Successful Counter-Reformation

Article excerpt


ON THE 4TH OF FEBRUARY THEY MET in Ottawa at 24 Sussex Drive. The prime minister and nine premiers signed an agreement on how to manage major social programs. Lucien Bouchard refused to sign, and Jean Charest made it clear that, given this agreement, he too would have refused to sign.

Much in the agreement has been drafted with intentional ambiguity so that divergent interests can give divergent interpretations. There is nothing inherently wrong in using ambiguity to resolve lesser points under negotiation, provided it does not confuse the core purpose at hand. In this case, ambiguity went too far. Elsewhere in this issue, Claude Ryan describes the agreement "as a tong-winded and weak text opening the door to an increased preponderance of the federal government in social policy." I agree.

For readers wanting to analyse in detail this agreement, I recommend Claude Ryan's article. (The text of the agreement forms an appendix to his article.) Ryan may be wrong -- I hope he is. Let me explain, however, why I agree with him.

Two modest Canadian manifestos

Where to begin? A good point of departure is Paul Martin's budget delivered in February 1995. It marked the end to Ottawa's fiscal drift, and the beginning of a credible commitment to cut spending enough to bring the federal books into balance without further tax increases. Since transfers to the provinces are very large, it was inevitable that they be cut, along with most other items in the federal budget. (In 1995, transfers were one quarter of all spending net of debt service costs; in 1999, they remain one fifth.)

In early 1995, most provincial governments were still in a state of denial about the urgency of ending two decades of public sector deficits. Many premiers were genuinely shocked by Ottawa's new course and, upon realizing that Ottawa intended to cut transfers, they decried "deficit offloading." This was an unfair indulgence in fed-bashing. Quite legitimately, Paul Martin maintained aggregate spending on Ottawa's basic social programs -- old age pensions, unemployment insurance and Aboriginal programming. If we set that portion of the budget aside, Martin's cuts in transfers to the provinces were proportionately similar to cuts made to all other budget items.

The offloading charge was unfair. What was fair was the premiers' insistence that Ottawa's unconstrained use of its power to spend on any matter Parliament approved was central to understanding why Canada's senior governments had generated a severe fiscal mess. For decades, federal politicians had used the spending power to extend their presence into any domain whenever they felt that B.C.'s dogwood, Alberta's wild rose, Quebec's fleur de lis or any other local flora were crowding out red maples. Ottawa's use of the spending power had become fundamentally inconsistent with preserving Canada as a federal country with a division of jurisdictions between two orders of government.

If federal politicians were eroding the federal nature of the country, provincial politicians, it must be said, had rarely resisted. When Ottawa offered cash, the provinces took it. The result of all this has been to blur the respective jurisdictions of the provinces and Ottawa, to encourage a kind of political irresponsibility with respect to program outcomes and fiscal accountability. Politicians in Ottawa and the provincial capitals blamed one other for inadequate social programming, and denied their own share of responsibility for the country's fiscal mess. Not surprisingly, Canadians were unable to nail this jelly to the wall.

The importance of Paul Martin's 1995 budget is that he admitted the jelly-like nature of previous federal budgeting. In turn, his fiscal realism catalyzed the premiers to rethink, and admit the extent to which they too had been feeding their electorates artificially coloured gelatin and water.

The most significant initiative the premiers undertook in 1995 was to strike a Ministerial Council on Social Policy Reform, comprising all provinces (except Quebec, which ignored fiscal realities until Bouchard replaced Parizeau). …