Federalism is a political system in which government power and responsibility is divided between a federal legislature and a number of state or provincial legislatures. In Canada, the federal government has jurisdiction over the entire country and each provincial government has jurisdiction over particular portions of the population. Both levels of government derive their authority from the written Constitution. A true federation, in the modern sense, means a state in which the smaller parts are not sovereign and cannot legally secede (see Constitutional Law). Canadian federalism has been tested throughout the country’s history and remains a subject of great debate.

Establishing a Federal Union

Although imaginative efforts have been made to trace the history of federalism back into antiquity, the United States Constitution (1787) is the earliest example of a modern federal constitution. The possibility of establishing a federal union among the remaining British colonies of North America was considered sporadically early in the 19th century, and more seriously from 1857 onwards. Negotiations among political leaders from the Province of Canada, New Brunswick and Nova Scotia resulted later in the Imperial Parliament's adoption of the British North America Act, which united those three colonies into a federal state in 1867.

Confederation marks the beginning of Canadian federalism. Unification was desired, particularly by commercial interests, as a means of facilitating economic growth, territorial expansion and military defence. Retention of existing colonial governments and boundaries, however, was desired by many influential people for a variety of reasons. French Canadians, a majority only in Québec, were unwilling to place all powers in the hands of a central government where they would be a minority. There was also a strong sense of provincial identity in Nova Scotia and New Brunswick. Federalism was therefore a necessary compromise. Canada’s first Prime Minister, Sir John A. Macdonald, was not enthusiastic about federalism and would have preferred a unitary state in which provinces get their authority from the central government and are subordinate. Moreover, the American Civil War had contributed to a belief that powerful provincial governments would be a source of instability. For these reasons, the Canadian Constitution includes features incompatible with a strict theory of federalism.

Unitary Powers Unused

The lieutenant-governor of each province, who is appointed by the central government, can prevent provincial legislation from taking effect until the central government has approved it. The central government can also disallow any provincial statute within a year of its adoption (see Disallowance). Parliament can adopt legislation concerning education within a province to protect the rights of certain religious minorities, and can also declare that "works and undertakings" within a province fall under its jurisdiction, regardless of the normal distribution of powers. The British North America Act, because of these unitary features, has been described as quasi-federal rather than strictly federal, but the quasi-federal powers have fallen into disuse.

Competing Concepts

Although Canadian politicians have articulated a variety of different concepts of Canadian federalism. Differences of opinion have been sharper in Canada over a longer period than in most federations, and no consensus has ever been achieved regarding the appropriate relationship between the two levels of government. National and provincial politicians tend to espouse different views, and these have become associated with partisan conflict when one party has held office at the national level for a long period while enjoying less success at the provincial level.

Macdonald's quasi-federal concept was associated with the Conservative Party until about 1900, when the generation of politicians that had been involved in drafting the BNA Act ceased to be influential in that party. It has had little support during this century, although a centralist view of federalism, emphasizing the importance of a strong and active central government, continues to enjoy considerable support. Modern centralists do not normally emphasize using the quasi-federal powers of disallowance and reservation. Instead, they argue for a broad interpretation of Parliament's legislative powers and believe that the central government should be permitted to make policy in its areas of jurisdiction without consulting the provincial governments. They also believe that the central government should have access to a predominant share of revenue from taxation and that it should be entitled to make conditional grants to provincial governments even in relation to matters not strictly within its jurisdiction.

Central Versus Provincial

A centralist view of federalism, with certain qualifications, was expressed in the 1940 report of the Royal Commission on Dominion-Provincial Relations (the Rowell-Sirois Commission). Since then, centralist ideas about federalism have been influential in the Liberal Party. The New Democratic Party also tends towards a centralist position. Politicians and political thinkers who have articulated a centralist concept of federalism include Louis St-Laurent, Francis Reginald Scott, Eugene Forsey, David Lewis, Bora Laskin, and, in his last years as prime minister, Pierre Elliott Trudeau.

Macdonald’s view that the provincial governments should be subordinate to the central government was controversial from the outset, and in the early 1880s a Québec judge, Thomas-Jean-Jacques Loranger, wrote that the central government had been created by the provincial governments and that no increase in the central government's powers, and indeed no substantial change in the Constitution, was permissible without the unanimous consent of the provincial governments. This view became known as the Compact Theory of Confederation and was expressed at the interprovincial conference of 1887, organized by Québec Prime Minister Honoré Mercier.

A similar view was expressed by certain premiers during the constitutional discussions of 1980-81. The emphasis on the importance of provincial autonomy has been influential since 1939 in the Progressive Conservative Party and in all parties at the provincial level in Québec. The Reform Party also supported this position. Supporters of the anti-centralist view believe that the functions of the central government should be limited to those that the provincial governments cannot perform for themselves, and that its control over revenue should be restricted accordingly. They have also argued that the central government should consult the provincial governments before initiating major policies. An eloquent statement of the anti-centralist view was the 1956 report of the Québec Royal Commission on Constitutional Problems, and the 1979 report of the Task Force on Canadian Unity.

See-Saw Struggle

Canadian federalism, in practice, has fluctuated between the extremes of centralization and decentralization in response to a variety of political, economic and social circumstances. Macdonald's preference for a highly centralized regime seems to have triumphed for a few years after Confederation, but by the 1880s the provincial governments were becoming as powerful as their US counterparts, if not more so. Provincial control over natural resources, especially after 1930, facilitated the development of largely self-contained provincial economies, and the concentration of secondary manufacturing in Ontario made its government particularly important and influential.

Deteriorating relations between francophone and anglophone Canadians undermined Macdonald's Conservative Party and increased anti-centralist sentiment in Québec. Centralization revived temporarily during the First World War and immediately after, when the central government levied an income tax for the first time in 1917, imposed military conscription and exercised an unprecedented control over the economy.

These tendencies were largely reversed after 1921, and the Great Depression demonstrated that the central government lacked the power to deal effectively with a severe economic crisis.

Efforts were made to ensure that centralization during the Second World War would have more lasting effects than it had had during the First World War. The central government monopolized personal income tax from 1941 until 1954, and constitutional amendments gave Parliament the power to establish employment insurance and universal pensions paid from a special fund in 1940 and 1951 respectively.

Interpretation of the BNA Act by the Judicial Committee of the Privy Council, which was considered to be favourable to provincial autonomy, was terminated in 1949. During the postwar period, extensive conditional grants were introduced to encourage provincial spending on health and welfare, and federal grants were given directly to universities.

Shift to the Provinces

A shift of power towards the provincial governments became evident after 1960, when a dynamic and interventionist Québec government, headed by Jean Lesage, emerged as an effective opponent of centralization. Other contributing factors included the growing importance of provincial natural resources particularly in western Canada, the decline of the old commercial and financial elite based in Montréal, economic integration between Canada and the US, and the development of a more competitive party system at the national level after the defeat of St-Laurent 's Liberal government in 1957.

Between 1960 and 1980, these circumstances led to a substantial increase in the provincial share of taxation and public expenditure. Grants to universities were replaced by subsidies to the provinces. By opting out of certain conditional grant programs, Québec received unconditional grants in return and established its own contributory pension plan, although the central government established one for residents of other provinces.

Conferences between the prime minister and provincial premiers became more frequent, a phenomenon described as "executive federalism." Provincial governments began to intervene more aggressively in provincial economies and also challenged the right of the central government to make economic policy without their collaboration or consent.

Provincial relations with foreign governments also became significant, particularly in the case of Québec, where the nationalist movement was encouraged by President Charles de Gaulle of France. The dramatic increase in Alberta's petroleum revenues after 1972 imposed further strains on the federal system and made that province's government increasingly contemptuous of the federal authorities. In Québec, the emergence of a major political party dedicated to seeking independence for that province, the Parti québécois, suggested that the survival of Canadian federalism could not be taken for granted.

Patriation of the Constitution

Formal changes in a country's constitution usually follow, rather than precede, informal shifts in economic and political power. The trend away from centralization in Canadian federalism was underway by 1960, and demands for a formal transfer of constitutional authority towards the provincial level of government became widespread in Québec shortly afterwards.

Other provinces, with the partial exception of Ontario, had little interest in constitutional change at that time; this encouraged the idea of "special status," whereby only Québec would receive additional powers. After 1972, increasing natural-resource revenues caused a number of other provincial governments to demand additional powers in a revised constitution, Alberta being the most militant.

In response to these pressures, the central government convened a number of intergovernmental conferences on constitutional change between 1968 and 1981, although it insisted that a charter of individual rights and the restructuring of national institutions be discussed in addition to the distribution of legislative powers. A related problem was the absence of an amending formula in the BNA Act. The constitutional negotiations included efforts to devise such a formula as a necessary prelude to "patriating" the Constitution, a matter that had been sporadically and inconclusively discussed as far back as 1927.

In 1980, the Trudeau government attempted to patriate the Constitution with an amending formula that would require the support of Ontario, Québec, two Western provinces and 2 Atlantic provinces for any subsequent change, and simultaneously to entrench a Canadian Charter of Rights and Freedoms in the Constitution. This initiative, which followed the breakdown of negotiations over the distribution of powers, was opposed by eight provincial governments, and was ruled unconstitutional in the conventional sense, although not illegal, by the Supreme Court of Canada. Further negotiations led to qualifications in the Charter of Rights and replacement of the original amending formula by one that required the approval of seven provinces comprising at least half of Canada's population, but permitted dissenting provinces to exempt themselves from the application of amendments that would reduce their powers.

All provincial governments except Québec accepted this compromise, which took effect when the constitution was formally "patriated" on 17 April 1982. Québec regarded the federal concessions as inadequate, and particularly objected to the entrenchment of language rights for its anglophone minority. Although the Supreme Court subsequently ruled that Québec's consent had not been required to amend and patriate the constitution, efforts to secure a constitutional settlement acceptable to Québec resumed in 1986.

Meech Lake and Charlottetown Accords

These efforts culminated in an agreement among the 11 first ministers in the Meech Lake Accord of April 1987, which would have recognized Québec as a distinct society, provided for provincial participation in the selection of senators and justices of the Supreme Court, restricted the federal power to spend in areas of provincial jurisdiction, recognized provincial powers over immigration, and made slight changes on the amending formula (see Meech Lake Accord: Document). Opposition to the Meech Lake Accord from a growing number of interest groups, Aboriginal people and Newfoundland premier Clyde Wells scuttled the Accord in June 1990.

A second round of constitutional negotiations resulted in a new agreement (the Charlottetown Accord) among the premiers and federal government, which was resoundingly defeated in a national referendum in 1992 (see Charlottetown Accord: Document). Although intended to bring a greater consensus among Canadians, the numerous public forums and government commissions exposed even greater divisions.

The independence movement in Québec, which appeared to lose momentum after the failed sovereignty referendum in that province in 1980, re-emerged after the failure of the Meech Lake and Charlottetown Accords, this time on the federal level with the Bloc Québécois. Western protest, which had subsided as the Conservative government of Brian Mulroney erased memories of the National Energy Policy, resurfaced over opposition to the GST, and was embodied in the Reform Party. Although the federalist Liberal Party won a large majority in 1993, it faced two powerful parties in the Commons, both committed to radically different views of Canadian federalism. The Liberal government after 1993 did not return to the centralist policies of the Trudeau era, some of which would no longer be permitted under NAFTA. Instead it concentrated on reducing the federal deficit by measures that included reduced spending on social programs and transferring federal functions to the provinces or to the private sector.

Whatever the future may hold in store, patriation of the Constitution and two extended rounds of constitutional negotiations have brought Canada no closer to achieving consensus on the direction in which federalism should evolve. A second Québec Referendum on sovereignty in 1995 revealed widespread dissatisfaction with federalism. Supporters of greater provincial autonomy emphasize the diversity of provincial interests and argue that a more stable and legitimate political order would result if the distribution of power between the two levels of government was adjusted to accord with what they view as the socio-economic realities.

On the other hand, those who support the retention or enlargement of the central government's powers argue that decentralization is more the cause than the consequence of interprovincial diversities and that it ignores the significant common interests of Canadians, which can only be expressed through a strong central government. They also argue that excessive decentralization weakens Canada's economy and Canada's influence in the world. It is unlikely that these differences of opinion will be resolved soon, whether or not Québec chooses to secede from the Canadian federation.