Chapter 8 - Federalism

Unitary System

All sovereign authority of that nation-state resides in one governing body (the national government).

• the government may delegate some of its authority to lower levels of government (county, cities) but it decides how much power it will delegate (devolution)

• There may be other governments besides the national gov’t, but they will always be subordinate to the national gov’t (can give and take power away)

• I.e. UK, France, Japan, Sweden

Federal System

• Authority is constitutionally divided between two levels of gov’t

  • Neither level can be understood to have sovereign authority and each receives authority from the constitution (subordinate to it)

• the two levels may share jurisdiction

• I.e. Canada

Section 91

Establishes the exclusive legislative jurisdictions of the federal government

Section 92

Establishes exclusive legislative jurisdctions of the provincial government.

Residual Power

The limited, leftover authority to influence decisions without the ability to control or override those who hold real decision-making power. Concerns the extra-parliamentary wing, which can debate policy and manage party organization but cannot effectively control the parliamentary wing or the party leader.

Concurrent

Areas of jurisdiction where both federal and provincial governments can legislate, but federal law prevails in cases of conflict.

Disallowance

Under section 90, the federal government can annul provincial legislation of which it disapproves. Drafters considered this a substitute for judicial review.

Reservation

Power of a lieutenant governor to withhold royal assent to a provincial bill so the federal government can review it before it becomes law.

Centralization

• Power is concentrated at the federal level.

• The federal government has more influence over national policy, even in areas that are normally provincial.

• Often happens through federal spending power (e.g., using transfer payments to influence provincial policies).

• Example: The federal government setting national standards for healthcare funding, even though healthcare is a provincial responsibility

Decentralization

• Power is spread toward the provinces, giving them more independence.

• Provinces can make more decisions without federal interference.

• Often occurs when the courts or constitutional amendments protect provincial jurisdiction.

• Example: Quebec controlling its own language laws or education curriculum.

Sources of Decentralization

• Constitution (CA 1867): Gives provinces exclusive powers (e.g. health, education), limiting federal control

• Regional diversity: Different economic, cultural, and linguistic interests push power closer to provinces

• Judicial interpretation: Courts have often protected provincial jurisdiction

• Fiscal arrangements: Provinces raise/spend their own revenues and negotiate transfers

• Political pressure: Premiers defend provincial autonomy to gain legitimacy and leverage

Quasi-Federalism (1867-96)

• The relationship between the national and provincial governments was analogous to the colonial relationship between Britain and Canada

• Provincial legislation was occasionally reserved or disallowed, and most of the great initiatives were undertaken by Ottawa, not the provinces

• Courts stay true to the intention of founders and ideas of centralization, but start to see potential of greater provincial jurisdiction

• Projects undertaken by federal gov’t, including Canadian Pacific Railway

Historical Development of Canadian Federalism

1. Quasi-federalism (1867-96)

2. Classical federalism (1896-1914)

3. Emergency federalism (1914-60)

4. “Cooperative” federalism (1960-95)

5. “Collaborative” and “open” federalism (1995-present)

Classical Federalism (1896-1914)

• Clear division of powers between Ottawa and provinces

• Courts (JCPC) protected and expanded provincial jurisdiction

• Provinces gained strength over time (property & civil rights)

• Federal powers like trade & POGG interpreted narrowly

Emergency Federalism (1914-1960)

• Return to centralization from requirement of more central power and control

• Balance of power swung back toward federal gov’t

• Wars, depression required central power and control

• The period between wars was marked by the economic collapse of the western democracies and the massive depression that ensued

• The Great Depression fostered increased centralization because it led to the idea that the purpose of gov’t should be expanded, since it led to bankruptcy

• Constitutional amendments added to federal power

  • Entrenched and first successful constitutional amendment

  • I.e. help people who lose their jobs → OAS (public pensions for old people)

• Abolishment of appeals to the PCO and newly empowered SCC favoured federal gov’t

“Cooperative” federalism (1960-95)

• Provinces expand roles (education, health)

• Courts create more balance between Ottawa & provinces

• Federal gov’t uses spending power to stay involved

• Policies made through negotiation & coordination

• Frequent first ministers’ & cabinet meetings → “age of executive federalism”

‘Collaborative” and “open” federalism (1995-present)

• Since 1995, federal-provincial relations in Canada have shifted toward less rigid, more flexible arrangements

• While the federal government still occasionally collaborates with provinces on shared goals, this is now based on mutual agreements rather than imposed federal norms, seen in areas like environmental assessment, childcare, and temporary foreign workers

• Not finished completely

• Court more balanced, not seeking to favour one level of gov’t or the other

Fiscal Federalism

• Provincial and federal gov’t have constitutionally-bound areas of jurisdiction, but if a gov’t can’t fund programs in its jurisdiction (like healthcare) there is a problem

• The financial relationship between Ottawa and the provinces, including taxation, transfers, and federal spending power

• Divided into three branches: taxation, federal spending power, and equalization payments.

Taxation

Ottawa has broad taxing power (any mode), provinces are limited to direct taxes, giving the federal government long-term financial dominance and creating ongoing tax-room conflicts.

Direct Tax

The taxpayer is taxed directly by the government i.e. income tax

Indirect tax

The tax is not collected directly from the taxpayer i.e. customs duties and excise taxes that are built into the retail price of goods → manufacturer pays tax but then passes it on in the price charged to consumer

Tax Room

The amount of taxation space available before taxes become politically or economically unacceptable.

• Both the federal and provincial governments tax the same bases (income, sales).

• If Ottawa already taxes heavily, provinces have less “room” to raise their own taxes without backlash

Federal Spending Power

Federal government can spend money in areas of provincial jurisdiction, influencing policy outcomes

• Allows the federal gov’t to influence policy in areas that constitutionally belong to the provinces

Conditional Grant

Federal transfer to provinces that must be spent according to federal rules or standards. i.e. in exchange for giving the provinces money to run healthcare, they must respect certain principles, such as the prohibition of user fees

Unconditional Grant

Transfer of a large block of funds to each province, which allows for great provincial discretion in how the monies are spent.

• In response to political pressure from provinces, especially Quebec

• Programs must still meet national standards set by federal gov’t

• Used to finance healthcare. post-secondary education, welfare, social services

• Now through the Canada Health Transfer (CHT) and Canada Social Transfer (CST)

Equalization Payments

Redistribution of federal tax revenue to provinces whose tax revenues fall belong a national average standard in order to ensure that Canadian citizens have roughly the same level of government services and taxation

• Established by CA 1867 → required federal gov’t to provide subsidies to the provinces for the expenses of their gov’ts

• Now entrenched in CA 1982, governed by federal regulation

• Provinces that do not need to receive equalization payments: BC, AB, SK

• Provinces that do: MB, ON, QC, NB, NS, PE, NL

Territorial Governments

• Yukon, NWT, and Nunavut

• Powers are delegated from the federal government, they are NOT sovereign (only provinces are)

  • Federal gov’t is their main source of revenues and thus have ability to change their powers, boundaries, or even abolish them altogether

  • Treated like small provinces

• Structurally similar to the provinces

  • Premier with a cabinet with is accountable to an elected legislature

Municipal Governments

• Creatures of provincial gov’t (Section 92(8))

  • Assigns each provincial legislature sovereign authority over municipal institutions in the province

  • Province determines what powers its municipalities will have, how councils are elected, and geographic shapes

• Create bylaws in key areas that influence everyday life

  • i.e. sidewalk maintenance, recreation

• Seek financial support from federal gov’t for $$$ things

• Restricted to property taxes and license and user fees as forms of revenue

  • Rely on senior levels of gov’t to raise sufficient funds

Indigenous Sovereignty and Self-Government

• Very long history of Indigenous resistance to colonial gov’t 

• Since 1982, a resurgence of self-government agreements between provincial/federal governments and Indigenous nations

• I.e. child welfare (2021), solar energy (2022), mineral rights (2025)

Pressure to Decentralize

• Quebec and prairie provinces generally in favour of more decentralized federation 

  • More power to provinces

• Canada is becoming more decentralized over time

  • 1995 Quebec separatist referendum 

  • Federal debt and deficit

• But there is a lot of pushback against decentralization; concerns about maintaining national standards (healthcare, education, etc.) 

Bicameralism

Power is shared by two separate chambers so that neither can act without the agreement of the other. The House of Commons and the Senate.

First Ministers’ Conferences

Premiers and PM wrangle over financial and jurisdictional questions, however, more rare in recent years

Council of the Federation

• A premiers-only forum to coordinate provincial/territorial positions and respond to federal policies

• Created in 2003

• Includes all provincial and territorial premiers

• Excludes the federal government

• Focuses on issues like healthcare funding, equalization, and intergovernmental relations

• Strengthens provincial cooperation and gives provinces a collective voice when dealing with Ottawa

Asymmetrical Federalism

An approach to federalism in which different provinces could have somewhat different powers

• I.e. Quebec can take greater control of its own affairs while maintaining a more centralized form of federalism in the rest of the country

• Canadian federalism may already be asymmetrical

  • Constitution provides special guarantees for provinces and senate

  • Amending formulas treat provinces differently

  • Federal-provincial agreements involve provinces outside of Quebec

• Unlikely to provide solution to Canadian federalism

Social Union Framework Agreement

A 1999 intergovernmental agreement between the federal government and most provinces that set rules for cooperation on social policy.

• Federal government + 9 provinces (Quebec did not sign)

• Covers social programs like healthcare, education, and social assistance

• Aimed to limit unilateral federal action and promote collaboration

• Required consultation before Ottawa introduced new social programs using its spending power

• An example of collaborative federalism

• Shows provincial efforts to constrain federal spending power