federalism and intergovernmental relations in canada
TRANSCRIPT
Federalism and structures of government and intergovernmental institutions
in CanadaPresentation by David Péloquin in the conference
“Desafíos institucionales y económicos en países federales:Los casos de Canadá y Argentina”
Embassy of Canada in Argentina and Fundación Dos Siglos, in cooperation withthe Universidad Nacional del Litoral (FCE-DAP) and Instituciones Regionales
Santa Fe (Argentina), March 29 to 31, 2016
Competition and/or cooperation?
The constitutional framework
The evolution of intergovernmentalism
Lessons for others?
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Outline of presentation
Competition and/or cooperation?1
Significant Canadian literature on the existence, advantages and challenges of competition between levels of government: governments are not “benevolent dictators” but instead are complex
organisms that pursue an amalgam of private and public interests thus: for citizens, a multitude of providers of public services (and competitors
for their allegiance) can be advantageous as a source of “checks and balances”
but: citizens also want order, transparency and intergovernmental harmony (as public goods in and of themselves)
Intergovernmental competition in Canadaand the dynamics of cooperation
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No contradiction between: an underlying competitive dynamic between governments, and the much-observed phenomenon of governments cooperating in the public
interest
However, this happy outcome – of a (different kind of) “invisible hand” – depends crucially on: a high degree of policy autonomy on the part of two or more levels of
government that overlap each other (i.e. rather than imprisoning them in a “joint decision trap”)
an informed electorate (supported by engaged media and “public academics”) that are able, willing and eager to hold their governments accountable
There is no necessary contradiction between competition and cooperation…
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… but a clear need to manage potentially problematicentanglements in their expenditure policies
Provincial-local
Federal
0 50 100 150 200 250 300 350CAD billions
Overlapping expenditure categories Policing /protection
Debt service
Defence /foreign
Transfers to othergovernments
Debt service
Other
Income support / social services
Supportto industry
Environment
Educationand researchHealth
Transport /communication
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Provincial-local
Federal
0 50 100 150 200 250 300 350CAD billions
Jointly occupied tax fields Property taxes
Federaltransfers
Other
Resource/ Investment revenues
User fees
Payroll taxes
Corporatetaxes
Sales and consumption
taxes
Personalincome taxes
… as well as revenue-raising entanglements (given a significant joint occupancy of tax fields)
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… and ongoing challenges in intergovernmentallegislative / regulatory coordination
• (Federal) employment insurance spillovers onto (provincial) social assistance
• (Federal) bank regulation interacting with (provincial) securities regulation
• Many other regulatory areas (e.g. environmental, health), plus budgetary policy and public debt
…but significant de facto cases of “intertwined” jurisdictions
(i.e. those with significant mutual spillover effects)
• Public contributory pension plans• Agriculture• Immigration / immigrant settlement
Only a few examples of formally concurrent jurisdiction
• (Federal) criminal law interacting with(provincial) administration of justice
Very few examples of formally “coordinate” jurisdiction
Competition and/or cooperation?1
The constitutional framework2
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Federal Legislative PowersGeneral power to make laws for “Peace, Order, and good Government” and enumerated powers over:• general government functions (e.g. federal public borrowing / debt / property)• revenue raising (“by any mode or system of taxation”)• criminal law ⁄ penitentiaries• national defence• cross-border transportation and related matters (including navigation, shipping, lighthouses, interprovincial ferries, railways,
canals and – through later jurisprudential interpretation – telecommunications)• regulation of trade, commerce and industry: fisheries, agriculture (concurrently with provinces, but with federal paramountcy),
money ⁄ banking, weights ⁄ measures, patents ⁄ copyrights, bankruptcy ⁄ insolvency)• postal service• immigration (concurrent with federal paramountcy), naturalization, marriage ⁄ divorce• census and statistics• “Indians” and “lands reserved for the Indians”• certain social programs, e.g.: unemployment insurance (since 1944), contributory pensions (since 1964 and concurrently with
provinces but with provincial paramountcy), quarantine and national public health
Note: Residual powers in principle lie with the federal parliament
Constitution Act (1867) envisaged “watertight compartments” for federal and provincial legislative powers
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Provincial Legislative PowersEnumerated powers over:• general government functions (e.g. provincial public borrowing / debt / property, including public lands and natural resources
on them, as well as local public works)• direct taxation within a province (though this has been very broadly interpreted by the courts)• non-criminal penalties ⁄ fines ⁄ imprisonment to enforce provincial laws• administration of justice, including provincial courts (civil and criminal) and prisons• health services (including hospitals)• education• municipal governments and institutions• regulation of trade, commerce and industry (e.g., incorporation and licensing of businesses)• solemnization of marriage• private law, property and civil rights• “all matters of local or private nature” (which jurisprudence has effectively made into a de facto residual power)
Constitution Act (1867) envisaged “watertight compartments” for federal and provincial legislative powers
Canada’s constitution makes minimal provision for managing intergovernmental relations
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Canada’s Senate was originally described as a “House of the regions” However, as in many other federations (e.g. US, Australia), it has not turned out
that way Instead, it has increasingly become a second partisan chamber (albeit a strange
one, since it remains an appointed chamber, not an elected one)
The Constitution effectively makes the Supreme Court the ultimate arbiter of intergovernmental conflicts
However, the federal executive appoints all members of both bodies…usually without consulting the provinces formally or informally
The “separate lives” of the levels of government aggravates the lack of provincial input into federal institutions
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Compared to other countries, in many provinces it is relatively rare for elected officials (and a fortiori its unelected officials) to jump from the provincial to the federal sphere … since, inter alia, provinces are in many respects the “senior” order of government
with public policy agendas that are particularly important to citizens
Moreover, political parties in Canada tend to play less of a “bridging” role (between levels of government) than in other countries
While federal Cabinets usually contain representatives from each province, they are often seen as lacking understanding of the interests and capabilities of provincial governments
2 The constitutional framework
Competition and/or cooperation?1
The evolution of intergovernmentalism3
Ongoing desirability of / need for federal and provincial governments to coordinate and harmonize the exercise of their powers: to legislate or regulate behaviour – where state power over citizens is at its
greatest to impose taxes – where state power to compel citizens is also very great (as is
the need to minimize their associated compliance costs) their power to spend – where power to compel is largely absent (though there
still remains a need to avoid confusion on the part of citizens and ensure the effectiveness of government spending)
their power to borrow – since one government’s credit-worthiness can affect those of other governments (and of citizens and businesses)
Managing intergovernmental entanglements in Canada constitutes a constantly evolving challenge
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Elaborate structures of “executive federalism” have evolved to manage these entanglements
In most policy areas, federal and provincial ministers and officials meet regularly: many standing and special federal-provincial committees meet to discuss
areas of common interest (often several times each year)
Given their high profile, meetings on budgetary and related policy matters (e.g. federal financing of health care) raise particular controversy: both federal-provincial and inter-provincial tensions often surface occasionally, these issues have even needed to been dealt with at meetings
of “First Ministers” (Prime Minister and provincial Premiers)
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Ministerialmeetings
FMM
+ Fr
eque
ncy
- + Profile -
First Ministers Meetings(FMM) are high-profile
but less frequent
Lower-profile “sectoral tables”at Ministerial / officials’ level
meet on a more regular basis to share information
and deal with common challenges
Meetings atlevel of officials
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Elaborate structures of “executive federalism” have evolved to manage these entanglements
In recent years, inter-provincial coordinationhas increasingly grown in importance …
Except in areas of exclusive provincial jurisdiction (e.g. education), the history of intergovernmental meetings had usually involved both federal and provincial participation federal participants chairing the meetings (i.e. both performing secretariat
functions and tending to set their agenda)
Since the mid-1990s, provinces have increasingly met among themselves to plan strategy prior to federal-provincial meetings… especially those dealing with financing and other high-profile issues
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… and has become more formalized as part of a“Council of the Federation”
Though federal-provincial meetings tend to attract greater public attention, the long-running series of meetings among provincial Premiers are growing in importance: occasional Premiers’ meetings began in the 1880s and have been held at least
annually since 1960 (with an annual rotation of the chair among the provinces) in 2003, they were further formalized, with the addition of a permanent
secretariat… and renaming themselves the “Council of the Federation” (even though
the federal government typically does not participate)
The Council of the Federation has increasingly set Canada’s public policy agenda in recent years
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A “natural sorting” of roles and responsibilities, reflecting: “first mover” / “follow the leader” dynamics the public’s aversion to wasteful overlap and duplication
Regular exchanges of information and meetings of first ministers, ministers and officials
Hundreds of actual agreements on specific policy issues Some semi-codified “rules of the game” (e.g. 1999 “Social Union
Framework Agreement”) A few examples of highly formalized joint decision-making
(e.g. on the Canada Pension Plan)
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Intergovernmental coordination is not limited to formal agreements, but has more broadly encompassed:
Constitutionally “fixed” jurisdictions
Main formsof cooperation
Nature of policy jurisdiction Example(s)
Informal information sharing, consultations and coordination
“Parallel”(with “spillover
effects”)
Employment insurance / social assistance;
most regulatory matters
Informal information sharing, consultations and coordination“Coordinate” Criminal law / administration
of justice
Joint decision-making (CPP) and informal coordination (QPP)“Concurrent” Public contributory pension
plans (i.e. CPP/QPP)
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… with the form of cooperation varying by policy area:
Main formsof cooperation
Nature of policy jurisdiction Example(s)
Formal agreements onharmonized tax collection;
“first mover” / “follow the leader”Taxing power Management of jointly
occupied tax fields
Specific-purpose federal transfers(with few conditions);
non-binding commitments;“first mover” / “follow the leader”
Spending power
Most major programs(e.g. health, education;
income support; support to industry)
Constitutionally “fluid” jurisdictions
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… with the form of cooperation varying by policy area:
… and in line with governments’ comparative advantage
Government-funded policy “pillars”
(usually highly subsidized)
Income support
e.g.: pensions,social
assistance
No clear comparative advantage
Servicesand in-kind
benefitse.g.: education,
health care
Clear provincial advantage
“Assisted self-help”policy pillars
(unsubsidized or partly subsidized)
Tax-assisted savingse.g.: private retirement
savings plans
Strongfederal
advantage
Contributions-funded
insurancee.g.: CPP,
employment insurance
Modestfederal
advantage
Direct or assisted lending
e.g.:studentloans
Modest federal
advantage
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2 The constitutional framework
Competition and/or cooperation?1
The evolution of intergovernmentalism3
Lessons for others?4
Key takeaways
Static (e.g. constitutional) frameworks often offer limited guidance or insights on the dynamics of intergovernmental relations
Cooperation across orders of government is not inconsistent with the reality of intergovernmental competition …… and can even be a sign of a healthy competitive dynamic between highly
autonomous “public policy entrepreneurs”
Intergovernmental cooperation does not imply “joint decision-making” and can take many alternative forms
Governments should focus on what they do best (“comparative advantage”) – though this can and does evolve over time
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