Policy & Politics: From MacEachen to Harper

THE HONOURABLE LOWELL MURRAY P.C.
POLITICIAN AND ACTIVIST

11 October 2012

Allan J. once accused me of being what he called a “provincialist.” I recall the occasion vividly. It was in Pakenham, Ontario, in the kitchen of my house, while he poured himself a drink of my Scotch. Appropriately enough, it was of the Famous Grouse. I replied then, and repeat now, that I am no more “provincialist” than he is and there is an extensive record in his case to substantiate this. I do confess an instinctive bent towards the Principle of Subsidiarity which those of you of a certain age will recognize as coming from Quadragesimo Anno, one of the Social Encyclicals that I learned about here at St. F.X. under the late Dr. Doris Boyle. As defined by Pius XI the Principle of Subsidiarity holds, in part, that nothing should be done by a larger and more complex organization which can be done by a smaller and simpler organization. The principle has emerged in public discourse in Canada from time to time, notably in Quebec where it has been invoked by both federalists and souverainistes but, alas, never, in that secular society, with attribution to poor old Pius XI.

(John Paul II put his own “spin” on this 10 or 12 years ago in his Encyclical Centesimus Annus, celebrating the hundredth anniversary of Rerum Novarum. The larger unit (in our case the central government) should not interfere in the internal affairs of the smaller unit but come to its assistance and coordinate its efforts with the rest of society, always with the common good in mind. It sounds like a good description of Canadian federalism when it is working as it should.)

I do not mean to imply that Allan J. is unfamiliar with sacred writings. On the contrary - a bit later he invited me to lunch at The Mill Restaurant on Wellington Street in Ottawa. I thought his purpose was to discuss the business of the Senate. Instead, we were no sooner seated at table when he launched into a learned commentary on the Lutheran doctrine of salvation by grace through faith alone. It will surely cause no scandal in this sophisticated and ecumenical gathering to report that he spoke quite favourably of it. At the time, I was more interested in the salvation of the Tory Party; and perhaps he should have been more concerned about the salvation of the Liberal Party.

It was only much later, and upon reflection, that it occurred to me that perhaps he was speaking about political salvation, but doing so by way of metaphor, allegory or even parable. As the Right Hon. John Turner was once heard to remark, “a conversation with Allan J. is the ultimate existential experience.”

To come back to the issue he raised in my kitchen, it needs to be said that most of Canada’s major social policy achievements, including those of the 1960s of which Allan MacEachen was author and/or lead federal minister were also remarkable achievements in Canadian federalism. They have remained so through the half-century of adaptations, improvements and successful implementation, mostly by provincial governments, down to this day, early disagreements and later tensions notwithstanding. Prime Minister Pearson gave a name to his innovative response to the social challenges that his government addressed. He called it “co-operative federalism.”

In practice this meant that social policies which consisted of straight income transfers to persons should be designed and implemented at the federal level. Programs involving the delivery of services or affecting direct provincial jurisdictions would be designed and implemented at the provincial level. For these, there were federal financial assistance, provisions ensuring portability of benefits and broad, pan-Canadian framework criteria. In the case of Hospital Insurance and Medicare, for example, these included universality of coverage, comprehensiveness of services covered, public administration and no user charge or extra billing at the point of service. There was room for variation. Obvious asymmetry exists between the Canada and Quebec Pension Plans. These principles are reflected in the Guaranteed Income Supplement, the Canada Assistance Plan and Medicare, three programs carrying the signature of Allan MacEachen as minister responsible. The approach was fully consistent with the Principle of Subsidiarity.

Permit me to dwell for a moment on one program in particular, MacEachen’s Canada Assistance Plan, because my direct experience with it was on the other side of the federal-provincial table, in the mid-1970s when I was Deputy Minister to Premier Hatfield of New Brunswick. Under the Canada Assistance Plan, Ottawa paid half the cost of “shareable” items subject to certain conditions such as a “needs test” (the CAP was part of the government’s “war on poverty”), and there was provision for assistance to the “working poor” as well as other important policy improvements.

What I remember about it from the provincial side was that every idea coming to cabinet for a new or improved social initiative was considered in the context of whether the proposal would be eligible for 50 per cent cost sharing by MacEachen and the federal government, and if there was any uncertainty, how to redesign the initiative to be sure it fit the criteria. Of course this created some heartache for the fiscal managers in Ottawa, and I am told that the legislation had barely received Royal Assent when Finance Department officials started a campaign to scupper it.

On the positive side, however, the design of the Canada Assistance Plan provided a terrific incentive for provinces to innovate and, in a working partnership with Ottawa, to tailor social programs to the considerable differences in economic and social needs and priorities across the country. In New Brunswick I seem to recall we introduced new initiatives aimed at the rehabilitation of young offenders; we financed day care to let poorer parents take advantage of job opportunities; and there were other improvements to meet particular social conditions and priorities in our province.

The Canada Assistance Plan finally fell victim to the spending restraint of the early Chrétien years and was changed from a cost-shared to a block-funded program, being folded into the Canada Social Transfer (CST). I doubt whether the change has been a great improvement, except in the eye of the federal, i.e., Finance department, beholder.

In passing, I may note that during most of the 17 years of the Hatfield government in New Brunswick, the social policy official whose policy and administrative skills and creative talent were deployed most effectively in designing new and improved programs tailored to New Brunswick conditions was a St. F.X. graduate, Bill Morrissey, who at various times during those years was Deputy Minister of Social Services, Deputy Minister of Health and head of the social policy unit in the cabinet secretariat. Bill was born in Saskatchewan and graduated here in 1957. Both Bill and his wife, the daughter of Geology Professor Don MacNeil, sadly died too young.

The fact that social conditions and needs may be quite varied from one province to another, and the need to take account of this when developing federal social policy was brought home to me again much later when as a minister in the Mulroney government I broached with the provinces the subject of a possible federal-provincial child care program. Premiers and provincial ministers, while not unwilling to consider cost-sharing in a new social program, took the occasion to remind me forcefully of existing and long standing problems and of the need for more and better federal financial and other help in tackling these. There had been a heavy influx of Asian immigrants to British Columbia and the integration programs, not to mention the availability of classes in English as a second language in Vancouver schools, were severely stretched – what was Ottawa, whose immigration policies were directly responsible for this, going to do to help? In some Prairie Provinces, the reproach that confronted me was that federal governments for years had been “nickel-and-diming” the provinces and shrugging off responsibility for off-reserve aboriginals and their generally awful social conditions in those provinces.

In Newfoundland, I was reminded of a higher than average adult illiteracy rate at the time; of the misery caused by the collapsing cod fishery; of the need for more training dollars to equip Newfoundlanders for the coming resource boom; or of the 150 Tamil refugees who had been brought ashore in two lifeboats in 1986 and were being accommodated in Newfoundland motels and served by social programs at the expense of the provincial government. “You want us to cost-share daycare? What are you going to do about these other problems, many of which your federal policies have helped create?”

In those conversations with provincial ministers, I could have argued that child care and early childhood learning programs would in the long run go some way to solving some of the very problems they had identified – integration of immigrant children, improving literacy rates among the poor, even the economic and social predicament of aboriginals. However the purpose of discussions with provinces is not to win an argument but to open the way for collaboration on problems that are the responsibility of all governments.

Accordingly, Prime Minister Mulroney pressed the daycare issue at federal-provincial First Ministers’ conferences in 1986 and 1987, and in 1988, he brought in legislation which passed the House of Commons but died on our Senate Order Paper when the 1988 election was called.

The issue was revived under the Chrétien government in 2003, again in a federal-provincial-territorial framework. By 2005, the Hon. Ken Dryden, minister in Prime Minister Paul Martin’s government had negotiated agreements in principle with all provinces totalling $5 billion over a five-year period for early learning and child care.

The Harper government was elected in January 2006 and almost immediately cancelled those Agreements, replacing them with a taxable, $100 monthly payment for children under six years of age. There is no shortage of good evidence as to the benefits of early learning and child care programs for children, especially for children who in one way or another are disadvantaged and lack full opportunity to develop their potential; as well as for families where both parents – or a single parent – work outside the home, and therefore for the country’s economic and social well-being. However the present government has apparently adopted the belief of some of its hard-line supporters that government-sponsored daycare is morally objectionable and so there will be no such national, federal-provincial program in the near future.

Whether the approach to developing social policy created in the 1950s and ‘60s is called “co-operative federalism”, or described as some scholars would have it as “executive federalism” or “federal-provincial diplomacy,” most federal governments in our lifetime have found that it is the only way to get things done. John Diefenbaker, when he went back as Opposition Leader after 1963, railed against opting-out legislation and tax point transfers to the provinces. As Prime Minister, however, he had presided over what I believe to be the very first tax point transfer with opting-out in order to accommodate Quebec’s constitutional objections and enable federal grants to universities in that province – a policy that had been initiated by the St. Laurent government. He also managed to get the Liberals’ National Hospital Insurance Plan going by removing the condition set by his predecessor that six provinces had to be on board before federal financial support would be provided to any participating province.

That formula, requiring a majority of provinces to agree to the launch of a new program, was conspicuously absent when Medicare was brought in. Provinces came in as and when they were ready to implement, New Brunswick being the last, in 1971. However, the six-province condition reappeared in the Social Union Framework Agreement negotiated by Prime Minister Chrétien; and again in Prime Minister Harper’s doctrine of “open federalism” which, as fleshed out in one of Jim Flaherty’s early Budgets, is virtually identical to the Chrétien Framework agreement.

Prime Minister Trudeau enjoyed – and I think “enjoyed” is the right word – a reputation for being quite muscular in his dealings with the provinces. In the practice of government however he was a lot more careful and nuanced, in the tradition established by Diefenbaker and Pearson. The first of the modern federal-provincial agreements on immigration was negotiated by the Trudeau government with the Parti Québécois government of René Lévesque; and the previously uniform, pan-Canadian program of family allowances became a federal program provincially tailored to Québec’s and Alberta’s needs and priorities as a result of negotiations between the Trudeau government, the first Bourassa administration in the early 1970s and the Alberta government of Peter Lougheed.

Co-operative federalism works. It is interesting to note that the term “cooperative federalism”, coined by Mr. Pearson in 1963, was accorded a constitutional or at least a judicial blessing last month when the Quebec Superior Court invoked it, ruling in favour of Quebec’s suit to stop the federal government from destroying the Long Gun Registry data relating to that province. Co-operative federalism works. Nevertheless there are still some impatient people and pundits, or advocacy groups, who believe that a given problem would be solved swiftly and for all time if only the federal government would “bring down the hammer” on the provinces, through its residual constitutional authority for “Peace, Order and Good Government”, or the Commerce power, or its spending power.

In the Mulroney government we had no doubt of our constitutional authority to negotiate the Free Trade Agreement with the United States. As a practical matter however and when it would come to implementation, the provinces had to be onside and we kept them closely onside every day of the negotiations.

The Acid Rain Agreement with the United States would not have been possible if the Mulroney government had not first achieved firm commitments in an Agreement with the provinces; and no effective attack on environmental problems now or in the future will be possible without intergovernmental cooperation.

As I have tried to recount, the idea of social policy as a partnership between the federal and provincial jurisdictions has endured through more than a half century of political and economic change. Today, the idea and the reality of this partnership is facing challenge on two fronts.

First, there is a new government in Quebec that is not much interested in the practice of cooperative federalism, still less in the Canadian social union. On the contrary they will try to prove, by a series of demands and provocations, that Canadian federalism does not work and cannot meet the aspirations of Quebecers. The good news is that Parti Québécois governments from 1976 to 1985 and from 1994 to 2003 – some 18 years in total – did not succeed in making that case. For various good reasons there is less support in Quebec than is sometimes supposed for the idea of an Ottawa withdrawal from social policy or from cultural programs.

Needless to say, this is no justification for complacency. In the days following the Quebec election last month, some commentators urged the federal government to adopt a policy of studied indifference to the Quebec government strategy. This would be a serious mistake. It would demoralize Quebec federalists. And whatever some commentators in the rest of Canada may say now, they would soon demand that their government – in fact all federal parties – respond and speak up for the Canadian federation and for Quebec’s special place in it.

The second challenge arises from the present government’s approach to social policy which is narrowly focussed on limiting Ottawa’s costs and liabilities and doing so in a way that deliberately and unfairly targets the less prosperous provinces.

Canadians, especially those who live in or come from the slower growth regions, tend to take for granted and to seldom acknowledge how federal government transfers to persons, such as pensions and Employment Insurance, contribute indirectly to the maintenance of decent incomes and living standards in these regions, and make possible the existence at any viable level of seasonal industries such as fisheries and tourism. Likewise, intergovernmental transfers – Equalization of course, and also transfers for health, post-secondary education and social programs – help maintain national standards and prevent the massive rate of disinvestment, outmigration and depopulation that would occur in the absence of such standards.

Several years ago, the present government began the process of eliminating the Equalization component of the tax point transfers for the Canada Social Transfer and the Canada Health transfer with only ad-hoc, temporary protection for the adversely affected provinces. Moreover they are now subjecting the general Equalization program to two caps, in practice abandoning the principle of bringing the fiscal capacity of the poorer provinces up to a national average.

Over time, this double whammy can lead to only one result – growing disparity in the quality and availability of health care and social services from one part of the country to another. The Canadian social union that emerged from the practice of cooperative federalism by federal and provincial governments since the 1950s will begin to wither away.

That would be the undoing of a great Canadian achievement, built incrementally built by politicians of all parties at both levels of government. Those politicians refused to let themselves be hamstrung either by a focus on minimizing fiscal risks or a rigid view of the constitutional division of powers. Instead, in a series of practical arrangements, they put into practice a broad, farsighted vision of what could be accomplished on a pan-Canadian level in social policy while respecting fiscal realities and constitutional constraints. Among the most important contributors to the realization of that vision was Allan MacEachen.