Limit Ottawa's spending power

17. Actualité archives 2007

Canada's Conservative government is reported to be readying limits to the federal spending power for inclusion in next month's Throne Speech. That's good news. Although the subject is little discussed outside government and academia, Ottawa's ability to dictate social policy to the provinces through its unlimited power to tax and spend has been perhaps the biggest single irritant to national unity in the past 60 years. It's about time this clout were done away with, or at least significantly curtailed.
Canada's Constitution gives jurisdiction over most social programs -- notably, health, education and welfare -- to the provinces alone. Until the advent of the modern social safety net, this seldom bothered the federal government. But from the Great Depression onward, Ottawa has agitated for a say over how provincial governments ran social programs.
Initially, the courts would not allow the federal government a direct role. They even chafed when the federal government tried an indirect approach, offering to give the provinces plenty of federal tax revenue in return for allowing Ottawa to set national social standards.
The Second World War, though, changed the balance. Ottawa took on emergency powers and special taxation authority to help it direct the war effort. When the conflict ended, federal politicians were reluctant to give up their newfound clout. Shortly thereafter, the Supreme Court of Canada replaced Britain's Judicial Committee of the Privy Council as the country's highest court. Since the Supreme Court had always been more amenable to arguments in favour of the federal spending power's constitutionality -- it was the Judicial Committee that blocked its use -- Ottawa was able to solidify its role in provincial constitutional jurisdictions.
Where once the Judicial Committee had used the doctrine of "pith and substance" to prevent one level of government from doing indirectly what the Constitution forbade it to do directly, the Supreme Court showed no similar compunction. By the mid-1980s, this power had grown so pervasive that Ottawa passed the Canada Health Act with little objection from the provinces, even though it effectively put Ottawa in charge of health care across the country and clearly would have been unconstitutional under the old interpretation of the separation of federal and provincial powers.
While many of the programs introduced using the federal spending power are popular, the power's repeated use has all but destroyed the notion that Ottawa and the provinces are "coordinate" orders of government, each equal and sovereign within its own sphere of operation. The Constitution never envisaged a structure in which the federal government bossed around the provinces in the manner that we now take for granted.
The spending power has made Canada one of the most centralized federations in the industrialized world. And federal intrusion into the provincial sphere has been behind many of the most divisive national debates. Disputes over health and social transfers, equalization, the fiscal imbalance and constitutional amendments have all shared a common irritant -- Ottawa's spending power.
Opposition critics have complained that the Conservatives' plans to limit this intrusive power will undermine our national welfare programs. Nonsense. There is nothing that prevents Ottawa from transferring the same amount of money to the provinces as it is now. The only thing that would change is that the federal government would no longer be able to attach the strings it currently does. It may continue to give money, just not unwanted advice on how it must be spent.
Nor is a constitutional agreement needed for Stephen Harper's government to apply limits on the federal spending power, as the Liberals have charged. The spending power is extra-constitutional. Nowhere is it written in the Constitution, nor has it ever been formally recognized by our courts.
If the Conservatives are able to implement this reform, they will re-establish Ottawa and the provinces as equal partners and prevent future federal governments from riding roughshod over provincial areas of jurisdiction. That should make for far less provincial irritation, and thereby strengthen the Confederation.
(c) National Post 2007

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