Canada by Picasso: The Faces of Federalism - Brender Writing

CANADAby Picasso

Roger Gibbins Antonia Maioni

Janice Gross Stein Introduction by

Allan Gregg

The Faces of FederalismTHE 2006 CIBC SCHOLAR-IN-RESIDENCE LECTURE

Canada by Picasso: The Faces of Federalism

THE 2006 CIBC SCHOLAR-IN-RESIDENCE LECTURE

by Roger Gibbins, Antonia Maioni, Janice Gross SteinIntroduction by Allan Gregg

The Conference Board of Canada • Ottawa, Ontario • 2006

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Gibbins, Roger, 1947– Canada by Picasso : the faces of federalism : the 2006 CIBC Scholar-in-Residence Lecture / by Roger Gibbins, Antonia Maioni,Janice Gross Stein ; introduction by Allan Gregg.

Includes bibliographical references. ISBN-13: 978-0-88763-742-1ISBN-10: 0-88763-742-6

1. Canada – Politics and government – 1993– 2. Federal government – Canada. 3. Québec (Province) – Politics and government – 1994–. I. Maioni, Antonia II. Stein, Janice III. The Conference Board of Canada. IV. Title.

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ACKNOWLEDGEMENTS

The Conference Board of Canada is deeply grateful to CIBC for its far-sighted investment in the Scholar-in-Residence Program, which made this volume possible and will support nine more years of cutting-edge research into topics of vital importance to Canada’s future.

We thank our media partners, the Ottawa Citizen and the National Post, for publicizing the June 2006 lecture that resulted in this volume and for giving Canadians an advance look at the arguments presented here.

At the Conference Board, Michael Bloom, Natalie Brender and Barb Hogberg organized the 2005–06 Scholar-in-Residence Program, and Natalie Brender edited this volume.

And, of course, we thank Roger Gibbins, Antonia Maioni, Janice Gross Stein and Allan Gregg for the splendid contributions to Canadian public debate that they have made.

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ABOUT THE CONFERENCE BOARD OF CANADA

We are:A not-for-profit Canadian organization that takes a business-like approach to its operations.Objective and non-partisan. We do not lobby for specific interests.Funded exclusively through the fees we charge for services to the private and public sectors.Experts in running conferences but also at conducting, publishing and disseminating research, helping people network, developing individual leadership skills and building organizational capacity.Specialists in economic trends, as well as organizational perfor-mance and public policy issues.Not a government department or agency, although we are often hired to provide services for all levels of government.Independent from, but affiliated with, The Conference Board, Inc. of New York, which serves nearly 2,000 companies in 60 nations and has offices in Brussels and Hong Kong.

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THE CONTRIBUTORS

Roger Gibbins is President and CEO of the Canada West Foundation, a public policy research group based in Calgary that operates across the four western provinces. Before assuming the leadership of the Canada West Foundation in 1998, he was a professor of political science at the University of Calgary. He started his academic career there in 1973 and served as department head from 1987 to 1996. He has authored, co-authored or edited 21 books and more than 100 articles and book chap-ters, many dealing with western Canadian themes and issues. He received his undergraduate degree from the University of British Columbia and his doctorate in political science from Stanford University.

Allan Gregg, a co-founder and Chairman of The Strategic Counsel, is widely known and respected as one of Canada’s senior research profes-sionals. Allan was a pioneer in the integration of consulting, public-opinion research, public affairs and communications. Much sought after for his analysis, he is the host of two popular and respected talk shows: “Gregg and Company” and “Allan Gregg In Conversation With.”

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Antonia Maioni is Director of the McGill Institute for the Study of Canada, as well as Associate Professor of Political Science and William Dawson Scholar at McGill University. She has published widely in the fields of Canadian and comparative politics, with a particular focus on health and social policy. She is currently investigating political change and the future of the Canadian health-care model. A gradu-ate of Université Laval, she earned a master’s degree from Carleton University’s Norman Paterson School of International Affairs and a Ph.D. in political science from Northwestern University.

Janice Gross Stein is Belzberg Professor of Conflict Management in the Department of Political Science and Director of the Munk Centre for International Studies at the University of Toronto. She is a Fellow of the Royal Society of Canada and the author of more than 100 books and articles. She currently serves as Vice-Chair of the Education Advisory Board to the Minister of National Defence, as a member of the Board of the Royal Military College of Canada and as a member of the Board of CARE Canada. Janice was the Massey Lecturer in 2001. She is also a Trudeau Fellow and was awarded the Molson Prize by the Canada Council for outstanding contribution by a social scientist to public debate. She was recently elected as an Honorary Foreign Member of the American Academy of Arts and Sciences. In 2006 she co-chaired the Advisory Panel on Fiscal Imbalance for the Council of the Federation.

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Table of Contents

PREFACE by Anne Golden 1

INTRODUCTION by Allan Gregg 5

CHAPTER 1 by Janice Gross Stein 15

Canada by Mondrian: Networked Federalism in an Era of Globalization

Picasso and Mondrian: Two Portraits of Canadian Federalism 17

Globalization 19

Federalism: What Does It Look Like? What Does It Do? 25

Canada by Picasso: The Fault Lines of Federalism 30

The Two Faces of Federalism: Federal and Provincial Governments 30

The Two Faces of Federalism: Canada at Home and Abroad 31

The Absent Face of Federalism: Cities 33

The Challenges to Federalism 35

The “Networked” Society 38

Tribes, Hierarchies, Markets and Networks 38

Over the Frontier: Policy-Making and Creativity in the Open 43

Canada by Mondrian: Networked Federalism 48

Modern Art Revisited 56

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CHAPTER 2 by Roger Gibbins 59

Canadian Federalism in an Age of Globalization: The Case for a New National Policy

Introduction 61

The Nature of Federalism 61

Stating the Problem 64

History Lessons 69

Agricultural Settlement on the Canadian Prairies 70

Connecting to Markets 76

More Recent Examples 77

Designing a New National Policy 79

Transportation 80

Immigration 81

Aboriginal Policy 83

Protecting Canada’s Economic Interests in the International Arena 84

Internal Barriers to Trade 85

Innovation and Technology 86

Regional Economic Development 86

Environment 87

Urban Agenda 88

Post-Secondary Education and Health Care 90

A National Energy Strategy 93

Conclusion 95

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CHAPTER 3 by Antonia Maioni 99

Quebec’s Blue Period

The Blues and les Bleus in Quebec: The Context of Quebec’s Blue Period 101

Quebec’s Blue Period and the Revival of les Bleus 104

Why Do Federalists Have the Blues in Quebec? 107

The Times, Are They A-Changing? 110

The Failures of Federalist Leadership in Quebec 113

Is the Revival of les Bleus the Answer to the Quebec Blues? 118

Why Do Sovereigntists Have the Blues in Quebec? 120

Quebec and the Economic Blues 123

A Clear-Sighted Future or Solidarity Forever? 130

The Health-Care Blues 131

Moving Out of the Blue Period 136

FROM THE LECTURE 139

Conversations and Questions

Prefaceby Anne Golden

President and Chief Executive Offi cerThe Conference Board of Canada

3Preface

For too many years Canadians have watched crucial policy chal-lenges facing this country remain unresolved as initiatives founder on the shoals of our fractured federal system. On issues

ranging from health care, innovation and the environment to immigrant settlement and funding for our cities, initiatives break down—or never get past the draft stage—because of wrangling over which level of government has the authority, money or will to act. As we delay, other countries are moving forward in finding solutions to their own chal-lenges. The policy deadlocks of Canadian federalism thereby threaten to undermine our global competitiveness—with very real consequences for our national capacity to provide citizens with the standard of living and quality of life they deserve.

That’s why The Conference Board of Canada chose to focus the inaugural year of our CIBC Scholar-in-Residence Program on the future of Canadian federalism, in the hope of producing insights that could move Canada beyond stale debates and clear new paths for action. We are thrilled that some of the country’s finest minds—Roger Gibbins, Antonia Maioni and Janice Gross Stein—agreed to be our three scholars-in-residence. Their efforts over the 2005–06 year produced the truly thought-provoking essays collected in this volume.

We were equally thrilled that Allan Gregg, widely known for his strategic thinking on public policy, served as host and moderator for the June 1, 2006, CIBC Scholar-in-Residence lecture at the Fairmont Chateau Laurier in Ottawa. That event is represented in this volume by two elements: the introduction Gregg gave at the lecture, and highlights of the subsequent discussion among Gregg, the scholars and the audience.

The Conference Board is deeply grateful to CIBC for its vision and generosity in providing 10-year funding for our Scholar-in-Residence series, which made possible the present volume and will fund future ones.

With its mission of advancing thought leadership for a better Canada, the Conference Board is proud to be able to present this collection of remarkable essays. We hope it will help leaders at all levels of govern-ment to renew Canadian federalism.

Introductionby Allan Gregg

7Introduction

As a modest student of Canadian history, I suspect our Fathers of Confederation possessed many fine qualities and talents. I can guarantee, however, that clairvoyance was not among them.

One hundred and thirty-nine years ago, 80 per cent of our population was rural. Given this fact, it should come as no surprise that the framers of our Constitution gave little consideration to cities—or that, today, the 80 per cent of the population who make up urban Canada have become “the orphans of Confederation.”

While the evidence suggests that John A. Macdonald’s preference was for a strong central government, he and his colleagues relegated “matters of a purely local nature” to provincial jurisdiction. In so doing, they never contemplated that health, education and welfare—activi-ties overseen at the time not by governments but by individuals, chari-ties and religious organizations—would become the issues that would dominate not just the nation’s finances, but also debate and emotion in the 21st century.

At that time, telecommunications barely existed. Legislation cover-ing this fledgling field was therefore shoehorned into the Railway Act, where it remained for over 100 years. Greenhouse gas emissions, western cities blighted by homelessness or Aboriginal poverty, Internet por-nography, stock exchanges, and a myriad of other concerns that seize the political agenda today could not have been imagined, so these wise Fathers could not be expected to offer any guidance to the inheritors of these problems.

During Canada’s first century, this understandable lack of pre-science did not fundamentally retard our development as a nation. As Alan Cairns reminds us, our pre-Charter British North America (BNA) Act was a “living constitution” that evolved organically, in response to the ebb and flow of shifting realities as much as to the shackles of codified law and legal precedent.1

And so resource ownership was shifted to the provinces in the 1930s. Responding to the need for national enterprise following the

1 Alan C. Cairns, “The Living Canadian Constitution,” Queen’s Quarterly 77, 4 (Winter 1970), pp. 1–16.

8 Canada by Picasso

Second World War, the federal government was granted an unfettered spending power that allowed Ottawa to intervene in all areas of juris-diction. A comprehensive web of shared-cost programs was soon spun that shaped our national identity and ushered in a period of coopera-tive federalism. Out of Quebec’s Quiet Revolution, however, came the notion of opting out and an orthodoxy of parallelism in that province that exists to this day. Over time, provinces were granted corporate and personal taxing powers; tax points were transferred between orders of government; and we learned to share jurisdiction over immigration, environment and agriculture.

But with the repatriation of the Constitution and the entrenchment of the Charter of Rights and Freedoms, our federalism seems to have grown less elastic, more brittle and subject to regular tensions that periodically shake the foundation of the nation.

The failure to bring Quebec into the constitutional family in 1982 reverberates to this day. The impasse of Meech Lake and the rejection of the Charlottetown Accord demonstrated both a recognition of the need to modernize our Constitution and a lack of consensus about how to accomplish that goal.

Fatigued with the whole process, we have chosen to muddle along for the last 14 years. However, in that time, we have seen a wholesale reversal of financial fortunes among our different orders of government and, with that, a whole new set of issues that form the focus of our national discourse.

Most recently, much of that debate has revolved around what many people—including the three scholars whose lectures appear in this volume—perceive to be a serious misalignment between fiscal capa-cities and responsibilities. The allegation, put simply, is that the federal government is awash with cash while the provinces labour under the burden of rising health-care and education costs, and our cities struggle with a tax base too anemic to meet either the needs of their swelling populations or the competitive pressures of globalization.

Aggravating this structural vertical imbalance has been an increas-ing tendency on the part of the central government to use its spending power—sometimes uniformly across the nation and other times

9Introduction

asymmetrically, where side deals are offered to some provinces but not all—to intervene in areas of provincial jurisdiction. Critics claim that these developments blur lines of accountability; divert attention and resources away from pressing matters that only the federal government can manage, such as border security and defence; and create undue tension and inefficiencies in federal–provincial relations. Defenders, of whom there seem to be very few, cite the need for national standards, and maintain that economic prosperity demands nationwide investment in early childhood education, post-secondary education and cities.

Less debated, but of no less concern in some quarters, is the emer-gence of a growing horizontal imbalance. Indeed, there is a real worry that a debt-free Alberta, fuelled by an insatiable worldwide thirst for its resources, will soon become the first region in Canadian history that has no financial reason to remain part of the federation. Add to this fear the gnawing dread that a time will also come when not a single existing manufacturing job in Ontario will not be performed as well and less expensively somewhere else in the world, and it becomes clear that our national economic balance is on a tectonic fault line. As a result—in stark contrast to the traditional national ethos that held we would always be our regional brother’s keeper—we are now hearing the groans of Ontario as it claims to be shouldering the lion’s share of responsibility for federal transfers, as well as conflicting voices calling attention to equalization as a flashpoint of federalism.

It is little wonder, therefore, that the theme of these lectures is that the face of modern federalism could well have been created by Picasso. Fractured lines of jurisdiction create jarring images of dysfunction as Canada confronts global pressures with a paintbox that has not been comprehensively overhauled for almost 140 years.

And these are only the constitutional issues. But as we set out to reconfigure divisions of responsibility and the

fabric of federalism, BNA purists should be equally mindful that other centrifugal forces at work in Canada today also pose a threat to our coherence as a nation.

Free trade has realigned our national commerce from an east–west to a north–south focus, resulting in the evolution of increasingly

10 Canada by Picasso

dissimilar regional economies. In 1989, only Newfoundland exported significantly more of its products to the United States than to the rest of Canada. By 2001, every province but Manitoba had a bigger trade balance with the United States than with its sister provinces.

This continuing activity obviously makes east–west links ever more tenuous; reduces the interdependence of provinces and the need for coordinated and complementary interprovincial trade practices; and, since it casts provinces as competitors in the scramble for north–south commerce, often shapes provincial interests that are independent of each other rather than in alignment.

Cascading voter cynicism has also weakened our national political institutions and eroded their ability to serve as the grand aggregators of the public interest. In the miasma of disdain for our elected leaders, many citizens seem to have forgotten that political parties are a central part of civil society. These essentially volunteer organizations exist as a crucible of consensus. Their purpose is to accommodate broad differ-ences in the population, including regional ones, so that diverse groups can broker their divergent claims and participate in civic affairs as part of a national institution, rather than from the outside as a special- or single-interest group.

The loss of faith in political authority has driven citizens away from direct partisan involvement. The fragmentation of our party system over the last decade and a half similarly reflects the growing view that regional interests may be best served by political parties dedicated to regional rather than national causes.

Not unrelated to this, we are also witnessing growing civic disen-gagement. While the tip of this iceberg is represented by a persistent pattern of low voter turnout, communitarian researchers have explored the base of the iceberg and documented our growing tendency to “bowl alone.” Their findings show that while we may be bowling as much as ever, the number of bowling leagues has decreased by 40 per cent over the last two decades.2 So too has our involvement in parent-teacher

2 Robert D. Putnam, Bowling Alone: The Collapse and Revival of American Community (New York: Simon & Schuster, 2000).

11Introduction

associations, our propensity to have neighbours over to dinner, and virtually any other kind of community-based bridging and bonding activity you care to examine. The price we pay for this modern way of life is a social capital deficit: a breakdown of trust and the further hollowing out of democratic institutions.

Yet a fourth factor that creates a constant strain on our national fabric—and one it seems increasingly politically incorrect even to mention—is the very nature of the federal system we choose to govern our affairs. Federalism unquestionably makes local voices heard and allows diver-sity to flourish. But the fact remains that by granting parallel sover-eignty in different and sometimes overlapping areas of jurisdiction to both the provinces and the central government, we enshrine a tension between the parts and the whole. High oil prices are good for Alberta and Saskatchewan and bad for Ontario; agricultural subsidies help more rurally populated provinces and hurt more urban ones. And so on.

Provinces, because of their sovereign powers within federalism and by virtue of the populations they serve, by definition exist to advance the cause of individual parts. If that cause is at odds with another part or even the whole, provinces are doing nothing other than fulfilling their mandate when they preach for their own parish. Now some may say that this is a creative tension that makes Canada the great country it is, or that because of the vast expanse and diversity of our nation, this is the only system that will work. They would be right to say so. But the fact remains: creative or not, necessary or not, a tension is still a tension.

These forces—north–south commerce, weakened political institu-tions, withering civic virtue and inherently adversarial federalism—all exist regardless of the role we prescribe for each order of government. When considering the appropriate roles of the different orders of gov-ernment, therefore, it strikes me that at least one of the questions we should also be asking is this: Does our national government have the power, authority, will and legitimacy to stand up to these forces?

And if the federal government possesses these tools, where does its reach legitimately extend and where does it stop? How can provinces, inherently closer to their constituencies and more alive to the realities


of local exigencies, participate meaningfully in national affairs and nation building without losing these innate strengths?

And what about our cities, the so-called “creatures of the provinces” that also happen to be acknowledged as the epicentres of innovation and our nation’s future prosperity? Where is their seat at the table?

The scholars whose essays appear in this volume were given free rein to apply their brush to the canvas of federalism and encouraged to paint outside the lines, rather than being constrained by the dictates of political necessity or bound by precedents. As you will read in the pages that follow, their analysis is comprehensive and often contrarian; their insights penetrating and revealing; and their conclusions innova-tive and bold.

It will also be apparent that there has been no collusion among the scholars in the preparation of their essays. To the contrary, their papers offer a dizzying array of approaches to the challenge that was set.

Janice Gross Stein’s starting premise is that the “attempt to match responsibilities and revenues neatly to the two orders of government, while logical and even elegant, is doomed to failure.” For her, the need is to “think about federalism differently” and to strive for a new regime that is “less defined . . . less concerned with jurisdictional rights . . . and much more focused on results.”

Not deterred by this admonition, Roger Gibbins proceeds to out-line a detailed new national policy firmly rooted in the sensibilities and history of western Canada. Yet when he cautions us that “the polarity of centralization versus decentralization may not be the best way to frame the debate,” he too is inviting us to view the challenge through a different lens.

Antonia Maioni turns her gaze to the challenge presented by Quebec and by Quebecers’ need (as opposed their mere desire) for “recognition and autonomy, in some form that would reflect what they perceive to be their collective difference.” This need, she submits, will not change regardless of fleeting sentiment for or against the sovereignty option that may be evidenced through media polling. From that premise, she reminds us that Quebec’s demands will always be “fundamentally dif-ferent from other federal–provincial tensions.” It would be a mistake to

13Introduction

view these demands as simply “‘me-too’ or ‘me-first’ provincialism,” or to believe that they can be satisfied by a simple “symmetrical decen-tralization of the federation.”

While the focus and approach of the scholars may be vastly different, there is no question that a common starting point and unifying theme runs through all three lectures: the need for change.

Stein states flatly that “the Canadian federation is out of whack” and that decentralization and rigid federal–provincial structures are not nimble enough to compete in the global economy. She ends on a note of urgency: “Time is pressing. Just-in-time delivery is here.”

With equal bluntness, Gibbins’ opening salvo asserts that the “contemporary Canadian federal state is poorly aligned with the eco-nomic challenges and opportunities of globalization.” He continues by saying that “we live in a federal system that is largely unconstrained by constitutional principles or design, where everything shy of the armed forces is up for grabs.”

Maioni draws parallels between the current state of national affairs and Picasso’s Blue Period, filled with “sad, haunting portraits, in which the characters depicted seem exhausted and hopeless.” Because Quebec’s quest is both “long-standing . . . [and] yet to be adequately diagnosed” by the rest of Canada, “letting go of past convention and constriction” becomes necessary. For her, there is no escaping the inev-itable: “[S]ooner or later the constitutional elephant in the room will have to be acknowledged.”

The recurring theme in the essays is clear: For each of these schol-ars, the federalist status quo no longer has any status. Reform must be root and branch, and the time for action is the present.

While the analysis of the problem and the time frame for action may be virtually identical, the three scholars serve up a feast of prescriptions.

Janice Stein is clearly the least concerned about questions of juris-diction and formal constitutional reform. Instead, her focus is on radically altering the process and structures of decision-making in the federation. Drawing on open source and social organization theory, she advocates a form of “networked federalism” to deal with the dense


flows of information that are an inherent part of globalization. Only in this way, she believes, will we be able to make third-party innova-tion central to policy development. Her vision calls for non-siloed, horizontal decision-making that brings all orders of government, as well as non-governmental organizations and individuals, into “shared policy space.”

Roger Gibbins’ new national policy envisions a revamped role for the federal government, grounded in three principles: re-engagement in the management, protection and promotion of our common economic space; disengagement from the management of social space, which is best left to sub-national governments; and a retreat from place-based programming, to be replaced by a focus on highly mobile human capital. Starting from these principles, he applies his microscope to a series of policy areas and neatly assigns them to a particular order of government.

For Antonia Maioni, the minimum table stakes for a united Canada involve “[d]ecentralization, the respect of provincial competencies and the recalibration of fiscal federalism.” Even more fundamentally, fed-eralists must make a “robust effort at identifying the meaningful ben-efits of Canada for Quebecers.” In essence, this approach means turning the age-old question “What does Quebec want?” on its head. The new answer will address what Canada means for and to Quebec, and what Quebec means for and to Canada.

Needless to say, these issues are complex, and their resolution has evaded generations of political leaders and our best public policy thinkers. But they also go to the heart of the nation we wish to be—and, even more importantly, to the heart of our capacity to become that nation. As a result, they are too important to be left unattended or to be tackled by ad hoc-ery or stealth.

The Scholar-in-Residence lecture, this volume and the debate that I hope will ensue in their aftermath should be viewed as the end of the beginning of a process that will shine a light on the future of Canadian federalism.

1

Canada by Mondrian:NETWORKED FEDERALISM IN AN

ERA OF GLOBALIZATION

by Janice Gross Stein

17Canada by Mondrian: Networked Federalism in an Era of Globalization

PICASSO AND MONDRIAN: TWO PORTRAITS OF CANADIAN FEDERALISM

I argue that the Canadian federation is out of whack, seriously mis-aligned. This misalignment comes from three different sources. The first is quite visible: the two orders of government, provincial

and federal, resemble a painting by Picasso. The responsibilities and the revenues of the two orders of government match less well than they ever have. The mismatch is currently so acute that the two parts of the picture do not resemble one another. The mismatch is compounded by a second factor, the behaviour of the federal government, which also looks like a work by Picasso. The federal government behaves glob-ally very differently than it does locally. It shows one face abroad and another at home. As important, a third order of government, the munici-pal, has no face, no voice, no seat at the table with the other two orders of government. It is absent from the picture. This absence makes little sense in an era where 80 per cent of our population lives in urban areas. Cities are already the magnets for immigration among an aging popula-tion and are the engines of innovation and growth in Canada.

None of these problems is new to Canadians. They were less serious, however, 50 years ago, when states were the primary players in inter-national politics and economies were largely national. This misaligned federation is a handicap as Canada moves into a world with a more globalized economy and increasingly dense connections across societies. Our federal system, as it is currently configured and as it now works, is not equipping Canadians well to thrive in an environment that is global as well as national and regional, and correspondingly more complex and layered than it was 50 years ago. The most serious mismatch is between Canadian federalism and the global economy and society.

We need to think about federalism differently. To continue the meta-phorical language of art, at times we paint a picture of two parallel orders of government, each sovereign with a neat division of revenues and responsibilities. This picture certainly does not capture the con-temporary messy reality of Canadian federalism, nor has it for the last 100 years. A second portrait is one of hierarchy, with a powerful federal


government at the apex of provinces and territories. Cities are nowhere in the picture. This portrait is also far too neat and orderly, and there-fore misses much that is dynamic in our contemporary reality. Neither picture captures the practice of Canadian federalism, nor would either be well suited to a global economy and society.

In this essay I try to draw a different picture, one of “networked federalism,” located in a grid that is simultaneously horizontal and ver-tical, where movement is along many of the axes, not through a central hub. The institutions remain, but the pattern of movement among them and between them changes. The important questions become those of the genesis of policy ideas, the creation of shared policy space, the opportunities for feedback and correction, and the resilience of trans-mission lines. I ask whether a concept of “networked federalism” might better reflect Canadian federalism in a global age. I suspect that we are already moving from federalism by Picasso to federalism by Mondrian. Picasso painted the disjunctures, the asymmetries that were often not visible until you looked carefully. Mondrian, as is clear from his Broadway Boogie-Woogie reproduced in this volume, paints the lines within a grid, and shows how we can move horizontally or vertically along these lines, without passing through a single choke point or gate-way. Multiple points connect through multiple connections, the essence of a network. It is networks that are emerging as the social organization of post-industrial life.

I divide this essay into several parts. In the first part I look at the global economic and social environment in which Canadians now live and our federation works. Do a global economy and society reshape our “national” space? Are Canadians facing different kinds of challenges and opportunities? I then take a brief look at contemporary federal-ism in Canada. What does it look like and what does it do in an era of globalization? Third, I examine the three important fault lines of Canadian federalism, as it is now configured, and argue that neither our political structures nor our performance equips us to engage effectively in the global economy and global society. In the final part I look at fed-eralism as a network, working within a grid, and examine what such a


model might deliver and how well Canadian federalism approximates this model.

To prefigure my conclusion I argue that we are moving toward more overlap and shared policy space, not less. The attempt to match respon-sibilities and revenues neatly to the two orders of government, while logical and even elegant, is doomed to failure. A neat division of pow-ers and alignment of responsibilities is, moreover, the wrong paradigm. A global economy rewards those who move sideways as well as up and down along the grid, with a large tolerance for fluid structures that give a quick response. Canadian federalism needs to be less defined, not more; less concerned with jurisdictional rights, not more; and much more focused on results, on what we need to get done and how we can get there.

GLOBALIZATION

There is no more overused and clichéd term than “globalization,” but the word does capture the thickening set of economic, social and cultural connections around us. Globalization is the set of processes that first connect and then integrate societies. It is centuries old and has proceeded throughout history at an irregular pace, in fits and starts, and with uneven intensity. Economic and cultural globalization acceler-ated again late in the 20th century, after almost 50 years of regression. The last intense period of globalization ended with the outbreak of war in 1914, and globalization did not pick up its pace again until the mid-1960s, as the global economy recovered from the two world wars.

Globalization shrinks distances through networks of connections. In the modern era globalization works through economic, environmental, technological, political, cultural, social and legal processes that con-nect societies. It transcends geography and borders and creates new “transborder” spaces in our lives. Whether we speak of global warming, global communications or global financial markets, we are talking about spaces that cross traditional borders and institutions. Globalization


opens up new spaces, reshapes existing space and creates all kinds of interesting overlaps. Practically speaking, globalization defies neat categorization, in large part because it thrives in an ecology of diversity even as many of the processes of globalization homogenize.

The current global economy is “everywhere and nowhere.” It has profoundly important effects on our daily life, but we cannot see it, we cannot give it the same kind of face that we give our domestic institu-tions. The market that is nowhere and everywhere all at once is made possible in part by the revolution in information technologies. These technologies, which enable information to reach markets at the speed of light, have exponentially expanded capital markets, trade, the mobility of factors of production, and investment opportunities. In the last three decades, international trade and foreign direct investment have been expanding proportionally far more quickly than domestic trade and investment. The growth of global production through inter-firm trade has been explosive, as firms relocate parts of the production process where they see significant competitive advantage.

In this phase of the global economy, knowledge has replaced other factors of production as the most important commodity. Unlike com-modities that were important at earlier phases in the history of the inter-national economy, knowledge is an infinitely renewable resource, only loosely related to geographic space. At its deepest level the emergent knowledge-based global economy is non-territorial, less and less tied to political boundaries. It is an economy that favours mobility, flexibility, nimbleness, speed and knowledge. Processes of globalization reward innovation, analytic thinking, independence and the capacity to “lead” flexible networks rather than “command” hierarchically organized bureaucratic organizations that are slow to respond.

It is this knowledge-based global economy that will shape Canada’s future. More than 40 per cent of Canada’s gross national product is dependent on international trade, trade that is overwhelmingly with the United States. More and more, economic lines run north–south rather than east–west. Across the country Canadians trade with their neigh-bours to the south. Although “border effects” remain important and

Broadway Boogie Woogie. 1942–43. Oil on canvas, 50˝ × 50˝. Mondrian, Piet (1872–1944). © 2006 Mondrian/Holtzman Trust c/ HCR International Warrenton VA.


large—we trade more with each other than we would if national borders did not exist—we look south a great deal of the time.

More recently we have been looking west to the surging economies of China and India. China and India are reshaping global markets in very large ways that we do not yet fully understand. Canadians are familiar with “outsourcing”—the capacity of firms to move jobs to places where labour costs are most competitive or where labour is most productive. When large American car manufacturers lose market share to com-petitors in Asia, Ontarians understand the outsourcing of jobs. When Japanese car manufacturers open facilities in Ontario, they acknowl-edge the superior quality of the Ontario workforce in a worldwide market. When software companies move a large chunk of their opera-tions to Bangalore in India, young Canadians with degrees in computer science intuit the workings of the global market. Jobs move easily as firms “flatten” in their global search for competitive advantage.

China and India are also consuming natural resources as the pur-chasing power of their more than two billion people grows. They have a combined middle class of at least half a billion, and it is growing. The demand for energy to support their expanding economies is likely to increase in the next decade or two, as an uncertain world energy mar-ket tightens. Whether world energy resources are larger or smaller than experts think—a fierce debate is ongoing about the size and amount of the world’s non-renewable energy—Canada’s natural resources, particu-larly its energy, are becoming more and more valuable in a global market where consumption is rising. The uneven distribution of natural resources among the provinces sharpens economic and political differences among Canadians even while it contributes to Canadian prosperity.

In the west and the east of Canada, and in the north, provincial and territorial leaders are basing their near-term economic strategies on natural resources. Resources as a share of our exports have doubled in recent years, although they currently account for only 25 per cent of our exports. Many of these resources are non-renewable, however, and eventually they will be gone. If Canada is to succeed as a mature economy, it will have to deepen its capacity to compete effectively


in a knowledge-based global economy. The present is a cautionary tale about the future. Our growth in productivity has declined relative to that of our principal trading partner, the United States, in the last 25 years. The United Kingdom, France and Japan have had higher annual productivity growth than we have in the last decade. Our pri-vate sector investment in research and development as a percentage of industry value-added is the lowest in the G7. Our investment in post-secondary education is considerably less per capita than in the United States. These numbers are troubling: we are drawing down, consuming rather than investing to help us prepare for the future.

We hear very little of this conversation in public life in Canada. In the federal election campaign in early 2006, there was very little talk of the global economy, of Canada’s future, of what we need to do as Canadians to prepare ourselves to participate effectively. It was frankly astonishing that there was almost no talk at all about global issues, except as they touched directly on the interests of a domestic constitu-ency. Yet we all have an overwhelming interest in creating the knowl-edge we need in a thickly connected global market and global society.

We touch processes of globalization most directly in our large cities, where people from all over the world have come to live. The same revo-lution in information technology that powers global markets enables those who have migrated to Canada’s cities to stay connected, in real time, with the families and societies that they left. Thickening networks of connection tie citizens “here” to citizens “there.” Many Canadians now hold dual citizenship; Italians living in Toronto were able to vote in the recent Italian election. As social networks become denser, the politics of other societies play themselves out in Canada and our politics echo instantly to communities around the world. These social networks tie Canadians to others and create new patterns of mobility, of simultaneously here and there, of migration and travel, of diasporas and citizenship that would have been inconceivable even 20 years ago. These new networked patterns of social organization will, if they have not already done so, shape the way federal institutions in Canada work.


FEDERALISM: WHAT DOES IT LOOK LIKE? WHAT DOES IT DO?

Federalism is a set of legal arrangements among orders of govern-ment that fulfills important economic, political, social and cultural functions. Federal structures vary, of course, in their centralization, and Canada has one of the most decentralized federal structures among developed countries. A very decentralized federal system has distinct advantages as well as disadvantages in a global environment.

I argue that our federation is doing well in enabling Canadians to participate in global society but far less well in building what we need to compete in the global economy. Why?

Federalism creates opportunities for difference and distinctiveness. It gives legal and political voice to different communities. In a unitary state all communities find their voices within the same political structure and work within the same political space. In a fed-eral structure communities may have their own political structures, legally recognized, that give them voice within a larger context. Political spaces overlap. Federalism works to protect minority rights by layering levels of government. Here, it provides a significant advantage. If one order of government abuses the rights of its citizens, citizens have recourse to the other order. In well-functioning federations the temptation to abuse by one government should be lower because another government is watching. Citizens in a unitary state have no such intermediary protections. As the global movement of people increases, and societies become more diverse, more multicultural, overlapping political spaces can be a distinct advantage and a mag-net for attentive immigrants.Federalism also enables pluralism, a critical requisite of mature democracies. It acts as a check on authoritarian rule and promotes vertical checks and balances. In a global society, where pluralism and democracy are increasingly valued, federalism is a significant asset. A federal structure provides political opportunities and entry points at different levels of government. From one perspective, it maxi-mizes the opportunities citizens have to participate in public life.

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From another perspective, federalism is “inefficient”: it can provide these opportunities for political participation only because it cre-ates overlapping and “redundant” layers of government. Those who work with top-down, hierarchical models of organization tend to treat redundancy as a negative; it is closely associated with inef-ficiency. Those who think in terms of networks see that redundancy is an asset; it contributes to the suppleness and resiliency of our federal structures.

As globalization accelerates, local voice has become increasingly important. The local has become the counterpoint to the homogenizing forces of globalization, an important part of a diverse ecology and a site of creativity in the global economy. I connect the importance of cities as a local site of global innovation later in the essay, but here I want to make the generic point that federalism gives voice to the local—no mean achievement. Federalism as a political and legal structure may be better suited to globalization than less complex political structures. We need to ask whether Canadian federalism is creating enough room for the local—whether it is opening up enough space, for example, for Canadian cities. I return to this issue later on in the essay.

Federalism does more than make space for the local. Well-functioning federations open up room but simultaneously blur differ-ences so that national policies are possible. This, too, is no mean feat in an era of globalization. Federalism allows for overlapping layers of jurisdiction to blur lines of division, acting as a counterweight to the fragmenting consequences of globalization. These kinds of institutions that can cross divides and meld preferences—the bridge builders—in our societies have become much more important. They help to create shared cultural norms, values and ideas across differences. In short, federalism can be very adaptive in the context of a global society.

Federal structures are less well suited to enabling performance in a highly competitive global economy. The global economy privileges nimbleness, skill, efficiency, high-quality performance and just-in-time delivery through firms that look more and more like networked supply chains that can maximize value, wherever value is to be found. Global


firms always have national headquarters, and the national component continues to be important even in a global economy. But connected to these national headquarters, these firms subdivide and move globally to where the advantage is locally. They weave around and through structures of political and legal authority. Embedded in value chains, global corporations are less about place than their predecessors were 50 years ago.

Federal structures were not designed to be efficient or to deliver just in time. On the contrary, as I have argued, they self-consciously build in duplication, overlap and redundancy. If efficiency were the highest value, Canada would have a single layer of government that could respond in real time to develop policies in a rapidly changing—and challenging—economic environment. Highly decentralized federal systems of the kind we have appear to be especially handicapped in man-aging economic performance in an era of accelerating globalization.

If we think about federalism less as an enabler and more as the designer of an appropriate regulatory framework for the economy, many of the same disadvantages apply. Good regulatory regimes provide free, high-quality information to global investors. Strong regulatory regimes for capital markets, for example, are an important asset in a competitive global economy; they provide timely information as a public good, at little or no cost to firms and investors. In addition, they provide “insur-ance” to firms seeking global advantage, again at no cost to them. In a decentralized federal structure, regulatory agreements must be negoti-ated between orders of government when the issues cross jurisdictions, so the regulatory environment becomes more complex and slower to adapt in a decentralized federation than in unitary political systems. It is harder in Canada, for example, to create a national system to regulate securities markets, because of provincial jurisdictions. Canada is one of the few OECD countries without a national securities system.

A decentralized federal structure, even though it is less suited to a global economy than a unitary state is, can nevertheless facilitate economic performance in two important ways. The first is obvious, in theory if not in practice. A federal system can make the strategic invest-ments that are necessary to strengthen capacity to participate in the


global economy. Investments in strategic infrastructure, to move goods, services and people, in education, in training, in research, in commer-cialization of knowledge—all are vitally important. They are more important in a global economy than they were when national economic space was more prominent.

A second function is less obvious but no less important. A high-functioning federal system can help to equalize opportunities across differences. Unitary governments are able, if that is their political will, to redistribute wealth to those people and regions that are disadvantaged by globalization. Revenues and losses all go to the same government. In a federal system the federal government has often taken upon itself to redistribute revenues, out of its tax revenues, to those governments and people faring less well. Almost all federal systems have some kind of equalization program, and Canada made its obligation to redistribute revenues constitutional in 1982, so that governments across the country could provide comparable public services at comparable levels of taxa-tion. The “how much” and the “how” of equalization remain, however, politically contested. This contestation now takes place in the context of a global economy that advantages some parts of the country and disadvantages others.

Why would equalizing differences matter to performance in the global economy? It is clear why a federation would wish to do so in the name of social justice, but why link reduction of difference to economic performance? In fact, conventional wisdom suggests that it is ineffi-cient to “prop up” unproductive regions by directing resources to weak industries and retaining populations “in place” rather than encourag-ing mobility. Many “successful” economies—the United States, China and India—have much larger socio-economic differences among their populations than does Canada.

This conventional wisdom is no longer universally considered quite as conventional or quite as wise. It is undergoing revision in the context of a global competition for talent. There are two related argu-ments to consider, and both speak to the importance of equalization of large differences. For the “creative class” that sparks innovation and global economic leadership, the reduction of difference makes


societies a more attractive and safer place in which to live, to invest and to create. Cities that have well-integrated and diverse popula-tions and a high quality of life are more appealing as places to live and are more likely to become one of the “spikes” of innovation in the global economy. However, world-class cities, the spikes in the land-scape of globalization, are not enough. Richard Florida, who studies global innovation, argues strongly that governments will have to make their “second tier” cities competitive and attractive places to live.1 Countries that have stable societies, well-educated populations, low rates of crime and violence, and well-developed legal regimes attract a disproportionate share of foreign direct investment. Other things being equal, sharp social inequalities act as a disincentive for highly mobile global entrepreneurs.

Second, equalizing differences does not necessarily translate into subsidizing inefficient industries or sustaining populations in place despite the absence of economic opportunity. Equalization can be con-sidered a form of “social investment” that is an essential prerequisite for participation in the global economy. It can translate into investment in the public services—health, education, retraining, commercialization of knowledge—that are a mixture of federal and provincial responsibil-ities, so that people are capable of adjusting, regenerating or moving. Whichever they do, the capacity to access equivalent services wherever they are or wherever they go is one of the most fundamental demands Canadians make of all their governments.2 For Canadians, equalization is as much about persons as it is about place.

In the current global context, a successful federation would simul-taneously work to diminish economic and social differences even as it gives expression to political and cultural differences. It is this capacity

1 Karen Christensen, “Interview with a Creativity Guru: Richard Florida,” Rotman (Spring/Summer 2006), pp. 10–13.

2 See The Council of the Federation, Advisory Panel on Fiscal Imbalance, Reconciling the Irrec-oncilable: Addressing Canada’s Fiscal Imbalance (Ottawa: COF, April 2006), Appendix 3, “The Citizen Dialogue Process,” pp. 109–112.


simultaneously to blur and reflect, I will argue, that, makes federalism so suitable to the challenges of a global environment.

CANADA BY PICASSO: THE FAULT LINES OF FEDERALISM

The Two Faces of Federalism: Federal and Provincial GovernmentsFederations vary in their degree of centralization. Canada is among

the most decentralized in the world. Canadians are occasionally sur-prised to learn that only in Switzerland do the cantons have greater autonomy than the provinces have in Canada. Yet Canada is riddled with conflict between provincial and federal governments. Provincial governments complain, often bitterly, that the federal government dis-poses of sources of revenue far greater than it needs while provinces struggle to provide the basic services—health care and education—that Canadians want and need. The cost of these services, especially health care, has grown in the last two decades and will likely continue to grow faster than the economy. It is this structural problem that the provinces have come, with some sense of urgency, to call “fiscal imbalance.”

The federal government responds that the provinces need to be more fiscally responsible, that they can always raise additional revenue by taxing more, that the provinces are perennially demanding and always ungrateful, no matter what they receive. More to the point, the federal government claims that it embodies the “national project,” the vision of all Canadians, and articulates the national standards for programs that all Canadians want. The federal government insists that it and it alone is the bridge across the geographical, regional, cultural and linguistic divides of this country that spans a continent. Especially in a thickening global economy and society, the federal government claims that it is the focal point for Canadians.

Canadians listening to this increasingly raucous conversation are at times bemused but increasingly frustrated. There is disagreement not only between the provinces and the federal government but also among the provinces themselves. Canadians are losing patience with the end-less cacophony. They want high-quality services, delivered in ways that


are transparent so that they can track results. They are pragmatists. Fix it, they demand. When it doesn’t get fixed, they grow impatient with institutional gridlock. Many younger people especially, growing up in a just-in-time world, or in a virtual world, have no patience with the painfully slow pace of change. They are not only impatient; they are also mobile. They understand that jobs move, and many younger Canadians move within the country, or in and out of it. They want access to services, wherever they are within Canada, and are impatient with the jurisdictional wrangling that repeatedly gets in their way.

The Two Faces of Federalism: Canada at Home and AbroadMore important to the way a federation works than the degree of

centralization or decentralization is agreement on norms and rules that govern the way the orders of government relate to one another and man-age policy differences. Consensus on norms and rules oils the wheels of federal structures.

The federal government in Ottawa understands this issue very well. Historically, Ottawa has led the discussion internationally on the impor-tance of rules-based regimes in the management of global public policy. It was a leading presence at the creation of the UN and has been an innovator ever since in the creation and design of new formal and infor-mal institutions to manage global policy issues. It was, of course, Lester Pearson who creatively inserted peacekeeping between the chapters of the UN Charter and led in the design of new rules for management of global conflict. In the last decade Canada was the lead innovator on a treaty to ban land mines, a treaty that originated outside the UN in a parallel process of negotiation. The federal government worked actively in partnership with a network of non-governmental organizations to go around gridlocked institutional structures at the UN and, by going around, drove a new treaty to completion. Canada was also an impor-tant partner in the creation of a major new international institution, the International Criminal Court. Internationally, the federal government has shown itself to be nimble at creating new networks and channels to solve problems, and adept at institutional innovation.


We have long urged our neighbour to the south to follow the rules and abide by the rulings of the NAFTA panels. It was Canada that insisted on a dispute resolution mechanism when it was negotiating NAFTA with the United States. Canadian governments of all political persuasions have agreed that rules-based regimes, dispute resolution mechanisms that are built into agreements, and a willingness to come to the table and negotiate differences are the essential lubricators of a well-functioning global political order. Canada, more than any other state of its size and strength, has opposed unilateral action. Historically, our federal government has been a rule-maker and a rule-taker. It is how we have pursued our interests, and it is how we have defined our per-sonality globally.

Yet in the last decade, that same federal government has behaved very differently at home. Federal governments have entered into the jurisdiction of provincial governments without consulting provincial premiers. They have made unilateral announcements about federal spending in areas of provincial responsibility. They have more than once unilaterally abrogated agreements when it suited their purposes to do so. In addition, they have repeatedly resisted binding dispute resolu-tion mechanisms to manage a disagreement with their provincial part-ners. When Ottawa finally did agree to a mechanism to resolve disputes in the Social Union Framework Agreement, it never used the process it had agreed to, but systematically worked outside the agreement.

This story of unilateral federal action is not uniform. On social policy, for example, decision-making between the federal government and the provinces has at times been unilateral, at times collaborative, at times independent and non-hierarchical, and at times hierarchical and independent.3 No single policy regime guides the management of the social union. The unilateral actions by the federal government, how-ever, in areas where policy space is shared loom large in the eyes of provincial leaders. They are a major irritant that gets in the way of a well-functioning federation.

3 Harvey Lazar, “The intergovernmental dimensions of the social union: A sectoral analysis,” Canadian Public Administration 49, 1 (Spring 2006).


The crucial point here is not the overlapping jurisdictions and messy sharing of power, responsibility and revenue between the two orders of government. That has been the history of this federation and will con-tinue to be even more so if globalization continues to thicken. What is at stake is the unilateral exercise of power, the failure to consult and the unilateral abrogation of agreements.

It is difficult to integrate these two faces of the federal govern-ment into a coherent whole. The discordance between the voice of the Government of Canada abroad—rule-maker, rule-follower, negotiator, mediator, enabler, facilitator—and the voice of the same government at home—rule-breaker, unwilling negotiator, go-it-alone unilateralist—is stunning. The federal government at home historically behaves much like those governments it roundly and repeatedly scolds abroad.

Yet Canada’s prescriptions for a well-oiled global political order make just as much sense for a well-functioning federation. Indeed, as Canada and the provinces become individually and collectively more engaged in the global economy and in global society, it becomes more important that our federation be governed by the same commitment to norms and negotiated rules that we urge abroad. The Canadian federal system has no norms or rules to govern its business. No network—or hierarchy, for that matter—works well without shared norms and rules. I argue that, in networked federalism, rules of the road are especially important. The most successful networks succeed because they have a well-developed consensus not only on ordering principles and norms, but also on a small number of rules that govern shared behaviour.

The Absent Face of Federalism: CitiesCities are an unrepresented voice in our federal architecture. In

Canada, an important “local” voice is missing. The sharpest fiscal imbalance in this country is between large cities—Montréal, Toronto, Winnipeg, Calgary, Edmonton and Vancouver—and the two orders of government. Historically, the municipal tax base of all the cities in Canada has been far too low to provide the transit, the social services and the infrastructure needed by the modern, dynamic cities that are home to 80 per cent of Canada’s population. The mayors of large cities


in Canada navigate between the two orders of government, moving up and down the hierarchy, pleading for funding to meet basic needs and provide basic services. Our cities are at risk, largely because they do not have adequate revenues to repair crumbling infrastructure and maintain social services, even in a period of prosperity. When recession comes, as it inevitably will, the burden will fall disproportionately on cities.

The dilemmas of cities are made more acute by processes of global-ization. Canadian cities are growing in dynamism, in their attractive-ness to entrepreneurs and new immigrants, as engines of wealth, as innovators and as incubators of new forms of cultural expression. They are the “local” sites of creativity. They have become the “hubs” con-necting diverse populations to hubs worldwide, the links in global chains. Our cities could become powerful global players, generating resources that dwarf those of provincial and federal governments. They are likely to be the primary producers of cultural products that trade directly in global markets and “brand” Canada. Cities invest their tax revenues primarily in infrastructure, safety and tourism to increase their attractiveness as hubs. But these cities do not have an adequate tax base to meet the needs of those marginalized by new forms of wealth creation. It is in the cities that social inequalities grow most sharply.

Federal and provincial governments bump up against each other all the time on policies that directly affect cities. Without significant immi-gration, Canada’s productivity and growth will decline dramatically over the next 50 years. Indeed, in 30 years some parts of Canada may well be depopulated unless immigration increases rapidly. Immigration is a concurrent responsibility that requires a collaborative policy regime among municipal as well as federal and provincial leaders; today, immigrants settle in cities. Settlement strategies are an essential ele-ment in the successful adjustment of immigrants to their new lives, historically within the jurisdiction of provinces. So is credentialing of the skills immigrants bring with them, historically the responsibility of provincially based associations and organizations. Public transportation and infrastructure, the lifelines of cities, are a mixture of federal and provincial responsibilities. Cultural institutions, which act as magnets


within cities and draw outsiders to them, are the constitutional responsi-bility of neither order of government but draw support from both.

Within our cities, and more generally within big megalopolises worldwide—Mexico City, Buenos Aires, Beijing, Shanghai—live some of the most marginalized people who struggle at the edges of society. Income support is partly a federal and partly a provincial responsibility. Health care is a provincial responsibility, but employment insurance is a federal program. It is in cities that the intermingling of federal and prov-incial jurisdictions stands out most clearly, and it is here that they are tested most sharply. It is impossible to imagine that these overlapping jurisdictions could be disentangled from our city regions, which are at the core of our future economic success.

Our federal institutions were designed in a different era. They were created to help build a national economy and reflect two founding cul-tures. They exist now in the context of an increasingly multicultural, multilingual and diverse urban society that is connected worldwide and mobile, and where economic lines are no longer only east–west within national boundaries, but also north–south and increasingly transconti-nental. Canada now lives in a largely post-industrial global economy with institutions designed before industrialization that, at best, have adapted reasonably well to the industrial age.

THE CHALLENGES TO FEDERALISM

What does this rapid survey of federalism in an era of globalization tell us? An effort to disentangle jurisdictions, to neatly sort responsibili-ties and match them to revenues, as seductive a picture as that is, is an impossible task. It is also not desirable.

Roger Gibbins argues in this volume that it would be helpful to distinguish the provincial responsibility for place from the fed-eral responsibility for persons. This idea is attractive conceptually: it provides a tidy organizational schema and promises to minimize the fractious bumping up of one order of government against another that


has become so well known and so disliked by Canadians. However, it is very unlikely that we can easily separate persons from institutions, nor can we separate institutions or persons from place. Federal funding for most social services, for example, is partly direct to persons and partly indirect through transfers to the provinces. Funding for post-secondary education, for example, follows students to only a very limited degree. A significant proportion of federal funding for post-secondary educa-tion goes to research done in universities. The students are mobile but the universities are not. In this sense, federal funding is partly place-based. Funding for health care follows people not at all. It is place-based and would be very difficult to change. There are practical constraints, then, to a neat separation between roles and responsibilities in a federal structure such as ours.

I would like to make the more controversial argument that neat division and alignment is the wrong paradigm. If we think again about cities in the next 50 years, they are likely to be the site of “local” voices, engines of the economy, sources of innovation, sites of immigration and settlement, homes of the creative arts, places where the demand for social services and health care will be the strongest, neediest of renewal of their infrastructure, epicentres of epidemics, homes to head offices of global firms and locations of Canada’s research-intensive universi-ties. Cities, not formally represented in our federal structure, will be the focal point, the site, of globalization.

In cities the responsibilities and the revenues of all three levels of government will be hopelessly intermingled, in theory, in policy and in practice, in persons and in places. It is from this intermingling, the friction of bumping into one another, from encounters rather than sepa-ration, from interconnected conversation rather than from silos, that creativity will flourish—in businesses, in universities, in the arts and in government. It is from collaboration across diverse sectors, diverse ways of thinking and diverse governments that innovative ideas and programs will grow.

I argue, therefore, that the federal project in Canada is not to disen-tangle overlapping jurisdictions. It is to acknowledge complexity and


pull on the best from the private, voluntary and public sectors to create shared policy space across levels of government for new ideas, feedback and correction. Our challenge for the next 25 years is not to simplify and order, as we intuitively think, but to build a grid that allows all three levels of government to manage complexity and avoid the gridlock that can be so crippling. The model of networks embedded in a grid is, as I will argue below, a more useful metaphor than that of parallel lines of government neatly separated from one another.

I call this “networked federalism,” located in a grid where move-ment is along many of the axes, not through a central hub. Others call it the “whole of government” or “multi-level governance.” The idea is the same: for hard and complex problems, the resources, expertise and jurisdictional authority of all levels of government need to be deployed in a coordinated way.

This is a hard argument to make today in a country that is prosper-ous, with an unemployment rate at historic lows. There is no guarantee, however, that present rates of growth will continue; indeed, the widen-ing gap in productivity is a flashing orange light. Canada needs to invest in research and development, in new environmentally friendly technol-ogies, in education, in science-based industries, in building the capacity to take discoveries to market, in state-of-the-art infrastructure, and in the support of its arts and culture that helps to make this country and its cities such attractive places to live. None of this will happen in silos.

Federal, provincial and municipal governments must work to forge new, more flexible structures that are more nimble, less rigid, less cumbersome and more transparent to Canadians. Contrary to much of the current public rhetoric, the principal issue is not accountability. On this issue we are using a sledgehammer to crack a nut and, in the process, crippling our public institutions. Corruption may be a terrific campaign issue, but it is not Canada’s most important challenge. We need to let our officials loose, to free them up, so that they can take some reasoned risks as they work to position this country in a global market and society. Most Canadians are already there. We now need to let our governments catch up to us.


THE “NETWORKED” SOCIETY

What does “networked federalism” mean conceptually? What would it mean in practice? How would federalism change if it were networked? Would networked federalism help to solve the problems of institutional deadlock that are so frustrating to Canadians across this country? State power is alive and well, skeptics would argue cor-rectly, and hierarchical institutions—command-and-control institutions where orders come down from the top and compliance flows up from the bottom—still shape significant parts of our society. Governments and federal arrangements are a fixed part of Canada’s landscape and will remain so.

It is important to qualify the claims that I will make for networked federalism. Institutions rarely disappear, but as new institutions and forms of social organization appear, they cohabit within shared space and change their function. Our federal institutions need to cohabit and share policy space. To function within this larger grid, they are going to need better traffic rules and more roads. I develop these arguments in part by telling a messy historical story of institutional evolution and cohabitation and then by looking over the frontier of social organization before pulling back again to look at our federal arrangements.

Tribes, Hierarchies, Markets and NetworksFirst, the evolutionary history of social organization. To make this

narrative a little easier to follow, I borrow David Ronfeldt’s story of history as an evolution through different forms of social organiza-tion.4 Societies have evolved through four basic social units, he tells us, which exist in different combinations. We began as clans and tribes, organized as extended families around kinship. In some societies today clans and tribes still remain the most important unit of social organi-zation. It is hard to think about Saudi Arabia or Somalia, for example, without giving pride of place to tribes in politics and society. In their

4 David F. Ronfeldt, Tribes, Institutions, Markets, Networks: A Framework about Societal Evolution (Santa Monica, California: Rand, 1996).


purest form tribes are rooted in ties of extended family and kinship, in remembrance of a common ancestor and common traditions. Tribes have evolved and continue to exist in even the most advanced societies through their cultural and social ties.

Hierarchies soon emerged to coexist with tribes and then to replace them as the dominant form of social organization. Empires and armies are hierarchical, as is the modern bureaucratic state and the corporation. Hierarchies have centres for decision and control, usually at the apex of the pyramid. Members report up and manage down. Think of the difficulties “whistleblowers” usually experience when they challenge the top of the pyramid. Hierarchies are more open than tribes because we can join a hierarchy, even if we are not connected through kin-ship. The weakness of hierarchies, however, is their limited capacity to handle complex flows of information and exchange. Information and exchange are all routed along the same roadway that gets more and more clogged, especially as volumes of traffic grow.

Open competitive markets rose to prominence in part because they were so much better at handling these complex flows of information and exchange. In an open market, in theory but often not in practice, everyone is free to join, as long as they participate in an exchange. Markets generally work to open up spaces. The weakness of markets is their tendency to create uneven distributions of wealth, to grow inequal-ity along with wealth. In the modern era the state regulated markets and redistributed income to moderate these inequalities. Working in contra-puntal tones, hierarchies and markets dominated the last century as the principal forms of social organization. In the process states took on new responsibilities and forged new social contracts with citizens. The state hierarchy evolved.

Networks, the latest organizational form to become prominent, are growing in importance because they are especially good at dealing with dense flows of information. They connect all members to each other in a “flatter” structure, without a pyramid and sometimes even without a formal centre. They enable communication and collaboration among members who may be dispersed in different organizations, in space and


in time. Networks multiply the channels through which information and exchange flow, and are, therefore, much less subject to blockage and gridlock.

Although networks have existed for centuries, the revolution in information and communications technology enabled them to prolifer-ate and grow. They are only now becoming socially important because of their comparative advantage in handling the large volumes of infor-mation that flow around the world at unprecedented speed. Networks are joining tribes, hierarchies and markets as contenders to shape soci-eties and states.

What is a network? We can think of a network as a collection of con-nected points or nodes. It can be one terminal connected to the Internet, or one expert communicating with another in a common network devoted to a shared problem. I am a member of a global network that uses e-mail every morning to share information and exchange views. In our network we all communicate directly with one another, without going through a centre that controls the flow of information, in what is called a “distributed” form of communication.5 In a distributed network messages are broken into individual “packets” that then take many dif-ferent paths to reach their destination. This kind of transmission allows communication to continue even if some nodes are destroyed or not working. When one node is not working, information is rerouted to others. In my e-mail network, when one expert has turned off her com-puter, information still moves to the other computers; it is not blocked because one node is off-line. Networks are resilient because of their built-in redundancy; the more nodes are added to the network, the more resilient the network as a whole becomes. It is this distributed pattern of communication that makes gridlock much less likely as informa-tion moves simultaneously along several paths. Ask any commuter in a large city: reducing gridlock is a huge comparative advantage in a just-in-time world.

5 Paul Baran, On Distributed Communications (Santa Monica, California: Rand, 1964), and Katie Hafner, Where Wizards Stay Up Late (New York: Simon and Schuster, 1996).


When a new form of social organization—such as a network—becomes prominent, older forms adapt. The most advanced societies have absorbed each new form of social organization without destroy-ing its predecessors. New combinations emerge through adaptation and change the way older structures work. Hierarchies changed the way tribes operated, and markets changed the way tribes and hierarchies worked. As markets grew, states assumed the responsibility of moderat-ing the inequalities that markets created. As the network grows in promi-nence, it too will change the way tribes, states and markets work.

Corporations have already moved to more networked forms of organization to do business in global markets. They are consequently able to move information, ideas and products much more quickly than they could if they were organized exclusively as a hierarchy. Corporate headquarters set goals and strategies, and generally monitor overall per-formance, but decision-making has been pushed down and out through global supply chains.

It is not only the corporate sector that has become more “network-like” in its behaviour. Using distributed forms of communication, open global networks of every kind have multiplied in the last decade: civil society activists, journalists, scientists, physicians, lawyers, scholars and environmentalists. These networks have created new conditions for local and global political action. They have been able to go around one state to work with another to innovate on policy. One of the obvi-ous consequences of networks, a consequence that we do not often talk about, is that states have lost their monopoly on public policy. They are already sharing space in the formulation of many public policies. Many of the new policy ideas are already generated outside government structures.

We may be only at the beginning of a revolutionary phase in infor-mation technology. The ongoing revolution will continue to diffuse power further from traditional command-and-control structures—away from hierarchies. The capacity of tiny silicon wafers is still multiply-ing, enabling computing power to grow as its costs per unit decline. As costs decline networks will multiply and thicken, and software will become “smarter” still and develop the human capabilities of voice


and vision. If not in the next 10 years, certainly within the foresee-able future, we will see the “death of distance” as people anywhere will be able to connect in real time.6 Advances in biotechnology and microelectronics will also create new capabilities for connectivity and “micro-sensing.” We are on the verge of allowing “grid” technology to lash computers together to solve shared problems. Technology would become almost like a utility, where users could then tap in to the prob-lem-solving capacity of powerful unused computing capacity anywhere within the grid.

We need the equivalent in our political institutions. Policy-making is becoming less hierarchical as policy players from across sectors of society become more actively engaged in the policy arena. Multiple players participate in converting problems into policy issues, in put-ting these issues on the policy agenda, in disseminating policy-relevant knowledge and in informing public debates. The making of public policy is becoming more network-like, with policy experts and highly knowledgeable policy watchers connected to government. In this sense our federal architecture is already living in a networked environment.

How has this sharing of policy space worked globally? Networks of human rights organizations have created new platforms to press govern-ments to be accountable for the treatment of their citizens. They part-nered with states to push for the creation of the International Criminal Court to hold leaders accountable for genocide and crimes against humanity. Over the last two decades these networks have changed norms and expectations worldwide about human rights. It was a net-work of non-governmental groups that partnered with Canada and other like-minded states to engineer the treaty banning land mines. The treaty was developed through this partnership, in a parallel process outside the UN. Only in its very last stages did the process become “official.” Transparency International is a networked organization that monitors

6 Frances Cairncross, The Death of Distance: How the Communications Revolution Will Change Our Lives (Boston: Harvard Business School Press, 1997), and the United States Commission on National Security/21st Century, New World Coming: American Security in the 21st Century(Washington, D.C.: U.S. Commission on National Security/21st Century, September 1999), pp. 6–8.


corruption in governments worldwide. Networks of environmental-ists push to hold governments and corporations accountable for their performance on environmental commitments. Citizens networks use boycotts to hold corporations accountable for their labour practices and push for “fair trade.” Across the spectrum of public policy, locally and globally, networks are sharing—and shaping—policy space with states and in markets. They are changing the way states and markets work.

Before turning to networked federalism and shared policy space as the federalism of the next few decades, I tell one last story of what may lie just over the frontier of social organization. It is a fascinating story of new understandings of the “ownership” of the knowledge that is created and travels through networks.

Over the Frontier: Policy-Making and Creativity in the OpenThe ownership of knowledge is a central issue for states, markets

and networks that operate in the global economy. In the last several years, the battle has played out largely on terrain defined by well-known institutions. Within the World Trade Organization (WTO), broad coalitions of developing countries and non-governmental organizations have challenged the legal regimes surrounding trade in intellectual property and services. Copyrights and patents for essential medicines to contain pandemics and treat their victims, for example, have been one of the epicentres of controversy. Networks of non-governmental organizations have led the effort to remove restrictions so that low-cost anti-retroviral drugs can reach the millions within the poorest societies who are stricken with AIDS. Doctors Without Borders built a coalition of non-governmental organizations to negotiate with the pharmaceuti-cal companies under the auspices of the UN. The negotiations broke the logjam: they led to an enabling resolution at the WTO meeting in Doha in 2002 and to reductions in the price of anti-retrovirals from $15,000 to $300.

The successful movement to develop “open source” software was very different. Software code is a set of instructions for a general-purpose computer. It is the code that provides the operating system and enables the hardware—the machine—to work. Computing is central to


the information revolution, to the knowledge economy and to the net-worked society. The story of open source software is not a story at the margins, but one that goes to the heart of the way networks may change the way states and markets work.

The story of open source begins with the personal computer. Once it became available, programmers began to come together in clubs, infor-mally, to experiment and fool around. They began to write, share and borrow code to see what they could do. The battle was joined as early as 1976, when Bill Gates, who with his partner had written computer language that could run on one of the first mass-produced PCs, wrote a letter to the “hobbyists,” charging that they were stealing software. This practice of “thieving” software, he argued, would stifle innovation.7 These lines of conflict between open sharing and closed proprietary knowledge still exist today.

Richard Stallman, an early pioneer of open source at the Massachusetts Institute of Technology, rejected the standard arguments about intellectual property and proprietary software. On the contrary, he said, they made “pirates” out of people who wanted to help each other solve a shared problem. They “ran directly against the moral sentiments of a decent society.”8 Stallman established four fundamental freedoms in a manifesto he released in 1984: the freedom to run the program for any purpose, the freedom to modify the program, the freedom to distribute copies, and the freedom to change and improve the program and to redistribute modified versions so that others can benefit and modify again. Stallman’s manifesto was the kernel of the open source community. He developed the General Public License (GPL), which he called “copyleft” rather than copyright. Software that is licensed under GPL cannot be made proprietary by anyone who uses it. In effect, Stallman established some basic rules for operating a network to develop software.

7 Steve Weber, The Success of Open Source (Cambridge: Harvard University Press, 2004), Chapter 2, p. 22. Weber has written a superb analysis of open source, and I draw heavily from his work.

8 Weber, The Success of Open Source, Chapter 2, p. 35.


In 1991, Linus Thorwald, a young computer scientist at the University of Helsinki, released the source code of an operating system that he had developed to an Internet newsgroup. He called the source code Linux and invited others to modify it, improve it and circulate their improved code, as long as there were no restrictions to distribution. By the end of the year, 100 hackers worldwide had joined his newsgroup and the first open source network was up and running. Fifteen years later, in an astonishing story, Linux runs more than a third of the servers that make up the World Wide Web, is being used by the Pentagon for specific tasks and is challenging the market giant Microsoft. This enormously complex and sophisticated operating system was built—and is being built—by the voluntary contributions of thousands of people spread around the world, linked together through networks.9

These knowledge networks, often drawing on spare processing capacity from computers linked in a grid worldwide—capacity that is volunteered by their owners—produce software that they do not copy-right and that they release freely along with its source code. Anyone is welcome to redistribute the modified package to others free of charge. Thousands of volunteers have come together to collaborate on a com-plex product, sustain that collaboration over time, build a product that challenges some of the most powerful global corporations and give that product away.

The story of open source software is almost impossible to believe. It defies economic logic. Yet, contrary to prevailing logic, work on the product continues and the network model is spreading to other areas of research that seek to provide knowledge-based “public goods.” Less radical experiments are going on elsewhere. Customers are co-creating products. In 1998 Lego introduced a build-your-own robot kit with a proprietary microprocessor and operating system. A univer-sity student quickly reverse-engineered the software and posted it on the Net. Operating as a distributed network, programmers around the world began writing applications, and after initial resistance, Lego now

9 Weber, The Success of Open Source, Chapter 3, pp. 1–2.


actively promotes customer-written applications. Here, customers work for Lego—for free!10 The success of open source tells an important story of the potential of networks to change the way markets behave, even when strong legal protection shapes the market.

It also tells a story of a changing concept of property that can recon-figure the relationships among networks, markets and states. We gener-ally understand property as an enforceable claim with regard to some “thing.” Where property regimes exist, the owner can exclude others in ways that are consistent with the regulations embedded within the regime. I own my home, so I can prevent you from coming inside, if I so wish. Indeed, some scholars argue that the creation of core property rights enabled the development of modern economies and their absence helps to explain why some economies fail to develop.11

Open source networks and systems redefine property as “the right to distribute rather than to exclude.”12 This redefinition of property has potentially fundamental implications for processes of knowledge creation through networks. One can imagine the coming together of knowledge networks configured around the right to distribute that could vastly increase the supply of knowledge as a global public good. Knowledge would be produced collaboratively through networked pro-cesses that draw on the work of networked individuals and would be governed by new norms of fairness in distribution. Innovation could change dramatically, as could the distribution of wealth, if open source networking grows to become an important paradigm.

The story open source networking tells, while still sketchy and pre-liminary, and almost visionary, is nevertheless important. It speaks first to innovation through networked processes. Knowledge networks are not a passing phenomenon; they are fast becoming the most impor-tant global form of production and exchange. They are important not

10 Don Tapscott and David Ticoll, The Naked Corporation: How the Age of Transparency Will Revo-lutionize Business (Toronto: Viking Canada, 2003), p. 85.

11 Douglas North, Institutions, Institutional Change, and Economic Performance (New York: Cambridge University Press, 1990).

12 Weber, The Success of Open Source.


only because of the knowledge they produce and disseminate, but also because of the social organization and innovation they enable. The most significant consequence of open source networking is likely to be the changes in social practices that challenge legal, political and social bar-riers to openness.

Open source tells a story of a potentially radical bottom-up trans-formation of what knowledge means, of rights and entitlements. The transformation comes not from advances in science and technology, not from the policy authorized by states or by the courts, but from the “community of practice” these “knowledge workers” have established, their norms and their values. This is, at its core, a story of new norms that reshape practice. Older, hierarchical orderings of policy space lose their meaning in a context of a volunteer network that distributes its products freely, in an endless cycle of innovation.

The success of open source challenges our conventional notion of cheaters and thieves—of those who steal, as Bill Gates put it 30 years ago, the ideas and work of others. Open source sees proprietary knowledge as an obstacle to innovation and creativity. It also chal-lenges conventional concepts of political space and institutional design. Open source networks do not worry about stealing or bother with per-formance measures, the current obsession of many who design ever more elaborate accountability systems for everything. Performance is “measured” every day by the usefulness of the code you write, and by how interested other people are in the code you post for others to see. Mistakes and bugs are not the issue; if you write something that is potentially useful, others will find the errors and debug the problem. Nor do open source networks worry about the perennial problem of “free riders,” those who use work without contributing. Almost every-one contributes eventually, because as they use programs, they find bugs and limitations that others then fix. The usefulness and creativity of the code you share make reputation grow throughout the network. Network members “know” the innovators.

Open source is, finally, a story of the governance of shared space. Those who participate in the open source community voluntarily abide by a set of principles and norms that they share. Through a simple set


of rules, which members voluntarily accept, the network governs an ever-increasing volume of traffic along multiplying routes. In large part because the routes increase as traffic grows, this network pro-vides almost instantaneous feedback about errors that is widely shared. There is constant quality improvement with very low transaction costs. It is not difficult to imagine that the open source paradigm will spread widely through research sectors to product delivery.

CANADA BY MONDRIAN: NETWORKED FEDERALISM

What, you may well ask, does this story tell us about the future of federalism in Canada? There is quite a stretch, you would be justified in arguing, from shared policy space in open source software to shared policy space in networked federal institutions. I argue that the leap of faith is not quite as big as it first appears. Drawing on the stories I have told about the global economy, global society, networks as an emergent form of social organization and innovation as shared policy space, I want to make a set of interrelated arguments about federalism in Canada.

1. Networked federalism is most suited to areas where policy juris-dictions overlap. Networked federalism is especially likely where global economic and social issues converge in Canadian political space. In areas where either order of government not only has a legal monopoly but also exercises exclusive jurisdiction, shared policy space is unlikely to develop.

I am not arguing that networked federalism replace or substitute for the existing legal and institutional arrangements that govern federalism in Canada. Nor am I arguing that these arrangements are inappropriate for those policy areas where policy does not cross, intersect and overlap jurisdictions. Defence spending, for example, will obviously remain an exclusive area of federal activity, with no maladaptive consequences.


There are, however, remarkably few such policy issues that can be neatly segregated. International trade, for example, now directly impinges on provincial and municipal interests. Take, for example, the issue of the border between Canada and the United States, seemingly a straightforward issue of exclusive federal jurisdiction. Yet the prac-tice is already very different. A summit meeting on “borders” in Gimli, Manitoba, in May 2006 included most of the provincial premiers, many U.S. governors and the ambassador from the United States to Canada, as well as the Canadian ambassador to the United States and the Prime Minister of Canada. The summit followed the annual Western premiers’ meeting, hardly the usual venue for this kind of international and federal–provincial discussion. Recent controversies over softwood lumber and passports convinced the Premier of Manitoba, however, that premiers and governors had to be part of Canada–U.S. discussions. Around this meeting parallel groups of experts from both countries have met to explore management of shared borders and are working together to feed their reports to federal agencies in Washington and in Ottawa, as well as to premiers and governors. New ideas and informa-tion are moving, not along a single track, or up a chain of command, but along several tracks simultaneously connected in a grid-like structure. Even on an issue where one order of government has exclusive juris-diction, the practice of federalism looks more and more like a network running along a grid.

How does this practice of networked federalism change the way fed-eralism works? It provides more comprehensive information in a timely way and allows information to move around institutional blockages in central nodes. It is difficult to exaggerate the importance of just-in-time comprehensive information that can help to inform policy agendas. Networked federalism should also increase the costs of unilateral action by the federal government. As the participants increase in number and significance, it becomes harder for the federal government to abrogate understandings that are the result of a broadly based consensus.

Critics of networked, messy federalism could well respond with derision. Of the claims that can be made for networks, the claim that


they are more functional and efficient at decision-making is the most dubious. “Death by a thousand public consultations and working groups,” one critic observed, “seems the more recognizable fate.” This argument conflates form with substance. Public consultations are often cynical exercises to manipulate opinion. Governments know that opin-ion is divided and that the consultations will produce enough division so that they can do precisely as they wanted once the consultations are over.

The concept of networked federalism starts from a different place. In a network governments connect with those who have important information, good policy ideas or strategic assets in policy implemen-tation. Since network membership is voluntary and fluid, those who participate expect real benefit over time. Federal, provincial and state leaders who came to the Manitoba meeting expected to be better able to go around the one or two central players that generally control the flow of information on these kinds of issues. Practically, they wanted information flows to look much less like a hierarchy and more like a grid. Some of those who came also wanted unmediated and unfiltered access to information. They expected to acquire valuable information, push new ideas or proposals, and broaden the policy framework. All this on an issue that is classically considered one of exclusive federal jurisdiction.

Who has final power of decision when there is no consensus? This is a legitimate question to ask of networked federalism that works less through formally articulated channels and more through multiple connections of official and unofficial participants, decision-makers, “policy wonks” and stakeholders who come in and out as the issues and problems change. In mixed networks of the kind I am talking about, decision-making power remains at all times with those who have legal authority. There is no ambiguity whatsoever about where the power to decide rests. Decisions are made by those empowered to do so, but in an iterative process, major decisions usually provoke a further round of problem-solving discussions as new questions arise. Feedback can be almost instantaneous.


What about accountability in networked arrangements? Who is ulti-mately held accountable by voters for getting things done? Networks generally place much less emphasis on accountability and representa-tion, and pay much more attention to innovation and problem solving. The best networks generally wrestle with a problem, looking for new information and new ideas, and working to frame a problem so that it becomes more tractable. They judge each other by the value of the contribution they make. Over time, reputations are built for different kinds of skills and contributions—quality information, good ideas, a willingness to experiment, ideas that work. Within the network, then, accountability does not loom large.

A focus on innovation and problem solving among people who have come to know and respect each other is not enough for voters. Voters need to know who is responsible for moving the agenda forward and who is blocking agreement. When all is said and done, whose file is this? Networks are not much help in answering this question, other than by the reference to formal responsibility. On public security, for example, even though federal and provincial governments must work together and with partners in the private and voluntary sectors, it is federal officials who will be held formally accountable for achieve-ments and for errors. The thrust of my argument has been that this kind of accountability, while politically necessary and legally mandated, is nevertheless misleading in our complex environments. Perhaps we are asking the wrong question.

I have argued that the global context in which federalism operates joins issues together in new ways and creates unanticipated linkages. I have already talked about shared public policy space in our cities, but many other policy issues—public health and health care, emergency preparedness, research and innovation, infrastructure, security—come to mind. Security, which falls exclusively within federal jurisdiction, may be a surprise on this list. Yet it is now people organized in net-works, rather than states, who are more likely to be security threats. Many criminal networks and networks of terror thrive in urban areas and have local as well as global connections. Federal security agencies


will be unable to do their jobs without the active collaboration of agen-cies at the provincial and municipal levels. A silo approach, as the United States learned on September 11, 2001, can generate devastating failure. The issue was not jurisdiction, nor roles and responsibilities, but the sharing and pooling of information in a timely way. Asking who was accountable for the intelligence failure was not terribly helpful in figuring out how to do better in the future.

How would “networked federalism” help on these kinds of issues? The way it has begun to work already, only more so. The three levels of government would come together to create a shared policy space, gov-erned by a minimum of rules. Networks of citizens and experts would be invited to contribute ideas. Officials would be encouraged to look outside Canada for innovative solutions. Officials from governments and other relevant institutions would work together to draft policies that could be shared until a consensus emerged or the responsible level of government was satisfied. Each level of government would contribute proportionately to the funding and would work out its contribution in collaboration with the other two. Small, temporary secretariats drawn from all three levels of government and other institutions would be created to evaluate the consequences of policy after it was rolled out and to provide feedback throughout the network. That is how highly functional networks work.

This kind of problem-solving network would be a parasite that would draw from existing institutions. It would borrow infrastructure, postage, telephones, a little space and, most important, people. Networks of this kind appear to be inexpensive because, like their open source coun-terparts, they are making use of capacity that is available, at least for the moment. In this kind of network, federal, provincial and munici-pal governments keep their identities; indeed, the need for recognition can be better met this way than it can be in adversarial bargaining. A non-hierarchical, interdependent problem-solving network focuses on cross-policy linkages, consequences that cross jurisdictions, and design of modalities to get quick and constant feedback so that errors are corrected on an ongoing basis. It is possible to imagine immigration


policy that is coordinated with settlement, infrastructure and housing in major cities across Canada.

Some of what I am describing already happens, albeit in partial and limited ways. Officials from different jurisdictions do meet, share information and talk about coordinated solutions to problems. Federal and provincial officials are working together with private partners on emergency preparedness and on managing pandemics. The new City of Toronto Act, given first reading in December 2005, contains an impor-tant provision for “shared policy space” with the province. This is the first time in Canada that the policy development role—as opposed to a service delivery role—of a city will be recognized in legislation. There are a few, small experiments in tri-level approaches to problem solving in cities in the West. It is not happening often enough, however, and not broadly enough. When officials from the different orders of government do meet, moreover, they often complain privately about their lack of confidence in one another.

2. Networked federalism requires “sticky networks” and social glue.

It is this social glue—shared norms, shared values, long-standing ties of friendship—that often underpins highly functional networks. From this perspective, federalism can be seen as a structure that is given life by the networks of informal political and social relationships among public officials, policy experts and academics that connect one order of government to another. In Canada, there is a limited number of officials and experts who come to know one another over the years. These “sticky networks” of teachers and students, of officials and advisors, of policy experts and researchers, of staffers and pollsters, tra-ditionally have helped to glue the social fabric of federalism together.

In the last decade, these sticky networks have not worked as well as they have in the past. Particularly since the sharp cuts in federal transfers in the mid-1990s, confidence and trust among officials from different orders of government seem to have broken down. The capa-city to talk informally together, to complain about their elected bosses


and to share stories seems to be much less than it was a decade ago. In a series of interviews with provincial officials across the country that I did recently, I was struck by the distrust, the suspicion, the resort to “enemy” language. I was more familiar with that kind of imagery in international politics, but, to my surprise, it was alive and well in federal–provincial relations. It is troubling to hear this language in Canada.

When these “trust networks” break down, federal–provincial rela-tions become rigid and brittle. Without these sticky networks Canadian federalism becomes less able to share information across boundaries and less able to innovate, to test ideas, to broker compromise and to move in something that remotely approaches “real time.” The inability to talk freely, to go out for a beer with a federal or provincial coun-terpart, all make the day-to-day business of federalism much more difficult. Here networked federalism can compensate, at least to some degree. The shared experience of working on a common problem, repeated rounds of engagement, the sharing of data and the pooling of information all help to break down barriers and build the sticky rela-tionships—the “trust ties,” as J. Stefan Dupré described them, that are essential to the functioning of any network.

3. Networked federalism does not require constitutional change, or the creation of a completely new set of institutions.

The proposals I am making for networked federalism require neither constitutional amendments nor formal institutional change. On the contrary, all that is required is the linking together of existing institutions in new chains of connections, connections that can form and dissolve as necessary. The historic advantage of networks is their capacity to form and sustain themselves and contribute to policy gener-ation and implementation if there is agreement on principles and rules. Their geometry is variable. In this sense, networks are more flexible and less rigid than deeply embedded institutions.

What networked federalism absolutely does preclude is unilat-eralism. I argued earlier that there has been a disturbing pattern of


unilateralism in the last decade by the federal government in its rela-tionships with the provinces. Unilateralism undermines networked col-laboration; indeed, it makes it impossible. Were the federal government to commit to a networked process, it would be committing to a collab-orative solution. Why would it do so? Only because the process prom-ised better, cheaper and faster information, a better capacity to iden-tify linkages and unintended consequences among policy issues, better ideas than the federal government could generate alone, and better and cheaper feedback. These are considerable advantages, even to a govern-ment that has relatively greater resources. Finally, the federal govern-ment would have to get greater recognition and visibility, as would all other levels of government that participated in a networked process.

4. Networked federalism, to succeed in Canada, will require a deep change in culture among political elites.

I have left the most serious obstacle, the one most likely to cripple experiments in shared policy space, to the last. The most serious obsta-cle to the renewal of federalism in Canada is the deeply embedded political culture of rights and entitlement of both orders of government and their emphasis on control. Over and over again, we hear about the rights a government has and the irresponsibility and bad faith of others. Our challenge is not another round of institutional design, but a shift in culture to accommodate networked politics.

Leaders at every level will have to move from this culture of rights and control to one of problem solving and innovation. This is prob-ably the steepest and most important challenge Canada’s leaders face if our institutions are to remain relevant to large numbers of our citizens, especially our young people. If this sounds like a tall order, it is helpful to remember that this kind of shift has already occurred in the corporate and voluntary sectors. In these two sectors, there were the equivalent of “centralized agencies” that play such an important role in government, but leaders in the other two sectors are more disciplined by their envi-ronments and, consequently, move faster. Leaders in government have to catch up.


A new set of leadership skills will be important. Matrix manage-ment, the capacity to steer throughout the grid, to look sideways as well as forward, to have peripheral vision, is demanding of time and energy. It requires the capacity to elicit rather than to order, to listen as well as to speak, and to be alert to the unanticipated, the non-linear. Most chal-lenging of all, network leadership requires a capacity to sustain messi-ness, iterated rounds of problem solving and some loss of control. The advantages, however, can be significant. When a network is working well, the quality of information, its timeliness, and the opportunity to generate creative ideas and approaches more than compensate. In a knowledge-based economy and society, it is difficult to exaggerate the value of good information and good ideas.

MODERN ART REVISITED

Networked federalism will not solve the most important issues that dominate current federal–provincial discussions. At least, it will not do so directly. The Picasso-like arguments about the fiscal imbalance, or about equalization, or about representation, or about distinctiveness will not go away. These issues will remain part of our institutional landscape. They may, however, not continue to be the most prominent issues.

First, in a context of networked collaboration, of good governance of shared policy space, of a growing habit of collaboration, even of shared innovation and of greater policy responsiveness in a Mondrian-like landscape, it may well be that these recurring issues that so embit-ter our politics will become less prominent in our federal landscape. They have not always been as prominent as they are now, especially when Canada has faced significant challenges. We face the challenge of investing in a sustainable future so that we are prepared to live in global society and compete in the global economy. That is not an insignificant challenge. None of our current preoccupations speaks to this challenge. We cannot meet the challenge of the post-industrial world if we rely exclusively on ways of managing public business that were adaptive in the industrial age.


Second, governments everywhere are recognizing that silo policy-making is inadequate. The federal government, for example, has been struggling for the last five years to reduce policy silos and to thicken the horizontal connections among departments. To give voice to what it wanted to do, it coined the quite awful word “horizontality.” Nevertheless, “horizontality” captures the urgency of working across departments and across policy issues so that linkages and consequences can be identified. Provincial governments focused on public emer-gencies have engaged in very similar processes. In all cases it has been a struggle. Old habits die hard, sometimes only in the face of shock. SARS, for example, shook the Ontario government out of long-standing habits.

To replicate silo decision-making in order to reduce federal–provincial friction would be to solve a smaller problem at the expense of a much larger challenge. Societies that do well in the next several decades will be those that innovate at the edges, where different policy issues meet and create friction. Innovation of environmentally friendly technologies and development of environmental policy cannot happen in silos. Immigration and strategic infrastructure must be considered in the context of health care, education and social assistance in our large cities as a set of interconnected issues that will shape our capa-city to mirror global society. If we get it right, that set of issues, bundled together as the consequences of one reshape another, will increase our productivity and our capacity to engage in the global economy.

Let me leave you with some bold assertions, deliberately phrased to provoke:

A heavy emphasis on our traditional culture of control and order in our federal architecture will not serve us well as Canada engages more heavily in global markets and in global society. Messiness, overlap and linkage are the incubators of creativity. Creativity and innovation will happen at the edges, where the tectonic plates bump up repeatedly against one another. In Canada, we overvalue order, especially in institutional design.

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Those societies that thrive in messiness and can see new patterns in what appears to be disorder will do best. They will attract the most creative people, at home and abroad, and will lead.Federal institutions, like all other government institutions, must better reflect the societies they govern. Jurisdictional arguments and silo arrangements reflect the past. They slow access by government to new information and new ideas, and lag in policy responsiveness. Problem-solving networked federalism is just one approach to bringing laggard governments up to speed with their societies. Time is pressing. Just-in-time delivery is here.

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Canadian Federalism in an Age of Globalization:

THE CASE FOR A NEW NATIONAL POLICY

by Roger Gibbins

61Canadian Federalism in an Age of Globalization

INTRODUCTION

My core argument in the following essay is that the contem-porary Canadian federal state is poorly aligned with the economic challenges and opportunities of globalization.

To address this lack of alignment I recommend that:the Government of Canada re-engage in the management, protection and promotion of our common economic space;the Government of Canada find the policy space and capacity for this re-engagement by disengaging itself from the management of social space best left to sub-national governments; andthe Government of Canada retreat from place-based programming and focus instead on highly mobile human capital.

When these recommendations are bundled together, they form the case for a new national policy.

Now this may be an unexpected argument from someone rooted in Western Canada, where historical experiences with iterations of national policies have seldom been positive. However, just as only President Nixon could go to China in 1972, perhaps only a western Canadian can argue the case for a new national policy. At the same time, and acknowledging the regional apprehension that accompanies any discussion of policies with the prefix national—cue echoes of the 1879 National Policy and the 1980 National Energy Program (NEP)—it is important to lodge this argument in the historical experience and current conditions of Western Canada.

THE NATURE OF FEDERALISM

It is helpful at the outset to clear away some of the conceptual under-growth that inevitably surrounds discussions of Canadian federalism in the context of globalization. For example, although Canada is emphati-cally a federal state, federalism itself encompasses only a fraction of the values and institutions that define our political life. Canadians embrace

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democracy, representative parliamentary government, individual rights and freedoms, the rule of law, the protection of minority rights, and a modicum of social and economic equality, but none of these are unique to federal states or, for that matter, to Canada. They are not federal values. For the most part when we refer to definitive Canadian values, we are referring to aspects of our political life and culture having little to do with the fact that Canada, like Australia and the United States but unlike Britain and France, is a federal state.

My exploration of The Conference Board of Canada’s theme “Canadian federalism in an age of globalization” therefore focuses on a set of federal principles, institutions and practices that even in their totality are far less than the sum of Canadian political life. Federalism is not about democracy, or individual rights, or equality; these values are embedded elsewhere in the country’s institutions and values. The Canadian Charter of Rights and Freedoms, for example, is not a federal document, although it—like the much earlier American Bill of Rights—certainly has implications for the operation and evolution of the federal system.

Federal states are very heterogeneous in their social and political character: Canada is not Russia, nor is Nigeria the United States, nor India Australia. What sets federal states apart from other national com-munities is not their values but a number of institutional design prin-ciples that include a division of legislative authority between two orders of government, each of which is elected directly by citizens, and each of which is sovereign in at least one legislative domain. This division of powers is set out in a written constitution that cannot be amended unilaterally by either order of government. In addition, federal states provide for the formal representation of their constituent communities (states or provinces) within the national legislature, although the means by which this is done range from direct popular election (Australia and the United States) to indirect election through constituent governments (Germany), and even to the appointment of friends and partisan col-leagues of the prime minister (Canada). Of particular importance to the present analysis, the design of federal states assumes that national


governments should not do everything; significant responsibilities are reserved for state or provincial governments.

This formal definition of federalism, admittedly, has little resonance for most Canadians. Debates about how well the federal system works quickly boil down to debates about the division of powers or, more pro-saically, debates about which government is doing or not doing what. (Although western Canadians also worry about the federal nature of parliamentary institutions, this is not a national concern.) And here it is clear that the formal, written constitution, the Constitution Act, fails to provide even a proximate guide as to who does what or should do what. While Canadians might expect some rhyme or reason, what they see is both the national1 and provincial governments involved virtu-ally across the board. Provincial governments serve on international trade missions and now international delegations (UNESCO), while the national government is engaged in daycare for children, the waiting time for hip replacements, and the allocation of scarce infrastructure funding between public transit and interchanges in local communities. The notion of constitutionally defined responsibilities has been blown away by the federal government’s spending power (the unfettered ability to spend in any area of responsibility); by dated constitutional text that understandably fails to capture contemporary legislative responsibilities and policy interdependencies; by the common assertion outside Quebec that national values and standards should trump dry constitutional text; and by the electoral appetites of both fed-eral and provincial leaders who assume that if something is important for Canadians, it must necessarily be important for the governments they lead.

In short, we live in a federal system that is largely unconstrained by constitutional principles or design, where everything shy of the armed forces is up for grabs. With this comes democratic confusion with

1 Federalism commentary in Quebec tends not to use the term “national” in reference to the Gov-ernment of Canada, whereas western Canadian usage makes no distinction between “national” and “federal” in reference to the Government of Canada. This essay follows western Canadian usage; the terms “national government” and “federal government” are used interchangeably.


respect to accountability and responsibility—should I complain to my MP, provincial legislative representative or local health authority if I’m unhappy with the medical services I receive?—and intergovernmental friction as the national and provincial governments jockey for the same programmatic space. However, although I do not share Janice Stein’s optimism that creativity comes out of chaos (in my life, further chaos more often comes out of chaos), the objective here is not to bemoan this general state of affairs but rather to draw attention to a specific concern, one rendered all the more important in the context of globalization.

STATING THE PROBLEM

At their inception, and although they differed from one another in many ways, all federal states were engaged in the construction of a common economic space to be shared by their constituent provinces or states. Of course, this was not the totality of what they were trying to achieve; military defence was another goal, albeit a brief and tran-sitory one in Canada, and most federal states rested on the vision of a transcendent national community. Nonetheless, building a common economic space was a fundamental task, quite literally a founda-tional task for new federal states, and Canada was no exception. They imposed a common currency, common weights and measures, and a common legal framework for business transactions. Internal tariffs on trade were prohibited—although success in prohibiting non-tariff bar-riers to internal trade was more limited, as the Canadian experience attests—and uniform tariffs were imposed on imports from outside the federation. The new national government spoke with a single voice in its economic relations with other states as it defended and promoted a common space within the international environment.

However, and to go to the core of my concern, this undertaking has been largely abandoned by or stripped from contemporary national governments in Canada. An important set of responsibilities has fallen through the cracks, and as a consequence Canadians are less prepared than they could be to confront the challenges and reap the opportunities


of globalization. Simply put, the Government of Canada has neglected an essential responsibility, and that is the protection and promotion of the common economic space shared by citizens from sea to sea to sea.

If I can paint with a very broad conceptual brush, a fundamental problem for federalism follows from this neglect. Citizens in well-functioning federal states live within a common economic space, but do so in a way that accommodates community differences in taste and preference. National governments manage, protect and promote this common economic space, while provincial/state and municipal gov-ernments manage the constituent communities. Thus, citizens can be part of a relatively large economic community while at the same time remaining attached to the smaller communities that are so important to their quality of life. This is the traditional appeal of federalism for Fran-cophone Quebecers, but it is also of more general appeal. For example, I can simultaneously be a Canadian, an Albertan, a Calgarian and a patron of my neighbourhood pub, enjoying the economic and other benefits of an overarching national citizenship while still enjoying life in more idiosyncratic local communities. Here Americans have nicely captured the essence of federalism—E pluribus unum, or “out of many, one”—but done so in such a way that the distinctiveness of constituent communities is not lost. Although federations are greater than the sum of their parts, the parts still matter.

I would argue that if federal states are to endure as federations, they must be successful on both fronts: they must nurture the common economic space while at the same time giving somewhat distinct societies room to breathe and the capacity to respond to their unique demographic and social circumstances. Now at the best of times, strik-ing the right balance between national economic management and community distinctiveness is a difficult political and institutional task. Today, however, it is rendered even more difficult by globalization that erodes state boundaries and thus challenges the very notion of national economic space. For better or for worse—in my mind, for better—we live in an era where national barriers to the flow of goods, services, finance, ideas and (less so) people are coming down. This global real-ity is further reinforced for Canadians by a new continental economic


space imperfectly institutionalized through the North American Free Trade Agreement (NAFTA). As a consequence, Canada’s economic space is called into question in an era of NAFTA, the World Trade Organization (WTO), increased international trade, truly global cor-porations, intensifying international competition and the instantaneous global flow of finance.

On the economic front alone, globalization presents not only oppor-tunities but also challenges for Canadians. As the Canadian Council of Chief Executives observes:

We live in an increasingly open world. Openness is one of Canada’s greatest strengths, and we have been a prime beneficiary of the growing flow of goods, ser-vices, money, ideas and people across borders. Being open to opportunities also means being open to compe-tition. Canada has done well in competition with other industrialized nations, but the rise of large developing economies such as China and India is transforming the competitive landscape for companies in every sector.2

The challenges are then compounded as globalization erodes the economic underpinnings of national governments in federal states. Their role as managers of the common economic space is reduced as decision-making shifts upwards to international forums such as the WTO and outwards to markets.

Moreover, just as boundaries around the national economic space have been eroded by globalization, just as the very concept of national economic space has come under attack, jurisdictional boundaries within the federation have also been eroded. Ottawa, for example, and for example only, has become engaged in the design of health-care delivery, in daycare and early childhood development, in urban planning and in microenvironmental management. The federal value of diversity among

2 Canadian Council of Chief Executives, From Bronze to Gold: A Blueprint for Canadian Leadership in a Transforming World (Ottawa: CCCE, February 21, 2006), p. 3.


communities has been discredited or abandoned as the Government of Canada positions itself as the defender of an overarching citizenship presumably reflected by and embedded in national standards for pro-gram delivery. The federal contract has been redefined from protecting community distinctiveness to ensuring the uniform application of national standards, an approach often associated with Charter feder-alism.3 National values are defined outside the context of federalism; they are articulated in a more partisan context by the national govern-ment of the day. Citizenship rights defined through the courts trump community distinctiveness. Although historically the Government of Canada played an important role in managing, protecting and promoting Canada’s common economic space, in today’s context of globalization the federal government increasingly pins its relevancy for Canadians on involvement in the traditional domain of provincial and municipal governments—hence the attention paid to such things as health-care delivery and child care in recent federal election campaigns.

It is important, of course, not to overstate the degree to which this evolutionary transformation has been the product of conscious design. I am not suggesting that the Government of Canada’s expansion into the social and jurisdictional space of provincial governments was con-sciously framed as a response to globalization. Many other causal fac-tors have also come into play in this shift in focus, and thus perhaps the most that can be said is that the shift coincides with the growing impact of globalization on the Canadian economy. Nor should we read moral reproach into this transformation, for the elevation of national standards above community distinctiveness holds considerable appeal among Canadians outside Quebec. Rather, the point to stress is that we have arrived at a situation where the federal balance has been fundamentally

3 The drift to become less federal, to assume that national values and standards should trump provincial distinctiveness, contributes to our ongoing inability to come to grips with national-ist sentiment in Quebec. It should come as no surprise that the sovereignty movement has not packed up its tents and silently stolen away, for although one could argue that Ottawa can do a better job of managing the common economic space than could Québec City, it is far less evident that it can do a better job of managing Québec’s distinct social space than could a sovereign Quebec state.


altered. The protection of the country’s common economic space has been largely abandoned, whereas the federal accommodation of com-munity differences in taste and preference has been weakened as the national and provincial governments compete for social programming. At issue is whether this evolutionary trajectory should be reversed in the context of globalization.

The concern driving the present analysis is that the Government of Canada, by shifting its focus away from our common economic space, is failing to equip Canadians for the onslaught of global eco-nomic competition. Canada is at risk of being outflanked and overtaken by its international competitors, in part because our federal system is not aligned with the new environment. The Government of Canada, along with parties in federal election campaigns, faces inwards to address a domestic social agenda rather than facing outwards to address the economic challenges and opportunities of globalization. With this domestic agenda has understandably come a focus on place-based poli-cies; greater attention is paid to the distribution of the national eco-nomic pie than to its growth.

Better alignment is needed and can be created through a new national policy built within the policy constraints of globalization. The case for this approach will be sketched in by first reviewing some of the steps taken by Canadian governments in the past to manage, pro-tect and promote the common economic space. I will then suggest that the lessons from this past experience—and, indeed, many of the initia-tives—can be used to patch together a new national policy in response to the economic challenges and opportunities of globalization.

Before embarking on this rather ambitious—some might say hope-lessly ambitious—quest, I should note three caveats:

First, although my focus will be on the economic dimensions of fed-eralism and how these have changed over time, it is not my intent to reduce questions of governance and national identity to dollars and cents. I recognize there are many non-economic factors that create national communities, hold them together and, in some cases, drive them apart. Economic considerations are only part of the federalism story, albeit an important part as globalization bears down on Canada.

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Second, this essay is written from an unabashedly western Canadian perspective. I would argue, however, that regional bias in this case is a virtue rather than a vice, for the dynamics of federalism in Western Canada bring the economic arguments of the essay nicely into focus. Promoting the common economic space has always been of greater importance in the West than protecting community distinctiveness. The imposition of national standards and values, which for the most part western Canadians share, has been much less problem-atic than has been Ottawa’s management or mismanagement of the common economic space, in part because many of today’s highly prized national values spring directly from the western Canadian experience. Saskatchewan’s formative contribution to the public health-care system is widely acknowledged; our national com-mitment to multiculturalism within a bilingual framework reflects western Canadian political pressure in the 1960s; and the federal government’s commitment to deficit-free financing—and, for that matter, the similar commitment of provincial governments west of Ontario—springs directly from the emergence of the Reform Party of Canada in the late 1980s. Third, the highly selective history of federal management of our common economic space that follows has been penned by a political scientist and not by an economic historian. Thus, commentaries on specific programs and initiatives should be taken with a large grain of salt.

With these caveats in mind, let’s turn now to the historical record, with particular emphasis on how it has played out in Western Canada.

HISTORY LESSONS

The Government of Canada that came into being in 1867 was involved in nation building in a very big and practical way. Quite literally, building a common economic space was the overriding pre-occupation of the new national government; this was the strategy we

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adopted to ward off the threat of American Manifest Destiny. Although it may seem a silly point to make, it is nonetheless useful to remember that national governments in the late 19th century were not involved in wait times for surgical procedures, or in the provision of child-care spaces, or, for that matter, in education at any level or in any form; everything had to do with managing and promoting the common eco-nomic space that had been created through the 1867 Constitution Act. With the British government casting its colony to the continental wolves, Canada’s political survival could only be assured through an economic nation-building strategy. This early history, which contrasts so starkly with the government scene today, is nicely brought into focus by the story of agricultural settlement in the prairie west.

Agricultural Settlement on the Canadian PrairiesThe founding relationship between the prairie west and central

Canada was essentially colonial in character. Note, for example, a pre-Confederation column in the Toronto Globe:

When the territory [the West] belongs to Canada, when its navigable rivers are traversed for a few years by vessels, and lines of travel are permanently established, when settlements are formed in favourable locations throughout the territory, it will not be difficult by grants of land to secure the construction of a railway across the plains and through the mountains. . . . If we set about the work of opening the territory at once, we shall win the race [against the United States, which was pushing steadily westward]. . . . It is an empire we have in view, and its whole export and import trade will be concentrated in the hands of Canadian merchants and manufacturers if we strike for it now.4

4 Toronto Globe, March 6, 1862.


Indeed, it was difficult to imagine the relationship in anything but colonial terms. The land, after all, was virtually empty except for an Aboriginal population that did not figure heavily in the nation-building visions of the Confederation period, and Canada was com-peting with the United States in a settlement race westward across the continent. Central Canadian banks financed the debtor frontier and the railways linking producers on that frontier to global markets. The fed-eral government orchestrated both the construction of the rail system and immigrant settlement in the late 1800s and early 1900s. Tariffs were used to direct trade along the country’s east–west axis and to tie the new western Canadian consumers to central Canadian manu-facturers. The agrarian settlement of the prairie west was therefore a national project, albeit a colonial one, and undoubtedly a successful one. It was nation building in the literal sense of the word.

For the new western Canadian population, it was also nation build-ing in a global economic context. The emergent western grain economy was tied to global markets from the get-go. Agricultural producers were necessarily dependent on those markets, as the domestic population was too small to absorb their output, and the United States was a vig-orous competitor more than it was a market. Globalization was a fact of life, if not a term used at the time. And, in global markets, national tariff policies provided no protection for western producers. Tariffs could and did protect the infant central Canadian manufacturing indus-tries, but agricultural producers were left on their own in the interna-tional marketplace, while at the same time having no choice but to absorb the costs imposed by tariffs on the machinery they used. This is why the 1879 National Policy of tariff protection had few fans in Western Canada. In fact, it triggered a regional aversion to the policy adjective “national,” an aversion reinforced by the NEP in 1980 and one that arises when national governments that are not truly national in their composition impose “national policies.”

In some ways, of course, prosperity in the early prairie west lay beyond the reach of public policies; it was in the hands of the weather, international markets and grasshoppers (if grasshoppers have hands). Yet in other ways, regional prosperity was tied directly to the policy


architecture of the federal government. The National Policy had a direct impact on the input costs faced by western producers, and the federal government sat astride the transportation infrastructure that linked western Canadian producers to world markets. Ottawa set freight rates, regulated and partially financed the railroads, and regulated the finan-cial institutions that provided credit to western producers. All of this meant that wielding political power in Ottawa was critically important for the economic interests of western Canadians. Although they were largely indifferent to the role that federalism might play in protecting community distinctiveness, they were hugely concerned about the man-agement of the country’s common economic space.

The fact that Ottawa mattered very much spawned the logic of what eventually became a regional mantra: “The West wants in.” Although this was the founding slogan of the Reform Party of Canada, created in 1987, the sentiment (if not the slogan) has much deeper roots in the West as the logical imperative for political action, and as an expla-nation for why western political discontent has not been associated with a withdrawal from national politics. Western Canadians could not afford to disengage, for only if regional political power could be wielded within the national government would the economic interests of Western Canada be protected and advanced. Greater decentralization was not the answer because the policy domains of greatest concern, including tariffs and interprovincial transportation, were intrinsically responsibilities of the Government of Canada and not provincial gov-ernments. Decentralization might work as a strategy to protect the cul-tural integrity of Quebec but not as a strategy to protect the economic interests of the West.

However, if the federalist logic of “the West wants in” was clear, the means by which this objective might be accomplished was not. The region’s political history is littered with the wreckage of failed attempts to gain national political clout—the early farm parties, including the United Farmers of Alberta and the United Farmers of Manitoba, as well as the Progressive Party of Canada, the Co-operative Commonwealth Federation, Social Credit and, more recently, the Reform Party of


Canada. The successes were few and brief, with the high-water marks coming with the minority government election of the John Diefenbaker Progressive Conservatives in 1957 and their landslide win in 1958; the first term (1984–88) of Brian Mulroney’s Progressive Conservative government, which brought in free trade with the United States and the abolition of the NEP; and Stephen Harper’s minority government.

The more general point is that Canadian federalism, and particularly the national government and its policy architecture, was highly relevant to western Canadians even though, in their eyes, it was badly flawed. Hence the reform impulse in Western Canada, an impulse reflecting the reality that what Ottawa did and did not do had a very significant impact on regional prosperity. The West was the most globalized part of the early Canadian economy, and success in global competition was tied directly to the policies and actions of the federal government. It is no wonder, then, that western Canadians wanted in; they had little choice. It is also no wonder that they championed institutional and political reforms, albeit with no success. The core of western Canadian discontent lay with this sense of impotence, of being unable to influ-ence the public policy determinants of regional prosperity. Yes, the federal government was important, but it was also remote, seemingly indifferent and occasionally hostile to western Canadian aspirations.

But that was then and this is now. In recent decades the linkages between federal policy and economic prosperity in the West have been substantially weakened. For example:

The tariffs that were so integral to the National Policy and that served as a lightning rod for agrarian discontent are gone. In most respects (some see the Canadian Wheat Board as a significant exception), the federal government no longer stands between western Canadian producers and the global trading system.The federal government now plays little role in the transportation systems linking western Canadians to global markets. Ottawa is nei-ther an investor nor a builder, and deregulation has further reduced the federal government’s role. Freight rates are set by markets, not by Parliament. Ottawa today is little more than a collector of taxes

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(e.g., the fuel tax) and rents (e.g., airports). The transportation system is unfortunately seen more as a revenue source than as the foundation for economic growth and prosperity.The relative importance of east–west interprovincial trade has decreased. During the 20 years between 1981 and 2000, interprovin-cial exports in the West fell slightly, from 22.5 per cent of regional gross domestic product (GDP) to 19.4 per cent, while in the rest of Canada they fell from 25.7 per cent to 18.9 per cent. Although east–west trade is not unimportant, it is progressively less important.International trade has become more important to the regional eco-nomy. In the 20 years between 1981 and 2000, international exports as a proportion of the western Canadian GDP rose from 18.8 per cent to 35.8 per cent; in the rest of Canada the change was even more pronounced, increasing from 20.8 per cent to 48.2 per cent.5

Against the backdrop of these changes, the West has emerged as the new economic engine for Canada. The region has vast energy sup-plies, energy markets are robust and natural resource markets are generally strong. Unemployment rates are low and public finances are in excellent shape. The national economy’s centre of gravity is shifting west, and the region’s share of the national population is steadily increasing; just over 30 per cent of Canada’s population now lives in the four western provinces, compared with slightly less than 24 per cent in Quebec.

Most of these changes in the economic landscape, with the possi-ble exception of the last, have played out across the country; the 1989 Free Trade Agreement (FTA) and NAFTA, for instance, have had a profound impact on the national economy. The particular relevance of these changes for western Canadians is that they decrease the relevance of the federal government. The economic realignment spurred by pros-perity in the West also turns the traditional “the West wants in” crusade on its head. For generations, western Canadians have sought a more

5 Robert Roach, Beyond Our Borders: Western Canadian Exports in the Global Market (Calgary: Canada West Foundation, 2002), p. 6.

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effective voice in Ottawa to call attention to regional aspirations and needs. Now, instead of western Canadians pleading their relevance to Ottawa, the challenge will be for the national government to show that it is relevant for the West. The discussion of “who wants into what” has been transformed.

The federal government also seems less able, or less relevant, or both, in protecting and promoting regional economic interests on the international stage. On softwood lumber and bovine spongiform encephalopathy (BSE), the federal government’s clout with the United States has been somewhere between modest and non-existent. In the broader international arena, Canada’s position in the latest round of WTO agricultural negotiations has been determined primarily by the supply management concerns of central Canadian dairy and poultry producers; commodity producers in Western Canada have been largely shunted aside, sacrificed to Canada’s defence of protectionism. While it may be possible to argue that western Canadians would be even worse off were it not for the intervention of the federal government, this is not an easy argument to make. The basic reality is that Canada is a small and proportionately shrinking player in the international trading sys-tem, where we speak softly and carry a small stick. As international trade becomes increasingly important, Ottawa’s international influence and domestic relevance decline.

Senator Pat Carney, former minister of energy in the Mulroney gov-ernment, was essentially right when she argued in Calgary during the 1988 federal election campaign that western Canadians should support the proposed FTA because, once it was implemented, the American government would then protect western Canadians from their own national government (an extraordinary argument for a minister of the Crown to make!). There is no need to “get in,” the Minister implied, so long as a foreign power can be relied upon to protect regional economic interests. Washington would ensure that future Ottawa governments would not resurrect the notorious NEP. Here it can also be argued that business interests in Western Canada have become increasingly indif-ferent to conventional methods of political representation. They exer-cise sufficient clout to have direct access to the federal government;


there is no need to channel their concerns through a local MP or senator. “Getting into the federal government” does not require institu-tional or political reform; it is just a matter of picking up the phone or hitting “send.”

In summary, the agricultural settlement of the prairie west illustrates the historical role played by the Government of Canada in building, protecting and promoting a common economic space. The national government was directly involved in promoting immigration, in the construction of the infrastructure needed to link western Canadian producers to world markets and in the establishment of the treaties with Aboriginal peoples that paved the way for agricultural settlement. That role, of course, was also contentious, as the effects of national economic policies were not evenly distributed across regional communi-ties; tariffs were a golden goose for central Canadian manufacturers and a cross to bear for agricultural producers on the Prairies. Nonetheless, the activism of the national government is undeniable, as is its broad success in helping to foster Canadian economic progress. Now, however, the federal government and its policy architecture appear increasingly irrelevant for economic prosperity in Western Canada.

Connecting to MarketsThe western Canadian experience illustrates the role that the

Government of Canada has played in helping to create the infrastruc-ture linking Canadian producers to domestic, continental and global markets. That role, however, was by no means limited to the prairie west. Note, for example, the federal government’s contribution to the construction of the St. Lawrence Seaway, a monumental engineering project that linked the continental heartlands of Canada and the United States to Atlantic markets. The federal government was a player in the construction of the Trans-Canada Pipeline, which created a central Canadian market for Alberta energy resources. The construction of the Trans-Canada Highway, carried out on a cost-shared basis with provin-cial governments, should also be noted, along with John Diefenbaker’s visionary—if weakly implemented—“roads to resources” program,


designed to open up the mineral wealth of northern Canada. Ottawa was a builder, and a builder that helped open up global markets.

Unfortunately, the Trans-Canada Highway is also an example of how policy implementation has fallen short of visionary goals. We still lack a divided, four-lane highway that stretches from coast to coast (never mind the third coast). There is no Canadian parallel to the inter-state highway system in the United States, a fact that diverts a great deal of east–west traffic south of the border onto American routes. The Trans-Canada Highway still has two-lane sections in Newfoundland and Labrador, New Brunswick, Northern Ontario, Saskatchewan and British Columbia. Sometimes we dream big but execute small.

More Recent ExamplesWe do not have to go back to the National Policy of 1879 or to the

construction of the St. Lawrence Seaway to find examples of how the Government of Canada has acted with vigour to protect and promote Canada’s common economic space. More recent, if somewhat con-tentious, examples come from the FTA in 1989 and NAFTA in 1994. These initiatives by Brian Mulroney’s Progressive Conservative gov-ernment were designed to transform the Canadian economy by opening it up to more robust continental competition, but also opening it up on a more secure basis to American and Mexican markets. Now admittedly, to some this continental approach might appear to fly in the face of protecting Canada’s national economic space; they might see it as an abandonment of this very notion. Others, however, including this author, see the FTA and NAFTA as bold steps to reform and ultimately strengthen the Canadian economy in the face of growing international competition. At the very least they provide examples of a national gov-ernment prepared to act decisively in pursuit of an economic vision informed by the new realities of globalization.

A less dramatic but still significant move came from the efforts of Jean Chrétien’s Liberal government to strengthen federal investment in Canada’s research and development capacity. This innovation, or prosperity, agenda was well tuned to the emerging drivers of successful


international competition, and it had a marked impact on the university research community. Whether the dollars matched the needs is not clear, but once again it provides an illustration of national leadership.

Finally, it is impossible for an Albertan to resist mentioning the NEP, which was another bold although deeply flawed attempt by the national government—in this case a Liberal government led by Pierre Elliott Trudeau—to move the national economy along a somewhat different trajectory than market forces might have dictated (unlike NAFTA, which was clearly aligned with market forces). The important thing to note about the NEP in the present context is that it was place-based, designed to shift oil and gas exploration outside Alberta and onto “Canada Lands” in the North and off the east coast. The goal was not to strengthen the national economy but rather to realign that economy to the benefit of some regions and the detriment of others. The NEP is a classic example of what not to do.

What, then, are the more positive lessons that might be drawn from this very brief historical sketch? The first is that many of the economic initiatives undertaken by Canadian governments in the past are relevant today. For example, Canadian producers of all stripes, and particularly those located outside central Canada, still find themselves a long way from continental and global markets. As a consequence, transportation infrastructure—the “ties that bind”—is as important today to economic prosperity as it was during the construction of the Canadian Pacific Railway across the West. Another example of continuity comes from immigration, which was so critically important to the agrarian settle-ment of Western Canada and remains important today as the Canadian economy faces growing labour shortages brought on by an aging popu-lation and birth rates well below the replacement rate.

More generally, my reading of history suggests that Canadian gov-ernments in the past often acted with boldness and success in man-aging, promoting and protecting Canada’s common economic space. It is only in recent years that national governments have become more hesitant, more preoccupied with a social agenda, although even here Chrétien’s innovation agenda and the Asia–Pacific Gateway initiative (discussed shortly) offer hope that the creative spark has not been


completely extinguished. The critical question is whether the federal government can again find its groove—whether its economic relevance can be rebuilt in the new circumstances of globalization.

DESIGNING A NEW NATIONAL POLICY

In turning to the design of a new national policy, we must recognize at the outset that the FTA and NAFTA, along with changes in the global trading system, have taken away some of the policy levers that govern-ments used in the past to manage the common economic space. Tariffs, for example, are effectively off the table, and subsidies of most kinds are moving rapidly to the table’s edge. Another NEP is improbable if not impossible under the terms of NAFTA, which prevents the differ-ential treatment of Canadian and American energy markets. However, the policy basket is not empty; there are things that can be done to better align the federal system with the challenges and opportunities coming from a new global economic order, things that do not violate international rules. We can pull together lessons from the past and weave together a new national policy that returns the focus of the federal government to our common economic space, encourages its withdrawal from the social space of provincial governments, and is consistent with the realities of globalization and continental eco-nomic integration.

The link between a renewed focus on our common economic space and reduced engagement in the social space occupied by provin-cial governments is important, if not immediately obvious. Reduced engagement is essential if Ottawa is to have sufficient policy focus and capacity. It is imperative that the Government of Canada not be seen as the hammer for every conceivable policy nail. Just because something is important for Canadians does not necessarily mean that it should be important for the federal government. To be effective the federal gov-ernment needs to constrain its appetite; it needs to be a nimble, not bloated, player on the international stage. To this end I recommend that the federal government move away from place-based policies


and toward a greater focus on mobile human resources. Rather than supporting communities, it makes more sense for the federal govern-ment to provide individuals with the skills they need to compete in an increasingly mobile economy. Where Canadians live should be of less importance than whether they enjoy prosperity and a high quality of life wherever they might be.

These two interrelated strategies—reduced engagement in the social policy space of provincial and municipal governments, and an increased focus on mobile human resources rather than place-based policies—underpin a new national policy for nurturing Canada’s common eco-nomic space. Let’s turn, then, to more specific recommendations to put some public policy flesh on this conceptual skeleton. I’ll start with some of the easy bits, the things that we have learned from history. As the discussion progresses it will become increasingly contentious.

TransportationDespite, or along with, the growth of the knowledge-based econ-

omy, Canada remains a trading nation, and goods still move across provincial and national borders. In this respect, there is an ongoing role for the federal government, one that harks back to an earlier period in the country’s economic history. The federal government should be more than a collector of transportation taxes and rents, and more than a regulator in an environment where market competition is sharply reducing the regulatory role. There is room for a literally more con-structive federal role in building the transportation infrastructure and corridors that connect the Canadian economy to continental and global markets. This entails ease of movement across the Canada–U.S. border, and ease of access to growing Asian markets. And in these respects the Government of Canada has been coming back to life in recent years; border infrastructure is improving, some of the fuel tax is now being put back into transportation infrastructure through municipal governments, the modest Asia–Pacific Gateway initiative has been launched and, in the 2006 election campaign, the Conservatives proposed the creation of a national transportation infrastructure fund. These are significant steps in recognizing federal responsibilities with respect to the transportation


infrastructure linking Canadian producers and consumers to global markets. Here the path forward is in part back to the future—back to the federal role in building the national rail system, the St. Lawrence Seaway and the Trans-Canada Highway.

Still, we have a long way to go if we are to move beyond piece-meal infrastructure projects toward an integrated national transportation strategy. A recent Globe and Mail editorial entitled “Our rotting high-ways” quotes David Flewelling, President of the Canadian Automobile Association, as follows: “Canada [in contrast to the United States] has no national highway plan—no consistent vision, no policy, no sustained funding, no national standards for our roads and highways.”6 Canadians need to ask whether the federal government is doing the right things (drawn from a vast menu of potential infrastructure projects), whether the magnitude of investment is sufficient and whether there is an inte-grating strategic plan. For example, will port investments related to the Asia–Pacific Gateway initiative keep Canadian ports on a level playing field with American ports on the west coast that have benefited from a massive infusion of public and private investment, or will we simply be falling behind less rapidly? The Martin government’s $591 million commitment to the Gateway has been retained by the Harper govern-ment, but it will now be spread over eight rather than five years. Here we risk a pervasive Canadian disease—doing the right thing on too small a scale to have any significant effect. Too often, it seems, we dream big and do small.

ImmigrationTo state the obvious, Canada is an immigrant society, and this char-

acterization applies to our future as much as it applies to our past. Canada’s ability to attract and retain immigrants will be an important determinant of success in global competition. This, in turn, means the ability to utilize fully the skills and ambition immigrants bring and, where those skills are not optimal, to provide training. It is essential

6 “Our rotting highways,” The Globe and Mail, April 18, 2006, p. A16.


that immigrants have the language skills to succeed not only in entry-level positions in the service industry but also at the upper rungs of the Canadian economy. There is, then, a clear, essential and con-tinuing role for the federal government; the recruitment, settlement and training of new Canadians, who will be part of a highly mobile national labour force, should continue to be a federal financial responsi-bility even if service delivery is handled by others. The federal govern-ment should also be a catalytic player in reducing the accreditation and Canadian work experience barriers that frustrate the contributions that new immigrants could make to the Canadian economy.

At the same time, federal policy should be indifferent to where immigrants settle, and federal funding should follow immigrants to their choice of destination. It makes no sense to partition federal fund-ing by province, to allocate a fixed proportion of funding to any par-ticular province regardless of its proportionate intake of immigrants. For example, if recent immigrants leave Quebec for better economic opportunities out West, their federal funding should also move. To shape national immigration policies and funding to fit the geopolitics of a past era is a recipe for failure in the 21st century.

Canada’s growth and prosperity have been built on immigration. The diversity of our communities is becoming an increasingly important competitive advantage in a global economy, yet the evidence sug-gests that it is taking immigrants longer to find work related to their qualifications and to catch up to the incomes of Canadian-born workers. As other countries compete more aggressively for skilled and mobile people, Canada will need to do a much better job of recruiting skilled immigrants, assessing and recogniz-ing their credentials and filling any gaps in knowledge that may limit their full and equal participation in the labour force.7

7 Canadian Council of Chief Executives, From Bronze to Gold, p. 9.


None of this precludes a complementary provincial role. The prov-incial nominee programs in Western Canada have been useful in aligning federal immigration policies and processes with provincial labour force needs, and Quebec officers abroad have helped in the recruitment of Francophone immigrants. Nonetheless, the federal government’s roles and responsibilities are paramount, and Canadians should be asking whether the financial resources that are being com-mitted match the magnitude of need in a time of increased international competition for human capital.

Aboriginal PolicyComing to terms with the rights, needs and aspirations of Aboriginal

peoples is an inescapable and important responsibility of the federal government. It is also an essential component of a new national eco-nomic policy, for Canada can ill afford to have a significant portion of its population, and the most rapidly growing component, less than fully integrated into the national economy. This is a matter of particular importance in the western provinces, where labour shortages are acute and the Aboriginal population is relatively large. It is also in Western Canada, and specifically in British Columbia, that unresolved treaty and land claims threaten to curtail economic development. In short, the policy architecture developed to support Aboriginal peoples is as much a part of Canada’s economic agenda as it is a part of the country’s social agenda, perhaps even more so. In a time of an aging and poten-tially shrinking labour force, the Canadian economy can ill afford to continue with a situation in which Aboriginal peoples are not full economic participants.

It should also be noted, however, that the recommendation that the federal government focus on the mobility of individuals within an increasingly fluid economy has unavoidable consequences for Aboriginal policy. It suggests that federal policy should focus less on communities and more on individual training and skills—beyond, of course, the settlement of treaty and land claims, upon which commu-nity survival may hinge in some cases. The preservation of Aboriginal communities per se may well remain a policy priority for those


communities, but it should not be a priority for the federal govern-ment. Community health should be seen as a means to an end rather than an end in itself; the end of federal policy should be highly skilled individuals capable of competing successfully within a complex national economy. Whether individuals choose to deploy their skills in Toronto, Winnipeg or their own Aboriginal community should be a matter of indifference to the federal government. Community building should be a matter of individual choice, not federal policy. Some exist-ing communities will forge prosperous and innovative futures, as will many non-Aboriginal rural communities, while others will fail and even disappear, as will many non-Aboriginal rural communities.

It is admittedly difficult to separate individual and community success, but keeping communities in place should not be a federal pri-ority or a criterion of policy success. And if federal policy turns more to individuals than to the communities in which they find themselves, this in turn suggests that greater policy attention should be paid to the 70 per cent of the Aboriginal population that lives off reserve and to the 50 per cent that lives in urban centres.

Protecting Canada’s Economic Interests in the International ArenaAny Canadian discussion of globalization must recognize an impor-

tant caveat. As globalization has advanced, the extent of Canada’s eco-nomic integration with the United States has also increased. Therefore, any debate about how the Canadian federal state should handle global-ization is in reality a debate about how Canadians should handle their economic relationship with the United States. Globalization is the new gloss on a much older issue: our economic dependency on or, at the very least, integration with the United States.

This suggests a number of things. First, managing Canada’s very complex relationship with the United States must be of the highest pri-ority. Second, and closely related, there is little question that security, and particularly border security, has now become part of the Canadian economic policy file given that ready market access to the United States is at risk. Security is important to Canadians largely, although not entirely, because it is important to Americans. Although it is all


right to reject American security concerns at a dinner party over a glass of fine wine, this cannot be done in the harsh daylight of economic realities. And, of course, border security is an inherent responsibility of the federal government.

In recent years, Canadian foreign policy resources have been largely directed toward the multilateral international environment, where our representatives are able to stand on the stage with quite literally a cast of hundreds, if not thousands (and sometimes with Bono!). However, our leverage within this environment is limited, and thus the argument can be made that Canadian resources would be better spent on manag-ing more proximate relationships with greater economic importance. The United States and NAFTA loom huge in Canada’s economic future, whereas our ability to bend the WTO to Canadian interests is very limited. It is also essential to devote more attention and resources to the Asia–Pacific region as a source not only of markets but also investments and imports. It can be argued that just as the FTA and NAFTA had a transformative impact on the Canadian economy, so too will the rapid growth of the Asia–Pacific economy. Not surpris-ingly, this need to look both west and south is of particular relevance to western Canadians.

Internal Barriers to TradeIt is often noted that while barriers to the movement of goods and

people are coming down globally, interprovincial barriers are still in place. Now admittedly, many of these are beyond the reach of the federal government, and in some cases it is quite appropriately prov-incial governments that are knocking down the barriers; the recent Alberta–British Columbia agreement in principle to reduce barriers to the flow of goods and human resources between the two provinces is an excellent example of provincial leadership on a difficult policy file. Nonetheless, the federal government could play a more aggressive role in directing attention to these barriers, in pushing for their removal and in exploring Ottawa’s constitutional scope for action. Canada’s entire population is less than that of the urban agglomeration of Tokyo, and having a national economy still fragmented by interprovincial barriers


to trade and the mobility of people makes no sense. A similar argument could be made with respect to the need to establish a national securities regulator. At issue here is the scale of the global economy; at a time when Canada is having difficulty holding its own, it makes little sense to consider the provinces as autonomous economies.

Innovation and TechnologyRecent federal governments have taken significant steps to increase

both public and private investment in innovation and technology, and it is difficult to see a new national policy that would fail to give at least equal—and, hopefully, even greater—attention to this side of the Canadian economy. By global standards, Canadians are not big inves-tors in research and development, and our success in commercializing research ideas is modest at best. We are not catching up with our com-petitors and quite likely are falling even further behind. This is an area where past federal governments were beginning to get it right, and we can only hope that their success will attract rather than repel govern-ments to come. Perhaps the only real issue is whether we are doing enough—whether we are strolling while others are running.

Regional Economic DevelopmentIf the federal government is to become less involved in place-based

policy, this would imply that regional economic development agencies would have a reduced role and that the regional location of economic activity would not be a federal concern. Certainly, these agencies’ role as dispensers of federal largesse should be rolled back. At the same time, there is an ongoing need to ensure strategic integration of fed-eral activity within regional communities, to plug policy gaps, to foster constructive intergovernmental collaboration and to ensure an adequate flow of policy advice upwards from the regions to the central govern-ment—all of which Western Economic Diversification has done so well. Thus, the future role of regional development agencies may be more constrained but no less important.


EnvironmentThe political power of environmentalism comes from place-based

politics, from the urge to protect the environment that one can see, smell, touch and breathe. If environmental politics are primarily place-based, then perhaps we should recognize that the bulk of environmen-tal policy should lie beyond the scope of the federal government. Just because the environment is a sexy policy field does not mean that the federal government should be involved; Canadians need a policy frame-work that is guided by principles rather than by political expediency. The logic of subsidiarity should apply: Ottawa should handle only those policy issues that cannot be addressed locally or provincially. The federal government should stick to its own knitting—oceans where there are oceans, national parks, clean air (given that the movement of air does not respect jurisdictional boundaries), cross-boundary water flows and taxation policy that could provide greater incentives for environment-friendly behaviour. The Canada–U.S. environmental file has to be reopened, and done so in a way that moves beyond specific disputes (such as Devils Lake) to address more continental concerns.

None of this is to suggest that environmental protection should be of diminished importance; it is only to suggest that the federal government’s role in this respect should be constrained. The Kyoto experience, in which the Government of Canada signed on to interna-tional commitments that it had no intention or capacity to meet, sug-gests that the virtues of federal environmental leadership have been oversold. Neither local communities nor provincial governments need a paternalistic federal government looking over their shoulders to make sure that environmental interests are protected; those days are gone, if they ever existed. (For example, do Albertans really need literally hundreds of Fisheries and Oceans inspectors in their province?) Here it is interesting to note the odd picture of the Canadian voter that often emerges in discussions of federalism. We too often assume that when individuals vote provincially, they are inclined to support parties that would gut the public health-care system and pillage the environment, and that it is only when we vote federally that we care about such things as environmental protection. In other words, we assume that


we need our federal superego to save us from our provincial id. This, I would suggest, is a dated and paternalistic view of federalism that no longer fits the Canadian reality. Psychiatrists have long abandoned this paradigm; perhaps commentators on Canadian federalism should do the same.

Environmental policy is an essential component of a new national policy because it speaks directly to one of our most important com-petitive advantages, our quality of life. The difficulty is figuring out how best to protect this advantage within a complex federal system of governance. Unquestionably, the fact that environmental challenges are imperfectly aligned with jurisdictional boundaries necessitates some role for the federal government; at the very least, Ottawa will have to play a coordinating role. Nonetheless, we need to recognize that the political power of environmentalism tends to come from the grassroots up, and this inherently constrains the federal government’s role.

Urban AgendaThe health and vitality of Canada’s urban regions will become

increasingly important determinants of success in global competition. Anne Golden, President of the Conference Board, therefore argues that as part of a global trade and domestic competitiveness agenda, “we must promote the development of Canada’s major cities—the drivers of the country’s trade and economic prosperity—by providing them with the fiscal resources and political empowerment they need to thrive.”8 Certainly this is a conclusion that is supported by work the Canada West Foundation has done over the past six years through its Western Cities Project. However, and to repeat a common theme, to say some-thing is important is not necessarily to say that there is an important role for the federal government.

The federal government should meet its own urban responsibilities with respect to immigration, post-secondary education, transportation infrastructure and tax policy. The federal government will also remain a

8 Anne Golden, “Canada’s Top Three Policy Challenges,” Inside Edge 10, 2 (spring 2006), p. 3.


significant landholder and landlord in urban regions. At the same time, it is by no means clear that there is any federal role or added value in urban planning, or in the design of urban transportation systems—in the choice between an overpass here or a new bus there. Cities will compete by building on their strengths, not by responding to planning directives from the federal bureaucracy. (Does it make sense, for example, to have cities and municipalities submit green plans for approval from Ottawa; does the federal public service really bring added value? Is someone working in Ottawa really more concerned about the social harmony, economic volatility and environmental sustainability of Calgary than I am?) When it comes to Canadian communities, the model for the federal government should come from the slogan (if not the policy specifics!) of Chairman Mao: “Let a thousand flowers bloom.” Provincial and municipal governments are necessarily place-based, but this does not mean that federal policies should also be place-based. Federal policies should be directed to Canadians regardless of where they choose to live and work.

Now some will argue for a much more aggressive federal urban role, and for federal support for selected urban projects. Such selected support may well make sense for electoral reasons or to achieve other policy goals, such as strengthening the country’s cultural infrastructure. However, it does not make sense to draw the federal government into urban affairs simply because cities are important or because of the size of the urban electorate. Ottawa’s urban role should supplement and complement, rather than compete with, that of local and provincial governments. We must be careful not to leap too quickly from the importance of cities to the necessity of a federal role.9

Although the health of cities is undoubtedly important for national economic prosperity, this conclusion does not lead smoothly to a fed-eral urban strategy. The difficulties in creating and then orchestrating an urban role for the federal government are nicely illustrated by the experience of the Jean Chrétien and Paul Martin governments. What

9 This has been a matter of lively debate within the Canada West Foundation, and the view expressed here is by no means fully representative of the Foundation’s staff or publications.


began as a “big cities agenda” morphed into a more inclusive “urban agenda,” which then morphed again into an even more inclusive “com-munities agenda” that could apply to communities wherever Canadians might choose to live. A policy agenda for cities thus became a policy agenda for Canadians, and a small funding allocation that might have had a strategic impact on a handful of large cities was thinly dispersed across the country.

It is important to build from this experience, to recognize that fed-eral policies that choose to favour some communities over others are politically unsustainable, and that federal policies applicable to com-munities from metro Toronto to small towns in northern Saskatchewan are not really place-based policies at all, given that they apply to all Canadians. The Liberal governments’ experience highlights an impor-tant cautionary tale: governments that refuse to make strategic choices so dilute their policy influence that, in the final analysis, they have no effect. The challenge, therefore, is to find a federal urban strategy that is indeed strategic, one that is tied to a broader national policy designed to foster economic competitiveness in a global age.

Post-Secondary Education and Health Care The realignment of federal roles that I am suggesting as part of a

new national policy—a federal government retreat from place-based programming and a greater federal engagement in protecting and pro-moting our common economic space—can be nicely illustrated by examining two critically important policy fields: health care and post-secondary education.

Health-care delivery is inherently local (or, at the most, provincial) in character. Except in rare circumstances, Canadians do not travel far from home to seek medical care. Indeed, the need for travel at all is indicative of system failure.10 Health-care delivery, including standards,

10 There is an important exception to note. Provincial governments and regional health authorities in Western Canada have been moving toward the regional provision of some forms of special-ized care. Thus, the concentration of infant heart surgery in Edmonton, for example, should not in any way be seen as evidence of system failure; it is quite the contrary.


forms of delivery, funding levels and the inevitable tradeoffs with other policy priorities, should be primarily a matter for local preference. Therefore, the logic of federalism suggests that health care is a matter for provincial governments; if we want to ensure that all Canadian citizens have roughly comparable levels of health care, the policy instrument of choice should be the equalization formula.

However, Canadians often travel far from home to pursue their post-secondary education and certainly travel far from home in utilizing that education. In the future, geographic mobility can only be expected to increase. Here, then, the logic of federalism suggests greater federal responsibility for post-secondary education, given that the carriers of that education are increasingly mobile across provincial boundaries. I would therefore propose a new deal, one that can be achieved without formal constitutional amendment, in which Ottawa would get out of health care and into post-secondary education. For their part, provin-cial governments should be prepared to accept less health-care funding (there would still be some) in exchange for increased educational fund-ing. The deal should be revenue neutral, initially representing neither an increase nor a decrease in net federal funding.

This is not to advocate that the federal government become more involved in primary or secondary education, for here again, standards, programs and delivery are local. Few parents send their Grade 4 sons across the country for better schools, and few Grade 11 girls consider leaving their community or province. (Admittedly, some do in either case, but for reasons that go well beyond the reach of public policy.) Thus, there is no intrinsic federal role in primary or secondary educa-tion. However, there is a potentially substantial federal role in post-secondary education, a role that would embrace the entire spectrum of post-secondary institutions and that would reach well beyond the cur-rent funding of research and a handful of specialized programs.

The case for more extensive federal funding of post-secondary edu-cation is based on the assumption—nay, the conviction—that individual labour force skills are highly mobile and that educational success for individuals is the essential foundation for national economic success. Someone educated at the University of Saskatchewan in Saskatoon is


part of a highly mobile national labour force, and as a consequence it is not clear why the cost of her education should be borne primarily by the taxpayers of Saskatchewan rather than by the taxpayers of Canada. If the University of Saskatchewan is enriching the national labour force, including both those who remain in and leave Saskatchewan, then why shouldn’t the funding come from the federal government? If it is in the national interest to have a first-rate university in Saskatoon (or St. John’s, Toronto or Québec City), then why should the funding responsibility rest with Saskatchewan taxpayers alone?

This argument, it should be stressed, need not imply an Ottawa department of post-secondary education creating cookie-cutter insti-tutions across the country. Canadian universities will excel only if they are able to capture local diversities, strengths and enthusiasms. However, the federal government should fund students across the country, without directing the educational choices students make. At present, most post-secondary funding goes to institutions, and students pay a reasonably small, albeit growing, portion of the cost of their edu-cation. Why not shift the funding stream from institutions to students, and from provincial governments to the Government of Canada? This shift, it should be stressed, would be in addition to existing federal funding for the research side of the post-secondary system. In exchange, the provincial governments would pick up more of the cost of and responsibility for health care.

Some will argue, of course, that stepping up support for post-secondary education is too late, that if the Government of Canada is really interested in maximizing human capital, it should be stepping in with respect to preschool education and, indeed, prenatal care. However, the issue here is not whether early childhood development is important, but rather whether this necessarily implies that the Government of Canada should be involved. If we adopt a governing philosophy that all issues of importance should come home to roost within the federal government, then we will have abandoned the strengths and principles of federalism.


A National Energy StrategyCanada is richly endowed with an incredible array of energy

resources—conventional oil and natural gas, both onshore and off-shore; vast amounts of thermal coal; the oil sands in northern Alberta, which form the world’s second-largest hydrocarbon reserve; coal-bed methane; uranium reserves in Saskatchewan; and hydro in Quebec, Manitoba and British Columbia. It is worth asking, therefore, if the Government of Canada could have a constructive role to play in addressing the connections among these energy sources, in encouraging sustainability, and in moving energy across the country and into conti-nental and perhaps global markets. Here the Canadian Council of Chief Executives recommends that “a Canadian energy strategy must address the needs of both energy consumers and producers, use competitive market forces to expand the supply of the full range of energy forms, reduce the stresses and strains within our electricity transmission net-work and ensure that Canadian energy resources remain an important source of national advantage.”11 Patrick Daniel, CEO of Enbridge Inc., echoed the same themes in a speech to the Empire Club in Toronto: “It’s hard for us to compete [with countries whose policies involve more central planning, including the United States] over the long term, because those countries often have a roadmap for development and we just seem to end up wherever we end up, and hope that’s where we wanted to go in the first place. We’ve been dealt a good hand; we need to play it much better.”12

At issue is not whether the federal government should infringe on the provincial management of energy resources, but whether there is a useful role for the federal government in helping to orchestrate and calibrate a national energy strategy. Given Canada’s energy strengths and our position as an energy storehouse for North America, it would be ill advised, if not passing strange, to construct a new national policy

11 Canadian Council of Chief Executives, From Bronze to Gold, p. 16.

12 Romina Maurino, “Enbridge calls for energy plan: Not every stakeholder can hold a veto, says CEO,” Calgary Herald, March 24, 2006, p. E1.


for economic prosperity without folding into this strategy a recogni-tion of Canada’s energy strengths. Canada has the endowment to be a truly global energy player, but this potential calls for a federal role. As Patrick Daniel argued, it is not good enough just to end up some-where and hope that’s where we wanted to be.

In summary, the Canadian federal system would be better aligned with the challenges and opportunities of globalization if Ottawa’s centre of gravity for public policy could be shifted toward transportation, immigration and post-secondary education and away from health care, and if the federal government’s appetites with respect to urban affairs and environmental protection could be constrained. What is called for is not a holus-bolus restructuring of the federal division of powers but, rather, greater strategic focus on the core competencies and responsi-bilities of the federal government.

The federal role envisioned here would not be excessively burdened by intergovernmental relations. For example, the funding for immi-grants would follow immigrants to the institutions in which they are enrolled and the agencies that provide settlement services; provincial governments need not be involved. Much of the post-secondary fund-ing could again follow students to their choice of destination; institu-tional funding would then be captured from students, with provincial governments playing little role. In short, the provincial role as middle-man, as the broker for and dispenser of federal largesse, could be reduced. By sticking to its knitting, the federal government could be more autonomous in its own policy domains and more directly relevant to Canadians.

A final question to ask is whether the above-mentioned policy rec-ommendations and priorities should be pursued on their own (under their own flag, so to speak) or whether they should be brought together under a thematic umbrella such as a new national policy. Here there are sensitivities in both Western Canada and Quebec about the attach-ment of “national” to federal policy initiatives, sensitivities in the West that reflect the legacy of the National Policy of 1879 and the NEP, and sensitivities in Quebec that reflect the attachment of “national” to the Quebec National Assembly and society. Nonetheless, the policy


threads are interconnected, and I would argue for the boldness of a new thematic title. Whether we are talking about a national “policy” or a national “strategy” or “framework,” or some other similar term, is not important. What is important is the need to galvanize Canadians around a national project designed to meet the challenges of global competition through a realigned federal system.

CONCLUSION

Canada has competitiveness challenges in the face of globalization that are not being met. In light of this, the present essay asks whether we can rediscover or at least reinforce an economic role for the Government of Canada; whether that role can enhance the relevancy of the federal government for Canadians; and whether this new role can better equip Canadians for the challenges of globalization while at the same time strengthening our federal system of government. The short answer is yes. A new national policy can be constructed on three pillars:

the Government of Canada should re-engage in the management, protection and promotion of our common economic space;the Government of Canada should find the policy space and capacity for this re-engagement by disengaging itself from the management of social space best left to sub-national governments; andthe Government of Canada should retreat from place-based program-ming and should focus instead on highly mobile human capital.

There is a path forward, one built around strategic choices rather than constitutional redesign.

Now there is a certain irony in the recommendations embedded in this essay. In essence, I am arguing that the federal government—the Government of Canada—can rebuild its relevance and realign the fed-eral system to better meet global challenges by becoming less federal. Maintaining the strength of the multitude of communities that make up Canada, including its provinces, municipalities and Aboriginal com-munities, should primarily be the responsibility of those communities

•

•

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themselves. The financial wherewithal for communities should come from their own tax base, reflecting the priorities of their own residents. Federal government success will come from being less federal and from addressing the needs of an increasingly mobile economy in an era of increasing global competition. The federal government should become geography blind; where Canadians live should play little role in federal policies designed to provide Canadians with the skills and opportunities they need to compete in a new economic order.

Of course, recognizing this irony will not deflect criticism. The case for a new national policy that has been sketched in above will undoubtedly be criticized on a number of grounds. First, some might argue that the case for a new national policy is little more than a thinly veiled endorsement of Stephen Harper’s “open federalism”—that (to mix metaphors) I am applying academic gloss to the Prime Minister’s alleged neo-con strategy of withdrawal from social services. Here I would argue in response that the potential appeal of a new national policy is not intrinsically or even particularly restricted to the Conservative Party. Note, for example, a recent column by Liberal leadership contender Michael Ignatieff:

The federal government is charged with maintaining a national economic space. Do we truly possess one if pro-fessional credentials recognized in one province are turned down in another? If students from one jurisdiction have to pay more to study in another province? If there is not one national securities market but 10? We cannot promote equality of opportunity without a national strategy to improve our productivity and our capacity for innovation.13

Although the new Harper government is showing some signs of with-drawing from the social space of provincial governments, it has shown little sign of aggressively addressing the common economic space of Canadians. This may come when the Conservatives identify their next

13 Michael Ignatieff, “Putting our house in order,” The Globe and Mail, March 31, 2006, p. A19.


set of priorities, but to this point there has been no articulation of a new national policy designed to meet the challenges and opportunities stemming from increasing global economic competition. In short, my case for a new national policy has yet to find a partisan home; it is up for grabs.

A second line of criticism is that the case for a new national policy would result in a more decentralized Canada. Here I’m neither sure nor overly concerned. It would mean a more heterogeneous Canada and, quite likely, a more internally competitive Canada. It would lead to greater public policy innovation and experimentation across provinces, municipalities and Aboriginal communities, and thus to greater diver-sity. However, it would not necessarily mean that the Government of Canada would become less relevant to Canadians. The federal govern-ment would still have an international and military role, and it would be more involved in immigration, transportation and post-secondary edu-cation. Of greatest importance, it would more fully occupy its own pol-icy domain as a steward of our common economic space. On balance, Ottawa might do less, but its autonomy within its own field of action would be increased. Focus would come at the expense of breadth, but greater focus need not erode relevancy in the eyes of Canadians. In short, the polarity of centralization versus decentralization may not be the best way to frame the debate. A better question to ask might be whether the recommended changes will lead to a diminished or enfeebled federal government, or to a federal government better able to equip Canadians for the challenges of global economic change.

A third line of criticism is that I am ignoring many of the social deter-minants of economic prosperity, and have given insufficient attention to the importance of such things as health status and wellness promotion, early childhood development, and safe, sustainable communities. In a recent newspaper column, Jeremy Rifkin laments the “diseases of the affluent”: Type 2 diabetes, cardiovascular disease, lung-related illnesses such as asthma, cancer, strokes, depression and attention deficit disor-der. He goes on to argue: “In the face of increasing global competition, the more mature economies need to find new strategies for increas-ing productivity and ensuring economic growth. A healthy work-force that is physically and mentally fit is among the most important


considerations in growing a sustainable economy.”14 Although I would not be quick to dismiss Rifkin’s analysis, the challenge is to locate it within the context of a federal state. I would argue that physical and mental well-being are important but are best addressed by provincial and local governments. The Government of Canada has to pick its shots, and I am not convinced that a healthy workforce should be a higher priority for the federal government than a well-educated workforce.

Finally, and in a version of the fear of decentralization expressed above, some might argue that the recommendations developed in this essay might dilute national leadership. In a recent publication, Anne Golden argues: “Ten provincial ‘me first’ strategies won’t be enough to boost Canada’s competitiveness in the world, prepare for the demo-graphic revolution at home, and manage our natural resources for success and sustainability. We need national leadership and genuine intergovern-mental collaboration to address these pan-Canadian issues.”15 I agree, but I would also argue that the recommendations sketched in above, the call for a new national policy, would in fact strengthen the Government of Canada by providing a platform for national leadership.

A recurrent theme of this essay is that the federal government must be strategic in meeting the challenges and opportunities of globaliza-tion, and then must be bold in pursuing its strategic choices. In the league of global economic competition, it is a matter of “go big or go home.” Canada’s population is smaller than California’s, and Canadian influence within the global economy is diminishing over time as our proportionate share of the global economy shrinks. These realities support the case for a stronger national government, a case that I also support. If the Government of Canada refuses to limit its terms of policy engagement, if it keeps a finger in every conceivable policy pot, then we will continue to do many of the right things, but without enough commitment or resources to make a difference. We need focus and boldness, and we need a new national policy. The alternative is to sit on the curb, waving our flag as the global parade passes by.

14 Jeremy Rifkin, “Diseases of the affl uent,” The Globe and Mail, May 16, 2006, p. A19.

15 Golden, “Canada’s Top Three Policy Challenges,”, p. 3.

3

Quebec’s Blue Periodby Antonia Maioni

101Quebec’s Blue Period

THE BLUES AND LES BLEUS IN QUEBEC: THE CONTEXT OF QUEBEC’S BLUE PERIOD

Picasso’s blue period was one of exceptional artistic production, during which he gradually attained a degree of commercial suc-cess. For the artist himself, however, this was a troubled period,

marked by introspection and stagnation in his artistic ideas. In the typical paintings from this period, the artist applied his monochromatic palette to sad, haunting portraits, in which the characters depicted seem exhausted and hopeless, revealing the author’s own soul-searching, as well as a profound sense of melancholy. In other words, the artist had “the blues,” out of which he eventually emerged to invent cubism, which defined his enduring legacy.

This paper is about Quebec, which, I will argue, appears to be going through, and perhaps emerging from, a similar “blue” period. Even though Quebec’s economic markers have improved over the last decade, Quebecers still seem to be engulfed in soul-searching, and almost everyone in the province, for some reason or other, seems to have the blues.

Why is it that Quebec seems to have the blues in the Canadian federa-tion and that, for many years, neither Quebec nor Canada has seemed to move beyond this blue period? Part of the problem is a misdiagnosis of Quebec’s needs within the Canadian federation and of Quebec’s politi-cal realities. This paper argues that the quest for recognition as a distinct society within Canada and the need for linguistic and fiscal security are long-standing issues that have yet to be adequately diagnosed. Instead of riding the roller coaster of support for sovereignty, instead of trying to “solve” the chicken-or-egg conundrum about who or what affects the tide of that support, a more logical approach would be to understand the primordial realities that have created the need for political recognition of Quebec’s difference from the rest of Canada.

Prime Minister John Diefenbaker’s question “What does Quebec want?” may have become an iconic lament in the rest of Canada, but inside Quebec it sounds as strange as it did a generation ago. Just as anywhere else, individual Quebecers want different things. While there


is a divergence of opinion in Quebec about its role in and relationship to Canada, there is nevertheless a certain convergence around basic issues. In one federal election after another, and in two referendums, the majority of Quebecers have been remarkably consistent about what they want—namely, recognition and autonomy, in some form that would reflect what they perceive to be their collective difference in the Canadian federation. It is true that it remains unclear what exact shape that kind of meaningful change could take, since Quebecers remain divided in this regard. But it is the other hard truth that presents a real conundrum: so far, the minimum amount of change that Quebecers—and most of their federalist leaders—would adhere to has turned out to be more than what the Canadian political process could accommodate.

For at least the past generation, each attempt to address these issues that initially captured Quebecers’ support started from the crucial step of changing the federation in a way that could recognize and accommo-date the fundamental essence of Quebec in Canada: Pearson’s fledging asymmetrical federalism in the 1960s, the solemn promises of Trudeau on the eve of the 1980 referendum, the grand designs of Mulroney at Meech Lake and Harper’s less grandiose concept of an open federal-ism. The failure to live up to these expectations has made these blues a quasi-permanent fixture of Quebec–Ottawa relations in a way that is fundamentally different from other federal–provincial tensions and has provided the fuel for the sovereignty movement to re-energize itself continually.

If nothing else this history has shown that, while regional diversity is an integral part of the Canadian landscape, the depth and sources of Quebec’s difference are simply not the same as elsewhere in the federation.

On the one hand, to see Quebec in the context of “me too” or “me first” provincialism, or to think that a solution lies in the symmetri-cal decentralization of the federation, is a misdiagnosis of present and future trends in Quebec’s politics and society. On the other hand, to see recognition, linguistic security and jurisdictional autonomy as relics from the past or solely the domain of uncompromising separatists is also to misunderstand modern Quebec and to misread at least the past 40 years of Quebec and Canadian history. These are seen by a majority


of Quebecers today not as instruments of redress, as some have argued, but rather as levers for future prosperity.

This paper attempts to address Quebec’s blues by recasting the question “What does Quebec want?” into the more essential “What does Quebec need?” Perhaps what Quebecers want is indeed what they feel Quebec needs to achieve broader and more fundamental cultural, economic and political goals. The “demands” that Canadians outside Quebec often find exasperating might thus be more fruitfully under-stood as “needs” that Quebecers see as essential to their cultural affirma-tion, their economic prosperity and their capacity to control the political instruments that allow them to make fundamental societal choices.

The analysis of public opinion in Quebec reveals sovereignty and federalism remain two distinct options for Quebecers. The vast majority understand that fundamental distinction: either Quebec is sovereign, or it is part of Canada in some way. That being said, there is a continuum within federalism that attracts different kinds of support (from status quo to more decentralization to substantially more autonomy), just as there is a continuum between various sovereignty scenarios, from a European-style economic and social union, to the kind of sovereignty-association initially envisioned by René Lévesque, to the sovereignty-partnership of 1995, to an independent state without any formal ties to its former federal partner. The key objective for federalists is to con-vince those who wish for a substantial amount of political autonomy for Quebec that this can be achieved without crossing the line from the first set of options to the second.

Quebec’s blues have to first be addressed from within, but it is clear that a change in the federation that reflects an understanding of the particular needs of Quebecers is an essential part of that process. Beyond issues of fiscal imbalance or provincial autonomy or regional representation, Quebec’s concerns about the future of federalism are fundamentally different from concerns anywhere else in Canada. Recast in this way the future of Canadian federalism is also a question of “What does Canada want?”

The larger question, then, is whether Canadians outside Quebec, and their elected representatives in provincial capitals and in Ottawa, are


willing to accept these needs as legitimate. For too long the more poi-sonous aspects of party politics and intergovernmental relations have exacerbated this situation by either ridiculing these needs in Ottawa or wielding them as un couteau à la gorge in Quebec. But does it have to be a zero-sum game? Is there a way to consider that Quebec’s needs are real and necessary for Canada as a whole?

The logjam of post-1995 federalism has been broken by the election of a new federal government and a revived dialogue between Québec City and Ottawa. But seen through the prism of political history and in the context of socio-demographic realities in Quebec, the real chal-lenge for the future of Canadian federalism is just beginning. This paper argues that the long-term resolution rests on two parallel engagements. The first is sustaining the federalism dialogue already underway and substituting the scaremongering of the past with a robust effort at iden-tifying the meaningful benefits of Canada for Quebecers. But this more important long-term engagement has to be about what Canada means and whether Canadian federalism can stretch to encompass that mean-ing. The real challenge is to bring to closure the recognition of Quebec’s essential needs in the Canadian federation.

QUEBEC’S BLUE PERIOD AND THE REVIVAL OF LES BLEUS

The story of the 2006 Canadian general election was not simply that the Conservative Party eked out enough seats for a minority govern-ment from the wreckage of the Liberal campaign. The big surprise was the breakthrough Stephen Harper made in Quebec. The Conservatives had not just been languishing in Quebec; they were, for all intents and purposes, non-existent. Since the rout of the Progressive Conservatives in 1993, the party had completely dispersed, while Reform and the Alliance held no meaning for Quebec voters except as a spectre of anti-Quebec sentiment in Western Canada.

Quebec’s blue period since the early 1990s may have coincided with an eclipse of the Conservative electoral presence, but conservative colours have always been part of Quebec politics. Students of Quebec


political history are often told the old story of how, before going to the ballot box, 19th-century parishioners would be admonished by Church leaders to remember that “le ciel est bleu et l’enfer est rouge!” It was simple enough until the turn of the 20th century, when Riel, Laurier and the rest would muddle the colours of political allegiances. Still, the notion of les bleus remained: Quebecers from specific rural and semi-rural regions who were supportive of traditional values and wary of state intrusion, and who periodically showed their willingness to support par-ties—federally and provincially—that were sympathetic to their views.

Would les bleus be an answer to Quebec’s blues? Many observ-ers point to Stephen Harper’s speech in Québec City on December 19, 2005, as a turning point in the recent Canadian election campaign. “I want to emphasize specifically today,” the Conservative Party leader said, speaking in French, “that we will develop mechanisms to allow the provinces a greater role in their own jurisdictions as they relate to the international arena.” Four months later, as prime minister, Harper returned to address an overflow crowd at the Montréal Board of Trade on April 20, 2006, and outlined an “open federalism approach” that included respecting areas of provincial jurisdiction, reining in the fed-eral spending power, and addressing the “fiscal imbalance” between Ottawa and the provinces.

Harper’s promise of “un Québec autonome dans un Canada fort et uni” sounded like an oxymoron to some and left many Francophones chuckling at the resemblance to Yvon Deschamps’ celebrated comic routine that what Quebecers really wanted is “un Québec indépendant, dans un Canada fort!” Nevertheless, the provincial Liberal government, overtly conciliatory to the Conservatives in part as a way of reviving its exceptionally bad poll numbers, greeted this as music to the ears of the province. Commentators immediately began comparing it to the beau risque of the mid-1980s, when newly elected Brian Mulroney extended a conciliatory hand to then–Parti Québécois premier René Lévesque, or a revival of the asymmetrical federalism initiated briefly by the Lester Pearson government in the 1960s, against the backdrop of the Royal Commission on Bilingualism and Biculturalism in Ottawa, the Quiet


Revolution in Quebec, and the negotiations with the Lesage government over the Quebec and Canada pension plans.

Are we there yet? Have we arrived at another turning point in Canadian federalism, specifically in the rocky relationship between Ottawa, the rest of Canada and Quebec? The political context of Quebec and Canada is very different from the context of 1965 or 1985. The constitutional fatigue that Canadians, including most Quebecers, have suffered since the early 1990s has yet to dissipate. And the key architect of such “open federalism” on the ground—namely the Liberal govern-ment in Quebec—is hardly in a position of strength to implement such change, which still falls short of Quebec’s long-standing preoccupation with its place in the federation.

The connection that Stephen Harper has made with Quebecers in reviving a federalist voice cannot be denied, nor should it be underes-timated. Beyond the poll numbers that have surprised just about every-one, there is the vox pop on the street that seems to be willing to listen to Harper’s message. While the new government’s overall communication strategy has been to temper expectations by focusing on a limited set of priorities, in Quebec expectations are soaring. Many Quebecers are pro-jecting onto Harper their hopes and aspirations for the future of Quebec in Canadian federalism. As someone from outside Quebec, and outside the inner core of Quebec politics, the new Conservative Prime Minister has used his outsider status to project the image of a leader unhampered by the political baggage of his predecessors.

The Conservative breakthrough in Quebec is, in effect, a kind of Rubicon. But Stephen Harper stands on shifting sands, and he can-not cross it alone. The surge in popularity for the new prime minister in Quebec is not the equivalent of an electoral success nor of a long-term change in support for sovereignty. It has brought the Conservative Party more potential candidates and jump-started a party base in the province, including the elusive greater Montréal area. The expectations game gives les bleus an exceptional opportunity to lead Quebec out of its blues. But the endgame remains, in Quebec, crossing over from expectations to a clear game plan for Quebec’s status in the Canadian


federation, and to a successful effort by the new leader to inspire his party followers and the rest of Canada to follow.

WHY DO FEDERALISTS HAVE THE BLUES IN QUEBEC?

Last October, there was little fanfare around an important milestone: the 10th anniversary of the 1995 referendum on Quebec sovereignty. There was only fleeting reference given to an event that, within a slen-der margin of votes, shaped the course of Quebec and Canadian history. The fact that the referendum failed to pass, that hardly any change at all had occurred in Canadian federalism in the 10 years since and that a federalist party was in power in Quebec’s National Assembly might have been cause enough for some kind of retrospective. Instead, there was a general feeling of malaise and unsettledness among federalists in Quebec. The federal government of the Liberal Party of Canada was mired in the fallout of a sponsorship scandal that hinted at financial irregularities associated with the federalist cause in Quebec; the Liberal Party of Quebec was at rock bottom in public opinion polls, hampered by a widespread perception that it was not governing well in office. Meanwhile, the sovereignty movement enjoyed a bounce in public favour, fuelled jointly by the provincial Liberals’ woes and the federal Liberals’ sponsorship scandal.

Why are federalists singing the blues in Quebec? The answer to this question involves understanding what federalism means to Quebecers and what drives the federalist engine in Quebec. Unlike attitudes in any other province, the political attitudes of Quebecers are not only defined along a left–right socio-economic axis but are also superim-posed on another dimension, that of appartenance to Quebec or Canada as the primary point of reference for their national identity. For those whose “nation” is Canada first, or who consider themselves exclusively Canadian, federalism remains the only political option, whatever its form. But for the vast majority of Francophone Quebecers, whose point of attachment may be Quebec exclusively, Quebec first, or even Quebec and Canada equally, the political options are more complex, spanning


a spectrum in which preferences can range from sovereignty to various forms of federal arrangement.

These deeper cross-cutting divisions have to do with the scale and scope of autonomy that the Quebec state should have from Ottawa, and by extension, the other provinces in the federation. This is not a question of decentralization alone but also one of identity, involving the sense of primary attachment to a specific collectivity. Unlike in the rest of Canada, the issue of Quebec’s future in the federation is not a “national unity” question but rather is referred to as la question nationale, which gives it a very different meaning and portent. Federalism is an elastic concept for many Quebecers that denotes the relationship to the rest of Canada in light of an existing sovereigntist option. For most Quebecers, however, the attachment to a collectivity is wrapped up in national identity, and while for some this can be a dual identity, the majority have grown to recognize themselves as Quebecers first and foremost. To be a nationalist-federalist is not an oxymoron in Quebec nor, as the results of the 2006 general election showed, is it inconceivable to be a nationalist-federalist-conservative.

Who are federalists in Quebec? More important, who could federal-ists be? Most Quebecers eschew the moniker “federalist,” no doubt in part because of its association with the federal government, but they are, in effect, “federalists” in the academic sense of the term. As D.V. Smiley has pointed out, federalism is a “condition,” a political arrange-ment in which the social and economic lives of citizens are affected by more than one level of government.1 If, in the context of the discussion of the future of federalism in Canada, we take as a premise the need to find a vision and purpose beyond the status quo, then the first challenge is to define the customer for this vision.

The analysis of support for sovereignty in 1995 reveals several important points that are often misread. One is that the steady rise in support for the “Yes” side was well underway before Lucien Bouchard took a leadership role in the referendum campaign, which punctures the counterfactual mythology (diffused by political observers outside

1 D.V. Smiley, The Federal Condition in Canada (Toronto: McGraw-Hill Ryerson, 1987).


Quebec) that without such a charismatic leader, sovereignty doesn’t stand a chance. Another is the actual structure of support for sover-eignty. In effect, the main indicator of support for the “No” side was language: Anglophones, Allophones and non-Francophone Aboriginal people voted en masse against the sovereignty project; it was, in effect, the Francophone vote that showed a greater diversity of opinion.2

Pierre Martin and Richard Nadeau have estimated that while 28 per cent of Quebecers (85 per cent of non-Francophones) were “immov-able” in terms of their consistent support for a federalist option on a referendum question, and 20 per cent were likewise unwavering in their support for sovereignty, the remainder were influenced, to vari-ous degrees, by three basic types of considerations: economic, cultural and political.3

Even though the fear of economic fallout is not as pervasive a rationale for federalism versus sovereignty as in the past,4 economic disincentives remain an important determining factor in support for the status quo. In other words, federalists in Quebec are or could be those more inclined to be swayed by the perceived economic risks of sover-eignty. But if economic issues are a brake on sovereignty, linguistic and cultural issues are a brake on the federalist option. For the vast majority of Francophones, the overwhelming perception is that Quebec’s French language and culture would be better protected if Quebec were sover-eign. The political dimension, meanwhile, offers the most compelling “malleability” factor in terms of the potential for federalist support in Quebec. If Martin and Nadeau are correct, Quebecers are weighing the “political gains” of sovereignty versus the autonomy and recognition they can obtain from federalism. But the gains are obviously moot if the

2 Pierre Drouilly, Indépendance et démocratie: Sondages, élections et référendums au Québec (Montréal and Paris: L’Harmattan, 1997).

3 Pierre Martin and Richard Nadeau, “Understanding Opinion Formation on Quebec Sovereignty.” In Joanna Everitt and Brenda O’Neill, eds. Citizen Politics: Research and Theory in Canadian Political Behaviour (Toronto: Oxford University Press, 2002), pp. 142–58.

4 Maurice Pinard, The Quebec Independence Movement: A Dramatic Reemergence, Working Papers in Social Behaviour (Montréal: McGill University, Department of Sociology, 1992) [typescript].


status quo is the only option, or if they are perceived to be insignificant in their impact in terms of the twin goals of autonomy and recognition.

In this optic, for most Quebecers, regardless of the intensity of their nationalist inclinations, the choice between federalism and sover-eignty really is a choice between two means to achieve a set of ends, rather than an end in itself. There have been many attempts to explore and define a shared vision between people living inside Quebec, in particular Francophones, and those in the rest of Canada. While that vision may exist for some, there really is a difference in perception and in practice.

THE TIMES, ARE THEY A-CHANGING?

There are arguments that have emerged to suggest that the new fuel for federalism need not come from political negotiations but rather may be a by-product of Quebec society itself: namely, the effects of genera-tional change and demographic patterns.

Quebec’s demographic changes are similar to those in other parts of Canada, at least in terms of an aging population and increased immi-gration, particularly toward urban areas (such as Montréal). But some of Quebec’s demographic challenges are unique, such as family com-position; almost 60 per cent of children are now born out of formal wedlock, a phenomenon that is without parallel in Canada and prac-tically throughout the world.5 While fertility rates have stabilized in Quebec, the population is growing at a rate of 0.7 per cent per year, mainly through immigration. More surprisingly, interprovincial migra-tion between Ontario and Quebec has now reached an equilibrium point. And while the percentage of Francophones has remained constant at about 82 per cent of Quebec’s population, a major change has been the substitution of Allophones (those whose mother tongue is neither

5 Victor Piché and Céline Le Bourdais, “Le Québec dans 50 ans: Quatre grands défi s démographiques du XXIe siècle.” In Michel Venne, ed., L’Annuaire du Québec 2004 (Montréal: Fides, 2003), pp. 76–83.


English nor French) for Anglophones as the principal linguistic minor-ity in the province.6 Larger numbers of immigrants to Quebec adopt French as a working language than they did a generation ago, and they have been obliged, through Bill 22 and Bill 101, to educate their chil-dren in French. Nevertheless, there is growing evidence that les enfants de la Loi 101, while at ease in the French language, tend to adopt English as their primary language at home.7

Does an aging population on the one hand, and Allophone adoption of the English language on the other, signal that federalists may soon be rid of their blues in Quebec? Not quite. The majority of federalists in Quebec are Francophones, and language remains a potent political marker for them. In addition, the thesis that as voters age, they become more conservative and lay to rest their sovereigntist ideals, has proven difficult to sustain. It is true that support for sovereignty is stronger than ever among new cohorts of voters. But the data also show that while support for sovereignty tends to be clustered among younger Quebecers, middle-class voters and Francophones, this support tends to be rein-forced as these generational cohorts age.8 Moreover, Allophone voters show the same generational patterns, albeit in different intensity. About a quarter of Allophones show support for sovereignty in public opin-ion polls, primarily younger Allophones and those active in the labour market. In other words, those who do adopt French as their primary language increasingly tend to respond like other Francophones in Quebec on the national question. Thus, even though the demographic composition of Quebec is changing, what remains stable is the primary attachment of its residents.

6 Simon Langlois and Luc Dupont, “Vingt grandes tendances.” In Michel Venne and Antoine Robitaille, eds., L’annuaire du Québec 2006 (Montréal: Fides, 2006), pp. 197–204.

7 Charles Castonguay, “L’anglicisation plus courante que la francisation.” In Michel Venne and Antoine Robitaille, eds., L’annuaire du Québec 2006 (Montréal: Fides, 2006), pp. 197–204.

8 Gilles Gagné and Simon Langlois, Les raisons fortes: Nature et signifi cation de l’appui à la sou-veraineté du Québec (Montréal: Les Presses de l’Université de Montréal, 2002). Simon Langlois and Gilles Gagné, “Les jeunes appuient la souveraineté et les souverainistes le demeurent en vieillissant.” In Michel Venne and Antoine Robitaille, eds., L’annuaire du Québec 2006 (Montréal: Fides, 2006), pp. 440–456.


In sum, it should not be surprising to note that in the 10 years since the 1995 referendum, support for sovereignty in Quebec has not disap-peared. In fact, the magnitude of movement in opinion over the decade has been about the same, with a few exceptions, as the range of varia-tion in support for sovereignty during the referendum campaign itself. Voting intention in favour of a “Yes” to a question similar to the 1995 referendum question has remained consistently above 40 per cent since 1995 (with the exception of 2002, the year before the 2003 provincial election, when discontent with the Parti Québécois government was at its peak), in the absence of any consequential debate, constitutional or otherwise, about Quebec or the federation. On some occasions, when circumstances were more favourable, such as in the midst of the spon-sorship scandal, opinion remained in the 50 to 55 per cent zone. Whether this means that there will be another referendum on sovereignty sooner rather than later, or whether the “Yes” side has mustered the neces-sary winning conditions to win that vote, is another matter. The main determinant of what happens next depends not only on the appeal of sovereignty but also on the articulation of a federalist vision.

For some, this vision should reflect the ambivalence of Quebecers toward la question nationale. For example, historian Jocelyn Létourneau has argued that Quebec–Canada history has been portrayed as a litany of past wrongs from which the independence movement gained currency and credibility. Instead, he argues, the past should be a crucible from which to derive positive sentiments about Quebec’s place in Canada, harkening back to the importance of two founding peoples.9 While inspi-rational in some sense, this analysis may lead to an inaccurate political interpretation that ignores the micro-level analyses of the bases of sup-port for sovereignty, which derives its modern meaning from a French language and culture specificity. This analysis also misreads sentiments in the rest of Canada, where the concept of two founding peoples can hardly be considered robust. A strong federalist vision for Quebec, which has remained elusive for many years, has to comport with the

9 Jocelyn Létourneau, Le Québec, les Québécois: un parcours historique (Montréal: Fides, 2004).


present and the future, with an eye to moving forward with the arrange-ment that best responds to Quebec’s needs.

THE FAILURES OF FEDERALIST LEADERSHIP IN QUEBEC

Federalist leaders have had the blues in Quebec for years. Part of it has to do with the historically strained relationship between the Liberal Party in Quebec and its federal counterpart in Ottawa. This is sometimes the case in other provincial settings as well, but the persistent sense of these two federalist parties working at cross-purposes for over a genera-tion on the crucial matter of Quebec’s role in the federation is unique. Quite simply, the Liberal vision in Ottawa, shaped by a generation of institution building and the influential thinking of Pierre Trudeau, has been fundamentally at odds with the Liberal dynamic in Québec City, which has posited a primary role for the Quebec state.

Party politics are important, then, in examining federalist fortunes in Quebec.10 But it is important not to overlook the fact that the federalist blues also have to do with competing conceptions of federalism within Quebec and how these play out in a pan-Canadian theatre. The historic antagonism between the major linguistic communities in the province is part of that puzzle. Quebec’s language wars left many scars, and those who bore witness to the brief but intense skirmishes over partition after the 1995 referendum are aware of how close to the surface they remain. Still more will remember that language politics had a lot to do with the way in which the Meech Lake Accord became a cause célèbre and, ultimately, a lost cause in Canadian political history.

For most Canadians, Meech Lake is a place near Ottawa or, perhaps, an outdated reminder of Canadians politics in the 1980s. For a wide swath of opinion leaders and politicians in Quebec, however, Meech Lake remains a potent symbol of the constitutional change that would

10 A. Brian Tanguay, “Sclerosis or Clean Bill of Health? Diagnosing Quebec’s Party System in the Twenty-First Century.” In Alain-G. Gagnon, ed., Quebec State and Society, 3rd edition (Peterbor-ough: Broadview Press, 2004).


have led to comfortable entente for Quebec within the Canadian fed-eration. More than one sovereigntist will admit, at least privately, that the Meech Lake Accord, which recognized Quebec’s distinct society and guaranteed Quebec’s jurisdictional autonomy, would have been the coup de grâce to sovereigntist ambitions.

The “mega-constitutional era” in Canadian politics11 is inextrica-bly linked to la question nationale in Quebec. The 1980 referendum in Quebec had been the jump-start for the repatriation of the Constitution in 1982, and the failure to ratify the Meech Lake Accord became the fuel for the second referendum in 1995. The endless debate about the process and the purpose of the Constitution Act continues in the aca-demic literature,12 but the progress of the rise and fall of the Meech Lake Accord is transparent. It began with Brian Mulroney’s pre-electoral promise in 1984 to have Quebec ratify the Constitution “with honour and enthusiasm” and the agreement to the conditions for Quebec’s ratification signed by the provincial premiers at Meech Lake in 1987. This document reflected several basic, but crucial, issues about Quebec within Canada, including a recognition of Quebec as a “distinct society” in the preamble to the Constitution and a veto over most con-stitutional amendments. All of the other elements of the accord, includ-ing increased provincial input into immigration and the nomination of Supreme Court judges, and an opting-out provision with compensation for new federal–provincial cost-sharing agreements, were extended to the other provinces. Just as a bipartisan vote had denied the ratification of the Constitution in the National Assembly, it was a bipartisan vote in Quebec that ratified the Meech Lake Accord. The saga of Meech Lake formally ended when the three-year window for ratification expired in 1990 (without the approval of Manitoba and with the rescinding of Newfoundland and Labrador’s approval), yet its political legacy endured with the formation of the Bloc Québécois (BQ), the train wreck

11 Peter H. Russell, Constitutional Odyssey: Can Canadians Become a Sovereign People? 2nd edition (Toronto: University of Toronto Press, 1993).

12 See, for example, Keith Banting and Richard Simeon, And No One Cheered: Federalism, Democ-racy and the Constitution Act (Toronto: Methuen, 1983).


of the Charlottetown Accord referendum in 1992, and the collapse of the Progressive Conservative Party in 1993.

Since then, there has been little effort at formulating a shared vision for Quebec within Canada, one that really spells out a common ideal of purpose. Not even in the 1995 referendum year did any logical, coher-ent ideas emerge to address what could easily have been the biggest train wreck yet in the history of Canadian federalism. Although soci-etal leaders threw themselves wholeheartedly into the 1995 referendum campaign, it represented a spectacular failure of political leadership to articulate a coherent counterproposal to independence, or to envision the kind of arrangement that would make some kind of change palatable to Quebecers, and to other Canadians as well.

The event that most Canadians remember is the famous—or infamous—flag rally a few days before the October 30 vote. But a more telling picture of the meaning of the referendum campaign is the con-trast between the two official political rallies that were held earlier that week at the Verdun auditorium. On the Tuesday night, a large crowd of “No” supporters gathered—Francophones and Anglophones, an older crowd, at once constrained in their passion and disoriented in their bearings. The shock of the closeness of the race was etched on every-one’s face, not only in the stands but on the stage as well. The evening was saved in extremis by Jean Charest, then leader of the Progressive Conservative Party, who put on a bravura performance that has yet to be replicated. The next night, the same venue was literally electric with excitement as “Yes” supporters gathered in overflow capacity, led by political and societal leaders from all over Quebec. The sense of cama-raderie and anticipation not only about the referendum, but also about Quebec’s future as a whole, was palpable.

The razor-thin defeat of the referendum led to significant changes in political leadership within Quebec, including the immediate replace-ment of Parti Québécois (PQ) Premier Jacques Parizeau with BQ leader Lucien Bouchard and, eventually, Jean Charest’s move from federal politics to the Liberal Party of Quebec. But politics on the ground remained remarkably static. The dearth of engaging ideas about federal-ism may be due in part to “constitutional fatigue,” or it may be due to the


preoccupations about fiscal problems and policy issues, such as health care, even though these are also related, in some measure, to federalism.

Although the spectre of “separatism” remained a pressing concern, the Liberal government in Ottawa did not embark on anything remotely like the grand vision of constitutional reform that had followed the 1980 referendum. Benign neglect had given way to panic during the final weeks of the referendum campaign, and this seemed to remain the driving force in confronting the national unity issue thereafter. Would federalist leaders in Ottawa look at the referendum results as a wake-up call to try to understand the reasons why Quebecers seemed receptive to the sovereignty idea? To try to figure out what it was about Canada that was so meaningful that they rejected sovereignty in the last instance? To consult with Quebecers and Canadians to present some sort of projet de société that might create a sense of shared enthusiasm for and belonging to a place called Canada? No. Instead, the situation of panic persisted, with frenzied monitoring of public opinion polls but little attempt to diagnose the reasons for their ebb and flow. And, of course, there were the flags.

In the absence of meaningful ideas to confront the national unity issue, the Liberal government devised a double-edged strategy: a Plan A and a Plan B. Before leaving the academy to become a federal Cabinet minister, Stéphane Dion had argued that the counterweight to separa-tion was a twin emphasis on “confidence” in the union and “fear” of secession.13 The problem, he noted, was that Canada had become too remote from Quebecers’ lives, that the money and services being pro-vided by the federation were not visible or appreciated enough. These notions were transformed into the post-referendum Plan A (encour-age Quebecers to embrace Canada as is) and Plan B (turn on the tough love if they don’t). Plan B got off to a controversial start by inflaming Francophone Quebecers—and bitterly dividing federalist sentiment—over the question of territorial partition. Then the focus shifted to an academic debate about the terms of secession. In the 1998 Quebec

13 Stéphane Dion, “Why Is Secession Diffi cult in Well-Established Democracies? Lessons from Quebec,” British Journal of Political Science 26, 2 (April 1996), pp. 269–83.


Secession Reference, the Supreme Court ruled that, while Quebec could not unilaterally secede, the rest of Canada would need to negotiate if a clear majority of Quebecers had voted on a clear referendum question. The federal Clarity Act, which was tabled in 1999, attempted to lay out what this meant, once again served to divide federalists in Quebec.14

What happened to Plan A? Instead of the new federalism that had been promised in the referendum campaign, the federal government used the levers of fiscal austerity and selective largesse to reshape fiscal fed-eralism across the country. In fact, the real Plan A became the strategy of visibility alluded to by Dion but executed in the bluntest way imag-inable: using the Canadian flag as wallpaper to cover over the cracks in Quebec’s relationship to the rest of Canada. Badly conceived, the spon-sorship program would be even less well implemented, leading to the scandal that would become the Liberal Party’s undoing in Quebec.

The discourse from Ottawa, from the excesses of Plan B to the monolithic discourse of Plan A, soon wore thin for many Quebecers. The reaction to the sponsorship scandal showed the extreme fatigue with the federalist cause as conceived by the Liberal Party of Canada. In the grand scheme of things, as historian Desmond Morton reminds us, it was a scandal like many others that have littered Canada’s politi-cal history.15 But in this instance, Quebecers were all too ready to have the revelations of the commission of inquiry confirm their worst suspi-cions about the federal Liberal Party. The scandal provided the kindling that led to a meltdown of Liberal Party support and the revelation of an opening toward a different message about federalism.

It is remarkable to note the fundamental misdiagnosis of the 1995 referendum that led to the political situation in its aftermath. Quebecers, in the final instance, chose Canada. After a decade of stasis in federal discourse, their reaction to even the faintest hope that Stephen Harper’s open federalism might lead to meaningful change showed that many

14 Claude Ryan, “Consequences of the Quebec Secession Reference: The Clarity Bill and Beyond,” C.D. Howe Institute Commentary 139 (April 2000).

15 Desmond Morton, “Refl ecting on Gomery: Political scandals and the Canadian memory,” Policy Options/Options politiques 26, 5 (June 2005), pp. 14–21.


were ready to choose it again. But is the Canada that professed such love on that flag rally day in Montréal finally ready to choose Quebec?

IS THE REVIVAL OF LES BLEUS THE ANSWER TO THE QUEBEC BLUES?

The preliminary evidence of the 2006 election results suggests that despite a reversal in fortunes of Canada’s two major political parties, the shares of their vote did not change dramatically outside Quebec.16 The real story of the 2006 Canadian general election is what happened inside Quebec, where the largest vote swings in the country were noted and where the two major parties “switched ranks in terms of vote share.”17 The Liberal Party had already suffered losses in 2004 on the corruption issue, but now federalists abandoned the party in droves. Where to? As the Conservative Party emerged as a credible alternative during the campaign, disgruntled federalists threw their support to the Conservatives, who also attracted, in smaller measure, some Bloc sup-porters. The relatively new Conservative Party was able to more than double its vote share—from 9 per cent in 2004 to almost 25 per cent in 2006—and to establish a beachhead in Quebec by winning 10 seats in the House of Commons.

The 2006 election opened the possibility that the realignment of Canadian political parties since the 1993 election has been significantly challenged. To put this in historical context, neither of the two constitu-ent parts of the Conservative Party—the Progressive Conservatives or the Reform–Alliance—had won as many seats or votes since 1988. And the new results were beyond the range of the Progressive Conservative Party’s tenuous showing in the 1997 election, in which its five seats had been clustered in the Eastern Townships. The 2006 results pointed

16 André Blais et al., “Corruption was the tipping point,” The Globe and Mail, February 1, 2006, p. A17.

17 Patrick Fournier et al., “Harper can thank federalist voters,” The Globe and Mail, February 8, 2006, p. A19.


to a surge in two main sources of Francophone support for the new Conservative Party: the Québec City region, known as an enigma for its vacillation on the sovereignty question and for its fickle voting patterns; and key areas of rural and conservative Quebec, known as the bleu heartland.

Who are les bleus? Historically, they represented the supporters of classical conservative ideology, focused on religion and ethnicity and supported by the Church in 19th-century French Canada. Uncomfortable with the state-centred impulses of liberals—and Liberals—these voters formed the core base of support for the Union Nationale in provincial elections and the Créditistes (the Quebec version of the Social Credit) federally. (Pierre Trudeau’s early texts on French-Canadian national-ism offer a scathing portrait of les bleus, and point to why there was little love lost between them and him.18) By the 1980s, these conser-vative voters were ripe for Brian Mulroney’s transformative message. When that message was abandoned after 1990, they quickly abandoned the Progressive Conservatives. Today, the contemporary heirs of les bleus are clustered in specific rural and semi-rural regions, and tend to be more socially and fiscally conservative than the average Quebecer. They also tend to be more narrowly nationalist in their outlook, whether defined in terms of la nation canadienne-française, such as federalist bleus in the Beauce, for example, or in terms of la nation québécoise and greater openness to the sovereigntist cause, as in Lac-Saint-Jean.

Are the modern day bleus the conduit for Conservative Party aspira-tions in Quebec? Has the Conservative Party become the last best hope to address the federalist blues in Quebec? The answers to both these questions are unclear. Support for the Conservative Party in Quebec is not yet broad or deep. Nor is it the same texture of support that the Progressive Conservative Party enjoyed in the 1980s—a broader-based support that was predicated on the Mulroney government’s grand con-stitutional and economic designs, in the form of the Meech Lake Accord and the Free Trade Agreement. As in other Canadian cities, the new

18 Pierre Elliott Trudeau, “New Treason of the Intellectuals.” In Pierre Elliott Trudeau, Federalism and the French Canadians (Toronto: Macmillan, 1968).


Conservative Party is unlikely to make inroads in federalist ridings in Montréal unless its conservative image is reconfigured to project an urban appeal. If it can continue to appeal to social conservatives while broaden-ing its appeal to fiscal conservatives (its challenge throughout the Canadian electoral landscape as well), it may be able to transform its minority government into majority power in the next electoral contest. But, in the context of Quebec, unless it uses those levers of power to deliver on specific promises related to Quebecers’ quest for recognition and autonomy, it will likely be unable to dislodge the Bloc Québécois.

The Bloc Québécois convincingly filled the political space left open by the disintegration of the Progressive Conservatives in Quebec. Today, it still retains twice as much electoral support as the Conservative Party and the majority of Quebec’s seats in the House of Commons. Its leader, Gilles Duceppe, is now the most politically experienced of any federal party leader, and his campaigning talents are well known. But the BQ also has the blues, so to speak. In 1993, the BQ successfully bridged the ideological divide between left and right around the nationalist cause. Since then it has lost many of its conservative stalwarts as the leadership of the party, under Duceppe, has anchored itself more firmly to the left, mirroring its provincial counterpart, the Parti Québécois. The attempt to boost its support in urban ridings and court the vote of “cultural com-munities” has proved successful, but at a price: in so doing, the Bloc has lost some of its appeal to conservative and right-leaning national-ists, who are now paying closer attention to the Conservative Party and Stephen Harper.

WHY DO SOVEREIGNTISTS HAVE THE BLUES IN QUEBEC?

A year ago, it was hard to believe just how badly things were going for the federalist cause in Quebec. Even though the sovereigntist move-ment was in a state of flux after 1995, when it failed to deliver on the referendum question, and even in the absence of heavy lifting by its proponents since then, support for sovereignty—and for both the Parti Québécois and Bloc Québécois—had remained fairly stable in


Quebec and was gaining considerable momentum in the wake of the sponsorship scandal in Ottawa and a government in Québec City that had all but lost the confidence of Quebecers.

This year began quite differently. An indication was that the play-wright Michel Tremblay and filmmaker Robert Lepage made headlines by declaring their doubts about the sovereigntist option for Quebec.19 Tremblay, for whom sovereignty remains, first and foremost, a cultural cause, criticized the “obsession” with finding an economic rationale for independence. In his view, the centrality of the economy in the sov-ereigntist discourse stripped the latter of its soul. For his part, Lepage questioned the need for an independent status on the international stage. A tempest in a teapot erupted as artists, journalists and Quebecers from every walk of life engaged in heated debate about the obligation of pub-lic figures to “keep the faith” in the cause for independence.

This waning of the feu sacré among some prominent sovereign-tists—even if only temporary, as Tremblay later pointed out—reflects a slowly spreading malaise within the movement. But the reasons for this have less to do with federalism—or sovereignty, for that matter—and more to do with the internal tensions racking the main political vehicle for independence, the Parti Québécois.

Despite the poor showing of the incumbent Liberals and the excep-tional lack of confidence in Jean Charest as premier, and despite sustained support for the sovereigntist option in public opinion polls, there may be reasons to doubt whether the Parti Québécois will in fact be able to win the next provincial election in 2007. While the threat from the Action Démocratique du Québec, the vehicle for the soft con-servative nationalism of its leader, Mario Dumont, dissipated with its poor showing in the 2003 provincial election, the PQ now faces a new electoral challenge on the left. The Québec Solidaire party made inroads in a recent by-election, and its margin of the vote share could be enough to swing close races in several ridings in Montréal.

19 Patrick White, “Après Michel Tremblay, Robert Lepage remet en question la souveraineté,” La Presse, April 10, 2006.


The PQ is in a difficult period in its history as it faces generational divisions, as well as ideological ones. Such divisions are, as some observers point out, healthy for a political party in the democratic process, but they have raised concerns about the PQ’s ability to muster a third referendum in Quebec, at least in the short term.

In spite of these passing difficulties, the Parti Québécois is in no danger of disappearing from the political landscape. It has become a mainstay of Quebec’s two-party system, alternating power in regular succession with the Liberal Party since 1976.20 Pending the reform of the electoral system now under consideration by the National Assembly, the PQ also enjoys a structural advantage in elections because the Liberal Party’s support is concentrated in fewer ridings. The PQ’s years in office have been marked not only by successive (and ultimately unsuccess-ful) referendum campaigns, but also by major reforms in party finan-cing, language legislation and social policy that were widely popular in post-1960s Quebec and secured the party’s base among Francophone voters and those on the left and centre left of the political spectrum. In the decade since the 1995 referendum, the party has, in much the same vein as the Bloc Québécois, reached out to cultural communities, with some success.

It is a party deeply affected by its political leadership: its revered founder, René Lévesque, the controversial Jacques Parizeau, the awk-ward tenure of Lucien Bouchard and the uneven performance of Bernard Landry. It also is a party that has not been kind to its leaders. René Lévesque himself was notoriously wary of his party’s unpredict-able militants. Lucien Bouchard, who came to the PQ as an outsider, never truly connected with the party apparatus and always remained under pressure from the party’s more uncompromising militants. Finally, Bernard Landry resigned when 24 per cent of party convention delegates questioned his leadership. Even though he won with a solid first-round majority, the current leader, André Boisclair, will not be immune to this kind of mutiny.

20 Tanguay, “Sclerosis or Clean Bill of Health?”


Although André Boisclair is no less vulnerable than his prede-cessors to his party’s “parricidal” inclinations, he does inject a dose of eclecticism into the mix. Young, handsome, openly gay, Boisclair is, by all accounts, in over his head trying to parlay his former, brief experience as a minister of the environment into the capacity to lead a difficult partisan coalition. Although he may be credited with gaining a few points in opinion polls at the expense of Mario Dumont’s Action Démocratique, many fear that his relative lack of enthusiasm for social-democratic ideas will soon alienate him from the PQ’s traditional allies on the left.

He remains without a seat in the National Assembly and has been accused not only of ambiguity in his political direction but of a vertige du vide [dizzying emptiness] in his political ideas.21 The left wing of the party remains wary of his apparent absence of social fervour, and he now faces substantial hostility from party stalwarts, including sup-porters of Pauline Marois, who quit her seat a few months after being defeated in the leadership race. Many were stunned when Boisclair greeted her departure with a thinly veiled invitation for older mem-bers of the National Assembly to pack their bags and make way for the new generation.

QUEBEC AND THE ECONOMIC BLUES

The debate about Quebec’s economic condition is both part of and parallel to the debate over Quebec’s political future. Economic dis-course has not been the primary force behind the quest for indepen-dence in Quebec; in other words, the momentum for the creation of a new nation-state does not rest on an economic rationale alone. That being said, economic concerns remain at the heart of the sovereignty debate, and arguments about the potential “costs” of separation had a significant impact on the referendum outcomes. At the same time,

21 Denis Monière, “Une impression de vide intellectuel,” La Presse, March 29, 2006, p. A23.


economic discourse in Quebec has, at least since the Quiet Revolution, been tempered by cultural concerns.

Since the 1995 referendum Quebecers have turned their attention outward to economic performance and competition in a globalized world. If university students are harbingers of the future, even casual observation reveals that they are flocking to new international relations programs rather than classes on Quebec–Canada relations, and many more are studying abroad through international exchanges. In other words, young Quebecers are becoming “internationalized” in a way that suggests their point of reference is the rest of the world rather than the rest of Canada. For many observers in Quebec, as in Canada, the “great-est challenges are clearly due to international developments more than to internal tensions.”22

Quebec, like other resource-rich areas, has always been a part of a global economy. Prior to the 1960s its global presence related primarily to exports of natural resources, to the low-wage manufacturing sectors that grew up alongside them, and to the extensive foreign investment, primarily American, that dominated regional economies from Asbestos to Schefferville. The first order of business during the early years of the Quiet Revolution was to create the levers of economic and social power that would allow Quebec society to move out of this situation, which stymied the prosperity of its residents—particularly Francophone ones. This was the era of “state building” by the Liberal government in Quebec that was fundamentally different from the substantial “province building” in other provinces, because it associated the raison d’être of the state with a distinctive society. That society’s primary point of ref-erence became l’État québécois, a legitimately constituted authority with recognized powers and responsibilities over a specific territory and population, even though it remained within—or alongside—the confines of another state in the federal setting of Canada. To this day the notion of the “Quebec state” is clearly recognized in everything from official government documents (such as the Liberal government’s agenda for

22 Robert Lacroix, “Canada’s national and international challenges,” Policy Options/Options politiques 27, 4 (April–May 2006), p. 31.


La modernisation de l’État) to academic treatises (such as the seminal work by Bergeron and Pelletier, L’État du Québec en devenir).

The rapid construction of the Quebec state in the 1960s had impor-tant consequences for Quebec’s international economic relations and for its global reach. The building of the Quebec state in the 1960s was based on the need to retrieve and develop key economic instruments, such as the nationalization of hydroelectricity and the creation of the Caisse de dépôt et placement du Québec. Language legislation in the 1970s was a natural extension of this, designed in part to enlarge the labour market for Francophones in the private sector.

As the role of the Quebec state widened to encompass educa-tion, culture and the economy, affirmation on the international stage became more important. Forty years before Stephen Harper came to Québec City to talk about Quebec’s role in UNESCO, Paul Gérin-Lajoie, Quebec’s first education minister, defined the basis for the Quebec state’s presence on the international stage in an address before Montréal’s consular corps in 1965. The Gérin-Lajoie doctrine, as it has become known, posits that the pursuit of such international relationships is a natural extension of the Quebec state’s jurisdictional responsibility in areas such as education and culture that are crucial to the projection and maintenance of Quebec’s distinctive society. This search for rela-tionships drew Quebec into conflict with the Canadian state, notably over its place in la Francophonie.23 But although the French connection might give Quebecers an outlet and an ally on the world stage, the real concerns of Quebec policy-makers were focused on the North American continent. How to make Quebec “sustainable” was an economic and a cultural question, and, ultimately, a political one as well.

When René Lévesque became premier in 1976, his first order of business was to address the Economic Club of New York in order to assure American investors of Quebec’s economic stability and, not unimportantly, of his social-democratic party’s moderate character. After the defeat of the 1980 referendum, the PQ government’s attention

23 Jean-Philippe Thérien, Louis Bélanger and Guy Gosselin, “La politique étrangère québécoise.” In Alain-G. Gagnon, ed., Québec: État et Société (Montréal: Québec-Amérique, 1994).


turned to ensuring its economic relationship with the United States, at a time when Canadian foreign economic policy was less inclined to do so. The proposals for a free trade arrangement with the United States, castigated by the federal Liberal Party, proved to resonate positively with Quebecers, who supported the measure by a much wider margin than voters in the rest of Canada. Economic security, it was argued, would be the key to cultural survival. When free trade was debated across Canada in the late 1980s, political parties at the federal level and in all other provinces took opposite sides on the issue, but in Quebec both the provincial Liberals and the Parti Québécois strongly sup-ported the Free Trade Agreement (FTA). Their positions were similar a few years later regarding the North American Free Trade Agreement (NAFTA). The Liberals favoured free trade mostly because of their pro-business inclinations, while the PQ supported the FTA and NAFTA in large part because they loosened the province’s economic ties to the rest of Canada, thus chipping away at some of the economic rationale for federalism.24

In later years support for free trade has been tempered somewhat by the attraction of the anti-globalization movement among younger generations, the constant irritants of unresolved trade conflicts with the United States (notably in softwood lumber) and the visceral aver-sion of Quebecers to George W. Bush and his brand of conservatism. Nonetheless, Quebecers recognize that their economy has thrived under free trade and no one is seriously advocating a return to the status quo ante in trade policy.

But how is Quebec doing, now, at home and abroad? In March 2006, Premier Jean Charest travelled to Chicago to attend BIO 2006, the world congress on biotechnology, and to attract global investors to the impressive Quebec biotech industry, which ranks third in North America after California and Massachusetts.25 Headlines such as these

24 Pierre Martin, “When Nationalism Meets Continentalism: The Politics of Free Trade in Quebec,” Regional and Federal Studies 5 (Spring 1995), pp. 1–27.

25 Presse Canadienne, “En bref: Jean Charest va à Chicago,” Le Devoir, March 17, 2006.


reflect the sense that Quebec can develop world-class industries in cutting-edge sectors of the economy.

The success of blockbuster industrial sectors, and there are several in Quebec, reflects in certain measure more intensive investment in R&D and a higher rate of post-secondary education. But this has not yet been able to drive the economy as a whole. The good news is that Quebec is quickly “catching up” to the rest of Canada, with per capita income on the rise and unemployment rates falling faster than in most other prov-inces in Canada. Still, the provincial economy has been steadily losing ground in terms of productivity and competitiveness in comparison with the rest of Canada and the United States.26 And while Quebec faces the same demographic trends as the rest of Canada, it “will be hit sooner and harder” by an aging population and the squeezing of the active labour force.27 Quebec governments have been determined, since the late 1990s, to reach a zero deficit and balance their budgets. The debt situation, meanwhile, has been left relatively unaddressed, with economic growth and inflation accounting for the decline in public debt over the past decade.28 At $118 billion, Quebec’s public debt is now over 44 per cent of GDP and the highest per capita debt in Canada. Such an enormous sum makes it difficult to envision how a consensus for debt repayment could be developed. Instead, the Charest government attempted, in its recent budget, to create a le fonds des générations to pay down the debt through the investment of Hydro-Québec royalties.

For some, drawing on the social-democratic tradition of the PQ, debt is less of an issue than solidarity and prosperity, which are seen to go hand in hand. Quebec was historically hampered by a poorer economy and then buffeted by industrial restructuring; public debt was necessary to build the infrastructure needed to undertake economic reform and to

26 Marcel Boyer, La performance économique du Québec: constats et défi es, Les cahiers scienti-fi ques du CIRANO (Montréal: Centre interuniversitaire de recherche en analyse des organisa-tions, January 2006).

27 Pierre Fortin, “Back to Basics,” Policy Options/Options politiques 27, 4 (April–May 2006), p. 59.

28 Marcellin Joanis and Claude Montmarquette, “La dette publique: un défi prioritaire pour le Qué-bec,” Choix/Choices 10, 9 (Montréal: Institute for Research on Public Policy, October 2004).


buffer the costs of economic adjustment. As Jean-François Lisée argues, middle-class Quebecers and the less well-off in Quebec now enjoy a quality of life superior to that anywhere else in North America. And even if they seem more heavily taxed than their Ontarian neighbours, Quebecers can profit from more affordable electricity, universal day-care, more post-secondary financing, public pharmacare and a host of other government programs.29

These figures are dismissed by other observers, such as Alain Dubuc.30 In his Éloge de la richesse (in other words, “in praise of wealth”), Dubuc is blunt: “Quebec is poor”; worse, Quebecers are blindsided by “wishful thinking” about the status quo, sapped of eco-nomic ambition and reluctant to embrace real wealth. Wealth may bring more inequality, he argues, but also more resources for social programs to combat these issues. Dubuc’s raisonnement is a deft hit on the “fic-tions” of fiscal imbalance: the idea that Quebec’s fiscal woes are the fault of Ottawa and that with more federal dollars and more fiscal autonomy, prosperity would follow. Dubuc’s argument is that the entire social-democratic “Quebec model” is overblown and unsustainable—from long-standing commitments such as health care to new and equally expensive ones like child care. Critics, however, have been quick to point out the overblown nature of Dubuc’s claims—the apocalyptic projections for health-care spending, for example, which the Charest government often repeats. More problematic is Dubuc’s assertion that because of the constitutional debate, Quebecers can’t focus on the real economic debate—that is, how to get wealthier. It assumes that all that stands between Quebec and Ontario in terms of per capita income is for Quebec to let go of its constitutional aspirations and the quest for distinctiveness, and to start to curb provincial spending, in particular social spending. That is a different argument, however. Ontario is also an aging society, albeit with better immigration prospects so far. And

29 Jean-François Lisée, Déchiffrer le modèle québécois [online]. (Updated May 2006). www.jfl isee.net.

30 Alain Dubuc, Éloge de la richesse: Des idées pour donner au Québec les moyens de ses ambitions (Montréal: Les Éditions Voix Parallèles, 2006).


the social spending debate is far from settled there, either. In fact, any number of the drags that Dubuc claims on Quebec’s wealth are to be found in other provinces as well. To focus on the constitutional debate is to make an analytical leap that, social scientists would say, mistakes correlation for proper causation.

Another point of view gaining momentum in Quebec takes a slightly different tack, arguing that Quebec is doing relatively well economically within Canada and that this fact alone should be enough of a reason for disengaging from the quest for sovereignty. In a provocative new book, Aux pays des merveilles (a pun on Alice in Wonderland), André Pratte takes Quebecers to task for their Alice in Wonderland approach to inde-pendence. Like most, he admits, he has been on and off the sovereignty merry-go-round, part of that malleable centre that federalist renewal is supposed to attract. But why, he asks, are we wasting energy on dreams of a mythological country, when Quebec is already part of a real one called Canada that, warts and all, remains the best hope for Quebec’s long-term future in a globalized world? Addressing his Francophone readership, Pratte argues it’s time for a reality check: let’s face it, he claims, we are all Quebec nationalists “à un degré ou à un autre.”31 It is time to recognize that nationalism and federalism have actually worked together to ensure economic prosperity, and from that, cultural survival. Pratte is suggesting we move toward a Plan A that gets Quebecers to focus on the benefits of being part of Canada, on what Quebec has con-tributed to the federation in a larger sense and on what it has reaped from the association, as well. He suggests there is enough middle ground for Quebecers to take their place in Canada. This vision of Canada through rose-coloured glasses has gained considerable political currency from the open federalism overtures of Stephen Harper, the expectations raised by the symbolic gesture of a voice for Quebec at UNESCO and the posi-tive noises being heard about provincial autonomy.

31 André Pratte, Aux pays des merveilles: Essai sur les mythes politiques québécois (Montréal: VLB Éditeur, 2006), p. 144.


A CLEAR-SIGHTED FUTURE OR SOLIDARITY FOREVER?

Although they differ in tone, both Dubuc and Pratte use an economic rationale to suggest that Quebec’s status quo within the federation, including its constitutional position, is not worth making a fuss about at this time. This economic rationale was part of an extraordinary debate that emerged last fall about Quebec’s economic future in the wake of globalization. (This also illustrates well the Quebec model of public debate, one that engages intellectuals, politicians, economic leaders and social advocates “sur la tribune publique.”) On the one side was the publication of a manifesto, Pour un Québec lucide [For a Clear-Eyed Vision of Quebec], with a dozen signatories, including former PQ pre-mier Lucien Bouchard, former PQ cabinet minister Joseph Facal, influ-ential economists Robert Lacroix and Pierre Fortin, and business leader Guy Saint-Pierre (SNC-Lavalin). Just as the Quiet Revolution had changed people’s mindsets to address the needs of an emergent society in the 1960s, these modern leaders now envisioned a new clear, respon-sible and open attitude for Quebec to meet the challenges of the 21st century. These challenges, contextualized in terms of growing economic competition abroad and stagnant demographic growth as a nation, could be addressed by making massive investments in education and training, freezing tuitions, paying down the debt, increasing taxes on consump-tion rather than earnings, and opening the way to more private sector investment, including private–public partnerships in health care.32

Critics on the left were quick to respond, publishing their own mani-festo, Pour un Québec solidaire [For a Quebec Based on Solidarity], signed by a larger group of social activists, artists, and social-democratic politicians and academics, inspired by social, environmental and equity concerns. For this group Quebec’s future prosperity rests on implement-ing progressive taxation, better distributing wealth, ensuring access

32 Lucien Bouchard et al., For a Clear-Eyed Vision of Quebec [online]. (October 19, 2005). www.pourunquebeclucide.com.


to education, preserving public control of the health-care system and enforcing environmental regulations.33

The extraordinary nature of this exercise was that it represented a public debate à la québécoise, animated by two groups of prominent citizens—drawn from business, media, government, social groups and the arts—that cut across partisan lines. Both sides received consider-able media attention and public support even as, elsewhere in Canada, all eyes were turned toward the looming federal election. More extraor-dinary still, the debate focused on Quebec’s future without so much as mentioning either sovereignty or federalism; in fact, the composition of the groups cut across the sovereignty–federalist cleavage. The point of the exercise was to debate the kind of society that Quebec should endea-vour to become, regardless of the amount of political autonomy it can have. If Quebecers are ready to fight for one political future or another, what vision of Quebec are they fighting for? What are Quebecers pre-pared to do with the levers of power they have now to address pressing economic and social challenges?

THE HEALTH-CARE BLUES

One of the most pressing challenges in this regard is health care. Even though health care has become a lightning rod for intergovern-mental tensions in Canada, and even though the federal government looms large in terms of its spending power, the debate over health-care reform is first and foremost a debate about the relationship between Quebec’s state and society.

Before arriving in Ottawa, Pierre Trudeau held up the social-democratic impetus that led to universal health care as an example of why Quebecers should be open to Canadian political tenets from the left.

33 Omar Aktouf et al., For a Quebec Based on Solidarity [online]. (November 1, 2005). www.pourunquebecsolidaire.org.


In fact, he had a point: in the 1950s, the Union Nationale government rallied behind a narrow interpretation of the division of powers and used this to resist federal intrusion into provincial jurisdiction in social matters.

But during the 1960s the discourse on federalism in Quebec changed, just as the discourse about the role of the state in society changed: the division of powers was no longer a firewall against social reform ema-nating from the Canadian state; instead, reformers in Quebec would argue that the division of powers gave Quebec the necessary levers to effect social change. The autonomists in Québec City eventually were to become no less, and in some areas much more, progressive than the centralizing reformers in Ottawa.

It was not until a Liberal government came to power in Quebec under Jean Lesage that Quebec introduced hospital insurance in 1961, the last province to do so. Quebec was also one of the last provinces to introduce medical insurance in 1971, under the federal cost-sharing program, but this time the delay was for different reasons. Health care was consid-ered part of a larger tableau of social reform in Quebec, from education to culture and labour training. In 1965 Claude Castonguay was asked to research the needs of Quebecers in health and social affairs and to evalu-ate the Quebec state’s role in delivering those services. The preliminary research of the Castonguay commission set the parameters of the public health-care system in Quebec: an emphasis on state regulation to ensure the widest possible access to services that could combine both health and social needs. The 1971 Loi sur les services de santé et les services sociaux put in place a distinctive health-care system that included “global medicine” as part of an integrated system of health and social services.34 Arguably, it was the most “public” health-care system in Canada, includ-ing an innovative system of community health and social service clinics (the CLSC network), a watertight “seal” between physicians in the public system and the very few who opted out, and a ban on extra-billing that caused considerable dissent within the ranks of medical specialists (who

34 Raynald Pineault, André-Pierre Contandriopoulos and Richard Lessard, “The Quebec Health System: Care Objectives or Health Objectives?” Journal of Public Health Policy 6, 3 (1985), pp. 394–409.


went on strike in protest in 1970). Even the organization of the medical profession emerged differently. The Quebec Medical Association has nowhere near the power or organization of its other provincial counter-parts; instead, physicians are required to belong to federations (of spe-cialists, general practitioners, residents) who negotiate on behalf of their members with the Régie de l’assurance-maladie du Québec.

Although the health-care system was in part financed through cost-sharing and federal block grants, the primary point of reference was the 1971 legislation and the regulatory features therein. Health care, as a jurisdictional responsibility of the Quebec state, was for all intents and purposes within the purview of the provincial government and its agen-cies. The health-care card, known first as la castonguette and later as la carte soleil, represented a direct link between Quebecers and their gov-ernment. The sentiment of a Canadian health-care system, or of a link to Canadian identity through it, was never a rousing force in Quebec.

The Canada Health Act of 1984 was arguably an attempt by the Trudeau government, in the last throes of power, to shore up what it con-sidered to be the values that public health care should aspire to across Canada.35 Liberal governments under both Jean Chrétien and Paul Martin understood the importance of using the Canada Health Act to carve out a political space in this area of provincial jurisdiction, deploy-ing the federal spending power as the fiscal lever to do so.

The Canada Health Act was contested by successive Quebec gov-ernments because it represented a unilateral imposition of central norms and was considered especially intrusive due to the fact that Quebec already subscribed to similar principles within the Loi sur les services de santé et les services sociaux.36 Even in subsequent amended ver-sions, the Loi does not make reference to the federal government nor spell out the principles of the Canada Health Act, as is the case in several other pieces of provincial health-care legislation.

35 Monique Bégin, Medicare: Canada’s Right to Health, (Ottawa: Optimum Publishing Inter-national, 1987).

36 Antonia Maioni, “Les normes centrales et les politiques de la santé.” In Clermont Bégin et al., Le Système de santé québécois: Un modèle en transformation (Montréal: Presses de l’Université de Montréal, 1999).


The reductions in federal funding in the 1990s coincided with a period of profound reform in Quebec’s health-care system toward a so-called virage ambulatoire—the Quebec government’s objective to reorient health-care delivery away from institutionalized care.37 At one point a trial balloon floated by the Bourassa government to intro-duce emergency room user fees in the early 1990s raised the spectre of the Canada Health Act, but the role of the federal government has been mainly fiscal villain in the blame game over sustainable funding for health care. Attempts to coordinate national strategies (such as the Health Council of Canada) or to ascribe “Canadian values” to health-care reform (the Romanow Commission is a good case in point) have been resisted in Quebec. Instead, health care became the principal fea-ture of Quebec’s claims of a “fiscal imbalance” in the federation.

The very term fiscal imbalance originated in Quebec, in part as a way of labelling the problems of federal transfers to the province, most notably in the area of health-care spending, which had, as elsewhere in Canada, felt the shock of cuts after the 1995 budget ushered in the Canada Health and Social Transfer. In the year 2000, the Parti Québécois government commissioned Yves Séguin (later briefly the Minister of Finance in Charest’s cabinet) and several prominent scholars to exam-ine the fiscal relationship between Quebec and Ottawa. In the Quebec context the imbalance issue was not primarily about equalization (funds that become part of the provincial government’s general revenues), but rather about the transfers of cash and tax points that Quebec needed to fund and develop its social programs. The issues were whether Quebec was receiving its fair share of transfers, how more of these could be translated into tax points and the extent to which Quebec could have the autonomy to deploy these funds for its specific needs. The basic question of health care in the fiscal imbalance, then, is essentially how Quebec can fulfill its jurisdictional responsibilities in health care through an appropriate fiscal capacity to do so. And that brings Quebecers back to

37 Pierre Bergeron & France Gagnon, « La prise en charge étatique de la santé au Québec », in Vincent Lemieux, ed., Le système de santé au Québec : Organisations, acteurs et enjeux, (Ste-Foy : Les Presses de l’Université Laval, 1994).


the essential issue of not only who pays, in terms of public spending, but also under what rules.

Last year’s Supreme Court decision in Chaoulli v. Quebec is an exam-ple of this dynamic. The case reminded Canadians of two basic points. First, health care is a provincial jurisdiction and the discourse about the “Canadian health-care system” or “Canadian medicare” is misleading. The Chaoulli case was fought in Quebec courts over Quebec’s health-care laws, and the Supreme Court’s judgment was focused on remedies within the purview of provincial competencies. Second, the case was a reminder that even though health care is a provincial responsibility, a national insti-tution—the Supreme Court—can have an important voice in shaping its reform trajectory, although the court referred to Quebec’s Charter of Rights and Freedoms rather than the Canadian Charter in the majority decision.

In Quebec there was very little discussion of Canadian values or of federalism. Instead, the decision—invalidating the ban on private insur-ance in Quebec’s health-care legislation—became a lightning rod for those on both sides of the lucidité–solidarité divide in a wider societal debate about the role of the private sector in health care. The Quebec government’s response to Chaoulli was practically devoid of reference to the Canada Health Act, although the Minister of Health, Philippe Coulliard, admitted that his proposal for private clinics for selective surgeries would not contravene its principles. That the response did not go further than that—for example, by allowing physicians to practise simultaneously in public and private markets (as had been suggested in Alberta’s Third Way)—reflects an astute reading of the political feasibil-ity of such proposals in Quebec, rather than a fear of federal reprisals.

Despite the flurry of private market activity related to certain medi-cal services in Quebec, and despite the fact that Quebecers are among the most critical in Canada of their health-care system, there remains a strong boundary around the extent of private health-care development. Part of the boundary reflects the political risk associated with too-rapid privatization; the other recognizes the economic costs associated with an expansion of private markets, perhaps the strongest argument made by Health Minister Coulliard in opting for a limited response to the Supreme Court.


If Quebec’s economic policy since the 1960s is an example of what was meant by Jean Lesage’s Liberal slogan that Quebecers should be “maîtres chez nous,” health policy in Quebec can be characterized by Robert Bourassa’s idea of “un Québec maître de ses choix.” The issue at stake is that Quebec choose the direction of health-care reform, based on societal choices and economic realities, rather than having change imposed from Ottawa or elsewhere.

MOVING OUT OF THE BLUE PERIOD

Picasso moved abruptly out of his blue period into a rose period, in which he painted with less passion but with more colour and hope. Applying this idea to Canadian federalism, there are also signs that Quebec is moving out of its blue period. The preoccupation with chart-ing a future course for the economy and social programs, the willingness of political leaders in Ottawa and Québec City to engage in a dialogue about open federalism, and the warming of Quebecers to this message suggest such a rose period for Quebec and Canada. Decentralization, the respect of provincial competencies and the recalibration of fiscal feder-alism are part of the new palette of rose-coloured federalism.

But is this rosy scenario sustainable in the longer term? For Picasso, the rose period didn’t last long. It was a transition toward the revolution of cubism, in which the artist did battle with existing convention and abandoned all preconceived notions of form and appearance. Cubism is the art of reconciling opposite perspectives in a complex arrangement that, in the end, projects harmony and order. The key is the reconcili-ation of these perspectives in two-dimensional space. Is this an ideal description of the future of Canadian federalism as well?The future of Quebec in the Canadian federation will be shaped by two movements: what happens inside Quebec and what happens in the rest of Canada outside Quebec. The reality is that French-speaking residents in Quebec are increasingly identifying themselves as Quebecers first. This individual identification and collective appartenance to a Quebec society, in political, linguistic and cultural terms, has no


parallel with provincial identities elsewhere. This Quebec identity is persisting and deepening, and this is the reality that will shape Quebec’s political future.

Its significance has to be understood as something more complex than what can be revealed in a series of snapshots of support for sovereignty. While the origins and evolution of the sovereigntist movement are essen-tial parts of the federalism puzzle, the fatal flaw of “federalists”—of all kinds, in Quebec or Canada—has been to try to hang the future of Canada on reading the tea leaves of the sovereigntist movement and riding the roller coaster of support for sovereignty in Quebec’s public opinion.

The reality of Quebec’s distinctive identity is what creates the need for Quebecers to better understand what it means to be part of Canada—but also the need for meaningful political recognition of Quebec’s dif-ference from the rest of Canada.

Demonstration of the benefits of being part of Canada is now being revitalized by the Liberal government in Quebec and the Conservative government in Ottawa. In the wake of past scaremongering and blame games, it is a refreshing and important change, and it is gaining force and momentum among opinion leaders in Quebec. The tone of this dia-logue is moving toward what Janice Gross Stein refers to as the recog-nition of shared challenges: Quebec society faces challenges similar to those of the rest of Canada in terms of investing in its future. The con-tent of the dialogue, meanwhile, reflects Roger Gibbins’s recommenda-tions for a less constricting federal framework, a kind of symmetrical asymmetry.

Neither of these reflections, however, gets at the crux of the question about the recognition and operationalization of Quebec’s difference in the long term. Opening Quebec to the rest of Canada requires a com-plementary movement of opening the rest of Canada to the realities of modern Quebec. The basic issue for Quebecers in their assessment of federalism and sovereignty involves the capacity to effectively manage the political instruments that allow them to make fundamental choices for a society that is different in more ways than one.

Is there a way to achieve this? First, it requires an acceptance of Quebec for what it is: for Quebecers, that it is part of a larger Canadian


landscape; for Canadians outside Quebec, that it represents an irrevo-cably distinct part of that landscape. Then, it requires an enduring and formal commitment to recognize and allow for the capacity to man-age Quebec’s distinctiveness. Although it is unfashionable to mention the “C-word” these days, sooner or later the constitutional elephant in the room will have to be acknowledged. The historical reality is that la question nationale in Quebec and the national unity question in the rest of Canada are inextricably bound up in constitutional issues about the shape of Canadian federalism. As long as they are ignored, “federal-ism” remains a partisan weapon for federalists and sovereigntists alike in Quebec. As long as they remain in the realm of political goodwill, they are unlikely to provide much promise and more likely to lead to another referendum.

The placid waters of Meech Lake harbour many political ghosts. The accord’s failure was not only about Quebec’s place in the federation; it was also about what Canadian federalism should look like in a larger sense. After years on the back burner, a new conversation is emerging, one in which ideas about federalism’s modern reach (Stein) and a new national policy (Gibbins) are interesting ways of trying to move forward to shape a new federalism. And focusing on an “open” federalism has thus far had limited political costs for the new Conservative govern-ment. But, as expectations are revived, Quebecers are likely to see this as the ouverture du bal, not the end of the party. What will happen to political sentiment in the rest of the country at that point? It will take a lot more inspired leadership from Ottawa and elsewhere in Canada, and a much stronger federalist leadership in Quebec, to shape a durable future for Canadian federalism.

Picasso’s blue period was ultimately followed by an artistic revolu-tion. The passage toward cubism went far beyond a simple re-mixing of existing colours; it required letting go of past convention and constric-tion, and reconciling opposing perspectives in multi-dimensional space. What will follow Quebec’s blue period? Will the recognition of Quebec’s needs and the enduring features of Quebec’s identity lead to a re-forming of the Canadian federal landscape? Or will those needs be fulfilled by another type of re-making that leads Quebec to sovereignty?

From the Lecture: CONVERSATIONS AND QUESTIONS

141From the Lecture: Conversations and Questions

At the CIBC Scholar-in-Residence Lecture in Ottawa on June 1, 2006, some 450 people gathered at the Chateau Laurier hotel to hear host Allan Gregg and the three scholars debate the current state of and prospects for Canadian federalism. The following pages present excerpts from their conversation and from the subsequent Q&A ses-sion with the audience.

Allan Gregg:Janice, you said that jurisdictions really are confused in the cities. It’s

acknowledged right now that there is an infrastructure deficit in cities of anywhere between $50 to $70 billion—sewers, water, bridges, every-thing. How does networked federalism work to solve that problem?

Janice Gross Stein:You get federal leaders, municipal leaders and people who work

in the private sector all at the same table. It then becomes an exercise in shared policy-making, in putting really good new ideas on the table and trying to see how you get around this institutional impasse. The argument that the federal government alone is responsible for strategic infrastructure, and could by a stroke of the pen solve this problem, is not realistic. The argument that provincial governments [that are] strapped for revenues themselves could solve this problem is not a realistic one either. Imagine the revenue-raising capacity you would have to transfer to cities in order to give the cities their own capacity to meet these chal-lenges. I don’t think that in Roger’s wildest dreams or anyone else’s can we envisage that kind of revenue transfer from the new order toward this [level of] government. There is no alternative but a sharing.

Gregg: Now Roger, you have offered something you have modestly called

a new national program, a policy for Canada, premised on three things: federal government engagement in common economic space, its dis-engagement from social space and the abandonment of place-based


federal spending in favour of person-based spending. Make that real by giving us an example of a shared jurisdiction—say, immigration. Who gets what, when and how under your new national policy?

Roger Gibbins:Immigration is a classic federal government responsibility at the

front end. The provinces are involved; I have no problem with that. I am not suggesting, as Janice was saying, that I want everything in pigeonholes; I am just saying that a system where every government is involved in everything, and everybody gets together at every table, scares me witless. So, on immigration what I am saying is that the federal government should be investing more heavily in immigrants. It’s not enough to give people the language skills they need to work in a mill; that’s not how we are going to build a knowledge-based economy. And I think that federal funding should be indifferent as to where immigrants settle. Right now we tend to partition immigrant sup-port to provincial governments, so that when somebody lands in one city and migrates to another city, the federal funding stays where the person landed instead of following the immigrant wherever he or she is going. There are ways of doing that. So, it’s a matter of achieving some focus—of saying, okay, this is something that we have to do well and something we are not doing as well as we could be doing, and let’s do it by having a national responsibility, rather than saying, well, let’s get everyone around the table and see if they can sort out immigration. It’s tempting to play to the home crowd here in Ottawa and argue that no matter what’s out there, there is a role for the federal government, but I just don’t think that’s an effective way of addressing these policy holes we have in terms of the national economic space.

Gregg:Antonia, you say the question is “What does Quebec want?” and the

real challenge facing the rest of Canada is providing a meaningful ratio-nale as to what Canada offers for Quebecers. What should the federal government be doing in order to close that deal?


Antonia Maioni:I think the important question is about what Quebec needs, because

the need is the way Quebecers see their future survival, and if you think about it in terms of needs instead of wants it becomes a different ques-tion. In terms of Canada I think that open federalism is a really inter-esting phenomenon that’s happened. Quebecers did choose Canada in 1995. And the rapidity with which this open federalism idea is gaining currency among a lot of Quebecers, I think, shows that there is a will-ingness in Quebec to be a part of Canada. Quebecers don’t want to have to choose between the nation and their country. There is a solution there to be hacked out, but I think it is not enough to try to fix the federal gov-ernment on the one hand and make some symbolic gestures in terms of UNESCO on the other. I think for most Quebecers, that’s the opening of the game, not the end.

Gregg: I want to ask all three of you to talk about national standards. If you

look at what is the source of Canadian identity, it’s not the acts of great men or great women, or even great events, so much as great public policy that has a coast-to-coast application that Canadians see reflect-ing their values. Where is the role of national standards in your vision of the future of federalism?

Stein:National standards are key. As Roger was talking about funds fol-

lowing immigrants as they move to different parts of the country—I hope I am not being unfair to Roger—that sounded a little bit to me like a voucher kind of an argument. And the risk of voucher arguments is that they de-institutionalize, because if the funding follows people, it weakens our institutions. One of the things we know about globaliza-tion, to push the argument back up for a moment, is that those societies that do best globally are those that have strong institutions. National standards matter in a global economy, and they matter a great deal. The


fact, for example, that we don’t have a national securities regulatory system in this country weakens our competitiveness globally. When our panel was travelling across the country and talking to people, we heard that Canadians get the fact that jobs are moving, and they want to move as well. But what they want is access to the same standards of health care and education province to province. They see themselves as Canadians as well as having provincial loyalties. When you get peo-ple around the table, that’s a key part of the discussion—what are the national standards?

Gibbins: I must say that my own sense of identity with the country is not

rooted in national standards. When I get up in the morning, what turns my crank is not the thought that wait times for cataract surgery are the same across the country. It’s irrelevant to my sense of my community. I much more engage in the landscape I live in, in the communities I live in and the things that knit us together. I think we put far too much emphasis on the role that national standards play in knitting us together. And the thought that new Canadians might actually have something analogous to a voucher and that they might be able to carry that support with them across the country, the thought of that being rolled up with my sense of being a Canadian, I find very peculiar.

Maioni: Let me take the example of health care: if you look at the way

Quebecers perceive their health-care system, there is nothing about Canada involved in that. The Canada Health Act is not germane to the way Quebecers see their relationship to their access to health care, or the way they see the organization and administration of health care. They know the federal government is involved in the financing of health care, but it’s sort of a villain role more than anything else. Quebec’s standards in health care, for example, predated the Canada Health Act. Quebec outlawed extra-billing in 1971 when the law came into place. Quebec has started with the most integrated health and social welfare service system, which has been imitated but not replicated


anywhere across Canada, indeed even across North America. So, in effect, Quebec sees its health-care system as a projection of itself. Perhaps there are values and identity attached to it, but it is inherently a Quebec system and it is something provided by the Quebec state. That is the point of reference.

Gregg: To the topic of vertical fiscal imbalance: to different degrees, you

all believe it exists. We now have a government that actually believes it exists. Janice, you just wrote a report for the Council of the Federation calling for all 10 provinces to be included in terms of equalization, including resource royalties. The resource royalty is becoming the sticking point. Why is this important, in your view, and what’s the impact of having studied it in detail?

Stein: The provinces and federal government need to sit down and figure

out what’s reasonable for this country at this stage—what’s a reason-able number, given the needs and other provinces. Right now we have a five-province standard, with all resources in. Across the country, by and large, there is a strong push to come up with a 10-province stan-dard. But just imagine if we were trying to equalize your income and we said, “Oh! By the way, we are not going to count your royalties for anything you do, and if you invest those royalties we are not going to count the income from that investment. We are going to add up your income without the royalties.” And then I, who earn no significant roy-alties because I’m an academic but might earn a little more in salary, am going to equalize with you. And when we do the equalizing, you end up with more than a non-equalization-receiving province. This is the fair-est way to do it, but it applies no final number. That’s the crucial point. If we do the sheer math, we are left with two “have” provinces in this nation today. Ontario is barely above that line. Ontario’s fiscal capa-city is barely above the average real fiscal capacity in this country. Now that’s a historic shift that we need to deal with.


Gregg:I wanted to shift that same focus to Roger on the horizontal imbal-

ance. You and I were talking recently and you said that Alberta’s capa-city right now to change the competitive balance in this country is far greater than the country’s ability to absorb it. Does Alberta’s sheer wealth right now pose a threat to federalism?

Gibbins:It does pose a significant political challenge for the country. We

have a lot of experience in Canada with equalizing up through all sorts of social programs and with our tax system, but we have very little experience with equalizing down. We have very little experience with a province that is positioned as Alberta is. The Alberta dilemma—maybe it’s a good dilemma to have—is that it has a lot of money. If it cuts taxes, that introduces real competitive strains within the federation, so I don’t think Alberta can be the Grand Cayman Island of the Canadian federation. We spend a lot of it—program spending is going up 11 per cent a year, which is a pretty healthy growth rate—but you can’t spend it all, even if you give it away. The reality is once you trim taxes a little bit, once you increase spending more than is sustainable, once you give a chunk of that away, you still have $8 to $10 billion a year surplus. So what Alberta does with that money? The wealth is not a problem. It’s how you use it—and just about anything that province might do can have distorting effects on the national economy. That’s why it is a national issue, and that’s why we should be having a national debate, and that’s why Alberta should be leading that debate, because if that resource boom is sustainable (which I suspect it is for a fair period of time), then the fact that you have this money piling up in one province inevitably, to my mind, creates a political problem for the federation. I don’t see how we can avoid it.

Gregg:Antonia, you made a point that expectations are soaring in the prov-

ince of Quebec. Now this whole notion of open federalism is big stuff. Quebec is clearly on the other side of this ledger from Ontario and


Alberta. It stands to be far and away the biggest beneficiary of a revised equalization. How much is what Jean Charest wants going to guide Stephen Harper’s final deliberation, do you think?

Maioni:One of the interesting things about the whole fiscal imbalance is

that the term was actually coined in Quebec. The Séguin Commission on the fiscal imbalance, which started in 2000–01, was something put into place by the Quebec government at the time to find out what hap-pened to the original deal about federalization and why Quebec wasn’t getting what it needed out of that arrangement. And so for Quebecers the whole fiscal imbalance is something that they have taken on as part of the Quebec position in the federation. The need for Stephen Harper to move on that particular promise is actually quite acute. Jean Charest is in a dismal place in polls in Quebec; this is his one shot to show Quebecers that there is something out there and that Canada can be of use in responding to their needs and is willing to do so through this open federalism that Stephen Harper is proposing. Stephen Harper started moving Quebec to his camp in December when he came to Québec City and talked about open federalism. He started by talking about UNESCO, but what people were really listening for was talk about the fiscal imbalance issue.

Gregg: As I go through your three papers, the glaring omission is Aboriginal

government. What role does Aboriginal government play in the future of federalism?

Stein: It’s a national issue, it’s a provincial issue, it’s an indivisible issue,

and we haven’t done a very good job in this country thus far. I think we are at one of these watershed moments in Aboriginal policy, and not only because of change in the federal government. It goes much deeper than that and we are, I think, four-square in front of two impera-tives. One, the North is now more important to us than it ever has been


in the past in terms of resource reclaiming. When we look at security issues, the North is now a southern issue as well. Secondly, we have more Aboriginal people living off reserves in cities, and this is a grow-ing trend. In that sense Aboriginal policy is now about far more than Aboriginal government. It’s a deep social issue, it’s an economic issue, it’s a security issue and it actually illustrates the argument I am mak-ing in my paper. It’s a federal responsibility, but that’s not going to get us far down the road unless the provinces and the cities and Aboriginal governments are part and parcel of a creative solution.

Gibbins:Well, Aboriginal governments are part of the new federal fabric we

have. I think the critical thing is that we can’t let federal government program support stop with or be channelled through Aboriginal govern-ments because we have to recognize our responsibility to individuals, and we have to have policies that reach individuals who are beyond the reach of those governments.

Maioni:I am not an expert in this area, but I just got back from Nunavut and

there were two things that made me most happy by going there. One was the attachment of the people whom I met to their land, and the way that they saw the preservation of the environment of their traditional hunting ways as very much attached to that land. It is something that you see in Quebec as well: this territorial attachment to a place, a sense of place. The other thing was the importance of language as the main element in their quest for cultural survival, and this again (coming from Quebec and going to Nunavut and seeing this on the ground) was eye-opening for me.

Audience Member:As a taxpayer, listening to this debate, it’s fairly sterile. It seems to

be mostly provincial and federal leaders carving up the jurisdictional pie, complaining about getting too much money or too little money. Right now we have Alberta and Ontario worried and Quebec wanting


more—that’s what it always is, and it’s so dysfunctional. Is our current federalism inherently adversarial?

Maioni: No, I don’t think it is. I think that the division of powers is a road

map. It’s a framework for dealing with the fact that, as Roger says in his paper, this was an economic union. It was a way of bringing together colonial entities, colonial past entities, into some kind of a union that would be greater than the sum of its parts. I think that’s a classic way to envision Canadian federalism, and I think for the most part it’s been successful in being able to do that. I think there are some outstanding issues, and the outstanding issue for Quebecers, or for Quebec govern-ments of either the sovereigntist or the federalist ilk, has not been the division of powers. It has been a different set of issues and options.

Stein:All three of our papers in a sense start from the premise of a

changing world. This is a world of new opportunities and new chal-lenges, fairly different from what Canada’s experienced in the past, so a lot of the debates that have preoccupied us are no longer the really important ones.

Audience Member:I moved to Canada in 1971, coming from a country with very low

mutual trust to a country where there was lots of mutual trust. What direction do you see this mutual trust capital in Canada going in?

Gibbins:I am not sure if there is a lack of mutual trust. Politics is conflictual;

that’s why we have a political process to resolve conflicts of interest and conflicts of values. So I think we operate with a reasonably good degree of trust within this country. I think we have a civility in our pol-itics, though it breaks down occasionally in the House of Commons. It doesn’t break down that badly in federal–provincial relations. Since politics is conflictual, that’s why I get impatient at the idea of people


sitting down at the table and contributing good thoughts. We have a political system because we know when we sit down at that table we disagree, we have different values and interests, and we try to work it out. So what we want is a federal system that doesn’t neglect certain things we should be doing. It has a lot of noise in it, but I am not terri-bly distressed at intergovernmental conflicts. That’s just part and parcel of it all.

Stein:I’ve been struck by the erosion of trust across the country. It was

really quite striking to me when I talked to senior civil servants in prov-incial capitals and in here in Ottawa. Virtually all of them commented about the deteriorating relationship that exists. That has not always been the case. We have had much better periods and we have had worse periods; it depends on challenges. I think we have gone through a pretty bad period and what’s happening now is not going to help. A major obstacle here is unilateral federal abrogation of agreements, which happened repeatedly in the last decade. And if we are looking for one frame, one particular policy issue, I would say that when you reach an agreement, whether it is on social policy or economic policy or what-ever, one party alone doesn’t abrogate without consulting and getting agreement of the other parties. That concept has not worked. We have been doing that over the last decade.

Audience Member:I’d like to start by reminding Professor Roger Gibbins of the thing

that he excoriated so much, the National Policy, the word “national” in it. But who defines the national space? I have heard a very parochial definition from at least two of you, I think.


Gibbins:I am trying to figure out what’s parochial about talking about a new

national policy. I think, ultimately, the national government plays the dominant role in defining the national space in which we live. There are limits to that, Antonia has pointed out. There is a limit to how far you can impose a pan-Canadian definition on a federal state. My con-cern has been that we have tried to define that national space through national standards, through the social programming of provinces, but that’s the most contentious area in which to define that national space. And so I think we have to go back and try to find a different way of doing it through the economic concerns of interest to Canadians, and aspirations that serve Canadians or that Canadians share. Now to describe that as parochial baffles me.

Stein: Let me help you out in this way. I think every time you use the word

“national” you are referring to the federal government. And, actually, the way I think about “national” is what the federal government, the provincial governments and municipal governments together define as a national project. The national is not the exclusive prerogative of the federal government in this country. Provinces are very much a part of that. So are municipal governments. The point I am trying to make is that in a global economy, the way we are going to get national stan-dards is not going to be the work of one order of government working in isolation from the other two, even though we have two constitutional orders in this country.

Maioni:You could only have this discussion about “national” and “nation”

in this way in Ottawa. I doubt we would be having the same conversa-tion anywhere in Quebec.


Gregg:Well, there are a few of us left who actually believe in strong

central government. I mean, if you want to discuss offshore oil or offshore resources, the position of the provinces is going to be defined by whether they have resources offshore, I can guarantee you.

Audience Member:Since coming to Ottawa about five years ago, I have actually had the

good fortune to work under the leadership of some incredible Quebec women. What struck me about working with the women in Quebec that I have met is that they have a commitment and an expertise that they want to share with the rest of Canada, and even though they may be very wedded to a nationalist interest or manifestation for Quebec, they still see themselves in a larger community. How do you see Quebec sharing its innovative approaches and its commitment to social solidar-ity with the rest of Canada? Obviously that’s a large question, but I am most curious to know if you think that Mr. Harper’s approach to open federalism actually facilitates that. What would a more robust Canada look like that fully integrates and values Quebec’s contribution?

Maioni:I think one of the things that Janice hints at but doesn’t say explicitly

is that the federation is not so great at interprovincial learning. There are things that Quebec has innovated in. There are models, probably, for other provinces in Canada in terms of health and social services, and it’s starting to happen in terms of universal child care as well. And what’s important to remember in Quebec is that there’s not just the federalism–sovereignty divide; there is also a very vivid left–right divide in Quebec, and it’s growing more vivid in part because of the attachment that some people have to these social programs, which some other people would like to see change. So I think the women that you are referring to are probably seeing if they could build a bridge to the rest of Canada to shore up support for what they consider to be social programs that are now under threat. This is not the kind of issue that they see probably Stephen Harper as being able to defend.


Audience Member:I am not sure why it shouldn’t turn someone’s crank, wherever you

live in this country, about whether or not you get your hip replacement or a knee replacement on time. I don’t think there is anything magical about the resources in Alberta that makes Albertans suffer less or more when they have the need for access to a hip replacement. So one could argue that there ought to be pan-Canadian objectives for access to those kinds of services wherever you need them in this country. Canadians should not have to wait twice or three times as long in one section of the country as in another, which is a reason for the use of the federal spending power in those areas.

Gibbins:I have no quarrel with the idea that governments across Canada,

provincial or local governments, should have some relatively equivalent fiscal capacity to address the concerns of their citizens. I have no prob-lem with that, and I have no problem with the portability of health care. It’s an economic advantage we have. The publicly funded health-care system we have is in most respects an economic advantage we have in competition, no question about that. All I am saying is there are things we should be doing as well and we don’t need the federal government necessarily there to ensure the quality of health care within provinces. We have this kind of schizoid view of the Canadian voter that when I vote for my federal MP, I am virtuous, I am defending the public health-care system, I am defending Canadian standards, I am doing all these things—and when I vote for my local or my provincial representative, I am voting for someone who is trying to pillage the environment and destroy the health-care system. It’s crazy. Canadians have values. They will enforce those values through the electoral process on their federal and their provincial governments, that’s all.

Audience Member:If you were the architects of Canada for the 21st century, would

you design the system that we have right now, which is three levels of government and a country in which we have to have agreements on


internal trade, where there are hundreds of associations that do recog-nition of credentials? Does the structure that we have in Canada really make sense when, with a population of 30 million, we put so much money into just having government?

Gibbins:I don’t think we’d have the system we have now, but I don’t think

that it would be radically different. I don’t think the federal system is overly wasteful by having too many governments for the size of the population we have. I think the different levels of government work reasonably well. The operating cost of the government is relatively small. So if I could start it all over, I don’t think the system would look radically different from what it is right now. But I think it would be dif-ferent at the margins. There would certainly be a stronger hammer for the federal government in terms of interprovincial barriers to trade and issues like credentialing and things like transportation. We have created a pretty prosperous, secure, interesting, creative, intellectually alive country, but it’s not perfectly aligned with the roles that lie ahead.

Stein:I don’t think we would have the system we have, but I agree with

Roger that it would not be that radically different. Roger is right—what we have been able to accomplish in this country is really extraordinary, and we often forget that. One thing I would change is that there would be a third order of government, which would be cities and it would not be communities. We would deal with it squarely if we were to be in the 21st century. Here, we would differentiate—and that’s an un-Canadian thing to do—but we would differentiate because it is our key platform for moving forward. Having said that, I think that in fact our taxation rates are globally aligned, relatively speaking.

Maioni:I personally as a Quebecer want to have more than one level of gov-

ernment. I don’t care how complicated it is; I think that’s the way that you engage citizens. And if it’s conflictual, then that’s the way you


bring conflicts to the surface and resolve them. My hope is that we can find some kind of a better federal arrangement to be able to do that, and so that we can actually get, not necessarily some closure, but some clarity on what the rules are and who should be playing by those rules. The last 10 years have been 10 lost years in Canadian federalism, not so much because of provinces dealing with one another but because of provinces dealing with the federal government.

Audience Member:How would the application of the notion of networked federalism

affect Canada’s ability to engage in rigorous foreign policy, considering provinces’ increasing role in international relations?

Stein:If you actually think about some of the big successes in our foreign

policy, they have been networked and that’s why we have succeeded. Take the land mines treaty: it was a networked collaboration led origi-nally by the voluntary sector and networked with our federal govern-ment, and it moved out to other governments. We are really good at this in Canada. We do it again and again and again. It doesn’t seem to me beyond our capacity to do it on federal–provincial–municipal issues as well.

Maioni:I don’t think there is anyone in Quebec who suggests that as long as

Quebec is a part of Canada that it should have a separate foreign policy. Quebec’s position on international relations coming out of the doctrine of the 1960s has always been that if there is an issue that deals with Quebec’s competence in education and culture and language, Quebec could have some kind of a role to play, some kind of a voice. That’s what the UNESCO debate was about. It wasn’t about Quebec going out and having a position on Afghanistan or on issues that are beyond its reach as a part of Canada.

Canada is at a turning point in the evolution of its federal

system. How does globalization affect the long-standing tensions between Ottawa

and the provinces? Can today’s federalism enable Canada to engage with changing

realities at home and abroad? What possibilities might new approaches to the

federation hold for Canada’s future? In this volume three renowned Canadian

scholars—the 2005–06 CIBC Scholars-in-Residence at The Conference Board

of Canada—present incisive analyses of federalism’s current predicament and

offer bold proposals for the way forward. Their essays are required reading

for all Canadians interested in how our political system must adapt to face the

challenges of coming years.

CONTRIBUTORS

Roger GibbinsPresident and CEO, Canada West Foundation

Antonia MaioniDirector, McGill Institute for the Study of Canada

Janice Gross SteinDirector, Munk Centre for International Studies, University of Toronto

and

Allan GreggChairman, The Strategic Counsel

About the CIBC Scholar-in-Residence Program

The CIBC Scholar-in-Residence Program is bringing renowned scholars to The Conference Board of Canada over a 10-year period to examine issues of national importance for improving Canada’s economic and social prosperity.

www.conferenceboard.ca

Documents

Canada by Picasso: The Faces of Federalism - Brender Writing