OUR CONSTITUTIONAL CRISIS [CREATED by the sponsorship scandal] is rapidly becoming systemic: Atlantic provinces discovering new energy wealth are seeking to patnate this wealth for their own development alone. Hard-pressed Ontario is ... raising fundamental questions about its historic role in equalization. Alberta has its own concerns with equalization. Saskatchewan wants to renegotiate its deal. Strapped municipalities - many of them larger than some provinces - are asking where they fit ... Successive federal and provincial governments have compounded the problem with case-by-case improvisation.
- Michael Ignatieff,
York University, April 2005
ELSEWHERE IN THIS ISSUE, TWO QUEBEC politicians debate the 2004 health agreement with its Quebec-specific addendum. Serge Joyal argues that Paul Martin is threatening the country's survival by opening the Pandora's box of asymmetric federalism; Benoît Pelletier disagrees. At the time of writing (late April), the sponsorship scandal has overwhelmed that particular debate. The scandal has decimated the credibility of Martin's government: the Bloc has a commanding lead among Quebec voters, and the Tories enjoy an overall plurality among voters in the nine other provinces.
Adding to Martin's woes, some senior Liberals have been urging historian and diplomat Michael Ignatieff to return from his comfortable exile at Harvard and offer himself as prospective leader should Martin stumble and fall. Ignatieff is clearly tempted. Among his exploratory forays into domestic Canadian politics this spring was a major address delivered at York University. In it he described current events as the "perfect constitutional storm."
Without naming him, Ignatieff included Martin's penchant for ad hoc improvisation as having contributed to the storm's intensity. He then drew a parallel with fiscal crises in the 1930s, which virtually bankrupted several provinces and motivated the work of the Rowell-Sirois Commission. Ignatieff wants a new royal commission "to think long and hard about how to renew our federation's finances in the 21st century."
By the time anyone reads this, Martin's government may or may not have survived the "perfect storm"; Jack Layton may or may not be first mate; Stephen Harper may or may not have taken over the helm. Whoever winds up on the bridge, Ignatieff is right to insist that one implication of the sponsorship scandal - there are others obviously - is to signal a breakdown in consensus on how to finance the country.
For us in western Canada, the sponsorship scandal is of a piece with Brian Mulroney's awarding the CF-18 contract to Montreal-based Bombardier over the technically superior Winnipeg-based contender in 1986. That fiasco breathed life into Preston Manning's nascent Reform Party; the sponsorship scandal is doing something similar to Harper's Tories. The partisan ad hockery in these deals sent a clear message: federal politicians make up the rules as they go along when it comes to the regional distribution of spending.
UNTIL THE 1960S, GOVERNING IN CANADA and the United States was similar inasmuch as both countries required their citizens to pay similar shares of income as taxes. The countries diverged in the 1960s as Ottawa and the provinces opted for generous European-style social programming. Since then, the Canadian tax/GDP ratio has risen by 15 percentage points, and for the last two decades has been roughly 10 percentage points higher than the American ratio. Central to this evolution in Canada was intergovernmental agreement on several large rule-based transfers. The keystone was equalization, something sufficiently important to figure in the 1982 constitutional patriation package.
The compromises of the 1960s and 1970s as to who - Ottawa or the provinces - should undertake which activity, and who should pay, have slowly lost credibility. Prior to 1995, the breakdown manifested itself in the refusal of Canadian politicians to balance their books and undertake needed program reform. …