate will be repealed when the Federal Accountability Act takes effect. Section 86 and 87 of the revised Parliament of Canada Act state that the new Commissioner will perform the duties assigned by the Senate and the House of Commons for governing members’ conduct. Part Four of the Conflict of Interest Act describes the office’s mandate and functions in relation to public office holders. In basic terms, they include: i.

providing confidential advice to the Prime Minister and to public office holders on their obligations under the Act (s. 43);

96 Macro Choices and Challenges ii. conducting investigations into alleged violations of the Conflict of Interest Act (s. 44, 45); iii. maintaining a public registry of public office holders’ disclosure reports declaring their assets, liabilities, etc. (s. 51); iv. administering monetary penalties for violations of the Act (s. 52).24

Overwhelming workload The Conservative government argues that these reforms will “strengthen” the Conflict of Interest and Ethics Commissioner’s mandate in comparison to that of the Ethics Commissioner, and that the new ethics regime will help to build “public confidence” in government and in parliamentary institutions. As mentioned already though, the lack of attention to ethical principles in the Conflict of Interest Act constrains severely its ability to achieve this goal. The Federal Accountability Act will not strengthen the Commissioner’s role as a monitor of politicians’ and public office holders’ integrity and adherence to ethical principles, but it will give him a significantly higher pile of paperwork. In fact, the expansion of the Commissioner’s mandate has gone too far. Commissioner Shapiro explained to the Senate Committee that the Office of the Ethics Commissioner has been “burning the midnight oil,” metaphorically, which suggests that the new Commissioner is in for a similar challenge. Granted, the Conflict of Interest and Ethics Commissioner’s office will have more resources at his disposal than Shapiro’s has had, but it will also have more responsibilities. The Ethics Commissioner’s and Senate Ethics Officer’s budgets and staff members will be turned over to the new Commissioner, who will benefit from these employees’ expertise as well as the two offices’ combined financial resources. However, Commissioner Shapiro has complained of not being able to spend as much time with individual mps as he would have liked to. During an appearance before the Senate Committee on Legal and Constitutional Affairs, Senator Anne Cools asked Commissioner Shapiro whether the new Commissioner’s position would become “bureaucratized” due to its extensive workload. He replied, “That is the current state of affairs in my office,” implying that things will only get worse under the new legislation. He admitted that it has not been possible for him to have annual personal meetings with each mp and public office holder from whom he receives a disclosure report. Shapiro said that members of his staff are able to meet with people to discuss their obligations under the ethics code applicable to them, but he admitted that this is less than ideal. Parliamentarians and public office holders often prefer to meet with the Ethics Commissioner himself, given the very personal nature of the subject matter. Senate Ethics Officer Jean Fournier has been able to meet with almost all Senators individually on an annual basis, and some of them more than once per year. He argues that this face-time is essential to building

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trust relationships with his clients and making them feel comfortable enough to discuss their private financial interests with him and seek his advice on complying with ethical rules.25 The new Conflict of Interest and Ethics Commissioner will be hardpressed to follow in Fournier’s footsteps, given that he will have to handle the disclosure reports of 308 mps, 105 Senators, 1500 full-time public office holders, and approximately 2300 part-time public office holders. Not surprisingly, Shapiro warned that the Commissioner will have an “extremely limited” amount of time to devote to any individual’s concerns.26 In addition, Shapiro opines that the new Commissioner will likely face more requests for investigation than the previous commissioners received in total.27 This is due to significant changes that the new legislation will make to the Commissioner’s inquiry powers. First, s. 44 of the Conflict of Interest Act authorizes the Commissioner to inquire into possible wrongdoing by any current or former public office holders. In contrast, under the current code, the Ethics Commissioner’s inquiry powers extend to current ministers, ministers of state, and parliamentary secretaries only. Second, s. 44(4) allows the Commissioner to consider information from the public that is brought to his attention by an mp or a Senator that suggests wrongdoing by a public office holder.28 If the public takes advantage of this opportunity, there is virtually no predicting how many requests for inquiry the Commissioner could receive in a year. Section 45 of the Act allows the Commissioner to examine matters on his “own initiative” if he suspects that any current or former public office holder has violated the code. The Ethics Commissioner has the authority to conduct “own motion investigations” into mps’ conduct under the Conflict of Interest Code for Members of the House of Commons, but the extension of this authority to public office holders is new under the Conflict of Interest Act. Under ss. 52-53 of the Act, the Commissioner is responsible for applying monetary penalties of up to $500 for public office holders who do not comply with disclosure requirements. This could be time-consuming, as his office will have to determine whether or not disclosure rules had been violated, and then give the public office holder in question the opportunity to correct the problem before deciding how significant the fine should be.29 It is difficult to predict with accuracy whether the application of fines will be a frequent occurrence. However, Commissioner Shapiro has reported high rates of compliance with the current code, and there is no reason to suspect that public office holders will be less compliant with the new rules.30 Senators’ Opposition to Single-commissioner Model Several Canadian Senators object to the creation of one ethics office for public office holders, mps, and Senators. Three separate arguments have surfaced in

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opposition to the consolidation. First, many Senators believe that having only one ethics official will compromise the constitutional independence of the House of Commons and the Senate. Second, several Senators, as well as Ethics Commissioner Shapiro and former Ethics Counsellor Wilson, have raised the idea that because each of the three populations mentioned above confronts its own unique ethical questions, it follows that each of them should have its own official to interpret and administer its ethics rules. Third, some Senators have expressed the concern that the new commissioner will become “politicized” as a result of partisan combat in the House of Commons, as Commissioner Shapiro’s has in the past. Senators have argued for separate ethics officers so that in the event that relations between the Conflict of Interest and Ethics Commissioner and the House of Commons go sour, the Senate can avoid being affected. In this section, I analyze each of these arguments. This is not the first time that senators have opposed the creation of one ethics commissioner for both houses of Parliament. When the federal Liberal government under Jean Chretien drafted its new ethics regime in 2003, it considered having a single ethics commissioner, but in a report tabled in April of that year entitled “Government Ethics Initiative,” the Senate Standing Committee on Rules, Procedures and the Rights of Parliament insisted that the Senate have its own officer.31 In the end, the government agreed, but now Senators are facing the same battle as the single-commissioner model has re-appeared with the Federal Accountability Act. The basic argument is that it undermines the constitutional independence of the houses from each other. To make this point, Senator Serge Joyal asserted the following: “The independence and autonomy of the two chambers are necessary to maintain the proper checks and balances that one House exercises over the other. … the exercise of the disciplinary function, which is intimately linked to the privileges of each House, must be maintained.”32 In other words, the power to establish rules for conduct and to discipline members’ misconduct is central to the Senate’s autonomy. Some senators have expressed doubt that the constitutional barrier that must exist between the houses of Parliament can be maintained if they share an ethics officer, who must report to committees of both houses. Not everyone is convinced that the Senate has a case here. Firstly, as Duff Conacher, president of Democracy Watch (a non-partisan citizens’ organization advocating democratic reform and government accountability), points out, the Federal Accountability Act and its single-commissioner model do not change the fact that the Senate drafts its own ethics code and is free to alter it when desired, without input from the House of Commons or the Commissioner.33 Therefore, even after Bill C-2 becomes law, the Senate will retain its power to define the ethical standards that apply to its members. Secondly, although the houses of Parliament will share the Conflict of Interest and Ethics Commissioner, the Federal Accountability Act

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gives the houses equal influence in the appointment process, as the successful candidate is to be chosen by the Prime Minister after consultation with party leaders in both the Senate and the House of Commons and after resolutions from both houses approving the appointment. This means that it is not possible for the prime minister to impose any particular Commissioner on the Senate against its will, and that the Senate has a responsibility to ensure that the successful candidate is a qualified one that is acceptable to them. Thirdly, the Senate will retain its ability to punish members’ misconduct. The Conflict of Interest Code for Senators states in section 46 (7) that a committee of senators may recommend sanctions for the full Senate to apply to a member who violates the code.34 Finally, the new Commissioner will perform the same functions and have the same powers as the Senate Ethics Officer does now, which include maintaining senators’ disclosure statements, giving advice on how to comply with the code’s requirements, and conducting inquiries into alleged violations of the Conflict of Interest Code for Senators.35 The Parliament of Canada Act limits the Commissioner’s involvement in the Senate’s ethics regime to that which is referred to the office by the Senate itself: 86. (1) The Commissioner shall perform the duties and functions assigned by the Senate for governing the conduct of members of the Senate.36

Given that the Senate is free to define the new commissioner’s role in the same terms as it has the ethics officer’s, it seems clear that the Federal Accountability Act will not change the Senate’s ethics regime in any discernible way. The second point that has been raised against the single-commissioner model is that because mps, Senators, and public office holders each confront ethical dilemmas that are unique to their vocations, and that each of these groups is regulated by its own code of conduct, there should be a separate ethics commissioner for each of them. Senate Ethics Officer Jean Fournier has argued that although the ethics code for Senators bears close resemblance to the one for mps, there are significant differences that substantiate the need for a separate interpreter for each code. For instance, because of their role as regional representatives and their responsibility to maintain close community ties, Senators face unique ethical questions and thus require their own ethics officer to help to advise them on such matters.37 A comparison of the Conflict of Interest Code for Senators with the Conflict of Interest Code for Members of the House of Commons reveals that the codes are very similar to each other, both in their “spirit” and in their wording. Both contain a “Purposes” section that alludes to the importance of maintaining and enhancing public trust and confidence. Both contain a “Rules of Conduct” section that prohibits conflicts of interest, undue influence, and the misuse of information obtained through one’s public position. The codes have

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very similar rules regarding parliamentarians’ involvement in government contracts, the disclosure of income, assets, and liabilities, and the acceptance of gifts.38 The congruence between the ethics codes indicates that the two groups confront similar sorts of ethical questions. For instance, senators and mps alike need to be clear on such things as when it is appropriate to accept gifts from constituents, when it is necessary to declare a private interest during parliamentary debates, and how to help constituents without offending conflict of interest rules. And, despite Officer Fournier’s attempt to single out senators as regional representatives, mps too continue to be members of their communities while in office and must balance their loyalties to their constituencies with their responsibility to the public interest. Therefore, it makes perfect sense for the two houses of Parliament to share an ethics commissioner. Public office holders, however, are indeed a different category. Former Ethics Counsellor Howard Wilson refers to them as “the decision-makers” and argues that as a result of this role, “the possibility of a conflict with private interests is a matter that can arise very rapidly.”39 Because of public office holders’ proximity to the “levers of power,” the ethics rules that apply to them are similar in “spirit” to the codes in place for parliamentarians, but different in application. For instance, public office holders are subject to more comprehensive disclosure requirements than are elected officials and must comply with post-employment rules following the completion of their tenure as a government official. Wilson contends that given the “complexity” of the rules for public office holders set out in the Conflict of Interest Act, it would be difficult for a single commissioner to “get their mind successfully around” the three different ethics codes.40 In light of the similarity between the mps’ and senators’ codes, and the overwhelming workload for a single commissioner for all three populations, an appealing solution at first glance is to have one commissioner for mps and senators, and another for public office holders. However, the twocommissioner model does not address senators’ third criticism of the single-commissioner model, which is that sharing a commissioner with the House of Commons leaves the Senate vulnerable to the negative outcomes that would result if the new commissioner were to lose the confidence of the House of Commons, whether through his own incompetence or because the House has politicized the commissioner’s position. Senators’ fears regarding the potential “politicization” of the commissioner’s office are understandable. On a few memorable occasions, Ethics Commissioner Shapiro has found himself in the “bad books” of at least some members of the House of Commons. For instance, when Shapiro decided to investigate both Prime Minister Stephen Harper and Cabinet Minister David Emerson following the controversial cabinet appointment, the Prime Minister’s Office expressed its unwillingness to cooperate with Shapiro’s investigation, referring to Shapiro as a “Liberal appointee” to undermine

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his authority.41 Parliamentarians’ jabs at Dr. Shapiro were not always part of partisan warfare, however. Veteran mp Ed Broadbent moved a motion of non-confidence in the Commissioner, citing what he believed to be errors in judgment on Shapiro’s part.42 Broadbent’s motion against Shapiro failed in Parliament, but succeeded in sending the message that Shapiro’s competence was in doubt. Prime Minister Paul Martin appointed Shapiro without consultation with other leaders. The House of Commons approved the appointment after Dr Shapiro appeared before a parliamentary committee, but all of this took place on the eve of a federal election campaign in the spring of 2004, which distracted both government and opposition mps from the appointment process.43 The inclusive, bi-cameral appointment process for the Conflict of Interest and Ethics Commissioner will provide the successful candidate with a better cloak of protection against accusations of being a “party hack.” However, as Senator Larry Campbell has pointed out, it is still within the realm of possibility that a commissioner could lose the confidence of one House, while maintaining the confidence of the other.44 In section 82, the Parliament of Canada Act states that the Commissioner can be removed for cause by the prime minister “on address of the Senate and the House of Commons,” but does not offer a resolution for an impasse between the two houses. This is not an easy circle to square. The wording of the clause suggests that the address of both houses would be necessary to remove the commissioner, as it reads “Senate and the House of Commons” (emphasis added).45 However, if a commissioner were allowed to continue with the confidence of one house but not the other, this arrangement would do little to encourage confidence in the commissioner’s competence and could undermine the sanctity of the ethics regime itself, given that the commissioner is, in many ways, the force behind it. The new commissioner’s enormous workload will make it virtually impossible to develop the relationships of trust with parliamentarians and public office holders that are essential to the functionality of the ethics regime. These bonds of trust would be even more difficult to establish if doubt were cast over the commissioner’s expertise, or if the commissioner was attempting to work with either the House or the Senate after it had lost confidence in him. For these reasons, the best arrangement would be a three-commissioner model, as each commissioner would become an expert in the appropriate rules and expectations, and would be better able to develop closer working relationships with clients and thus perform the advisory function more effectively.

c o n c lu s i o n s The Conflict of Interest Act broadens the commissioner’s mandate to a fault, but it does not strengthen the commissioner’s role in monitoring and enforcing

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ethical principles. Its failure to prohibit the appearance of conflict of interest, as previous ethics codes have done, is antithetical to the government’s goal of enhancing the public’s trust in the government’s integrity. The overwhelming workload of the Conflict of Interest and Ethics Commissioner will undermine the commissioner’s ability to develop and maintain relationships of trust with mps, senators, and public office holders, which could compromise the effectiveness of the ethics rules in place for each of these three populations. The legislation’s rules-based approach is a disappointing step backward from previous ethics codes that cited ethical principles as their foundation. The temptation to define political ethics in strict, conflict of interest terms is understandable, given the elusiveness of terms such as “honesty” and “integrity.” The Conflict of Interest Act paints the domain of political ethics in black and white terms: those who comply with conflict of interest and disclosure rules are “ethical” and those who violate them are not. To members of the public, who demand a higher standard ethics from those whom they elect to protect the public trust, this simplistic approach to ethics is insufficient. Because of the discrepancy between the public’s expectations and the standard of ethics defined in the Conflict of Interest Act, this part of the government’s new ethics package stands virtually no chance of enhancing public trust in the integrity of government.

notes 1 Government of Canada. “Brochure – Federal Accountability Act and Action Plan,” 11 April 2006. http://www.faa-lfi.gc.ca/brochure_e.asp 2 MacEachern, Allan J. “Members of Parliament and Conflict of Interest.” Ottawa: Information Canada, 1973. 3 Parliament of Canada. Conflict of Interest Code for Members of the House of Commons. March 2004. http://www.parl.gc.ca/information/about/process/house/standingorders/ appa1-e.htm 4 For a critical analysis of American ethics regulations, see G. Calvin Mackenzie and Michael Hafken, Scandal Proof: Do Ethics Laws Make Government Ethical? (Washington D.C.: Brookings Institution Press, 2002). 5 Conflict of Interest Code for Members of the House of Commons. 6 A survey taken by Ekos Research Associates in 2002 showed that even while Prime Minister Jean Chretien’s new ethics package was the subject of a considerable amount of media coverage, 66% of those surveyed had not heard of it before being surveyed. For more information, see “Trust and the Monarchy: an examination of the shifting public attitudes toward government and institutions”. 30 May 2002. Ekos Research Associates. http://www.ekos.com/admin/articles/31may2002.pdf 7 Bernard J. Shapiro, “The 2005–2006 Annual Report of the Ethics commissioner,” Office of the Ethics Commissioner. June 2006. http://www.parl.gc.ca/oec/en/media/ annual_reports/reports/AR06_MP_EN.pdf

103 The Federal Accountability Act 8 Ethics Manual for Members, Officers, and Employees of the U.S. House of Representatives. Committee on Standards of Official Conduct. 1992. http://www.house.gov/ ethics/Ethicforward.html 9 Conflict of Interest and Post-Employment Code for Public Office Holders. Government of Canada. 2006. http://www.parl.gc.ca/oec/en/public_office_holders/ conflict_of_interest/docs/code_e.pdf 10 Bernard J. Shapiro, “The Harper Emerson Inquiry,” Office of the Ethics Commissioner. March 2006. http://www.parl.gc.ca/oec/en/media/inquiry_reports/reports/ Harper_Emerson/Harper_Inquiry.asp 11 For a discussion of the Emerson incident, and problem of unenforceable principles in the Conflict of Interest Code for mps, see Lori Turnbull, “Rules are not enough: How can we enforce ethical principles?” (forthcoming). 12 Howard Wilson, Proceedings of the Standing Senate Committee on Procedure and House Affairs, 5 September 2006. 1800-11. 13 Conflict of Interest and Post-Employment Code for Public Office Holders. 14 Conflict of Interest Act. 15 Ibid. 16 Government of British Columbia. Members’ Conflict of Interest Act. Victoria, British Columbia: Queen’s Printer, 1986. http://www.qp.gov.bc.ca/statreg/stat/M/ 96287_01.htm#section2 17 Ian Greene and David P. Shugarman, Honest Politics: Seeking Integrity in Canadian Public Life (Toronto: James Lorimer and Company, 1997), 144. 18 Conflict of Interest Code for Members of the House of Commons. 19 Bernard J. Shapiro, “The Grewal Inquiry,” Office of the Ethics Commissioner. June 2005. http://www.parl.gc.ca/oec/en/media/inquiry_reports/reports/ ReportG_EN1_web.pdf 20 Greene and Shugarman, 48. 21 Conflict of Interest Act. 22 Jean T. Fournier. 23 Parliament of Canada Act. http://www.faa-lfi.gc.ca/faa-lfi/faa-lfi04_e.asp 24 Conflict of Interest Act. 25 Jean T. Fournier. 26 Bernard J. Shapiro, Testimony before the Senate Standing Committee on Legal and Constitutional Affairs, 5 September 2006, 1800-38. 27 Ibid., 1800-40. 28 In 2006, the prime minister amended the Conflict of Interest and Post Employment Code for Public Office Holders so that the Ethics commissioner could consider information from the public that is brought to him by a member of Parliament that suggests that a public office holder had violated the code. This provision can be found in section 5 (4) of the code. 29 Federal Accountability Act, s. 52. 2006. http://www.faa-lfi.gc.ca/faa-lfi/faa-lfi03_e.asp 30 Bernard J. Shapiro, “Annual report of the Ethics Commissioner on activities in relation to public office holders for the fiscal year ending March 31, 2005,” Office of the

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31

32 33

34 35 36 37 38 39 40 41 42 43 44 45

Ethics Commissioner, 30 June 2005. http://www.parl.gc.ca/oec/en/media/ annual_reports/reports/AR05_POH_EN.pdf Lorna Milne and Raynell Andreychuk. “Government Ethics Initiative: Interim Report of the Senate Standing Committee on Rules, Procedures and the Rights of Parliament,” Parliament of Canada, 10 April 2003. http://www.parl.gc.ca/37/2/parlbus/ commbus/senate/Com-e/rul2-e/rep-e/rep08apr03-e.htm Serge Joyal, Proceedings of the Senate Standing Committee on Legal and Constitutional Affairs, 5 September 2006, 1800-14. Bea Vondouangchanh, “Senate to amend pm’s proposal for single ethics officer: Senator,” The Hill Times, 4 September 2006. http://www.hilltimes.com/html/ index.php?display=story&full_path=/2006/september/4/legpro/&c=1 Conflict of Interest Code for Senators. Office of the Senate Ethics Commissioner. 2005. http://www.sen.parl.gc.ca/seo-cse/eng/Code-e.html Office of the Senate Ethics Officer. “About Us”. http://www.sen.parl.gc.ca/seo-cse/ eng/AboutUs-e.html Parliament of Canada Act. Fournier, Jean T. For more information, see the Conflict of Interest Code for Senators and the Conflict of Interest Code for Members of the House of Commons. Howard Wilson, Testimony before the Senate Standing Committee on Legal and Constitutional Affairs, 5 September 2006. 1800-41. Ibid. Campbell Clark, “pm takes flak over boycott of Emerson investigation,” The Globe and Mail, 7 March 2006, A2. Romeo St. Martin,“Stephen Harper’s Worst Nightmare,” Politics Watch. 7 March 2006. Campbell Clark. Larry Campbell, Testimony before the Senate Standing Committee on Legal and Constitutional Affairs, 5 September 2006, 1800-34. Parliament of Canada Act.

6 Why Ministerial Accountability Can Still Work j o n at h a n m a l l o y and scott millar

A number of critics have incorrectly suggested that the doctrine of ministerial accountability is broken.1 This has led to repeated and ill-conceived calls for scrapping the doctrine altogether in favor of a system that requires ministers to be accountable to Parliament for policy matters related to their departmental portfolios and for public servants to be separately accountable for administration. Despite modern realities and pressures, the doctrine is still relevant for ensuring the accountability of government. It needs only to be better understood and consistently applied in order to remain effective. It demands that ministers, supported by their officials, be solely responsible for correcting administrative errors that occur within their departments, and that they provide related information to Parliament and Canadians. The doctrine solves problems of administration and sets in place processes to prevent future errors. The issue of accountability in government is front and center after the Gomery Report and the Harper Government’s Federal Accountability Act. But calls for reform are nothing new in Canadian politics. One of the most recurring themes in Canadian politics is the call for institutional reform, and particularly reform of parliamentary accountability processes. “Ministerial accountability” is at the heart of this debate. The processes of ministerial accountability are variously labeled vague, insufficient, unrealistic, outdated and/or simply ignored. The sponsorship scandal is the latest in a long history of breakdowns of responsibility at the top, leading to accusations that the system needs radical reform. Some suggest the doctrine of ministerial accountability is marred beyond redemption, and incapable of addressing problems of administration within a modern and complex government.

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However, we argue that the doctrine of ministerial accountability is still strong and intact. This chapter will clarify what ministerial accountability entails and why, despite some noted challenges, the current system should continue, linking these longstanding debates with the Gomery Commission recommendations and the Federal Accountability Act reforms. It will focus especially on the “accounting officer” concept drawn from the United Kingdom, endorsed by Gomery, and proposed in the Federal Accountability Act. The chapter will highlight the role ministerial accountability played in resolving the controversial hrdc grants and contribution affair. Drawing from a series of personal interviews with senior public servants, we will argue that ministerial accountability proved durable and effective in that affair, and remains the best system available to ensure accountable government and leadership. While touching on a set of reforms for clarifying and strengthening the current system, including the recent Federal Accountability Act, we contend that ministerial accountability as a whole remains alive and well in Canada.

w h at i s m i n i s t e r i a l a c c o u n ta b i l i t y ? The terms ministerial accountability, ministerial responsibility, and ministerial answerability are often used interchangeably and/or with slightly different shades of meaning, leading to general confusion and disagreement over their meaning and significance. In 1984, John Langford called the concept of “accountability” within government a “badly used term that means different things to different people”2 – and the confusion has only increased in recent years. We will not try to provide exact and ironclad definitions here. However, we understand responsibility to be the provision of authority to a person or organization, while the requirement of accountability is to render an account for the use or misuse of that same authority. In other words, a minister is given responsibility for a portfolio. He or she then is accountable for how they exercise that responsibility. And an important part of that accountability is answering questions about their area of responsibility. Ministerial responsibility and accountability flow from the concept of responsible government. Responsible government means that prime ministers and cabinets have the authority to govern, but are then responsible to Parliament and ultimately the electorate for the exercise of that authority. A government that fails to retain the confidence of Parliament, usually by failing to pass the budget or losing a specific vote of non-confidence, must resign and face a general election. Responsible government focuses on governments as a whole. Ministerial responsibility concerns the actions of cabinet ministers, both in a collective and individual sense. Ministers are both responsible in the overall body of cabinet,

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but also responsible for their own individual actions. This is so central that David Smith calls ministerial responsibility “the hinge of the Constitution.”3 Collective ministerial responsibility is an ancient concept, used originally by ministers to shield themselves from pressure from the monarchy. In modern times it means that ministers do not discuss or reveal cabinet matters, do not criticize or vote against cabinet policies, and generally stick together in the face of opposition, even from their own political parties. They then stand or fall together as a responsible government. But individual ministerial responsibility requires that ministers are responsible for the actions of their respective departmental portfolios and hence accountable to Parliament. Exactly what this means is hotly debated and the subject of this chapter. Nevertheless, the general concept is wellunderstood. It means that ministers speak on behalf of their entire departments, acting as the department’s “public face,” and should take both credit and blame for what happens in their portfolios. S.L. Sutherland argues that individual ministerial responsibility creates a “timeless focal point for legal, political and administrative responsiveness” within Parliament.4 Holding ministers responsible for everything means there is no doubt who is ultimately in charge. Blame cannot be easily shifted. The minister must account for what has gone on in their area of responsibility. But what does it mean to account? One interpretation is that ministers must resign when things go wrong. David Smith observes that “resignation is the measure and the meaning of ministerial responsibility – to the media, who need only to fix their focus on an individual, and to the public, who take their understanding of ministerial responsibility largely from the media.”5 Opposition parties play on this and regularly demand that ministers resign over almost any problem or error in their portfolio – even though, once elected to government, these parties drastically change their tune and resist those same demands. But resignations are only a small and extreme aspect of ministerial accountability (which is why opposition parties change their tune). As Sutherland points out, actual resignations over administrative errors are almost unheard of.6 Here is where the concept of accountability becomes useful. While accountability involves taking some blame for what has happened, it is not always the same as being punished for it. Ministers must account for what goes on in their portfolios – bad decisions, poor outcomes, lost documents, etc. This follows from ministerial responsibility – the idea that they are ultimately responsible for everything that happens under their authority. It is crucial to note that the minister does not need to have been personally involved in the error. The doctrine of ministerial responsibility means they are ultimately responsible for everything that goes on. Hence they must answer questions in Parliament and elsewhere about what happened, and what they are going to do about it. The counterpart of this is public service

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anonymity. Holding ministers publicly accountable means that public servants – including the ones who made the actual error – are not publicly accountable. They may be punished, but privately and confidentially. The “timeless focal point” that Sutherland talks about means ministers must always give an account for what happened, and cannot shift public blame onto public servants. Ministers cannot throw up their hands, say they were not involved, and leave it at that. The minister is always responsible and accountable – even if they knew nothing about the original error and have acted prudently and appropriately. The focal point gives the media, opposition and general public a place to direct questions and criticisms, and a source to expect answers from.

d o e s m i n i s t e r i a l a c c o u n ta b i l i t y r e a l ly wo r k ? This is the theory of ministerial accountability. But there is much debate about how it actually works. We have already mentioned the popular view that ministerial accountability does not work if ministers do not resign. But more seasoned observers argue that the theory of ministerial accountability does not work in practice, because it is so difficult to find someone to truly blame for problems. Ministers may account for problems, but take pains to emphasize that they were not personally involved. Being human and political, they usually blame previous administrations or other scapegoats. Rarely does anyone step forward publicly and admit they caused the problem, partly because of the tradition of public service anonymity that means public servants are reprimanded only in private. But if public servants are to remain anonymous, how can the full story be obtained? What really happened? Who is to blame? C.E.S. Franks argued in 1997 that “Canada is on the extreme end of parliamentary systems … in professing an absolute and hard doctrine on the anonymity of the public servant.”7 As we will see below, Franks and others support the introduction of “accounting officers”– senior public servants who, rather than the minister, are accountable for administrative matters in their portfolios. The Gomery Commission made this recommendation in its 2006 report on the sponsorship scandal, arguing that such a practice may have stopped many of the improprieties in that case. Introducing a more nuanced system could possibly increase public understanding and confidence. As Aucoin and Jarvis note: “In several respects, the existing regime strikes many as out of step with public expectations on accountability. When things go wrong, the public expects that someone a minister, preferably, or an official – should resign, be fired, or at least be appropriately disciplined. This is what the public assumes to be the norm in private sector organizations. Heads roll as necessary, or so the rhetoric has it.

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In contrast, ministers and public servants are perceived to be insulated from the kind of consequences that people in private sector institutions face.”8 Thus many argue that ministerial accountability and public service anonymity create a blur rather than a clear focus. The minister may take theoretical, overall responsibility, but no one seems to accept real personal responsibility and blame. Ministers do not resign, nor are public servants publicly blamed and punished. For some critics, ministerial accountability thus seems to protect governments more than anything, covering up mismanagement and problems rather than exposing them to public and parliamentary scrutiny. But others argue strongly that the current system remains best. Splitting responsibility, they argue, will only allow blame to be shifted more easily. In particular, they argue, public servants are more likely to be caught between the proverbial rock and a hard place. They may be under pressure from ministers and political staff to do certain things, but then held accountable for such actions. Pressures to reform ministerial accountability were heightened by the sponsorship scandal of 2004 and the resulting inquiry by Justice John Gomery (the Gomery Commission). In this scandal, ministers, political aides, and public servants were all accused of fraud and wrongdoing. The federal government program of sponsorships and advertising featured many dubious or outright fraudulent contracts and billings. But no one, and particularly no minister, admitted overall responsibility or accountability for the problem. In its final report, the Gomery Commission argued that the system of ministerial accountability had indeed broken down, and major reforms were needed to make it work. In particular, it recommended the introduction of “accounting officers” and a greater distinction between political and administrative responsibilities as a way of ensuring better overall accountability. We will thus turn to this concept.

the accounting officer Proposals to reform ministerial accountability have generally emphasized dividing responsibility between ministers and deputy ministers. In vast government departments, should ministers be held accountable for all problems occurring within their portfolio (both policy and administrative)? Or can deputy ministers, as the senior managers of departments with much more experience running large organizations, be separately accountable before parliament for administrative errors that occur? The debate on splitting accountability between ministers and deputy ministers dates back to the 1970’s, when the 1979 Royal Commission on Financial Management and Accountability (the Lambert Commission) called for deputy ministers to be separately accountable to parliamentary committees for the administration of government departments. The traditional concept of

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ministerial responsibility calls for ministers to be solely responsible for their departmental portfolios from a legal, political and administrative standpoint. The Commission challenged that definition when it suggested a separation between the administrative responsibilities of deputy ministers and the political responsibilities of their ministers. The Lambert report recommended that “deputy ministers be liable to be called to account directly for their assigned and delegated responsibilities before..the Public Accounts Committee.”9 In this scenario, a deputy minister would be held accountable to parliament “for legality of expenditures, the economy and efficiency by which programs are run, and their effectiveness in achieving policy goals.” Similar proposals have been made over the years by various reports and authorities. Reformers are particularly interested in the concept of “accounting officers” found in the British civil service. According to Franks, in Britain, an accounting officer (i.e. the permanent secretary of a department) is held fully and personally responsible and accountable before the Public Accounts Committee for their financial administration for the department. These responsibilities include ensuring that proper financial procedures are followed, that public funds are well managed, and “in the consideration of policy proposals..ensure that all financial considerations, including any issues of propriety, regularity, or value for money, are taken into account, and where necessary brought to the attention of ministers.”10 Franks supports the adoption of the British system in Canada as good management sense, seeing it as giving identity to the public service as a unique corporate body that is directly accountable to Parliament, independent of ministerial responsibility. The accounting officer model dates back to the mid-1800s, when permanent secretaries were personally responsible for all public funds spent by the department and were required to sign for the accounts of the department. If the department overspent what it had been allocated, the permanent secretary was required to pay that amount back to the government out of his personal finances. Later, the concept was broadened to the point that as part of their financial stewardship accountability function, accounting officers must have the necessary management process in place to ensure good financial management. As the accounting officer of a department, the permanent secretary is explicitly responsible for giving an account of human resources management and a number of other broad management responsibilities. In other words, being designated as the accounting officer carries with it the responsibility of being the manager of the department and being prepared to give a public accounting of that management. As required in the British government’s guidance to accounting officers, “the essence of an accounting officer’s role is a personal responsibility for the propriety and regularity of the public finances for which he or she is answerable; for the keeping of proper accounts; for prudent and economical administration; for the avoidance of waste and extravagance; and for the efficient and effective use of all available resources.”11

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Both the Gomery Commission and the House of Commons Standing Committee on Public Accounts became convinced that this model needed to be adopted in Canada.12 They argued that such a division might have stopped the abuse of the sponsorship program much earlier. If the deputy minister of Public Works or another public servant had been required to act as the “accounting officer” for the large public funds involved, abuse of the program might have stopped much earlier. Furthermore, the accounting officer would have been able to use their powers to stand up to the pressure of the minister or other political heavyweights. However, when considering whether Canada should adopt the ‘accounting officer’ model, it is important to note that in Britain a very clear distinction is made between the accountability of the minister, which remains intact, and the personal responsibility of the accounting officer to render an account for the for the good management of a government department. The accounting officer is required to be a witness before the Committee of Public Accounts to answer questions regarding their department’s accounts and for the findings of any reports submitted to Parliament by the comptroller and auditor general. The British reconcile the accountability of ministers and accounting officers in a variety of ways. Similar to Canadian deputy ministers, British accounting officers are answerable to Parliament for their activities, but are not the conduit through which parliamentary committees can render criticisms or recommendations. As result, it is not the responsibility of the Public Accounts Committee to demand that a permanent secretary fix a problem, since that person is accountable to their minister and not to the committee. It is only for the minister to receive Committee criticisms and to correct problems. Some argue that Franks and other proponents overstate the differences between the Canadian and British systems as they now exist. The Canadian system does not deviate too far from the British practice of differentiating between political and administrative accountability. Similar to their counterparts in Britain, Canadian deputy ministers appear before our own Public Accounts Committee for review of their financial and administrative activities. There they must show that funds were effectively and properly administered. J.R. Mitchell points out that, akin to the U.K., “this can be an arduous experience for a deputy, as can be seen in a number of cases in recent years, where the Canadian public accounts committee has taken a strong interest in administrative practice and alleged mismanagement.”13 There is a strong sense of answerability, not accountability, for deputies in both countries. The British model does not imply a separate accountability for accounting officers. The British Public Accounts Committee cannot provide direction to deputies or reward them. The only sanction that the committee can engender is public disapproval, which is minimal when compared to the harsher sanctions that can be imposed by those to whom the deputy is actually directly accountable, their minister and the prime minister.

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In both Canada and Britain, ministers (not deputy ministers) are held accountable by the electorate and Parliament for departmental mismanagement, and are expected to take steps to correct such problems. Mitchell indicates that both he and Sutherland feel that “this self-correcting feature of Westminster government is one of its most valuable attributes [serving] as a mechanism to constantly improve the quality of governance and administration generally.”14 In summary, despite the prima facie appeal of the “accounting officer” concept, as well as the realities and complexities of modern government, it is still wise to hold a minister solely accountable for his/her department’s policy and administrative functions. Ministers should not be in a position to assign blame to public servants as a means of avoiding political controversy. Moreover, reforms should not be made that would create a framework for direct accountability of departmental officials to Parliament. Both parliamentarians and citizens alike are better served by an accountability system that provides a clear conduit for addressing and answering to problems of administration. Sharing accountabilities with their deputies would only weaken the accountability and the authority of ministers, and going forward would create greater confusion as to who is responsible for future errors. Minister-deputy minister relationships would become poisoned if deputies began to see themselves as working for several bosses. As Arthur Kroeger underscores, deputy ministers would be given an independent power to refuse to do certain things for a minister where a certain parliamentary committee is perceived as having a higher authority.15 Conversely, at the behest of a committee, a deputy could do certain things for which his/her minister does not approve. Beyond these concerns, it should be noted that there are also other obvious problems with setting up a system that sees a deputy directly accountable to a parliamentary committee that in the Canadian experience is divided into four political parties. Regardless of claims to the contrary, the doctrine of ministerial accountability does not enable deputy ministers to escape accountability for the significant powers conferred to them. Deputy ministers are already held accountable through a variety of effective processes that do not shift ultimate portfolio responsibility and accountability away from their respective ministers. Such processes include the scrutiny of Treasury Board; the Office of the Auditor General; the Public Accounts Committee; the respective cabinet minister; the Prime Minister; Privy Council Office; the deputy ministerial community; and the electorate. Any transferring of accountability away from ministers to deputy ministers will only exacerbate existing complexities within government. Separating policy and administrative accountabilities is a theoretical suggestion that has little basis in reality, as seen in numerous examples where parliamentarians have exploited incidences of government mismanagement for their own

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political ends: the administrative can always become political, especially when errors are discovered. If senior public officials become subjected to the threat of direct accountability processes and the political quagmires that often accompany them, then the important work undertaken in ministry portfolios may become atrophied, as deputy ministers begin to overwhelm their respective ministers with every piece of information and menial decision in order to protect themselves from becoming the parliamentary targets for any possible future departmental lapses. The sponsorship scandal prompted renewed interest in accounting officers and the overhaul of ministerial accountability. But another, older affair will better illustrate how ministerial accountability can actually work. This is the furor over the grants and contributions program of Human Resources Development Canada – the hrdc affair of 2000.

the hrdc grants and contributions a f fa i r : a c a s e f o r m i n i s t e r i a l a c c o u n ta b i l i t y The essence of accountability for a minister is that when an administrative problem comes to light, that same minister takes complete ownership for that error by ensuring that effective action is taken to understand the problem (i.e. the symptoms and root causes) and then fix the problem, if it requires fixing. When there is any question about the proper management of publicly funded government programs, Canadians should be able to know what went wrong as opposed to just securing a Cabinet minister’s resignation. The existing vehicles of governmental oversight provide an effective and open public process that can hold ministers to account for the activities of their portfolios, and serve to enable the public, retrospective study of lapses in government administration and to facilitate sufficient corrective policy and administrative changes for the future. The handling of the hrdc affair exhibits the positive impact of the Canadian processes for ensuring accountability within government, and the fact that the doctrine of ministerial accountability works when it is applied properly. In 1998, the federal department Human Resource Development Canada (hrdc) voluntarily initiated an internal audit of eight program areas that utilized some $1 billion in grants and contributions expenditures. In 1999, the department released to the public results of the audit, which indicated, among other things, that projects were being managed with incomplete paper work (including applications, forecast cash flows, results expected, etc.), as well as with insufficient ongoing project monitoring on the part of hrdc officials. The media and the Opposition parties claimed that millions of dollars were lost by the government, and labeled the incident a “billion dollar boondoggle.” hrdc underwent intense public and parliamentary scrutiny throughout

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2000 to determine what went wrong, who was responsible, and who should be sanctioned. External studies into the affair were conducted by the auditor general as well as the House of Commons standing committee on Human Resources Development and the Status of Persons with Disabilities. As well, the minister of hrdc, Jane Stewart, and her officials were constantly pressed for further details by the media and parliamentarians. The 1998 internal audit was commissioned by the minister and deputy minister after a series of earlier audits conducted by both hrdc and the auditor general. The audit entailed a file review, as opposed to a financial audit, that looked into the ‘nature and extent’ of documentation found within a random sample of 459 projects from April 1997 to June 1999 across eight program areas. The results of the audit indicated that improvements needed to be made in project monitoring, contracting procedures and financial management practices.16 Fifteen percent of the audited projects had no applications on file; seventy-two percent had no cash flow forecasts; twenty five percent had no description of the activities to be supported; and eleven percent had no budget proposals or descriptions of results. In addition, eighty percent or more of the files showed no evidence of financial monitoring or any supervision. These results did not mean proper processing and monitoring had not occurred. However, they did confirm that the necessary information was not being collected and properly filed by front-line government officials. Jane Stewart and her officials accepted the findings of the audit and decided to publicly release the results along with a six-point action plan to address the deficiencies. This included ensuring that payments met financial program requirements; checking and correcting problem files; equipping and training staff appropriately and making sure they better understood the need for accountability; and reporting progress on the action plan to the general public. Significant staff and resources were committed to this plan and enormous innovations and changes were implemented within the department’s ongoing operations. The October 2000 auditor general report noted that “hrdc has initiated corrective action that addresses the deficiencies we found in our audit.”17 The report praised the department for its significant process in implementing its six-point action plan, as well as other corrective measures, and indicated that the department should continue to maintain its rate of progress. The auditor general also praised the department for fulfilling its pledge to provide quarterly public reporting on its progress with respect to strengthening the financial control and monitoring of its grants and contributions programs. Following the review of 16,971 files, representing a total value of $1.347 billion, it was found that there were only six overpayments made, with a total loss to the government being estimated at $3,229.

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The essence of ministerial accountability is that a minister is accountable when a problem is identified to take action to fix the problem. Attaining the resignation of a minister for an administrative error is not a solution, as the next minister will still need to be accountable for fixing the problem. In the case of hrdc, there was a wealth of significant problems that needed to be addressed. Despite the resulting intense public and political pressure placed upon her as a result of the hrdc affair, Jane Stewart was a strong example of a minister standing responsible and accountable for her departmental portfolio. She defended her decision to make the internal audit public by saying: “There’s nobody that forced me to do this. This is me and there’s a lot of people looking askance and saying you’ve got to be crazy. But I can’t do it any other way. The idea that its standard practice, that it gets swept under the carpet until the Opposition decides its going to make an issue of it, that’s not the way I do business … Is the system we’ve created such that if you identify problems from within, you’re a bum, but if you identify them from the outside, you’re a hero? … I don’t believe that, because if I did I might as well pack up and go.”18 Ms. Stewart, because she was the minister, had to answer for what had occurred and had to oversee the corrective measures. This was despite the fact that she was not personally to blame for any of the problems; she did not authorize the activities or direct people to act inappropriately. The minister made no effort to identify departmental officials responsible for the state of affairs for the purposes of deflecting blame and providing a scapegoat for parliamentarians and the media to target. Deflecting a suggestion that “heads would roll,” the Minister stated “This is not a witch hunt. This is about making sure we improve our administrative practices, that we track, that we train, that we do spot audits, that I measure my officials’ performance reports about how well they make progress in this regard.”19 Whether or not all her actions were correct and went as far as they could, Minister Stewart stood up in Parliament and informed her colleagues and the general public that there was a problem with hrdc, and that she was committed to fixing it. Her officials also supported her requirement to be answerable to for her department, through parliamentary committee appearances, technical briefings on the action plan, media interviews, launching internal processes to pull together and make available performance-related information, and providing answers for question period. There is little doubt that the constant barrage of questions in Question Period and the intense media coverage put pressure on hrdc to make information available for Minister Stewart to provide answers to the questions that were asked. As has been cited elsewhere, the affair led to “800 questions to the minister in question period, 17,000 pages of information on the department’s website, [and] 100,000 pages of material released to the media under the Access to Information.”20

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This intense pressure, in part, encouraged the extensive public dissemination that took place on behalf of the department regarding the grants and contributions program. It also underscored for the department the need to create and/or refine the processes necessary to ensure timely access to performance-related information. However, following the good report card from the Auditor General, questions related to grants and contributions began to dissipate in the House of Commons and in the media. The November federal election then saw the Liberal government and Minister Stewart reinstated. In summary, the hrdc affair proved that Canada’s accountability system can work well. It included the use of an internal audit, reviews by parliamentary committee and the auditor general, public progress reporting, Question Period, and ultimately an election. At the apex was the minister, who accepted the existence of problems, announced corrective actions, and put in place aggressive actions to solve those problems. The system of administration within the department provided advice and support to the minister, who took full public responsibility for what had happened in her department, even though she had no direct knowledge of the problems. However, the hrdc affair also illustrates difficulties with how ministerial accountability is perceived and presented, particularly by the Opposition and media. The Opposition parties repeatedly called for the minister’s resignation throughout the affair. The Canadian Alliance filed a dissenting report to the final House of Commons committee report on the affair, citing the requirement of ministerial accountability when it called for the resignation of Minister Stewart, and for the present and past deputy ministers of hrdc to be held accountable through some form of employment action. But this suggestion flies in the face of several key components of ministerial accountability already discussed in this analysis, especially: 1) only ministers are accountable for administrative errors, not deputy ministers; and 2) ministers have never been required to resign for administrative errors, only to correct them. Similar to the Opposition parties, from the first day the internal audit findings were released to the public, the media painted the affair as a “scandal” and a “billion dollar boondoggle,” with headlines such as “bureaucrats mismanaged $3 billion” and “department loses track of $1 billion.”21 The media gave the impression that the internal hrdc audit found that all of the grants and contributions money had been lost by bungling bureaucrats, as opposed to just poorly documented and tracked (which was the correct story). David Good notes that in the overall media treatment of the affair, first impressions became lasting impressions and that the public and parliamentary deliberations became framed by misinformation and journalistic efforts to undermine the anonymity of public servants by ferreting out “who knew what, when and where … and whose head should roll.”22 In retrospect, the intense media coverage seems wildly overstated when considering that the ‘billiondollar boondoggle’ narrowed down to less than $4,000 in overpayments by the

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government, and every other dollar was accounted for. Good sums it up best: “It seems unimaginable that what started as ‘the biggest scandal in Canadian history,’ and preoccupied the government and the Opposition for six months until June 2000, did not become an issue in the November general election and did not affect the election outcome.”23 In the end, the problems at hrdc were addressed largely to the satisfaction of the government and Parliament. Perhaps it is a testament to Canada’s system of accountability that if a minister and the government work within the bounds of the doctrine of ministerial accountability and the vehicles in place to support it, administrative errors can be addressed and excessive political pressure outlasted, despite the hyperbole and misinformation that can be found in political rhetoric and media headlines.24

a way f o r wa r d f o r m i n i s t e r i a l a c c o u n ta b i l i t y The hrdc affair shows how the theory of ministerial accountability can work in practice. But for many, the very fact that Minister Stewart did not resign suggests that the system is ineffective. Thus, the theory and practice of ministerial accountability works, but remains misunderstood, especially when tied too closely to the idea of resignation. In 2005, the sponsorship scandal reopened the debate about ministerial accountability, particularly with the Gomery Commission’s recommendation that accountability should be split and the accounting officer concept introduced. But the difference between the hrdc affair and the sponsorship scandal was that in hrdc, the minister presented herself as responsible and accountable. While public servants appeared before parliamentary committees, they did so on behalf of the minister, rather than in their own right. In comparison, neither ministers nor deputy ministers took more than modest responsibility for the abuses of the sponsorship program. However, the Commission argued that a different system might have produced different results. In particular, even if the minister did not take responsibility and/or was involved in the problem themself, a deputy minister with British-style “accounting officer” powers might have been able to stand up to the abuse and/ or be held fully accountable for what went on. But as we have already suggested, the accounting officer concept is not a panacea, and Canadian and British practices are in fact already similar in many ways. And, the federal government has taken a number of actions in recent years aimed at refining and improving accountability for deputy ministers, within the traditional framework of ministerial accountability. These include guidance documents compiled to clarify the responsibilities and accountabilities of ministers and deputy ministers. In addition to the Guidance for Deputy Ministers, a management accountability framework, as well as the

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injection of results-based criteria into the pco-led performance management program of deputy ministers, has expanded the capacity for ministers and central agencies to hold deputies accountable. The Liberal government went even further in its 2004 Budget to announce a slate of reforms aimed at improving accountability and transparency.25 It announced the creation of an Office of the Comptroller General, as well as separate comptrollers for individual departments, to oversee all proposed government spending. The internal audit capacities of departments were also to be expanded to allow for greater risk analysis of departmental programs. A further commitment was made to implement new financial and human resource-related management systems to ensure timely tracking of governmental spending and “to provide appropriate tools for effective scrutiny and decision making.” Finally, in early 2006, soon after the final report of the Gomery Commission, the new Conservative government introduced the Federal Accountability Act. Among its many provisions, the Act calls for deputy ministers to be accountable before parliamentary committees to answer questions related to their responsibilities. This is an interesting legislative enhancement, as it suggests a reform that is in fact not new, but a long standing tradition. As already discussed in this chapter, deputy ministers have long been ‘answerable’ before committees for the management of departmental portfolios. Additionally, building upon another recommendation contained in the Gomery report, the Act calls for a process to resolve disputes between ministers and their deputies when there is a disagreement over the “interpretation or application of a Treasury Board policy, directive or standard.” In such cases, deputy ministers are to seek written guidance from the Secretary of the Treasury Board. If the dispute is not resolved, then the minister seeks a decision of the Treasury Board, which is subsequently shared with the auditor general. This proposal is a variation of the British accounting officer model, where there is a formal requirement for permanent secretary to seek written instructions from their ministers when asked to implement something that does not meet the normal public service management criteria of regularity and propriety and value-for-money. In such cases, British accounting officers must do two things: 1) inform the minister in writing that as accounting officer for the department, they are not prepared to take personal responsibility for that action; and 2) if the minister persists the deputy is under instruction to require the minister to give formal instruction in writing that that they want that action to happen. Once these two conditions are met, the answerability for the proposed action passes from the permanent secretary to the minister. The letter of

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instruction from the minister is immediately filed both with the auditor general and with the Treasury department. When appearing before the Committee of Public Accounts (the only parliamentary body to which the accounting officer is answerable), the committee will recognize that the accounting officer is not answerable for the transaction under question. Ralph Heintzman, the former vice-president of the Public Service Human Resources Management Agency, criticized the informal processes that have been traditionally available to deputy ministers when dealing with ministers that seek to implement something that the public service would not normally recommend (either from a legal, procedural, or value-for-money perspective).26 When such disputes have transpired, deputy ministers, because they have no formal accountability or responsibility, have had few tools with which to deal with these situations, other than completely informal tools of influence. As a result, deputy ministers have lacked adequate mechanisms to clarify their areas of answerability, and to protect themselves from vilification where improprieties are brought to light and there is a public and/or political outcry. An informal process requires a deputy who has had enough experience to effectively challenge a minister. Where action is taken, there is a very high risk that an element of friction will be created in the minister/deputy minister relationship. Appearing before a parliamentary committee dealing with the Federal Accountability Act, Arthur Kroeger also cautioned against the holus bolus adoption of the British model of ministerial instruction. Kroeger supports the creation of a mechanism to address management disagreements between deputy ministers and ministers. However, his concern is that the written instruction model used by the British may be an overbearing measure that will disrupt the functioning of government by adversely affecting the collegiality that is absolutely essential in minister-deputy minister relationships. Kroeger endorses the alternative contained in the Federal Accountability Act. By giving Treasury Board the role to mediate and resolve conflicts between deputies and ministers, elected officials are making judgments about other elected officials rather than “an unelected official throwing roadblocks in the way of what the minister wants to do.” The Federal Accountability Act proposes another promising reform with the call for deputy ministers to ensure an appropriate internal audit capacity and to establish departmental audit committees. Former Treasury Board Secretary Frank Claydon notes that ministers need to have the assurance that their departments are being managed well.27 One way to provide that assurance would be for ministers and deputy ministers to have an agreed upon checklist of audit plans based on programs assessed from a risk management perspective. Through the use of such a checklist, ministers could have some level of confidence that administrative problems would surface through such reviews, and deputy ministers would be able to assure ministers that the proper audits and administrative processes were in place and functioning well.

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c o n c lu s i o n s : t h e n e e d t o m a i n ta i n t h e d o c t r i n e Ministerial accountability is more than just than assigning blame for government mismanagement and seeking revenge against cabinet ministers by effecting their resignations, or against senior public servants by making them directly accountable to Parliament through ill-defined and ad hoc parliamentary inquiry and disciplinary processes. This is not to say that the existence of ministerial accountability shelters government officials from the consequences of their errors. For example, in the year following the hrdc affair, every executive in the whole department was denied a performance bonus. Moreover, as we have seen in recent court actions involving key players of the sponsorship scandal, public servants cannot escape criminal liability for fraudulent activities of which they are personally to blame. Nevertheless, if the doctrine was limited to finger pointing and public hangings, then would-be reformers are justified in suggesting that ministerial accountability is ineffective. However, accountability is not about naming and shaming. On the contrary, the doctrine of ministerial accountability provides a focused target (in the role of a minister) for parliamentarians and the general public to look to for identifying and solving administrative errors of a particular department, and to providing timely and accurate information related to the problems under scrutiny and the corrective measures undertaken. The hrdc affair testifies to the strength of the current accountability regime, and the futility of attempts to separate the political from the administrative in order to split accountabilities between ministers and their officials. The grants and contributions scandal was primarily the result of poor record keeping and yet, as was glaringly apparent, that issue of administration became extremely political. Sutherland notes that if critics are correct that the “role of ideas” in the Canadian system of traditional ministerial accountability is weak, this problem “should be addressed by strengthening the role of political ideas rather than by the haphazard implementation of an irresponsible and unverifiable system of direct accountability [of public servants to Parliament].”28 A uniform understanding and approach to applying the doctrine of ministerial accountability is a fundamental starting point to ensuring the proper accountability of government to Parliament and to the electorate. Ministerial accountability and its supporting vehicles and processes face many challenges in the present age and must be clarified and strengthened, as well as sufficiently communicated, if it they are to survive. In summary, while it is fair to suggest that some reforms are required to further improve and modernize the concept, the traditional doctrine of ministerial accountability is in no sense ‘broken.’ Regardless of the improvement that could be made, a system is only as strong as the people within it. Failures

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like the recent sponsorship scandal are ones of individuals and leadership, not the system itself. A different system of ministerial accountability would not have stopped abuse of the sponsorship program, and in fact may have only complicated things further, especially for public servants unwittingly caught in the web of fraud and deceit. In contrast to the sponsorship scandal, the handling of the hrdc affair suggests that very few changes need to be made in Canada to support the doctrine of ministerial accountability; and that the doctrine itself only needs to be understood clearly and applied more stringently and consistently than it has in recent years. The fault for any imperfect application of the doctrine in Canada lies not in its lack of utility but, instead, in the imperfect understanding or use of the doctrine amongst some parliamentarians, public servants, journalists and members of the electorate. Creating processes that would enshrine past efforts to hold public servants directly accountable to Parliament, as opposed to their ministers, would only serve to further exacerbate and undermine an already complex accountability system. It would also distract focus away from debate surrounding reforms necessary for improving government accountability. Instead of championing reform initiatives that weaken the concept of ministerial accountability, efforts are required to further build upon and clarify what ministerial accountability is and how it aids in the proper functioning of government within a Westminster-style system such as Canada’s. While it taken several hits in recent years, ministerial accountability is alive and well in Canada.

notes 1 See in particular the recommendations of the Commission of Inquiry into the Sponsorship Program and Advertising Activities (the Gomery Commission) Restoring Accountability: Recommendations (Government of Canada, 2006). 2 John Langford, “Responsibility in the Public Service,” Canadian Public Administration 27, no. 1 (March, 1984), p. 520. 3 David Smith, “Clarifying the Doctrine of Ministerial Responsibility as it Applies to the Government and Parliament of Canada,” Commission of Inquiry into the Sponsorship Program and Advertising Activities, Research Studies, Volume 1 (Government of Canada, 2006), p. 104. 4 S. L. Sutherland, “Responsible Government and Ministerial Responsibility: Every Reform Is Its Own Problem,” Canadian Journal of Political Science 24, no.1 (March 1991), p. 95. 5 Smith, “Ministerial Accountability” p. 107. 6 Sutherland, “Responsible Government.” 7 C.E.S. Franks, “Not Anonymous: Ministerial Responsibility and the British Accounting Officers,” Canadian Public Administration 40:4 (Winter 1997), p. 627.

122 Macro Choices and Challenges 8 Peter Aucoin and Mark D. Jarvis, Modernizing Government Accountability: A Framework for Reform (Canada School of Public Service, Government of Canada, 2005), p. 41. 9 Royal Commission on Financial Management and Accountability, Final Report (Ottawa, 1979), p. 189. 10 C.E.S. Franks, “Not Anonymous” p. 631. 11 Government Accounting 2000, Annex 4.1, p. 2. 12 Commission of Inquiry on the Sponsorship Program and Advertising Activities, Restoring Accountability (Government of Canada, 2006); House of Commons Standing Committee on Public Accounts, Governance in the Public Service of Canada: Ministerial and Deputy-Ministerial Accountability (May 2005). 13 Mitchell, J.R., “Reply to C.E.S. Franks,” Canadian Public Administration 40:4 (Winter 1997), p. 654. 14 Ibid., p. 655. 15 Personal interview by Scott Millar with Arthur Kroeger (2003). 16 Human Resources and Development Canada, “Backgrounder: Human Resources Development Canada Internal Audit Report on Grants and Contributions,” (Ottawa, January 19, 2000). 17 Office of the Auditor General of Canada, “Management of Grants and Contributions at hrdc,” (Ottawa, October 17, 2000). 18 David A. Good, The Politics of Public Management (University of Toronto Press, 2004), p. 68. 19 Good, The Politics of Public Management, p. 21. 20 Donald J. Savoie, Breaking the Bargain: Public Servants, Ministers and Parliament (Toronto: University of Toronto Press, 2003), p. 147. 21 Good, The Politics of Public Management, p. 23. 22 Good, The Politics of Public Management, p. 24. 23 Good, The Politics of Public Management p. 60. 24 Nevertheless, there should be no minimization of the effect of such a sustained and pointed attack by mps and the media on the morale of public servants, all of whom seemed to be cast as incompetent and in some cases criminal. 25 All succeeding information and quotation related to the Budget 2004 reforms are drawn from Treasury Board Secretariat, Strengthening Public Sector Management (Treasury Board Secretariat: Ottawa, 2004). 26 Personal interview by Scott Millar with Ralph Heintzman (2003). 27 Personal interview by Scott Millar with Frank Claydon (2003). 28 “Responsible Government and Ministerial Responsibility,” p. 120.

7 Room for Manoeuver? The Tory Agenda and Liberal Commitments carey anne hill a n d tr e v o r e . l y n n What was the point of doing a lot of work if governments aren’t prepared to live up to the commitments of a previous government? Clement Chartier, President Metis National Council1

While annual budgeting is deemed to be the norm, a series of minority governments provide an opportunity to examine multi-year budgeting in the Canadian context. In Liberal Finance Minister Ralph Goodale’s final budget speech, he explained that the framework for the 2005 budget involved a five-year timeline. Specifically, he noted, “For the sake of completeness and transparency, and given that many of the Government’s newest and largest program obligations (like those enshrined in federalprovincial and territorial agreements) represent commitments of five years or longer, the framework for this budget is in fact five years, rather than the usual two.”2 This approach to budgeting raises governance issues about annual budgeting versus multi-year budgeting. We argue that multi-year budgets, especially in a minority context, involve delegation of spending from one government to another, and even from one party to another. We examine under what conditions governments at the federal level in Canada might delegate spending to future governments.3 The chapter explains this dynamic with a focus on three areas in which the Liberals made significant long-term commitments: (1) the Environment (2) the Research and Development/Innovation Agenda and (3) the Cities Agenda. The paper is primarily limited to an analysis of the Goodale and Flaherty budgets. An overview of spending announcements and commitments of the Liberal governments, the extent to which this spending occurred, and the amount of spending delegated to future governments, including the current Harper Conservatives, are discussed. To what extent did Liberals actually spend and to what extent did they delegate spending? What is the efficacy of multi-year versus annual budgeting?

124 Macro Choices and Challenges

Our analysis demonstrates that the federal government can successfully delegate spending via agreements with the provinces. Indeed, as noted above, Minister Goodale appears to offer some hint of this strategy in his 2005 budget speech. We also consider arguments for annual and multi-year budgeting, explaining that delegated budgetary commitments allow the current government to claim credit while passing costs onto future governments. Even if the future government fails to accept the commitments, they are charged with the burden of explanation. Prime Minister Harper has experienced this situation first-hand as he alters the Liberals’ course on environmental policy. Moreover, by using delegated spending the Liberals have essentially “done the job” on research and innovation allowing Harper to avoid making meaningful decisions on this file. In examining the issue of delegated spending, the analysis uncovers an important aberration (perhaps an unconstitutional one) that we suggest should be further explored: the failure of the Harper Conservatives to implement the Kelowna Accord. In several areas, with the important exceptions of childcare, environmental policy, and the Kelowna Accord, the Martin Liberals used delegated spending effectively. By spreading program spending out over five and ten year increments, they were able to set the public policy debate in a number of areas for the immediate future. Much of Harper’s spending agenda is influenced by his reactions, both positive and negative, to Martin’s moves.

b a c kg r o u n d c o n t e x t When the Chretien government took office in 1993, the federal debt to gdp ratio was at 68.4 percent.4 As finance minister, Paul Martin initiated cutbacks to government spending to balance the budget. New-found budget surpluses were the result of these cutbacks coupled with the strength of the Canadian economy. While the Liberals used these funds to pay down the federal debt, they also initiated program spending and transfers to foundations to reduce this unexpected “embarrassment” of riches. For the Liberals, budgets could be used to address social issues through new spending. Therefore, the Liberals preferred to make funding announcements containing spending commitments to address challenges in Health Care, Aboriginal issues and with municipalities. The Conservatives view financial administration differently. While they have not abandoned all new program spending, they prefer to be branded as “accountable” stewards of public funds. Most spending will occur in areas they promised in the election with little room for other projects. Spending will be more short term and focused on tangible goods as opposed to longer term societal issues. With the exception of certain multi-year statutory agreements with the provinces, annual budgeting has been the norm in Canada, regardless of the

125 The Tory Agenda and Liberal Commitments

party in power.5 As Doern et al explain, “The notion of annual budgets, however, is not strictly adhered to, in that certain programs involve multi-year statutory agreements with the provinces.”6 One example of this trend was the agreement made with the provinces regarding healthcare in 2003. This agreement resulted in a shift from the Canada Health and Social Transfer to two transfers: the Canada Social Transfer and the Canada Health Transfer. The Canada Health Transfer committed federal transfers to the provinces of $34.8 billion over five years. Indeed, federal-provincial agreements have long resulted in multi-year commitments. Another similar commitment includes the Equalization and Territorial Formula Financing Framework involving $33.4 billion over 10 years. By contrast, Jim Flaherty’s first budget was quite different. While budgets brought down by Manley and Goodale detailed extensive new plans and new spending announcements, the first Flaherty budget was much more modest in scope and focuses on only a few core areas of action. Harper and Flaherty seemed to reject most, if not all, of the previous government’s priorities except for research and innovation. The Conservatives did make a long-term commitment of their own, however. Even the commitment to spend on the military was announced as an annual commitment rather than program spending (i.e., The 2006 budget involves a commitment of $1.1 billion this fiscal year with $5.3 billion over five years as bracketed spending).

a n n ua l v e r s u s m u lt i - y e a r b u d g e t i n g Citizens delegate tasks to government. Public budgets serve as a template of spending commitments by governments. In Canada, and within the G8 more generally, public budgeting occurs on an annual basis. In parliamentary systems, citizens entrust this role to finance ministries. Canadian finance ministers base their decisions partly on the policy directions outlined in the throne speech, and partly on their own spending priorities and then provide itemized spending plans in an annual budget speech delivered by the minister of Finance. We assume that governments seek to claim credit and avoid blame for their actions and decisions in order to achieve ongoing electoral success.7 Furthermore, we assume that governments can delegate responsibilities to other governments.8 Our discussion that follows relies on some arguments within the literature, most notably those of the American budgeting expert Allen Schick, and more classically of Aaron Wildavsky. In the late 1960s, the question of budget timelines attracted considerable interest in the field of public administration. In that debate, Wildavsky argued for the abandonment of a periodic budget cycle, noting that only the

126 Macro Choices and Challenges

introduction of new programs or changes to programs should be put for review.9 Among other aspects, he pointed out that decision-makers often operated annually with the same information they had the previous year. With respect to rationales for annual or multi-year budgets we have depended on the existing literature, and on our own understanding of budgetary logic. While this work may not provide an exhaustive examination of relevant arguments it does provide consideration of arguments from both viewpoints. Annual Budgets Annual budgeting practices have been the norm within democratic countries. Annual budgets offer citizens accountability as governments outline their expected activities on a regular basis. Within Canada the principle of responsible government is brought into play when the annual budget is introduced. As the budget is a tax and spending bill of considerable consequence, the government tests whether it has the confidence of the House of Commons. A negative vote on a budget bill signals the end of that government and a coming new election. The budget speech reminds voters of who a government is. For governments, the budget speech has the benefit of allowing the party in power to clearly differentiate itself from the opposition as having the spending power. Thus, annual budgets both test and strengthen the governing party. Moreover, annual budgets offer flexibility. They allow governments to identify new priorities and commit funds to implement these. They ensure the hands of the government are not tied and allow for shifts in policy direction. Governments may need this flexibility to respond swiftly to changes in international and domestic markets or to capitalize on economic trends. Finally, annual budgeting might allow governments to provide smaller pay-offs to several constituencies over time. On an annual basis, the government can re-affirm its commitments to various constituencies. It can commit to spend in new areas thereby signaling support for new priorities and related constituencies. Multi-Year Budgets While conceivably offering less accountability, multi-year budgets may provide greater certainty and capacity for planned commitments. Certainty can enable decision-makers to plan long-term in order to bring about expected results. For example, environmental problems require significant spending commitments and benefit from long-term planning. Multi-year budgeting recognizes that programs take time to implement. One year is often only enough time to initiate a program but not long enough to begin carrying out

127 The Tory Agenda and Liberal Commitments

its aims. Nor is it usually enough time to determine if the program has achieved its intended outcomes. In addition, certainty may be a market requirement. In Australia, it appears that multi-year budgeting might have arisen as a way to manage debts and deficits long-term.10 For example, Allen Schick has argued that “budgetary systems were deficient where nations produced annual budgets without the discipline imposed by a multi-year fiscal plan.”11 As a complement to providing certainty and enabling planning, multi-year budgets permit the government to delegate spending either to a subsequent year or to a subsequent government. Governments can engage in what might be termed ‘symbolic spending’ as they announce program-spending in the billions while only responsible for a portion of that spending during their mandate. Within a government’s mandate this symbolic spending may allow them to “save by stealth” as the voters encounter program announcements while in reality the government has largely postponed action until a later date. Once commitments are delegated to a future government, it may be legally bound to carry out the delegated commitments. Even if not legally bound, it may be bound by convention or public opinion. As well, even if its hands are not tied in practice, in order to escape from these delegated commitments it is faced with the specter of announcing its decision to render the commitments null and void and thereby remind voters of the priorities of its opponents. To summarize, annual budgets have the benefits of flexibility and act as a true annual test of the government’s values and commitments. By contrast, multi-year budgeting offers certainty and the ability to execute programs over longer periods of time. A multi-year budgeting process also allows the governing party to postpone spending while claiming credit for significant program announcements in the present. In the next sections, we examine some of the multi-year commitments made by the Liberals and the extent to which they were able to delegate these to the Conservative government. Our approach involves analysis of the 2005 and 2006 federal budget documents including the budget speeches, as well as examination of the public accounts. The federal Financial Administration Act (1985) governs financial administration in Canada including the establishment, roles, and responsibilities of the Treasury Board, and all aspects of public disbursements, public debt, public money, and public accounts. According to this Act, the Public Accounts of Canada must be tabled in the House of Commons, annually. The public accounts include a statement of the financial transactions for the fiscal year, expenditures and revenues of Canada, and assets and liabilities of Canada. This statement thus includes the commitments of Canada beyond the current fiscal year. For example, outstanding obligations beyond 2012 appear in the Public Accounts for 2006.

128 Macro Choices and Challenges

environment Environment-related spending commitments by the Liberals outlined in the 2005 budget involved over five billion dollars in spending over five years, including three billion dollars in new commitments. While most of these spending announcements were over several years, some were one year measures within the 2005 fiscal year including, for example, $200 million in a sustainable energy science and technology strategy, $295 million in enhanced tax incentives to encourage investment in efficient and renewable energy generation, $90 million to support scientific assessments and research under the Canadian Environmental Protection Act (cepa), and $209 million to maintain and acquire capital assets in national parks. Close to three billion in commitments that were delegated will never be implemented. These include commitments (see Table 1) regarding stimulation of renewable energy sectors, in particular, energy generated from wind, small hydro, biomass, and landfill gas. Some of these commitments extended well beyond the five years noted by the Finance Minister. Commitments with respect to the energy sector extended over three times that to fifteen years. It could be argued, however, that such commitments were appropriate as the creation and development of new energy sectors takes long-term commitment and requires some certainty to stimulate investment. In any case, the Conservatives opted not to accept any of the Liberal delegated commitments regarding the environment. Even one of the short-term commitments was reneged on by the Harper Conservatives. Conservative Natural Resources minister, Gary Lunn, announced that Natural Resources Canada (nrcan) would not be going ahead with $225 million in spending on the EnerGuide for Houses Retrofit Incentive Program. While the Conservatives opted not to implement any of the Liberals’ environment-related spending commitments, it is worth noting that they offered few of their own commitments regarding the environment as it did not fall within their fivepoint agenda. Environmental commitments within the Flaherty budget were thin. There were two main initiatives announced: (1) a tax credit for monthly bus passes and (2) acceleration of the capital cost allowance for forestry bioenergy. Neither of these commitments was multi-year other than in the sense that, if maintained, they will result in perpetual revenue losses to the treasury. With respect to delegating commitments to the Conservatives, the Liberals were not successful on the environment file. Their attempts when in government to get an agreement with the provinces regarding Kyoto, which might have bound the hands of the Harper Conservatives, failed. Their longterm commitments to environmental protection ended up being merely symbolic.

129 The Tory Agenda and Liberal Commitments Table 7.1 Liberal Multi-Year Commitments in Budget 2005 – The Environment Amount of Spending Announced

Timeline to Implementation in Years

Clean Fund to stimulate cost-effective action to reduce greenhouse gas emissions in Canada

$1 billion over five years

To 2010

Funding to stimulate the use of Wind Power to generate energy

$1.2 billion between five and fifteen years

$200 million over 5 years and $920 million over 15 years

Funding to stimulate forms of renewable energy other than wind such as small hydro, biomass and landfill gas

$983 million between five and fifteen years

$97 million over 5 years and $886 million over 15 years

Specific Commitment

research and development a n d i n n o vat i o n While Liberal commitments regarding environmental protection were in vain, the Liberals were much more successful in their efforts to advance a research and innovation agenda. Our analysis suggests that the Liberals were able to pass a significant portion of these commitments onto their predecessors. Compared to other G8 countries, and as a result of fiscal belt tightening in the 1990s, funding for research and innovation had become quite sparse. Liberal politicians viewed research and innovation as a way to increase Canada’s productivity along with its competitive edge against other countries. John Manley implemented increases to the federal granting agencies (Social Sciences and Humanities Research Council, Natural Science and Engineering Research Council and Canadian Institutes of Health Research), provided additional money for Genome Canada and the Canada Foundation for Innovation and the National Research Council. Goodale and Martin did not abandon many of the directions set by Chretien and Manley in 2003. The first Goodale budget offered familiar spending increases for research and innovation. Goodale modestly increased funding for the indirect costs of research (a program set up to assist universities with funding ancillary costs associated with federally funded research conducted on their campuses). He provided additional funds to the Canada Foundation for Innovation (cfi), Genome Canada and the Canada Research Chairs and provided money to the Networks of Centres of Excellence (nce).

130 Macro Choices and Challenges Table 7.2 Liberal Multi-year Commitments in Budget 2005 – Research and Development12 Amount of Spending Announced

Timeline to Implementation in Years

Increased funding to the granting agencies (sshrc, nserc, cihr)

$375 million over five years

To 2010

Indirect costs of research

$75 million over five years

To 2010

Tri-University Meson Facility

$126 million over five years

To 2010

Additional funding for cfi, Genome Canada, Canada Graduate Scholarships, nce, and University Commercialization

Ranging from $10 million (commercialization) to $550 million (cfi) per year

Ongoing

Specific Commitment

Ralph Goodale’s second budget was familiar despite the minority status of the government and was significantly more expansive in its funding announcements than his first budget. Goodale likely saw the budget as an opportunity to cement the Liberals’ hold on core constituencies by providing long-term funding to programs that their caucus and voters had come to value. Research and innovation were no exception. In fact, budget 2005 went beyond his previous budget in its spending commitments. Goodale announced additional funding for the indirect costs of research, the granting agencies, foundations and funded new projects aimed as improving the commercialization results on university campuses. Despite Budget 2006’s different direction and critique of past Liberal efforts, Flaherty’s first budget states that “Since the deficit was eliminated, the federal government has increased its support for post-secondary education research, with nearly $11 billion in incremental funding. These investments have assisted Canadian universities in strengthening their research capacity and building a global reputation for excellence.”13 Harper and Flaherty seem to have accepted the Liberal vision for innovation and research, at least until the Tory’s own promised s&t strategy is announced. They tacitly say that previous budgets have made spending commitments in this area and they don’t need to alter them. Spending announcements by the Liberals are good until 2006–2007 so this government appears to be willing to stay the course. Flaherty and Harper also included some vague promises to initiate further measures to promote research and innovation14 and to continue with investments in this area. These promises are, however, not costed and non-specific. On September 25, 2006, Flaherty announced a one time transfer to the provinces of $3.3 billion. The provinces

131 The Tory Agenda and Liberal Commitments

may spend the money as they see fit but general operating principles suggested a portion of the funds be used to update research facilities and laboratories. It will be up to the provinces to determine how this money is spent. A “stay the course” agenda on research and innovation appears to be in order until the next federal budget. While funding for research and innovation appears to be in a holding pattern under the Conservatives, there appears to be no additional monies being made available for this enterprise. This is in contrast to other oecd countries, including the United States of America, who continue to aggressively fund research and innovation programs. Canada is therefore slipping compared to other countries and is experiencing a research funding decline through neglect as funding decreases as a percentage of total government expenditures. The Conservatives’ faith in these programs may be faltering as they have called for a review of spending by the three granting councils, cut support for research into medicinal marijuana, and funding geared towards climate and atmospheric sciences. The Liberals’ faith in research and innovation funding appears to be shared by the Conservative government, to-date, and thus the delegation of spending appears to be non-problematic, yet it is noteworthy that the Conservatives were simply able to borrow from previous budgets in this area. Spending measures had been approved and essentially require no further government action to promulgate. Universities and other research organizations should be somewhat worried, however, by the tone of recent reviews and announcements. Past Liberal budgets varied in their degree of generosity towards research projects but were usually specific and direct. If budget 2006 and subsequent reviews are any indication, the Conservatives may have yet to make up their mind on this funding area.

m u n i c i pa l i t i e s In addition to research and innovation, and the environment, the Cities Agenda was one of Paul Martin’s priorities and, if the Conservative commitment to implement it continues, will be one of his legacies. For their part, cities were not on the Conservative agenda. Their five point plan included no mention of municipalities. The Conservatives failed electorally in Canada’s major cities, failing to elect any Members of Parliament from Vancouver, Toronto or Montreal.15 Nevertheless, during the election, Stephen Harper said the Conservatives would deliver on the New Deal agreement thus borrowing from Martin’s delegated spending. In the 2005 Liberal budget speech, Finance Minister Ralph Goodale explained the importance of the federal government’s commitment to municipalities: “Most significantly, municipalities are the level of government closest to Canadians. They deal with fundamental issues that touch people’s

132 Macro Choices and Challenges

daily lives. In light of that, the Prime Minister proposed a New Deal for Cities and Communities based upon a set of principles: to provide new, reliable, long-term funding; to ensure fairness among regions and among communities of different sizes; to respect the jurisdiction of provinces, and to set shared objectives and report results to Canadians.”16 The long-term commitment was therefore part of the Liberal strategy to provide some certainty to municipal governments. This commitment began in the 2004 budget when the Liberals announced the decision to give municipalities full relief from the Goods and Services Tax describing it as a contribution of as much as $7 billion to municipalities over 10 years. In the 2004 budget, the Liberals had committed to providing municipalities with one cent per litre of gas tax revenues amounting to $400 million annually. In the 2005 budget, they announced an increase to $600 million. Moreover, they announced a long-term commitment to increase the amount of gas tax revenues to five cents per litre by 2009/2010 which would amount to $2 billion annually. Why did the Conservatives agree to maintain the Liberal commitments to the municipalities? We suggest that the key to the delegation of this commitment is that an agreement had been made with the provinces. The New Deal was not merely signaling a new federal-municipal relationship. It also entailed an agreement with the provinces that were not about to give up their jurisdiction with respect to municipalities. The 2005 budget speech affirmed the constitutional responsibility of the provinces regarding cities. As the Constitution Act (1867, 1982) makes clear, municipalities are creatures of the provincial governments. The transfer of gas tax revenues was to be mediated through the provinces and not go directly to cities. Provincial revenues were at stake. Rendering a federal-provincial agreement null and void might cause a fiscal crisis or at least a provincial political firestorm. While cities did not vote for the Conservatives, and cities were not part of the Tory agenda, the Tories were bound by the federal-provincial agreement that was the New Deal. Where the environment was not an area that the federal government could get the agreement of the provinces, cities was. The Harper Conservatives had little choice but to accept this legacy of the Martin Liberals.

the kelowna accord We have argued that in addition to research and innovation, where the Conservatives were willing to stay the course, the Martin Liberals were successful in tying the hands of the Harper Conservatives in areas where they had achieved significant federal-provincial agreement. Obviously, this begs the question of why not the Kelowna Accord with Aboriginal peoples? Our intention initially was to limit our foci to cities, research and innovation, and the environment, but our findings require us to consider the Kelowna Accord. In addition to the cities agenda, federal-provincial agreements also

133 The Tory Agenda and Liberal Commitments Table 7.3 Liberal Multi-Year Commitments in Budget 2005 – Municipalities

Specific Commitment

Amount of Spending Announced

Timeline to Implementation in Years

Portion of Gas Tax Revenues

$5 billion

5 years beginning with $600 million and increasing to $2 billion annually by 2009/2010

Renew and Extend the Three Major Infrastructure Programs – Municipal and Rural, Strategic and Border

Ongoing

Ongoing

maintained commitments in healthcare and a new Equalization and Territorial Financing Framework. Thus, Kelowna is a quandary. Though not addressed at length in this analysis, childcare (see Table 7.4 at the end of the chapter) is also a long-term commitment the Liberals failed to delegate. This commitment differed significantly from the Kelowna Accord, however, as it did not involve Aboriginal Peoples and had an ‘escape clause’, which the Kelowna Accord did not include, that permitted either level of government to withdraw from the childcare agreement after one year. In this section, we argue that reneging on the Kelowna Accord is contrary to the fiduciary responsibility the federal government has to Aboriginal peoples, and is, following our previous line of argument, contrary to the status of the Accord as a federal-provincial agreement of significance. The Kelowna Accord was concluded on November 25, 2005 by Aboriginal leaders, by all the provinces, and by the federal government. It included $5.1 billion in spending over five years, including $1.8 billion for education, to create school systems, train more aboriginal teachers and identify children with special needs, $1.6 billion for housing with $400 million to address the need for clean water in remote communities, $200 million for economic development, and $1.3 billion for health services. The agreement involved funds that would be used for Aboriginal peoples on reserves and also included funds that would be distributed to provinces. For example, $300-million would be spent over three years to provide improved housing for aboriginals living off reserve. Several of the other commitments involved transfer of funds to the provinces as the spending fell within their areas of jurisdiction. This agreement was made not only with and for aboriginal peoples; it was an Aboriginal-federal-provincial-agreement. This agreement occurred late in 2005, indeed just seventy-hours before the Martin minority government fell. Therefore, funds for this agreement were not accounted for in the 2005 budget and federal departments had no time to put in place contribution agreements. Originally, the Tories committed to

134 Macro Choices and Challenges

meeting the targets of the Kelowna deal.17 However, the 2006 budget committed to spending only $450 million over two years when nearly twice that amount was to be spent in one year based on the agreement. Due to the time frame involved, the Martin Liberals were unable to give effect to this agreement by drafting or signing any contribution agreements. They did, however, delegate a moral responsibility to the Conservatives to spend in these areas as the agreement involved a significant level of participation from the Canadian political community including all ten provinces and aboriginal organizations. Arguably, the commitments made in the Kelowna Accord should have appeared in the 2005–06 Public Accounts of Canada. Other long-term spending commitments, for example, the Gas Tax Revenue contribution agreements are specified through 2010 (but not beyond) as would be expected according to the delegated commitment. The minority government situation meant that the Martin Liberals did not prepare the Public Accounts for their last year in power, however. It is up to the President of the Treasury Board and the Minister of Finance to determine what should appear “to present fairly the financial transactions and the financial position of Canada.”18 The public accounts include contracts, arrangements and obligations. We suggest that the Conservative refusal to follow through on the Kelowna Accord, while not entailing the cancellation of pre-existing programs, did entail the denial of a legitimate expectation from the Provinces and Aboriginal peoples. Indicative of this expectation, in June 2006, the premiers of Canada’s western provinces held the Western Premiers Conference in Gimli, Manitoba and reiterated their support for the Kelowna Accord. One month earlier, the Premier of British Columbia, Gordon Campbell, made a plea to the federal government to follow through on its commitment to aboriginal peoples, stating: All governments, including First Nations governments, need to know they can count on stable revenue streams to provide the services for which they are responsible. That was implicit in the five-year commitment made in Kelowna. … I characterized [the Kelowna Accord] as Canada’s ‘moment of truth.’ … It was our chance to end the disparities in health, education, housing and economic opportunity. All first ministers rose to that moment of truth alongside Canada’s Aboriginal leaders to undertake that challenge. Having made that extraordinary national commitment, any unilateral reversal will invite consequences that only make us poorer as a nation.”19

The failure of the Harper Conservatives to follow through on the Kelowna Accord raises issues that we cannot adequately address here. With respect to federal-provincial financial arrangements, Peter Hogg explains “In Canada, in the fiscal area, major federal developments have normally been preceded by a period of consultation leading to the agreement of all or most of the provinces. Cooperation has become the rule and unilateral initiatives the

135 The Tory Agenda and Liberal Commitments

exception.”20 Our reading of the relevant constitutional law suggests that the federal government would have been expected to follow through on its commitment.21 Indian Affairs Minister Jim Prentice has noted that the agreement did not constitute a “national consensus” as aboriginal leaders in Quebec did not take part.22 However, constitutional law suggests that constitutional changes require not unanimous consent but a ‘substantial degree’ or ‘substantial measure’ and this was clearly demonstrated at Kelowna.23 There may be some question about the extent to which this delegated spending that was not addressed by the budget constitutes a tax on citizens as a violation of section 53 of the Constitution Act.24 We suspect, however, that since the Accord’s main purpose was not the “raising of revenue” it is doubtful that line of argument can be followed.25 Moreover, the existence of the surplus further diminishes that view. Our analysis suggests that the Kelowna Accord demands much more consideration within the Canadian political community than it has received. Indeed, Paul Martin’s private member’s bill26 may be more than just one man’s attempt for attention or legacy-expansion; it might also present an opportunity for the federal government to keep its fiduciary duty to do what it had bargained to do.

c o n c lu s i o n s Consideration of annual versus multi-year budgets under two minority governments has identified several questions for consideration, especially with respect to the relationship between the federal government, the provinces, and Aboriginal Peoples in Canada. We have explained that annual budgets have the benefit of regular accountability as governments outline their expected activities on a predictable basis. The budget speech also reminds voters of who the government is. Annual budgets both test and strengthen the governing party. Annual budgets also offer flexibility and may allow governments to provide smaller pay-offs and benefits to several constituencies over time. Multi-year budgets, by contrast, involve greater certainty and capacities for planned commitments. They may also be a market requirement. As well, multi-year budgets permit the government to delegate spending either to a subsequent year or to a subsequent government. Once commitments are delegated to a future government, it may be legally bound to carry out them out. Even if not legally bound, it may be bound by convention or public opinion. Further, we have argued that multi-year budgets involve the delegation of spending to future governments. Our analysis demonstrates that federal governments within Canada can successfully delegate spending by binding the hands of future federal governments via agreements with the provinces. While annual budgets are the norm, multi-year budgeting has traditionally occurred in order to meet ongoing commitments to the provinces.

136 Macro Choices and Challenges Table 7.4 Comparing Liberal Delegation of Commitments Across Policy Areas

Policy Area

Federal-Provincial Agreement (Y/N)

Consent of Parliament (Y/N)

Successfully Delegated (Y/N)

National Childcare Program

Yes but escape clause

Yes – in 2005 budget

No – action in policy area yet significantly different

Environment – Action on Global Warming

No – Attempted and failed

Yes – in 2005 budget

No

Cities Agenda

Yes

Yes – in 2005 budget

Yes – fully delegated

Healthcare

Yes

Yes – in 2004 and 2005 budgets

Yes – fully delegated

Research and Innovation

No – Not attempted

Yes – in 2004 and 2005 budgets

Yes – most commitments were delegated though a review of granting councils initiated and minor reneging on some funding programs (e.g., Climate Change research)

Equalization and Territorial Financing

Yes

Yes – in 2005 budget

Yes – fully delegated

Aboriginal Peoples

Yes – Kelowna Accord involved AboriginalFederal-provincial agreement

No – Time ran out as minority government fell

No

Table 4 provides a concluding summary of the various areas of Liberal delegation examined in the chapter. Though the Conservatives failed to retain the Liberals’ environmental promises and have had a mixed, if lukewarm, reception to research and innovation, they have felt compelled to keep agreements with other governments as evidenced by the continuation of the cities agenda and the health accord. The Kelowna Accord, by contrast, remains a quandary. While the agreement was there, it did not have time to come into force which allowed factions within the Conservative cabinet to kill it. This action, while politically questionable, may also be unconstitutional.

137 The Tory Agenda and Liberal Commitments

The Liberals and the Conservatives have approached spending differently. The Liberals “program announcement” based approach to spending allowed them to make inroads on social concerns and do so at a cost that, from year to year, would not endanger their surplus. However, since all spending was not done while they were in power, the Liberals were not able to fully implement their commitments but were able to take credit for the full value of each announcement. In general, the Conservatives have a “tangible/accountable” approach to spending. Their approach, while incremental and narrow, follows on platform commitments and is easy to implement. Yet, it does leave a number of groups out of the picture including women, minority groups with Charter issues, and others. The Conservatives, may, however, not ultimately be able to re-shape the country as they had expected. Their “tangible/ accountable” approach is short-term, leaving little if anything for the Liberals to deal with should they get re-elected. The Liberals could almost start where they left off, with the exception of Afghanistan. The Liberals used spending to cultivate support, whereas the Conservatives seem to use it to reinforce themes. If the Conservatives are unable to deliver another successful budget, and the Liberals win the next election, their spending footprint may be very narrow indeed. The failure of the Tories to implement the Kelowna Accord stands as a serious challenge for our argument. Yet we suggest the inaction on the part of the Tories is inconsistent with federal-provincial relations, more generally, and may even be unconstitutional. Clearly this issue demands much greater attention from the provinces which, along with Aboriginal peoples, are set to lose significant revenues committed by the federal government under the Martin Liberals. Moreover, the attention of the scholarly community and the public might be expected considering that constitutional conventions rely on the fact that their breach will normally result in serious political repercussions.

ac k n ow l e d g e m e n t s The authors acknowledge the helpful suggestions and feedback provided by Bruce Doern and Robert Young. Carey Anne Hill acknowledges the support provided by the sshrc mcri Postdoctoral Fellowship in Multilevel Governance and Public Policy and the University of Western Ontario. Trevor Lynn acknowledges the support provided by Michael von Herff and Frances McRae of Fleishman-Hillard Canada.

notes 1 John Gray, “Native spending falls millions short of pact – Tories commit $450 million over Two Years but deal calls for $800 million this year,” Globe and Mail, May 3, 2006, A19.

138 Macro Choices and Challenges 2 Canada, Department of Finance, The Budget Speech (Ottawa: Department of Finance, February, 2005), 4.; Bruce Doern, ed, How Ottawa Spends 2005–2006: Managing the Minority (Montreal: McGill-Queen’s University Press, 2005), 9. 3 Thanks are owed to Kathryn Harrison and David Brock who provided comments on an earlier draft. 4 Canada, Department of Finance, Restoring Fiscal Balance in Canada, Focusing on Priorities, Canada’s New Government, Turning a New Leaf (Ottawa: Department of Finance, May 2, 2006), 14. 5 Bruce Doern, Michael Prince and Allan Maslove, eds, Public Budgeting in Canada – Politics, Economics and Management (Ottawa: Carleton University Press, 1988 ), 37. 6 Ibid. 7 Kent Weaver, “The Politics of Blame Avoidance,” Journal of Public Policy 6:4, 371-398. 8 A contrary view is taken by Walter Bagehot in his famous, The English Constitution, wherein he underscores the supremacy of Parliament and the incapacity of any government to delegate to another government. Bagehot (1873) wrote, “The ultimate authority in the English Constitution is a newly elected House of Commons. No matter whether the question upon which it decides be administrative or legislative; … no matter whether it be the imposing a tax or the issuing a paper currency; … – a new House of Commons can despotically and finally resolve.” See Walter Bagehot, The English Constitution (London, United Kingdom: Oxford University Press, 1928), p. 175. Readers will bear in mind that Canada is both a federal and a parliamentary democracy and view our conclusions in that light. 9 Aaron Wildavsky, “Toward a Radical Incrementalism: A Proposal to Aid Congress in Reform of the Budgetary Process” in Alfred de Grazia, ed., Congress: the First Branch of Government (New York, New York: Doubleday, 1967), 111-153. See also Wildavsky. 1978. “A Budget for All Seasons? Why the Traditional Budget Lasts” Public Administration Review 38:6. 501-509. 10 John Wanna, Managing Public Expenditure in Australia (St. Leonards: Allen and Unwin, 2000). 11 See Allen Schick, The Spirit of Reform: Managing the New Zealand State Sector in a Time of Change (August. Report to the State Services Commission and the Treasury, New Zealand), 1996, p. 59. as quoted in Wanna, 2000. 12 Canada, Department of Finance, Budget Plan 2005 (Ottawa: Department of Finance, February 23, 2005), see pages 16, 127 to 133. 13 Canada, Budget 2006, (Department of Finance), p. 36. 14 Ibid., page 68. 15 David Emerson crossed the floor from the Liberals and sits as a Conservative representing Vancouver-Kingsway, however, he was not elected as a Conservative. 16 Department of Finance Canada, Budget Plan 2005, p. 9. 17 cbc News. 2006. Undoing the Kelowna Agreement, June 2. Accessed on October 23, 2006 at http://www.cbc.ca/news/background/aboriginals/undoing-kelowna.html 18 See Financial Administration Act, Part vi: Public Accounts 64(2)(d).

139 The Tory Agenda and Liberal Commitments 19 Office of the Premier. 2006. “Premier’s Statement on the New Relationship with Aboriginal People,” 2006OTP0086-000551. Victoria, British Columbia: May 4. 20 Peter Hogg, Constitutional Law of Canada (Toronto: Thompson Carswell, 2006), p. 179. 21 The 1991 Supreme Court of Canada Canada Assistance Plan (cap) Reference Case suggested the federal government could get out of its legal obligations to provinces but it had to so by legislative means. It should be noted that the cap was significantly different from Kelowna as it has an ‘escape clause’ whereby by mutual consent or after a minimum of one years notice the agreement could be terminated. For a broader discussion of the legality of federal-provincial agreements see Johanne Poirier. 2004. “Intergovernmental Agreements in Canada: At the Crossroads Between Law and Politics” in Peter J. Meekison, Hamish Telford and Harvey Lazar. Canada – The State of the Federation 2002 – Reconsidering the Institutions of Canadian Federalism (Kingston: McGill-Queen’s University Press, 2004), pps. 425-462. 22 cbc News. 2006. “Undoing the Kelowna Agreement” June 2. Accessed on October 23, 2006 at http://www.cbc.ca/news/background/aboriginals/undoing-kelowna.html 23 Peter Hogg 2006 explains that the Patriation Reference 1981 noted that there was no legal requirement for consent of the provinces to be obtained but that “by convention, a substantial degree or substantial measure” of provincial consent was required for Canada to patriate the constitution. 24 Section 53 of the Constitution Act, 1867 states that a bill levying a tax must originate in the House of Commons. In Eurig Estate (1998) Judge Major wrote that section 53 “ensures parliamentary control over, and accountability for taxation.” 25 Peter Hogg (2006) explains that the Supreme Court in Eurig Estate (1998) struck down a probate fee imposed by the government of Ontario on the estates of deceased persons as a delegated tax violating section 53. In determining whether the probate fee was a tax, the court asked if its main purpose was the raising of revenue. 26 Rt. Hon. Paul Martin, P.C., M.P. (LaSalle-Emard) introduced Bill C-292 in the House of Commons – “An Act to implement the Kelowna Accord” – as a private member’s public bill on May 17, 2006. It passed second reading on October 25, 2006 and has been referred to the House of Commons Standing Committee on Aboriginal Affairs and Northern Development where, at the time of writing, it is undergoing review.

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8 Energy Shift: Canadian Energy Policy under the Harper Conservatives keith brownsey

The concept of an energy shift refers to a period of transition from one primary energy source to another. Over the last few hundred years there have been several such shifts. In the late 18th and early 19th centuries there was the shift from wind, wood and water to coal. At the beginning of the 20th century governments and business in the United States and Great Britain began the transformation to an oil-based energy system. The existing coal-based systems were plagued by labour unrest, environmental concerns, and what were thought to be dwindling supplies. At the same time other factors such as the internal combustion engine, geopolitical rivalry between the great powers, and commercial competition accelerated the use of oil. Despite the obstacles of two World Wars and the Great Depression, within a few decades oil-based technologies and infrastructure had transformed the world energy system.1 Previous energy shifts have been the result of the convergence of several factors including geopolitical rivalry, commercial competition and social conflict. The shift from coal to oil, for example, was precipitated by the labour unrest that was endemic to the coal industry, the geopolitical rivalries between the Great powers of the late 19th and early 20th centuries, and corporate competition in an increasingly global market place. The current world energy system faces a similarly uncertain future. In the early years of the 21st century, peak production for oil and natural gas has signaled the eventual decline of supplies, increasing corporate competition has escalated with the expansion of world markets, environmental problems related to the consumption of fossil fuels and climate change have created an incentive to explore alternative, less polluting energy sources, and questions of security and

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geopolitical rivalry have resulted in vulnerable and unstable sources of energy and of supply chains. Canada responded to this situation with a variety of competing and contradictory policies. Between 1993 and 2006 the Jean Chretien and Paul Martin Liberal governments encouraged individual Canadians to reduce their greenhouse gas emissions, signed and ratified the Kyoto Protocol, initiated a program of sustainable energy development and supported research into alternative energy sources such as wind, solar, biofuels and even newer nuclear power technologies. At the same time, however, Chretien and Martin supported the liberalization of energy markets. They sought to expand Canada’s oil and natural gas sales and refrained from imposing measures that would have substantially reduced greenhouse gases and other pollutants. While the Liberal policies were contradictory, they did signal a recognition that the current energy system could not continue as it had in the past. The new Conservative government of Stephen Harper has taken a different approach to energy policy from its predecessor. It has chosen to continue liberalizing Canada’s energy markets while abandoning commitments to the Kyoto protocol, cutting funds for alternative energy research and innovation, criticizing its competitors for hindering a free market in energy, and promoting Canada as an energy superpower. There is little recognition that the current energy system may be in a period of transformation from an era of abundant, secure, and inexpensive hydrocarbon and other energy resources to a period threatened by dwindling supplies, environmental problems, inadequate and aging infrastructure, and security concerns. Instead, the Harper government has decided to model its energy policies on those of the Bush Administration in the United States, ignoring its international obligations for reduced carbon emissions, discounting alternative sources of energy, and neglecting to diversify markets. While the long and difficult process of diversifying the types and sources of energy moves forward, the Conservatives have instead decided that the Canada will rely on the free exchange of energy products based on competitive market principles. Harper’s profession of faith in free-market mechanisms ended the contradictory policies of the former Liberal government. Canada’s Conservative government will now sell its energy – oil and gas, uranium, hydroelectricity, and coal – without regard to its commitments to the Kyoto Protocol, the policy of sustainable development or any other constraint. Whether or not the existing energy system is undergoing a transformation or shift remains uncertain. But it is clear that the Conservative government has chosen an energy policy direction that ignores the complexities of the current energy system in an increasingly global and interdependent world. It has, simply put, committed to an energy policy framework that runs counter to international trends of sustainability and environmental protection. The Harper

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government may have placed Canada in an uncompetitive position with its trading partners as the energy system shifts to a more sustainable model.

c a n a d i a n e n e r g y s u p p ly The vast majority of Canada’s energy supply comes from hydroelectricity, nuclear power, fossil fuel generated electricity, oil, natural gas, and coal. This list does not include several less efficient sources of energy such as wood, animal parts, and crop residues which are still in use but account for an increasingly small portion of total energy production. As well, new, environmentally friendly sources such as wind and solar power are a small portion of the overall energy picture.2 In 2004 Canada produced approximately 567.8 terawatt hours of electricity from various sources – 60 per cent from hydroelectricity, 26 per cent from burning coal, oil, and natural gas, and 15.02 per cent from nuclear generation.3 Petroleum and natural gas accounted for over 75 per cent of total energy production in Canada in 2005. The Canadian Association of Petroleum Producers (capp) calculates oil production from conventional and nonconventional sources at 2.5 million barrels per day (b/d). Approximately 1.36 million barrels were conventional oil while 1.14 million barrels per day were from the oil sands. Atlantic offshore production of conventional crude was 313,000 barrels per day. It is expected that non-conventional oil production will surpass conventional production around 2010. Canada’s bitumen reserves are now recognized by the United States Department of Energy and the Oil and Gas Journal in their annual summary of world oil reserves. Reserves of conventional oil were estimated at 4.3 billion barrels while nonconventional reserves were set at 175 billion barrels.4 Conventional crude production in Canada declined by 11.7 per cent between 2003 and 2005. The decline in conventional production was offset, somewhat, by an increase by non-conventional or bitumen production during the same period. Oilsands production between 2003–04 increased by 13.63 per cent but declined between 2004–05 by 3.3 percent. This decline was due to a fire at the Suncor Energy oilsands upgrader and scheduled maintenance at a Shell upgrader. In 2005 Alberta accounted for 77 per cent of Canada’s total natural gas production in 2004. British Columbia was responsible for 16 per cent, Saskatchewan four per cent, Nova Scotia two and Ontario, the Northwest Territories and the Yukon were at one half percent.5 According to the Canadian Association of Petroleum Producers production in 2004 was 6,254 trillion British Thermal Units (btu) while estimates marketable gas reserves were 56,543 trillion btu’s. The National Energy Board calculates remaining potential gas reserves at 370,000 trillion btu’s.6 Canadian production of natural gas has been stable since 1999. Production has been maintained by an

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increase in drilling. In 2005, for example, natural gas well drilling increased by nine per cent to approximately 20,000 wells with a one percent increase in production. In 2005 gross natural gas exports from Canada reached 101.4 billion cubic metres while imports were 12.5 billion cubic metres. Coal production in Canada in 2004 was 70.47 million tonnes in 2004. Domestic consumption was 60.47 million tonnes. While Canada imported 23.62 million tonnes, it exported 30.14 million tonnes. The largest coal producing and consuming province is Alberta at 30.91 million tonnes per year closely followed by British Columbia at 27 million tonnes. Most of the coal produced in Canada is used for the domestic generation of electricity. Alberta, for example, is the largest consumer of coal. Almost all of its consumption of 25.64 million tonnes is used to generate electricity – 25.43 million tonnes out of a total of 25.64. Canada has eight billion tonnes of proven coal reserves. The largest deposits are found in British Columbia, Alberta, and Saskatchewan.7 The Canadian electricity generation and transmission industry has undergone a fundamental restructuring over the last decade. The industry is almost fully integrated into a North American grid.8 In 2005 Hydroelectricity accounts for 340.4 terawatt hours (TWh) or 59.8 per cent of total generation. Nuclear generation jumped dramatically between 2003–2005 from 70.7 to 85.9 terawatt hours or 21.5 per cent. Thermal generation from coal, natural gas and oil declined from 2003 from 159.5 to 145.7 terawatts or 28.33 to 26,05 per cent over the same two year period. In 2005 Canadian exports of electricity to the United States increased from 33 TWh in 2004 to 41.9 TWh in 2005, an increase of approximately 30 per cent. This follows a rise in electricity exports between 2003 and 2004 of 13 per cent. The rise in electricity exports followed several years of decline in export due to lower generation capacity due mainly to a prolonged drought in western Canada. On the other hand, domestic consumption of electricity remained stable between 2004 and 2005 with an increase of only .05 percent from 548.8 TWh to 549.1 TWh. Since 2000 domestic demand has remained flat with increases of less than 1 per cent annually. This leveling of demand is attributed to improvements in technology, introduction of various government programs which encourage conservation, and the fact my children have learned how to turn off an electric light.9 Beginning in the mid 1990s electricity markets throughout North America began a process of restructuring and deregulation. Because electricity generation, transmission and distribution mainly fall under provincial jurisdiction, there has been a diversity of policies across Canada. The National Energy Board – which has authority over interprovincial and international transmission – believes that deregulation will enhance competition, improve market efficiency and offer greater choice of services and suppliers. The goal of deregulation is, therefore, to unbundle the functions of provincially owned or

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controlled electric utilities – generation, transmission and distribution – to lower price and increase supply. Alberta and Ontario have gone the farthest in deregulation while British Columbia, Saskatchewan, New Brunswick, Nova Scotia, and Quebec have established wholesale markets and limited retail access.10 The incentive for restructuring came from the United States. Under the authority of the Energy Policy Act 1992, the U.S. Federal Energy Regulatory Commission (ferc) issued orders 888 , 889, and 2,000 which established a series of regional competitive wholesale electricity markets. These new regulations also mandated that any utility selling into the U.S. market had to provide open access transmission services as a condition of receiving access from transmission owning utilities in the United States.11 With large publicly owned electric utilities with excess capacity, British Columbia and Quebec opened their transmission lines. Alberta, with no spare capacity and private ownership of electrical utilities, engaged in a deregulation process in the hopes of increasing electric generation and the eventual sale of excess supply to the United States. The result in Alberta has been dramatically increased consumer prices and marginal increases in supply. Overall, electrical deregulation has not met expectations. In those provinces where it has occurred consumer prices have risen while supply has not noticeably increased.

the canadian energy policy context Under the Constitution Act 1867 provincial governments have jurisdiction over natural resources. There was, however, and exception to this rule. The federal government retained control over natural resources on the prairies until 1930. The Dominion Lands Act 1872 provided the legal framework for federal control of natural resources in the Northwest Territories. After the Northwest Territories were divided into the provinces of Alberta and Saskatchewan in 1905,12 the federal government kept control of natural resources. Jurisdiction was transferred to the prairie provinces by the Natural Resources Transfer Act 1930. While the Constitution Act 1867 assigns jurisdiction over natural resources to the provinces, the federal government has responsibility over interprovincial and international trade as well as other economic powers. Ottawa has used its authority to play a significant role in the Canadian energy sector. Through its regulatory arm, the National Energy Board (neb), the federal government oversees international and interprovincial energy flows. Federal acts which directly affect the energy sector are the National Energy Board Act, Canada Labour Code, Canada Oil and Gas Operations Act, Canada Petroleum Resources Act, Canadian Environmental Assessment Act, Energy Administration Act, Mackenzie Valley Resource Management Act, the Northern Pipeline Act, and the Species at Risk Act. Within each of these pieces of

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legislation there are various regulations and procedures for environmental protection, worker safety, and public consultation. For example, under the National Energy Board Act, there are 18 sets of regulations which deal with such issues as pipeline tolls and onshore pipeline construction.13 Federal energy policy focuses on five areas: resource management on frontier lands, uranium and nuclear power, interprovincial and international trade and commerce, trans-boundary environmental impacts, and policies of national interest including economic development, energy security, and science and technology. These areas deal mainly with interprovincial and international movements of energy and with projects that extend beyond provincial boundaries. As a result, the federal government has enacted policies to regulate international and interprovincial trade, pipelines and electricity transmission and also nuclear safety. As well, the Ottawa has broad taxing and spending powers which have a direct impact on the energy sector. Recent actions by the federal Minister of Finance, Jim Flaherty, to end the tax loophole created by energy trusts government is just one example of how financial regulation affects the Canadian energy sector. Long viewed with disdain by many in the oil and gas sector, energy trusts had become a way in which corporations had avoided paying taxes by distributing profits to shareholders. With the prospect of Canada’s largest oil and gas producer, Encana, forming a trust, the federal government amended the tax code in order to avoid massive revenue losses.14 Federal energy policy is also framed by domestic and international treaties. These agreements include the North American Free Trade Agreement (nafta) between Canada, the United States, and Mexico, and the Canada-U.S. Clean Air Agreement which limits emissions of sulphur dioxide and nitrous oxide – the components of acid rain. nafta, for example, gives national status to U.S. and Mexican corporations operating in Canada as well as proportional access to our energy resources such as oil and natural gas. Federal-provincial agreements such as the Newfoundland-Canada and Nova Scotia-Canada Offshore revenue agreements are key pieces of Canadian energy policy. They allow the two Atlantic provinces to share in offshore oil and gas revenue from areas under federal jurisdiction. Although an international treaty designed to reduce emissions of greenhouse gases (ghgs) the Kyoto Protocol is at the centre of the debate over Canadian energy policy. The United Nations Framework Convention on Climate Change was signed by 159 countries on 11 December 1997. The Kyoto Protocol committed the signatories to reduce ghgs to six percent below levels found in 1990 by 2008–12. The Protocol “stipulates that progress in achieving this reduction commitment will be measured through the use of a set of internationally agreed-to emissions and removals inventory methodologies and reporting guidelines”(Olsen et al. 2002, iii). Kyoto entered into

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force when 55 signatories to the Convention accounting for a total of 55 per cent of ghgs agreed to ratification. Foreign domestic policies also frame Canadian energy. Several of the most important is the United States’ May 2001 National Energy Policy, the August 2005 Energy Policy Act, and the rules and regulations of the United States Securities and Exchange Commission and the Federal Energy Regulatory Commission. All of these pieces of legislation, policy, and regulations have a direct impact on Canadian energy policy.

c a na d i a n e n e rg y p o l i c y h i s to ry There has been no consistent theme in federal energy policy. Ottawa has, at times, neglected the energy sector while at others it has made it the centre of its economic strategy. The first major development in Canadian energy policy was the transfer of control over natural resources to the prairie provinces in 1930.15 During World War II the federal government used its declaratory power to take control of almost all energy production in Canada. After the war, energy returned to provincial jurisdiction although Ottawa retained control over uranium production and nuclear power. The key federal department from the mid 1960s on was Energy, Mines and Resources. Its focus was initially on the development of Canada’s natural resources in the north. In the 1950s energy debate centred on the construction of interprovincial oil and gas pipelines and electric transmission lines. It was not until the controversial debate over the construction of the Trans-Canada natural gas pipeline in the 1950s that energy policy became a major national political issue. The 1956 pipeline debate concerned federal subsidies and the route of a transcontinental line to bring western natural gas to central Canada. The National Oil Policy of 1960 was a federal response to demands by the western petroleum producing provinces to open markets for its crude oil and natural gas in central Canada.16 During the 1960s and early 1970s Ottawa appeared to ignore energy policy. The federal government was involved with the negotiations over the Columbia River Treaty with the United States, but took little or no interest when Quebec and British Columbia nationalized their privately operated electric utilities.17 In June 1971, the minister of Energy, Mines and Resources, Joe Greene, stated in the House of Commons that at current rates of production Canada had a 923 year supply of oil and a 392 years of natural gas.18 It was not until the 1973 oil shock that the federal government took an active role in the area of energy policy. The Yom Kippur War of October 1973 radically changed Canada’s energy sector. An Organization of Petroleum Exporting Countries (opec) embargo on western nations resulted in the price of a barrel of crude oil rising from approximately $3U.S. per barrel West Texas Intermediate (wti) to over $12 per barrel wti. The federal government was

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mystified at the sudden shortages and price spike. In 1974 Ottawa, feeling it needed a better window on the oil and gas sector and inspired by Canadian nationalists, created a state-owned oil company, Petro-Canada. Petro-Canada or PetroCan was resented by both oilpatch veterans and the governments in the producing provinces. The Western Canadian oilpatch had a self-image of rugged individualism and any state incursion was resented as an unnecessary impediment on their God-given right to drill, produce and market oil and natural gas.19 The resulting federal-provincial conflict created a lack of coherence in energy policy. Instead, of working toward maximization of revenues and recovery and a coherent set of environmental regulations, the two levels of government were in a continuous conflict over the direction and control of the oil and gas industry.20 A second oil shock came with the 1979 Iranian Revolution. After the seizure of the United States Embassy in Tehran in 1979, the U.S. imposed economic sanctions, froze Iranian assets in the United States, and prohibited the import of Iranian oil into the U.S. On the other side, the Iranian revolutionaries simply stopped oil exports to the west. Oil and gas prices increased dramatically from just under $20US a barrel to $40US There was the expectation that petroleum prices would go much higher. The federal government responded to the second oil shock with the National Energy Program (nep). The nep offered incentives for drilling in the Canada lands (the northern territories and the offshore), increased export taxes on oil and gas, and a variety of “off-oil” measures in an effort to conserve domestic oil and gas reserves while decreasing dependence on foreign energy supplies. Ottawa’s motivation for the nep was straightforward: it wanted to alleviate the shock of 1979–80 increase in the cost of oil and natural gas by keeping prices below world levels, increase its share of revenues from the petroleum sector, continue to promote the Canadianization of the industry, and to have a national voice in energy affairs. Although a number of domestic companies benefited from the federal initiatives, the nep was strongly resented by the petroleum industry and the Alberta and Saskatchewan governments.21 After a series of negotiations between the producing provinces and the federal government, an agreement was reached concerning pricing and taxation. As well, the provinces were able to secure an amendment – Section 92a Constitution Act 1982 – to the existing constitutional division of powers which strengthened provincial control over natural resources. But the constitutional amendment and negotiations with the federal government maintained the basic structure of the nep. With the election of a Progressive Conservative government in September 1984 Canadian energy policy underwent a fundamental change. Part of the Conservative election platform was a promise to end the nep. The new government kept its word. With the signing of the Western and Atlantic Accords in spring 1985, direct federal involvement in the energy sector – except for

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nuclear power – came to an end. The market liberalization continued under the 1989 Canada-U.S. Free Trade Agreement (fta). The Canada-U.S. fta guaranteed American companies and consumers national treatment and proportional access to Canadian energy sources. The effort to Canadianize the industry was replaced by a policy of continental integration. Market forces would dictate the price and supply of energy while the federal government would concern itself with environmental and competition regulation. The election of a Liberal government in 1993 did little to change Canadian energy policy. At the same time as the Liberals committed Canada to a policy of environmental and energy sustainability, they signed the North American Free Trade Agreement (nafta) with the United States and Mexico in late 1993. nafta extended the energy provisions of the 1989 Free Trade Agreement between Canada and the U.S. Chapter Six of nafta, for example, commits the three countries, United States, Mexico and Canada, to free trade in energy and basic petrochemicals. This goal is to be achieved through sustained market liberalization. Any form of quantitative restriction is prohibited, as are minimum and maximum export requirements and price restrictions. Although there are exemptions for Mexico’s state-owned oil and gas industry, no party to nafta was to “adopt or maintain any duty, tax or other charge on the export of any energy or basic petrochemical good” to the other signatories. Moreover, if one of the signatories enacts restrictions on energy exports, the this will not reduce the proportion of total export shipments. Simply put, under nafta the United States and Mexico are guaranteed national treatment and proportional access to Canada’s energy supplies.22 Full market liberalization was now enshrined in Canadian energy policy.

t h e n e w a m e r i c a n “nep” a n d k yo t o In May 2001, the Bush administration released its National Energy Policy. Written by the National Energy Policy Advisory Group and chaired by vicepresident and former chief executive officer of Haliburton Corp. (one of the largest oil and gas field serve firms in the world), Dick Cheney, the National Energy Policy called for secure supplies of oil and gas and electricity for the United States through such mechanisms as enhanced recovery, increasing domestic supplies and global alliances.23 The National Energy Policy recognized Canada’s deregulated energy sector as United States largest energy trading partner and leading supplier of natural gas, oil and electricity. The Cheney Report stated that in 2000 Canada supplied 14 percent of U.S. energy needs through an integrated network of pipelines and electricity lines. Moreover, Canadian energy supplies – especially natural gas and oil – were not described as a foreign source of energy but as part of the U.S. domestic reserves. American recognition of Canada’s importance as a source of energy was seen as part of the evolution of an integrated North American energy sector.24

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The federal government’s enthusiasm for the U.S. National Energy Policy produced, however, a contradictory message. The Liberal governments of Jean Chretien and Paul Martin had committed Canada to a policy of sustainable development. The Sustainable Development Strategy was tabled in Parliament in 1997, but it was not until the release of Natural Resources Canada’s Energy in Canada in 2000 that the concept was incorporated into energy policy. The sustainability framework had three main objectives. The first was to develop a competitive and innovative energy sector. This was to be achieved through the promotion of the long-term development of Canadian energy resources, the wise use of energy resources and maximization of economic opportunities. The second feature of the sustainability framework was to encourage environmental stewardship by mitigating the environmental impact of energy development and transportation through the integration of environmental objectives into all policies and programs. Finally, the sustainability framework was to establish secure access to energy resources by ensuring that current and future generations of Canadians have sufficient competitively prices energy. This was to be achieved by making efficient use of existing resources.25 Within this framework four domains were the focus of energy policy – rapidly developing energy markets, the environmental impact of energy development and use, nuclear power and frontier lands oil and gas exploration and development. The federal government recognized that the conventional energy supply of hydrocarbons and electricity was evolving to meet the demands of the North American market. Natural Resources Canada (nrCan) – the department responsible for energy – began to question the need for economic regulation as well as the appropriate roles for federal and provincial governments. Open access to the United States market necessitates new regulatory approaches. Canadian natural gas production, for example, has now been integrated into a North American market which nrCan believed, would lead to lessening of the regulatory role for the federal government.26 Canada signed the Kyoto Protocol to the United Nations Framework Convention on Climate Change on 11 December 1997. Although Canada was now committed to reduce greenhouse gas emissions (ghgs) to six percent below 1990 levels by 2008–12, the Chretien government announced in 2002 that it would ratify the treaty but failed to finish the ratification process nor did it set out a policy framework for its implementation. The Kyoto Protocol was ratified by the Martin Liberals on 16 February 2005. In the 2005 budget, the government specified a number of policy instruments including the introduction of a $1 billion Clean Fund to encourage the reduction of greenhouse gases, the increased use of wind-power production, and various tax measures to encourage investment in efficient and renewable energy generation equipment. It was hoped that these policies and other initiatives would create a clean energy future and increase the efficiency, sustainability and competitiveness of the Canadian economy.27

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While the Martin government attempted to bring coherence to its energy strategy, they lacked the ability to implement it. Key personnel changes at the highest political and administrative levels hampered their ability to put an energy policy in place. The deputy minister of Natural Resources retired in the spring of 2005 and was not replaced for over four months. As well, the minister, John Efford, was forced to resign because of ill health. He was replaced in the fall of 2005 by the former Defence Minister and Minister of National Revenue John McCallum, a Toronto area mp with little knowledge of the energy sector. The failure to appoint the senior civil servant as well as the absence of the minister in the department responsible for the government’s key energy and environmental policy reinforced the Martin government’s image as dithering. Along with the personnel problems, the Martin government signaled a change in Canada’s relationship to the United States. Although the Liberals had set closer relations with the United States as one of their priorities, disputes over an American tariff on Canada’s softwood lumber exports and a number of other trade and security issues with the George W. Bush administration had forced them to reevaluate their thinking. Part of this revaluation was to send the new minister, John McCallum, to China in an effort to find markets and investment for Canada’s unconventional oil and natural gas. But with its close ties to the United States, the energy sector was worried about offending its American customers. As well, the Americans had made it clear that they were anxious to construct two arctic pipelines for natural gas, one down the Mackenzie River Valley and the other from the North Slope of Alaska down the Alaska Highway. In both the May 2001 Energy Policy statement and the August 2005 Energy Policy Act, the United States recognized Canada as a secure and strategic source of oil and gas and electricity. Any effort to expand China’s role in Canada’s energy sector was seen by the Bush administration and their Canadian allies in the energy sector as counter to U.S. strategic interests in the north Pacific. The U.S. Energy Policy Act will have a significant impact on Canadian energy policy. Passed by the United States Congress in August 2005, this massive bill included a section directed toward the implementation of mandatory electric reliability standards as well as provisions to secure safe and reliable sources of energy. While not mentioned explicitly in the act, it was assumed that Canada would be a key source of much of the energy needed. The new act also gave the U.S. Federal Energy Regulatory Commission the task of establishing and overseeing an independent Electric Reliability Organization (ero) which would create and enforce mandatory standards for the transmission of electricity. Because of the interconnectedness of the North American electricity grid, the ero will have a direct impact on the Canadian electricity industry. In response to the American initiative the North American Electric Reliability Council began consultations with the neb and provincial

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regulators in late 2005 to discuss how Canada’s interests could best be represented on the ero.28

t h e n e w c o n s e r vat i v e s On 23 January 2006 Canadians elected a minority Conservative government. Led by Stephen Harper, a one-time member of Parliament for the right-wing populist Reform Party and a past president of the National Citizens’ Coalition, a right-wing lobby group, the Conservatives campaigned on a platform of accountability and transparency in government. With a backdrop of scandal and indecision, the Liberal government of Paul Martin went down to defeat. But the Conservatives were denied a majority government. Harper won only 125 seats in the 308 member House of Commons. Even though the Conservatives faced a very fractious and divided parliament, they had several advantages. There was no desire among voters or the major parties to have another election in the near future and the Official Opposition Liberals were divided and without a leader. As well, the Conservatives had campaigned on a simple five-point platform. In stark contrast to the previous Liberal government, the Harper Conservatives demonstrated a decisiveness which won them initial praise in the media and with voters. Although the new Conservative government was vague on energy issues it was understood that with the prime minister and the minister of the Environment, Rona Ambrose, both from petroleum dependent Alberta, the Conservatives would either abandon or ignore the Kyoto Protocol. Moreover, Harper had made it clear that his government would respect areas of provincial jurisdiction including energy. Beyond this it was unclear what direction – if any – the Harper government would take in energy policy. The first Conservative budget, for example, contained no explicit reference to energy policy. There was only a promise to reduce carbon and other emissions by providing $1.3 billion for public transit infrastructure and a tax credit for bus passes. No mention was made of Canada’s Kyoto commitments or any other energy initiative. But for many in the energy sector, anything would be an improvement over what was perceived as the incoherent and dithering policies of the previous Liberal regime. Although the new minister of Natural Resources Canada, Gary Lunn, a lawyer from southern Vancouver Island with experience in the resource sector, has had little to say publicly about energy, an outline of Conservative policy is apparent. While in opposition the Conservatives had been opposed to the Kyoto Protocol. Several prominent Conservatives, including the prime minister, have expressed skepticism that global warming is occurring and if it is that human beings are not responsible for it. As well, the government has argued, the rejection by the Bush administration of the Kyoto Protocol makes any effort by Canada to reduce greenhouse gas emissions

155 Canadian Energy Policy Under the Harper Conservatives

economically unfeasible. Meeting its Kyoto commitments would put Canada at a comparative economic disadvantage with its largest trading partner. The governments of several oil and gas producing provinces, but especially the Klein Progressive Conservative government in Alberta, believe they would suffer a disproportionate burden of the costs of reducing greenhouse gases if Kyoto is implemented. They are concerned that the added costs of ghg reduction would price non-conventional out of the North American and world markets. Comparing the Kyoto Protocol with the unpopular National Energy Program, the Klein government has argued that billions of dollars in planned investment could be lost and the future economic prosperity of Alberta threatened. In September 2006, Lunn announced that Ottawa would put in place a “made-in-Canada” plan for reducing greenhouse gases and ensuring clean air, water, land and energy. As part of the Conservative environmental program, the minister announced the end to 15 climate-change-related programs. Among the cuts was a project designed to assess the regulatory and economic issues related to the interprovincial electricity trade, a study of the feasibility of carbon sequestration to help offset greenhouse gas emissions, and the onetonne challenge, the former Liberal government’s high profile advertising campaign to encourage Canadians to reduce their ghgs. In response to a report by the commissioner of the Environment and Sustainability that the former Liberal government had announced billions of dollars in spending on climate change without any way to measure outcomes, the government of Canada, the environment minister, Rosa Ambrose, said that the government will act within its constitutional authority “to put in place a national plan that will cover all industry sectors and deal with” a variety of air-quality concerns. The new approach will include increased auditing, reporting, and monitoring “to show progress both in the reduction of greenhouse gases” and other air pollution.29 As well, there is speculation that the Conservatives will change the Canadian Environmental Protection Act to allow the federal government to transfer powers to the provinces to enforce air quality and other environmental regulations.30 On 19 October the minister introduced the Conservative government’s Clean Air Act. The bill replaced Canada’s commitments to reduce ghg emissions as required by the Kyoto Protocol. The main thrust of the bill is to fight smog and improving air quality. The Conservative government will consult with industry over a three year period to set intensity targets for the reduction of air pollution. The federal legislation is similar to an Alberta plan to reduce greenhouse gases and other pollutants in that the focus of the legislation is to reduce the intensity of emissions. Greenhouse gases and other pollutants will increase as the economy grows but at a slower rate. The legislation called for the reduction of ghg by 45 to 65 per cent by 2050. Although the legislation was vague it contained a number of specific commitments. These included

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rules to force new cars and trucks sold in Canada to meet new standards for better fuel efficiency, a requirement that appliances such as dishwashers be more energy efficient, regulations to reduce ghg emissions from train engines beginning in 2011, and new laws concerning off-road engines which will be harmonized with those in the United States. The Conservatives’ approach to air quality issues closely follows the American and Australian models both have which have done little to reduce greenhouse gases.31 While the Conservatives have allies in their alternative approach to Kyoto there are several provinces who strongly oppose any attempt to dilute Canada’s international commitments to reduce greenhouse gases. Both Manitoba and Quebec – with large hydroelectric capacities – support Kyoto. The government of Quebec has announced that it will proceed with implementation of Kyoto without the support of the federal government. This is a political problem for the Harper government. Although the Conservatives unexpectedly won ten of Quebec’s 75 seats in the January 2006 election and have spent much time and effort to win more support in the province, their hopes of gaining more votes have been damaged by their opposition to Kyoto. The federal equalization program has become an issue in the debate over energy policy in Canada. Equalization is a constitutionally entrenched program designed “to ensure that provincial governments have sufficient revenues to provide reasonably comparable services at reasonably comparable levels of taxation.” The complicated formula for calculating equalization payments is based on a five province average that excludes the wealthiest and poorest provinces. With billions of dollars in surplus oil and gas revenues, the province of Alberta has opposed efforts of the other provinces and the national government to include energy and resource revenues in the equalization formula. Although equalization is a federal program, the former premier of Alberta, Ralph Klein, vowed to fight “tooth and nail” against any attempt to tap into the province’s enormous energy wealth. This debate is a reflection of regional division within the Canadian federation caused by enormous oil and gas windfalls of the past several years. The outline of Conservative energy strategy was articulated at meeting of the leaders of Canada, the United States and Mexico in Cancun in March 2006. All three leaders emphasized the importance of collaboration on energy technologies and facilitating energy markets in order to enhance security. This message of increased North American cooperation was reiterated in a meeting of energy ministers in Washington dc in early May 2006. Gary Lunn stated that Canada, the United States, and Mexico “are committed to working together to improve our understanding of the distinct energy capacities of our nations, and to sharing our expertise in key areas such as energy technology.”32 In July 2006 the prime minister and the minister of Natural Resources both declared Canada to be an emerging energy power. The Conservative

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government’s commitment to a liberalized energy market was evident in both speeches. At a meeting of the Canada-United Kingdom Chamber of Commerce in the middle of the month, Harper stated that investors “have recognized Canada’s emergence as a global energy powerhouse – the emerging ‘energy superpower’ our government intends to build.” He went on to say that Canada was the fifth largest energy producer in the world. Canada, he said, ranks third in natural gas production, fifth in oil and produces more hydroelectricity than any other country. As well, Canada is the world’s largest producer of uranium. But he especially reminded his audience that Canada has the second largest oil reserves in the world – the oilsands. These enormous reserves are exceeded only by Saudi Arabia. More importantly, he argued, Canada’s production is expected to reach four million barrels a day by 2015, two-thirds of which will be from the oilsands. He made it clear to his audience that Canada was “a stable, reliable, producer in a volatile, unpredictable world.” Canada’s energy policy, he stated, is based on the idea of the free exchange of “products based on competitive market principles, not selfserving monopolistic strategies.”33 The minister of Natural Resources, Gary Lunn, made a similar speech to the Pacific Northwest Economic Region summit on 19 July 2006. Speaking to business and political leaders from the region, Lunn described the importance of energy to the Canadian and North American economies. As Harper had done several days earlier in London, Lunn declared that “Canada is an emerging energy superpower. Our energy sector,” he went on to say, “is prosperous and innovative.” He claimed that the challenges facing the energy sector include labour shortages, inadequate infrastructure, environmental issues, and streamlining the regulatory process. He emphasized his belief that Canada’s “energy strategy is key to North America’s economy and to our leadership in addressing the world’s energy and environmental challenges, and the security of our nations.”34

c o n c lu s i o n s The new Conservative government of Stephen Harper has continued many of the policies of the previous Liberal governments. They have emphasized their commitment to further market liberalization and the promotion of Canada as a secure and sustainable source of energy. But they have made some substantial changes. The emerging outline of energy policy reflects the broader ideological orientation of the government. The Conservatives are committed to closer North American economic and political integration as well as a decentralized state. Their free market ideology fits the Bush administration’s emphasis of meeting increased demand with increased supply. But it is a strategy that ignores the possibility of an energy shift away from a reliance on fossil fuels and towards an environmentally sustainable energy system.

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There are three identifiable trends in Canadian energy policy under the Conservative government. The first sign of a new emphasis in Canadian energy policy is the repudiation of the Kyoto Protocol. While the Conservatives have not officially ended Canada’s commitments (mainly for political reasons) to Kyoto, their “made-in-Canada” clean air strategy signals the end of federal efforts to reduce greenhouse gases. For example, the Conservatives have replaced Kyoto with what they call a “made-in-Canada” clean air strategy. As well, Natural Resources Canada – the department given the task of coordinating the government’s Kyoto efforts – has ended funding for 15 studies and programs designed to increase knowledge and awareness about climate change. It has also curtailed its support for alternative energy research, except where it might benefit their core support among western grain farmers in the form of subsidies for biofuels. Finally, Conservative ministers have stated that implementation of the Kyoto Protocol would place Canadian energy producers at a comparative disadvantage in relation to their American competitors. The Kyoto targets are, according to the minister of the Environment, unrealistic. These changes signal a shift away from previous government policy. The second shift in Canadian energy policy is a move toward North American energy integration and away from efforts to diversify Canada’s energy customers. While the Liberal governments of Jean Chretien and Paul Martin made an effort to lessen dependence on the U.S. energy markets the Conservatives have embraced North American energy integration. The cooling of relations with China and criticism of Russian energy policies indicate a new direction in Canadian energy policy toward a closer alignment with the United States. The federal government has not acted on Russian proposals to distribute liquified natural gas in North America or on Chinese plans to invest in the oilsands. Instead, the prime minister has criticized Russian energy policy and ignored the Chinese. This change of direction in Canada’s foreign and energy policy is based as much on ideology as on market considerations. Despite all the new government’s rhetoric about free markets and efforts to sell Canadian energy, ideology appears to play a greater role in Conservative energy policy than it did in previous Liberal governments. While the Canadian government has shifted its focus away from global energy markets, it has emphasized North American energy integration. The prime minister has stated that Canada is a stable, secure, and sustainable source of energy in North America. There has been an emphasis on the North American Energy Working Group – an officials-level forum for cooperation on energy issues ranging from regulatory cooperation to security. The Working Group is responsible for implementing commitments the Conservative government made under the Security and Prosperity Partnership of North America. There have been other indicators of change in Canadian energy policy. The minister of Natural Resources has made numerous

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statements about the need to streamline the regulatory process in order to bring new supplies of energy to market. He has also emphasized a need for innovative, green technologies. But he has not acted on these issues. The prime minister and minister of Natural Resources have declared Canada an energy superpower. This may be an exaggeration, but with the country’s vast energy resources – from uranium to hydroelectricity – Canada will have an increasingly important role to play in world energy markets. Both Harper and Lunn have marketed Canada as a stable and secure source of energy in an unpredictable world. The question remains, however, whether an ideologically committed right-wing government can shape an energy policy that will be able to adapt to a complex and changing energy system. The Conservative government’s continued emphasis on market liberalization, the repudiation of the Kyoto Protocol, their decision to end funding for alternative energy technology, and further North American energy integration illustrate an unwillingness to engage in a debate over the future of the energy system. Instead of embracing a possible shift in energy systems, the Conservatives have retreated behind an ideological wall that may not be sustainable.

notes 1 Bruce Podobnik, Global Energy Shifts. Fostering Sustainability in a Turbulent Age (Philadelphia, Temple University Press, 2006), 1-17. 2 See Judith Lipp, “Renewable Energy Policies and the Provinces,” in Bruce Doern, ed. Innovation, Science, Environment: Canadian Policies and Performance, 2007–2008 (McGill-Queen’s University Press, 2007), 176-199. 3 National Energy Board, Annual Report to Parliament 2005 (Calgary: National Energy Board, 2006), 29. 4 These figures were supplied by the Canadian Association of Petroleum Producers. 5 National Energy Board, Annual Report to Parliament 2005 (Calgary: National Energy Board, 2006), 25. 6 The production and reserve figures for natural gas were supplied by the Canadian Association of Petroleum Producers. 7 Coal Association of Canada, Coal Economics (Calgary: Coal Association of Canada, n.d.). 8 Monica Gattinger, “Canada-United States Electricity Relations: Policy Coordination and Multi-Level Associative Governance,” In Doern, ed., How Ottawa Spends 2005– 2006 (Montreal and Kingston: McGill-Queen’s University Press, 2005) 143-162. 9 National Energy Board, Annual Report to Parliament 2005 (Calgary: National Energy Board, 2006), 29. 10 National Energy Board, Annual Report to Parliament 2004 (Calgary: National Energy Board, 2005), 23-27. 11 G. Bruce Doern and Monica Gattinger, Power Switch: Energy Regulatory Governance in the Twenty-First Century (Toronto: University of Toronto Press, 2003), 71-91.

160 Selected Policy, Political, and Budgetary Realms 12 David H. Breen, Alberta’s Petroleum Industry and the Conservation Board (Edmonton: University of Alberta Press and Energy Resources Conservation Board, 1993), ch.1. 13 National Energy Board, Annual Report to Parliament 2005 (Calgary: National Energy Board, 2006), 61. 14 Sinclair Stewart, Andrew Willis, and David Ebner, “Encana’s trust plans triggered crackdown. $45 billion spinoff was last straw for Tories, who now face a stiff tax battle in the oil patch,” Globe and Mail, 4 November 2006, A1. 15 Reginald Whitaker, The Government Party. Organizing and Financing the Liberal Party of Canada, 1930-58 (Toronto: University of Toronto Press, 1977), 12-13. 16 William Kilbourn, Pipeline (Toronto: Clark Irwin and Co., 1970); Robert Bothwell and William Kilbourn, C.D. Howe, A Biography (Toronto: McClelland and Stewart, 1979). 17 Neil Swainson, Conflict Over the Columbia: The Canadian Background to a Historic Treaty (Institute of Public Administration of Canada, McGill-Queen’s University Press, 1979). 18 Peter Foster, The Blue-Eyed Sheiks. The Canadian Oil Establishment (Toronto: Collins, 1979), 51. 19 J.D. House, The Last of the Free Enterprisers. The Oilmen of Calgary (Toronto: Macmillan of Canada, 1980). 20 John Erik Fossum, Oil, the State, and Federalism. The Rise and Demise of Petro-Canada as a Statist Impulse (Toronto: University of Toronto Press, 1997), 10. 21 Allan Blakeney, seminar presentation at Queen’s University, March 1988. 22 Canada, North American Free Trade Agreement (Ottawa: Supply and Services Canada, 1993), chapter 6. 23 National Energy Policy Development Group, 2001. 24 Ibid. 25 Natural Resources Canada, Energy in Canada, 2000 (Ottawa: Queen’s Printer, 2000), 9. 26 Ibid, 137-138. 27 Ibid., 174-175. 28 National Energy Board, Annual Report to Parliament, 2005 (Calgary, National Energy Board, 2006), 29. 29 Mike DeSouza, “Green reform will hit oilpatch,” Calgary Herald, 30 September 2006, A1. 30 Mike DeSouza, “Tory Green Plan includes close ties with U.S.,” Ottawa Citizen, 23 August 2006, A5. 31 Bill Curry, “Critics blast Ottawa’s ‘shameful’ green plan,” Globe and Mail, 20 October 2006, A1 and John Ibbitson, “Clean Air Act Delivers Rude Awakening,” column, Globe and Mail, 20 October 2006, A4. 32 Natural Resources Canada, “Natural Resources Minister Lunn Meets with U.S. and Mexican Counterparts to Discuss North American Energy,” media release, 4 May 2006. 33 Stephen Harper, “We intend to build `energy superpower,’” Financial Post, 29 July 2006, fp15. 34 Natural Resources Canada, “Minister Lunn Puts Spotlight on Canada as Energy Superpower,” media release, 19 July 2006.

9 Patience! … Wait Time Guarantees and Conservative Health Care Policy g e r a r d w. b o y c h u k

In contrast with the impressive progress made on its other main priorities, the Harper government has been much more patient with regard to its commitment to wait time guarantees for health services. This patient approach, while contributing to a much-needed cooling of the political rhetoric enveloping health care debates, will likely have important political dividends. Even if the Conservatives are only able to announce some modest measure of success on their wait time guarantee agenda, they will have seriously undermined claims that they have a hidden health care agenda. This is likely to again neutralize health care as an issue in a possible 2007 federal election. The federal government has been able to proceed quietly and patiently with its wait time agenda because it has been spared entanglement in the health care imbroglio primarily as a result of developments largely outside of its own control: the decision by the Quebec government to respond to the Supreme Court’s decision in the Chaoulli case with reforms that do not challenge the Canada Health Act (cha); the effective passing from the political scene of Alberta Premier Ralph Klein in the midst of his swansong attempt at major health funding reform; and British Columbia’s relatively surreptitious approach of professing strong support for the cha while quietly violating it. These developments, combined with the federal government’s cautious and patient approach, have allowed Ottawa to successfully avoid the most fundamental challenge in the field of health care currently facing a federal government of any partisan stripe – managing the significant differences in provincial preferences regarding the appropriate mix of public and private funding for health services. The degree to which Ottawa will allow provinces to rely on private funding and delivery of health services in guaranteeing wait

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times as well as the degree of provincial distinctiveness it can or will tolerate under a nominally “national” wait time guarantee are central questions which remain unanswered and, yet, are crucial to making real progress on the wait time guarantee agenda. That it will take considerable time for the federal government to address these questions and secure provincial participation is, thus far, the only wait time in Canada which is guaranteed.

t h e chao u l l i d e c i s i o n The context for the current health care debates has been strongly shaped by the decision of the Supreme Court in the case of Chaoulli v. Quebec (Attorney General) in June 2005.1 At issue was the Quebec government’s ban on the provision of third-party insurance for publicly-insured services. The plaintiffs claimed that the prohibition on private health insurance violated citizens’ rights under s. 7 of the Canadian Charter of Rights and Freedoms and s. 1 of the Quebec Charter of Human Rights and Freedoms by effectively denying them, where significant waiting lists exist, access to health services. A Quebec Superior Court and, subsequently, the Court of Appeal ruled against the claim on the basis that the infringement of the right to life, liberty and security of the person guaranteed under the Canadian Charter was justifiable and in accordance with the principles of fundamental justice. On appeal to the Supreme Court, four of the seven ruling justices found that the legislation violated the Quebec Charter of Human Rights and Freedoms on the basis that there was no proportionality between an absolute prohibition on private insurance and the objective of preserving the integrity of the public health care system. Furthermore, the Court found that a ban on private insurance was not clearly demonstrated to be the minimal impairment of individual rights necessary to achieve the broader policy objective and, rather, that “[t]here are a wide range of measures that are less drastic and also less intrusive in relation to the protected rights.”2 The Court stayed the judgment for a period of one year to allow the Quebec government to respond by amending the legislation or by addressing the central issue of the case – waiting times for publicly-insured health services. The Court split evenly (3–3) on the issue of whether the prohibition violated the Canadian Charter of Rights and Freedoms with one justice abstaining on the basis that, since the legislation violated the Quebec Charter, consideration of the Canadian Charter would be superfluous.3 Using reasoning similar to that applied in the majority decision based on the Quebec Charter, three justices argued that the ban could not be justified under s.1 of the Charter because the government of Quebec was failing to deliver public health care “in a reasonable manner.”4 In contrast, the three dissenting justices found that the prohibition on private insurance did not violate any established principle of fundamental justice and that the public policy objective of

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“health care of a reasonable standard within a reasonable time” is not a legal principle of fundamental justice. Furthermore, they found that the legislation was consistent with the intended goal of providing “high-quality health care, at a reasonable cost, for as many people as possible in a manner that is consistent with principles of efficiency, equity and fiscal responsibility” and, thus, did not constitute an arbitrary infringement of individual rights. Despite claims in the media that the decision represented a fundamental challenge to the cha and the existing system of public health insurance in Canada more broadly, there are a number of critical caveats. First, in the absence of a successful case in another Canadian province with a similar ban, the ruling (based as it is on the Quebec Charter) has no legal force outside of Quebec although it may be of considerable political consequence.5 Secondly, the majority ruled that an absolute ban on private insurance was an infringement of individual rights only in the context of unreasonably long waiting lists. Thus, the infringement could be remedied by addressing the length of waiting lists rather than striking down the ban on private insurance. Thirdly, while the cha requires that public health insurance coverage be universally available on uniform terms and conditions without barriers to reasonable access including those of a financial nature, it does not require a ban on private insurance.6 Only six of the ten Canadian provinces explicitly prohibit thirdparty insurance for services which are publicly covered.7 Thus, the decision does not fundamentally challenge the cha or the central elements of universal public health insurance provision. The Chaoulli decision has, however, generated strong political dynamics pushing governments to deal with wait times. It is important not to overstate the general political resonance of the Chaoulli decision with the Canadian public. Three months after the decision was announced, a majority of Canadians (even in Quebec) were not aware of the decision or had no opinion on it.8 Those with a strong opinion (either for or against) made up less than a quarter of the population in all Canadian provinces (except Alberta) and, for the most part, were roughly balanced between those in favour and those against. While the Chaoulli decision has been an important tool in political jockeying over health care reform, it has not been a central driver of health care reform outside of Quebec (where the provincial government was legally obligated to respond.)

h e a lt h c a r e i n t h e 2 0 0 6 e l e c t i o n With the 2006 election coming just six months after the Supreme Court’s decision, all major parties were forced to react to the decision. While this guaranteed that a certain amount of attention would be paid to health care in the election, it represented a minor election issue at best. The vagueness of the Chaoulli decision allowed the Liberals and Conservatives to each interpret the decision in keeping with their own pre-existing

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policy preferences while the ndp was the only party to reject the decision. The Conservatives emphasized that the decision required formally recognizing the rights of patients to receive health services elsewhere if they cannot be offered on a timely basis through the public system within a given province.9 The Liberals, alternatively, while professing agreement with the decision, emphasized the need to reduce wait times in the public system.10 The ndp characterized the Supreme Court decision as “unfortunate and regrettable” while also noting that it is “the most direct assault on public health care yet.”11 These differences existed in the broader context of basic agreement among the three national parties on health care which neutralized it as a major issue in the election. All three national parties were firmly committed to the central principles of the cha.12 All three also committed to the reduction of waiting times – the Conservatives and Liberals through recourse to a wait time guarantee and the ndp by providing more funding, encouraging homecare, and training more doctors and nurses. For their part, the Bloc Quebecois insisted that health care remain a prerogative of the provinces, opposed any increased federal intervention in the field, and argued for a transfer of fiscal capacity to the provinces to allow them to adequately exercise provincial responsibilities in the field. The primary difference between the Conservatives and Liberals lay in their distinct approaches to the wait time guarantee. The main thrust of the Liberal proposal was to create a Health Care Guarantee Fund of $75 million to assist patients with travel and accommodation costs required to receive services in public facilities in other provinces should this be necessary in order to ensure timely access to care.13 There was, however, no mechanism in the Liberal plan to ensure that patients would have access to such support in all cases where timely access could not be provided nor any actual guarantee of receiving health services in a timely fashion. In contrast, the Conservative proposal for a Patient Wait Time Guarantee promised to ensure that all Canadians receive treatment within clinically acceptable waiting times or they would be eligible to receive treatment in another jurisdiction.14 At the same time, the Conservative platform did not commit any additional federal funds thus raising the question of why provinces would agree to binding wait time guarantees in the absence of new federal financial inducements. Nevertheless, the Conservatives committed to having wait-time reduction targets for key procedures – “the foundation of the guarantee” – in place no later than the end of 2006.15 A second distinction was that the Conservative wait time guarantee would grant individual Canadians who do not receive services within a specified length of time the ability to receive services in another jurisdiction (another province but also, potentially, the United States) as well as from private, for-profit providers operating outside the public system. Conversely, the Liberal wait time guarantee explicitly specified that such services would have to be provided within the public system

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with patients being given the option of receiving services from “a public facility in another province.”16 Nevertheless, these differences were not sufficient to dispel the broad impression of general similarity between the two parties on this issue. As the National Post reported in regard to the Liberal wait time guarantee: “The plan was similar to a program the Conservatives unveiled, although the pledges vary somewhat in details.”17 This impression of similarity was reinforced by Stephen Harper’s deliberate portrayal of the Liberals’ proposal as simply mimicking that of the Conservatives.18 While this approach helped neutralize health care as a decisive issue in the election campaign, the newly-elected Conservative government would need to show at least serious efforts at progress in this regard – if not actual success – before the next election. At the same time, it would have to avoid igniting the latent conflict inherent in federal-provincial differences (as well as differences among provincial governments) on the issue of the role of private service delivery in any wait time guarantee.

h e a lt h c a r e p o s t - e l e c t i o n The federal government has worked quietly and patiently on its wait time guarantee agenda in the post-election period. Not surprisingly, progress has been slow. While some observers characterized this as a major failure, progress is proceeding slowly, at least in part, as a matter of design. Proceeding slowly represents a calculated balance between the need to maintain the image of on-going progress on the one hand, and, on the other, the Conservatives’ absolute unwillingness to increase health transfers as well as the imperative to minimize the risk of federal-provincial conflict over fundamental philosophical issues such as the role of the private sector in health funding and delivery. From the outset, the Conservative government promised only to make “progress” on the issue of wait times and was very careful not to commit to any deadline for implementing guarantees.19 As outlined in the Speech from the Throne, the Conservative government committed itself in April 2006 to “engage the provinces and territories on a patient wait times guarantee for medically necessary services. This guarantee will make sure that all Canadians receive essential medical treatment within clinically acceptable waiting times.”20 The budget of May 2006 provided no greater detail on the federal plan. The Budget Plan 2006 cites the implementation of the Martin government’s 10-Year Plan to Strengthen Health Care and a Patient Wait Times Guarantee as the first two items in its list of “immediate action to restore fiscal balance” – although it is not at all clear how the Patient Wait Times Guarantee addresses the fiscal imbalance.21 The Budget Plan is crystal clear on the fact that there would be no new money for the wait times guarantee with the new guarantee to be funded through the existing plan including the $5.5 billion

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(from 2004/5–2013/14) wait time reduction fund.22 In its detailed discussion of Patient Wait Times Guarantee as a core priority, the budget plan committed the government to the existing framework and timetable outlined in the 10 Year Plan to Strengthen Health Care including the establishment of provincial wait time reduction targets for priority procedures identified by the provinces.23 While the Budget Plan discusses provincial efforts to date to address wait times as well previous federal-provincial efforts in setting common benchmarks, it is absolutely silent on the specifics of the government’s future commitment toward establishing a wait time guarantee beyond the general commitment to “working with provinces and territories to develop a Patient Wait Times Guarantee to ensure that all Canadians receive necessary medical treatment within medically acceptable waiting times.”24 That Ottawa would insist on moving forward without increasing federal funding beyond that already committed is not surprising considering that many observers believed, when Prime Minister Paul Martin signed his ten year plan in 2004, that this massive commitment of federal funds would preclude additional health care funding – and the negotiating leverage attendant with additional funding – for the next decade.25 The Globe and Mail editorialized more recently that the federal health minister is “right to prod the provinces” on the issue of wait times.26 However, the federal government has little recourse left to financial carrots to persuade the provincial governments to accept binding guarantees and the available stick (attaching new conditions to existing transfers) would undoubtedly generate a potentially explosive confrontation with the provinces. Despite the federal Health minister’s characterization of provincial reticence as “inexplicable,”27 it is not surprising that provincial willingness to commit to wait time guarantees has been less than enthusiastic. First, the obligation on provinces to pay for services in another jurisdiction (including travel costs) generates significant potential for increased costs with the federal advisor on wait times to the Health minister, Dr Brian Postl, noting the potential for an “enormous acceleration” in public costs.28 Of course, the provinces, for their part, are insistent that the federal government make a contribution toward financing the wait time guarantees.29 The president of the cma argued that a federal financial contribution would be required to ensure provincial participation and proposed that the federal commit $1 billion with the provinces collectively matching the amount.30 Nevertheless, the federal government remains steadfast in its position that adequate funding was provided for in the September 2004 health accord. The issue of financing is not the only obstacle to the federal plan. There are also fundamental disagreements between the federal government and some provinces – most notably Ontario – about whether the guarantee mechanism should provide access only to publicly provided health services or both to public and privately provided services. As the National Post notes, “A bigger

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problem for the federal government, and its commitment to reducing wait times, may be the ideological opposition from the Ontario government to any reforms that include increased private-sector participation. George Smitherman, Mr. Clement’s successor as Health Minister, has already stated that the province is not interested in expanding the role of private health care. That seems to set him on a collision course with the Harper government.”31 The potential for philosophical differences to become a flashpoint in interactions between the Ontario government and federal government became clearly evident in early September when the Ontario minister of Health publicly accused the federal minister of not doing enough to protect the public health care system noting the federal minister’s former support for two-tier health care: “he’s [not] going to be leading the troops and rallying people to say this public health system is good, can be better and asking people to join up and fight to preserve it for future generations. I don’t think Tony Clement is going to be at the front of that parade.”32 On the following day, the Ontario government announced an additional expenditure of $108 million to help reduce wait times for specific health services such as hip and knee replacements and diagnostic imaging.33 In the face of provincial recalcitrance, the federal government has adopted a flexible and accommodating posture sufficient to keep the image of progress alive. In mid-July 2006, the Minister outlined to his provincial counterparts in a video-conference that the national health-care guarantee need not necessarily apply to the same health services in all provinces and “would allow for provincial flexibility in delivering the program”: “Rather than work on a one-size-fits-all approach, I and the government are prepared to be flexible and work with you one-on-one to see what works best in your own particular province or territory.”34 However, despite the appearance of federal urgency to move forward with wait-time guarantees, it had not put forward a plan for officials to work on nor had it clearly identified how it would ensure that provinces abided by their own stated guarantees.35 Ottawa has also demonstrated flexibility in terms of its conceptualization of recourse under the guarantee. In late spring, the National Post reported that “Canadians stuck on waiting lists for health care could take legal action under the Conservative government’s promised wait times guarantee, Health Minister Tony Clement indicated yesterday.”36 Five months later, in clarifying the federal position on what recourse would look like in practice, the Minister outlined that patients would be put on a centralized waiting list and various options for care would “become automatically available as a patient’s wait time increases.”37 However, should this automatic process not operate adequately in practice, “patients themselves should be able to trigger recourse by going to an ombudsperson or an administrative tribunal.”38 The minister no longer appeared to support legal recourse for patients: “Now, of course, I don’t think any of us want the alternative, which is recourse based on litigation

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– a process that is slow, adversarial and expensive. This is not my idea of building certainty for patients.”39 Such flexibility is indicative of the difficulties facing the Conservatives in balancing between addressing the central elements actually required to implement a wait time guarantee (which would entail a significant risk of serious federal-provincial conflict) and having their agenda appear to be stalled. By the end of the summer, the national media was referring to the Conservative wait times guarantee as a broken promise whether the failure was attributed to the federal Conservatives or the provinces.40 The National Post referred to the initiative as a “bust.”41 John Ibbotson, dubbing the initiative the Patient Wait Times Failure, argued that “it is beyond hope that this government will fulfill that promise within the foreseeable future.”42 However, the federal Health minister continued to deny any spectre of failure arguing instead that progress on the wait time guarantee was ongoing: “It may not necessarily be the most glamorous part of the government agenda, but it is seen as a very necessary part. From my perspective, the work is ongoing and will continue to be that way. Maybe that’s not attention-seeking, but that is the best way to move forward … This is going to take some collaboration, this is going to take, frankly, some work behind the scenes.”43 In a speech to the Canadian Medical Association in August 2006, Minister Clement outlined his vision for moving forward which was very cautious. First, he proposed a federal-provincial-territorial Health ministers’ “Success Conference” for the fall of 2006 to “show Canadians how their health leaders are working together to reduce and better manage wait times” and to “learn better from one another about what works and what doesn’t, as we move ahead to guarantees.”44 Further, he proposed that by the fall of 2007, “provinces and territories should be in a position to state their intention to establish guarantees in critical areas such as cardiac care where progress has already been made.”45 By spring 2008, “all jurisdictions should be making progress towards establishing wait times guarantees for other essential health care services.”46 Obvious by its omission, the speech makes no mention of a date when provinces would actually begin providing the guarantee. With federal-provincial-territorial health ministers tentatively set to meet in Moncton in early December, there seems to be little prospect that the meeting could be, in any way, construed as a ‘success conference.’ Rather, by late fall, the federal minister was reported to have acknowledged that “provincial governments have so far refused to put in place a more comprehensive set of guarantees” and that “the provinces have balked at implementing the health care guarantee concept without receiving more federal government money.”47 The issue of progress on wait times guarantees was re-ignited by a series of articles in the Globe and Mail examining cancer treatment in Canada that revealed that only 50 to 60 percent of hospitals were meeting the benchmark

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for wait times for cancer radiation treatment agreed to by the federal and provincial governments in December 2006. The stories generated heated questioning of the federal health minister by the Opposition in question period.48 On the same day, the federal minister announced that the federal government would be proceeding with its own wait time guarantees – a two-year pilot project for wait time guarantees for health services for pregnant women in ten aboriginal communities.49 One week later, the federal government announced a similar pilot project for the treatment of aboriginal diabetes.50 The initiatives were reported as a federal effort to “breathe some life into the Conservative’s near-dead promise of a health warranty.”51 Nevertheless, these efforts represented, at best, “a meager version of the proposed national system of guarantees that formed a key plank of the Tories’ election platform.”52 At the same time, the prime minister also announced the creation of the Canadian Partnership Against Cancer, a not-for-profit corporation created to implement the Canadian Strategy for Cancer Control – a plan for cancer control developed by a multi-stakeholder consortium in operation since the early 2000s.53 The partnership is to be supported by $260 million in funding over 5 years announced in the 2006 budget.54 By late fall, the wait time agenda was coming under fire from yet another angle – not for being ineffective but, rather, for being too effective. Concern over diversion of health care resources into the five priority areas established in the 2004 federal-provincial health care deal (cancer care, heart operations, cataract surgery, hip and knee replacements, and diagnostic imaging) and away from other health service areas resulting in longer wait times in those non-priority areas was raised in late September at a meeting of the Royal College of Physicians and Surgeons. Similar concerns resulted in major online study launched by the Canadian Medical Association in early October.55 These criticisms forced the federal health minister to defend the overall approach to wait times as well as the Conservatives’ specific wait time guarantee which, initially applying only to the five existing priority areas, would potentially exacerbate such diversions.56 Such criticisms may not be all that serious a political problem for the Harper Conservatives as they may not need to deliver on the wait times guarantee prior to the next federal election. Rather, they need to continue to neutralize health care as an electoral issue. Progress on wait times, even if marginal, will help the Conservatives clearly establish that they are committed to the cha and convince Canadians that the Harper government does not have a hidden agenda of dismantling the public health care system in Canada.

h e a lt h c a r e r e f o r m i n t h e p r o v i n c e s The Conservatives have been allowed to pursue wait times patiently and quietly due, in large part, to developments in the provinces which have

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allowed them to avoid the thorny issue of stark regional differences in support for private funding and delivery of health care services. Provinces in addition to Quebec – most notably Alberta and British Columbia – viewed the decision as an opportunity to broach the issue of private funding and delivery of health care services.57 Some observers sensed the possible emergence of a strong coalition of three of the four largest Canadian provinces, representing just under half of the Canadian population, launching a simultaneous drive to significantly increase private funding and delivery of health services.58 As Jeffrey Simpson asked rhetorically, “With three provinces about to breach previous understandings of the limits imposed by the Canada Health Act, what will the Harper Conservatives do?”59 The answer to this question was greatly complicated by the fact that other provinces – most notably Ontario which passed its own Commitment to the Future of Medicare Act in 2004 – have remained adamantly opposed to increasing private funding or the role of private service delivery. In the event, none of the proposed reforms in any of the three provinces represented a significant challenge to the cha and, as a result, the federal government has been able to avoid confronting this divisive issue. Quebec The response of the Quebec government to the Chaoulli decision, presented in a public consultation document released in February 2006 just weeks after the Harper victory, was three-fold.60 In order to expand capacity without requiring new capital outlays by government, the first element was to allow for the development of specialized clinics which would operate in affiliation with an existing public hospital to provide specific publicly insured services. The affiliated specialized clinics would be reimbursed according to a fee schedule set out in the agreement under which the costs must be comparable to or less than costs in the public system. Secondly, the Quebec government has committed itself to a wait-time guarantee for a range of health services, including cardiac surgery and cancer treatments, hip and knee replacement, and cataract surgery. The guarantee commits the government to pay for procedures done at private clinics or outside the province – including potentially the United States – if they cannot be accommodated within public facilities within the guaranteed maximum wait-time. In regard to hip and knee replacement and cataract surgery, the proposed maximum wait-time is six months after which patients could seek treatment in another facility or in a private, hospital-affiliated clinic and, after nine months, in a private facility or another jurisdiction. Finally, the government would also lift the ban against third-party insurance for a limited range of publicly funded procedures which are subject to an access guarantee – most notably joint replacement.61 Private insurance would be required to cover the cost of the entire

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medical intervention and services could only be provided by providers having opted completely out of the public health care system. Various observers have argued that the changes represent a challenge to the cha.62 Premier Charest insisted that the Quebec proposals would be in compliance with the cha.63 For its part, the federal government lauded the Quebec initiative: “Recently, the Government of Quebec, while confirming its commitment to public health care and its respect for the principles of universality and equity, has proposed a health care guarantee for certain health services. Quebec’s proposed approach is innovative and will help ensure that patients receive timely access to these vital services.”64 For other observers, the proposed changes were a major disappointment – not going far enough in injecting options for private funding and service delivery into the public system.65 Some observers perceived major implications of the Quebec approach for the possible direction of reform in other provinces: “Quebec’s decision to respect the Canada Health Act is a huge blow to premiers Klein and Campbell.”66 Clearly, the proposed reforms do not pose a direct challenge to the cha. In regard to the first two elements of the proposal, the cha does not ban the private provision of publicly insured services which is the central issue in regard to allowing affiliated specialized clinics as well as enforcing the wait time guarantee through public procurement of services from private facilities. Secondly, lifting the ban on private insurance for health services echoes the current practice in the four other provinces which do not prohibit third party insurance for publicly insured services.67 The circumstances were certainly ripe for a more forceful challenge to the cha by the Quebec government. Not only is public opinion in Quebec certainly more predisposed in favour of private funding and service provision than is the case in other provinces, the Chaoulli decision clearly put Ottawa on the defensive and limited its room to manoeuvre in enforcing the cha. Ottawa could certainly not be seen to be pressuring the Quebec government to violate the latter’s own Charter of Human Rights and Freedoms. That the Quebec response to Chaoulli did not more directly challenge the cha has proven a lucky stroke for the Harper Conservatives. Harper has been desperately attempting to woo Quebec voters in order to fashion a coalition of electoral support capable of sustaining a majority government.68 Doing so, while also managing in the rest of Canada to appear firmly committed to the principles of the cha, is made difficult by the fact that both the provincial government and Quebec public opinion is significantly more supportive of private alternatives in health funding and delivery than is the case elsewhere in Canada. Given circumstances which could hardly be more propitious for ambitious reforms to increase the role of private funding, insurance, and service delivery, the Quebec reforms are relatively modest.

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Alberta The Harper Conservatives also seemed liable to face a significant challenge on the health care front posed by the proposed health reforms in Alberta. Released in February 2006, Alberta’s Health Policy Framework report was greeted with considerable fanfare in the national news media.69 Globe and Mail columnist John Ibbotson, for example, wrote that the report “marks the beginning of the end of medicare as practiced today in Canada; the end of the Canada Health Act, at least as conventionally interpreted; the end of the world’s only fully publicly funded health-care delivery system; the end of the guarantee that only need, and never wealth, will determine who gets served first.”70 This reaction was, of course, fanned by inflammatory language from the Alberta government itself. In contrast to Quebec which forcefully asserted that its reforms were in keeping with the national principles outlined in the cha, the Alberta government took a deliberately provocative stance. While the Alberta minister of Health declared that she was not sure whether the plan would violate federal legislation,71 Premier Klein, upon releasing the proposals, stated to reporters that “[i]t may violate the Canada Health Act.” – echoing statements made late in the 2004 federal election campaign that Alberta’s reforms would fall outside the cha.72 Of those recommendations relating to health funding, private insurance and private delivery, many of the report’s proposals are allowable under the cha and are currently the practice in other Canadian provinces. The report suggests reshaping the role of hospitals and, although vague, makes reference to the possibility of “delivering more services through private surgical facilities.”73 While essential health services would still be publicly funded, the report emphasizes limiting publicly funded health services by excluding health services which are “discretionary, are not of proven benefit, or are experimental in nature”74 and leaving those services to be financed either by patients directly or through third-party insurance. The report commits the government to examining alternatives to the single-payer public insurance system including private insurance options.75 The report also recommends allowing health care providers to both bill publicly for some procedures and bill privately for others in contrast to the current legislation which requires that a provider must opt out of the public system completely if they have any private billings. Despite the fact that it is not a violation of the cha, this provision was characterized in the national news media as “crossing the Rubicon of health care” and “breaching the firewall.”76 The Alberta proposals also clearly contained elements that, if adopted, would constitute a violation of the cha: requiring co-payments (e.g. user fees) for publicly-insured services or allowing public facilities to charge for expedited access to publicly-insured services.77 Whether charged by a publiclyfunded hospital or a privately-owned clinic, such charges would almost certainly be a violation of the cha if the associated physician services were paid for under the public insurance plan.

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The federal Health minister refused to state whether he believed the proposed reforms would be in violation of the cha.78 Both the federal minister and prime minister himself had repeatedly warned the Alberta government that reforms must fall within the parameters of the cha.79 Once the proposals were released, the federal Health minister outlined his preference for the Quebec model which requires physicians to opt completely out of the public system in order to undertake any private billings while also stating concerns about the possibility of queue-jumping – mirroring Prime Minister Harper’s statement of preference for the Quebec model of reform.80 Prime Minister Harper expressed his concern to Premier Klein in early April in a letter considering various aspects of the proposed Alberta reforms.81 Foreshadowing the type of interprovincial conflict that could erupt over the role of privatelyprovided services in enforcing a wait time guarantee, the Ontario government also weighed into the debate denouncing the Alberta reforms as an affront to the public medicare system.82 Whether a serious confrontation would have ensued if Alberta had pursued some of its more radical proposals will never be known – the proposed reforms were derailed by Premier Klein’s surprisingly poor showing in the review of his leadership at the annual Progressive Conservative Party meeting in April 2006 where he received only 55% of delegate support. Shortly thereafter, the Alberta government announced that it would be shelving its reform plans.83 As the plans were withdrawn, Premier Klein castigated the federal government for offering no alternatives and accused it of political expediency in portraying itself as the defender of medicare.84 Despite this parting shot, the Harper government was spared having to directly address the challenge Alberta’s health proposals would have created. British Columbia The bc government’s renewed focus on health care reform was announced in the 2006 Speech from the Throne which outlined the fundamental premise of the government’s approach to reform that “in Canada, we have known for many years that the escalation in health care costs is not sustainable. The question for all British Columbians is this: Are we prepared to change to face up to that fact?”85 The Speech posed the question: “What are the fundamental changes we must make to improve our health and to protect our precious public health care system for the long-term?” The Throne Speech suggested the possibility of a greater role for the private sector in the delivery of publiclyfunded health services: “Does it really matter to patients where or how they obtain their surgical treatment if it is aid for with public funds? Why are we so afraid to look at mixed health care delivery models.” At the same time that it proposed fundamental changes to the health care system, the Throne Speech clearly commits the bc government to ensuring that “any changes it makes are consistent with the Canada Health Act.”86 In

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regard to the bc government’s approach to options for reform, it was reported that “essentially, anything that doesn’t blatantly contravene the Canada Health Act is on the table.”87 The milquetoast nature of the rhetorical Throne Speech questions and the assertions of support for the cha have allowed the federal minister to dismiss questions regarding bc’s apparent support for private delivery of publicly-funded health services: “I don’t see anything wrong with British Columbia asking questions and consulting with their fellow British Columbians about the answers to those issues.”88 Rather than openly challenging the cha, the bc government is arguing instead that it needs strengthening: “The Canada Health Act needs to be updated. Not to make it weaker – but to make it stronger and consistent with its original vision and intent – to preserve public health care for all Canadians.”89 In doing so, the bc government argues that an additional principle must be added to the five existing principles of the cha – the principle of sustainability. The Throne Speech also contains a subtle, implicit critique of the cha noting that the cha holds out the “promise” of universal, accessible, comprehensive, portable, and publicly administered health care emphasizing that “after four decades of public health care, supported by over $1.5 trillion dollars in public expenditures, those five principles remain largely undefined.”90 Thus, the challenge, as portrayed by the bc government, is to “define for itself how the Canada Health Act should be interpreted.”91 In order to do so, the Speech commits the government to a province-wide public consultation process. While the Throne Speech provided few details, the public consultation process will include avenues for e-mail input, interactive online discussions, and a series of regional forums across the province.92 The consultation initiative is certainly ambitious: the Conversation on Health is projected to cost up to $10-million over two years with an additional $2.5 million for an advertising campaign and a special assistant deputy minister being assigned to oversee these efforts.93 The public consultation is slated to last for 18 months with the government bringing in reforms starting by the end of 2008 and being completed prior to the provincial election in the spring of 2009.94 Observers have cause to be skeptical as to the motivation for the public consultations. In the words of bc Premier Gordon Campbell, “We are going straight to the people. We need help on this.”95 However, with no apparent concern for pre-empting its consultation process, the Throne Speech concludes: “British Columbians want better access, greater choice, increased flexibility, and new options under their public health care system. They want high quality health care that is fair and equitable to all British Columbians regardless of their incomes.”96 At the same time that the government professes unwavering commitment to the principles of the cha, British Columbia, as of April 2006, remained the only province to be fined by federal government for allowing contraventions of the cha.97 The bc violations relate to extra-billing by private surgical

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facilities – a practice that has been at issue between the federal government and bc government since 2000.98 At the same time, the province has carefully avoided provoking any highly-publicized confrontations with Ottawa on the issue. For example, the province has been firm in dealing with private clinics charging enrollment fees which the province has claimed is a violation of the cha.99 When patients who had paid a fee to a private medical broker were found to be receiving mri s in a public facility ahead of patients on the public waiting list, the bc Health minister immediately condemned the practice as a violation of the cha and began investigating similar incidents.100 The bc government’s nominal support of the cha has, thus far, proven sufficiently credible to allow the federal government to avoid having to directly confronting the issue of cha compliance at the political level.

c o n c lu s i o n s The Harper Conservatives have taken a patient approach to their proposed wait times guarantee for a number of important reasons – they are not willing to devote further fiscal resources to health, it is an area of primarily provincial jurisdiction, and there are wide differences among the provinces as to whether such guarantees should include recourse to privately-provided services. This patient approach may serve the Conservatives well – it allows them to demonstrate commitment to the principles of the cha and dispel perceptions that they have a hidden agenda in health care. It allows them to also avoid directly confronting some of the primary obstacles to the implementation of a national wait time guarantee – issues which need to be addressed if the Conservatives are to seriously pursue such a goal. The success of this approach is, in large part, predicated on a number of fortuitous developments in the provinces. Quebec could well have used the Supreme Court decision as an opportunity to forcefully challenge the cha – it is hard to imagine more propitious circumstances for doing so. Had it done so, Quebec may have been joined in those efforts by British Columbia and Alberta. In the face of strong opposition on the part of Ontario to further privatization, these provincial developments would have placed the Harper Conservatives in a very difficult position. As it has turned out, the cha has not been directly challenged and it seems increasingly unlikely that health care will emerge as a decisive issue in the next federal election. As for the patient wait time guarantees … it is patients who must have patience.

notes 1 Chaoulli v. Quebec (Attorney General), [2005] 1 S.C.R. 791, 2005 scc 35. 2 Ibid.

176 Selected Policy, Political, and Budgetary Realms 3 The Canadian Charter outlines that rights to life, liberty and security of the person are not to be infringed “except in accordance with the principles of fundamental justice.” The relevant section of the Quebec Charter has no comparable exception and is, thus, of broader applicability than the Canadian Charter. 4 S.1 of the Canadian Charter of Rights and Freedoms stipulates that the rights guaranteed in the Charter are subject to “reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.” 5 A case similar to the Chaoulli case has been launched in Alberta. See John Carpay, “Chaoulli Comes to Alberta,” National Post, 19 September 2006, A21. 6 Canada Health Act, 1984, c. 6. Accessed online (25/05/06) at http://laws.justice.gc.ca/ en/c-6/17077.html 7 See Gerard W. Boychuk, “Provincial Regulation of Private Health Insurance in the Post-Chaoulli Era,” paper presented to the Canadian Political Science Association, Toronto, June 2006. 8 Pollara, Health Care in Canada, 2005. Survey administered in August/September 2005. Accessed online (24/10/06) at http://www.pollara.ca/Library/Reports/ HCIC8.pdf 9 Conservative Party of Canada, Stand Up for Canada: Federal Election Platform, 2006, 30. 10 Liberal Party of Canada, Securing Canada’s Success, 2006, 11. 11 New Democratic Party, Getting Results for People: Platform, 2006, 10. 12 Conservative Party of Canada, Stand Up for Canada, 30; Liberal Party of Canada, Securing Canada’s Success, 10; New Democratic Party, Getting Results for People. 13 Liberal Party of Canada, Securing Canada’s Success, 13. 14 Conservative Party of Canada, Stand Up for Canada, 30. 15 Allan Woods and Elizabeth Thompson, “Liberal Wait-Time Strategy Similar to Conservatives,” National Post, 5 January 2006, A4. 16 Liberal Party, Securing Canada’s Success, 13. 17 Woods and Thompson, “Liberal Wait-Time Strategy Similar to Conservatives.” 18 Campbell Clark and Stephen Chase, “Leaders Announce Dueling Health Care Proposals,” Globe and Mail, 5 January 2006, A7. 19 Tom Blackwell, “’Progress’ Promised on Wait Times Pledge,” National Post, 5 April 2006. 20 Canada, Speech from the Throne, April 2006. Accessed online on October 15, 2006 at http://www.sft-ddt.gc.ca/default_e.htm 21 Department of Finance, Budget Plan, 2006: Focusing on Priorities (Ottawa: Department of Finance, 2006). 22 Budget Plan, 143. See also Gloria Galloway, “Minister Urges ‘Innovation,’” Globe and Mail, 18 February 2006, A7; Gloria Galloway, “No Extra Health-Care Cash Now, pm Says,” Globe and Mail, 22 February 2006, A14. 23 Budget Plan, 144. 24 Ibid., 143. 25 See Gerard W. Boychuk, “How Ottawa Gambles: Rolling the Dice and the Politics of Health Care Reform in 2004,” 41-57 in G. Bruce Doern, ed., How Ottawa Spends,

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26 27 28 29 30 31 32 33 34 35 36 37

38 39 40 41 42 43 44 45 46 47 48 49

2005/6: Mandate Change in the Paul Martin Era (Kingston: McGill-Queen’s University Press, 2005). “Health Care, When?” Globe and Mail, 23 August 2006, A12. Juliet O’Neill, “Wait Times Pledge Will Be Costly and Will Fail If Rushed: Doctor,” National Post, 7 July 2006, A4, italics mine. Ibid. Brian Laghi, “Health-Care Guarantee Is ‘Flexible,’ Clement Says,” Globe and Mail, 14 July 2006, A10. Tom Blackwell, “’Progress’ Promised on Wait Times Pledge,” National Post, 5 April 2006. John Ivison, “Clement Sees ‘Opportunities’ in Health Care Talk,” National Post, 2 March 2006. Karen Howlett, “Minister Attacks Clement’s Record,” Globe and Mail, 12 September 2006, A14. Karen Howlett, “Ontario Announces Funds to Reduce Waiting Times,” Globe and Mail, 13 September 2006, A7. Laghi, “Health-Care Guarantee is ‘Flexible.’” Ibid. Mike De Souza, “Patients Will Have Legal ‘Recourse,’ Minister Says,” National Post, 31 March 2006, A4. Italics added. Speech by the Honourable Tony Clement, Minister of Health, to the Canadian Medical Association, Charlottetown, Prince Edward Island, 21 August 2006. Accessed on October 9, 2006 at http://www.hc-sc.gc.ca/ahc-asc/minist/health-sante/ speeches-discours/2006_08_21_e.html Ibid. Ibid. “Waiting for the Provinces,” National Post, 23 August 2006, A14; “Health Care, When?” Globe and Mail, 23 August 2006, A12. “Waiting for the Provinces,” National Post, 23 August 2006, A14. John Ibbotson, “One Promise the Tories Won’t Keep,” Globe and Mail, 26 July 2006, A4. Ibid. Speech by the Honourable Tony Clement, Minister of Health, to the Canadian Medical Association. Ibid. Italics added. Ibid. Italics added. Tom Blackwell, “Medical Wait-Times Guarantee: Tories Unveil ‘Pilot’ with Aboriginal Jurisdiction,” National Post, 21 November 2006, A1. Lisa Priest, “Ottawa ‘Dropped the Ball’ on Wait Times,” Globe and Mail, 23 November 2006, A17. Health Canada, “Canada’s New Government Launches Historic First Wait Times Guarantee in First Nations Prenatal Project.” News release, 20 November 2006. http://www.hc-sc.gc.ca/ahc-asc/media/nr-cp/2006/2006_110_e.html

178 Selected Policy, Political, and Budgetary Realms 50 Health Canada, “Canada’s New Government Moves Toward Second Wait Times Guarantee: For First Nations Diabetes Care.” News release, 28 November 2006. http://www.hc-sc.gc.ca/ahc-asc/media/nr-cp/2006/2006_118_e.html 51 Blackwell, “Medical Wait-Times Guarantee.” 52 Ibid. 53 Office of the Prime Minister, “Prime Minister Announces Canadian Partnership Against Cancer.” News release, 24 November 2006. http://www.pm.gc.ca/eng/ media.asp?category=1&id=1417 54 Department of Finance, Budget Plan 2006 (Ottawa: Department of Finance, 2006): 106. 55 Gloria Galloway, “Waiting Time Vow Delays Key Surgeries, mds Say,” Globe and Mail, 6 October 2006, A1. 56 Gloria Galloway, “Clement Defends Waiting-Times Strategy,” Globe and Mail, 10 October 2006, A4. 57 Canadian Press, “Alberta Considers Health Care Competition,” Calgary Herald, 14 September 2005, A4. 58 “Another Premier Faces Health Care Reality,” National Post, 16 February 2006, A18. 59 Jeffrey Simpson, “Three Big Reasons for Change,” Globe and Mail, 17 February 2006, online edition. 60 Quebec. Le Ministère de la Santé et des Service sociaux. Guaranteeing Access – Meeting the Challenges of Equity, Efficiency and Quality: Consultation Document. Quebec: msss, 2006. 61 “Quebec’s Sensible Health-Care Saw-Off.” Globe and Mail, 17 February 2006, online edition. 62 Simpson, “Three Big Reasons for Change.” 63 Rhéal Séguin, “Quebec Opens Door to Private Health Care,” Globe and Mail, 17 February 2006. Online edition. 64 Department of Finance, Budget Plan 145. For news coverage of the federal reaction, see, for example, Terry Weber, “Harper Praises Quebec Health Plan,” Globe and Mail, 21 February 2006, online edition. 65 “Quebec’s Climb-Down,” National Post, 18 February 2006, A16. 66 Norman Spector, “Different Sides of the Health Care Debate,” Globe and Mail, 27 February 2006, S1. 67 See Boychuk, “Provincial Regulation of Private Health Insurance.” 68 See Laforest and Graefe, this volume. 69 Government of Alberta. Health Policy Framework. Government of Alberta, 2006. 70 John Ibbitson, “Klein’s Revolution Gives Harper a Tough Choice,” Globe and Mail, 5 March 2006, online edition. 71 Katherine Harding, “Alberta Reshapes Medicare,” Globe and Mail, 1 March 2006. Online edition. 72 Katherine Harding and Gloria Galloway, “Klein Willing to Defy Ottawa,” Globe and Mail, 2 March 2006. Online edition. 73 Government of Alberta. Health Policy Framework, 13.

179 Wait Time Guarantees and Health Care Policy 74 Ibid., 14. 75 Ibid. 76 Don Martin, “Klein a Major Medicare Pain for Harper,” National Post, 2 March 2006, online edition. 77 The report discusses “allowing both public and private providers to offer enhanced services and expedited access to a limited range of ‘non-emergency’ services at an appropriate charge.” Alberta, Health Policy Framework, 16. 78 Harding, “Alberta Reshapes Medicare.” 79 Canadian Press, “Alberta Health-Care Reforms Must Obey Medicare, Tories Say,” Globe and Mail, 27 January 2006, online edition; Harding, “Alberta Reshapes Medicare”; Harding and Galloway, “Klein Willing to Defy Ottawa.” 80 Gloria Galloway, “’We’re Studying It,’ Ottawa Says,” Globe and Mail, 1 March 2006, online edition. 81 Brian Laghi, “pm Warns Klein of Gaps in Care, Queue Jumping in Health Plan,” Globe and Mail, 8 April 2006, A9. 82 Karen Howlett, “’Two Tier Proposal Denounced by Ontario,’” Globe and Mail, 2 March 2006, A5. 83 Dawn Walton and Bill Curry, “Alberta Backs Off Private Medicare Blueprint,” Globe and Mail, 21 April 2006, online edition. 84 Ibid. 85 British Columbia, Speech from the Throne. 14 February 2006. Accessed online at http://www.leg.bc.ca/38th2nd/4-8-38-2.htm 86 Ibid. 87 Jeff Lee, “European Health Reforms Impress B.C. Premier,” National Post, 7 March 2006, A4. 88 Gloria Galloway, “Clement Urges ‘Innovation,’” Globe and Mail, 18 February 2006, A7. 89 British Columbia, Speech from the Throne. 90 Ibid. 91 Petti Fong, “The Influencers: bc to Put Own Stamp on Canada Health Act,” Globe and Mail, 11 October 2006, A6. 92 Rod Mickleburgh, “bc Debate Goes Public,” Globe and Mail, 29 September 2006, S1. 93 Ibid. 94 Jeff Lee, “European Health Reforms Impress B.C. Premier,” National Post, 7 March 2006, A4. 95 Mickleburgh, “bc Debate Goes Public.” 96 British Columbia, Speech from the Throne. 97 Pamela Fayerman, “bc Government Fined by Ottawa for Overbilling at Private Medical Facilities,” National Post, 5 April 2006, A6. 98 Health Canada. Canada Health Act Annual Report, 2004–2005 (Ottawa: Health Canada, 2006), 11. 99 Rod Mickleburgh, “Clinic Controversy,” Globe and Mail, 2 February 2006, S2. 100 Rod Mickleburgh, “$1,400 Buys mri in Daytime at Public Hospital,” Globe and Mail, 13 September 2006, A1.

10 The Harper Government’s Universal Child Care Plan: Paradoxical or Purposeful Social Policy? michael j. pr ince and k at h e r i n e t e g h t s o o n i a n

Implemented in July 2006, the Universal Child Care Benefit (uccb) is the first new universal federal income program in over 40 years.1 Through this incorporation of universality as a policy technique in Canada’s income security system for families, the Stephen Harper government has revived one of the main elements of the post-World War II era of social policy. What makes this policy initiative of particular interest is that a Conservative government has introduced it, challenging the prevailing view of the social liberal/universality and neo-conservative/selectivity divide. On political preferences for selective versus universal income programs, Paul Pierson suggests: “An ideologically committed and consistent conservative government would object most strongly to governmental provision for the middle class. It is universal rather than targeted programs that compete with viable private-sector alternatives. If conservatives could design their ideal welfare state, it would consist of nothing but means-tested programs.”2 In fact, the last Conservative administration at the federal level, the Mulroney government, eliminated the universal Family Allowance program, the so-called “baby bonus,” replacing it with a selective program, although one income-tested rather than means-tested.3 How, then, are we to understand the apparent paradox of a Conservative government introducing a universal income benefit which parents receive as a right, particularly a Conservative government that harshly criticized the Chrétien/Martin Liberals as ensnared in a “political culture of entitlement”? Is this a case of the Harper government being philosophically inconsistent and less than ideologically committed, as Pierson might infer? Our answer to the latter question is “no.” In this chapter we argue that this policy initiative should be understood as consistent with key elements of the

181 The Harper Government’s Universal Child Care Plan

conservatism that informs the Harper government agenda, and in particular with those strands in the party’s ideological makeup that flow from its Alliance/ Reform Party roots. These elements include an antipathy to government, including politicians, bureaucrats and the “special interests” that are aligned with them (for example, academic researchers and child care advocates); a strong commitment to the “traditional” nuclear family with its gendered division of labour; a desire to support the needs and interests of “ordinary Canadians,” particularly those in rural communities, small towns, and remote areas; and a belief in the efficacy of private solutions generated by business, communities and families to social and economic problems. Even though a “universal” program might seem to be at odds with conservative ideology, the policy instruments through which the Conservatives are claiming to address child care have been structured so that their approach is congruent with the values and ideological orientations of economic conservatives suspicious of government spending on social programs, as well as with those of social conservatives supportive of heterosexual nuclear families structured around a breadwinning father and a mother who takes principal responsibility for the care of the children. Our central line of analysis is that the Harper Universal Child Care Plan is a form of residual social policy. By replacing the Liberal government’s Early Learning and Child Care (elcc) agreements with the uccb and the Child Care Spaces Initiative (ccsi), the Harper Conservatives have shifted federal government resources away from provincial and territorial governments and public providers toward families, friends and neighbours, firms and employers. We characterize these policy changes as a significant move from a supply side approach through coordinated public actions toward a demand side approach that favours individualized and private provision. We suggest as well several factors that help explain why universality is the preferred policy instrument for a children’s allowance by the Harper Conservatives. We analytically cluster these factors into three groups: budgetary and policy context, program design features, and political/partisan considerations. In developing our arguments, we first discuss the place of child care in the 2006 general election. Then we outline Harper’s main child care and family policy decisions, and illustrate the ways in which they are supportive of key elements in the government’s ideological program. We then describe the uccb in some detail and explore why the Conservatives opted for a universal social policy. The chapter ends with some observations on future directions and choices in this policy field.

t h e c o n s e r vat i v e p l at f o r m and the 2006 election In this section we discuss the place of child care in the 2006 general election in three steps: first, the Conservative’s child care platform, formulated at a

182 Selected Policy, Political, and Budgetary Realms

party convention in March 2005 and unveiled, in a slightly modified form, in early December 2005; second, Harper’s characterization of the Liberals’ record and policy plans on child care; and, third, Liberal political reactions and counter-policy response over the election campaign. The Conservative Child Care and Family Support Platform In March 2005, the newly formed Conservative Party of Canada held its first national policy convention. On support for parents, the convention agreed that “A Conservative Government will consider, in collaboration with the provinces and territories, establishing the policies required to give parents who choose to stay home to take care of their preschool children the recognition and financial support they need to carry out this important task.”4 On child care, the convention declared that: The Conservative Party recognizes that parents are in the best position to determine the care needs of their children, and that they should be able to do so in an environment that encourages as many options as possible, and in a manner that does not discriminate against those who opt to raise their children in family, linguistic, and religious environments. We also recognize that the delivery of education and social services are provincial responsibilities under the constitution. We believe that support should go to all parents and families raising children, especially lower and middle income parents. All existing levels of support will be maintained and improved if necessary.5

We see in these statements a number of ideas that have appeared as prominent themes in Conservative discourse ever since: preference for parents over professionals; the importance of choices and options in child care; provincial responsibility for service delivery; and, the need for universal financial support to all families with preschool children, including those providing care at home. The one commitment from the policy convention that has been breached is that all existing levels of support for child care will be maintained; instead, the Conservatives 2006 election platform included a proposal to “honour the [federal] government’s existing bilateral child care commitments for one year” [emphasis added].6 As is the custom for such policy matters (and photo ops), Harper announced the Conservative child care platform for the upcoming 2006 election at a play centre in early December 2005. The party’s central proposal was what was initially dubbed the Choice in Child Care Allowance: a new $1,200 per year payment to all families for each child under age six, to be taxable in the hands of the spouse with the lower income, commencing in 2006. The Conservative proposal for creating child care spaces focused on workplaces and community groups, offering $250 million a year in tax credits to employers and non-profit associations. This funding was intended to support the creation of an estimated 125,000 new spaces over a five year period by providing assistance with capital costs.

183 The Harper Government’s Universal Child Care Plan

Conservative Framing of the Liberals and the Liberals’ Reaction The Conservatives astutely nested their 2006 election platform promises within a number of existing programs while launching a major partisan attack through their framing of the Liberal record on child care. The frame was obviously unsympathetic, rhetorically strident and filled with considerable spin. 1 Harper and other Conservatives mocked the Liberal policy as “phoney” and not being “authentic.” They dubbed the Liberal plans as representing “huge” promises of $5 billion over five years to create 625,000 new spaces, and strongly implied that the public could not count on those promises ever being implemented. 2 They ridiculed the policy agreements with the provinces on early learning and child care as impractical and bureaucratically restrictive, a plan for politicians to pay other politicians. 3 The Conservatives asserted that the Liberal plans would limit the choices of parents concerning child rearing, adding that Liberals do not trust Canadians with their own money to make the choices that are best for their families. 4 Conservatives claimed the Liberal elcc agreements suited only parents in traditional nine-to-five jobs and excluded 67 per cent of families who want care for their children that is not institutional daycare. 5 They also expressed contempt for child care and early learning researchers, academics and policy advocates, depicting them as self-interested and interfering. Harper stated during the campaign on more than one occasion that “there are only two experts,and their names are Mom and Dad.” Immediate reaction came from Prime Minister Paul Martin and Ken Dryden, the minister for social development. Martin used the Harper announcement to reiterate the Liberal theme of there being a stark choice between the two main parties’ interpretation of Canadian values; and to emphasize the Liberal commitment to federal support for child care and early learning services. Martin described child care as a public right, along the lines of medicare, for Canadian families and their children. He further responded to the Harper platform by indicating that the Liberals would extend the elcc agreements from five to ten years, thereby committing a further $6 billion for a total investment of $10 billion that would result in more than 1 million new child care spaces by 2015. As well, Dryden, as the lead Liberal minister on the child care file, noted that the Conservative cash allowance was just that: it was a modest financial benefit to families, but it was not child care. Indeed, Dryden pointed out that after taxes, the benefit would be about $1,000 a year per child, or about $20 per week, which was “not even very much for babysitting.” This meant, he reasoned, that the Conservatives did not understand the need for accessible, affordable and quality child care. Beyond these remarks,

184 Selected Policy, Political, and Budgetary Realms

however, Liberals were in disarray and few understood the Conservative’s proposal or appreciated its political significance. The “beer and popcorn” faux pas Just days after Harper announced the Conservative child care policy in the early part of the 2006 election campaign, the director of communications to then Prime Minister Martin, Scott Reid, argued on a television panel that the Conservative plan of giving families with young children $1,200 a year was not a child care policy at all. In what quickly became a highly visible and costly election blunder, Reid said: “Don’t give people 25 bucks a week to blow on beer and popcorn. Give them child care spaces that work. Stephen Harper’s plan has nothing to do with child care.” While Reid was trying to draw attention to the relatively small monetary value of the proposed benefit and the fact that it was not tied to child care spaces, Conservatives instantly seized on his remark as a gross insult to parents. They argued that Reid was questioning parents’ love and devotion to their children, and that his comment provided strong evidence of Liberals’ mistrust of families to make their own choices. Although the issue of child care had faded as a focal point of attention during the election campaign, the beer and popcorn faux pas propelled it to the top of the electoral agenda. Reid quickly apologized and Martin assured Canadians that Liberals do believe parents use government payments in a responsible way for the benefit of their families. But the media firestorm created a significant partisan opportunity for the Conservatives. Later in the campaign, Harper attacked the Liberals and promoted his child care plan, referring to the sponsorship scandal with such rhetorical flourishes as, “these guys can trust their friends in the advertising business with 100 million dollars of your money, but they won’t trust mom and dad with 100 dollars a month.” Throughout the campaign, and subsequently, Conservatives repeatedly referred to parents as the real experts regarding how children should be cared for, implicitly calling into question the legitimacy of others – government bureaucrats, advocates and academic researchers – who try to “tell parents how to raise their children.” Conservatives presented themselves as more respectful of ordinary parents then those developing policy based on something other than parental expertise. For example, Stockwell Day suggested “We trust families to be able to make decisions about where the money would be best used for their child care, for instance. Whereas a Liberal government, or a socialist party such as the ndp, would tend to not have the same level of trust in individual wisdom so they move to a more collectivist mode. We see, therefore, that when it comes to child care they want a program that is government run, government institutionalized and focuses solely on government institutions.”7

185 The Harper Government’s Universal Child Care Plan

the harper government ’s policies When the Harper Conservatives came to power in early 2006, federal government funding commitments for child care and child benefits included the Canada Child Tax Benefit (cctb), the National Child Benefit Supplement, the elcc, and the Childcare Expense Deduction. Conservative decisions on child care and child benefits involved a number of important changes to these policies: serving notice of cancelling the elcc agreements; folding the cctb supplement into the Universal Child Care Benefit (uccb); launching the uccb; starting a Child Care Spaces Initiative; enhancing the Child Disability Benefit; and, introducing a Child Fitness Tax Credit. Essentially all these decisions came from within the Conservative Party or Harper government rather than from the federal social policy bureaucracy.8 For example, the decision to abolish the cctb Supplement and fold it into the financing for the uccb appeared during the election campaign on the Conservative Party website. And the Harper government’s decision to deliver the uccb as a separate payment rather than through the already existing payment vehicle for the cctb was clearly motivated by a desire to reap political credit, and public support, for a visible new benefit. As a public income benefit, the uccb is a transfer to a group of people – in this case, all families with children under age six – irrespective of their income or financial situation or employment status. It is these core characteristics that make it a universal benefit. The benefit is paid monthly in a uniform rate across the country on behalf of just over two million preschool children whose parents are Canadian citizens or permanent or temporary residents. Receipt of the uccb does not affect the benefits a family may obtain under the cttb or the Child Care Expense Deduction. The Puzzling Distribution of uccb Benefits As an unconditional cash benefit, the uccb payments can be spent on anything; there is no specific or dedicated link to child care. Financed from general revenue, subject to income tax and interacting with numerous other programs, the net effect of the uccb on a family with young children is complicated and not immediately apparent. Fortunately, the Caledon Institute of Social Policy has undertaken a series of detailed analyses of the distributional impacts of the new universal benefit. One feature of particular note is the fact that, as a benefit taxable to the lowerincome spouse, the uccb tends to favour one-earner couples over single parents and two-earner couples, thus creating significant horizontal inequities (that is, unequal treatment in the distribution of net benefits between different types of families with the same income level). In their analysis of the uccb, the Caledon Institute concludes it is “striking” how the new program

186 Selected Policy, Political, and Budgetary Realms Table 10.1 Federal Child Care Policy, 2006–2008: Major Changes and Consequences Changes

Consequences

Cancellation of the Early Learning and Child Care Agreements (effective April 2007)

Abandons three years of intergovernmental negotiations and agreements and disrupts programming plans for the next four years in this field. Loss of $4.2 billion to provinces in federal transfers for early learning and child care spaces and services. Sharp move away from a supply-side emphasis on child care provision.

Abolition of the Canada Child Tax Benefit’s young child supplement and folding it into the new Universal Child Care Benefit (July 2006)

Loss of $249 per year to families with children age six and under, affecting mostly low- and modest-income families. Weakens the progressive impact of the uccb (dilutes the vertical equity between low/modest income and higher-income families).

Creation of the Universal Child Care Benefit (July 2006)

Net federal cost of $1.6 billion in 2006–07 and $2.1 billion in 2007–08 to the parents of 2 million children under age six.

Introduction of the Child Care Spaces Initiative (starting 2007–08)

Estimated creation of up to 25,000 new child care spaces annually. An investment of $250 million per year for capital assistance in the form of tax credits and grants. No provision for assistance with operating costs.

Enhancement of Child Disability Benefit (2006)

Maximum annual amount increased 11 per cent to $2,300 and eligibility extended to middle and higher-income families. Estimated tax relief of $35 million in 2006–07 an $45 million in 2007–08.

Introduction of Children’s Fitness Tax Credit (2007)

A credit of up to $500 per child under 16 for eligible fees for physical activity programs. Estimated cost of $40 million in 2006–07 rising to $160 million in 2007–08.

Sources: Budget 2006, Focusing on Priorities: Canada’s New Government, Ottawa: Department of Finance; Ken Battle, The Incredible Shrinking $1,200 Child Care Allowance: How to Fix It, Ottawa: Caledon Institute of Social Policy, April 2006; and Ken Battle, Sherri Torjman and Michael Mendelson, More than a Name Change: The Universal Child Care Benefit, Ottawa: Caledon Institute of Social Policy, May 2006.

advantages one-earner couples and disadvantages single-parent families. “Yet it is precisely single-earner parents who most need assistance for child care as they have no other options. One-earner-couples typically have little or no expenses for out-of-home child care, yet they will usually receive the largest net Universal Child Care Benefit.” Caledon adds: “there is no rhyme or reason to the way that the new program will distribute its net benefits.”9

187 The Harper Government’s Universal Child Care Plan

However, this conundrum resolves itself once we let go of the assumption that the primary purpose of the uccb is in fact to provide financial support for parents using out-of-home child care. Conservatives have stressed that this is just one possible way in which parents may wish to use the uccb, and emphasized equally strongly a broad range of other purposes to which the payment could be put: occasional babysitting or child care help from a grandparent or a neighbour; the purchase of educational resources; or to pay for visits to museums. While this implies government disinterest in which of these choices parents make, other evidence suggest that Conservatives do have a particular commitment to encouraging women with partners who are able to support them financially to remain in the home full-time. Indeed, there are strong indications that the central purpose of the uccb is to effect precisely the outcome that the Caledon Institute notes, that is, to provide a symbolic endorsement of the decision by some parents – mostly mothers – to provide full time care for their children at home. Thus, amid the various statements insisting that the uccb is intended to support and acknowledge the diversity of choices that parents make regarding their children’s best interests, we find the following from Lynne Yelich, Parliamentary secretary to the minister for Human Resources and Social Development: The parents who have come to us are not asking for a handout. They are not asking for money. They are just asking for the same choices that other parents have of sending their children to an institution or keeping them at home. They do not want others to choose what their taxpayer dollars go toward. As they are staying home and taking care of their own children, they want to have the flexibility to choose whomever they want to take care of their children, whether it be a grandparent or someone else. … It is not about the money as much as it is about child care. We want to give an option to parents who want to stay at home; those who home school their children or perhaps want to have a little extra money to put their children into child care of their choice [emphasis added].10

In this comment regarding the uccb, Yelich stresses the importance and legitimacy of providing assistance to parents who do not choose formal child care settings but instead are “staying home and taking care of their own children.” It thus seems reasonable to conclude that the uccb has been designed to give life to the Conservatives’ 2005 policy commitment to support families structured in this way. This interpretation of the uccb is further supported by the political profile of the groups endorsing the Conservatives’ child care initiative. Minister Finley notes that the plan has the support of many organizations, including Advocates for Childcare Choice, the Institute for Canadian Values, Kids First Parent Association of Canada, and Prairie Advocates for Child Care Choices. These are all groups that advocate for policies supportive of full-time parenting and that are critical of centre-based, regulated child care.11 These views

188 Selected Policy, Political, and Budgetary Realms

resonate strongly with the Harper agenda, despite Conservatives efforts to claim that as a government they are supportive of the broad range of choices that parents make, including the use of formal child care arrangements. Both the political alliances the Conservatives have forged in promoting their approach to child care policy, as well as their allocation of financial resources – as noted by the Caledon Institute – suggest that the neoconservative vision of mothers at home supported financially by breadwinning fathers is the government’s parenting arrangement of choice. “Real” Spaces and Resource Silences Conservatives have emphasized that their Child Care Spaces Initiative (ccsi) will provide “real spaces,” in contrast with the Liberal government’s “empty promises: that delivered nothing.” In legislative debate, its proponents have presented this Initiative as a flexible alternative to the problem of “one-sizefits-all” government-controlled child care programming (i.e., the Liberal government’s elcc agreements with the provinces). Characterizing the Liberals’ approach as out of touch with the needs of real parents in diverse communities across the country, Conservatives have argued that the ccsi will instead provide the flexibility and openness to grassroots input that will permit the emergence of a child care system that is truly responsive to the needs of specific families in specific communities. The policy tool through which spaces are to be created is the provision of tax incentives to businesses and non-profit organizations who undertake to build new spaces. Since there is no provision in the ccsi for ongoing funding for operating costs it is unclear how the services thus created will be financially viable over a sustained period of time. In sidestepping this question, the Initiative fails to address a number of crucial issues, some with an important gender dimensions. For example, caregivers’ wages and benefits constitute a large proportion of the operating costs of out-of-home child care. Unless there is some form of subsidy to the organization providing the service, or to caregivers to enhance their wages, there is a direct trade-off between the interests of parents in low fees and the interests of care providers in a living wage. Where fees are high in order to pay (mostly female) caregivers adequately, mothers’ lower earning power compared with fathers’ means that it “makes sense” for mothers to stay home with their children where their income isn’t sufficiently high to make the cost of out-of-home care seem “worth it.” This limits women’s opportunities to participate in the paid labour force and thereby their access to financial resources independently of their partner, if they have one. The alternative resolution is to keep caregivers wages low in order to make non-parental care more affordable, but this too has a negative impact on women, who constitute the vast majority of those providing care for children other than their own.

189 The Harper Government’s Universal Child Care Plan

Questions and concerns regarding the sustainability of spaces where there is no government support for operating costs become even more acute in the contexts where Conservatives argue that their initiative will flourish – for example rural areas or for families requiring access during non-standard working hours – but where there are significant additional challenges and costs involved in the provision of non-parental care for children. Nevertheless, the interests of social conservatives in supporting full-time motherhood for women and of economic conservatives in keeping government spending low are both served by leaving the issues that operating funding might otherwise address to be sorted out through market mechanisms. In this regard, both the uccb and the ccsi are privatizing measures. The uccb provides symbolic acknowledgement of and support for child care practices that mobilize family and neighbourhood networks. The ccsi makes government spending contingent on the commitment of financial resources by private sector actors, and rests on an assumption that communities of interest will emerge that are capable of generating and sustaining diverse forms of non-parental care with only tax incentives to assist with capital costs.

s t e a lt h a n d s p i n : s e l l i n g t h e c o n s e rvat i v e a p p roac h to c h i l d c a r e Having already discussed the uccb in some detail, here we wish to draw attention to certain aspects of “stealth” in program design and “spin” elements in marketing the program. The concept of stealth refers to the use of esoteric and technical mechanisms to implement public policy changes without adequate public justification of their actual consequences. By spin, we mean the oblique, partial, unqualified and scattered presentation of information (in the forms of charts, tables, text, titles thematic highlights, and grand totals) to obscure the real consequences of policy decisions, as well as the discursive strategies through which policy options are presented and assessed.12 Table 2 outlines elements of stealth and spin that relate to the program implementation and political promotion of the uccb. We should add that some aspects of the Harper child care policy agenda have not been pursued through the subtlety of stealth and spin, most notably perhaps the cancellation of the elcc which required formal federal notice to the provinces, prompting considerable political reaction and media attention. The Politics of Numbers The child care issue is, in large part, a numbers game. As Deborah Stone notes, “debating the size of a phenomenon is one of the most prominent forms of discourse in public policy” and that this sort of debate “is usually about categorization – how the different sides ‘count as.’”13 We certainly see

190 Selected Policy, Political, and Budgetary Realms Table 10.2 Stealth and Spin: Political Construction of the Universal Child Care Benefit Government statements

Obscured consequences

The new government is providing more choice in child care spaces and will actually create real spaces.

While the federal government will provide $650 million to provinces and territories, in 2006–07 under the elcc, the Harper child care space initiative only begins in 2007–08 with a $250 million investment.

Total uccb support to families with children in the 2006–07 benefit year is $2.5 billion.

Including savings from rolling the ncb supplement into the uccb means total support in 2006–07 is $1.6 billion.

“The uccb will be universal and it will provide direct financial support to low-income families with young children.” “… our government recognizes that no two families are exactly alike. But all Canadian parents struggle to balance work and family commitments and to meet their children’s individual needs.”

A estimated 16 per cent of uccb payments go to families with after-tax annual incomes over $100,000, compared to 2 per cent for cttb base benefit.

Effective July 2006, families with children under the age of six will receive a benefit of $100 per month, per child – that’s $1,200 per year.

As the uccb is taxable, the actual value of the benefit is less than $1,200 a year per child.

Source: Budget Papers 2006, Ottawa: Department of Finance.

evidence of this in the Conservatives’ criticisms of the Liberal government’s elcc agreements and in the claims that they have advanced on behalf of the policy package that they have offered in its stead. For example, in legislative debate Conservative mps referred to numbers drawn from a Statistics Canada survey released in April 2006 to argue that their policies are in keeping with the desires of the Canadian public.14 They noted that only a small percentage of young Canadian children (15 or 16 per cent) attend day care centres, and that “almost half of Canadian parents continue to find ways to stay at home to care for their preschoolers themselves.” Developing this claim further, the minister of Human Resources and Social Development Canada, Diane Finley, argued that the “biggest portion, well over half of all children under the age of six, are actually cared for at home by mom, dad, grandma, or another close relative or neighbour.”15 In these arguments, Conservatives are practising a form of “counting as” – that is, they are counting the decisions that parents have made about their children’s care as an expression of parents’ preferences regarding their children’s care. Through this strategy of “counting as,” the demand for centrebased care is framed as very small and the desire to parent at home appears

191 The Harper Government’s Universal Child Care Plan

very large (“almost half ”). However, one might count otherwise: for example, another study indicates – among other things – that 70 per cent of “stayat-home” moms would prefer to be working part-time but cannot afford to do so and also reveals that parents, asked to consider their child care preferences in an ideal world, rank day care centres care higher than friends or a babysitter.16 The policies implied by these different ways of “counting as” vary considerably.17 The politics of numbers is also apparent in different framings of which party is (or was) spending what on the child care needs of parents. For example, the Child Care Advocacy Association of Canada has argued that the $250 million that the Conservatives have allocated for their child care spaces initiative “replaces previously committed and dedicated federal funds for child care services of $1.2 billion, for a net loss of $950 million.”18 Diane Finley, speaking on behalf of the Conservatives’ initiatives, argues instead that “our government is committing over $10 billion to assist parents with their child care needs, more than twice as much money as the previous Liberal program promised but did not deliver.”19 Not stated here is the fact that (a) a significant portion of the “over $10 billion” will be delivered through the uccb and therefore will be spent entirely at the discretion of parents, rather than specifically on child care provision as under the elcc agreements; and (b) a not inconsiderable percentage of this sum will return to the governments’ coffers via the tax system. The Politics of “Choices” In defending their policies regarding the care of young children, Conservatives have identified the willingness of their government to honour the diverse choices that parents make as the cornerstone of their policy approach and as a key point of contrast with Liberal policies, which are framed as problematic because they provide support only to those parents choosing regulated, formal child care settings. Conservative mps have repeatedly emphasized that “no two Canadian families are alike” and “each family is unique” in order to underline how inappropriate – in their view – it would be for governments to provide support for only one particular approach to child care. Doing so, as they suggest the Liberal government before them had done, would be disrespectful of parents’ knowledge of what is best for their children and the different decisions that they make about forms of care. Instead, Conservatives insist that “parents need the freedom to choose what is best for their family” and argue that the uccb is well-suited to support this goal. One interesting feature of the Conservatives’ choice discourse is that it is couched almost entirely in gender-neutral terms. Whereas debates on proposed child care legislation during the 1980s saw mps from all parties, including the Conservatives, arguing that their preferred policy configuration was desirable, in part, because it would enhance “choices for women,” Conservative

192 Selected Policy, Political, and Budgetary Realms

claims in the present period are couched solely in terms of “parental choices” and “choices for families.”20 Gender-neutrality also pervades Conservative discussion of one particular choice, that is, the choice for one parent in two parent families to remain out of the paid labour force in order to provide fulltime care for children. Acknowledgement of the fact that it is generally women who are at home full-time with their children enters into Conservative commentary indirectly and infrequently. Along with the gendered profile of those making this particular choice, key features of the context surrounding it – including women’s lower earning power as compared with men’s and the high cost of child care – also disappear from view. Of course, many critics of the uccb have noted that the degree to which an additional $100 per month (less after taxes for most families) will actually extend the range of choices available to parents in terms of their child care options is limited. Some Conservative commentators do acknowledge these limitations, conceding that the uccb is not intended to fully subsidized child care and that some families cannot afford to let one parent stay home to care for the children. More often, though, Conservative claims regarding the effects of the uccb are couched in more sweeping terms, suggesting that the policy enables parents to access whatever form of child care they require. Canadians who participated in focus group research on issues surrounding the Harper child care plan, conducted by Ipsos-Reid in May 2006, appear unpersuaded by these claims. Parents and others polled saw the cash benefit provided through the uccb as a nice gesture and first step but as having no real impact on child care choices, given the modest amount of the benefit relative to the actual costs of child care arrangements. Focus group participants also expressed concerns over the benefit being taxable and limited to preschoolers.21

s h a p i n g u n i v e r s a l i t y: t h e c o n s e r vat i v e ’ s a p p r o a c h Universality in Canadian income security policy has been seen traditionally as a device introduced by Liberal governments and loved by those on the political left, but cut back or eliminated by Conservative governments and reviled by those on the political right. We have thus noted that the Conservatives’ framing of their policy initiative as “universal” seems at odds with conventional understandings of how a “small c” conservative government would approach social policy issues. However, this rhetorical move makes sense when we consider the political benefits that flow from the Conservatives’ use of this framing, and the particular understanding of “universal” that informs the shape that their “child care” policies have actually been given. Several factors help explain why universality was the preferred policy instrument for a child care allowance by the Harper Conservatives. We cluster these factors into three groups.

193 The Harper Government’s Universal Child Care Plan

Budgetary context and policy frame Despite the opposition to universal social policy traditionally emanating from the political right, few voices in the current period – even within conservative quarters – are raising concerns about a benefit going to those families who are well-off and therefore diverting limited funds away from less-well off families in real need. This may reflect, in part, the fact that the uccb was introduced in the context of recent and expected federal budget surpluses, and that it is a modest form of universality both in the net monthly amount and in the limiting of its scope of coverage to pre-schoolers. Moreover, some press reports interpreted the uccb (inaccurately) as “acrossthe-board” tax relief that puts money back into the pockets of taxpayers, thereby creating the impression that the policy is consistent with the political agenda of the right.22 In fact, the particulars of the uccb – including the measure’s universality – do not constitute that radical a change to existing federal child benefit policy. The Canada Child Tax Benefit (cctb) introduced by the Chrétien Liberals in 1997 was initially targeted at about 75 per cent of families with children but had, through enhancements and reforms, extended its coverage by 2005 to about 90 per cent of all Canadian families with young children. It was, in effect, a near-universal benefit reaching well into the upper-income levels. In this context, the uccb constitutes merely an incremental extension of the coverage offered by the cctb, rather than involving an entirely new spending program. Furthermore, the uccb has fiscal consequences for the government that are much more predictable than, say, health care services. Thus it is a “low risk” sort of universal program, in the sense that the government can be reasonably confident there will not be significant costs beyond those already anticipated and budgeted for. Conservatives’ willingness to adopt universality as a policy approach also reflects a particular – arguably idiosyncratic – understanding of what it entails.23 For example, Lynne Yelich has argued that “[w]e are being asked to provide parents with a universal plan because they all want to be treated equally.” Equal treatment is understood as involving treating everyone the same, rather than reflecting a commitment to substantive equality, which involves variable treatment for differently located groups in order to achieve equality of benefit. Thus Diane Finley notes with pride that the Conservatives child care plan “is about treating all Canadian families the same, whether they live in downtown Toronto, rural Prince Edward Island, or Inuvik.” It is this notion of “treating everyone the same” that underpins the Conservatives’ framing of “universality” rather than any idea that universality involves public or collective support for services that are broadly available but that may be differentially used by individuals. Conventional understandings of universality support policies, for example, under which the tax dollars of those without

194 Selected Policy, Political, and Budgetary Realms

children sustain the public education system and those experiencing poor health do not (or until recently, have not been expected to) shoulder a disproportionate share of the cost of the universal public health system. None of this is pleasing to the Conservatives. One Conservative mp argued “residents have been telling me that they are tired of contributing their tax dollars to services to which they have no access.” Another Conservative mp describes with admiration a family in his constituency that has raised five children with the mother at home full time and the father earning $39,000 a year. Noting that had the uccb been in effect while they were raising their children they would have received $36,000 from the government, he points out that they would have received nothing from the policies pursued by the previous Liberal government and asks “under the Liberal plan, this family would pay through their taxes to send their neighbours’ kids to daycare. Why is that fair?”24 Rather than the provision of collectively supported services, the Conservative party is committed to a market oriented approach to caring for children that engages citizens as consumers who get what they’ve paid for – nothing more and nothing less. These views are at some distance from conventional understandings of what universal social programs entail. Program design features The universal policy tool, compared to selective programs and service provision, is administratively simpler given that eligibility conditions are relatively straightforward. It does not require construction of “a massive childcare bureaucracy.”25 Minimizing the need for bureaucracy and regulations also limits discretionary and “intrusive” powers by officials over citizens. These are important features for many Conservative mps whose comments regarding their “universal child care plan” reflect strong traces of the antipathy to government and special interests that originally animated the Reform Party and Canadian Alliance. David Laycock observes, “Reform opinion-makers identified two categories of elites denying average people control over their lives; the ‘special interests’ who receive favours from a self-perpetuating bureaucratic class in government, and the bureaucrats whose continued employment depends on retention and expansion of programs designed to meet the demands of those ‘special interests.’”26 Concerns over special elites are indeed conspicuous in Stephen Harper’s argument that his government’s policies will provide parents with “real financial help rather than just shuffling money from one politician to another” and will “help parents pay for child care that makes the most sense to them, not to some bureaucrat or special interest group in Ottawa.”27 In light of these concerns, the universality of the uccb becomes an asset for Conservatives because of the program design features that it permits. As well, the universal benefit is taxable, making it appear to fairly deliver targeted benefits. Thus during the election campaign, Harper said that “It’s

195 The Harper Government’s Universal Child Care Plan

a universal payment, but the heaviest benefits are at the lowest income.”28 However, as the Caledon Institute has noted, upper income families benefit to a greater extent than this statement suggests, an effect which is masked by the intricacies of the tax system. The design of the benefit thus allows the Conservatives to make specific political claims on behalf of the policy that are at odds with what is actually achieved through it by stealth. Finally, the decision to make the uccb an unconditional benefit (which means recipients are not obliged to use it for certain prescribed purposes) fits with the conservative belief “in freedom of choice” that “let[s] parents choose what’s best for their children.” Again, this is presented as an attractive virtue of the program structure. Political/partisan considerations A cash allowance, the program gives money directly to a broad range of families and voters, which is an important consideration for any political party. Even after taxes, the uccb delivers financial benefits to well-to-do families with young children, a constituency likely to support the Conservatives. The benefit goes to all Canadian families with young children, “the building block of society,” in contrast to Liberal plans that would “benefit only a small percentage of Canadians.” In this, Conservatives see an investment that benefits families as well as society as a whole, a perspective that fits with an organic view of society and “pro-family” beliefs. A universal income program directed at the well-being of all young children could be said to reflect the influence of traditional conservative values (sometimes called toryism) in addition to individualistic liberal values in Canadian politics and social policy.29 It also has allowed the Conservatives to signal to the party’s constituency in rural and small town Canada that their well-being is no longer to be sacrificed to “special interests” and the values permeating larger urban centres as, it is claimed, was the case with the Liberal’s child care plans. Touting a measure as “universal” allows the Conservatives to present themselves as responding to the needs of all Canadians, and permits them to align themselves with the strong Canadian commitment to universal health care – and indeed with advocates’ insistence on a “universal child care system” – without adopting policies that in any way resemble these rhetorical near-neighbours. In legislative debates, Conservative speakers have extended the reach of the descriptor “universal” so that it isn’t just the benefit that is characterized as universal, but the plan more generally. As a result, universality comes to be associated with the spaces initiative, as well with the cash benefit, despite the many ways in which the cssi differs from existing universal programs.30 Conservatives also portray the benefit as a financial resource for all parents to help them “balance work and family life.” This implicitly links the benefit to supporting labour force participation, even though the uccb

196 Selected Policy, Political, and Budgetary Realms

will do little to facilitate this option for women for whom it is otherwise not economically feasible. Universal income programs historically were seen as a form of progressive social policy; a view still held by many people. Perhaps a political calculation by the Conservatives, in preparation for the 2006 federal election, was that a universal child care allowance would act as a positive counterweight to their image as a party that threatens social programs. Certainly, Harper needed a measure to substitute for his plan to terminate the Liberals’ child care commitments with the provinces. Tactically, it allowed the Conservatives to argue, with some credibility, that they were putting forward “a positive agenda” and that their plan for families was “rooted in Canadian values.”

c o n c lu s i o n : u n i v e r s a l i t y is a political to ol The Harper government’s child care policy is a story of retrenchment and replacement; terminating a major intergovernmental agreement on early learning and child care, while putting in place a new universal cash program for families with pre-school children and planning a comparatively modest initiative on spaces. To accomplish this dramatic shift in policy, the Harper Conservatives blamed the Chrétien/Martin Liberals for their tardy response after so long in power and criticized their government-focused approach to child care as disrespectful of parents, limiting choices, and lacking flexibility. The Conservatives developed, instead, a set of policies designed to address the child care issue in a manner consistent with the party’s political and ideological commitments and, once elected, overrode criticisms by the opposition parties in getting these policies implemented. The policy package adopted by the Conservatives combines elements likely to appeal to both economic and social conservatives within the party, and in the electorate more generally. While the ucbb is universal in coverage, it represents a modest increment in government spending commitments (financed in part by the cancellation of previous spending plans) and is relatively simple to administer. Although the Child Care Spaces Initiative has been characterized rhetorically as part of the Conservatives “universal child care plan,” it involves a central role for private sector actors and shares little with the universal child care services long called for by child care advocates. And the uccb offers the acknowledgement through public policy of parents caring for their children at home that social conservatives within the Conservative Party have insisted on for years. As a policy instrument, universality can do many things. The uccb enabled the Harper government to finesse opposition to cancelling the intergovernmental framework on child care spaces by introducing a universal cash benefit seemingly more inclusive and flexible in supporting families

197 The Harper Government’s Universal Child Care Plan

with children. The actual workings of the uccb and its interactions with other programs, particularly the Child Care Expense Deduction, result in the universal benefit disproportionately helping upper income families plus advantaging traditional families of stay at home mothers supported financially by breadwinning fathers. Political alliances the Conservatives have made in promoting their child care policy and their allocation of financial resources indicate that the neoconservative vision of mothers at home is the Harper government’s parenting arrangement of choice. To be sure, the termination of the elcc agreements is a pivotal social policy change and political event. The death of these agreements means the delay if not demise of expanding public child care space options for families, improving the working conditions of child care workers, and adequate investing in early learning services across the country.

notes 1 The last universal income program introduced nationally was the Youth Allowance, a monthly benefit of $10 for children age 16 or 17 who attended school or who, because of a disability, were not in school and because of their age were not yet eligible for disabled persons’ allowance. The Youth Allowance program began in 1964, following a similar program launched in Quebec three years earlier. 2 Paul Pierson, Dismantling the Welfare State? (Cambridge: Cambridge University Press, 1994), p. 101. Another counter-example to Pierson’s thesis is the proposal advanced by the Trudeau Liberals in 1970 to eliminate the universal Family Allowance and replace it with an income tested family benefit in order to better address the economic challenges facing low income Canadian families. In 1978 the Liberal government did reduce the value of the Family Allowance in order to finance a new refundable child tax benefit. 3 The Family Allowance (fa) program, in existence from 1945 to 1993, will no doubt be familiar to many readers. How does the new Universal Child Care Benefit compare to the fa? There are several similarities and some notable differences. The uccb and fa both involve a flat-rate monthly cash benefit to all families with children of a certain age group, whether or not the parent(s) are in the work force; are financed from general revenue; index benefits to the rate of inflation; and make benefits taxable in the hands of the parent with the lower income. Both, too, are an expression of the federal spending power, providing distinct cheques from the Government of Canada in a regular and visible manner to millions of families across the country, thereby directly linking citizens and the state. Although they are formally couched in gender neutral terms, the uccb and the fa arguably both rest upon a specific gendered notion of family life, the male breadwinner model with the mother as the prime care giver. Three major differences between the programs are that, first, the fa covered children and youth from birth to age 16 (eventually extended to 18) while the uccb is up to age 6; secondly, the fa in its last 20 years of operation allowed provinces to adjust the

198 Selected Policy, Political, and Budgetary Realms

4 5 6 7

8 9

10 11

12

13 14 15 16

17

rate of payments by the age or number of children, an option taken up in different ways by Alberta and Quebec; and, thirdly, the fa operated during the demographic period of the “baby boom” generation with larger families, while the uccb will operate in the “baby bust” and “echo” generations of comparatively smaller-sized families. Conservative Party of Canada, Policy Declaration, adopted at the National Policy Convention, Montreal: March 19, 2005. Ibid. Conservative Party, Stand Up for Canada, 2006, p. 31. Hansard, May 8, 2006. Interestingly, the Conservatives’ privileging of parental wisdom and their concomitant suspicion of research findings is distinctly at odds with the current emphasis on the importance of “evidence based” decision making in the health and social care arenas. Indeed, federal officials apparently resisted the idea of the uccb but of course had to accept and implement it as a core Conservative priority. Ken Battle, Sherri Torjman and Michael Mendelson, More than a Name Change: The Universal Child Care Benefit (Ottawa: Caledon Institute of Social Policy, May 2006), pp. 3–4. Hansard, May 4, 2006. For example, the founder of Advocates for Child Care Choices has argued that “affordable, high-quality, universal child care is bad for kids and bad for the economy” and suggests that the federal-provincial deals struck by the former Liberal government would “encourage parents to spend less time with their children and, in the process, sabotage the one ingredient necessary for positive child-outcomes – time with their parents.” See www.kidsfirstcanada.org/globe-feb13-2006.pdf Public advertising is another form of communications meant to inform families about the existence of the uccb and its program features, as well as to advise people that may need to apply and how to do so. See Sage Research Corporation, Universal Child Care Benefit Advertising Research Final Report, Prepared for Human Resources and Social Development Canada, August 4, 2006. Available at www.hrsdc.gc.ca Deborah Stone, Policy Paradox: The Art of Political Decision Making (New York/ London: W.W. Norton & Company, 1997), p. 167. Tracey Bushnik, Child Care in Canada (Ottawa: Statistics Canada, 2006). Hansard, April 7, 2006, May 4, 2006, September 25, 2006. Reginald W. Bibby, Press Release: Child Care Aspirations. Vanier Institute for the Family, 2005. www.vifamily.ca/newsroom/press_feb_10_05.c.html. Accessed November 12, 2006. The Liberals also make strategic use of numbers, pointing to the fact that 70 per cent of children under the age of six have both parents in the paid workforce to bolster their argument that a major investment in affordable child care spaces is needed. Here, they are counting “parents in the paid labour force” as “parents desiring a child care space” whether or not this is how their children are currently cared for; the Conservatives, by contrast, count parents’ current choice (decision) as reflecting parents’ first choice (preference).

199 The Harper Government’s Universal Child Care Plan 18 Child Care Advocacy Association of Canada, The Financial Reality behind the Federal Child Care Spaces Initiative: A Mismatch of Mythic Proportions. http://www.childcareadvocacy.ca/resources/pdf/Financial_reality_behind_spaces_initiative. Oct06.pdf. Accessed November 9, 2006. 19 Hansard, April 7, 2006. 20 Katherine Teghtsoonian, “Promises, Promises: ‘Choices for Women’ in Canadian and American Child Care Policy Debates,” Feminist Studies, 1996, 22 (1), 119-46. 21 Ipsos-Reid, Focus Groups on Issues Surrounding Child Care, May 23, 2006. Report commissioned by Human Resources and Social Development Canada. Available at www.hrsdc.gc.ca. See also Bill Curry, “Tories’ child-care plan falls flat, poll says,” The Globe and Mail, Toronto: September 11, 2006, p. A4. 22 See, for example, “A better tax break,” The National Post, Toronto: December 14, 2005, p. A18. 23 For Yelich see Hansard, May 4, 2006; for Finley see Hansard, April 7, 2006. 24 For the quotations in this paragraph see Hansard, May 4, 2006 and May 9, 2006. 25 Conservative Party of Canada, Stand Up for Canada, 2006, p. 30. 26 David Laycock, The New Right and Democracy in Canada: Understanding Reform and the Canadian Alliance (Don Mills, Ontario: Oxford University Press, 2002), p. 56. 27 Harper also insisted in the election campaign that “academics, experts, lobbyists, researchers, advocates and other politicians got lots of money in the name of child care. They got their money out of the system, but we intend to bring forward legislation that will help parents, children and families immediately.” 28 The Harper quotes in this paragraph and the next are drawn from Conservative Party of Canada, Stand Up for Canada, 2006, pp. 30–31. 29 Dennis Guest, The Emergence of Social Security in Canada (Vancouver: University of British Columbia Press, 1985), pp. 15–17, 131, and 264. 30 Since the only other element of “the plan” is the Child Care Spaces Initiative, it seems reasonable to read this as an attempt to appear to be responding to the calls of child care advocates for “universal child care.”

11 Federal Public Service Labour Relations: Business as Usual? ti m ot hy j. ba rt k i w and gene swimmer

In many ways, 1998 signalled a return to normalcy in the Federal Public Service, after five years without collective bargaining and a reduction of 40,000 employees, who were either laid off, retired early or moved with their jobs to another employer. Federal budget deficits had turned into healthy surpluses, the economy had recovered, and the government realized that it needed to restore its relationship with its own employees. The purpose of this chapter is to outline what has happened in terms of labour management relations over the past eight years of Liberal Governments and speculate how things may change with the Conservatives now in charge. The chapter begins with an analysis of compensation and employment outcomes. An analysis of Federal Public Service salary increases indicates that there has been substantial catch up to other private and public sector unionized groups for the lost ground in the middle 1990s. Changes in the size and composition of the Federal public service from 2000–05 are then addressed. We demonstrate that the size of the Public Service has increased by almost 25,000, although the growth is not proportional across all occupational groups. This is followed by a discussion of the public service pension plan, which has been partially funded by employee contributions, at rates determined unilaterally by the government. When a $30 billion actuarial surplus developed in the late 1990s, the Liberal government expropriated all of the money, rather than sharing the windfall with current employees and retirees. The unions have gone to the courts to nullify the government’s actions, and their case will be heard in 2007 by the Ontario Supreme Court. Although the government’s rationale will probably suffice on purely legal grounds, it falls dramatically short on moral grounds.

201 Federal Public Service Labour Relations

The next section then summarizes the major recommendations of the Fryer Committee, established to advise the Liberal government on public service labour management relations, in response to the frustration of the five year legislative suspension of collective bargaining. The committee’s recommendations only obliquely addressed the central problem of government unilateralism, and these reforms were only partially implemented in the Liberal government’s subsequent legislation. It is too early to say whether two reforms that became part of the law, requirements for ongoing consultation and establishment of informal dispute resolution procedures, will improve the labour relations climate. The final part of the chapter looks at the current Conservative government’s record, with regard to employee relations. To date, there are no signals of a change in direction from that of the Liberals, but the next wave of bargaining won’t begin until 2007. We make some predictions of how the Conservatives may address labour relations in the future, under majority status and/or a recession. Our basic view is that, contrary to the Liberals, who have been quick to change the rules using legislation, the Conservatives will likely use their considerable bargaining power under the existing rules of engagement to gain restraint. This is clearly superior in terms of the legitimacy of the collective bargaining process. On the other hand, we don’t expect the Conservatives will be as generous to their employees in good times, as the Liberals, so bargaining outcomes could be worse for employees.

s a l a ry i n c r e a s e s i n t h e f e d e r a l p u b l i c s e rv i c e As part of their restraint programs to address massive federal government deficits, both the Mulroney Conservative and Chrétien Liberal governments used legislation to suspend collective bargaining and, in effect, severely restrict salary increases from 1992–96.1 This section attempts to determine if Federal salaries have been able to catch up for the lost years, once collective bargaining returned in 1998. Table 1A summarizes the average annual increase in base rate salaries in major unionized collective agreements (those covering at least 500 employees) for Federal, Other Public Sector and Private Sector organizations from 1992 to 2006. From 1992–1996, Federal base rate salaries increased by 1.7%, while other public sector base rates increased by 3.8% and private sector rates increased by 7.9%. Since the return to normalcy in 1998, with retroactive increases to 1997, Federal base rates have outpaced the other groups with base rate increases of 29.6%, compared to about 24.6% for the other two groups. Based on Table 1, this represented a complete catch-up to the rest of the public sector (with federal increases from 1992–2006 slightly exceeding the rest of the public sector), although federal base rate increases still lagged behind private sector increases by 3 percentage points (31.7% vs. 34.7%).

202 Selected Policy, Political, and Budgetary Realms Table 11.1a Base Rate Salary Increases in the Federal Public Service and Other Sectors Effective Base Rate Salary Increases for Major Collective Agreements

Year

Federal Public Sector %

Other Public Sector * %

Private Sector %

1992

1.7

2.0

2.6

1993

0.0

0.7

0.8

1994

0.0

0.0

1.2

1995

0.0

0.6

1.4

1996

0.0

0.5

1.7

1997

2.3**

1.0

1.8

1998

2.3**

1.4

1.8

1999

2.9

1.9

2.7

2000

2.1

2.6

2.4

2001

3.0

3.5

3.0

2002

2.9

2.9

2.6

2003

3.1

2.9

1.2

2004

2.4

1.3

2.2

2005

2.6

2.1

2.4

2006***

2.7

2.6

2.3

1992–1996

1.7

3.8

7.9

1997–2006

29.6

24.5

24.8

1992–2006

31.7

29.3

34.7

* The Other Public Sector category increases was determined by subtracting the salary increase for the Federal Public Sector category, weighted by employment, from the overall Public Sector weighted average increase. **There was one Federal settlement negotiated at the end of 1997 (covering only 640 employees). That settlement was included to the 1998 weighted average settlements for the Federal category. Virtually all of the contracts negotiated in 1998 included retroactive salary increases to 1997. ***Includes agreements concluded up to June 30, 2006. Source: Special run by Human Resources and Skills Development Canada, Labour Division, September 2006.

In fact, most federal public servant salaries increased by more than the base rates, because the Treasury Board and unions often negotiate changes to the minimum and maximum salaries, the number and values of salary increments,2 and special adjustments, none of which are reported in base

203 Federal Public Service Labour Relations

rate increases. Calculating the effects of these changes is a very complicated, but fortunately, the resulting increases were determined for a selected number of job classifications, in a special study conducted by the rcmp Pay Council.3 The salary increases for individuals at the bottom of the grid (equivalent to the base rate) for the 12 classifications available with at least 475 bargaining unit members are included in Table 1B. These groups represent almost 89,000 federal public employees in 2005 (about 55% of nonexecutive total employment). The two large administrative groups, Administrative Services and Program Administration, accounting for more than 39,000 employees, had base rate salaries increase from 30.5 to 46.5%. The largest group, representing 29,000+ administrative support employees, clerical and regulatory received base salary increases of at least 44.6%. Only three groups, representing 4,000 employees, hospital services, general technical and technical inspection, received overall salary and increment increases at below 30%. Weighting by employees, the minimum overall salary increase, at the bottom of the salary grid, was 36.3%, which exceeds the private and other public sector base rate increases from 1992–2006.4 Although the twelve federal bargaining groups are not a random sample, and there could have been improvements to the increment structure in other public and private sector major agreements, we believe the evidence is persuasive that federal employees have completely recouped the losses of the mid 1990’s. Another front in the Liberal government’s war on the deficit was massive reduction in the size of the Federal Public Service. In the 1993–98 period, approximately 53,000 federal jobs were eliminated (22% of the total), of which approximately 10,000 were devolved (with the incumbent employees) to another public, non-profit or private sector employer. Almost all of the remaining job losses were accommodated through generous voluntary severance and early retirement incentive packages (only 500 people were actually laid off between1995–98). The job reductions were not neutral with respect to occupational category. Administrative and foreign service and scientific and professional employee categories, often referred to as “knowledge workers,” were reduced by only 1% and 11%, respectively while the executive (senior management) and lower skilled technical, administrative support and operational categories, were all reduced by more than 30%.5 Table 2 presents the employment data from a slightly different perspective, to allow for the fact that National Revenue ceased to be a government department and became a separate agency in 1999. All the pre-2000 employment data in this table exclude Department of National Revenue employees.6 With National Revenue excluded, the employment reduction elsewhere in the public service increases to 60,408 or a 30.7% drop.7 However, from 1998 to 2004, when surpluses replaced deficits, the public service increased by over 29,000 employees (there was virtually no change from 2004 to 2005).

204 Selected Policy, Political, and Budgetary Realms Table 11.1b Salary Increases in Selected Federal Bargaining Units, Including Special Adjustments and Increment Restructuring

Group Size – 2005

Cumulative Increase at Bottom of Salary Grid (%)*

Administrative Services

21,619

30.5–40.6

Clerical and Regulatory

29,237

44.6–72.9

Programme Administration

17,466

33.2–46.5

Secretarial, Stenographic and Typing

1,090

31.7–88.2

Welfare Programs

2,405

32.9–33.7

General Labour and Trades

5,035

39.4–85.0

476

54.0–54.3

1,264

31.5–37.0

595

26.5–26.6

Engineering and Scientific Support

6,222

32.0

General Technical

2,091

27.0

Technical Inspection

1,354

26.9

Bargaining Unit

Heat, Power and Stationary Plant Ops Ships’ Crews Hospital Services

* Salary increases refer to the starting salary prior to June 21, 1997 until June or August 2006. Sources: rcmp Pay Council, What are They Worth: A Business Case for rcmp Compensation, August 2005, pp. 121–122 (salary increases). Human Resources Management Agency, Employment Equity in the Federal Public Service 2004–05, pp. 38–41 (group size). http://www.hrma-agrh.gc.ca/reports-rapports/ee-0501_e.asp

About half the job cuts were reversed by the Liberals, once there was a return to normalcy in employee relations, probably for two reasons. First, there was an overreaction on the need to downsize, as many departments found themselves woefully understaffed, with much of their administrative memory having retired. Secondly, the events of 9/11 renewed the public’s demand for services, particularly related to security. Not all occupations were revitalized to the same extent. Just as administrative support and operational categories were the big losers in the original job cuts, these categories saw little or no reversal (administrative support jobs fell another 7% from 2000–2005, while operational jobs only increased by only 2%). The biggest winners continue to be the “knowledge” occupations, the administration and foreign service, the scientific and professional and the executive categories, all grew by more than 30% over the same five year period. Apparently, the increasing use of technology and the refocusing of the Federal government toward policy making as opposed to service delivery, are tilting the government’s employee

205 Federal Public Service Labour Relations Table 11.2 Federal Public Service Employment Excluding Revenue Canada and other Separate Employers, Various Years

Year

Federal Public Service excluding Revenue Canada*

1993

Executives

Scientific & Prof.

Admn. & For. Srvc

Technical

Admn. Support

Operational

197,023

na

na

na

na

na

na

1998

136,615

na

na

na

na

na

na

2000

141,253

3,296

18,002

53,397

15,540

33,034

17,984

2001

149,339

3,522

19,291

58,089

16,303

33,794

18,340

2002

157,510

3,901

21,156

63,298

17,097

33,602

18,456

2003

163,314

4,209

22,880

67,389

17,557

32,586

18,693

2004

165,976

4,322

23,920

69,868

17,567

31,736

18,563

2005

165,856

4,305

24,400

70,487

17,569

30,701

18,394

1993–1998

-30.7%

na

na

na

na

na

na

1998–2005

21.4%

na

na

na

na

na

na

1993–2005

-15.8%

na

na

na

na

na

na

2000–2005

17.4%

30.6%

35.5%

32.0%

13.1%

-7.1%

2.3%

Percentage changes:

* Employment is defined as all indeterminate employees (full and part time), plus term employees on contracts of three months or more, and seasonal employees, on the payroll as of March 31 of the year. To maintain consistency for the entire time period, Revenue Canada employees were subtracted from the 1993 and 1998 data (Revenue Canada became the Canada Customs and Revenue Agency on November 1, 1999). Sources: Treasury Board of Canada Secretariat, “Employment Statistics for the Federal Public Service,” 1993– 1994, 1997–1998, and Treasury Board of Canada, “Employment Equity in the Federal Public Service,” and Public Service Human Relations Management Agency “Employment Equity in the Federal Public Service,” various years http://www.hrma-agrh.gc.ca/ee/ar-ra/ar-ra_e.asp

mix to a more highly educated and skilled workforce. The government needs to recruit these workers in ever increasing numbers to replace its aging workforce.8 Given that these workers are also in high demand by other sectors of the economy, it will be extremely difficult to keep a lid on their compensation, even in the short run. This undoubtedly is a partial explanation for why the Liberals have allowed employee salaries to catch up for the five year bargaining hiatus.

206 Selected Policy, Political, and Budgetary Realms

pensions We turn our attention now to one of the most contentious aspects of federal public service compensation in recent history, pensions. It should be understood at the outset that the Public Service Pension Plan is determined by legislation, and has never been subject to collective bargaining. It is funded jointly by the Government of Canada, as employer, and employee members of the plan, who were contributing 7.5% of earnings to the plan in the 1990’s. Unlike most pension plans, until 2000, the employer’s contributions were essentially accounting entries to the superannuation account. Employee contributions went into general government revenues and benefits are paid from the same general revenue pool. No securities or financial market investments were made, but records were kept of the notional employer contribution, and interest was paid (also in a notional sense) based on the long term Canadian government bond rate. Like many other public sector plans during the 1990’s, the federal plan developed a large actuarial surplus, Ie. the plan assets exceeded what would be necessary to pay current and future liabilities. The main reason for the surplus was that the federal public sector salaries did not increase as fast as actuaries had predicted (indeed they were practically frozen for five years), meaning that future pension benefits were lower than expected. The surplus continued to grow throughout the decade amounting to $30.2 billion in 1999 (this includes the combined value for the public service, rcmp and Canadian Forces).9 At the same time, the manner in which the surplus should be dealt with became a contentious issue not only between the government and the plan members (current employees and pension beneficiaries), but also within the government bureaucracy itself (between the Treasury Board and the Finance Department).10 The Treasury Board view was that the legal ownership of the surplus was unclear, and that it should be shared, as part of a negotiations strategy to reduce the government’s long term risks by investing part of the money in financial instruments and placing limits on ‘indexed’ benefits. The secretary of the Treasury Board wrote the minister of Finance, stating that the government should subsidize employee contributions for five years, by sharing $1.8 billion annually.11 On the other hand, the Department of Finance position was that capturing the accumulated pension surplus was a “relatively painless way to reduce the deficit,” and would avoid another round of major expenditure cuts.12 The Finance position prevailed and virtually the entire surplus was booked against the government’s annual deficits. At the last negotiating session between the government and the unions in December 1998, the government offered to use a five year highest average salary (instead of six years), as the basis for calculation of pension benefits (estimated to increase overall benefits by $.7 billion in present value terms), and in return the unions would drop any claim to the pension surplus. The unions refused and

207 Federal Public Service Labour Relations

the government subsequently introduced legislation in April1999 to amend the pension plan, allowing the government to remove the surplus. The unions have filed a law suit and the case will be heard by the Supreme Court of Ontario beginning in February 2007. The government typically defends its decision to appropriate the pension surplus in public discussions by stating that because the pension was a “defined-benefit” type plan, it would be responsible for making future pension benefit payments, even where the plan had an actuarial deficit. Therefore, the converse should also be true; the government should be entitled to any actuarial surplus. In legal disputes involving private sector employers attempting either to take contribution holidays and/or withdraw surpluses under ongoing plans, or to acquire surplus distribution at the time of wind-up or partial wind-up, such logic has not always been applied, for various reasons. Courts have been regularly inclined to apply concepts of contract, equity and trust law in such circumstances, and unions and workers have often successfully argued that workers hold some entitlement to such surplus funds, since they are effectively funded in part by employees, as deferred compensation or foregone earnings, and are thus part of the overall compensation package negotiated by the parties. Even those not persuaded by the general “foregone earnings” argument should find the government’s rationale to be extremely weak in these circumstances. First of all, much of the surplus originated from the government’s unilateral use of legislative power to cancel collective bargaining and freeze salaries in the mid-1990s. All the while, employees were required by law to pay pension premiums based on the actuarial assumptions that included salary increases. Secondly, while the government claims that it is liable for plan deficits, in the same manner as a private sector employer, the reality is that unlike private sector employers who must usually negotiate plan contribution rates with bargaining agents, the government may simply be tempted to unilaterally impose, through legislation, an increase in employee benefit contributions to cover any shortfalls, rather than having to cover any deficiencies itself. In fact, this is exactly what the Liberal Government did in 1999 and 2005, when changes to the Quebec Pension Plan and Canada Pension Plan (qpp/ cpp) contribution rate were increased, which de facto decreased the federal employee contributions to the Public Service Pension Plan.13 Effective January 1, 2006, federal public employee premiums increase by .3% per year until 2008 on earnings covered by qpp/cpp (currently $41,000), and 2013 on earnings above the qpp/cpp maximum. The Treasury Board’s rationale for the increase is that federal plan members were contributing only 28% of the premiums, while the government puts in 72% (as opposed to the 40% employee-60% employer historical split), and that overall the federal plan contribution rates are lower than other public sector pension plans.14

208 Selected Policy, Political, and Budgetary Realms

Suppose the government had shared the pension surplus with the Public Service Pension Plan members, even at a 40% employees /60% government ratio in 1999, and had continued to pay interest at the long government bond rate on the principal. Forty percent of $30.2 billion is $12.08 billion, the employees’ share from all three pension plans. After deducting for the increased benefits from the 6 to 5 year salary average (worth $.7 billion) and taking 70% of $11.38 billion, which limits the analysis to the Public Service Pension Plan, there would be a principal of $7.966 billion. The annual interest on that amount of money would be approximately $183.2 million at the long term government bond rate of 2.3% in 2005.15 Because the surplus was not shared, in effect the annual subsidy that plan members gave to the government for the plan was about $183 million from 1999 to 2005. Adding that figure to the actual employee contributions made in 2005 of $923 million means that in a de-facto way, employees paid $1,106 million out of the $3,190 million, or 35% (not 28%) in total contributions for 2005. Suppose that the outstanding principal of $7.966 billion was amortized over 25 years with a 2.3% interest rate and credited against the employees pension contributions, beginning in 2005. That would amount to an annual payment of $419 million. When added to the actual 2005 employee contribution, the total de facto employee contribution would become $1,342 million or 42% of the pension contributions in 2005. In a real sense, if the government had been prepared to give the plan members their share of the pension surplus over the next 25 years, there would be no need to raise employee premiums for a long time into the future, because employee de facto contributions exceed 40%. How likely are the unions to win their case and get a share of the pension surplus? We are not optimistic about their chances. The courts have generally ruled that the federal government has the power to change terms and conditions of work for its employees through legislation, and the pension plan is part of compensation. Legislation has successfully enabled the federal government in the past to brazenly override contractual compensation terms, with no legal ramifications,16 and the unions’ arguments about breach of contract and/or trust will likely be rejected in a similar fashion. The unions also allege that the legislation enabling the pension appropriation violates the equality rights provisions of the Charter. They argue that it is discriminatory since the government does not allow “other employers within its jurisdiction” (i.e., private sector employers) to appropriate pension surpluses without legal authority, and it has not imposed similar amendments on all pension plans it administers.17 While these claims may be true, there are rather stringent tests for establishing that unequal treatment in law amounts to discrimination under section 15 of the Charter. First, in previous challenges against legislation, including restrictions on the right to strike applying only to public sector workers, the courts refused to find that the characteristic of being employed in the public sector was a

209 Federal Public Service Labour Relations

“personal characteristic” of the type normally required to found a discrimination complaint based on a ground analogous to those set out in section 15 of the Charter.18 Rather, the courts have required evidence of “disadvantage that exists apart from and independent of the particular legal distinction being challenged.”19 While some cases have slightly relaxed the requirement to show historical disadvantage as a precondition, another key decision suggests that unequal treatment in law does not violate the Charter unless such treatment strikes at an element of “human dignity.”20 In assessing this impact to dignity, the court may review various “contextual factors,” including historical disadvantage, and the extent to which the law favourably treats the group in question.21 Even if federal public employees may face unequal treatment in terms of potential legislative suspension of bargaining or other rights, the government will certainly point to various positive aspects of their overall social status and treatment. Some such factors might include entitlement to formal unionization in general, the denial of which to certain workers has been found acceptable under section 15 of the Charter22; access to employment equity laws which don’t cover all of the workforce; and arguments about favourable terms and conditions of employment based on empirical evidence, including research identifying the presence of a small but persistent public sector “wage premium.”23 In our own review of salary adjustments above, we have also concluded that federal public servants seem to have caught up to their unionized colleagues in other jurisdictions. Overall, given the difficulty in meeting the thresholds set in prior Supreme Court decisions, we do not believe that the Unions are likely to succeed in these legal challenges.

a r e f o r m e d l e g a l f r a m e wo r k f o r l a b o u r r e l at i o n s ? By the late 1990s, it had become quite apparent that relations between workers and their unions and the government employer had significantly deteriorated. As part of its efforts to improve the workplace relationship and morale following the lengthy era of restraint, the Treasury Board appointed an Advisory Committee on Labour Management Relations in the Federal Public Service (“Fryer Committee”) to be chaired by John Fryer, whose mandate included a full review of the legislative environment. This committee tabled its two reports, the first identifying issues and the second outlining suggestions for law reform, in 2000 and 2001 respectively.24 In some ways, the law reform recommendations of the Fryer report were extensive and would have likely improved labour relations in the federal public service. Yet, placed against the historical backdrop of extensive unilateralism in which the government employer repeatedly used its extraordinary legislative power to impose its will on its employees, rather than allow for

210 Selected Policy, Political, and Budgetary Realms

negotiated outcomes under established bargaining procedures,25 the Fryer report’s recommendations seem less ambitious. While the first report did cite “unilateral government action” as a key structural problem with the system, it is significant that the second report contained little to no recommendation for reforms designed as a commitment against the future use of unilateral legislative intervention into collective bargaining.26 In November 2003, the government passed the Public Service Modernization Act 27 (psma), ostensibly to implement reforms recommended in the Fryer report. Given the lack of radical reforms aimed at restraining unilateral legislative intervention in the Fryer report, it is surprising that many of Fryer’s recommendations were not implemented. Table 3 contains an overview of the major recommendations of the Fryer report, compared to the reforms included in the psma. One theme here is the shift from unilateralism to what might merely be called “unilateral-voluntarism.” While the reforms provide opportunities for the two sides to interact more co-operatively, there is very little evidence of any formal obligations that would require or commit the employer to act co-operatively, meaning that they are entitled to choose when to engage in co-operative behaviour. A good example of this can be seen in the set of major recommendations including a broad, blanket commitment to “consultation and co-development” of workplace policy generally, with specific recommendations that certain types of issues (staffing, classifications, pensions, etc.) be subject to forms of “co-development” rather than have them be subject to either managerial unilateralism or collective bargaining. While the psma does require deputy heads to establish “consultation committees” for the general purpose of exchanging information and opinion, it defines “co-development of workplace improvements” separately. Rather than requiring the two sides to engage in co-development with respect to the recommended areas or any other issues in general, the psma simply states that the two sides may enter into such discussions, if they mutually agree to do so. Since there is little reason to believe that the two sides were not legally entitled to engage in such voluntary discussions historically, where they mutually agreed to do so, these reforms do little to alter formal rights and power structure. The recommendations for the adoption of two-tier bargaining and for enshrining the right to union meetings during work time was similarly left to a voluntarist approach under the psma. Contrary to the recommendations in the Fryer report calling for specific issues to be directed to the National Joint Council, and for its dispute resolution process to apply, there is no requirement that the parties use any particular venue, and no dispute resolution process required. Thus, the expanded use of the National Joint Council, which is widely regarded as having served the two sides well historically as a venue for service-wide negotiations,28 will only proceed voluntarily as well. As noted, there was little reform addressing the federal government’s historical proclivity to circumvent collective bargaining in favour of legislation

211 Federal Public Service Labour Relations Table 11.3 Comparison of Recommendations of Fryer Committee with Terms implemented by the Public Sector Modernization Act Fryer Recommendation

psma

Preamble – set out principles of Public Service Staff Relations Act in statute

New Public Service Labour Relations Act, with preamble/principles

Consultation and Co-development – blanket recommendation of co-development of policies at service-wide, departmental and workplace levels and suggested that the parties should self-determine how to implement the process. Disputes about co-development should be resolved under new dispute resolution process at the njc.

Each deputy head must establish “consultation committee” with representatives from both sides for purpose of exchanging information and obtaining advice on workplace issues. “Co-development of workplace improvements” is defined as a separate voluntary process, involving consultation and participation in identifying problems and analyzing solutions “with a view to adopting mutually agreed to solutions.” The parties may engage in this at departmental or service level, under njc or any other body agreed upon. No new dispute resolution process created, so Employer retains final authority even if agrees to co-development process.

Staffing issues subject to Consultation and co-development at njc – codify values of merit, ee, fairness, transparency in statutory to guide process

No specific requirement for staffing to be subject to co-development. Several changes to appointments process. Revised definition of merit. General preference for hiring from within the public service removed. Removal of certain restrictions and relaxed merit principle increase authority of deputy heads or their delegates.

Classification system subject to consultation and co-development at njc

No specific requirement for classification to be subject to co-development.

Pension Plan, provisions, funds, and investments subject to consultation and co-development at njc and be comanaged by a joint Management Board

No specific requirement for co-development or co-management of pension.

Two tier bargaining – service wide CA’s with general terms, allowing for agreements at departmental and workplace levels for application of terms – enable collective bargaining at the departmental and agency level to set specific details Re general terms negotiated at service-wide level

Voluntary option to agree to engage in two-tier bargaining. Departmental level bargaining only where parties agree to do so.

212 Selected Policy, Political, and Budgetary Realms Table 11.3 Comparison of Recommendations of Fryer Committee with Terms implemented by the Public Sector Modernization Act (Continued) Fryer Recommendation

psma

Excluded positions – narrowed – only managers or those with ir confidential information

Managerial and confidential exclusions only. Legal officers (in Dept of Justice and ccra) and Treasure Board officers no longer automatically excluded.

Designating Essential Ees – Permanent list to be established jointly, process similar to clc – test for “essential” same as clc – activities maintained during strike to extent necessary to prevent immediate and serious danger to safety or health of public – cirb to resolve essentiality disputes

Essential services defined as those necessary for safety and security of the public. Employer has exclusive right to set level or extent of essential service. pslrb may identify positions necessary (or not) for employer to provide level of essential service, but cannot require employer to alter level of service.

Administration of Act by cirb, including bu certification; no applications for bu changes for 2 years;

Administration by new pslrb, including bu certification.

Rights Disputes – New Public Service Rights Redress Board to deal with all rights disputes, including staffing issues (rather than appeals to the psc); use mediation and other adr if necessary – union group/policy grievances allowed – psrrb be “representative” – allow for determination of human rights issues, rather than separate human rights complaint

No new rights redress board, grievances dealt with by adjudicators or boards of adjudication established by pslrb – deputy heads must establish “informal conflict management system” – group grievances allowed, with consent of each individual, and only for each “portion” of the service – some new limited scope for policy grievances – deputy heads must establish a conflict management system – revisions to scope of grievable issues – human rights issues may now be resolved under grievance and adjudication process (except pay equity)

Dispute Resolution in Collective Bargaining – new pidrc – tripartite representative board reporting to Parliament. New Board powers: – fact-finding; refer back to parties; mediation; preliminary reports with comments; preliminary reports with potential settlements to be adopted or imposed by parties; imposition of a collective agreement at request of union in specified circumstance

Chair of new pslrb may appoint mediator, who may employ fact-finding, mediation, facilitation, and recommendations if requested. Public Interest Commissions appointed to assist parties, make recommendations, and report back to Chair of pslrb. Parties may agree to binding determination of any issue by third party, even during conciliation process. No new power to impose ca. Not independent commission as envisaged by Fryer, Ie. doesn’t report directly to parliament, Board members themselves may be removed by Cabinet “for cause”

213 Federal Public Service Labour Relations Table 11.3 (Continued) Fryer Recommendation

psma

Expanded njc – Compensation research Bureau managed jointly under njc – njc structure and mandate formally recognized in statute as operating parallel to other Boards, have it report directly to Parliament – adequate funding for njc

Compensation research services to be managed and provided by pslrb. Use of njc essentially voluntary; codevelopment at njc must be voluntarily entered into by both parties.

Separate Employers – to be able to conduct collective bargaining on own w/o Treasury Board mandate nor order-in-council approval to implement results – be required to provide grievance process; improved dispute resolution in collective bargaining; Consultation and codevelopment for conditions not subject to bargaining – allow njc directives to apply to separate employers where appropriate

Separate agency may negotiate agreement separately, with approval of Governor-inCouncil (Cabinet)

Miscellaneous – Labour Relations Accountability Plan to be created – comprehensive joint union management training in labour relations and conflict resolution – union meetings permitted onsite during regular work hours – middle managers permitted to form a representative association

No clear right to union meetings during work hours. Employer may choose to allow. Employees may engage in political activity as long as it does not impair their ability to perform their job in a politically impartial manner. Political activity defined broadly. Employees need consent of psc to be an electoral candidate.

to impose its will on employees. Rather than accepting committee’s modest suggestion of an independent Public Interest Dispute Resolution Committee reporting directly to parliament, the psma provides “Public Interest Committees” under the auspices of the new Public Service Labour Relations Board which deals with almost all aspects of labour relations between the two sides, and which reports to Cabinet. While the longstanding choice of procedure between interest arbitration and conciliation (the strike option) remains intact, the pslrb has no new power to impose a collective agreement on the government under the conciliation route in certain extraordinary circumstances, as recommended in the Fryer report. Further, it is unlikely that the complex reforms to the designation of “essential” employees will result in a loosening of these restrictions, given that the government employer retains the sole right to determine the “level of service” during a strike, which may not be challenged. Aside from creating a “new” range of voluntary options for the two sides, the psma seems to only impose two new sets of obligations at the departmental level: the establishment of consultation committees for

214 Selected Policy, Political, and Budgetary Realms

the purposes of discussion and exchange of information, and the establishment of an informal conflict management system. Some other reforms improve individual employee rights on the one hand by expanding the scope of permissible grievances (including human rights issues) and the scope of permissible political activity by employees, while others decentralize authority and empower departmental managers, including simplified staffing rules and a revised merit principle. Overall, the psma may be regarded as somewhat of a progressive human resources exercise, rather than a fundamental reform of the labour-management institutional framework.

p r o s p e c t s f o r l a b o u r r e l at i o n s u n d e r t h e c o n s e r vat i v e s At the time of writing, there is little evidence of any significant shift in direction by the Harper Conservative government away from the general pattern set by the Liberals over the past 8 years. While there has been little collective bargaining, the few agreements signed continue the ongoing level of scale increases (2.5–3%), while a large round of bargaining is set to begin to take place in one year. The simple continuation of the status quo seems largely driven by two key contextual factors: the minority status of the government, and the continued existence of a healthy budgetary surplus that, by most recent projections, stands at approximately $6.7 billion.29 With these two contextual factors unchanged, we expect a general continuation of the current pattern of moderation. The government is not likely to provoke the unions by seeking excessive constraint, since there is, on the one hand, little economic justification for this, and, on the other hand, there is the risk of some political “cost” for such aggression, which a minority government may be less willing to assume. Were either the minority status of the government to change, or a fiscal deficit to return, however, we would then expect the Conservatives to engage in more aggressive restraint strategies. In public sector labour relations, there are essentially three types of restraint strategies that the government may employ.30 First, the government may employ a co-operative bargaining approach, in which it genuinely seeks union input into restraint policy options, is open to alternatives, and is willing to provide quid pro quo for restraint gains. Second, they may take an adversarial bargaining approach, in which the government makes aggressive demands for concessions and restraint, but does so within the existing collective bargaining framework, which may require them to tolerate lengthy strikes during bargaining. Lastly, it may simply act unilaterally, and impose its will through legislation. Co-operative approaches to restraint in Canada have been more generally associated with ndp provincial governments. Public sector unions are more inclined to be aligned with centrist or left-leaning governments, since they are less inclined to aggressively pursue a smaller budgetary package

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ceteris peribus, and there is also empirical evidence that leftist governments are more generous towards their public sector employees.31 Consistent with this, we have documented a significant compensation “catch-up” of federal public service employees under the Liberals since 1998. Over the long run, it is likely that Liberal governments are likely to be more generous with their unionized employees when resources are available than the Conservatives. The Liberal pattern over the long run, however, has been a paternalistic one, in which Liberal governments have been quite willing to unilaterally impose restraint outcomes whenever they deemed it necessary short term fiscal policy. On the other hand, we have witnessed a mix of hard-bargaining and legislative approaches amongst more right-leaning governments. The Klein government of Alberta, interestingly, obtained very significant restraint outcomes from its public sector unions in the 1990s, but did so through a hard bargaining approach, without needing to resort to legislation.32 The Harris government of Ontario in the latter half of the 1990’s used a mix of hard-bargaining and legislation. While it tolerated several lengthy strikes under an adversarial bargaining approach to generate negotiated outcomes, it also used legislation to alter the rules of engagement in the government employer’s favour.33 While governments choosing an adversarial bargaining approach may pay a price for allowing labour strikes and inconvenience, this strategy may further legitimize the restraint outcomes achieved, while also, paradoxically, increasing the legitimacy of the collective bargaining process in place, such as it is. Indeed, with increasing restrictions on the right to strike in the public sector over time, including the federal public service, governments have become increasingly able to withstand strikes.34 Given that the current rules in federal public service labour relations enable the government to unilaterally set the level of essential services that must be provided during strikes, which may not be challenged by the union, there seems ample space for the government to successfully employ an adversarial bargaining approach and gain substantial restraint. Overall then, even if the Conservatives may be expected to be relatively less generous towards public service employees, there is good reason to believe they may well not follow the unilateralist approach of their Liberal predecessors but will rather emulate the adversarial bargaining approaches of other similarly right-leaning governments.

c o n c lu s i o n Following the turbulent years of restraint and restructuring in the federal public service throughout most of the 1990’s, we have recently experienced a period of moderation. We have shown that there has been significant recent catch-up within the federal public service, both in terms of compensation and

216 Selected Policy, Political, and Budgetary Realms

employment outcomes. Certain factors seem to continue to apply upward pressure on these outcomes. First, the federal government has large recruitment needs presently and for the foreseeable future, given that approximately 40% of its current workforce is predicted to retire in the next 5 years.35 This short term recruitment imperative will likely also place upward pressure on compensation. As well, unlike in most other public sectors, wage compensation represents a relatively small percentage of total expenditures in the Canadian federal government, reducing both the necessity and payoff of aggressive labour cost restraint strategies. Nevertheless, should restraint soon become a priority again, for fiscal and/or ideological reasons, the existing rules of the game have been largely unchanged by the legislative reforms under the psma. Management’s sole power to set the “level of services” during strikes, and the lack of any significant new dispute resolution mechanism, leaves the historical power structure fundamentally unchanged, while leaving open the option of “hard bargaining” under existing rules, for the Conservative government. In the daily conduct of federal public service labour relations, we also expect minimal change resulting from the adoption of the psma, with some exceptions. The new requirements for departmental Consultation Committees seem to have greatly stimulated the number of meetings ostensibly for purposes of consultation, although some union officials claim that in the vast majority of cases, these are merely processes of “notification” of pre-set managerial courses of action.36 Not surprisingly, there seems to have been and will likely remain a range of quality in labour relations across departments. Those areas where consultation was taken more seriously in the past have likely engaged in more meaningful behaviour under the new processes,37 whereas in others, there will either be a long learning process, or “notification” may simply remain the norm. While it may be too early to tell, our preliminary inquiries also suggest that there have been extremely few examples of actual co-development initiatives emerging within the voluntarist framework established by the psma. 38 Lastly, we have argued that the ongoing saga of the federal public service pension dispute will be anti-climactic, given an expected loss for the unions in their upcoming court challenge. It will again be “business as usual,” as the court will likely re-affirm the longstanding unilateral right of the government to revoke employees’ contractual rights through legislation should they deem it necessary.

notes 1 For an in-depth analysis of these restraint programs, see Gene Swimmer and Sandra Bach, “Restructuring Federal Public Sector Human Resources” in Public-Sector Labour Relations in an Era of Restraint and Restructuring, Gene Swimmer, ed. (Don Mills: Oxford University Press, 2000), pp. 178–211.

217 Federal Public Service Labour Relations 2 An increment is the annual increase that employees receive, more or less automatically, for a fixed number of years spent in a given job classification level; there are often 3 to 5 increments for each job level. 3 rcmp Pay Council, What are They Worth: A Business Case for rcmp Compensation, August 2005, pp.121–122. 4 The weighted average is based on the smallest increased reported for the bottom of the grid. For example, 33.2% was used for the Program Administrators group, even though the increases ranged from 33.2–46.5%. 5 These data all include the Department of National Revenue, which was part of the federal public service proper, at the time. See Swimmer and Bach, Supra, Note 1, pp. 200–201. 6 It is not possible to report public service employment by category, once the Department of National Revenue is excluded because the historical data do not simultaneously breakdown employment by occupational category and department. 7 Apparently, National Revenue employment continued to grow during the five year period, probably to deal with the relatively new sales tax, the gst. It is also probably the case that many of these jobs were seasonal positions needed around income tax time. 8 50% of Federal public servants are at least 45 years old. The long term staffing problems are exacerbated by many departments who hire new employees on a short term or casual basis, as a stop gap, rather then becoming involved in a lengthy official job competition. See Kathryn May, “Stop-gap staffing will lead to crisis: ps watchdog” Ottawa Citizen, October 23, 2006, pp. A1, A12. 9 By 2000, the reported surplus in the Superannuation Account was $14.8 billion, because the Government began recapturing the interest payable on the surplus in 1995– 96 and crediting it as revenue, at a rate of about $2-2.5 billion per year. 10 Many of the memos written by Treasury Board and Finance officials became available to the public service unions, through ‘access to information’ requests. These documents are quoted often in the unions’ “Statements of Claim” before the Ontario Supreme Court. The Court ruled in October 2006 that the documents were admissible, as evidence, and will no doubt be a big part of the unions’ case, when it resumes in February 2007. See http://www.pipsc.ca/english/pensions/claim-nop-nov1405.pdf and http://www.pipsc.ca/english/pensions/claim-nov1405.pdf 11 Letter dated September 11, +1996, reproduced in the Public Service Alliance’s “Fresh Statement of Claim,” presented to the Ontario Supreme Court of Justice, November 8, 1999, pp. 14–15. http://www.pipsc.ca/english/pensions/claim-nov1405.pdf 12 Memo prepared for the Secretary of the Treasury Board, dated June 28, 1996, reproduced in the Professional Institute of the Public Service of Canada, et. al., “Fresh Statement of Claim,” presented to the Ontario Supreme Court of Justice, November 8, 1999, pp. 16–17. http://www.pipsc.ca/english/pensions/claim-nop-nov1405.pdf 13 The plans are linked in terms of employee contributions and eventual pension benefits, so increased premiums on qpp/cpp translate into a smaller percentage of the 7.5% of earnings contributed by federal employees on the first $41,000 (the current

218 Selected Policy, Political, and Budgetary Realms

14 15

16

17 18

19 20 21 22 23

24

25

26

cpp/qpp maximum) of income, actually going to the Public Service Pension Plan. The 1999 legislation modified the combined cpp/qpp and public service pension contribution from 7.5% of earned income, to actual cpp/qpp premium plus 4% to the public service pension on the first $41,000 of income, and 7.5% on the remainder of income. See “Changes to the pension plans for members of the Public Service, the Canadian Forces, and the Royal Canadian Mounted Police” July 7, 2005. http//:www.tbs-sct.gc.ca/pubs_pol/hrpubs/Pensions/fscppm-frcrm_e.asp The increases affect all three plans, the Public Service, rcmp, and Armed Forces Pension plans. The data for this analysis come from the 2005 Annual Report to Parliament on the Public Service Pension Plan, pp. 4, 18, 30, 36; http://www.tbs-sct.gc.ca/report/apssa/ 2005/pssa_rrfp_e.asp One example is the Chrétien government’s decision in 1994 to use legislation to override the salary and increment provisions in place in collective agreements for two years. See Public Service Alliance of Canada, “Fresh Statement of Claim,” pp. 19–20. Katherine Swinton, “The Charter of Rights and Public Sector Labour Relations” in Gene Swimmer and Mark Thompson, eds., Public Sector Collective Bargaining in Canada: Beginning of the end or End of the Beginning?, (Kingston: irc Press, 1995). R. v. Turpin, [1989] 1 S.C.R. 1296. See also Andrews v. Law Society of British Columbia, [1989] 1 S.C.R., 143; and R. v. Swain, [1991] 1 S.C.R. 933. Law v. Canada (Minister of Employment and Immigration), [1999] 1 S.C.R. 497. Ibid. Fraser v. Ontario (Attorney General) [2006] O.J. No. 45 (O.S.C.J.). Morley Gunderson, “Public Sector Compensation,” in Gene Swimmer and Mark Thompson, eds., Public Sector Collective Bargaining in Canada: Beginning of the end or End of the Beginning?, (Kingston: irc Press, 1995). The evidence furthermore suggests that these public sector wage premia are higher amongst women and lower paid groups, which contradicts the claim of historical or general disadvantage. Identifying the Issues: First Report of the Advisory Committee on Labour-Management Relations in the Federal Public Service (Ottawa: Treasury Board, 2000) (“Fryer Report (2000)”). Working Together in the Public Interest: Second Report of the Advisory Committee on Labour-Management Relations in the Federal Public Service (Ottawa, Treasury Board, 2001) (“Fryer Report (2001)”). For an overview of federal government legislative intervention into collective bargaining in the 2 decades prior to the Fryer report, see Swimmer and Bach, 2000, Supra, note 1. It could be argued that the exception to this claim is the recommendation for an independent Board known as the “Public Interest Dispute Resolution Commission,” which would report directly to Parliament, and would assist the parties in collective bargaining dispute resolution, although even this body would not have had any formal power to bind the government employer against its will and, through its power to make recommendations, would have relied primarily on exhortation. See also Gene

219 Federal Public Service Labour Relations

27 28

29 30

31

32

33 34

35 36 37 38

Swimmer, “Putting the Fryer Committee Recommendations in Context,” Canadian Labour and Employment Law Journal 9 (2002), pp. 313–334. S.C. 2003, c. 22. Richard Chaykowski, “Prospects for the National Joint Council in the Renewal of Labour-Management Relations in the Canadian Federal Public Service,” Canadian Labour and Employment Law Journal 9 (2002), pp. 387–413. Steven Chase and Heather Scoffield, “Ottawa awash in surplus cash,” Globe and Mail, October 25, 2006. Gene Swimmer, “Public Sector Labour Relations in an Era of Restraint and Restructuring: An Overview,” in Gene Swimmer, ed., Public Sector Labour Relations in an Era of Restraint and Restructuring (Toronto: Oxford University Press, 2001). Andre Blais, Donald Blake, and Stephane Dion, 1993. “Are Leftist Governments More Generous Toward Public Sector Employees? Evidence from Canada, 1967–1984,” Governance 6 (1), 67-78. Ibid. See also Yonatan Reshef, “The Logic of Union Quiescence: The Alberta Case” in Gene Swimmer, ed., Public Sector Labour Relations in an Era of Restraint and Restructuring (Toronto: Oxford University Press, 2001). Joseph B. Rose, “The Assault on Teacher Bargaining in Ontario,” Relations Industrielles 57, 1 (2002). In fact, there seems to have been some convergence towards the “limited” or “controlled” strike as the dispute resolution mechanism of choice by governments. Bernard Adell, Michel Grant, and Allen Ponak, Strikes in Essential Services (Kingston: irc Press, 2001). Supra, note 8. Interview with Jean Ouellette, director of Labour Relations, Canadian Association of Professional Employees November 30, 2006. This view was provided in an interview with Michel Paquette, head of Consultation Services, The Professional Institute of the Public Service of Canada. An example of one exception seems to be a “Memorandum of Understanding with Respect to Joint Learning” developed between the Public Service Alliance of Canada and the Public Service Human Resources Management Agency of Canada, in which a joint steering committee is empowered to set certain policies, budgets, etc. concerning learning projects and initiatives.

12 Righting Wrongs: Locking them up without losing the Key-Tory Reforms to Crime and Punishment ian lee Research into the effectiveness of mandatory minimum sentences has established that they do not have any obvious special deterrent or educative effect … . [minimum mandatory sentences have] no discernible benefits. 2006 Department of Justice briefing note to incoming Minister of Justice1 Where is the evidence to support what they propose? It exists in rhetoric, tabloid columnizing and the police associations. It does not exist in fact … There isn’t any evidence, therefore, in Canada or abroad that mandatory minimums deter crime. Jeffrey Simpson2 Determinate sentencing laws [mandatory minimum sentencing] decrease murders by 16%, aggravated assaults by 12%, robberies by 24%, rapes by 12% and larcenies by 3%. Joanna Shepherd, Clemson University and Emory University3 credible research shows that longer sentences do not contribute to public safety … there is little or no empirical evidence to support the premise that hiring more police, as proposed in the platform, will have the result of reducing rates of crime and victimization, 2006 Department of Public Safety briefing note to incoming Minister of Public Safety4 many studies published in recent years have found results that are at a minimum consistent with the presence of an important deterrence effect using a range of different measures Daniel Kessler (Stanford) and Steven Levitt (Chicago)5

221 Tory Reforms to Crime and Punishment … the evidence linking increased punishment to lower crime rates is very strong (p. 178) … incarceration over the 1990s can account for a reduction in crime of approximately 12% for the first two categories [homicide and violent crime] … or about one-third of the observed decline in crime (p. 178–9). Steven Levitt6

introduction Public policies dealing with deviance, crime and punishment have always been political and politicized from the very beginning of the Western tradition. Most famously, at the very beginning, Plato focused on the question of “what is justice”, in The Republic.7 These issues continue to be debated in modernity by individuals ranging from ordinary citizens to novelists such as Dostoevsky (“For what is man without desires, without free will, and without the power of choice but a stop in an organ pipe?”8), to philosophers such as Hobbes, Bentham and Foucault. One of the most important analyses in modernity to address individual responsibility and accountability and its relationship to justice, was provided by Hannah Arendt in Eichmann in Jerusalem: A Report on the Banality of Evil,9 in her deconstruction of arguments that supported collective rather than individual responsibility and accountability for specific acts that contributed to the Holocaust. This chapter will review the foundations of these policy differences, which are embedded in contradictory principles of sentencing that slowly emerged with the evolution of constitutional government initially in England and later in Canada and the USA. The Canadian Sentencing Commission10 summarized and analyzed the six principles explicitly noting that some are in conflict with one another: • • • • • •

retribution just desserts denunciation deterrence incapacitation rehabilitation

Indeed, these values were subsequently included in the Canadian Criminal Code: 718. The fundamental purpose of sentencing is to contribute, along with crime prevention initiatives, respect for the law and the maintenance of a just, peaceful and safe society by imposing just sanctions that have one or more of the following objectives: (a) to denounce unlawful conduct;

222 Selected Policy, Political, and Budgetary Realms (b) to deter the offender and other persons from committing offences; (c) to separate offenders from society, where necessary; (d) to assist in rehabilitating offenders; (e) to provide reparations for harm done to victims or to the community; and (f) to promote a sense of responsibility in offenders, and acknowledgment of the harm done to victims and to the community.

The fundamental principle of sentencing is as follows: 718.1 A sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender.

Other sentencing principles include the following: 718.2 A court that imposes a sentence shall also take into consideration the following principles: (a) a sentence should be increased or reduced to account for any relevant aggravating or mitigating circumstances relating to the offence or the offender, and, without limiting the generality of the foregoing, (i) evidence that the offence was motivated by bias, prejudice or hate based on the race, nationality, colour, religion, sex, age, mental or physical disability or sexual orientation of the victim, or (ii) evidence that the offender, in committing the offence, abused a position of trust or authority in relation to the victim shall be deemed to be aggravating circumstances; (b) a sentence should be similar to sentences imposed on similar offenders for similar offences committed in similar circumstances; (c) where consecutive sentences are imposed, the combined sentence should not be unduly long or harsh; (d) an offender should not be deprived of liberty, if less restrictive sanctions may be appropriate in the circumstances; and (e) all available sanctions other than imprisonment that are reasonable in the circumstances should be considered for all offenders, with particular attention to the circumstances of aboriginal offenders11

The debates and disputes amongst scholars, elected officials, public officials and citizens concerning crime and punishment are driven by the degree to which one sentencing principle is emphasized over another. These very pronounced differences of philosophy and values concerning crime and punishment and sentencing principles in the political and policy arena have been manifested in scholarly research. As evidenced by the quotes above, the body of scholarly research – which spans criminology, law, economics, political science, business, public policy – is as divided as the political parties.12

223 Tory Reforms to Crime and Punishment

Notwithstanding the advice from the Departments of Justice and Public Safety public servants to the incoming Conservative Ministers of Justice and Public Safety, it is inaccurate – actually profoundly misleading – to suggest that the extant research across scholarly disciplines has resolved the debates with clear, unambiguous, incontrovertible, undisputed answers concerning crime, punishment, deviance and deterrence. Indeed, not only is there significant controversy within the scholarly research across the disciplines concerning the efficacy of sentencing as a deterrent, but the research conclusions are frequently heavily qualified with significant caveats, noting problems with the sample size or the time frame or the methodology or inadequate or imprecise data or intervening variables that cannot be captured or isolated.13 The methodological problems of the research literature analyzing deterrence were summarized by Professor Spellman: “We no longer use cross sectional data sets because they make it impossible to separate simultaneous effects; we no longer use national times-series data and ratio variables because they produce inflated estimates … Nonetheless, some problems persist: simultaneity (just as prison affects crime, so crime affects prison and it is difficult to isolate one effect from the other); specification error (especially left out variables); and difficulties in comparing among states (since different states use their prisons very differently).”14 These serious research methodological issues suggest that policies concerning crime and punishment cannot be grounded exclusively on the basis of scientific research – due to the indisputable substantive scholarly disagreements in the extant research concerning deviance and deterrence – contrary to the claims by Justice Canada and Department of Public Safety, some criminologists and journalists such as Jeffrey Simpson and Dan Gardner.15 As the GermanAmerican philosopher Hannah Arendt noted, there is no Archimedean point i.e. “no gods eye view of the universe” (especially in the social sciences) which supports implicit claims of absolute truth by any scholar.16 Indeed, this policy field strongly mirrors the contentious philosophical debate concerning abortion. Ultimately, the policies embedded in the laws passed by Parliamentarians, express and manifest their deeply held moral, ethical and philosophical values concerning free will, personal accountability and societal responsibilities in a democratic nation expressed in democratic elections.

the 2006 federal election Debates concerning crime and punishment converged in the 2006 national election that led to a minority Conservative government. On Jan. 2, 2006, the Conservative Party announced its 5 policy priorities: reducing the gst, tackling crime, healthcare wait times, childcare support, and accountability and cleaning up government. This platform was unique in contrast to the approach taken by the other major political parties. The Tory platform not only

224 Selected Policy, Political, and Budgetary Realms

restricted the party focus to 5 key areas but it also laid out a clear plan in terms of how it would approach each of its priorities. The tackling crime priority was defined as “Stand Up for Security”17 in which the Tories pledged: • Mandatory prison sentences for serious drug trafficking, weapons, and violent offences, and ending house arrests for violent, sexual, and other serious offences. • Ending the wasteful long-gun registry and using the savings to hire more front-line police officers. • Protecting women and children from sex offenders through a mandatory dna data bank, raising the age of sexual consent from 14 to 16 years old, and ending all defence loopholes for child pornography. • Strengthening border port and airport security, consolidating security services under a new National Security Commissioner, and quickly deporting non-citizen criminals.

Contrary to arguments made by Jeffrey Simpson18 and Dan Gardner19 that the Conservatives were pandering to the public on an emotional issue, the crime and punishment objectives announced by the Tories represented a long and deeply held philosophy of conservatives in Canada. Indeed, crime and punishment was a core pillar of the Reform Party of Canada20 at its founding convention 15 years earlier, as well as its successor, the Canadian Alliance.21 Even the more centrist Progressive Conservative Party of Canada had long held similar policy positions.22 Moreover, although it represented a long and deeply held Conservative value, it did not resonate as deeply with voters, as indicated by the following public opinion poll of the Conservative Party’s Five Priorities, which revealed support for the crime package at 9.5% (thereby empirically invalidating the Simpson-Gardner “pandering to public opinion”argument). The contrast in party philosophies and positions became highly visible in the middle of the campaign on Boxing Day 2005 when a 15 year old, Jane Creba, was murdered on Yonge Street in downtown Toronto while shopping with her mother and sister. Then Prime Minister Martin responded by stating that her death was due to the “consequences of exclusion,” suggesting to Canadians that the murderer was the real victim.24 Immediately after this tragedy, the Liberal Party started dropping in the polls. None of the polling firms were in the field from Dec. 23 until Dec. 29 – with the exception of ses which went back into the field Dec. 26. The ses data below reveals that the shift in Liberal numbers can be dated to Dec. 26–28 when they dropped 3% and suffered another 3% decline Dec. 29–30. This sudden and sharp decline in Liberal polls was attributed by media pundits and analysts to the rcmp announcement of an investigation into Finance Minister Goodale on Dec. 27. However, this interpretation ignored the visceral

225 Tory Reforms to Crime and Punishment Table 12.1 ses Polling Data, Policy Options, June 200623 Question 1: Which one is the most important priority to you personally?

Total

Cutting gst

A crime package

The healthcare Support for Cleaning up guarantee childcare government Undecided

Responses Percentage Percentage Percentage Percentage Percentage Percentage Region Aggregate

1006

14.7

9.5

46.9

10.4

16.8

1.7

Atlantic

100

22.0

6.8

46.6

5.4

18.3

.9

Quebec

251

11.9

9.8

62.2

7.2

7.3

1.6

Ontario

303

14.2

8.9

42.9

13.6

17.4

2.8

West

352

14.9

10.6

39.4

11.4

22.5

1.1

Table 12.2 2006 National Election Opinion Polls26

Ekos

Jan 1–3 n=1386 error= +/− 2.7% Undecided: 8%

10

36

5

30

18

ses

Jan 1–3 n=1200 error= +/− 3.1% Undecided: 17%

13

36

4

33

15

Strategic

Dec 30–31 & Jan 3 n=1500 error= +/− 2.5% Undecided: n.a.%

13

32

6

32

17

Ipsos

Dec 29–30 n=1000 error= +/− 3.1% Undecided: 6%

12

33

5

32

18

ses

Dec 27–29 n=1200 error= +/− 3.1% Undecided: 16%

13

34

5

35

14

ses

Dec 26–28 n=1200 error= +/− 3.1% Undecided: 16%

13

32

4

38

14

226 Selected Policy, Political, and Budgetary Realms

outrage by Canadians across the country, horrified that a middle class, straight A-student, teenage girl could be killed in broad daylight on a major retail shopping street in downtown Toronto. I argue that ordinary voters sensed that the Liberals were out of touch with middle class values – demonstrated vividly by Martin’s cavalier and deeply insensitive comment on the cbc tv evening news Dec. 26 – and reinforced the very next evening, Dec. 27, with cbc pictures of the rcmp arriving with a search warrant at the Saskatchewan farm of Finance Minister Goodale. In this interpretation, the original raison d’etre of government articulated by Hobbes in the Leviathan – the surrender of the person’s sovereignty to the state in return for protection of the citizen by the state – had been violated by the state in its failure to prevent both violent crime and alleged white collar crime (albeit orchestrated by the same government25). Thus, the government had lost its legitimacy to rule and this was manifested empirically on Jan. 23, 2006. Indeed, the murder of Ms Creba and subsequent reaction captured the tensions and disputes expressed in the quotes at the beginning of this article. It vividly illuminates the underlying philosophical debates between conservative and liberal values, concerning the degree to which an individual should be held personally accountable for the commission of violent crime versus the culpability of society. The Liberal Party and liberals have historically supported diminished personal accountability for those individuals who are disenfranchised or disadvantaged or marginalized27 (this will be evidenced further in the chapter concerning Liberal Party criticism of Bill C-9, C-10, and C-27 not withstanding its support for some of these principles during the 2006 election). Thus, the state response should be founded on the sentencing principle of rehabilitation rather than the principles of retribution, just desserts, denunciation, deterrence, or incapacitation. What ethicists characterize as “the duty of care,” is owed to the offender and not the victim, as this view believes that society is complicit in the individual’s deviance (captured succinctly by Prime Minister Martin’s comments concerning the “consequences of exclusion” i.e. by society). Contrarily, Conservative philosophy concerning crime and punishment privileges the sentencing principles of denunciation (i.e. the “expressive value of law”28), deterrence29 (i.e. general) and incapacitation30 (i.e. specific deterrence), as they believe that the duty of care is owed to the victim and more generally to law-abiding citizens. To privilege rehabilitation over and above the principles of denunciation, deterrence and incapacitation is to reward deviant behaviour that leads towards anarchy rather than civilization (these issues were first and most comprehensively analyzed by Thomas Hobbes in the Leviathan). Moreover, violence to another human being involves a violation of the most fundamental human right of all, which is the right to be left alone in peace. In this view, liberalized policies towards crime and punishment violate the ordering or foundational principles (first discussed by Plato in The Republic) – and

227 Tory Reforms to Crime and Punishment

fail to support the human rights of each citizen – that foster, support and sustain a civilized, liberal, democratic society. In this view, a commitment to social justice requires that violent, dangerous individuals are removed from society and incarcerated in order to prevent further violations of the human rights of others, and to ensure that the violent person is treated and rehabilitated. Indeed, the failure to enact policies that clearly condemn and punish deviant choices signals a tolerance that unwittingly encourages the deviant behaviour that society wants to prevent. Conservatives believe that this view is empirically demonstrated by the increases in violent crime over the past 40 years (see figure 1 and the Crime Funnel (figure 2), which empirically demonstrates the dramatic increase in crime and the absolute numbers of criminal acts today), during which time criminal justice policies were steadily liberalized (e.g. abolition of capital punishment, decreasing sentence length for violent crimes, increased use of conditional sentencing, alternatives to incarceration, passage of the offender-rights based ccra 31 etc.).

us experience with tougher crime policies Conservatives point to the experiences of three American jurisdictions for empirical demonstration of the efficacy of longer sentences – including minimum mandatory sentences – to decreased crime rates: US, California, and Florida. Federal Policy Commencing in the very late 1980s and continuing throughout the 1990s, the US federal government (and most state governments) adopted much tougher policies concerning sentencing. The number of prisoners incarcerated increased very dramatically at both the federal and state levels. Consequent to the dramatic increase in incarceration, commencing in the early 1990s the US experienced a dramatic decline in all types of violent crime. To interpret these statistics, we turn to the Chicago School, from which evolved several related research streams during the past 50 years and indeed have earned 4 Nobel Prizes in economics during the past 10–15 years: • • • •

Gary Becker (crime and punishment) James Buchanan (public choice) Ronald Coase (social cost) Douglas North (Institutionalism)

Within the Chicago School, a substantial body of research known as “law and economics”38 (centered primarily at Stanford, Chicago, Harvard, Yale,

228 Selected Policy, Political, and Budgetary Realms Figure 12.1 Canadian Rates of Violent Crime Recorded by Police, 1962–200432 1 400

Rate per 100 000 population

1 200 1 000 800 600 400 200 0

2 4 6 8 0 2 4 6 8 0 2 4 6 8 0 2 4 6 8 0 2 4 196 196 196 196 197 197 197 197 197 198 198 198 198 198 199 199 199 199 199 200 200 200

Figure 12.2 The Crime Funnel33

Total Federal Offences Known to Police: 2,626,239*

Estimated Convictions in Adult Court: 283,724**

Estimated Cases Given a Prison Sentence: 98,656**

Total New Convictions by Federal Offenders on Conditional Release: 3,297 * All Federal Statute Offences including Criminal Code, Traffic, Drug and Other. ** Adjusted for Missing Data. Source: Offender Management System records, Performance Measurement, Correctional Service of Canada. Uniform Crime Reporting Survey and Adult Criminal Court Survey, Canadian Centre for Justice Statistics, Statistics Canada.

229 Tory Reforms to Crime and Punishment Figure 12.3 Four Measures of Serious Violent Crime34 Offenses in millions 5 Total violent crime 4

3 Victimizations reported to police 2 Crimes recorded by police 1

Arrests for violent crime

0

1973

1978

1983

1988

1993

1998

2003

Source: doj Bureau of Justice Statistics

Homicide Victimization 1950–200435 Rate per 100,000 population

10

5

0 1950

1960

1970

Source: doj Bureau of Justice Statistics

1980

1990

2000

230 Selected Policy, Political, and Budgetary Realms Figure 12.3 Four Measures of Serious Violent Crime (Continued) Homicide Victimization by Age36 Rate per 100,000 population Age

20

18–24 25–34 10 35–49 14–17 50+ Under 14 0 1980

1985

1990

1995

2000

Source: doj Bureau of Justice Statistics

Adult correctional Populations, 1980–200437 Probation

4,000,000

3,000,000

2,000,000 Prison 1,000,000

Parole Jail

0 1980

1985

1990

1995

2000

Source: doj Bureau of Justice Statistics

Princeton, and Carnegie Mellon), has “found results that are at a minimum consistent with the presence of an important deterrence effect using a range of different measures.”39 Using highly advanced statistical techniques in a series of articles, Prof Steven Levitt (Chicago) rejected six reasons often provided to explain the dramatic decline in crime in the 1990s (strong economy, changing demographics, innovative policing practices, gun control laws,

231 Tory Reforms to Crime and Punishment

death penalty). Instead, Levitt40 found that the enormous reduction in crime in the 1990s was “accounted for” by: • • • •

increased incarceration rates (about 1/3 of decline in violent crime) legalization of abortion (25% to 30% decline in violent crime) waning of crack epidemic (10% of decline in violent crime) increases in the number of police (5%-6% of decline in violent crime). California and Three Strikes Law

Turning to the second jurisdiction, in response to enormous increases in crime in California, Proposition 184 was passed by the voters and the California Assembly then passed the “three strikes and you’re out” law (Chapter 12, 1994). In summary, it provided the following: • • • • •

1st two “strikes” accrue only for serious felonies law doubles sentences for second strike third crime that triggers life sentence can be any felony but da s & judges have discretion concerning recognition of 3rd crime requires that extended sentences be served in prison

Contrary to a great deal of misinformation concerning this law in the media and amongst scholars, the California statute did not incarcerate all felons for life after 3 convictions. Indeed, the statute mandated that only serious crimes specifically itemized counted towards the first or second strike. Moreover, the statute specifically granted discretion to both District Attorneys and judges to exclude or “not count” a third offence if it was in the “interest of justice.” As Dr. Jennifer Walsh empirically demonstrated in two excellent articles, the urban legend of felons incarcerated for stealing a pizza three times was deeply misleading, for the vast majority of felons convicted under 3 strikes, were given life sentences for very serious crimes e.g. murder, rape, arson.41 The astonishing impact of the 1994 “three strikes” – a minimum mandatory sentencing law – are revealed in the figure 12.3.42 Moreover, while the legislation did produce increases in the inmate population, the increases were significantly less than projected. Much more importantly, total violent crime fell from 1101 per 100,000 in 1992 to 589 per 100,000 in 2002 – an astonishing reduction of almost half i.e. 46%. One of the only rigorous statistical analyses of the full deterrent effect of California’s 3 strikes law noted that: “Theory-based empirical results indicate that strike sentences generally deter the crimes covered by the laws. During the first 2 years of the legislation, approximately eight murders, 3,952 aggravated assaults, 10,672 robberies, and 384,488 burglaries were deterred in California; however, larcenies increased by 17,700 during this period.”43

232 Selected Policy, Political, and Budgetary Realms Figure 12.4 California Crime Rate

Numbers of Crimes per 1,000 population

The number of serious offenses* per 100,000 inhabitants 7,000 6,500 6,000 5,500 The Crime Index Has Remained Stable Since 1999

5,000 4,500 4,000 3,500

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

Source of all crime statistics is the California Crime Index

California Crimes, 1952–2003 Violent Crimes by Type Rate per 100,000 Population

Rate per 100,000 population

800

600

400 Assault Robbery 200 Homicide

Rape 0 52

56

60

64

68

72

76 80 Year

84

88

92

96

00

03

Florida and 10–20–life In 1996, the state of Florida passed a law called 10–20–life. It provided the following minimum mandatory sentences: • • • •

Felon possessing a gun: 3 Years Using a gun to commit a crime: 10 Years Pulling the trigger during a crime: 20 Years Injuring or killing a victim by firing a gun during a crime: 25 Years to Life

233 Tory Reforms to Crime and Punishment Figure 12.5 California Projected Prison Population after 3 Strikes vs Actual, 1992–2001 Three Stikes – “Omnious Projections and Reality” (The Explosion that Never Occured) California Adult Prison Population 250,000 232,386

235,000 220,000 205,000

Dept. Of Corrections Projection of inmates - Aug. 1995 (Following Passage 3-Strikes

196,680

Inmates

190,000 170.834

175,000 160,000

146,390

161,497 Dept. Of Corrections Projection of Inmates - Aug. 1993 (Before 3-Strikes)

162,064

145,000 141,017

130,000

Actual Number of Inmates

Three Strikes Passed

115,000 100,000 1992 1993

1994 1995

1996

1997

1998 1999

2000

2001

Table 12.3 Crimes per 100,000 Before and After California 3 strikes44 Type

1992

2002

Difference

%

All crime

3491

1890

1601

46

Total violent

1104

589

514.7

46.6

Murder

12.5

6.8

5.7

45.6

Rape

40.7

28.8

11.9

29.2

Robbery

418

183

234

56

Assault

632

370

262

41.5

234 Selected Policy, Political, and Budgetary Realms Figure 12.6 Florida’s Crime Rate 1996–200546 Florida’s Crime Index Rate Per 100,000 8,000

6,000

Total Index Property

4,000 Violent Crime 2,000

0 1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

Year

Figure 12.7 Florida’s Violent Crime % Change, 1996–200547 Violent Crime Percent Change Since 1996 Number of Offenses

Rate per 100,000

5 –0,4

0 -5

–2,4

–7,7

–10 –14,9 –11,3

–15

–15,4

–13,9

–15,5

–16,9 –17,9 –18,3

–20 –19,9 –25 –23,7

–24,0

–30

–27,0 –30,7

–35

–32,8

–33,1

2004

2005

–40 1996

1997

1998

1999

2000

2001 Year

2002

2003

According to the State of Florida Department of Corrections: • 10–20–life has helped drive down Florida’s violent-gun crime rates 30% since 1998 • State’s 2004 index crime rate lowest in 34 years • violent rime rate lowest in quarter century45

235 Tory Reforms to Crime and Punishment

This review of American experience with much more aggressive incarceration policies – including mandatory minimum sentences in California and Florida – provides a context to analyze Canadian criminal justice policies. Prior to reviewing the most important criminal justice bills introduced by the new Conservative government, it is crucial that we review changes in the profile of the average Canadian federal offender over the past 10 years, for they provide the immediate context for Conservative government policies.

t h e chan g i n g p r o f i l e of canadian federal offenders The Tackling Crime policies enunciated by the Conservative Party in 2006 were supported by the changing profile of the federal offender, from a less violent offender serving a longer sentence to the current phenomenon of more violent offenders incarcerated for a shorter period (see figures 12.8, 12.9, and 12.10). According to the Correctional Service of Canada, the profile of the average offender has changed during the past 10 years.48 Today, 56% of new offenders are serving less than 3 years. At the same time, the number of offenders incarcerated for violent acts has increased to 76% of all federal offenders. Thus, there is a paradox in that offenders are more violent while serving increasingly shorter sentences on average. It is logical and rational to assume that more violent and dangerous offenders require more extensive rehabilitation, which requires longer amounts of time. Yet, this is less possible with so many serving such short periods of incarceration. Thus, those that favour a more liberal treatment of offenders – measured by shorter periods of incarceration or alternative non-penal treatments – unwittingly undermine their very own arguments for rehabilitation as the primary principle that should govern sentencing.49 In a speech to the International Corrections and Prisons Association (icpa)50 on October 22, 2006, the csc commissioner, Dr Keith Coulter, stated: • Our offenders have more and more extensive histories of involvement with the court system – roughly 9 out of 10 now have previous criminal convictions • Our offenders also have more extensive histories of violence and violent offences in their criminal history, and far more are assessed as violence-prone, hostile, impulsive and aggressive • increase of more than 100% in the proportion of offenders who are classified as maximum security on admission – 13% are now classified at this level on admission • increase of 33% in the proportion of offenders with gang and/or organized crime affiliations – 1 in 6 male and 1 in 10 female offenders now have known affiliations • 14% increase in the proportion of offenders serving sentences for homicide – it now stands at more than 1 in 4 male offenders

236 Selected Policy, Political, and Budgetary Realms • 71% increase in the percentage of male offenders and 67% increase in female offenders identified at admission as having very serious mental health problems – 12% of male and 26% of female offenders are now so identified • about 4 out of 5 offenders now arrive at a federal institution with a serious substance abuse problem, with 1 out of 2 having committed their crime under the influence of drugs, alcohol or other intoxicants • trend towards shorter sentences here in Canada and for csc this has meant an increase of 62% in the proportion of male offender admissions serving a sentence of less than 3 years (see graph below)

To summarize the csc commissioner, offenders upon entry to the csc are on average more violent today and more violent offenders have greater rehabilitation needs. Moreover, the ccra mandates statutory release of most federal offenders at 2/3rds of sentence. This suggested to the author the danger of violent offenders being released – due to shorter average sentences exacerbated by statutory release – prior to completing the full suite of programs54 essential for their rehabilitation. Indeed, alarm bells were sounded by the Office of Auditor General of Canada55 as early as 1999, when it determined that the recommended number of correctional programs for offenders often could not be delivered prior to earliest possible parole date. The first step in processing a federal offender to a penitentiary is an “intake assessment” of the needs and risks of that offender,56 so that a personalized correctional plan can be created. According to csc policy, the time allotted for intake assessment of offenders serving less than 4 years is 70 days.57 However, in 2005, the average number of days needed to complete the correctional plan documents was 130.58 The offender is then transferred to his assigned institution where the rehabilitation work begins. The author filed an atip request to determine the average number of days before an offender starts his first correctional program. The Director of Access to Information of csc advised that, “the documents you requested do not exist within the Correctional Service of Canada.”59 This is an astonishing response from an organization whose legislative mandate is to rehabilitate offenders, at a time when offenders are serving shorter sentences and yet are more violent with greater rehabilitation needs. This means that time is of the essence in delivering the programs necessary in such a short time and yet the csc does not capture this information. For the purposes of the calculation below, in the absence of this information, the author has assumed an average of 4 months before an offender starts his first rehabilitation program. The 1999 oag audit estimated that on average 3 rehabilitation programs were prescribed for low-risk/low-need offenders. However, as recently noted by the Commissioner of Corrections, “Our offenders also have more extensive histories of violence … and far more are assessed as violence-prone, hostile,

237 Tory Reforms to Crime and Punishment Figure 12.8 Percentage of Federal Offender Population by Offence Type51 (as of April 10, 2005) 70%

Aboriginal Offenders Non-Aboriginal Offenders

64.8%

60% 48.9%

50% 40% 30% 20% 10%

16.0%

13.6% 14.2%

13.5%

16.6%

4.5%

3.6% 4.3%

0% Murder I

Murder II

Schedule I

Schedule II

Non-Schedule

Schedule I refers to certain offences under the Criminal Code prosecuted by way of indictment. Schedule II refers to offences under the Narcotic Control Act or the Food and Drugs Act prosecuted by way of indictment.

Figure 12.9 Average Sentence Length – Canada52 Mean Provincial Sentence (Days) Days

Months

Mean Federal Sentence (Months)

1,150

110

1,100

105

1,050

100

1,000

20 01 /

19 90 /

19 97 /

6/ 9 19 9

19 95 /

19 94 /

02

1,200

115

20 00 /0 1

1,250

120

00

1,300

125

19 98 /9 9

1,350

130

98

1,400

135

7

1,450

140

96

1,500

145

95

150

238 Selected Policy, Political, and Budgetary Realms Figure 12.10 Time Served to First Release in csc Penitentiary53

Federal Time Served to First Release 2