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BP-379E NATIONAL STANDARDS
AND SOCIAL PROGRAMS:
Prepared by
TABLE
OF CONTENTS A. The Era of "Cooperative Federalism" B. Programs and Standards as of the Early Seventies C. Developments since the Early Seventies 1. The EPF Arrangements of 1977 3. The Canada Health and Social Transfer PART II: THE JURISDICTIONAL BASIS PART III: INTERGOVERNMENTAL PROCESSES 1. Taxation: National Standards through the Back Door 2. The Federal Spending Power: National Standards C.O.D. 3. Shared or Divided Policy Fields: National Standards by Gamesmanship 4. Charter Rights and Affirmations: National Standards
through 5. Intergovernmental Agreements: National Standards through B. Alternatives to Unilateralism: The Orchestration of Standards 1. National Standards by Public Demand: The Power of Persuasion 2. National Standards and the "Information Age" 3. National Standards by Interprovincial Consensus PART IV: TWO PRACTICAL CONSIDERATIONS 1. Intergovernmental Pressures 1. The Provincial Capacity Argument 2. The Effectiveness of Penalties 3. The "Political Loop" - A Concluding Note PART V: GENERAL OBSERVATIONS AND CONCLUSIONS APPENDIX I: FEDERAL CAPS AND CUTS, 1972-1995 APPENDIX II: FURTHER POLL RESULTS NATIONAL STANDARDS
AND SOCIAL PROGRAMS: In recent years, continuing federal reductions to transfers to the provinces for social programs have prompted concerns about whether the federal government can continue to ensure that these programs adhere to national standards. These concerns, in turn, represent but one dimension of a broader debate over appropriate roles for the federal government. This paper focuses on the federal capacity to influence the setting of nation-wide standards for provincial social programs and subsequent provincial adherence to these standards. This issue is logically distinct from the issue of what the federal role should be, but conclusions about the federal capacity do have implications for this broader debate. What is appropriate will be determined, in part, by what is possible. Conclusions about the current capacity of the federal government require the bringing together of the several different kinds of information that establish the structure of this paper. Part I provides an historical overview, focusing on the post-war period during which the modern social safety net was substantially created, and outlines some long-term trends. Part II examines the respective constitutional powers of the federal and provincial governments, and their evolving practical significance. Part III discusses some of the political institutions, practices and processes through which the federal government interacts with provincial governments, and which permit greater or lesser degrees of influence. Part IV gives specific attention to two of the practical factors that determine the actual impact of historical roles, constitutional powers and political processes: political will and money. A final section briefly states some general observations and a basic conclusion about the federal capacity to influence provincial social programs. A. The Era of "Cooperative Federalism" Beginning before World War II, the federal government gradually established a social policy role as an initiator of national programs and national standards, in some cases in areas at least partly within the provincial jurisdiction. Examples of programs that to some extent owe their existence to this role include: the original old age pensions (1927); social assistance (1927, 1937, 1951, 1954 and, comprehensively through the Canada Assistance Plan, 1966); hospital insurance (1957); and Medicare (1966). Most accounts of the development of Canada’s social safety net explain these initiatives and the heightened role of the federal government that they involved, in terms of three central factors:(1)
While this overview captures essential relationships, it is misleading unless qualified by the following key points:
B. Programs and Standards as of the Early Seventies As of the early seventies, the major federal-provincial social safety net programs were as follows:
C. Developments since the Early Seventies The greater flexibility achieved in the social programs of the mid-sixties did not dispel underlying provincial pressures for greater independence. These pressures were reflected, for example, in the arrangements established by the Family Allowances Act of 1974 which (in addition to dramatically increasing benefits) allowed the provinces to define their own family entitlement regimes, based on the age and number of children. During the early and mid-seventies, there were a number of major attempts at social policy reform, culminating in the federal-provincial Social Security Review of 1973 to 1976. These initiatives were largely unproductive of significant reform, however. The decreased capacity of the two levels of government to reach agreements reflected constraints on the fiscal capacity of the federal government that resulted from the economic problems of the seventies: oil shocks, "stagflation," lagging national productivity and rising unemployment. These fiscal tensions added to divergencies over policy (reflecting independent provincial policy development capacities) and continuing jurisdictional sensitivities (especially in Quebec after the 1976 election of a Parti Quebecois government).(9) 1. The EPF Arrangements of 1977 Provincial governments became progressively more dissatisfied with the inflexible requirements of the hospital insurance agreements, and with the federal audit that determined shareable costs. At the same time, Ottawa was increasingly concerned about the fact that its rapidly escalating health and post-secondary education transfers were essentially beyond its control, being determined by provincial spending levels. The result was the move from cost-sharing to block funding achieved in the Established Program Financing (EPF) arrangements set out in the Federal-Provincial Fiscal Arrangements and Established Programs Financing Act, 1977.(10) The EPF replaced 50/50 conditional grants for Hospital Insurance, Medicare and Post-Secondary Education with a combination of
Provincial flexibility was increased because the EPF transfer detached federal funding from provincial spending for each of the programs involved; thus, the provinces were no longer obliged to spend in order to get federal money. It is noteworthy, however, that the federal government retained the ability to withhold its contribution where a province failed to meet the criteria set out in hospital insurance and Medicare legislation.(11) As well, the EPF arrangements contained a provision for federal-provincial consultations concerning post-secondary education policies with national implications.(12) The formal preservation of the federal government’s capacity to apply penalties did not, however, forestall debate about whether or not standards were being maintained. Thus, in hearings of the 1981 parliamentary task force on fiscal arrangements, it was alleged that a number of provinces were taking advantage of the fact that federal money was no longer tied to specific programs to divert funds to programs outside the health and education sectors, and that this threatened to undermine standards.(13) During the late seventies, medical practitioners in a number of provinces began to resort to extra-billing in growing numbers, in an attempt to counter the effect of inflation on provincially established fees for services. This resulted in growing public pressure for more effective controls than were provided by hospital and medical insurance legislation, which did not prohibit user fees or extra billing so long as they did not compromise "reasonable access." The federal response, which prompted strong protests from several provinces, was the Canada Health Act of 1984. This provided for penalties where provincial hospital insurance or Medicare systems contravened the following federal requirements:
The Canada Health Act specifically provided for dollar-for-dollar reductions to federal EPF transfers for revenues gained by user charges or money paid for services subject to extra billing. Substantial public support for the legislation enabled its passage, in the face of significant opposition from provincial governments and many doctors. 3. The Canada Health and Social Transfer The final significant structural change in federal-provincial social program transfer arrangements took place more than a decade after the Canada Health Act. It reflected a significant worsening, during the early 1990s, of the underlying pressures that had been shaping social program arrangements for over two decades. In particular, the failure of the Meech Lake Accord revived and intensified Quebec nationalism, while the impact of the 1991 recession in Ontario (the province that in 1990 had generated 47% of federal revenues) heightened fiscal pressures on the federal government and fostered this province’s increasingly confrontational "Ontario-first" approach to intergovernmental affairs.(14) More specifically, it responded to pressures created by the federal cap on CAP transfers to B.C., Alberta and Ontario (see Appendix I), which had introduced a progressive disparity into this transfer. The Canada Health and Social Transfer (CHST), established in 1995, combined the EPF and CAP transfers in a single block transfer. Under the CHST,
The 1996 long-term funding commitments for the CHST (see Appendix I) respond to the apprehensions of many social policy analysts that, as introduced in 1995, the CHST would have seen the federal cash transfer "decline steadily and rapidly (after the initial cuts) ...to disappear entirely early in the next century."(16) Recent attempts to preserve some federal leverage based on cash transfers do not reverse the evolution that the federal role in funding social programs has undergone since the mid-seventies. While this evolution is suggested by the structural changes discussed above, it is only fully apparent in the cumulative impact of the series of de-indexations, caps and cuts applied to federal transfers over the past three decades. (For a listing of major fiscal restraint measures, see Appendix I.) Attempts have been made to quantify the impact on the provinces of federal fiscal restraint. For example, the Canadian Tax Foundation found that, between 1986-7 and 1994-5, the combined effect of federal restraint measures had been to reduce transfers to the provinces under the EPF and CAP by a cumulative total of some $35 billion (about four times the total annual transfer as of the mid-eighties).(17) While figures of this kind are inherently arbitrary (there is no clear reason for selecting 1985 arrangements as a basis for identifying "reductions"), they nevertheless provide a useful indication of the global trend in federal funding. They are supported by a second set of figures, which indicate that since the early seventies federal transfers have become less important as a percentage of provincial revenues: Percent of Total Provincial Revenues Obtained from Federal Grants(18)
It is useful, finally, to consider the possible impact of intergovernmental pressures, the more flexible arrangements that responded to them, and declining federal funding on the national standards for provincial social programs. While a full exploration of this question would require detailed attention both to standards and levels of actual enforcement, some initial conclusions are suggested by even a general comparison. The chart below suggests several observations:
National Standards
Notes
PART II: THE JURISDICTIONAL BASIS The capacity of the federal government to influence the provinces is ultimately a product of the powers constitutionally vested at the federal level. It is therefore appropriate to outline these powers before examining, in Part III, the kinds of influence that they enable. The constitutional basis for federal action within what have come to be seen as the health and social policy fields can be understood only in the light of three fundamental processes of change that have operated since the enactment of the British North America Act in 1867.
The five changes described have had profound impacts on the constitutional basis for federal influence within the social policy fields. They have determined the practical meaning of the federal powers. More fundamentally, they have defined the jurisdictional questions in response to which these powers have been clarified, and shaped the political and intergovernmental context in which a federal role can be put into practice. The resulting federal powers, described by policy field, are as follows: By virtue of section 93 of the Constitution Act, 1867, provincial governments have the exclusive power to make "laws in relation to education," and are thus responsible for the establishment and administration of schools and universities. Under section 93(4), the federal government has a power to enact laws to implement constitutional provisions related to denominational schools, should the provinces fail to do so. This power has never been used, however. The federal government also has certain narrow responsibilities incidental to various heads of federal power, including responsibility for operating schools on military bases and Indian reserves.(24) More problematically, the federal government’s acquisition in 1940 of jurisdiction over unemployment insurance has provided it with the constitutional basis for an enhanced role in manpower training, beyond its previous role, based on the spending power, as an initiator and co-funder of cost-shared programs. Provinces have varied in their acceptance of a stronger federal presence, however; in several cases, they claim that all training is a subspecies of education, and therefore a purely provincial matter, and have moved aggressively to establish their own training initiatives. Thus, for example, Quebec, Ontario, and British Columbia in the early nineties created structures that either competed with (or in the case of Quebec, pre-empted) the Canadian Labour Force Development Board initiatives that the federal government sought to establish beginning in 1991.(25) More recently, the federal government has moved to substantially vacate this field (see p. 24 below). The spending power remains, however, a central basis for federal involvement in this field. It enables both direct and indirect participation. Indirect participation consists of the post-secondary education cash and tax transfer to the provinces (now a component of the CHST), and funds provided for minority official language education and second official language instruction through the Department of Canadian Heritage. Direct participation includes aid to students (loans, grants and tax measures), and direct support for various aspects of post-secondary education, notably research (through federal contracts and granting councils). As well, the Department of Indian and Northern Affairs supports the post-secondary education of Indian and Inuit students.(26) Although the Constitution Act, 1867 assigned jurisdiction over hospitals to the provinces, it made no mention of the various additional components of the modern field of health policy and related programs. Reflecting this, the courts have deemed health to be an "amorphous topic," where one level of government (or possibly both) may act, depending on the purpose and effect of the particular health measure involved.(27) Both levels of government thus have come to be active in this field, using the various jurisdictional bases given them by the Constitution Act, 1867 and subsequent interpretation. Provincial jurisdiction over property and civil rights (as interpreted by the courts) has become a major source of provincial regulatory authority within the health field. It provides a basis for regulating: (a) the manufacture and sale of food and drugs; (b) occupational health and safety (through labour relations and standards) in most sectors of the economy; (c) the licensing of physicians, nurses and other health professionals and (d) medical and hospital insurance plans.(28) The provinces are the major players with respect to the provision of facilities and services. In addition to clear jurisdiction over hospitals and asylums, the provinces have been given extensive authority over public health on the grounds that it falls within the class of local or private matters made provincial responsibilities by the constitution. The provinces also administer provincial medical insurance plans, reflecting their regulatory authority. The federal government’s jurisdiction over the criminal law authorizes it to proscribe and punish conduct that is dangerous to health, notably with respect to food and drugs. In addition to the responsibility for marine hospitals and quarantine conferred in 1867, the federal government has come to provide health services for Indian and Inuit people (as a result of its general jurisdiction concerning these groups). Certain services are also provided to residents of the Yukon, federal government employees, immigrants and civil aviation personnel. The federal government regulates food and drugs, inspects medical devices, administers health care insurance, and provides general health information services. As well, it can address issues of occupational health and safety in federally regulated economic sectors, through jurisdiction over labour relations and standards.(29) The federal spending power has been used to considerable effect in the health care sector, as has been seen in Part I of this paper. In addition to its use in launching hospital insurance and Medicare at the national level, the spending power is also the basis for diverse other federal activities in the health care sector, including the funding of medical research.(30) The income support category is not mentioned in the Constitution, but the term has come to be employed by social policy analysts in recognition of the shared practical effect of a range of constitutionally distinct programs, all of which provide financial support based on an assumption of need. Two major types of such programs are: welfare-type non-contributory programs, whose eligibility tests focus on demonstrated need or membership in a designated group assumed likely to be in need, and insurance-type contributory programs which provide assistance to individuals who have contributed to them from previous income. The capacity of provincial governments to make welfare payments to individuals has never been questioned. It is founded on the constitutional jurisdiction over "charities and eleemosynary institutions," supported by jurisdiction over "municipal institutions," "property and civil rights," and "matters of a merely local or private nature in the province."(31) The federal government has no specific jurisdiction relating to social assistance payments or services, but the general "peace, order and good government" power has been accepted by the courts as a basis for some assistance programs, notably the Family Allowance, which was upheld on this ground in 1957.(32) Given that this power applies only outside the provincial jurisdiction, its utility as a basis for broad federal activity in this area is questionable, however. The federal spending power has proven to be the central basis for federal involvement in this field. It has been invoked by the federal government as a basis for payments to individuals, payments to institutions, such as grants for the purpose of funding administrative improvements, experimentation and welfare research; conditional grants to provinces; and unconditional transfers such as the CHST and equalization payments.(33) The 1867 Constitution was interpreted by the Judicial Committee of the Privy Council as giving jurisdiction over social insurance-type programs to the provinces, as a species of insurance. After federal legislation that would have established a national social insurance program in response to the depression had been struck down by the courts in 1937, the federal government and the provinces agreed to a constitutional amendment giving the federal government exclusive jurisdiction over unemployment insurance. When attention turned to contributory pensions in the fifties and sixties, the 1937 court decision prevented the federal government from establishing any pension program directly linked to the taxes or contributions used to finance it. In 1951, with provincial agreement, the Constitution was amended to enable the federal government to operate old age pensions; in 1964, an additional amendment expanded this jurisdiction to include supplementary benefits such as survivors’ and disability benefits. Federal jurisdiction over pensions and supplementary benefits did not confine the existing provincial jurisdiction, which was made paramount in the event of a conflict between federal and provincial laws. The provinces retain general jurisdiction over contributory programs outside unemployment insurance; workers’ compensation programs thus remain an exclusive provincial responsibility. As well, paramountcy within the pension jurisdiction enabled the provinces to press the federal government for explicit guarantees when the Canada Pension Plan Act was being drafted. Accordingly, this provides: (1) that any changes to the plan must be approved by two-thirds of the provincial governments representing at least two-thirds of the population, and (2) that any province may opt out with compensation and establish its own plan. Thus far, the government of Quebec has been the only province to do this.(34) The federal spending power is of limited importance within the social insurance sector because federal jurisdiction enables the federal government to establish federal programs, and because of the nature of these programs as funded by contributions. PART III: INTERGOVERNMENTAL PROCESSES The powers just outlined can be used by the federal government in some areas to deliver social programs directly. In the provincial jurisdiction, the powers provide the basic tools with which the federal government can attempt to influence provincial programs and standards. This section provides a status report on major types of federal influence upon provincial governments. It is organized in two parts, to reflect the reality that intergovernmental relations are in virtually continuous evolution, and that at any given moment in the history of the federation some types of influence have been in stasis or decline, while others have been gaining importance. The distance traversed since 1867 may be suggested by the fate of what originally appear to have been envisioned as two key sources of the federal government’s capacity to manage the federation. The power of disallowance given to the federal government in 1867 allowed it unilaterally to disallow any provincial law within one year of its passage; the related power of reservation allowed the Lieutenant Governor of a province to reserve a bill for the "pleasure of the Governor General in Council" and provided that a reserved bill would have no effect unless approved at the federal level. As the provinces have emerged as a distinct level of government, however, this high level of federal influence has become less and less acceptable politically, even though the powers remain in the Constitution. The power of disallowance has not been used at all since the 1940s, and not extensively since the turn of the century, while the power of reservation has likewise fallen into disuse. Attempts to use these powers today would undoubtedly provoke enormous political controversy and could also be open to judicial rejection as violating a constitutional convention. In short, the evolving system has left them aside. 1. Taxation: National Standards through the Back Door The power to tax is dealt with in general terms in the Constitution Act, 1867. The federal government is given unrestricted powers to tax, while the provincial governments are awarded the power of direct taxation within the province (i.e., taxes demanded from the persons intended to pay them, rather than indirect taxes, which can be passed on to customers) and powers of licensing. In the years since 1867, the taxation system has come to perform a number of critical functions additional to that of revenue-raising. It is a major means of economic management, and also "an important vehicle for delivering social benefits to Canadians."(35) An example is the child tax benefit, which (as a refundable credit) has the effect of "topping up" the incomes of poor families on welfare, those on unemployment insurance, and those relying on low wage jobs.(36) Refundable tax credits are paid directly in the form of a cheque rather than in the form of reduced taxes and thus benefit those earning little or no taxable income. They provide a major potential means for federal income support, up to and including a national guaranteed income. Federal tax credits can contribute directly to the meeting of national standards for income support, and can also contribute indirectly by altering the provincial tax base and triggering involuntary provincial tax benefits. In addition, the tax credit mechanism has potential uses as a means of maintaining standards widely outside the area of income support. For example, it could provide a 100% refund for money spent on user fees or other medical charges, and thus (in theory, at least) maintain standards of accessibility without the punitive reduction of transfers upon which the Canada Health Act relies. Limits: The use of the tax system to ensure adherence to national standards is, however, limited in four important ways:
2. The Federal Spending Power: National Standards C.O.D. The Constitution does not explicitly define a "spending power," either of the federal government or the provinces. Both levels of government have therefore felt free to spend revenues outside their areas of substantive jurisdiction. In the case of the federal government, a spending power can be inferred from the powers granted to levy taxes (implying the raising of revenue), to legislate in relation to public property, and to appropriate federal funds.(38) The array of federal-provincial cost-shared programs created during the post-war period, implies an extremely wide potential scope for the federal spending power. It is noteworthy that the Supreme Court, in a 1991 case in which the government of British Columbia attempted to have the unilateral federal cap on CAP transfers declared unconstitutional, specifically affirmed the federal Parliament’s right to authorize grants to the provinces for use within their fields of jurisdiction, and to impose conditions on the recipient provinces.(39) This interpretation reflects precedent. The Hon. Monique Begin’s account of the development of the Canada Health Act, for example, stresses the painstaking attention given to the drafting of legislation so that it could not be construed as an intrusion on the provincial jurisdiction, but would apply solely to the use of the federal spending power.(40) The central advantage of the spending power is precisely that the absence of constitutional definition enables an extremely wide application. Reflecting this, the spending power has provided the constitutional basis not only for a multitude of federal-provincial transfers over the years, but also for grants and loans to private firms or individuals, the tax expenditure provisions of the Income Tax Act, and the commercial activities of the federal government. Limits: While use of the spending power does not appear to be seriously constrained by the Constitution, it remains subject to important fiscal and political limits.
3. Shared or Divided Policy Fields: National Standards by Gamesmanship Shared, contested or overlapping policy fields create a subset of potential intergovernmental activity involving the capacity of both levels of government to regulate and/or provide services within a policy field. Thus, each level of government has a range of possible opportunities to influence the other level, depending on their respective jurisdictions, activities involved, existing intergovernmental arrangements, and prevailing political imperatives. The development of the Canada and Quebec pension plans illustrates some of the dynamics that can apply within a shared policy field. Old age pensions are a concurrent jurisdiction with provincial paramountcy, which enabled Quebec to opt out of the Canada Pension Plan (CPP) at its inception. Mobility and equity considerations created a strong incentive, however, for the harmonization of the national and Quebec plans. The government of Quebec outlined a pension regime at a 1963 federal-provincial conference that offered broader coverage, higher benefit levels, and stronger redistributive impacts than the scheme being proposed by Ottawa. This created pressure on the federal government to enhance its own proposals, in order to reassert policy leadership and demonstrate that the federal system could deliver pensions as attractive as the one proposed by Quebec. The resulting CPP/QPP arrangement in effect embodied standards reflecting the Quebec model.(42) Limits: Four general limitations apply to federal action within shared policy fields as a means of influencing standards:
4. Charter Rights and Affirmations:
National Standards through Since 1982 (1985 for equality rights), the Canadian Charter of Rights and Freedoms has emerged as a powerful national standards mechanism. As interpreted by the courts, its provisions concerning mobility rights, minority language education rights, and equality rights, among others, create a series of national standards with which Canadians can demand that both federal and provincial governments comply. The Charter also affirms certain standards applying to intergovernmental relations. Although questions remain as to its enforceability, section 36 affirms the commitment of both federal and provincial governments to broad principles of equalization: promotion of equal opportunities, reduction of regional disparities, and provision of essential public services of reasonable quality to all Canadians. Had they been successful, subsequent efforts at constitutional reform would have extended the role of constitutionalized national standards. The 1992 Charlottetown Agreement, for example, proposed the entrenchment of a statement of principles of the Canadian social and economic union, to be monitored by an intergovernmentally established mechanism. Discussion leading up to this proposal had given rise to a number of more wide-ranging "social charter" or "social covenant" ideas, which proposed constitutional entrenchment of a variety of positive social and economic rights, including a right to adequate housing, food and other basic necessities, medical care, education, and an improved environment. The reappearance of proposals along these lines may be anticipated in future constitutional rounds.(44) In general, the constitutionalizing of national standards provides a powerful means of securing those standards that can be made justiciable.(45) Non-justiciable charters or covenants are not subject to enforcement through the courts, although they may be an element of the constitutional context that the courts could consider in reaching decisions. As the frequency of references to section 36 of the Charter in debates about equalization may suggest, constitutionalized commitments can become a reference point for public debate, and for assessing the performance of governments.(46) Limits: While constitutional charters and related instruments can be powerful protectors of national standards, they have a number of inherent limitations as mechanisms enabling federal influence:
5. Intergovernmental Agreements: National
Standards through As has been seen, the creation of the modern social safety net involved a range of formal intergovernmental agreements, several of which set out detailed national standards applying to the programs they created. As the federal government’s ability to exercise dominant influence over such negotiations by wielding the spending power and other traditional federal strengths has waned, however, the nature of these negotiations has altered. It is thus useful to discuss the intergovernmental agreement process separately from the types of influence applying within it, as a mechanism through which the federal government might influence provinces. Intergovernmental agreements exist across an extensive range of policy fields, testifying to the capacity of the federal and provincial governments to collaborate in the discharge of joint responsibilities.(47) At the same time, most general assessments of trends in intergovernmental relations conclude that the potential for stalemate has increased since the fifties, reflecting the absence of decisive leverage on either side of the federal-provincial negotiating table.(48) An important test of the present capacity of the process to deliver national standards in the social policy sector is currently underway. As this is written, discussions announced with the 1996 budget are continuing between the federal government and the provinces in order to jointly develop "values, principles and objectives" which can govern the CHST and, more generally, the diverse programs and practices that define the social union.(49) A Federal-Provincial-Territorial Council on Social Policy Renewal was created in 1996 to coordinate provincial/territorial participation in these discussions and, at the Annual Premiers’ Conference in August of 1997, was mandated to work with the federal government to develop a framework agreement addressing cross-sectoral issues such as the development of common principles.(50) Provincial pressure for joint approaches to the definition and enforcement of standards in specific sectors, such as health, has not met with unqualified federal enthusiasm, however. At a meeting of federal, provincial and territorial health ministers on 11-12 September 1997, federal Health Minister Allan Rock maintained the position that interpretation and enforcement of the Canada Health Act are federal responsibilities. It thus remains to be seen whether substantive social program standards can be achieved through the intergovernmental agreement process. Limits: Leaving aside limitations connected to the federal government’s diminished fiscal and related clout within the process, the intergovernmental agreement process remains subject to several inherent limitations as a means of federal influence:
B. Alternatives to Unilateralism: The Orchestration of Standards The traditional ways in which the federal government has exerted influence on behalf of national standards for matters within the provincial jurisdiction appear, for a variety of reasons, to be of diminishing effectiveness in the contemporary environment. First, use of the spending power, tax system, and direct federal action within shared policy fields all require federal expenditures. In the short term at least, this puts them in conflict with the severe fiscal restraints required to attain deficit reduction objectives. Secondly, they involve a degree of federal unilateralism. This has always been a source of federal-provincial difficulties, even during what has since come (somewhat erroneously) to be seen as the golden age of federal-provincial cooperation in the 1950s. More recently, political resistance to federal unilateralism has increased in response to diminishing federal transfers. It is predictable that the combination of the long-standing political and more recent fiscally driven sensitivities will continue to result in provincial resistance to anything perceived as federal unilateralism. Several available modes of federal influence minimize concerns about spending and intrusion but imply that the federal role of directly establishing and enforcing national standards will be replaced by a role as the orchestrator of processes of consensus-building that generate national standards. By definition, these standards rely less on control-compliance relationships between the federal government and individuals or other governments, and more on democratic processes for which articulated standards provide significant reference points. Some possibilities: 1. National Standards by Public Demand: The Power of Persuasion The federal level of government possesses a substantial political and communications presence across Canada, irrespective of the popularity of individual governments. A popular Prime Minister and cabinet are uniquely able to influence public expectations and the political demand for standards. Modern communications technologies enhance this capacity, which also reflects relatively high levels of media attention resulting from the "marketability" of nationally known political figures. The capacity of national leaders in Canada to appeal directly to the people "over the heads" of provincial governments and politicians is illustrated by the constitutional negotiations of the early eighties. The federal government deliberately highlighted its Charter proposals within what was presented as a people’s package, while portraying the provincial government package as reflecting parochial ambitions and a self-interested obsession with expanded powers. While the precise impact of this strategy remains open to conjecture, and provincial agreement to a Charter was obtained partly through federal concessions in the course of negotiations, it remains true that a Charter of Rights and Freedoms was ultimately accepted by most provincial leaders, despite long-standing provincial resistance to such proposals.(51) Furthermore, the emergence of new policy fields in which both the federal and provincial governments share responsibilities, as outlined in Part II of this paper, has typically been accompanied by the emergence of new groups of stakeholders who deal on a continuing basis with both levels of government. Where the federal government can successfully recruit support for values, objectives or national standards within such groups, provincial governments may come to adhere to these standards simply as a result of provincial consultative and democratic processes. Limits: As a means of influencing the standards governing provincial social programs, direct appeals to the people have two inherent limitations:
2. National Standards and the "Information Age" Commentaries on the combination of technological and social changes (often lumped together in phrases such as "the information revolution") widely recognize its immense potential impact on government. Indeed, the existence of increasingly educated and politically sophisticated publics, the dispersion of information traditionally viewed as the preserve of "experts," and growing public disenchantment with governments are central sources of the "reinventing government" initiatives that have recently arisen in many western countries.(52) In Canada, consequences of these trends have been strikingly visible in constitutional politics since the mid-eighties. The failure of the Meech Lake Accord is widely recognized as signifying that constitutional reform can no longer rely upon negotiations conducted behind closed doors under conditions of relative public indifference. While it has been argued that the Charter has had a special role in fostering the development of constitutional involvement outside traditional intergovernmental circles, it is likely that participatory pressures and populist suspicions similar to those that arose during the Meech Lake process would have arisen even in the absence of the Charter. Outside the constitutional process, as government devolves responsibilities upon individuals and attempts to become more responsive in discharging its remaining roles, public information will become increasingly important as the base upon which publics judge institutions and formulate and apply standards. If the federal government desires enhanced performance standards in areas such as education or manpower training (assuming the success of current devolutionary initiatives), the provision of high quality performance information which permits voters in the provinces to compare local performance with others may prove to be a potent means of fostering such standards.(53) Centrally, a federal role in supplying (or ensuring the supply of) such high quality performance information would support democratic processes of public accountability and responsiveness with respect to provincial programs. Indirectly, it could foster adherence to national standards, seen more as prevailing norms rather than as standards imposed unilaterally by the federal government or arrived at through intergovernmental bargaining. Limits: While potentially very broad in scope, the use of information to inspire adherence to standards is subject to substantial uncertainties in any given policy field. In particular:
3. National Standards by Interprovincial Consensus The annual Premiers’ Conference provides a mechanism for enabling provincial leaders to work towards consensus on common issues, including standards for matters within the provincial jurisdiction. Recent years have seen a number of proposals which argue for a degree of federal withdrawal from standard-setting in such matters and for the capacity of provincial governments to jointly establish standards on their own. For example, the 23 August 1996 Premiers’ Conference considered a paper jointly sponsored by Ontario and Alberta which proposed broad reforms along these lines. This proposal was not accepted, as result of opposition from many of the smaller provinces; however, it remains a good illustration of the larger provinces’ perspectives on standard-setting within their jurisdiction. The paper advocated the substantial disentanglement of the two levels of government and (among other changes) the concentration of full responsibility for the design and delivery of health care, welfare and education in the hands of provincial governments.(54) This proposal would have eliminated federal-provincial cash transfers for social programs, and shifted tax points to the provinces to enable them to finance such programs autonomously. Pan-Canadian aspects of social program responsibilities would not have been addressed through federal leadership or influence, but by the provinces through an interprovincial accord that would have guaranteed portability and mobility and established principles and standards. It is recognized that the viability of such a proposal would hinge on the capacity of the provinces to actually deliver such an accord, and abide by its terms. By definition, the central objective underlying this interprovincial consensus approach is not to provide a mechanism for federal influence, but to replace that influence. The history of federal arrangements suggests, however, that unintended consequences are likely to accompany any such major change. One possible unintended consequence might be to release the federal government from the constraints of federal-provincial bargaining and enable it to develop and publicly advocate positions based solely on national interest considerations. While this is not a form of influence per se, it could enhance the credibility and impact of the political appeals discussed above. Limits: The use of interprovincial accords and agreements has, in theory, unlimited scope within the provincial jurisdiction. Any federal influence achievable within, or through, an interprovincial consensus process would, however, be subject to some practical limits applying to that process:
PART IV: TWO PRACTICAL CONSIDERATIONS The above review of traditional modes of federal influence provides a clear basis for perceptions of diminished federal influence over social programs within the provincial jurisdiction. Equally, however, it suggests that diminished influence should not be equated with negligible influence. The two key determinants of whether, and how effectively, potential federal influence will actually be exercised are (1) political will and (2) the availability of federal money. These warrant separate discussion. In a democratic system, the existence of political will within governments cannot be seen as an independent variable, expressing solely the intentions of politicians. Rather, it results from a complex interplay of factors, including the motives and policy commitments of individual politicians; the perceived political risks, costs and benefits of action; public demand for substantive policy; and the practical capacity of governments to act. This capacity reflects, in turn, factors such as the presence of the required fiscal, jurisdictional and other resources and the degree of legitimacy that citizens accord to particular governments and politicians. Several of these factors have a special significance for federal action on social program standards. 1. Intergovernmental Pressures Prevailing federal-provincial dynamics are of central importance in determining the outcome of issues relating to national standards for social programs. It is not difficult to predict the continuation of pressures on the federal government to reduce its influence in this sphere, both within areas of provincial jurisdiction and within areas where both levels of government are able to act. These pressures have been virtually continuous since the inception of the federation, beginning with the early province-building efforts of Ontario.(56) In recent years, they have been propelled centrally by the emergence of modern Quebec nationalism, growing assertiveness among the Western provinces and, since the recession of the early 1990s, Ontario’s fiscally driven resentments. An indication of the current direction of these pressures is provided by a December 1995 report that was endorsed by the Premiers of all provinces except Quebec as a basis for discussions on renewing the federation, and forwarded to the Prime Minister for response at the 1996 First Ministers’ Conference.(57) The report calls for, among other things:
At their August 1997 Annual Meeting, premiers reviewed and approved a progress report on the themes set out a year earlier, as well as a paper providing more detailed options for the management of the social union.(58) The decision to seek a broad framework agreement with the federal government to deal with cross-sectoral issues such as common principles, use of the federal spending power, and new dispute resolution mechanisms, indicates the directions that provincial governments may be expected to pursue in the near term. Public opinion is another key factor in the formation of political will. In the context of federalism, it provides a major potential counterbalance to intergovernmental pressures and can become an important operative factor where such pressures are based only on bureaucratic or political self-aggrandizement. For example, advocacy of a substantial devolution of powers by Alberta Premier Donald Getty in the early stages of the Charlottetown process faded rapidly in the face of opinion poll results which indicated little support among Alberta voters for a major transfer of powers. Recent opinion polls suggest that Canadians are increasingly ambivalent about the appropriate role of the federal government in maintaining national standards in Medicare and other social programs. One the one hand, there is clear support for the programs (at least for those providing direct benefits widely to the public). Reflecting this, a Globe and Mail/Environics poll conducted 18 December 1996 to 15 January 1997 found that, in a sample of 2,000:
As well, the annual year-end poll conducted for Maclean’s Magazine and the CBC found that, of those interviewed:
On the other hand, the universal health care and relatively generous social safety net traditionally viewed as "sacred trusts" appear, according to the same poll, to be viewed with growing scepticism. While health care and other social services continue to be among the half dozen priority issues identified by Canadians, of those interviewed:
There is evidence, as well, of public resistance to punitive actions taken by the federal government against provinces that violate federally proclaimed standards. An Insight Canada Research poll, taken in November 1995 (shortly after the application of federal penalties to several provinces over facility fees) found that, of those interviewed:
For more detailed information on the polls summarized above, along with 1995 poll results contrasting with some of their findings, see Appendix II. In conclusion, at least two important elements of the political will "equation" reduce the likelihood that the federal government can develop and sustain the will for aggressive use of the various strategies available to it for influencing social programs within the provincial jurisdiction. A second general factor that determines the practical scope of federal influence is the availability of federal funds. As noted above, the current fiscal constraints on the federal government severely limit the availability of new money for new programs (and new or newly emphasized national standards). Furthermore, it must be recognized that recent progress with deficit-reduction has been significantly aided by low interest rates. When the business cycle inevitably brings higher rates, the size of the national debt ensures that interest costs will pose a major challenge to governments. Thus, although new money may be available intermittently and for a limited number of carefully selected initiatives, federal-provincial transfers will be subject to global restraint patterns for the foreseeable future. A full exploration of the probable impact of scarce money on the federal government’s ability to use its potential influence would necessarily be complex, since the impact will be greater on some modes of influence (e.g., the spending power) than on others (e.g., populist appeals). It can be concluded, however, that it will remain necessary to be extremely selective in using the types of influence that depend directly upon spending (notably the spending power itself), and that types of influence which do not tie national standards directly to the federal capacity to fund them (e.g., the alternative options discussed in Part III, B) will have a major advantage under foreseeable conditions. Many of the concerns raised about recent trends in the area of national standards have tended to focus narrowly on the federal spending power. Even within this narrower focus, however, the relation between declining federal transfers and national standards is complicated. There are at least three possible relations:
It is important to recognize the differences among these arguments, which are sometimes combined by critics seemingly intent only on compiling as many criticisms of transfer cuts as possible. Arguments (1) and (2) make contrary and incompatible assumptions about the intentions of provincial governments. If, for example, provinces are said to be forced to depart from federal standards as a result of transfer reductions, federal penalties are unlikely to solve the problem (indeed, logically, more severe penalties will exacerbate the problem). Argument (3) raises a possibility that is also implicit in argument (2): that the impact of transfer reductions has to be understood primarily in political terms, rather than narrowly fiscal terms. The key determinant of the impact of a reduction would thus be how it is perceived by provincial politicians and the public, rather than its direct impact on the fiscal capacity of a province. 1. The Provincial Capacity Argument The first argument - that cuts to federal transfers have eroded the capacity of provinces to adhere to national standards - depends on matters lying well beyond the scope of this paper. These include a province’s potential for improved program efficiency (enabling its absorption of transfer cuts) and the need for global assessments of provincial programs in order to explore the possibility of reallocations from elsewhere in a provincial budget. It remains noteworthy that claims focusing on provincial capacities require supporting arguments of this sort if they are to be convincing. It is also noteworthy that this argument has not been extensively made by the people with the most to gain by making it: provincial premiers. For example, premiers who argued at the 20-21 June 1996 First Ministers’ Conference that declining federal contributions should be reflected in a declining federal role in standard-setting did not claim that provinces had become incapable of adhering to National Health Act standards, but rather that the federal government had ceased to have a legitimate claim to a role as the unilateral guardian of standards.(62) This may suggest that the capacity of provinces to adhere to national standards has not yet disappeared (although this remains a future possibility). 2. The Effectiveness of Penalties The second argument expresses concerns that date back at least to the early nineties. At that time, the National Council of Welfare, among others, calculated that the various de-indexations and freezes applied to the EPF transfer since the eighties would in the near future reduce the transfer to a level that would be fully covered by the value of its tax point component (as early as 1996-7 in the case of Quebec).(63) At this point, it was feared, the absence of a cash component to the transfer would disable the federal government from applying (or threatening) fiscal penalties in order to dissuade provinces from violating federally established standards. In particular, the Canada Health Act standards would be undermined, because they rely on provisions authorizing Ottawa to reduce the cash component of the EPF (or, now, the CHST) on a dollar-for-dollar basis for any province permitting unauthorized charges to patients. The 1995 budget, which announced the CHST, prompted a renewal of these concerns. Thus, for example, a Caledon Institute of Social Policy publication developed projections indicating that cash transfers under the CHST (i.e., all federal cash payments for both the programs previously covered by EPF and social assistance programs) would disappear between the years 2006 and 2011 in most provinces and in others (e.g., Quebec) as early as 2004. Their conclusion was blunt:
The long-term CHST funding commitments announced in the 1996 federal budget would appear to address such concerns. Still of interest, however, is the question of how large the cash component of the transfer needs to be in order to preserve its potential effectiveness in penalizing provinces. Is the 1997-98 cash floor of $12.5 billion, which will apply between now and the year 2000 when the cash component is projected to begin to increase, enough?(65) By province, the 1997-98 allocation is as follows (in millions of dollars):(66)
The recent conflict between the federal government and Alberta over facility fees may be taken as an illustrative case. Following a lengthy dispute with Alberta over the practice of permitting "facility fees" (i.e., user fees claimed to cover operating costs of a facility, rather than service costs), the federal Minister of Health announced that Alberta’s failure to replace the arrangement with either full public funding, or full private funding and exclusion from public support would be penalized. Starting in November 1995, a $422,000 per month penalty was levied against federal EPF transfers to Alberta; this amount matched provincial receipts from the facility fee on a dollar-for-dollar basis. The penalty levied against Alberta between November 1995 and June 1996 is equivalent to an annual penalty of $5,064,000, or only about 0.52 % of the 1997-98 CHST transfer to Alberta. In other words, even as the federal capacity to penalize reaches its low point, it would still enable the federal government to impose a penalty 200 times greater than that actually levied against Alberta. This suggests that the federal capacity to penalize is not undermined by CHST funding levels. The 1 July 1996 retreat of the Alberta government on the issue of facility fees would support this optimism. Under an agreement with the federal government announced in May, the provincial government assumed interim responsibility for paying the facility fees charged by private clinics, while regional health authorities were to negotiate longer-term contracts with the clinics. In other words, Alberta complied (if belatedly) with federal requirements. While the case of Alberta dominated the news media, three other provinces were also subjected to penalties over facility fees in November 1995:
These three provinces have not altered facility fee practices in response to federal sanctions, despite having sustained cumulative penalties (as of September 1997) of at least $1,150,000 (Manitoba), $180,000 (Newfoundland), and $130,000 (Nova Scotia).(67) The persistence of facility fee practices in three provinces would appear to refute any general conclusions suggested by the Alberta case. Furthermore, it calls into question the assumption that the fiscal impact of the penalties is the key to explaining their consequences, since the dollar-for-dollar basis for calculating the fees (and thus their net impact) is the same in all cases. The most obvious distinguishing feature of the Alberta case is that the dollar figures involved were higher, and that they prompted substantially greater media and public attention. This suggests that governments are less influenced through the direct fiscal impact of penalties than through the "political loop," centering on public dissatisfaction over what are perceived to be forgone provincial revenues and local benefits. 3. The "Political Loop" - A Concluding Note The case of the British Columbia welfare residency requirement appears to support conclusions suggested by the impact of facility fee penalties. In early November 1995, British Columbia announced a three-month residency requirement for social assistance recipients, to take effect on 1 December 1995; the federal government responded to this violation of Canada Assistance Plan standards (subsequently incorporated in the CHST) by withholding the $47-million final payment due to British Columbia under the CAP for 1995. This penalty considerably exceeded the $25 million the B.C. government had estimated its measure would save annually. The residency requirement was not withdrawn until 6 March 1997, however. The federal government obtained British Columbia’s agreement to withdraw residency requirements by undertaking to bring the original penalty into line with the dollar-for-dollar penalties applied to other provinces; this meant reducing the penalty to just over $20 million (reflecting actual savings to the province achieved by the residency requirements). As well, it was agreed that a national multilateral process for considering issues of internal mobility would be established, with a two-year timeframe. It may also be noteworthy that the agreement about residency requirements coincided with a second agreement beneficial to the province, whereby federal funding for the settlement of immigrants would be increased by $67.2 million over three years.(68) The fact that the residency requirement persisted for well over a year after the application of federal penalties may have reflected the political appeal of the requirement within British Columbia (the government portrayed its stance as a valiant attempt to maintain assistance levels, despite inflows of recipients from provinces that had recently lowered benefits, and despite the federal 5% cap on CAP transfer growth applying to B.C.). Also reflected may have been other circumstances, such as the apparent absence of a clear federal intention to continue penalization. In any event, it is significant that the requirement was not cancelled as a result of heightened federal penalties, but rather by more positive inducements. More broadly, provincial premiers’ comments on the transfer fee reductions of recent years provide considerable evidence of the salience of political considerations in determining provincial reactions. As noted above, at the 20-21 June 1996 meeting of First Ministers, several premiers supported a proposal that federal and provincial governments jointly participate in interpreting and applying the Canada Health Act on the grounds that the federal government’s influence should decline to reflect the recent decline in its fiscal contribution. Provincial positions were not dictated by fiscal determinism. The impact of federal fiscal withdrawal (and perhaps, in some cases, of fiscal penalties) was primarily on the willingness of provincial leaders to accept continuing federal influence. PART V: GENERAL OBSERVATIONS AND CONCLUSIONS Considered together, the historical, constitutional and intergovernmental perspectives developed in this paper suggest six general observations, and one fundamental conclusion:
The fundamental conclusion of this paper is that the scope for federal influence over provincial social programs and standards is clearly more restricted than it was during the immediate post-war period. It is equally clear that the causes of this change go far beyond the reductions to transfer payments that have been taking place since the seventies. It follows that efforts to increase federal influence, should this be desired, will need to take account of the evolving character of the federal system rather than attempting to recover a world that was already in the process of disappearing 30 years ago. Abele, Frances, ed. How Ottawa Spends. Carleton University Press, Ottawa, 1992. Bakan, Joel and David Schneiderman, eds. Social Justice and the Constitution - Perspectives on a Social Union for Canada. Carleton University Press, Ottawa, Canada, 1992. Banting, Keith G. The Welfare State and Canadian Federalism. Second Edition. McGill-Queen’s University Press, Kingston and Montreal, 1987. Banting, Keith and Ken Battle, eds. A New Social Vision for Canada?. School of Policy Studies, Queen’s University, Kingston, and Caledon Institute of Policy Studies, Ottawa, 1994. Banting, Keith, Douglas M. Brown and Thomas J. Courchene, eds. The Future of Fiscal Federalism. School of Policy Studies, Queen’s University, Kingston, 1994. Battle, Ken and Sherri Torjman. "Federal Social Programs: Setting the Record Straight." Caledon Institute of Social Policy, Ottawa, Spring 1993. Battle, Ken and Sherri Torjman. "How Finance Re-Formed Social Policy." Caledon Institute of Social Policy, Ottawa, April 1995. Cairns, Alan C. Reconfigurations: Canadian Citizenship and Constitutional Change. Douglas E. Williams, ed. McClelland and Stewart Inc., Toronto, 1995. Canada, Government. "Renewing the Canadian Federation: A Progress Report." Background Document for the First Ministers’ Meeting of 20-21 June 1996. Ottawa, 1996. Canada. "Improving Social Security in Canada. Federal Support to Post-Secondary Education: A Supplementary Paper." Minister of Human Resources Development, 1994. Canada, Parliament, Parliamentary Task Force on Federal-Provincial Fiscal Arrangements. "Fiscal Federalism in Canada." Final Report. Minister of Supply and Services Canada, 1981. Canada, Privy Council Office, Federal-Provincial Relations Division. A Descriptive Inventory of Federal-Provincial Programs and Activities as of September 30, 1973. Ottawa, 1974. Canada, Privy Council Office. Federal-Provincial Programs and Activities - A Descriptive Inventory, 1993-1994 and 1994-1995. Minister of Public Works and Government Services, Ottawa, 1995. Carter, George E. Canadian Conditional Grants Since World War II. Canadian Tax Papers, No. 54. Canadian Tax Foundation, Toronto, November 1971. Courchene, Thomas J. Access - A Convention on the Canadian Economic and Social Systems. Working Paper Prepared for the Minister of Intergovernmental Affairs. Government of Ontario, August 1996. Courchene, Thomas J. Social Canada in the Millennium - Reform Imperatives and Restructuring Principles. C.D. Howe Institute, Toronto, 1994. Courchene, Thomas J., David W. Conklin and Gail C.A. Cook, eds. Ottawa and the Provinces: The Distribution of Money and Power. Ontario Economic Council, Toronto, 1985. Drache, Daniel and Andrew Ranachan, eds. Warm Heart, Cold Country - Fiscal and Social Policy Reform in Canada. Caledon Institute of Social Policy, Ottawa, and Robarts Centre for Canadian Studies, York University, North York, 1995. Economic Council of Canada. Financing Confederation - Today and Tomorrow. Canadian Government Publishing Centre, 1982. Grady, Patrick, Robert Howse and Judith Maxwell. Redefining Social Security. Government Competitiveness Project. School of Policy Studies, Queen’s University, Kingston, 1995. Hogg, Peter W. Constitutional Law of Canada. Third Edition. Carswell, Scarborough, Ontario, 1992. Hum, Derek. Federalism and the Poor: A Review of the Canada Assistance Plan. Ontario Economic Council, Toronto, 1983. Ismael, Jacqueline S., ed. Canadian Social Welfare Policy - Federal and Provincial Dimensions. Institute of Public Administration of Canada, McGill-Queen’s University Press, Kingston and Montreal, 1985. Knop, Karen, Sylvia Ostry, Richard Simeon and Katherine Swinton, eds. Rethinking Federalism: Citizens, Markets, and Governments in a Changing World. UBC Press, Vancouver, 1995. Leslie, Peter M., Kenneth Norrie and Irene K. Ip. A Partnership in Trouble - Renegotiating Fiscal Federalism. Policy Study 18. C.D. Howe Institute, Toronto, 1993. Meekison, J.P., ed. Canadian Federalism: Myth or Reality. Third Edition. Methuen, Toronto, 1977. Ministerial Council on Social Policy Reform and Renewal. Report to Premiers. December 1995. Olling, R.D. and M.W. Westmacott, eds. Perspectives on Canadian Federalism. Prentice-Hall Canada Inc., Scarborough, 1988. Provincial-Territorial Council on Social Policy Renewal. Progress Report to Premiers. July 1997. Provincial-Territorial Council on Social Policy Renewal. New Approaches to Canada’s Social Union – An Options Paper. 29 April 1997. Quebec Liberal Party, Committee on the Evolution of Canadian Federalism. Quebec’s Identity and Canadian Federalism - Recognition and Interdependence. December 1996. Rocher, François and Miriam Smith, eds. New Trends in Canadian Federalism. Broadview Press, Toronto, 1995. Simeon, Richard, Research Coordinator. Division of Powers and Public Policy. Vol. 61 of the Studies Prepared for the Royal Commission on the Economic Union and Development Prospects for Canada. University of Toronto Press, Toronto, 1985. Simeon, Richard, Research Coordinator. Intergovernmental Relations. Vol. 63 of the Studies Prepared for the Royal Commission on the Economic Union and Development Prospects for Canada. University of Toronto Press, Toronto, 1985. Stevenson, Garth. Ex Uno Plures - Federal-Provincial Relations in Canada, 1867-1896. McGill-Queen’s University Press, Montreal and Kingston, 1993. Taylor, Malcolm G. Health Insurance and Canadian Public Policy. Institute of Public Administration of Canada. McGill-Queen’s University Press, Kingston and Montreal, 1987. Torjman, Sherri and Ken Battle. "Can We Have National Standards?" Caledon Institute of Social Policy, Ottawa, May 1995. APPENDIX I: Responding to the combined impact of fiscal, intergovernmental and other pressures, the federal government has, since at least the mid-seventies, been engaged in what has been widely portrayed as a retreat from the social policy role established during the immediate post-war period. Major milestones in this development are:(69)
APPENDIX II: 1. Globe and Mail/Environics poll (taken 18 December 1996 - 15 January 1997) details:
2. Another recent poll supports the Maclean’s CBC poll findings on public attitudes concerning universal access versus a two-tiered health care system. A mid-September 1996 Gallup poll produced the following results:(70)
(1) See Ronald Manzer, Public Policies and Political Development in Canada, University of Toronto Press, Toronto, 1985, p. 56 ff. (2) See Paul Barker, "The Development of the Major Shared-Cost Programs in Canada," in R.D. Olling and M.W. Westmacott, eds., Perspectives on Canadian Federalism, Prentice-Hall Canada Inc., Scarborough, 1988, p. 197 ff. (3) For a discussion of various aspects of the development of provincial governments, see Richard Simeon, "Regionalism and Canadian Political Institutions," in J.P. Meekison, ed., Canadian Federalism: Myth or Reality, Third Edition, Methuen, Toronto, 1977, p. 292 ff. (4) Cited in Canada, Parliament, Fiscal Federalism in Canada, Report of the Parliamentary Task Force on Federal-Provincial Fiscal Arrangements, Minister of Supply and Services, August 1981, p. 30. (5) See Hospital Insurance and Diagnostic Services Act, 1957, c. 28, s. 1., esp. sections 3, 5 and 8, and Canada, Privy Council Office, Federal-Provincial Relations Division, A Descriptive Inventory of Federal-Provincial Programs and Activities as of September 30, 1973, Ottawa, 1974, p. 214-15. See also Malcolm G. Taylor, Health Insurance and Canadian Public Policy, Institute of Public Administration of Canada, McGill-Queen’s University Press, Kingston and Montreal, 1987, p. 239. (6) "Fiscal Federalism in Canada" (1981), p. 53. (7) See Medical Care Act, 1966-67, c. 64, s. 1. (8) See Fiscal Federalism in Canada (1981), p. 59 ff. (9) See, for example, Keith G. Banting, The Welfare State and Canadian Federalism, Second Edition, McGill-Queen’s University Press, Kingston and Montreal, 1987, p. 75, and Derek J. Hum, "Social Security Reform during the 1970s," Chapter 3 of Jacqueline S. Ismael, ed., Canadian Social Welfare Policy - Federal and Provincial Dimensions, Institute of Public Administration of Canada, McGill-Queen’s University Press, Kingston and Montreal, 1985, p. 33 ff. (10) It is noteworthy that this move responded primarily to pressures from Ontario and Quebec; most of the smaller provinces would have preferred a reformed cost-sharing arrangement (Barker (1988), p. 209). (11) Hon. Allan J. MacEachen, Minister of Finance, Submission to the Parliamentary Task Force, cited in Fiscal Federalism in Canada (1981), p. 71. (12) See John F. Graham, "Funding of Universities in Canada," in Thomas J. Courchene, David W. Conklin and Gail C.A. Cook, eds., Ottawa and the Provinces: The Distribution of Money and Power, Vol. 1, Ontario Economic Council, Toronto, 1985, p. 326. (13) Fiscal Federalism in Canada (1981), p. 75-76. (14) See Judith Maxwell, "The Social Role of the State in a Knowledge-Based Economy," in Patrick Grady, Robert Howse, Judith Maxwell, Redefining Social Security, Government Competitiveness Project, School of Policy Studies, Queen’s University, Kingston, 1995, p. 34. (15) Department of Finance Canada, "Canada Health and Social Transfer: Backgrounder," at http://www.fin.gc.ca/fedprove/chse.html, 2 October 1996, p. 1. (16) Sherri Torjman and Ken Battle, "Can We Have National Standards?" Caledon Institute of Social Policy, May 1995, p. 1. (17) Drawn from a table cited in Thomas J. Courchene, "Canada’s Social Policy Deficit: Implications for Fiscal Federalism," Chapter 3 of Keith G. Banting, Douglas M. Brown and Thomas J. Courchene, The Future of Fiscal Federalism, School of Policy Studies, Queen’s University, Kingston, 1994, p. 99. (18) Based on Table in Robin Boadway and Frank Flatters, "Fiscal Federalism: Is the System in Crisis?" Chapter 2 of Banting, Brown and Courchene (1994), p. 41. (19) See, for example, Leslie A. Pal, "Federalism, Social Policy, and the Constitution," Chapter 1 of Ismael (1985), p. 12 ff. (20) See, for example, Martha Fletcher, "Judicial Review and the Division of Powers in Canada," Chapter 7 of Meekison (1977), p. 100 ff. (21) While, in recent years, there has been a widespread tendency to ascribe this tendency to the forces of nationalism in Quebec and decentralist pressures from the Western provinces, it is noteworthy that Ontario played a central role in counterbalancing the federal government at earlier junctures. See Garth Stevenson, Ex Uno Plures - Federal-Provincial Relations in Canada, 1867-1896, McGill-Queen’s University Press, Montreal and Kingston, 1993, p. 48 ff. (22) See Garth Stevenson, "The Division of Powers," in Richard Simeon, Research Coordinator, Division of Powers and Public Policy, Vol. 61 of the studies commissioned by the Royal Commission on the Economic Union and Development Prospects for Canada, University of Toronto Press, Toronto, 1985, p. 92 ff. (23) See Stevenson (1985), p. 75 ff. (24) See Peter W. Hogg, Constitutional Law of Canada, Third Edition, 1992 Carswell, Scarborough, Ontario, 1992, p. 1227 ff. (25) Rodney Haddow, "Federalism and Training Policy in Canada: Institutional Barriers to Economic Adjustment," Chapter 14 of Francois Rocher and Miriam Smith, eds., New Trends in Canadian Federalism, Broadview Press, Toronto, 1995, p. 353 ff. (26) Government of Canada, "Improving Social Security in Canada. Federal Support to Post-Secondary Education: A Supplementary Paper," Minister of Human Resources Development, 1994, p. 15 ff. (27) Hogg (1992), p. 476. (28) Ibid., p. 476 and 149. (29) Nancy Miller Chenier, "Health Policy in Canada," Current Issue Review 93-4, Library of Parliament, Parliamentary Research Branch, p. 2-3, and Hogg (1992), p. 475 ff. (30) Fiscal Federalism in Canada (1981), p. 51 ff. (31) Leslie Pal, "Social Policy and the Constitution," Chapter 1 of Ismael (1985), p. 12. (32) Banting (1987), p. 52. (33) Ibid., p. 53. (34) Ibid., p. 50. (35) Ken Battle and Sherri Torjman, "Federal Social Programs: Setting the Record Straight," Caledon Institute of Social Policy, Ottawa, Spring 1993, p. 5. (36) Negotiations for the harmonization of federal and provincial measures to create an enriched National Child Benefit (incorporating a federal commitment of $600 million in new funds announced in the February 1997 budget) continue as this is written. (37) For a discussion of the complex forms of intergovernmental cooperation involved in current taxation arrangements, and the problems they superseded, see Fiscal Federalism in Canada (1981), p. 43 ff. (38) Hogg (1992), p. 150. (39) Ibid., p. 152-3. (40) See Monique Bégin, Medicare - Canada’s Right to Health, Optimum Publishing International Inc., Ottawa, 1987, p. 104 ff. (41) For a specific account of the impact of this on intergovernmental relations, see A.W. Johnson, "Federal-Provincial Fiscal Relations: An Historical Perspective," in Vol. 2 of Courchene, Conklin and Cook (1985), p. 126 ff. (42) Banting (1987), p. 74. (43) For a status report, see Government of Canada, "Renewing the Canadian Federation: A Progress Report," Background Document for the First Ministers’ Meeting of 20-21 June 1996, Ottawa, 1996. (44) See Joel Bakan and David Schneiderman, eds., Social Justice and the Constitution - Perspectives on a Social Union for Canada, Carleton University Press, Ottawa, 1992, Appendices II-V, et passim. (45) Katherine Swinton, "Federalism, the Charter, and the Courts: Rethinking Constitutional Dialogue in Canada," Chapter 15 of Karen Knop et al., eds., Rethinking Federalism: Citizens, Markets, and Governments in a Changing World, UBC Press, Vancouver, 1995, p. 300. (46) Section 36 of the Canadian Charter of Rights and Freedoms commits Canadian governments in principle to equal opportunities and public services of reasonable quality, and commits the Canadian government to making equalization payments for those purposes. (47) For an inventory of current agreements, see Government of Canada, Privy Council Office, Federal-Provincial Programs and Activities - A Descriptive Inventory, 1993-1994 and 1994-1995, Minister of Public Works and Government Services, Ottawa, 1995. (48) See, for example, Donald V. Smiley, "An Outsider’s Observations of Federal-Provincial Relations among Consenting Adults," Chapter 16 of Olling and Westmacott (1988). (49) Department of Finance Canada, "Canada Health and Social Transfer: Backgrounder" (1996), p. 1. (50) See News Release, Thirty-Eighth Annual Premiers’ Conference, "Social Policy Renewal," Canadian Intergovernmental Conference Secretariat Reference 850-061/009, p. 2. (51) Central concessions were the insertion of the notwithstanding clause and the reflection of provincial demands within the amending formula. For a discussion of the broader federal strategy, see Alan C. Cairns, Reconfigurations: Canadian Citizenship and Constitutional Change, Douglas E. Williams, ed., McClelland and Stewart Inc., Toronto, 1995, esp. p. 194 ff. (52) See David Osborne and Ted Gaebler, Reinventing Government, Addison-Wesley Publishing Company, Reading, Mass., 1992. These themes are usefully related to developments in Canada in F. Leslie Seidle, ed., Rethinking Government: Reform or Reinvention?, Institute for Research on Public Policy, Montreal, 1993. (53) Public response to the annual McLean’s Magazine survey of universities may provide an indication of the public appetite for comparative performance information relating to public institutions, and of the immediate impact of this on practices within these institutions. This issue has become the magazine’s most popular issue, in terms of newsstand sales, and routinely triggers a flood of comments and inquiries. (See Robert Lewis, Foreword to "The Maclean’s Guide to Universities," Maclean Hunter, Toronto, 1996, p. 4.) (54) See Thomas J. Courchene, Access - A Convention on the Canadian Economic and Social Systems, Working Paper Prepared for the Minister of Intergovernmental Affairs, Government of Ontario, August 1996, esp. p. 16-19. Although it does not advocate the Courchene approach, it is noteworthy that the more recent Report of the Quebec Liberal Party Committee on the Evolution of Canadian Federalism ("Quebec’s Identity and Canadian Federalism - Recognition and Interdependence," Quebec Liberal Party, December 1996) asserts that Quebec should actively participate in interprovincial decision-making processes directed to the achievement of common standards in areas such as social assistance (p. 34-37), and affirms the potential effectiveness of these processes. (55) The Courchene paper (1996) argues that a degree of "enforcement" would be achieved, for example, by: legislative "manner and form" provisions reducing the likelihood of future amendments, political pressure (supported by credible monitoring and public reporting of governmental performance) and, ultimately, by the capacity of provinces to punish a recalcitrant province by refusing to grant mobility rights to its residents (in the context of Courchene’s proposal, this would take place within the framework of a "social union" from which individual provinces could be expelled), p. 29-31. The second of these is arguably important; however, the first would be of limited value in restricting the activity of sovereign legislatures and the third, even if made possible by such required changes as amendment of the Charter, would provide only a one-time draconian response whose use for minor defaults would not be credible. (56) See Stevenson (1993), esp. chap. 3, p. 48 ff. (57) Ministerial Council on Social Policy Reform and Renewal, Report to Premiers, December 1995. While this paper was not endorsed by the Government of Quebec, it is noteworthy that December 1996 Report of the Quebec Liberal Party Committee on the Evolution of Canadian Federalism called broadly for a rebalancing of federal and provincial roles within the federation and, on several key issues, adopted the language of the Ministerial Council report (see, for example, p. 71-72). (58) See Provincial–Territorial Council on Social Policy Renewal, Progress Report to Premiers, July 1997 and New Approaches to Canada’s Social Union – An Options Paper, 29 April 1997. (59) Edward Greenspon and Hugh Winsor, "Spending Increase Favoured, Poll Finds," Globe and Mail (Toronto), 23 January 1997, p. A-1 and A-5. (60) "Canada in the Year 2005," Maclean’s, Vol. 109, No. 53, 30 December 1996/6 January 1997, p. 23 ff and p. 46 ff. (61) Jim Bronskill, "Ontario Residents Don’t Want Federal Crackdown on Provinces," The Ottawa Citizen, 26 August 1996, p. A-3. (62) See Jack Stilborn, "Federal-Provincial Relations," Library of Parliament, Parliamentary Research Branch, CIR 93-10E, p. 14. (63) See Allan M. Maslove, "Reconstructing Fiscal Federalism," Chapter 3 of Frances Abele, ed., How Ottawa Spends, Carleton University Press, Ottawa, 1992. (64) Ken Battle and Sherri Torjman, "How Finance Re-Formed Social Policy," Caledon Institute of Social Policy, Ottawa, April 1995, p. 8 and 9. (65) On 2 June 1997, it was announced that better-than-expected progress on deficit reduction would enable the cash component of the CHST to be maintained at $12.5 billion, rather than declining to the $11 billion originally projected. (66) Department of Finance Canada, "Canada Health and Social Transfer: Backgrounder," Depart-mental Internet Home Page, 2/10/96, p. 3. (67) Information provided by an official of Health Canada, supplemented by figures contained in Mark Kennedy, "Provinces Continue to Flout Medicare," The Ottawa Citizen, 30 September 1997, p. A-6. (68) See British Columbia, Government Communications Office, "PM, Premier Settle B.C. Residency Dispute, Agree to New Co-operation on Mobility, Immigration and Asia-Pacific," News Release dated 6 March 1997. (69) Events 1985-1993 based on summary in Battle and Torjman (1993), p. 14 ff. (70) R. Gary Edwards and Jon Hughes, "Public Remains Divided on Two-Tiered Health Care," The Gallup Poll, Vol. 56, No. 67, Gallup Canada Inc., Toronto, 19 September 1996. (71) Jim Bronskill, "Ontario Residents Don’t Want Federal Crackdown on Provinces," The Ottawa Citizen, Ottawa, 26 August 1996, p. A-3.
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