Canadian Federalism in Canada

According to Claude Bélanger, Marianopolis College:

Federalism is a system of government where two levels of government exist, each sovereign in its sphere of jurisdiction. The federal or central level takes care of all of those things that are common to the whole of the country while the other level of government (provincial, state or canton) has jurisdiction over those things that are of local concern. Federalism is to be contrasted to the other two types of political systems: the unitary (sometimes called legislative union in Canada) and confederal systems. The unitary system is characterised by the fact that sovereignty resides exclusively with the central government and that local governments, when they exist, are entirely subordinated to the central authority. In the confederal system, sovereignty entirely resides with the member-states and the central government that has been created is subordinated to them. In a confederation, because the member-states have retained the entirety of their sovereignty, they may pull out of the union at any time. The federal system borrows some features from the other two systems: from the unitary system it adopts the idea that the central government must have some sovereign powers while it retains from the confederal system the principle that the local governments have preserved for themselves some sovereign powers. This is why the main feature of federalism is the distribution of sovereignty between two levels of government in such a way that neither level is entirely subordinated to the other.

Federalism is usually adopted in countries that display differences of climate, geography, religion, language, culture and economies; it is especially suited for multinational and multicultural states that wish to preserve these characteristics. The system is also found in countries that are too large for a single government to handle effectively. Essentially, the federal arrangement, or compact, is the result of conflicting pressures among its constituting parts. On the one hand, groups have found good reasons to join with others and to form with them a new political entity; this is often done for defence (they may fear some common enemy), or for economic reasons, as joining with others may enhance their hopes of prosperity; sometimes, there has been in the past common experience of union together and, always, there are some common shared values. On the other hand, the same groups who wish to unite find equally good reasons to remain apart perhaps because they have had a long heritage of self-government that they do not wish to forsake, or because they take pride in their group distinctiveness and wish to retain their individuality. Federalism is so designed as to reconcile these conflicting feelings. The groups will agree to come together on those things that they deem to be in their mutual interest, and entrust to the central government power to act in all such cases while, at the same time, they will continue to exist separately and retain for themselves full power over the things that they wish to continue to control and which are usually related to their individuality. This is why federalism has sometimes been described, in a broad sense, as an organisational system that unites separate groups within a single political system so as to permit each group to maintain its fundamental political integrity. Thus, essentially, the federal system is adopted where it is felt that the preservation of the individuality and separateness of the constituent parts is as important as the preservation of the nation as a whole. In some circumstances, it might even be argued that the preservation of the nation as a whole is dependent on the maintenance of the constituent parts: one would not exist if the other was not guaranteed.

Thus, federalism is the result of centralising and decentralising forces which are at play at the time of the formation of the union and that continue to affect the union long after the system has been created. When the reasons to come together are extremely powerful, the tendency is to entrust the central government with large and extensive powers, indeed to make it the “main” government. When the reasons to remain apart are stronger than the reasons to come together, the result will be that the local governments will be entrusted with the largest powers. Each federation finds its balance somewhere along the line and the resulting distribution of power between the two levels of government is witness to the respective strength of the centralising and decentralising forces at the time of the union. So long as some sovereignty is deposited in each level of government, then we are dealing with a federal system.

In federations there is no standard distribution of powers since each country must find its own balance between the centralising and decentralising forces and, in this respect, no two countries are quite alike. Thus, comparisons between the distribution of powers in federal systems of different countries are useless to determine their federal nature and can only be used to measure more adequately whether one’s federal system is more centralist than others are. Yet, notwithstanding the above, there remains a certain pattern in the distribution of powers in many federations. At a minimum, the central government will receive the external signs of sovereignty (foreign affairs, treaties and defence) and economic powers of an international or interprovincial nature; each level is also given an autonomous tax base. The rest is subjected to a process of bargaining and power allocation whose ultimate outcome is determined by the respective strength of the centralising and decentralising forces at the time of the union.

In Canada’s case, federalism was, without a doubt, the result of pressures from Quebec, and to a lesser extent of the Maritime colonies. Quebec wished to share with the other colonies in the development and the resources of the continent; the province also desired to gain access to the market of the other provinces and to achieve the security that a larger union would provide for all. Quebecers were not unmoved by visions of creating, in the northern half of the continent, a vast dominion that they would share with their anglophone compatriots. But, at the same time, Quebec greatly feared the minority position in which a unitary state would have placed it. The people of Quebec took pride in their separateness, in their sense of nationality. They wished to preserve their faith, their language, their laws and their culture, all essential constituting elements of their distinctiveness, of their existence as a separate people; above anything else, these components they wished to preserve and to safeguard in the future. Ultimately, they thought that their separate or distinct existence would be best assured by joining together with the other provinces in a union that recognised and supported their autonomy. For better or for worse, they believed that the survival of French Canada was linked to the creation of a federal system, that as long as Canada would continue to exist French Canada would also continue to survive.

The federal system was thus adopted as the only acceptable solution despite the fact that many of the Fathers of Confederation (John A. Macdonald and George Brown for example) did not believe the system practicable and thus opposed it and would have preferred a unitary state. The example of the American Civil War, which struck at the heart of the problems inherent in federalism, led the Fathers of Confederation to adopt a particularly centralised form of federalism, leading one expert in federal governments, K. C. Wheare, to call the Canadian system “quasi-federal”.

It has been said that federalism, if applied properly, is incompatible with dictatorship as dictatorship implies the absolute control of power by one somewhere while federalism diffuses power between various units. Federalism also denies the application of simple majority rule since the purpose of federations is to recognise that the rights of small units have to be acknowledged and respected. In essence, by creating local units, and empowering them with sovereignty, the federal system creates a majority out of what would have been otherwise a minority; such a group can adopt for itself within its sphere of jurisdiction the legislation that it desires to assure its own survival and development. The federal system is difficult and costly to operate; it frequently leads to tension but provides, as well, the mechanism to resolve these. It is a system particularly suited for large and diverse countries where cultural, religious and linguistic differences are pronounced. It makes of peoples, who might otherwise be strangers, if not enemies, partners in development and allows them to co-exist in peace while learning from one another.

Main features of federalism

The following are the main features of federalism:
1.Two levels of government created and protected by the Constitution, with sovereignty stemming neither from above, nor from below, but distributed between the two, in some fashion by the Constitution.
2.Neither level of government is entirely subordinated to the other; each has powers and these are guaranteed by the Constitution.
3.Supremacy rests in the Constitution. Formal changes in the relative position, or powers, of each level of government cannot be achieved by one level alone, but are subjected to some form of mutual consent; the method for effecting such changes (amendments) is outlined in the Constitution.
4.Both levels of government enact legislation affecting the same citizens; the central government enact laws in certain fields for the whole (or possibly part) of the country; the provincial government enacts legislation on other subjects for the residents of their respective provinces.
5.The legislation of the provincial government can only apply to the people of their province. Provincial law does not have the power of extraterritoriality.
6.Overlapping of jurisdiction (so-called “grey areas”) is inevitable within a federal system. When such overlapping exists, there is a need to determine, in the Constitution, which of the two levels of legislation shall prevail if the laws are found in contradiction.
7.Federal constitutions must be, at least, partly written so that the allocation of fields of jurisdiction is made clear and guaranteed. Such constitutions are also said to be rigid since, for the most part, it would require more than a simple majority of the legislatures to change it.
8.Jurisdictional disputes between the two levels of government are decided upon formally by a Supreme or Constitutional court. Such a Court finds its existence guaranteed in the Constitution. Ordinarily, the court is also beyond the control of any one level of government.
9.Disputes may also be resolved by bypassing the court system if the two levels of government so desire; the issues can be resolved politically or administratively through processes and institutions of intergovernmental co-operation.
10.The interests of the member-states in a federation are not only protected by a formal distribution of power, guaranteed by the constitution, but, as well, by some form of local representation in the institutions of the central government. In Canada, this is done in the Senate and, to a lesser extent, in the distribution of federal cabinet positions. Where local interest is not well represented in the institutions and processes of the central government, the role of the provincial governments, to carry out that task, is that much more emphasised and important.
11.Each level of government is not only allocated a list of fields of jurisdiction but, as well, given autonomous revenue sources to finance its operations. A government without revenues of its own, would not really be a sovereign entity.
12.Each of the two levels of government has substantially complete governing institutions with power to modify these unilaterally.
13.Federal countries, especially lately, have developed elaborate structures and devices of intergovernmental co-operation, blurring increasingly the division of powers that normally separates them. In the process they have multiplied “grey areas” and rendered it difficult for citizens to determine who is responsible precisely for what… Such intergovernmental bodies, frequently working in the background, away from the scrutiny of the public, have lessened the control that citizens wish to have over the system.
14.Some federations, such as Canada, have developed, through the existence of the central government, an elaborate system through which the wealthy regions contribute substantially for the support of the less fortunate parts of the country. In Canada’s case, this is done principally through the equalization payments and shared costs programmes.

© 1998 Claude Bélanger, Marianopolis College

Canadian Federalism for Maple Leaf Web

Division of Powers between Levels of Government

In basic terms, federalism refers to “a division of jurisdiction and authority between at least two levels of government” (Jackson & Jackson: p. 189). This division usually occurs between two or more constitutionally recognized levels of government; that is, levels of government separated under the nation’s constitution and with their own autonomous (or semi-autonomous) constitutional powers.

In most instances of federalism there is a single national government, often referred to as the “federal government,” which exercises its particular powers across the whole country. In addition, there are multiple regional governments, often referred to as “provincial” or “state” governments, which exercise their powers within their particular regional territory.

Moreover, each level of government usually has its own particular jurisdiction; that is, areas of public policy in which it, and only it, may exercise authority (or have the final authority). For example, typically the national government will have final authority over “national” issues, such as national defence, foreign policy, and treaty-making, just to name a few. By contrast, the regional governments will have power over more “regional” issues, though this can vary widely from one federation to another.

How jurisdiction and power is divided among each level of government can lead to assessments of a centralized or decentralized federation. In its highly centralized form, jurisdiction and authority lies mainly in the hands of the national level of government, while the multiple regional governments have very little power. Power is thus “centralized” in the hands of a single national government. In its highly decentralized form, jurisdiction and authority lies mainly with the various regional governments, while the national government has very little power. Here, power is “decentralized” in the sense that it is spread out amongst multiple regional governments. Federations in the world differ significantly in terms of where they fall on this spectrum between the centralization and decentralization of power.

There are numerous examples of federalist governments in the world today, including (but not limited to) Canada, the United States, Australia, Argentina, Brazil, Mexico, Nigeria, the Federated States of Micronesia, and the United Arab Emirates.

Federal versus Unitary Governments

Federalism, as a form of government, can be contrasted to unitary government. Unitary governments are those which have only one level of government, or only one level of government which has its own autonomous constitutional powers. In some cases of unitary government, there is only one national government that makes all political decisions. In other cases, state, provincial, or local governments may exist, although these regional levels have no constitutional autonomy and are dominated by the national government.

Most countries in the world are organized as some form of unitary government. Examples include (but are not limited to) the United Kingdom, France, Italy, Japan, the People’s Republic of China, Singapore, and South Korea.

Potential Benefits and Detriments of Federalism

Why, precisely, do federal states exist? Why aren’t all nations organized as unitary governments? There are many different reasons why federalism is preferable, and usually varies from one federal country to another.

One of the most often cited benefits of federalism is that it acts as an additional check on government power. In unitary states, governmental power is usually highly centralized within a single level of government. In federal states, by contrast, power can be dispersed amongst multiple levels of government. Accordingly, it is much more difficult for one set of political elites to control the power and direction of government. The different levels, instead, can act as a check on one another in the exercise of political authority.

Another oft cited benefit of federalism is that it can protect local or regional interests to some extent. Many modern nation-states are very large and have highly diverse populations. In some cases, regional groups in one part of the nation can have very different political needs and views than those in other regions. It may be that a region is dominated by a particular religious, ethnic, or linguistic group, which is a minority within the larger nation (such as the French Quebecois in Quebec). Federalism can prevent geographically-based minorities from being at the total mercy of the larger national majority by giving them their own level of government, with their own autonomous political jurisdictions and powers.

Another possible benefit of federal, as opposed to unitary, states is their ability to manage and administer large geographical areas. This was particularly true in the past, when the central government faced huge communication and transportation issues in administering large nations. The presence of regional governments administering local issues made such nations much easier to manage. Today, however, this is much less of an issue, as technology allows a central government to effectively administer very large and diverse geographical areas.

Federalism, as a form of government, can also have several potential weaknesses. While federalism can act as a check on government power, it can also lead to paralysis and an inability for government to deal with difficult national issues. During the Great Depression in Canada, for example, the federal government was unable to institute national policies to address mass unemployment and poverty, as it did not have the constitutional authority to do so (these powers, instead, were dispersed amongst the provinces).

Moreover, as federalism often protects regional interests, it can reinforce and entrench divisions within a country, and contribute to ongoing political instability between groups. One might wondered whether Quebec nationalism would be so strong today if Canada had been a unitary, as opposed to federalist, state. On the other hand, one could also argue that Canadian federalism has been a major factor in keeping the country together, as it is has permitted the protection of Quebec’s interests within Canada.

It is important to note, however, that whether a particular federal state exhibits these possible benefits and detriments depends in large part on how it divides power between levels of government. A highly centralized federal state, for example, may not act as a check government power or protect regional interests, due to the fact that most powers (or at least, the most important ones) are given to the central government.

Levels of Government in Canadian Federalism

Federal, provincial, territorial, and local governments

Canadian federalism has two constitutionally recognized levels of government: federal and provincial. The country also has two further forms of government, territorial and local, which are not constitutionally recognized. The following section introduces each level of government and its status within Canada’s federal framework.

Federal Level of Government

The first constitutionally recognized level of government is the federal or national government. This level is responsible for enacting and implementing laws for the whole country. In doing so, the federal government is provided with its own constitutional powers and jurisdictions, which it may exercise independently from the provincial level of government.
•See the Canadian Federalism and Division of Powers section of this article for more information on federal constitutional powers and jurisdictions.

Canada’s national Parliament located in Ottawa, the nation’s capital, is the premier institution of the federal government. It consists of the Monarchy (and his/her federal representative, the Governor General) and two legislative chambers, the House of Commons and the Senate.

For more information on Canada’s system of parliamentary government:
•Mapleleafweb: Parliamentary Government in Canada: Basic Organization and Practices

The head of state for the federal government is the Monarchy; however, his/her role is primarily ceremonial under Canada’s contemporary system of government. The bulk of federal power lies with the federal head of government and his/her executive council, which are officially referred to as the Prime Minister and Cabinet, as well as the elected legislative chamber, the House of Commons. The second federal legislature, the Senate, is an appointed body and exercises considerably less power relative to the elected House of Commons.

Another key federal institution is the federal judiciary. This includes the Supreme Court of Canada, which is appointed by the federal government and is the highest court in the country. Other important federal-level courts include the Federal Court of Appeal, the Federal Court, the Tax Court of Canada, the Court Martial Appeal Court, and the Courts Martial (the latter two are military courts). Another important federal institution is the national public service. This includes all of the federal government departments and agencies, which are responsible for helping the federal government form and implement policy within its jurisdictions.

Provincial Level of Government

Provincial governments form the second constitutionally recognized level of government in Canada. There are 10 provinces in Canada, each with their own provincial government: British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Newfoundland and Labrador, Nova Scotia, New Brunswick, and Prince Edward Island. These provincial governments enact and implement laws within their particular provincial territory, and are provided with their own constitutionally recognized powers, which they may exercise independently from the federal government, and from each other.
•See the Canadian Federalism and Division of Powers section of this article for more information on provincial constitutional powers and jurisdictions.

Each provincial government has its own legislative assembly, which is located in its respective provincial capital. The Monarchy (or the Lieutenant-Governor, his/her provincial representative) is the provincial head of state. However, as is the case at the federal level, this office is primarily ceremonial. Real provincial power lies, instead, in the hands of the provincial heads of government and their executive councils (Premiers and their Cabinets), and the provincial elected legislature.

There is also a provincial-level court system, which includes provincial courts of appeal and provincial trial courts. These courts are inferior to the federal Supreme Court of Canada (meaning the Supreme Court may overrule them), and typically hear criminal, constitutional, civil, family, traffic, and bylaw cases. In addition, each province has its own provincial public service, which includes government departments and agencies that are responsible for assisting their respective governments in forming and implementing policy within provincial jurisdictions.

Territorial Governments

Canada also has three territories, each with their own governments: the Yukon, the Northwest Territories, and Nunavut. Like their provincial counterparts, these are regional governments, which are responsible for enacting and implementing laws within their particular territorial area. Unlike the provinces, however, territories are not constitutionally recognized entities, with their own autonomous powers and jurisdictions. Instead, the territories fall under the legislative jurisdiction of the federal government, whom is responsible for creating territories and setting out their basic framework.

In practice, territories are usually accorded many of the privileges associated with being a province. Each has its own legislative assembly, which has the power to enact laws within its own territory. The head of state is a territorial Commissioner, which performs many of the same roles as a provincial Lieutenant-Governor. As is the case with provincial and federal governments, however, real power lies in the hands of the territorial head of government and his/her executive council (the Premier and Cabinet), as well as the elected legislative assembly. Each territory has a public service and court system (although, in some cases, a territory will share a court with a neighbouring province).

As territories are not constitutionally recognized as autonomous governments, their status within Canadian federalism is technically inferior. As such, territories do not have a legal say in constitutional amendments regarding the separation of powers between the federal and provincial levels of government. Nevertheless, it is common practice to include territorial governments in inter-governmental meetings and decision-making processes.

Local Governments

The final type of government in Canada is local government, which includes municipal, county/parish, and semi-regional councils, boards, and agencies. Like the territories, local governments are not constitutionally recognized entities with their own autonomous powers and jurisdictions. Instead, local governments fall under the jurisdiction of the provinces and territories, which are responsible for creating local governments and setting out their basic frameworks.

In practice, local governments are usually highly dominated by their respective provincial or territorial government. Provincial/territorial governments often restrict the sorts of laws a local government may pass, how much money the may spend, and how they may implement long-term development strategies. Consequently, local governments are usually non-factors in inter-governmental relations and decision-making. However, the issue of cities, particularly Canada’s large metropolitan centres, can often be a contentious one between the federal and provincial/territorial levels of government.

For more information on local government in Canada:
•Local Government in Canada: Organization and Basic Institutions

Canadian Federalism and the Divisions of Powers

Federal and provincial powers under the Canadian Constitution

Confederation and the Division of Powers

The fundamentals of Canadian federalism were first provided at the time of Confederation via the 1867 British North America Act (which, in 1982, was renamed the Constitution Act, 1867). This Act set out the jurisdictional powers of both the federal and provincial levels of government.

For the full text of the Constitution Act, 1867:
•Government of Canada: Constitution Acts 1867 to 1982

In regard to the provinces, Section 92 of the Act granted each province 16 enumerated powers. This includes legislative control over such things as hospitals, asylums, charities, municipal institutions, prisons, and property and civil rights, just to name a few. Section 92 granted the provinces sole jurisdiction in these areas, meaning that only they, and not the federal government, could constitutionally legislate in them.

Section 93 of the Act grants the provinces exclusive jurisdiction over education, allowing provincial governments to structure and manage their own education systems.

In addition to these areas of sole jurisdiction, Section 95 of the Act provided for two concurrent powers in agriculture and immigration. The term “concurrent powers” here means that both levels of governments are constitutionally permitted to legislate in these areas. In other words, it is a shared area of jurisdiction in which the federal government and provinces may both enact laws.

In the context of financial powers, the provinces were given only limited powers of taxation. Section 92 of the Act confined the provinces to only “direct taxation” in order to raise revenue for provincial purposes. The question of what counts as “direct taxation” for the purposes of the Act has been a major issue in Canadian federalism, and has been reviewed numerous times by the Canadian judiciary. Currently, most provinces charge an income and corporate tax, a sales tax on the exchange of goods and services, as well as raise revenues through licensing and other fees.

Section 91 of the Act deals with federal powers, and has two parts. First, the Peace Order, and Good Government clause (commonly referred to as the “POGG clause”) says that all powers not given to the province in Section 92 are left with the federal government. Only the federal government, and not the provinces, could constitutionally legislate in these areas.

Section 91 of the Act goes on further to list 29 examples of federal powers. These include the regulation of trade and commerce, postal service, census and statistics, the military, navigation and shipping, sea coast and inland fisheries, Indians and reserve land, and the criminal law, just to name a few. Finally, Section 132 of the Act provided the federal government with the power to implement international treaties.

Unlike the provinces, the federal government was granted very wide taxing powers. Section 91 of the Act states the federal government may raise revenues by any mode or system of taxation. This may include forms of direct taxation, such as income or corporate taxes, as well as indirect taxation, such as duties and fees.

In addition to its jurisdictional and financial powers, the Act also provided the federal government with special powers for controlling the provinces. The first of these was the power of reservation, which allowed the Lieutenant Governor of a province (a federal appointee) to reserve provincial legislation for the consideration of the federal Cabinet. The federal Cabinet could then approve or reject the legislation. Even if the Lieutenant Governor granted assent to a piece of provincial legislation, the federal Cabinet could subsequently disallow it with through their power of disallowance. Furthermore, the federal government could use its declaratory power to place any local work or undertaking, which it deemed to be for the general advantage of Canada, under its control. While the federal government has used these powers in the past, it is now an unwritten convention of the Constitution, superseding the written words of the Constitution Act, 1867, that these federal controls not be used.

Constitutional Amendments and Division of Powers

Since Confederation there have been several constitutional amendments related to the division of powers between the federal and provincial governments.

The bulk of these amendments dealt with federal-provincial control over social benefits, and resulted in an expansion of federal power. In 1940, power over unemployment insurance was added to the list of exclusive federal powers under Section 91 of the Act. Previously, the courts had ruled that unemployment insurance fell under provincial jurisdiction. In 1951, old-age pensions were made a concurrent power, meaning that both levels of government were permitted to legislate in this area. Previously, control over pensions had been a solely provincial power under Section 92 of the Act. Federal powers over pensions were further extended in 1964, when it was permitted to legislate in the areas of widows’ and survivors’ benefits and disability pensions.

Another important area of constitutional change centres on the process of constitutional amendments themselves. In 1949, the federal Parliament was allowed to amend the Constitution unilaterally in areas of purely federal concern. This power had been previously held by the British Parliament. The amendment, however, was appealed in 1982 when the federal government and the provinces adopted new constitutional amending formulas. These new formulas are significant in the context of federalism, as they stipulate the rights of each level of government when it comes to changing the Constitution. Any change to the Constitution that impacts one or more provinces, for example, now explicitly requires some level of consent from those provinces affected.

For more information on Canada’s constitutional amending formulas:
•Mapleleafweb: The Canadian Constitution: Introduction to Canada’s Constitutional Framework

In addition to the new amending formulas, the 1982 constitutional reforms also impacted Canadian federalism in the areas of natural resources and regional disparities. Under those reforms, provincial powers over their natural resources were expanded, although, the federal government still maintained some power in this field. Furthermore, Section 36 of the Constitution Act, 1982 included a commitment by both levels of government to reducing economic disparities and unequal access to public services between regions in Canada. Moreover, the Act also included a commitment on the part of the federal government to the principle of making equalization payments to ensure provincial governments have sufficient revenues to provide comparable levels of public services.

Judicial Interpretation and Division of Powers

Constitutional amendments are not the only source of changes to the division of powers between the federal and provincial levels of governments. Another key source of federal evolution has been judicial interpretations of the basic federal framework in the Constitution. It is important to note here the constitutional role of the courts. While the Constitution sets out the basic rules of Canada’s system of government, the courts interpret those rules whenever conflicts arise. In the context of federalism, the courts are asked to rule on disagreements between the different levels of government over such things as the division of powers. These judicial decisions can, in turn, have important impacts on the nature and operation of Canada’s federal system.

In this context, two courts are of particular significance. Prior to 1949, the Judicial Committee of the Privy Council (JCPC), in London, England, was Canada’s final court of appeal, and it rendered most constitutional decisions. After 1949, this responsibility was transferred from the JCPC to the Supreme Court of Canada. Over their histories, these courts have had a great impact on how Canada’s federal system operates.

Between 1867 and 1949, the JCPC effected a major change in the basic divisions of powers between the federal and provincial governments, due in large part to its particular interpretation of Section 91 of the Constitution Act, 1867. As discussed above, this section outlined federal powers in two parts. The first part, the POGG clause, states that all powers not given to the provinces in Section 92 were to be left to the federal government. The second part, the enumerated powers, provided specific examples of what those federal powers would include. In a series of cases, however, the JCPC interpreted Section 92 very differently. It viewed the enumerated powers not as examples of federal jurisdiction, but as a list of the real federal powers. Furthermore, it transformed the POGG clause from a declaration of normal federal power, to an emergency powers provision. As a result, federal powers were limited to simply those enumerated in Section 92, while the POGG clause only allowed the federal government to exceed those powers in times of national emergency.

In addition to limiting the scope of federal powers under Section 91 of the Act, the JCPC expanded provincial powers, particularly in regard to the provincial power over civil and property rights under Section 92. For example, Section 91 stipulated that responsibility for regulated trade and commerce fell solely under federal jurisdiction. The JCPC, however, limited this federal power to just international and inter-provincial trade, meaning that the federal government could only control trade between Canada and other countries and between provinces/territories. The JCPC placed intra-provincial trade, or trade that occurs within a province, under provincial jurisdiction via the provinces’ power over civil and property rights. Another example was federal jurisdiction over international treaties. The JCPC limited this federal power to just treaties that dealt with subject matters under federal jurisdiction. The JCPC granted the provinces the power to make international treaties that dealt with provincial jurisdictions. Again, this power was extended through the provinces’ control over civil and property rights.

After 1949, the Supreme Court of Canada replaced the JCPC as Canada’s highest court. In some cases, the Supreme Court backtracked from the JCPC’s tendency to expand provincial jurisdiction at the expense of federal power. Under the POGG clause, for example, the Supreme Court has recognized federal control over many key areas, such as aviation and airports, offshore minerals, telephones and telecommunications, and pollution (in cases of extra-provincial implications). Moreover, the Supreme Court has recognized these federal POGG powers on a permanent, rather than simply emergency, basis.

Spending Powers and Canadian Fiscal Federalism

Federal and provincial-territorial financial relations

Spending Powers under the Constitution

As discussed in the previous section, the Canadian Constitution sets out the powers and jurisdictions of each level of government; that is, the areas in which the federal government and provinces may legally pass laws. There is, however, another power – governmental spending powers – which is not explicitly discussed in the Constitution, but nevertheless plays an important role in the operation of Canadian federalism. Spending powers simply refers to the right of a government to spend its own money in areas outside of its normal constitutional jurisdictions. While the Constitution forbids one level of government from passing laws that regulate areas outside of its jurisdiction, it does not explicitly forbid them from spending money in those areas.

Federal Government and the Spending Power

While the spending power is available to both levels of government, it is a much more powerful tool in the hands of the federal government. This is due to the fact that the federal government usually has a larger financial capacity than it needs for its own areas of jurisdiction. As a result, the federal government has excess funds which it may direct towards provincial jurisdictions. Provincial governments, by contrast, usually do not have this sort of financial capacity; although, certain provinces, such as Alberta, British Columbia, and Ontario, do to some extent. As a result, provincial governments do not generally spend their financial resources in areas of federal jurisdiction.

This federal spending power and capacity has come to play a crucial role in federal-provincial relations, especially since the 1940s and 50s and the creation of the Canadian welfare state. Under the Constitution, key aspects of the welfare state, such as public health care, education and welfare, fall under provincial jurisdiction. This means that only provincial governments may legislate and regulate in these areas. Nevertheless, the federal government has been able to use its spending power to create national policies and programs within these provincial jurisdictions.

There are two key ways in which the federal government may do so. First, it may provide funds directly to Canadians in support of certain social policies. The Millennium Scholarship Fund, introduced by the Liberal federal government in 1998, is a perfect example in this context. The Fund is a federal program which provides funding to students in order to reduce the cost of post-secondary education. The federal government uses its spending power to do so, even though post-secondary education falls under exclusive provincial control. Another example is the Universal Child Care Benefit, introduced by the Conservative federal government in 2006. This Benefit provides funds directly to parents in support of child care costs, even though child care falls under the sole jurisdiction of the provinces.

The second way in which the federal government may use its spending power is to fund programs through the provinces. Under this approach, the federal government transfers funds not directly to Canadians, but to provincial governments. The use of federal spending powers in this context forms a critical aspect of what is commonly referred to as fiscal federalism, the complex interrelationship between the federal government and the provinces in the area of finance. Federal tax and funding transfers to the provinces in support of provincially-provided health care, education, child care, and welfare programs are all examples of this sort of federal action.

It is important to recognize, however, that the federal government does not simply give its money away to the provinces. Instead, it often (but not always) uses its spending power to gain provincial compliance with federal initiatives. It will use the promise or denial of federal funds as a means of getting the provinces to adopt federal policies and programs in areas of provincial jurisdiction. Hence, while the federal government does not have the constitutional authority to legislate in provincial jurisdictions, it can nevertheless use its spending power to influence provincial action in these areas.

Key Elements of Fiscal Federalism

As stated above, fiscal federalism refers to the complex interrelationship between the federal government and the provinces in the area of finance. Three elements are central to this financial interrelationship: federal-provincial taxation agreements, federal conditional and block grants, and equalization payments.

Both the federal government and the provinces/territories have the constitutional power to impose direct forms of taxation, such as income and corporate tax. In doing so, the different levels of government usually coordinate their efforts through federal-provincial/territorial taxation agreements. This is due to many reasons. First, some level of coordination is required in order to ensure that governments, as a whole, do not over tax individuals and businesses. Second, the federal government often uses the tax system as a means of transferring funds to the other level of government. The federal government will provide “tax points” or “tax transfers” to the provinces and territories, which reduce federal tax room in order to make more room for provincial or territorial governments. Tax transfers are provided for in formal agreements between governments, and are often used as a means of federal support for provincial and territorial services (such as health care or education).

In addition to taxation agreements, the federal government also provides conditional and block grants to the provinces and territories. These are sums of money which the federal government provides each year in support of provincially and territorially provided programs, such as health care, child care, education, and welfare. In some cases, these grants are conditional, meaning that the federal government places significant conditions in order to receive the money, thereby promoting federal policies in areas of provincial jurisdiction. Federal grants for health care fall under this category, with federal conditions for funding being outlined in the Canada Health Act. In other cases, federal grants are unconditional (or “block” grants), which means the provinces and territories have a high level of discretion in how they use the funds.

The final key element of fiscal federalism in Canada is the system equalization payments. First introduced in 1957, equalization payments are a system of unconditional grants provided by the federal government to “have-not” provinces based on provincial need. The purpose of these payments is to ensure that all provinces can offer a relatively equal standard of public services, regardless of their population or revenue base. Typically, all of the provinces, except Ontario, British Columbia, and Alberta, receive some level of equalization payments each year.

Fiscal Federalism and Federal-Provincial/Territorial Conflict

While the provinces accept (and even encourage) federal spending in areas of provincial jurisdiction, this relationship often has conflicts. Some provinces, especially those that are more financially self-sufficient, often take issue with the conditions that the federal government places on them in order to receive federal funding. They would, instead, prefer to have complete discretion in how they use the federal funds.

Another key issue is the perception (true or not) that an imbalance exists in federal and provincial financial situations, commonly referred to as a “fiscal imbalance”. Proponents of the fiscal imbalance thesis argue that the federal financial capacity is too large relative to its jurisdiction responsibilities, while provincial financial capacities are too small. As such, provincial governments should be allowed to collect greater revenues, at the expense of the federal government, in order to properly balance the finances of the two levels of government. Such a change would, of course, render the federal spending power less effective, as the provinces (or at least some of them) would be more financially self-sufficient and the federal government would have a reduced capacity to spend outside of its own jurisdictions.

For more information on the fiscal imbalance argument:
•Mapleleafweb: Fiscal Imbalance Debate: Origins and Perspectives

Some of these ongoing conflicts led to the 1999 Social Union Framework Agreement (SUFA), signed by the federal and provincial governments (except Quebec). Under SUFA, governments agreed to give one another advance notice before implementing a major change in a social policy or program that would substantially affect another government. While this provision did not prohibit governments from developing and implementing social policy independently from one another, it did require them to provide some advance notice to other governments.

The most significant aspect of SUFA centred on the use of federal spending powers. The federal government agreed not to introduce new social programs that are funded through intergovernmental transfers without the agreement of a majority of provincial governments. This represented a major limiting of the federal spending power. The federal government did, however, retain the right to use its spending power to make transfers directly to Canadians. In that context, it promised to give notice and offer to consult with the provinces and territories before implementing such programs.

It is important to note, however, that SUFA is not constitutionally binding, nor does it have any robust enforcement mechanism. Participating governments can opt-out of the agreement at any time, and there is very little in the way of punishment if a government fails to live up to its commitments.

Canadian Federalism and Inter-Governmental Interaction

Departmental and ministerial relations between governments

Governments in Canada do not simply go about their business independently and without contact with each other. Instead, all governments regularly meet and communicate with one another through formal and informal means. The following provides a brief summary of some these key means of interaction.

Departmental Relations between Governments

Intergovernmental relations in Canada are characterized by a high level of day-to-day communication between personnel from different governments. Ministers, political staff, and regular public service personnel talk to their counterparts in other governments regularly in order to share information and to coordinate their activities. This is especially the case in areas where there is a high level of governmental interdependence, such as health care or taxation.

In order to manage these regular intergovernmental contacts, many governments (both provincial/territorially and federally) have created their own departments of intergovernmental affairs. These departments are often well staffed and funded and have their own Minister, who sits in Cabinet. The primary responsibility of such departments is to manage contacts and communications with other governments in Canada, as well as report to Cabinet on intergovernmental business and priorities.

For more information on intergovernmental relations and conferences:
•Canadian Intergovernmental Conference Secretariat

First Minister’s Conferences

One of the most high-profile, although not necessarily productive, means of interaction between governments are the First Minister’s Conferences. These are meetings between the federal Prime Minister and the provincial and territorial Premiers (hence, the term “first ministers”), which are called by the Prime Minister and have typically been held annually. Meetings of first ministers can trace their origins back to the mid-1860s, when the various Canadian governments (then British colonies) met to discuss Confederation.

Today, these conferences represent an opportunity for the Prime Minister and Premiers to discuss important intergovernmental issues and business. In some cases, these meetings are called to discuss specific policy issues. First Minister’s Conferences in the 1990s, for example, led to the Meech Lake and Charlottetown Accords on constitutional reform. In 2004, the federal government called a First Minister’s Conference on the Future of Health Care. It resulted in significant intergovernmental agreements on public health care services and funding.

In other cases, these meetings are used for the heads of each government to meet face-to-face, share information, and lobby one another on regular intergovernmental business. The provinces and territories often use the meeting to push the federal government for increases in federal fiscal transfers or to discuss issues of contention regarding federal action. The federal government, by contrast, will use the opportunity to lobby for its own national initiatives.

Council of the Federation

Another important intergovernmental forum is the Council of the Federation. First created in 2003, the Council is a provincial/territorial forum constituted by the Premiers of each province and territory in Canada. The federal government is not a member of the Council, although it is permissible for the members of the Council to invite the Prime Minister (or a Cabinet Minister) to attend a Council meeting when deemed necessary. The Council’s purpose is to promote inter-provincial/territorial cooperation, both between members, as well as in their relations with the federal government.

The Council in no way takes away from the powers of individual provinces and territories. It is, instead, simply a forum for discussion and information sharing between members. Nevertheless, the Council has played a role in some key events in Canadian federalism. In 2003-2004, for example, the provinces and territories used the Council to form a common position against the federal government in negotiations on health care funding and reforms.

Federalism

Definition of Federalism by Rand Dyck and Christopher Cochrane (in their book “Canadian Politics: Critical Approaches”) in the context of political science in Canada: A system of government characterized by two levels of authority federal and provincial and a division of powers between them, such that neither is subordinate to the other.

Definition of Asymmetrical Federalism

The Canada social science dictionary [1] provides the following meaning of Asymmetrical Federalism: Where a federal system of government does not accord precisely the same legal powers and areas of jurisdiction to all its constituent states or provinces. In Canada, this form of federalism has been advocated as a way to reconcile Quebec to the federal system by awarding the province specific additional powers connected to the protection and promotion of French language and culture.

Asymmetrical Federalism: Resources

Notes and References

1. Drislane, R., & Parkinson, G. (2016). (Concept of) Asymmetrical Federalism. Online dictionary of the social sciences. Open University of Canada

Resources

See Also

• Politics
• Political Science

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This entry was last updated: March 8, 2017