Meech Lake Accord marks the first concerted effort by Canadian
governments to place explicit constitutional limitations on the
federal spending power. Clause 7 of the Meech Lake Accord would
amend the Constitution Act, 1867 by adding the following section:
(1) The Government of Canada shall provide reasonable compensation
to the government of a province that chooses not to participate
in a national shared-cost program that is established by the
Government of Canada after the coming into force of this section
in an area of exclusive provincial jurisdiction, if the province
carries on a program or initiative that is compatible with the
Nothing in this section extends the legislative powers of the
Parliament of Canada or of the legislatures of the provinces.
this section does, in essence, is to guarantee a provincial government
"reasonable compensation" for opting out of future national shared-cost
programs, provided the government in question establishes provincial
programs that conform to "the national objectives". In this way,
the Accord seeks to limit the power of Ottawa to use conditional
grants as a mechanism for dictating the details of programs that
fall within provincial legislative Jurisdiction.
problem with the proposal is that it does not go nearly far enough.
First, it applies only to future shared-cost programs, not to
existing ones. Second, while purporting to guarantee a measure
of provincial control over the details of such programs, section
106A would not impede the ability of the federal government to
set spending priorities or to dictate general program objectives.
Indeed, by formally recognizing Ottawa's power to set "national
objectives", the section could actually encourage the federal
government to tighten the conditions it imposes on existing shared-cost
Third, section 106A would do nothing to curb federal spending
outside the context of shared-cost programs. Thus if Ottawa wished
to avoid the new limits on shared-cost programs, it could establish
spending programs of its own. Alternatively, it could use the
device of tax expenditures in an effort to avoid limitations imposed
upon it by the proposed amendment.77
At best, therefore, section 106A might marginally enhance provincial
autonomy over policies falling within provincial legislative jurisdiction.
At the same time, it would do little if anything to strengthen
political accountability. By leaving political responsibility
diffused between two orders of government, the Accord would continue
to leave voters in doubt as to whether the deficiencies of a shared-cost
program - even one initiated by a province - lie in the provincial
or federal aspect of its design and implementation.
What is needed is a more radical and comprehensive approach. First,
conditional transfers between governments should be constitutionally
prohibited, and the tax room currently required to fund such transfers
given over to the government with legislative jurisdiction. Second,
federal and provincial governments should commit themselves to
a joint initiative aimed at eliminating the use of other conditional
grants, loans and tax expenditures for the promotion of policies
that fall outside their respective legislative jurisdictions.
Third, the federal government's commitment to regional equalization
of tax revenues should be spelled out more specifically in the
Constitution. Finally, formal procedures for constitutional amendment
should be made more flexible.
us consider each of these proposals in turn. The first is directed
at eliminating the spending mechanism that is most destructive
of provincial autonomy and political accountability: the conditional
transfer from the federal to provincial governments. Conditional
transfers are particularly pernicious because they do not use
federal spending to address social conditions directly; rather,
they use it to influence the exercise of regulatory authority
by the other level of government. The disruptive potential of
eliminating these transfers would be great if not accompanied
by specific guarantees ensuring the continuity of the programs
that they fund. However, this danger would be substantially reduced
if the federal government were required to turn over to the provinces
the tax room it currently occupies to fund such transfers. As
a further hedge against political disruption, provinces should
be required to continue programs in accordance with federal conditions
until after a provincial election. This would ensure electors
an opportunity to express their views before any provincial government
decided to abandon or substantially alter an existing program.
second proposal seeks to place some political limits on the use
of other conditional spending programs. It would entail the establishment
of an intergovernmental agency with powers to prevent federal
and provincial governments from employing such programs to influence
policies beyond their respective legislative jurisdictions. Such
an agency, for example, would require the phasing out of federal
student loans and provincial foreign aid. Again, to minimize political
disruption, the funding government would be obliged to transfer
the necessary tax room to the government with legislative jurisdiction.
In return, the latter would be required to assume responsibility
for the program and to continue it in its present form until after
a general election.
should this agency be political rather than judicial? The answer
lies in the complexity of current fiscal arrangements and in the
difficulty of distinguishing between spending that is aimed at
a legitimate federal or provincial purpose and that which is not.
Unlike conditional transfers, which invariably flow from the federal
government and which relate to a discrete group of policy initiatives,
other conditional spending initiatives comprise a complex web
of federal and provincial grants, loans and tax expenditures.
The task of disentangling this web requires political sensitivity
and skill. It is a job that must be given to a body that is capable
of comprehending the complexity of the task and that possesses
the means to respond in a constructive and sophisticated fashion.
Moreover, while programs funded by means of conditional transfers
have been generally recognized as falling under provincial legislative
jurisdiction, the jurisdictional pedigree of many other spending
initiatives is problematic. This is especially true of tax expenditures.
Is a particular expenditure aimed at promoting tax equity or a
social policy that falls within provincial jurisdiction - or is
it aimed at both? In many cases, the answer will turn on questions
of political judgment. To leave determinations such as these to
a detached adjudicative agency with limited remedial powers would
be to invite ongoing political instability and disruption. The
only practical solution is to entrust these determinations to
a body that fully understands the practical implications of its
actions and has the capacity to make decisions and recommendations
that will produce jurisdictional disentanglement at the least
third proposal is designed to ensure that the elimination of conditional
transfers and other conditional spending programs does not diminish
the federal government's commitment to equalizing tax revenues
on a regional basis. It would require the inclusion in the Constitution
of a specific formula guaranteeing that current levels of regional
equalization, including those embodied within existing conditional
grant programs, be maintained or enhanced. This requirement could
be met by means of unconditional transfers to the provinces or
other initiatives whose effect would be to equalize revenues on
a regional basis.
three proposals would go a long way to restoring provincial autonomy
and political accountability to Canadian federalism while protecting
the principle of regional equalization. But there is more to be
done. If governments are to be deprived of spending as an informal
means of constitutional adjustment, it is essential that formal
amendment procedures be made more flexible. In this respect, the
Meech Lake Accord marks a step backwards. First, it would impose
a unanimity requirement on certain constitutional amendments affecting
national institutions and on amendments providing for the creation
of new provinces.78
Second, by providing greater compensation to provinces that opt
out of other amendments, the Accord would make it more difficult
to obtain the required measure of provincial consent under the
general amendment formula.79
The inevitable impact of embracing such constitutional rigidity
would be to increase the pressure upon governments to resort to
spending and other expedients to overcome jurisdictional barriers.
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