The Future of Fiscal Federalism.

• Author: Cousineau, Kenneth

Kingston, ON: Queen's University at Kingston, School of Public Studies, 1994. (368 pp)

Reviewed by Kenneth Cousineau, executive director of the Association of Municipal Clerks and Treasurers of Ontario.

Canada is renowned for its national social policy and its delivery. This book presents a series of 19 essays and commentaries which examine the future of Canadian social programs in the context of the current federal-provincial funding formulas. While concentrating on the impact of various actions and trends on the delivery of social programs, this book also illustrates concerns related to unilateral action on the part of the federal government and to the impact which ceilings and caps imposed at the federal level have on Canada's social programs.

The book reviews fiscal federalism in Canada from three perspectives: 1) the core principals of public finance, 2) the global forces affecting social policy, and 3) the ability of current political systems to provide the right conditions for change.

Robin Broadway and Frank Flatters use the five principles of public finance to assess the long-term future of social programs in Canada. Their discussions promote the use of net fiscal benefits (NFBs) as a measure of equality. Further, they recommend a system designed to result in the full equalization of NFBs between provinces. Fred Gorbet's response concludes that the future of social programs in Canada will hinge more on their affordability, flexibility to meet regional need, and accountability for delivery. Gorbet puts forward two "families of opinions." One involves the status quo with respect to tax agreements and the merging of the most significant income distribution and resource equalization programs at the federal level. The other involves the cancellation of the GST program and the replacement of these revenues at the federal level by cuts to the two programs mentioned above as well as by increased income taxes; however, given the current environment, it would seem unlikely that either of these "families of options" would be likely to occur.

Courchene's essay puts forward the premise that a group of forces will require Canadians to rethink the entire social policy envelope and that this, in turn, will structure the program of fiscal federal transfers to the provinces. In their responses to his suggestion, Lars Orsberg and Claude Forget both refer to Courchene's fixation on "transfer dependency." Orsberg believes that recent research no longer...