Six degrees of -- separation.

Author:John Richards
 
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Hallowe'en came a day early in 1995. From the initial results in Iles de la Madelaine until well into the night, the OUI side was ahead in the referendum tally. With 70 percent of the vote in, it was 50-50. Only after two hours of counting, after most of the ballots in Montreal had been tabulated, did it become clear that the sovereignists had lost their referendum. The margin--50.6 percent NON versus 49.4 percent OUI--was so narrow, however, that people will take a long time to forget their Hallowe'en scare.

Like many other Canadians, the two of us have sat down and discussed what it all means and, more important, what's to be done? In this article, we attempt to provide a guide to the debate and suggest--immodestly--a solution.

We have both moved--"stumbled" say the less charitable--between the worlds of academia and practical politics. We share a commitment to a generous but fiscally responsible welfare state. We would like to see an improvement in relations between Quebec and the rest of Canada (ROC), preferably within the federal system but, failing that, as separate sovereign countries with some mutually acceptable association. Whether any of these good things come to pass is open to much speculation.

From Dicey to Deschamps

We also share a respect for the tradition of classic federalism where, by definition, each of two levels of government enjoys a reasonably precise set of powers, and politicians at neither level can unilaterally decide to intrude on one another's turf. Long ago, the famous Victorian legal scholar A.V. Dicey (1915, 75-76) laid out the requirements for a successful federal state:

There must exist, in the first place, a body of countries such as the Cantons of Switzerland, the Colonies of America, or the Provinces of Canada, so closely connected by locality, by history, by race, or the like, as to be capable of bearing, in the eyes of their inhabitants, an impress of common nationality ...

A second condition absolutely essential to the founding of a federal system is the existence of a very peculiar state of sentiment among the inhabitants of the countries which it is proposed to unite. They must desire union, and must not desire unity.... We may perhaps go a little farther, and say that a federal government will hardly be formed unless many of the inhabitants of the separate States feel stronger allegiance to their own State than to the federal state represented by the common government.

Quebec comedian Yvon Deschamps nicely summarized all this with his old joke about Quebecers wanting a strong independent Quebec inside a united Canada. Substituting the relevant province, the same dual loyalty is true, if to a lesser extent, of residents of the other provinces. (Only those who live within sight of the CN or Peace Towers consider themselves to be unambiguously unhyphenated Canadians.) Dicey and Deschamps are right: the government that makes sense for Canada is a classic form of federalism that, within the scope of provincial powers, allows people to do things differently in different parts of the country.

Doing things differently may also mean that "distinct" subnational units are treated as such. This is accepted practice in many countries including Spain, Germany, Russia, India and Malaysia. Several clauses of the British North America Act differentiate between provinces. And, even in the Mother of Parliaments in London, politicians are debating their own version of "variable geometry," in setting out the powers for potential assemblies in Scotland, Wales, Northern Ireland and the regions of England.

Given the overwhelming preference among Quebec Allophones and Anglophones for the constitutional status quo, the referendum result means that a clear majority of Francophone Quebecers, approximately 60 percent, were prepared to secede from Canada. Admittedly, some OUI supporters did not want a new country. They voted strategically to strengthen Quebec's constitutional bargaining position within Confederation. Nonetheless, they were willing to risk a new country, rather than opt for the status quo. Moreover, many Francophone NON supporters, while not prepared to risk a new country, were clearly unhappy with the status quo. For the great majority of Francophone Quebecers, Dicey's conclusion remains true: they may desire "union"; they do not desire "unity."

Our mistake over the last 30 years has been, put simply, to give too much credence to the "anti-federalist" arguments of those, like Trudeau, who held that we could dispense with classical federalism. Contemporary "anti-federalists" have differed among themselves. Some want Ottawa to use its spending power to impose more-or-less uniform national standards on provincial social programs; some want Canadians from St. John's to Montreal to Vancouver to identify with justiciable Charter rights; some oppose provincial powers on the grounds that provincial governments are nothing more than agents for interest groups seeking to limit interprovincial free trade. What unites these "anti-federalists" is mistrust of regional loyalties among Canadians and, a fortiori, mistrust of all variants of Quebec nationalism.

Part of the damage done by anti-federalism has been the blurring of federal and provincial fiscal responsibilities. Starting in the mid-1960s, Ottawa dramatically increased its use of conditional transfers (i.e. its use of federal spending power) to induce provinces to enlarge social programs. The advantage of Ottawa's intrusion was to accelerate what would probably have occurred more slowly otherwise: creation of a European-style welfare state in Canada that, overall, provides the ordinary Canadian a superior level of services than that enjoyed by his or her US counterpart. The disadvantage was to avoid working out a social contract on how to pay for generous social programs, and to sow confusion over which level of government was responsible for managing them. That we Canadians have not agreed on how to pay the bill is obvious: in aggregate, federal and provincial governments have been in deficit every year since 1974 and, among G-7 countries, our debt/GDP ratio is second only to Italy's. That we are confused over who is responsible for managing social programs has become painfully obvious by the extent of political recrimination surrounding Ottawa's introduction of the Canada Health and Social Transfer (CHST) in the 1995 budget. The CHST reduced both the strings attached to federal transfers to the provinces--and the cash. Ottawa, or at least the Finance Department, has accepted that the provinces are responsible for basic social services; many Canadians have not.

The history of intergovernmental transfers provides important lessons about the danger of blurring federal-provincial responsibilities. Ottawa's intrusion peaked in the mid-1980s when cash transfers exceeded 4 percent of GDP; by 1997-98, cash transfers are projected to fall back to roughly 2 percent, the ratio prevailing in the mid-1960s. With a quarter of federal program spending devoted to conditional transfers in recent years, many Canadians concluded that, de facto if not de jure, Ottawa was ultimately responsible for the quality of Canadian social services. When the Tories worried about the federal debt, raised taxes and modestly lowered per-capita program spending, Canadians on the centre-left of the political spectrum concluded that Brian Mulroney had embraced a heartless "neoconservative corporate agenda." Feeling betrayed, they voted in 1993 for Chretien's Liberals in ROC and for the Bloc in Quebec.

Governments change; confusion remains. The size of the debt obliged the Liberals to cut spending more aggressively than did the Tories. And the provinces face similar fiscal problems, problems aggravated by reductions in federal transfers. With Premier Bouchard's decision to attack his province's deficit, all senior governments except British Columbia now accept the necessity for serious fiscal restraint. (At time of writing, in April 1996, British Columbia is in pre-election turmoil which includes ferocious "fed bashing." It is hard to know the provincial government's true beliefs about fiscal matters.) But, given blurred responsibilities, implementing restraint has been accompanied by much acrimonious blame-mongering. With a few honourable exceptions, finance ministers from Victoria to St. John's, passing through Ottawa, have indignantly blamed others for their own tax increases and program cutbacks.

From Complacency to Despair

Quebecers have made their move; the next move is up to those in the rest of ROC. It is far from clear what it will be.

As late as mid-campaign, few outside the sovereignist Quebec leadership took seriously the prospect of a OUI majority. Early in the campaign, polls showed that even the majority of OUI supporters thought the NON would win. The dominant NON tactic was simply to claim that the constitutional status quo was preferable to the economic costs that secession would impose. Such a tactic had the advantage of allowing "ROCers" not to divide over their own disagreements. This tacit agreement on tactics held until late in the campaign. A week before the vote, the Reform Party (1995) broke the oath of silence by publishing full-page newspaper ads across the country setting...

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