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In new reflections on the "structural incoherence" of federal-provincial relations, Queen's University policy analyst Harvey Lazar laments the erosion of vision, the lack of purpose, in the governing of Canada. "It has been increasingly difficult in recent years to find an overarching vision," he says, "on the appropriate role of the state or on the nature of the federation." In other words, the Canadian state no longer has a credible answer to the existential query: Why am I here?
Queen's has often acted as an oracle for the federal government. Its greatest names -- the legendary principals Mackintosh, Corry and Deutsch, for example -- stand as symbols of this service. As a former deputy chairman of the Economic Council of Canada and as the former director of Queen's Institute of Intergovernmental Relations, Mr. Lazar is part of the tradition. It was William Archibald Macintosh, by the way, who adapted Keynesian economics for postwar use in Canada. It was John Deutsch who served as the first chairman of the economic council when it was established by prime minister Lester Pearson in 1963 as an independent advisory agency.
In his introduction to Canadian Fiscal Arrangements: What Works, What Might Work Better, published this month by Queen's Institute of Intergovernmental Relations, Mr. Lazar argues that Canada's national vision has been lost to fiscal complexity -- to erratic management of federal -provincial "files," now as bewildering in number as dumbfounding in detail. The result, he says, is gridlock from "a lot of intergovernmental traffic." The result is a kind of mayhem in which governments hurt the programs and finances of other governments.
Although federal bureaucracies trespass more and more on provincial turf, authentic co-operation has been in decline for decades. The federal government has far more money than it has obligations, a disparity that will probably grow in future years. He observes, though, that Prime Minister Paul Martin presumably will want to advance his more "muscular federalism" with Canada-wide social programs, such as child care -- although it's not clear that he will provide enough cash to keep them going.
Contrary to the impression left by perpetual federal-provincial conflict, we have less government now than we had in the early nineties. Mr. Lazar says, for example, that government expenditures -- federal, provincial, local -- fell to 30 per cent of GDP in 2003 from 39 per cent 1992. This amount of government is what it was, in relative terms, in 1975. On another basis of comparison, Mr. Lazar reports that federal government program spending (including transfer payments) has fallen from 18 per cent of GDP in the seventies and eighties to 12.5 per cent in 2000.
As for transfer payments from the federal government to the provinces, current surplus funds and headline hostility notwithstanding, nothing much has changed since 1950. As a share of provincial revenue, federal transfers provide 15 per cent, precisely the same share as they did 55 years ago. When Mr. Martin cut transfer payments in the mid-nineties, causing the provinces to weep and wail, he essentially reduced the federal share of provincial revenues to 12 per cent from 16 per cent . Now, with an embarrassment of revenue, he has reversed direction, lifting the federal share back, almost, to where it normally was.
As often happens with the elaborate movement of federal money, nothing much gets fixed and nothing much gets fundamentally changed. On equalization spending, a federal budget item that divvies up $10-billion a year among the have-not provinces, Mr. Lazar observes that no one has any idea whether it has worked or not -- and that very few recall what it was supposed to do in the first place.
Have we lost our vision and our purpose? Perhaps. But confusion and complexity is the destination of all governments. As Friedrich Engels observed, on the withering away of the state, governments ultimately get subsumed "by the administration of things."
- reprinted from the Globe and Mail