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Chapter 3:
Concerns Over Blurred Accountability Due to Reduced Clarity in Roles and Responsibilities

Legislative Roles and Responsibilities

The Constitution assigns a range of exclusive legislative powers to the federal and provincial orders of government. It also explicitly provides for joint federal and provincial jurisdiction over contributory public pensions (such as the Canada Pension Plan), agriculture and immigration.

Taxation

The Constitution also explicitly sets out federal and provincial taxation powers. While both orders of government are given fairly general tax powers, provincial taxation powers are formally restricted to direct taxation. In practice, this constraint has had only a limited impact on provinces’ ability to access major tax fields because most major taxes in use today are direct taxes, such as personal and corporate income taxes and payroll taxes. Constitutional jurisprudence has also confirmed that sales taxes levied by provinces are direct taxes as well. Provinces, therefore, have access to all major tax fields in use today.

The Spending Power

By contrast, unlike most constitutions adopted by federal countries since the early 20th century, Canada’s Constitution does not explicitly provide for a general spending power. Over time, it has become common in practice for both orders of government to spend in areas over which they do not exercise legislative jurisdiction. Transfer payments from the federal government to provinces and territories in support of programs such as health care, post-secondary education, training, housing or child care constitute prime examples.

Shared Responsibilities in Certain Areas Can Result in Less Clarity

In practice, the multi-faceted nature of many policy issues and the emergence of entirely new areas of public policy since the 1860s have resulted in pragmatic arrangements that have contributed to a lack of clarity in roles and responsibilities in certain areas.

There are distinct federal and provincial aspects to many areas, such as the environment, where responsibility for key policy instruments falls to both orders of government. In such cases, federal and provincial-territorial governments have needed to work out how to coordinate their distinct but related responsibilities in the best interests of Canadians.

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Current Roles and Responsibilities in Canada

	Federal	Provincial
Money and banking	√
International and interprovincial trade	√
Airlines and railways	√
Telecommunications and broadcasting	√
Foreign affairs/international assistance	√
Defence and veterans affairs	√
Border security	√
Employment insurance	√
Criminal law	√
Fiscal Equalization	√
Indirect taxation	√
Direct taxation	√	√
Pensions and income support	√	√
Aboriginal peoples	√	√
Immigration	√	√
Agriculture	√	√
Industry	√	√
Environment	√	√
Policing	√	√
Transportation infrastructure	√	√
Housing	√	√
Post-secondary education, training and research	√	√
Public health	√	√
Primary and secondary education		√
Health care		√
Municipal institutions		√
Social assistance and social services		√
Natural resources		√
Administration of justice		√

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In efforts to eliminate its deficits during the early and mid-1990s, the federal government considerably reduced program spending both in areas of clear federal responsibility and on transfers supporting areas of primarily provincial and territorial responsibility. Once balanced budgets were restored, and particularly once the federal government began to register significant surpluses, it was able to launch new spending initiatives. But the pattern of new spending that emerged during the past decade has often led to concerns about blurred accountability.

Insufficient Focus on Federal Responsibilities

During the period of budgetary restraint in the mid-1990s, the federal government reduced its spending on core areas of federal responsibility. In some areas, the gaps that resulted have not been closed after eight years of surpluses and rapid increases to overall federal program spending. In other cases, the federal government injected new funds, but without changes in focus that would be required to make federal spending more effective at meeting its goals and adapting to new realities. Examples include:

• Defence: The progressive erosion of the federal commitment to national defence since the 1960s was aggravated by significant cuts made to Canada’s defence programs in the mid-1990s. Even with increases in recent budgets, significant pressures remain for further investments to enhance security, defend Canada’s sovereignty over its vast territory and territorial waters, and maintain Canada’s long-standing international military role.
• Border Security: Despite significant investments following the tragic events of September 11, 2001 and in light of threats posed by pandemics, significant pressures remain to do more to improve Canada’s national security and to work with the United States on facilitating the movement of people and goods while controlling risks along our shared border.
• Coast Guard: Since 1987, the Canadian Coast Guard has not purchased any new large vessels and has been operating and fulfilling its mandate with an aging civilian fleet. It was only in 2005 that significant new funds were allocated towards acquiring new vessels.
• Immigration: Despite significant investments, pressures remain to manage immigration backlogs and a complex refugee determination system. Canada must attract the highly skilled and talented newcomers it needs to meet its economic challenges and be able to promptly remove those individuals who do not have a legitimate right to remain in the country.
• Justice and Law Enforcement: There remain significant pressures for increased investments and new approaches in the criminal justice system and law enforcement to ensure that federal interventions are adequate and effective at providing security at home as well as at Canada’s borders and internationally.
• International Assistance: While commitments have been made for significant increases in Official Development Assistance (ODA), greater attention needs to be paid to ensuring that this assistance is as effective as possible.
• Aboriginal People: Substantial resources have been provided for Aboriginal people since the deficit was eliminated. Despite this, significant pressures remain for further investments and for increased accountability, and to ensure these investments become more effective at addressing the needs of Aboriginal communities for adequate water, schools, housing and other services.

Use of the Federal Spending Power in Areas of Provincial Responsibility

In parallel to this insufficient focus on priorities in areas of federal responsibility, various initiatives—which have expanded the use of the federal spending power—have been launched in areas of provincial responsibility since the federal deficit was eliminated. Concerns have been raised that these initiatives have often imposed new conditions and cost pressures on provincial and territorial governments. Examples include:

• Early Childhood Development: In September 2000, $2.2 billion over five years in new funding was announced for transfers to provinces and territories—conditional upon expansion of early childhood development programs and services.
• Child Care: In 2003 more than $1 billion over five years was committed for provinces and territories—conditional upon expansion of their regulated child care programs and services. Budget 2005 announced a further $5 billion over five years—conditional upon development of government-regulated child care across the country.
• Housing and Homelessness: Starting in 1999, $1.3 billion in funding for efforts to target homelessness was announced. Since 2001, a further $1 billion has been put in place to increase the supply of affordable rental housing, which was made available to provinces and territories on the condition that they match federal contributions.

While these initiatives have provided welcome support for Canadians, they and other examples of increased federal spending in areas of primarily provincial responsibility often:

• Resulted in strains between the federal government and the provinces and territories in cases where expenditures were undertaken without adequate consultation or consensus on priorities.
• Created new cost pressures on provincial and territorial governments, potentially distorting their spending priorities, particularly where initiatives required matching funds.
• Increased uncertainty where initiatives were introduced without long-term, stable federal funding.

The combined effect of increased federal spending in areas of provincial responsibility, and a lack of focus on areas of clear federal responsibility, has been to raise concerns over increasingly blurred lines of accountability that make it more difficult for Canadians to determine which order of government should be held accountable for specific policies and initiatives.

 

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