Advantage: provinces. Under Prime Minister Justin Trudeau, Canada is entering a new era of federalism. Unlike his predecessor, Trudeau has committed himself to reaching agreement with the provinces on a wide variety of contentious issues, from climate change to pensions. Yet it seems doubtful the federal government will be able to take the lead on any of these topics, given how far ahead the provinces are already. Ottawa is about to find out how little power it actually has on the biggest issues of the day.
The nine years of the Stephen Harper’s government were notable for the absence of conflict between the federal government and the provinces. Rather than involve himself in areas of provincial jurisdiction, Stephen Harper preferred to hand over unconditional cash transfers; as a result, squabbles over health care funding largely disappeared and Quebec separatism fell off the radar. This reluctance to engage with the provinces created some policy oddities, however. While the Conservative government planned to raise the retirement age for Old Age Security from 65 to 67, such a change was never contemplated for the Canada Pension Plan (CPP). Why? Because doing so would require complicated negotiations with the provinces.
Trudeau is charting a much different course. Just before Christmas, for example, federal Finance Minister Bill Morneau met with his provincial counterparts about enlarging the CPP, something Ontario is already moving ahead with on its own. A final decision is expected a year from now, but will require the consent of a majority of provinces. On a host of other files Trudeau’s national plans also require permission from provinces which, in many cases, already have unique plans of their own. Nowhere is this dynamic more apparent than his signature plan for a national climate change policy.
At the Paris climate change talks in December, Trudeau committed Canada to full participation in the global effort to keep temperatures at no more than 2° C above the long-term average, with a 1.5° C cap as the ultimate goal. Such a target will require substantial changes to the Canadian economy, most notably by putting a price on carbon emissions. During the Harper era, several provinces seized this initiative. B.C. imposed a carbon tax in 2008 while Quebec and California created North America’s first carbon emissions cap-and-trade system, which Manitoba and Ontario now plan to join. Alberta has announced its own unique carbon-pricing plan.
At a meeting with the premiers promised for March, Trudeau said he will hammer out a “pan-Canadian framework for combating climate change.” But creating a coherent national plan sufficient to hit the Paris targets looks to be an impossible task. The provinces all have different prices, emissions targets and exemptions for favoured industries. Creating a uniform Canada-wide carbon price will inevitably create a split between provinces with a carbon tax (which mandates a specific price) and those with cap-and-trade (which allows the market to set the price).
Similarly, any national emissions target apportioned between the provinces will create winners and losers depending on how shares are calculated. And we can expect the provinces to jealously guard their independence on this file. Repeated failed efforts to get the provinces to agree on a national securities regulator seem instructive here.
Further complicating Trudeau’s efforts to bring the provinces into alignment on climate change is the fact that billions of dollars in new carbon revenue will be flowing into provincial—and not federal—coffers. This means it won’t be possible to bribe the provinces into compliance, as was Harper’s preference. The premiers thus hold all the cards. The outcome of the March meeting will be whatever they allow to occur: most likely the sum of what they’re already doing. Significantly, this will not be enough to meet Trudeau’s Parisian commitments.
A solution to the similarly difficult issue of physician-assisted suicide also appears to lie with the provinces. Following last February’s Supreme Court ruling striking down a blanket prohibition against the practice, Quebec has already enacted its own legislation while Ontario has launched an expert task force on behalf of all provinces. What was once the exclusive domain of the federal Criminal Code has now become shared jurisdiction: “It is for Parliament and the provincial legislatures to respond,” the Supreme Court decision states. The Trudeau government has asked the court for a six-month extension while the provinces race ahead.
This resurgence of the provinces is the new reality of Canadian federalism. On climate change especially, but across a broad array of other policies as well, the premiers have taken charge. They control new revenue streams and are experimenting with new policy innovations. More often than not, they also have the backing of the Supreme Court. In the wake of the Harper years, Ottawa can no longer expect to be the dominant partner in any national plan. Where former prime minister Pierre Trudeau once said he had no intention of becoming “head waiter to the provinces,” his son may soon be asking: “Soup or salad?”
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