Federalism in Canada

Establishing a Federal Union

The Constitution of the United States (1787) is the earliest example of a modern federal constitution. A federal union of the remaining British North American colonies was first considered in the early 19th century. It was pursued more seriously from 1857 onwards. Negotiations among the Province of Canada, New Brunswick and Nova Scotia took place at the Charlottetown Conference and the Quebec Conference in 1864. These discussions ultimately led the British Parliament to pass the British North America Act (now called the Constitution Act, 1867). It united those three colonies into a federal state as of 1 July 1867.

Confederation marked the start of Canadian federalism. The main goals of the union were to facilitate economic growth, territorial expansion and national defence. However, many people wanted to keep existing governments and boundaries, for a variety of reasons. French Canadians held a significant majority in Quebec. They did not want to place all powers in the hands of a central government, in which they would be a minority. There was also a strong sense of provincial identity in Nova Scotia and New Brunswick. Federalism was therefore a necessary compromise.

Canada’s first prime minister, Sir John A. Macdonald, was not keen on federalism. He preferred a unitary state; provinces would get their authority from, and would be subordinate to, the central government. Another key factor was the American Civil War. It saw the Southern States secede from the federal union. This contributed to the fear that giving the provinces too much power would make the united country unstable. For these reasons, the Canadian Constitution includes features that are incompatible with a strict approach to federalism.

Unused Unitary Powers

The lieutenant-governor of each province, who is appointed by the federal government, can prevent provincial legislation from taking effect until the central government has approved it. The central government can also disallow any provincial statute within a year of its adoption. (See Disallowance.)  Parliament can pass legislation related to education within a province to protect the rights of religious minorities. It can also declare that “works and undertakings” within a province fall under its jurisdiction. It can do this regardless of the normal distribution of powers.

Because of these unitary features, the Constitution Act, 1867 has been described as quasi-federal. However, the quasi-federal powers have fallen into disuse.

Competing Concepts

Canadian politicians have expressed different versions of Canadian federalism. These differences of opinion have been sharper in Canada, and over a longer period, than in most federations. No consensus has ever been reached regarding the appropriate relationship between the two levels of government. National and provincial politicians tend to hold different views. These have resulted in partisan conflict when one party has held office at the national level for a long period while having less success at the provincial level. (See also Party System.)

Macdonald’s quasi-federal concept was associated with the Conservative Party until about 1900. By then, the politicians that drafted the BNA Act were no longer influential in the party. Quasi-federalism also had little support during the 20th century.

However, a centralist view of federalism continues to enjoy considerable support. It stresses the importance of a strong and active federal government. Modern centralists normally avoid the quasi-federal powers of disallowance and reservation. Instead, they argue for a broad interpretation of Parliament’s powers. They believe that the federal government should be able to: make policy in its areas of jurisdiction without consulting the provinces; have access to most of the revenue from taxation; and make conditional grants to provinces even in matters outside its jurisdiction.

Central Versus Provincial

The authors of the BNA Act had intended for the federal government to be more powerful than the provincial governments. Yet over time, the provinces grew in power. In part, this was because of the growing importance of areas of provincial jurisdiction (such as social programs and natural resources). It was also due to a series of court rulings that favoured the provinces. (See Judicial Committee of the Privy Council.)

A centralist view of federalism, with certain qualifications, was expressed in the 1940 report of the Royal Commission on Dominion-Provincial Relations (the Rowell-Sirois Commission). Since then, centralist ideas about federalism have been influential in the Liberal Party. The New Democratic Party also tends towards a centralist position. Politicians and political thinkers who have articulated a centralist concept of federalism include Louis St-Laurent, Francis Reginald Scott,  Eugene Forsey, David Lewis, Bora Laskin and Pierre Trudeau.

Sir John A. Macdonald’s view that the provincial governments should be subordinate to the central government was controversial from the start. In the early 1880s, a Quebec judge, Thomas-Jean-Jacques Loranger, wrote that the central government had been created by the provincial governments. He argued that no increase in the central government’s powers, and no substantial change to the Constitution, was allowed without the unanimous consent of the provincial governments. This view became known as the Compact Theory of Confederation. It was expressed at the interprovincial conference of 1887, organized by Quebec Premier Honoré Mercier.

A similar view was expressed by certain premiers during the talks in 1980–81 to patriate the constitution. The emphasis on provincial autonomy was influential in the Progressive Conservative Party after 1939 and in all provincial parties in Quebec. The Reform Party has also held this stance. Supporters of decentralization believe that the functions of the central government should be limited to ones that the provincial governments cannot perform for themselves, and that its control over revenue should be restricted accordingly. They have also argued that the central government should consult the provinces before launching major policies. (Eloquent expressions of decentralization can be found in the 1956 report of the Quebec Royal Commission on Constitutional Problems, and in the 1979 report of the Task Force on Canadian Unity.)

See-Saw Struggle

In practice, Canadian federalism has swung between the extremes of centralization and decentralization. This has happened due to a variety of political, economic and social circumstances. Sir John A. Macdonald’s preference for a highly centralized regime reigned for a few years after Confederation. But by the 1880s, the provinces were becoming as powerful as their US counterparts, if not more so. Provincial control over natural resources led to the development of largely self-contained provincial economies. This was especially true after 1930, when Alberta and Saskatchewan took over control of their resources. The high volume of manufacturing in Ontario made its government particularly important and influential.

Worsening relations between francophone and anglophone Canadians undermined Macdonald’s Conservative Party and increased anti-centralist feelings in Quebec. Centralization was revived during the First World War and immediately after. The federal government levied an income tax for the first time in 1917. It also imposed military conscription and exercised unprecedented control over the economy.

These tendencies were largely reversed after 1921. The Great Depression showed that the federal government lacked the power to deal effectively with a severe economic crisis. Efforts were made to ensure that centralization during the Second World War would last longer than it had after the First World War. For example, the central government took all revenue from personal income tax from 1941 until 1954. Constitutional amendments gave Parliament the power to establish employment insurance and universal pensions; these programs were financed from a special fund in 1940 and 1951, respectively.

Interpretation of the BNA Act by the Judicial Committee of the Privy Council was widely seen as favoring provincial autonomy. But this ended in 1949, when that power shifted to the Supreme Court of Canada. During the postwar period, many grants were given to the provinces to encourage spending on health and welfare. Federal grants were also given directly to universities.

Shift to the Provinces

A shift of power towards the provincial governments became clear after 1960. A dynamic and active Quebec government, led by Jean Lesage, emerged as an effective opponent of centralization. Other factors included the growing importance of provincial natural resources; the decline of the old commercial and financial elite based in Montreal (see Laurentian Thesis); economic integration between Canada and the US; and the development of a more competitive party system at the national level after 1957.

Between 1960 and 1980, there was a substantial increase in the provincial share of taxation and public expenditure. Grants to universities were replaced by subsidies to the provinces. By opting out of certain conditional grant programs, Quebec received unconditional grants in return. It also started its own contributory pension plan. (See Quebec Pension Plan.) The federal government established one for residents of other provinces.

Meetings between the prime minister and premiers became more frequent. (See First Ministers Conferences.) This came to be known as “executive federalism.” Provincial governments began to intervene more aggressively in provincial economies. They also challenged the right of the federal government to make economic policy without their collaboration or consent. Provinces engaged much more with foreign governments. This was especially true of Quebec. The dramatic increase in Alberta’s petroleum revenues after 1972 led to other strains on the federal system. It also led to contempt between Alberta and the federal authorities. The emergence of the Parti québécois, a major political party dedicated to Quebec separatism, suggested that the survival of Canadian federalism could not be taken for granted.

Patriation of the Constitution

Around the world, informal shifts in economic and political power usually lead to formal changes in a country’s constitution. In Canada, the trend toward decentralization had begun by 1960. Not long after, demands for a formal transfer of constitutional powers to the provinces became widespread in Quebec.

Other provinces, with the exception of Ontario, had little interest in constitutional change at the time. This encouraged the idea that only Quebec would receive additional powers, and therefore had “special status.” After 1972, increasing natural-resource revenues led a number of other provinces to demand more powers in a revised constitution. Alberta was the most vocal in this regard.

In response to these pressures, the federal government held intergovernmental conferences on constitutional change between 1968 and 1981. It agreed to discuss a new distribution of powers. But it insisted that a charter of rights and the restructuring of national institutions also be on the table.

A related problem was the absence of an amending formula in the Constitution Act, 1867. The criteria that would have to be met to make a legal change to the constitution had not been established. Efforts were made at the negotiations to come up with such a formula. This was necessary to “patriate” the Constitution, a matter that had been discussed as far back as 1927.

In 1980, the government of Pierre Trudeau tried to patriate the Constitution. It proposed an amending formula that would require the support of Ontario, Quebec, two Western provinces and two Atlantic provinces to make any future change. It would also add the Canadian Charter of Rights and Freedoms to the Constitution.

This initiative came after the negotiations over the distribution of powers broke down. It was opposed by eight provincial governments (the Gang of Eight). It was also ruled unconstitutional, but not illegal, by the Supreme Court. (See Patriation Reference.) As a result of further negotiations, qualifications were added to the Charter of Rights. An amending formula was also introduced. It required the approval of seven provinces with at least half of Canada’s population (the 7/50 rule). However, provinces were also allowed to exempt themselves from applying amendments that would reduce their powers.

All provinces except Quebec accepted this compromise. It took effect when the constitution was formally patriated on 17 April 1982. Quebec felt the federal concessions were inadequate. It objected to the addition of language rights for English-speaking Quebecers. The Supreme Court subsequently ruled that Quebec’s consent had not been required to amend and patriate the constitution. Despite that, efforts to gain Quebec’s signature resumed in 1986.

Meech Lake and Charlottetown Accords

These efforts culminated in an agreement among the 11 first ministers in the Meech Lake Accord of April 1987. It would have recognized Quebec as a “distinct society”; provided for provincial participation in the selection of senators and justices of the Supreme Court of Canada; restricted the federal power to spend in areas of provincial jurisdiction; recognized provincial powers over immigration; and made slight changes on the amending formula. (See also  Meech Lake Accord: Document.) Opposition to the Accord from a growing number of interest groups, Indigenous people and Newfoundland premier Clyde Wells scuttled the Accord in June 1990. (See Editorial: The Death of the Meech Lake Accord.)

A second round of negotiations among the premiers and the federal government led to a new agreement — the Charlottetown Accord. It was soundly defeated in a national referendum in 1992. (See also Charlottetown Accord: Document.) The many public forums and government commissions were intended to help Canadians reach a greater consensus. But they exposed even greater divisions.

The separatist movement in Quebec seemed to lose momentum after the failed 1980 referendum. But it re-emerged after the failure of the Meech Lake and Charlottetown Accords. This time, the cause was pursued at the federal level by the Bloc Québécois. The Conservative government of Brian Mulroney had erased memories of the National Energy Program. As a result, Western protest had subsided. But it resurfaced over opposition to the Goods and Services Tax (GST) and was embodied by the Reform Party.

The federalist Liberal Party won a large national majority in 1993. But it faced two powerful parties in the House of Commons. The Bloc Québécois and the Reform Party both held radically different views of Canadian federalism. After 1993, the Liberal government of Jean Chrétien did not return to the centralist policies of the Pierre Trudeau era. (Some of them were no longer allowed under NAFTA.) Instead, it reduced the federal deficit by lowering spending on social programs and transferring federal functions to the provinces or to the private sector.

Conclusion

The patriation of the Constitution and two other rounds of constitutional negotiations brought Canada no closer to answering the question of how federalism should evolve. A second Quebec Referendum on sovereignty in 1995 revealed widespread dissatisfaction with federalism. Supporters of greater provincial autonomy emphasize the diversity of all the provinces’ interests. They argue that the distribution of powers between the two levels of government needs to be brought into line with what they view as socio-economic realities. In their view, the result would be a more stable and legitimate political system.

Those who support keeping or expanding federal powers argue that decentralization is more the cause than the consequence of interprovincial diversities. They argue that decentralization ignores the significant common interests of Canadians — interests that can be stewarded most capably by a strong central government. They also argue that excessive decentralization weakens Canada’s economy and its influence in the world.

It is unlikely that these differences of opinion will soon be resolved.

See also: Constitution of Canada; Constitutional History; Constitutional Law; Constitutional Monarchy; Peace, Order and Good Government; Statute of Westminster; Constitution Act, 1867 Document; Patriation Reference; Patriation of the Constitution; Constitution Act, 1982; Constitution Act, 1982 Document.