In December 2003, when Paul Martin succeeded Jean Chrétien, who often acted toward the provinces in a casual and even arrogant manner, he came with a reputation for being more conciliatory toward provincial concerns.
Meanwhile, on the provincial front, the Council of the Federation was established on the initiative of Jean Charest’s new Quebec government. All of this took place in the context of the mounting “fiscal imbalance” as cash-strapped provinces faced swelling health care costs. Has there been a new era of provincial partnership with the federal government? I will look at this question, and Quebec’s position in particular.
The signals from Ottawa since Martin’s accession have been mixed. In a speech three days before he took over as prime minister, Martin asserted that the federal government had to change its approach to dealing with the provinces. He added that the first thing he did after winning the Liberal leadership was to meet the provincial and territorial premiers during the Grey Cup: “I did so because, if we hope to strengthen universal public health care, we have to work with the other provinces to do that.”1 Yet not long afterwards, in the June 2004 election, he ran on a platform signalling a federal foray into social programs essentially under provincial jurisdiction. The Liberal Party promised to “strengthen and enhance Canada’s social foundations. And it will begin by achieving real progress on the issue that matters most to Canadians: the quality of the health care we receive.”2 After the election, Martin tried to reconcile his promises with the fact that management of the health system is under provincial jurisdiction by calling a first ministers’ meeting, held in September 2004.
For its part, the Quebec Liberal Party under Jean Charest had been promoting the creation of a Council of the Federation since 2001. As the Quebec Liberals perceived it, the Council would seek greater cooperation between the two levels of governments in economic development, and would hopefully strengthen the Agreement on Internal Trade (AIT) concluded in 1994. It would also assume responsibility for enforcing the national standards defined in the Canada Health Act, something currently under Ottawa’s purview. Finally, Quebec hopes the Council could limit Ottawa’s unilateral use of its spending power in fields of provincial jurisdiction.3
In December 2003, the Council of the Federation officially came into existence. It is an interprovincial institution in which the federal government is not represented; its primary goal is to “give back to the provinces and territories the influence and strength they need to become true partners in shaping the Canada of tomorrow”4 by promoting provincial cooperation to counter the traditional federal strategy of “divide and conquer.” The Council must hold a minimum of two meetings a year, with the provinces and territories represented by their premiers. Besides a permanent secretariat, the December 2003 agreement also instituted two additional bodies, the Premiers’ Council on Health Awareness and the Secretariat for Information and Co-operation on Fiscal Imbalance.
Since the premiers had already developed a habit of holding regular meetings to discuss common issues, it remains to be seen what emerges from the new institution. Alain Noël of the University of Montreal argues that the Council represents an important ideological shift for the Quebec government: from a strategy of enhancing its own provincial power and seeking federal acknowledgment of its “distinct” character to one of encouraging intergovernmental collaboration. To sell this strategy shift to the Quebec public, Charest needs to point to short-term accomplishments, particularly on Quebec’s position on the fiscal imbalance.5 Though Ottawa publicly responded favourably to creation of the Council, federal policymakers realize that it may threaten Ottawa’s capacity to be the sole guarantor of “national objectives.”
What has the Council of the Federation achieved?
It is too early to come to any definite conclusions with regard to the Council. The Council has been mandated to ensure that the commitments of the Agreement on Internal Trade are actually implemented. Though some progress on removing barriers has been made in the decade since the AIT was signed, much more work still needs to be done.
Given that the provinces are all experiencing rapid growth in public health care costs, and all premiers are insisting on more cash or tax room from Ottawa, internal trade issues have had to take second place to health care. The Council had no choice but to make the financing of health care its main concern. The premiers demanded that Ottawa finance 18 per cent of all health and social welfare expenses over the course of the current fiscal year, and that the federal share rise by 1 per cent annually until it reaches 25 per cent. The Council also identified eight fields for new investment: primary care, home and community care, community mental health, medical diagnostic services, human resources, pharmaceutical products, the reduction of waiting times and preventive medicine. The list was drawn up so as to give each province flexibility to meet its own particular needs.
When the Council met in Niagara-on-the-Lake, Ontario, in late July 2004, the premiers concluded that federal compensation had diminished by $3.7 billion over the course of the last three years; hence current federal financing provided as part of the adjustment program should be immediately restored at least to the level of the 2000–2001 fiscal year – if not to the level before the 1995 spending cuts. The premiers added that simply injecting new funds for health while continuing to reduce transfers would create further imbalance and further restrict the provinces’ room to manoeuvre. They called for an annual federal contribution to health care financing of $13.1 billion. This would include a comprehensive pharmaceutical insurance program (as had been promised by the Liberals during the election campaign), estimated at $7.5 billion.
Toward asymmetrical federalism?
This was the loaded context in which the first ministers’ conference took place in mid-September 2004. In his opening speech, Paul Martin tried to limit the parameters of discussion. Drawing on elements of the Liberal electoral platform, he set out the direction his government would take. Provincial jurisdictions must be respected, but the federal presence is needed in fields symbolically linked to the very definition of the Canadian nation. The public health system “speaks eloquently to our values as a nation … to both our unity of purpose and sense of self,” as a “vital aspect of our shared citizenship.” If a particular governmental mission underlies the very existence of the Canadian nation, then there is an inherent logic in moving “toward a common goal.” For the Prime Minister, “It is the federal government’s role to articulate national objectives and protect the national interest. It is, of course, the provinces and territories that deliver and manage health care, and in doing so tailor health services to the specific needs of their population. But it is my firm belief that some key principles transcend regional interests.”6
Martin’s speech constituted an unusually clear assertion of the federal government’s role. In this logic, the role that provinces are called on to play is meaningful but ultimately secondary. Essentially, this approach implies that Canada is not a federation that respects the roles and the responsibilities of the different orders of government, but a decentralized regime in which major policies are set at the centre and managed by the provinces. In effect, the provinces become mere contractors and administrators of services.
As expected, the conference gave rise to a war of numbers concerning the actual and desirable extent of the federal contribution to health care financing. Yet it also resulted in a plan to deal with areas identified beforehand by the provinces and Ottawa. On the basis of the financial agreement that was reached, an additional $41 billion of federal money will be injected into the provinces’ health care costs over the course of next 10 years. In exchange, the provincial governments agreed to submit accounting and other information.
An additional element received wide public attention, at least in Quebec: the Quebec government succeeded in negotiating a parallel agreement. This agreement explicitly referred to “asymmetrical federalism” and allowed each province to “exercise its own responsibilities with respect to planning, organizing and managing health services within its territory.”7 Specifically, Quebec would not be subject to the requirement of accountability to the federal government, but would instead be accountable to its own population.
Because the provinces succeeded for once in maintaining a united front and did not disintegrate under pressure from Ottawa, Martin agreed to inject more funds into health care and to acknowledge the asymmetrical character of the Canadian political system. This breakthrough is not unrelated to the fact that Martin was leading a minority government and needed a more positive profile in Quebec if he were ever to win a majority. But some credit must be given to the political skills shown by Jean Charest in maintaining provincial solidarity through the Council of the Federation.
La Presse columnist Alain Dubuc saw the agreement as the beginning of a new vision of Canada open to accommodating Quebec’s distinctiveness. There is something to this, but how much is not clear. The federal government still refuses to acknowledge that a fiscal imbalance exists between it and the provinces. At the October 2004 first ministers’ meeting on equalization, Ottawa insisted the issue was one of “fiscal pressures.” We should note further that the asymmetrical agreement with Quebec is above all an administrative understanding, which confirms Quebec’s jurisdiction in the field of health. Politically, had the Charest government agreed to submit accounts to Ottawa, it could have been disastrous for the Liberals provincially and even federally. The asymmetrical approach allows Quebec ostensibly to maintain interprovincial solidarity while acting distinctly from the other provinces.
In sum, Paul Martin has not changed Ottawa’s rhetoric, which continues to stress the need for a powerful central government representing “national interests.” At the same time, Jean Charest has chosen to play the card of interprovincial collaboration, with some apparent success. It remains to be seen whether something lasting has been achieved or whether asymmetrical federalism simply amounts to the usual horse-trading in a new guise.
1 Paul Martin, “For a Competitive, Compassionate, Independent Canada,” Policy Options, February 2004, p. 5.
2 Liberal Party of Canada, Moving Canada Forward: The Paul Martin Plan for Getting Things Done (2004), p. 15.
3 Parti libéral du Québec, Comité du Parti libéral du québec sur l’avenir politique et constitutionnel de la société québécoise, Un plan d’action: affirmation, autonomie et leadership (2001), p. 16.
4 Quebec, Secrétariat aux affaires intergouvernementales canadiennes, The Council of the Federation: A First Step towards a New Era in Intergovernmental Relations in Canada (2004), p. 14.
5 Alain Noël, The End of a Model?: Quebec and the Council of the Federation (Kingston, ON: Queen’s University, Institute of Intergovernmental Affairs/Montreal: Institute for Research on Public Policy, 2003).
6 Address by Prime Minister Paul Martin at the First Ministers’ Meeting, September 13, 2004.
7 Canada, Prime Minister’s Office, “Asymmetrical Federalism that Respects Quebec’s Jurisdiction,” communiqué, September 15, 2004.