Disputatio, Volume 13 #5

Canadian federalism has had to deal with a complex set of factors in establishing and maintaining social programs. One of the key challenges is to address regional needs and inequities while at the same time addressing individual needs and inequities. It is remarkable that federalism has successfully balanced these goals when other policy areas are marked primarily by federal-provincial conflict.

Eric Kierans characterizes this historically successful balance as "federal interference in provincial affairs." His article in the July/August issue of Compass gives a very one-sided portrayal of federalism in Canada.

Federal-provincial cost-sharing arrangements are the way Canada has dealt with the institutional hurdles of federalism. The provinces have constitutional responsibility for social programs, but have very unequal spending and revenue-raising capacities. The federal government has access to major sources of revenue, as well as a constitutional responsibility to ensure equity between regions in Canada and between Canadian citizens across provincial boundaries.

The federal responsibility for national equity is outlined in sections 36.1 and 36.2 of the constitution, and includes responsibility for "providing essential public services of reasonable quality to all Canadians" and responsibility to "ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation."

As Keith Banting explained in his book The Welfare State and Canadian Federalism, "The reduction of regional disparities is a very different objective from the elimination of poverty." This is because a majority of poor Canadians live in the three richest provinces. According to the most recent poverty profile from the National Council on Welfare, 55 per cent of poor people in Canada live in Alberta, Ontario and British Columbia.

Equity between Canadian citizens is addressed through national standards that ensure access to comparable levels of public service across Canada, as found in the Canada Assistance Plan (CAP) and the Canada Health Act. Equity between regions is promoted through equalization payments. The use of federal spending power, with conditions attached to the use of those dollars, is not "interference" but the primary means by which the federal government fulfils its constitutional responsibility to ensure national equity.

The design of the new Canadian Health and Social Transfer (CHST)--unless changes are made to retain a federal cash transfer and to ensure national standards--undermines the federal government's ability to ensure equity between citizens in Canada by removing two of the three national standards that existed in the Canada Assistance Plan. By keeping equalization payments, Ottawa retains its ability to address regional inequities.

There are serious consequences in shifting the weight of federal involvement from addressing individual inequity to addressing regional inequity. Equalization reallocates funds away from the rich provinces to poorer regions, such as Atlantic Canada. If assistance that addresses individual inequity disappears, the wealthier provinces' commitment to equalization will diminish, and Canada's ability to address regional inequities will be undermined as well.

There is no reason to expect that provincial governments will be inherently more responsive to the needs of the poor (as Kierans suggests) or closer to the community level in their administration of social programs. In fact, there is much current evidence to the contrary. In Alberta, Saskatchewan and some of the Atlantic provinces, provincial governments are closing local hospitals, and some provinces are amalgamating local school boards into regional ones.

Under the Canada Assistance Plan, local governments had a place at the table in establishing the tripartite agreements by which many of the services provided under CAP are delivered. The changes reflected in the proposed legislation for the CHST do not provide for municipalities to continue their policy and funding partnerships with the federal and provincial governments. With the removal of CAP, local governments stand to lose any influence they now have.

The Canadian Health and Social Transfer is not merely the rightful return of responsibility for social programs to the provinces, as the federal government and Eric Kierans would have us believe. This legislation will seriously damage the federal government's ability to meet its responsibilities in the area of national equity.

Stephanie Baker Collins is the national researcher for Citizens for Public Justice. She wrote and helped present CPJ's submission on the Canadian Health and Social Transfer to the House of Commons Standing Committee on Finance.