Step in the right direction.

IN FEBRUARY 1999, OTTAWA AND NINE PROVINCES subscribed to an agreement concerning management of the Canadian social union. Quebec refused to sign. Claude Ryan's article on all this in the last issue of Inroads (No. 8, 1999) has sparked a lively debate. Lengthy excerpts from the article were reprinted in Le Devoir; Quebec columnists discussed it, and federal cabinet ministers responded. Finally, I note, it prompted Andre Burelle to initiate an exchange of correspondence with Claude Ryan (which has been translated and reproduced in the current issue of Inroads).

Mr. Ryan is a significant representative of the federalist camp of Quebec nationalists who, in his words, advocate the growth of Quebec within a renewed Canadian federation, and as such his views should be taken very seriously by federalists in the rest of Canada. While Mr. Ryan's position is often seen as falling between the extremes of status quo federalism on the one side and secession and sovereignty on the other, it can also be distinguished from other views in the primacy he places on ends over means. For Mr. Ryan the goal is Quebec's continued growth as a dynamic and unique French-speaking North American society. He would prefer this evolution to occur within a larger Canadian federation rather than as a separate nation-state, but this is of secondary importance.

In the article, Claude Ryan carefully acknowledged his own long experience with the Quebec nationalist movement as well as his current position "as an independent observer free from the responsibilities and constraints of office." In this same spirit, I want to come clean with the reader. I was a participant in the social union discussions, from the time when the idea was first raised in the spring of 1995 until the Social Union Framework Agreement was signed on the 4th of February 1999. I was first involved as Saskatchewan's deputy minister responsible for the Saskatchewan negotiating team and later, behind the scenes, as Premier Roy Romanow's policy advisor and cabinet secretary. Obviously, I cannot be an independent observer. Moreover, unlike Mr. Ryan, I am somewhat constrained in what I say by my current responsibilities and office. Nonetheless, to the extent that I can, I would like to state some of my own views concerning the Social Union Framework Agreement (SUFA) and offer a critique of some of Mr. Ryan's assertions. In the process, I also set out what I think is the potential of SUFA in terms of the future of the Canadian federation.

The nature and form of the Social Union Framework Agreement

With its focus on process rather than outcomes, SUFA is in reality a coordination protocol between the two constitutionally recognized orders of government. It is a compact -- a "code of conduct" if you like -- on how the partners within the federation are expected to behave in the future. The principal strength of the agreement is that it recognizes the degree of interdependence between the central and provincial governments in the conception, funding and delivery of social programs to Canadian citizens.

As a purely administrative agreement, SUFA does not change one line in the constitution. Therefore, contrary to Mr. Ryan's view, it would have served little purpose -- other than to add some arcane constitutional language -- to "restate the guidelines concerning the division of powers between the federal Parliament and the legislative assemblies of the provinces and territories in the areas of education, health and social services." Provincial and federal negotiators understood the division of powers as it relates to social policy, including the historic differences of interpretation. With past constitutional failures clearly on their minds, first ministers mandated their negotiators to work within the framework of the constitutional status quo.

Given the extreme constitutional fatigue among the general public -- to say nothing of that among the politicians themselves -- this was a good thing. But the more progress made on actual programs (the National Child Benefit of 1996 being the chief example), the more obvious became the need for clarity on how the two governments should work together in the future design, delivery and financing of social programs. Since such a coordination protocol hardly seemed a burning issue for most Canadians, however, the purpose of SUFA had to be laid out as simply as possible. This was consistent with the drafting of the agreement as a whole, most of which is framed in relatively simple, accessible and non-technical language.

It was the first ministers themselves who insisted the document be tailored for the general public as much as for the governments concerned. Throughout the almost four years of negotiation, provincial premiers had expressed grave concerns about the specialized intergovernmental language used in the texts produced by their officials and cabinet colleagues on the Ministerial Council on Social Policy Reform and Renewal. They were very concerned, for example, about release of the 1995 Ministerial Council's Report to Premiers because most felt the stilted, bureaucratic language would confuse the public and upset the media. By the later stages of the SUFA negotiations, towards the end of 1998, the premiers made it clear they wanted a simple and accessible document, a clear departure from the 1995 Report to Premiers and what they viewed as its "clunky intergovernmental phrasing." This was, of course, easier to ask than to deliver.

The complex negotiations led to fragile compromises, and some of the "intentional ambiguity" of SUFA, as John Richards (1999) puts it in his editorial in last year's Inroads, overcame what would otherwise have been divergent viewpoints. Whether this ambiguity went too far, or whether simplicity of language overwhelmed the needs of precision, depends on your point of comparison. Both Mr. Richards and Mr. Ryan, who would have preferred more explicit and far reaching limitations on Ottawa's role in social policy, clearly believe that it did. I would argue otherwise.

Most of the articles of the agreement are at least as precise as the clauses in the Charlottetown Accord, a constitutional agreement in which a much higher standard of precision of language usually prevails. But on this point, I would readily admit that reasonable people can disagree. The truly important debate concerns Mr. Ryan's view that any alleged ambiguity automatically benefits Ottawa as opposed to the provinces. There is no more logic or evidence supporting this position than the opposing view, held by old-style centralists and organizations such as the Council of Canadians, that SUFA takes power and responsibility away from Ottawa and gives it to the provinces.

Neither interpretation is correct. The agreement simply assumes that, while most social program delivery lies in the hands of the provinces, provincial policies and programs can have significant extra-provincial impacts. While respecting the constitutional division of powers, this interdependence calls for constructive federal-provincial collaboration. In this sense, SUFA avoids a jurisdictional or "division of powers" perspective in favour of a service delivery approach.

The mobility principle

The ability to move throughout Canada without fear of provincial residency requirements for access to social or health services, or punitively high differentials between fees charged to in-province and out-of-province post-secondary students, should be a basic right. Anything less makes a mockery of the phrase social union. While Mr. Ryan supports the general principle of mobility within the federation, he nonetheless concludes that, "in the areas linked to its distinct character," a Quebec government of any ideological stripe would be unwilling "to cede to an outside authority its constitutional jurisdiction" in education, health and social services. While we would need to clarify what this means, I suspect that much of what falls under the current purview of SUFA could fall within this exempted category. In other words, if future Quebec governments follow Mr. Ryan's line of reasoning, they would not be prepared to work collaboratively with their partners in the federation determining the national standards and portability mechanisms to ensure the principle of mobility.

On this point, I find myself in complete agreement with Andre Burelle's argument, made last July in Le Devoir. (See the translation of this article, the first item in the exchange between Andre Burelle and Claude Ryan.) Section 36 of the Constitution Act 1982 commits both orders of government to "promoting equal opportunities for the well-being of Canadians" as well as "providing essential public services of reasonable quality to all Canadians." As Mr. Burelle aptly puts it, Quebecers cannot say yes to the equalization payments that allow its provincial government to provide reasonably comparable public services while saying no to jointly determined minimum standards that define comparable services across the country. And Quebecers cannot say yes to mobility within the Canadian social union while refusing to guarantee Canadian citizens, residing in Quebec, services equivalent to those offered in their province of origin.

Moreover, SUFAs requirements on mobility are hardly onerous. Governments are required to eliminate "residency-based policies or practices which constrain access to post-secondary education, training, health and social services and social assistance" except where the retention of the restrictive policy or practice can be "demonstrated to be reasonable and consistent with the principles of the Social Union Framework." To offer but one potential example: university tuition fees. Few doubt that Quebec's current differential tuition policy (very low fees to Quebecers, higher fees to non-Quebecers) would be considered legitimate as long as out-of-province tuition fees are not out of line with fees in the rest of the country.

The Agreement also requires governments to come into full compliance with the mobility provisions of the Agreement on Internal Trade by the 1st of July 2001. Given that the AIT was first signed in 1994, this is hardly an aggressive timetable. And whatever political difficulties individual provinces may have in meeting this requirement, I expect that most Canadian citizens, including most Quebecers, would prefer to have fewer obstacles to gaining their livelihoods in other parts of the country. A majority would, for example, like to see mutual recognition of the qualification standards for trades and professions. But Mr. Ryan's argument would likely prevent this from happening in many, if not most cases, because successive Quebec governments have traditionally viewed labour market issues as critical to Quebec's distinctiveness, and therefore to be protected from any standards and portability mechanisms that might be negotiated among the partners in the federation.

Public accountability and transparency

Mr. Ryan takes a nuanced position on the respective commitments made by the two orders of government towards achieving accountability and transparency. If they are "interpreted as leading to increased cooperation between governments, in the full respect of the jurisdiction of each and minimal bureaucratic entanglements," then such commitments are fine. But if the accountability provisions produce "expensive and complicated new mechanisms for gathering and interpreting statistics," then they will -- inevitably in his view -- "lead to the federal bureaucracy's seeking to exercise greater control." Once again, Mr. Ryan assumes that the federal government will use every possible avenue to usurp provincial initiative and control. He imputes no similar motive to the provinces.

I think this is a perverse and inaccurate view of federal-provincial dynamics. Provinces too have powerful interests, and are predictable and tenacious in pursuing them in dozens of intergovernmental venues. Moreover, the history of the federation over the last 30 years has, on balance, tilted towards greater decentralization. If you examine basic indices such as the allocation of public sector revenues between the federal and provincial orders of government, both before and after transfers, the provincial share is large relative to other federations (Marchildon, 1995). Moreover, it has grown over time. But all such arguments miss the main point. SUFA is about coordinating the existing and future activities of the senior orders of governments, not about changing or rebalancing the existing distribution of powers and responsibilities.

SUFA and constructive entanglement: Towards a codecision paradigm

Here again, I can only seek to reinforce what Mr. Burelle has argued. Rejecting the notion of federal hegemony over social policy through Parliament unilaterally defining national standards, Mr. Burelle has put forward a codecision or codetermination model in which the partners in the federation jointly establish common objectives and minimum standards. In areas of exclusive provincial jurisdiction, for example, Mr. Burelle would have the provinces negotiate the standards and Ottawa use its spending power to enforce the standards. In areas of mixed or concurrent jurisdiction, both orders of government would set national standards. In both cases, such standards could be negotiated through a Council of First Ministers with weighted voting rules set by the members of the council.

To ensure public accountability and ensure against the worst excesses of executive federalism, however, I would add a process for democratic approval in the home legislatures of the governments involved. While this poses complexities and feedback loops that boggle the imagination, the increasing importance of the decisions made by such a council will produce demands for some degree of democratic oversight through existing federal and provincial Parliamentary processes.

I believe that SUFA is a modest but nonetheless significant step in the direction of a codecision paradigm. Given the extensive responsibilities of the provinces for social policy -- in constitutional, political and administrative terms -- the federal government should not be able to impose national principles or standards unilaterally. Moreover, as both Mr. Ryan and Mr. Burelle point out, unilateralism is contrary to the federal principle of nonsubordination of one order of government to the other. Finally, relative to models inspired by extreme centralism or decentralism, and their clarion call for disentanglement, the codecision model better accounts for the large degree of interdependence between the central and subnational governments in modern government service delivery.

A codecision model is a kind of "constructive entanglement" where federal-provincial collaboration in social policy funding and formulation (and in rare cases, in service delivery) is encouraged in cases where neither level of government can be as effective acting alone. This model, as proposed by Premier Romanow (1998), accepts the central government's role in keeping the social union glued together under the pressures posed by globalization, but it also respects the provinces' historic role in social policy innovation and program implementation. While respecting the existing division of powers, the principal goal is to deliver the most effective social programs possible at sustainable levels of taxation. I am not suggesting here that the vast majority of what we call social policy should be the subject of federal-provincial collaboration -- although I do argue that social program and policy interdependence has grown rather than diminished over the last half century.

Does Mr. Ryan accept the interdependence argument? Perhaps in principle, but he seems much more concerned about the sovereignty of the provinces in social policy, and the alleged intrusion of the federal government on provincial responsibilities and prerogatives, than he is about the effectiveness of federal-provincial collaboration in any individual case. More importantly, he argues that Quebec, as the principal home of one of the two founding nations of Canada, is unique among provinces in terms of protecting and promoting the language and culture of Quebec. In his view, this uniqueness demands more latitude in the exercise of its sovereign powers under the constitution than is desired by other provinces. As a consequence, he is strongly in favour of asymmetrical federalism, and strongly against the use of the federal spending power in relation to Quebec. There is, as I have previously argued (Marchildon, 1998), considerable merit on the language side of this argument, but I question whether it has as much merit when applied to social policy.

A little history ...

The spending power refers to the power of Ottawa to transfer money to individuals or provincial governments for purposes which lie outside the normal constitutional authority of the central government. The spending power is not an explicit part of the Canadian constitution. It has been inferred from various other provisions in the Constitution Act, 1867. These confer on the federal Parliament the right to legislate in relation to public debt and property, to raise money by any mode of taxation, to create a Consolidated Revenue Fund, and to appropriate funds. An important ingredient in building the Canadian postwar welfare state, the use of the spending power has been controversial from the beginning.

In 1945, at the Federal-Provincial Conference on Reconstruction, Ottawa put forward a series of sweeping social policy proposals. The comprehensive federal plan included:

* a federal-provincial health insurance scheme wherein 60 per cent of hospital and medical care costs would be assumed by Ottawa;

* a federal-provincial shared-cost plan for the unemployable (above and beyond unemployment insurance, which had already been implemented by Ottawa alone); and

* a national pension plan for everyone over 70 years of age, supplemented by a federal-provincial shared-cost program for the needy between the ages of 65 and 69.

Arguing that the constitutional division of powers did not, and should not, prevent the two orders of government from collaborating in the delivery of this comprehensive new welfare state out of the ashes of the Great Depression and the Second World War, Ottawa was prepared to use the full potential of its spending power. Ottawa's principal ally at the time was the recently elected CCF government of Saskatchewan. As the country's sole social democratic premier, Tommy Douglas supported most of Ottawa's objectives. But he had some very substantive ideas of his own as to how the welfare state could be constructed and he wanted the conference to refine and improve the design of Ottawa's proposed package of reforms. Instead, the discussion quickly turned to the jurisdictional concerns of Quebec and Ontario, particularly as they related to taxation. Both provinces .joined forces to defeat the proposal on the basis that it would result in an overly centralized federation.

The rest is, as they say, history. Unable to secure intergovernmental agreement for a national health insurance plan, the Saskatchewan government was forced to proceed on its own with a much more modest hospitalization plan in 1947. It took another 15 years before the province, again acting on its own, introduced a more comprehensive medical care insurance system, comparable to what both Ottawa and Saskatchewan wanted in 1945. The outcome of the 1945 conference also forced Ottawa to adopt a more incremental approach to social policy. Shared-cost programs underwritten by the federal spending power were initiated in a slow and piecemeal basis. As a consequence, the so-called welfare state took decades rather than years to construct.

The "wide-ranging social security net" eventually created in Canada during these postwar decades would, Mr. Ryan readily admits, have been impossible without the "leadership of the federal government." Second, he accepts that the federal spending power was very useful -- perhaps even necessary -- for a postwar Canadian government wanting to respond to the challenges of the country as it emerged from the Great Depression and anxious to promote equal opportunity for all Canadian citizens. He refers to the commissions and studies that advocated a more activist central government in alleviating the risks of an advanced industrial society including unemployment, accidents, sickness and poverty in old age, as well as improving accessibility to better education. Given the consistent opposition to progressive social policy by the Duplesis government -- a government which Mr. Ryan consistently took to task in his texts of the time -- Quebec added little to the debate until the Quiet Revolution of the 1960s.

The federal spending power and Mr. Ryan's unconditional right to opt out

I agree with Mr. Ryan that the provisions covering the federal spending power are the most controversial of the agreement, not only for Quebec but also for a majority of the provinces. He readily admits that a spending power is an essential feature in all federations. Ron Watts' (1999) recent study of the spending power in diverse federations from the United States and Germany to Belgium and India has demonstrated this to be so. But Mr. Ryan shares Quebec's traditional opposition to Ottawa's use of the spending power unless it is accompanied by an unconditional right for Quebec to opt out of national shared-cost programs with full compensation. Beginning with the Lesage government, successive Quebec administrations have insisted on the right to opt out of such programs, with full financial compensation.

The Canada/Quebec Pension Plan arrangement of 1964 is probably the most famous early negotiated opt out. But efforts to get the full unconditional version of the opt out written into a new constitution failed time and time again, from the Victoria Charter of 1971 to the Meech Lake Accord in the 1980s and Charlottetown in the early 1990s. Now, SUFA, a non-constitutional agreement, has tackled this thorny issue. While not granting Quebec or any other province an unconditional right to opt out, it is a substantial improvement over a status quo in which the federal government has been unconstrained in its use -- and withdrawal -- of federal funding for social programming. At least in cost-shared and block funded programs, the federal government is henceforth expected to respect provincial jurisdiction and work cooperatively with the provinces and territories in establishing new initiatives in heath care, post-secondary education, social assistance and social services generally. Moreover, Ottawa explicitly recognizes for the first time that the provinces rather than Ottawa are responsible for detailed program design. In addition, no national program can be introduced without a majority of the provinces agreeing, a constraint which did not exist before SUFA. Finally, as long as a province is operating within an agreed set of Canada-wide objectives, it will receive its proportionate share of funding for its own initiatives in the same or related priority area. And, contrary to what happened in 1995, the federal government is now obligated to consult with the provinces one year prior to any potential funding reductions for social programs.

Some provinces would have liked a greater constraint on the federal spending power. All would have liked more funding predictability. But, at the end of the day, SUFA was a substantial improvement over the status quo -- a status quo that placed virtually no constraint whatsoever on the federal government's use of the spending power. As a consequence, all premiers (aside from Lucien Bouchard) calculated that it was better to take what was achievable in February 1999 than go back to a completely unacceptable status quo. Moreover, the three-year term of the agreement built in the possibility of negotiating future improvements to SUFA.

As Mr. Bouchard stated, SUFA fell short of Quebec's traditional demands concerning the federal spending power, and was therefore rejected by his government. While he is supported in this by Mr. Ryan, I agree with David Cameron (1999) that SUFAs provisions on the spending power go further than the amendment proposed in the Meech Lake Accord. So, while I respect Mr. Ryan's opinion that $UFA did not go as far as he would have liked, I would hope that any future federalist government in Quebec would be willing to negotiate with its partners in the federation to improve the agreement over time.

Conclusion

If the price of democracy is eternal vigilance, then the price of Canadian federalism for Mr. Ryan is the eternal defence of provincial rights and responsibilities in the face of an aggressive central government with an insatiable appetite to extend its power and authority. Add to this the "unique character of Quebec" relative to the other provinces, and you end up with a demand that Quebec have the unconditional right to opt out of Canada-wide social programs with full compensation from the federal government. But there is another way to proceed. You can accept the implications of interdependency while respecting the powers and responsibilities of both orders of government, and work towards a codecision model. In this respect, SUFA provides a good starting point.

Until now, Claude Ryan's view of federalism has been the majority view among Quebec "soft nationalists." This is beginning to change. In a series of eight editorials earlier this year in La Presse, Alain Dubuc argued it was time for Quebecers to stop regarding their glass as half empty. Quebec society is now relatively secure and confident in terms of business, culture and language. Quebecers had, in the postwar era, become winners within the existing federalist framework. Rather than continuing to plead for constitutional amendments on recognition and the spending power, Quebecers should focus on ways to make themselves even more prosperous economically and even more advanced socially in terms of education and health.

Personally, I hope the Quebec government reconsiders SUFA in the months ahead, and joins the other provinces in subsequent revisions. Quebec's entry to the agreement will require some changes to the current SUFA, including a more explicit constraint on the federal spending power. Whatever Ottawa currently thinks, this would be a far preferable outcome than the current arrangement whereby Quebec operates outside the consensus. I hope that Mr.' Ryan himself will put his considerable influence behind such an effort.

References

Boase J. 1996. "Trends in Social Policy: Towards the Millenium." in C. Dunn ed. Provinces: Canadian Provincial Politics. Peterborough: Broadview Press, 1996, 451.

Burelle A. 1999. "The Social Union and Monsieur Ryan's Unconditional Right to Opt Out." Le Devoir. Translated and reproduced in this issue (13 July 1999).

Cameron D. 1999. "The Social Union Agreement: A Backward Step for Quebec?" Toronto Globe and Mail (9 February 1999).

Johnson A. 1963. Biography of a Government: Policy Formulation in Saskatchewan, 1944-1961. Unpublished Ph.D. thesis. Harvard University.

Marchildon G. 1995. "Fin de Siecle Canada: The Federal Government in Retreat." Disintegration or Transformation? The Crisis of the State in Advanced Industrial Societies (eds. Patrick McCarthy and Erik Jones). New York: St. Martin's Press, 1995, pp.133-51.

Marchildon G. 1996. "An Attempt to Reconcile the Irreconcilable." Inroads 5 pp. 98-103.

Marchildon G. 1999. "`Constructive Entanglement:' Intergovernmental Collaboration in Canadian Social Policy." In S. Delacourt & D. Lenihan eds. Collaborating Government: Is There a Canadian Way? New Directions 6 pp.72-80 (December).

Richards J. 1999. "A Successful Counter-Reformation." Editorial. Inroads 8 pp. 5-10.

Romanow R. 1998. "Reinforcing the Ties that Bind." Policy Options 19 (Nov. 1998), pp. 68.

Ryan C. 1999. "The Agreement on the Canadian Social Union as seen by a Quebec federalist." Inroads 8 pp. 25-41.

Taylor M. 1985. Health Insurance and Canadian Public Policy. Montreal: McGill-Queen's University Press.

Watts R. 1999. The Spending Power in Federal Systems: A Comparative Study. Institute of Intergovernmental Relations. Kingston: Queen's University.