Posts Tagged ‘Canada’

Faint signs of democratic awakenings

I have written a number of posts on how whipped Canadian backbench MPs are when compared to their counterparts in other parliaments. In recent weeks, it would seem that some backbenchers have maybe had enough of this situation.

One MP raised a point of privilege to argue that prevented by his party whip from delivering a statement in the House during “Statements by Members”, a 15-min period each day during which backbenchers can deliver one-minute statements on matters of international, national or local concern. As per the Standing Orders, any MP can be recognized by the Speaker to speak during this time, but, in practice, the Speaker is guided by lists provided by the respective party whips. The Member, Mr. Warawa, appealed to the Speaker that in being removed from his side’s list last Thursday, his privileges as an MP were breached.

For a detailed overview of the situation, I will refer you to this guide prepared by Aaron Wherry of Macleans. Mr. Wherry’s guide includes a multitude of links to other posts he and others have written on the issue. A number of MPs spoke up in support of Mr. Warawa’s point of privilege, and the Speaker delivered his ruling on the matter last week, which you can read in full here. The Speaker did not find that there was a prima facie case of privilege but reminded backbenchers that the Speaker is guided by the lists, not bound to them, and if they want to speak, they need to “seek the floor”, which they are free to do at any time.

For people unfamiliar with the Canadian House of Commons, it is important to understand that the issue of lists of which MPs will speak is not limited to Members’ Statements. The party whips provide lists to the Speaker for Question Period, for debates on bills – in sort – for virtually every single item of business in the House. And it isn’t simply a matter of these lists largely determining which MPs will be able to speak in the House, if they are on the list, they are often also told exactly what they will say when they do get the floor. They are given scripted questions to ask during Question Period, which means that rather than question the government and hold it to account, questions from government backbenchers are used to attack and question opposition party policy, or to give the government an opportunity to promote a policy or initiative. And sometimes, the question will manage to do both:

Mr. John Carmichael (Don Valley West, CPC): Mr. Speaker, while the NDP members continue to bend and twist Canada’s rich military history to suit their far left leanings, our government is committed to commemorating Canadian veterans and their accomplishments.

In January our government proudly marked 2013 as the year of the Korean War veteran, and today the Minister of Veterans Affairs and the Minister of National Defence made yet another great announcement. Would the Minister of Veterans Affairs please update this House on how we are continuing to recognize Canada’s great accomplishments during the Korean War?

Hon. Steven Blaney (Minister of Veterans Affairs and Minister for La Francophonie, CPC): Mr. Speaker, the member for Don Valley West is right. They were young and reckless. Along with more than 15 countries with the United Nations 60 years ago, they fought in Korea for freedom, democracy, and the rule of law against communism. Today, the Minister of National Defence and I presented a certificate of recognition to our great Canadian Korean War veterans to show our deepest gratitude and recognition for their many sacrifices. I thank our Korean War veterans. Thank you very much.

The Speaker concluded his ruling thusly:

Even so, as Speaker I cannot exercise my discretion as to which Member to recognize during Statements by Members or at any other time of the sitting day if only one Member is rising to be recognized.
As previously mentioned, due to an over-reliance on lists, more often than should be the case, even those Members on the list do not always rise to be recognized.

Were the Chair to be faced with choices of which Member to recognize at any given time, then of course the Chair would exercise its discretion. But that has not happened thus far during Statements by Members, nor for that matter, during Question Period. Until it does, the Chair is not in a position to unilaterally announce or dictate a change in our practices. If Members want to be recognized, they will have to actively demonstrate that they wish to participate. They have to rise in their places and seek the floor.

In the meantime, I will continue to be guided by the lists that are provided to me and, when and if Members are competing for the floor, will exercise my authority to recognize Members, not in a cavalier or uninformed manner but, rather, in a balanced way that respects both the will of the House and the rights of individual Members.

While this should strike most as common sense – if a Member wants to be recognized by the Chair, he or she needs to stand in their place to indicate to the Speaker that they want to speak – what is surprising (also shocking and terribly saddening) is that some MPs apparently didn’t even know that they could do this. As Laura Ryckewaert writes in “Former House Speaker Fraser calls Scheer’s ruling ‘very important,’ but another expert expects MPs won’t do much with ruling” ($):

Mr. Scheer’s ruling isn’t groundbreaking, and he has instead highlighted a pre-existing right that was forgotten over time by MPs but Mr. Warawa and Mr. Chong said they hadn’t previously realized they had the right to stand to be recognized by the Speaker during statements or questions.

Another MP, Mr. Rathgeber, told reports that he planned to take advantage of this new-found right and added that “he thought there would be a ‘transition’ as “members will have to adjust to being able to speak without having been approved, being put on a list.”"

Many might wonder how this dire state of affairs came to be. Peter Loewen explains the situation quite well in this article from the Ottawa Citizen. Mr. Loewen writes that prior to 1970, party labels did not appear on ballots, only the names of the candidates running in each constituency. The candidates were representatives of a party, but the situation wasn’t regulated and at times, there could be two candidates claiming to represent the same party. Parliament decided that reform was required and the solution adopted “was to have party leaders sign off on candidacies, officially identifying their party’s candidates.”

This solution created a new problem – the party leaders realized that this gave them enormous power over their MPs:

Since party leaders sign off on candidates, they can also refuse candidates by declining to sign their nomination papers. There is no legal mechanism for locally-selected candidates to overcome this prerogative. Sitting MPs are subject to this signature at every election. As a consequence, MPs serve not only at the pleasure of their electorate but also of their leader.

That MPs work beneath the thumbs of their leaders would be less objectionable if they had some counterweight. In other Westminster-style democracies, the counterweight is obvious: party leaders serve at the pleasure of their caucus.

In Canada, we have delegated the right to remove leaders to party members, that small class of Canadians who pay a pittance each year to carry a party’s card. From time to time, a small minority of them will trek off to a convention centre or a hockey arena to decide whether to renew their leader’s mandate.

They are accountable to no one. It should be no surprise, then, that the leaders they affirm are equally free of accountability.

The neutering of our MPs as free-thinking, independent representatives begins with their nominations and it ends with their inability to keep their leaders in check. In the meantime, the media and the punditocracy do what they can to remind MPs of their diminished role.

Since the ruling, some MPs have tried to stand and catch the Speaker’s eye to be recognized. Some have succeeded, others haven’t. A former House of Commons committee clerk, Thomas Hall, is quoted in the Ryckewaert article as saying that he doesn’t expect this to last: “If the whip wants to, he can crack down on that, he still has the power to discipline Members who disobey him.” In the same article, Professor Lori Turnbull (political science, Dalhousie University) says some MPs would consider this new-found freedom “career suicide”:

If you’re an MP and if you’re thinking, ‘Okay, I want to be on that particular committee, or I want that particular diplomatic post when I retire, or I want to say on [current Prime Minister] Harper’s good side’ or whatever it is, then you’re not going to be the guy who stands up in the House with the explicit knowledge that the Prime Minister and the party whip think you should sit down and shut up.

Still, perhaps the radical idea that MPs have the right to stand up of their own initiative and speak in the House might spark an interest in exploring other ways by which backbenchers might regain some power in the House. There is still a very long way to go before one can speak of real democratic reform, but at least it’s a step in the right direction.

Related Posts:

Proposal for elected Commons committee chairs

For the past three years now, this blog has explored some of the more interesting developments in parliamentary procedure in various jurisdictions (primarily the UK, Canada, Australia and New Zealand). Regular readers know that I am a big fan of many of the reforms introduced in the UK House of Commons in 2010, as per the recommendations of the Wright report.

One of those reforms involved select committee chairs being elected by the whole House, as I’ve blogged about in detail in other posts. For example, back in April 2011, I wrote one of my Fixing Ottawa posts, this one focused on Committees, wherein I explained in detail how UK select committee chairs and members are now elected. In another post written later that same year, I discussed the findings of the UK House of Commons Procedure committee’s report reviewing the elections held, for the first time, in most cases, to fill various positions in the House, including, of course, the election of committee chairs and members. If you read either or both of those posts, you will see that I am quite fond of this reform, and would very much like to see it adopted here in Canada.

Consequently, I was very pleased to read, via Kady O’Malley’s Inside Politics Blog, that a Conservative backbench MP, Brad Trost, will be putting forward a motion proposing something very similar to what the UK House of Commons – that is, have the House elect committee chairs via a preferential ballot.

As Kady O’Malley points out, if this motion passes, “it would be binding, as it would constitute an instruction to the House.”

If you are interested in parliamentary reform, I would strongly encourage you to contact your MP and ask them to support this motion. It has made a huge different in the UK with committees becoming far more independent, less partisan, and generally more effective.

Further reading

Related Posts:

Appointed political hacks

Recent controversies surrounding a handful of Canadian Senators have sparked an intense debate (at least among the chattering political classes) with many calling not simply for Senate reform, but for the Upper Chamber to be abolished. Those in favour of abolition view the Senate as a graveyard for appointed political hacks. I have written a good number of posts defending the Senate. I am not at all in favour of abolishing it, however, I do recognize that the appointment process is flawed. I will once again address some of the issues raised by critics of the Senate.

“Appointed political hacks”

One of the most common criticisms levelled at current day Senators is that they are simply “appointed political hacks”. The specific problems which have surfaced in recent days are due in large part to the appointment process.  Senators are appointed by the Governor General, on the advice of the Prime Minister. In reality, the Prime Minister chooses who he or she wants, and the Governor General simply formalises that choice. How does the PM choose a candidate for the Senate? No one really knows. They may well solicit recommendations from others, but whether or not there is any sort of vetting undertaken to ensure that at the very least, the prospective Senator meets the very minimum requirements outlined in the Constitution Act, 1867, is impossible to say. One of those requirements is that the Senator live in the province they are representing, and one of the Senators currently in the media spotlight is in trouble over the very fact that it appears he does not, in fact, live in the province he is supposed to be representing – yet he is claiming the housing allowance. This would have been a very easy thing to verify before appointing said Senator. Apparently, no one bothered.

Appointment in and of itself is not the problem. Many high-level positions in this country are filled via an appointment process, for example, judges. The problem with Senate appointments is, as stated above, that there is no, or very little, vetting of prospective candidates, the process is under the full control of the Prime Minister, and there is little specific criteria set out that a prospective Senator needs to meet. Consequently, critics are right on this point – those who get appointed are largely political hacks – party fundraisers, failed candidates who lost their seat in the last election, etc.

Section 23 of the Constitution Act, 1867, sets out the following qualifications for a Senator:

(1) He shall be of the full age of Thirty Years;

(2) He shall be either a natural-born Subject of the Queen, or a Subject of the Queen naturalized by an Act of the Parliament of Great Britain, or of the Parliament of the United Kingdom of Great Britain and Ireland, or of the Legislature of One of the Provinces of Upper Canada, Lower Canada, Canada, Nova Scotia, or New Brunswick, before the Union, or of the Parliament of Canada after the Union;

(3) He shall be legally or equitably seised as of Freehold for his own Use and Benefit of Lands or Tenements held in Free and Common Socage, or seised or possessed for his own Use and Benefit of Lands or Tenements held in Franc-alleu or in Roture, within the Province for which he is appointed, of the Value of Four thousand Dollars, over and above all Rents, Dues, Debts, Charges, Mortgages, and Incumbrances due or payable out of or charged on or affecting the same;

(4) His Real and Personal Property shall be together worth Four thousand Dollars over and above his Debts and Liabilities;

(5) He shall be resident in the Province for which he is appointed;

(6) In the Case of Quebec he shall have his Real Property Qualification in the Electoral Division for which he is appointed, or shall be resident in that Division.

Reflective of the time, these requirements focused on property ownership and financial solvency. A Senator had to be at least 30 years old, a British citizen (since there was no Canadian citizenship at the time), own land worth at least $4000, not in debt, and be a resident of the province from which he (for there were no women Senators in 1867) was appointed.

As we can see today, even these minimal criteria haven’t been properly met by some recent appointees, which further supports the argument that very little vetting actually takes place.

The solution to the above isn’t abolishing the Senate, but reforming the appointment process. I have previously written about this, and while many ideas have been put forward, my preferred option remains that proposed by the late W.T. Stanbury and B.Thomas Hall in their paper “Reforming Canada’s Senate: a pragmatic approach“. Hall and Stanbury propose constraining the power of the PM by establishing an independent commission with legislated criteria for selecting appointees. This independent Senate Appointments Commission (SAC) would recommend candidates to the PM, who would then advise the Governor General to make the appointments.

The authors also propose criteria for nomination: “emphasize outstanding attainment in a profession or occupation, and/or a substantial record of interest in and contribution to public affairs” with the objective being to:

appoint men and women of real accomplishment seriously interested in effective public policy – rather than partisan advantage, although former partisans wouldn’t be excluded. We want Senators to reflect the diversity of Canada, and be able to provide a regional perspective where that can improve the quality of federal laws.

Hall and Stanbury posit in their paper that the creation of a SAC would not require any constitutional changes – it could be done by the federal government alone. I am not a constitutional expert, and so I will take them at their word on that. I’m certain some provinces would object, they usually do, but the authors state clearly that:

Our proposals are also not open to constitutional challenge by the provinces.

We believe democracy requires that a partisan body be subjected to periodical elections for it to be held accountable to citizens. We do not believe that a non-partisan body, whose members have been appointed for their knowledge, experience and devotion to the interest of all Canadians, need to be held accountable through elections. Instead, their work must be open and transparent and subjected to the criticism of the public and the public’s elected representatives.

“Elected political hacks?”

While some critics of the Senate aren’t calling for its abolition, they do want it to become more legitimate, e.g. they want elected Senators. As I’ve previously written in an earlier post on the Senate, I sometimes struggle to understand people’s fixation with democratising everything. I don’t think that elected necessarily equals better. We often lament the fact that we can’t attract really outstanding individuals to run for public office. There are a myriad of reasons why people might not be interested in subjecting themselves to the ups and downs of running for office, and I can certainly sympathise with them on that front. However, that doesn’t mean that these same people wouldn’t be interested in serving the country in a different way, and would welcome a Senate appointment. Still, it remains that many will not be satisfied with anything less than elected Senators. While electing Members of the Upper House might legitimize their existence for some, there is a real possibility that Senators would then go from being appointed political hacks to elected political hacks.

I say this because of the current status of the Canadian House of Commons. Concurrent with the debate on the Senate, there is a growing call for reform of the Canadian House of Commons, which many political observers (if not all of them by this point) consider to be highly dysfunctional. Various media and other sources have launched discussions on how to reform the House, and have identified some of the key problems. One of the biggest is that of the excessive control the party leader exerts over his or her MPs. By some accounts, the level of party discipline in Canada is the strictest in the world. Canadian MPs almost never vote against their party – even on items which shouldn’t be whipped votes (meaning there shouldn’t be a party line to vote against), such as Private Members’ bills and motions, as I explained in this post. Rebellion on larger issues, such as the budget? Forget it. While UK MPs regularly defy their party whips, this simply does not happen in Canada.

Part of the reason for this is that the party leader signs each candidate’s nomination form. Fall out of the leader’s good graces and that will be the end of your career as an MP. Of course, they could try running as independents, but independents very rarely get elected – and have virtually no power once in Parliament should they manage to get elected. If the party leader has that much control over MPs, surely the same process would be put in place for elected Senators. Meaning once elected, Senators would be as beholden to the party leader as MPs are. We’d end up with two Chambers of completely whipped automatons. I really fail to see how that would be an improvement over the current situation.

“Who needs it anyway?”

Which brings us back to the abolitionists’ position – just get rid of the Senate. It doesn’t do anything. Well, anyone who says that simply doesn’t pay any actual attention to the work that the Senate does. Because of the current level of dysfunction in the House of Commons, often the only real scrutiny any bill gets is in the Upper House. The Commons finds itself handstrung by time allocation measures or overwhelmed by massive omnibus bills – which are often also time allocated. The Standing Committee on Government Operations and Estimates concluded that the House is failing in its duty to properly oversee how the Government spends money.

Many on the pro-abolition side point to the provinces, which are all unicameral, and happily state that they function just fine without an upper chamber. Again, I can only assume that they don’t pay very close attention to what really goes on in most provincial legislatures. If they did, they probably wouldn’t make that assertion. Some smaller legislatures probably do function fine with only one chamber, but being in a position to very closely observe one of the larger provincial chambers, I can say that the problems common to the House of Commons are in some ways even more prevalent at the provincial level. An Upper Chamber might actually be a welcome addition for some provinces.

Related Posts:

Canada’s Royal Succession Bill

In 2011, at a meeting of the Commonwealth Heads of Government held in Perth, Australia, the 16 countries which have Queen Elizabeth as their head of state agreed to modernize the rules of royal succession. The proposed changes would put an end to three current practices:

  • male children inheriting the throne ahead of their older, female siblings.
  • a ban on a monarch or direct heir to the throne marrying a Roman Catholic.
  • the requirement for all descendants of George II to obtain the monarch’s permission to marry or else have their marriage declared void.

The Canadian government recently introduced Bill C-53, An Act to assent to alterations in the law touching the Succession to the Throne. A motion was moved, and agreed to unanimously, to give the bill second and third reading the same day, and it is now before the Senate.

For many, however, the Canadian bill is problematic and potentially even unconstitutional. Essentially, it merely assents to the Bill currently before the UK Parliament. You can track the progress of the UK bill as well as read it in its current form here. By merely assenting to the UK bill, Canada is merely agreeing with whatever changes are ultimately adopted by the UK Parliament.

Many constitutional experts are arguing that this approach is not sufficient, and that Canada would actually be required to amend its Constitution in order to adopt these changes. The constitutional amendment would also require the support of all of the provinces.

I am by no means a constitutional expert, and so I will  link to articles written by people far better qualified to explain this complex issue.

1. For an excellent overall background piece, please read Janyce McGregor’s Canada’s royal baby bill risks constitutional complications. McGregor explains how this issue came about, and provides an overview of the main constitutional arguments in a very accessible way.

2. For a more detailed discussion of the constitutional questions raised by Bill C-53, please read Prof. Philippe Lagassé’s The Queen of Canada is dead; long live the British Queen:

If the United Kingdom cannot legislate the rules of succession for the Canadian Crown, it follows that Canada must have the power to determine the rules of succession for its Sovereign and head of state. At present, the Canadian rules of succession are those that were inherited from the United Kingdom. And an argument might be made that they must mirror those of Great Britain absent a constitutional amendment, owing to the preamble of the Constitution Act, 1867. But mirroring the British rules does not mean Canada can simply assent to British bills to bring its succession into line with the United Kingdom’s. If Canada is a sovereign state and has an independent Crown, the Canadian legislatures—Parliament and the provincial legislatures—must pass substantive legislation to ensure that Canada’s rules of succession reflect those of Great Britain, not merely assent to a British law. Here again, the Governor General’s granting of Crown consent to the Canadian bill indicates the government is at least partially aware the British and Canadian Crowns cannot be affected by the same British law.

3. Australian constitutional expert Anne Twomey is also baffled by the Canadian government’s approach, as she explains in The royal succession and the de-patriation of the Canadian Constitution:

Hence, all that the Canadian Bill appears to do is to agree to a change in the law of succession in relation to the British Crown that does not in any way affect, or purport to affect, the succession to the Crown of Canada. The consequence would be that if the eldest child of the Duke and Duchess of Cambridge was a girl and a later child was a boy, the girl would become Queen of the United Kingdom and the boy would become King of Canada (assuming that neither jurisdiction had become a republic by that time).

(…)

Likewise, s 2 of the Canada Act 1982 provides:

No Act of the Parliament of the United Kingdom passed after the Constitution Act, 1982 comes into force shall extend to Canada as part of its law.

It would therefore seem to be abundantly clear that a Canadian law that simply ‘assents’ to a British law that changes succession to the British throne, does not and cannot affect succession to the throne of Canada.

Similarly, the Canadian Royal Heritage Trust argues:

Queen Elizabeth II was proclaimed in Canada as the Sovereign and “Supreme Liege Lady in and over Canada to whom we acknowledge all faith and constant obedience” before she was proclaimed Sovereign in the United Kingdom. Of course Elizabeth II had become the Queen of both countries the instant that her father had died, by virtue of the laws of Succession. Her sovereignty was announced to her peoples, not granted, by the respective Accession Proclamations, but Canadians were able to recognize who their Sovereign was without reference to any proclamation of recognition in the United Kingdom because the laws of Succession in the two countries produced the same Sovereign. If there were no laws of Succession in Canada the Canadian Accession Proclamation in 1952 could not have been issued first. For the record, it was the already proclaimed Queen of Canada who was then proclaimed as Queen of the United Kingdom.

Of course, not everyone agrees with these arguments. For example, Prof. Mark Walters of Queen’s University dismisses these concerns:

The question has produced controversy — but it shouldn’t.  The short answer is simple: under the law of the Constitution of Canada, the king or queen of Canada is whoever happens to be the king or queen of the United Kingdom. Although the government of Canada introduced a bill into the Canadian Parliament this month that, when enacted, will express “assent” to the changes to the rules of royal succession to be made by the British Parliament, this assent will be given as a matter of constitutional practice or convention only; it is not required by, and it will have no effect within, Canadian constitutional law. Again, the rule of Canadian constitutional law is simply that the Crown in Canada is worn by whoever wears the Crown in the United Kingdom. While British rules on who wears the Crown in Britain are complex and open to change from time to time, the Canadian rule on who wears the Crown in Canada is simple and, for the time being, fixed.

Further Reading:

Related Posts:

On Constitutional Monarchy

Canada, the United Kingdom, Australia, New Zealand, and many other countries, are constitutional monarchies. Constitutional monarchy is a form of monarchical government established under a constitutional system that acknowledges an elected or hereditary monarch as head of state. Modern constitutional monarchies usually implement the concept of trias politica or “separation of powers”, where the monarch either is the head of the executive branch or simply has a ceremonial role. Where a monarch holds absolute power, it is known as an absolute monarchy. The process of government and law within an absolute monarchy can be very different from that in a constitutional monarchy.

Canada is a constitutional monarchy and a Commonwealth Realm that formally recognizes Elizabeth II as Queen of Canada. Though the United Kingdom and Canada share the same Monarch, the Queen of the United Kingdom is a legally separate role from the Queen of Canada.

Today, constitutional monarchy is almost always combined with representative democracy, and represents theories of sovereignty which places sovereignty in the hands of the people, and those that see a role for traditions in the theory of government. Though the king or queen may be regarded as the head of state, the Prime Minister, whose power derives directly or indirectly from elections, is head of government.

Although current constitutional monarchies are mostly representative democracies, this has not always historically been the case. There have been monarchies which have coexisted with constitutions which were fascist (or quasi-fascist), as was the case in Italy, Japan and Spain, or with military dictatorships, as was the case in Thailand.

Some constitutional monarchies are hereditary but others, such as that of Malaysia are elective monarchies.

The Sixteen Realms of the Commonwealth of Nations

The most significant family of constitutional monarchies in the world today are the sixteen Realms of the Commonwealth of Nations, all independent parliamentary democracies under Elizabeth II. Unlike the United Kingdom, almost all of the other countries in this family have written constitutions with complex processes for constitutional change. Through political crises, peaceful constitutional drafting and international debate, the Westminster conventions concerning the constitutional monarch have gained much clearer definition in the other fifteen Realms than in the United Kingdom. In many of these constitutions the monarch or her representative have been regarded as an integral part of the Executive and Legislative processes, and their positions are explicitly protected, at least in part, by the written constitution.

Unlike some of their continental European counterparts, the Westminster monarch and her representatives retain significant “reserve” or “prerogative” powers, to be wielded only in times of extreme emergency (e.g. Australia 1975, Granada 1983, Solomon Islands 1994), usually to uphold parliamentary government. On these occasions a lack of understanding by the public of the relevant constitutional conventions can cause controversy: for example, the 1975 dismissal of the Whitlam Government in Australia.

Canada as a Constitutional Monarchy

Canada is a constitutional monarchy and a Commonwealth Realm that formally recognizes Elizabeth II as Queen of Canada. Though the United Kingdom and Canada share the same Monarch, the Queen of the United Kingdom is a legally separate role from the Queen of Canada.

The role of the sovereign, which on paper seems to be all-encompassing, is contrasted with the reality that the Queen is bound by convention to very rarely exercise her powers, and is thus largely a ceremonial figurehead. Instead the great majority of the Monarch’s power, prerogatives, and duties are performed on a day-to-day basis by the Governor General at the federal level, or by the Lieutenant-Governors at the provincial level. While her formal political role has diminished, and the Governor General has taken on more of the Head-of-State functions, the Monarch is still the constitutional head of Canada. In that capacity, all government business, all laws, all elections, etc., are done or proclaimed in the Sovereign’s name.

The current Queen, Queen Elizabeth II, has reigned as Canada’s sovereign since her ascension on February 6, 1952, and she has been a far more visible Monarch than any in the past, visiting Canada 21 times as Queen (and once as a Princess), more than any other Commonwealth Realm except the UK itself.

In Canada, the Queen’s official title in English is: Elizabeth the Second, by the Grace of God of the United Kingdom, Canada and Her other Realms and Territories Queen, Head of the Commonwealth, Defender of the Faith. In French, the Queen’s title is: Élizabeth Deux, par la grâce de Dieu Reine du Royaume-Uni, du Canada et de ses autres royaumes et territoires, Chef du Commonwealth, Défenseur de la Foi. In common practice, Queen Elizabeth II is referred to simply as “The Queen” or “The Queen of Canada” when in Canada, or when abroad and acting on the advice of her Canadian ministers.

Some Notable Features of the Canadian Constitutional Monarchy

Although Queen Elizabeth II is also monarch of the United Kingdom and several other Commonwealth countries, each nation, including Canada, is sovereign and independent of the others. The identity of the sovereign is determined by the conditions set out in the Act of Settlement. As a result of the Balfour Declaration of 1926, the dominions acquired the right to be considered equal to Britain rather than subordinate; an agreement that had the result of, in theory, a shared Crown that operates independently in each realm rather than a unitary British Crown under which all the dominions were subordinate. The monarchy thus ceased to be an exclusively British institution, although it has often been called British since this time (in both legal and common language) for historical reasons and for convenience. The Royal and Parliamentary Titles Act, 1927 was the first indication of this shift in law, further elaborated in the Statute of Westminster, 1931. Under the Statute of Westminster, 1931, Canada has a common monarchy with Britain and the other Commonwealth Realms and cannot change the rules of succession without the unanimous consent of the other realms, unless Canada explicitly leaves the shared monarchy relationship by means of a constitutional amendment.

Succession to the throne has been by male-preference primogeniture and governed by the provisions of the Act of Settlement and the English Bill of Rights. These documents are now part of Canadian constitutional law. In 2011, the Commonwealth Realms agreed to amend the rules governing the line of succession to the Throne. The changes will enshrine gender equality and freedom to marry an individual of another faith in the laws governing the Royal line of succession.These changes are expected to be adopted in 2013.

Although the Queen’s Canadian title includes “Defender of the Faith/Défenseur de la Foi,” neither the Queen, the Governor General, nor any Lieutenant-Governor has any religious role in Canada. There have been no established churches in Canada since before confederation in 1867. This is one of the key differences from the Queen’s role in the United Kingdom where she is Supreme Governor of the Church of England.

On all matters of state to do with Canada, the monarch is advised solely by the Canadian federal and provincial first ministers. Effective with the Constitution Act, 1982 no British government can advise the monarch on any matters pertinent to Canada.

All powers of state are constitutionally reposed in the Queen, who is represented at the federal level by the Governor General of Canada and at the provincial level by Lieutenant-Governor. The Governor General is appointed by the Queen upon the advice of the Prime Minister of Canada. The ten lieutenant-governors are appointed by the Governor General, in the name of the Queen, upon the advice of the Prime Minister of Canada though the Queen is informed of the Prime Minister’s decision before the Governor General gives assent. The Commissioners of Canada’s territories of Nunavut, Yukon, and Northwest Territories are appointed by Governor in Council at the recommendation of the Minister of Indian Affairs and Northern Development. But as the territories are not sovereign entities, the commissioners are not representatives of the sovereign. They receive instruction from the said federal Minister of Indian and Northern Affairs.

Royal Assent and proclamation are required for all acts of Parliament and of the provincial legislatures. Territorial legislatures are subject to the oversight of the Government of Canada. Provinces and their legislatures, as sovereign entities, are not.

The legal personality of the monarch in Canada is referred to as “Her Majesty the Queen in Right of Canada,” and likewise for the provinces and territories (i.e., “in Right of Ontario,” etc.). For example, if a lawsuit is filed against the federal government, the respondent is formally described as Her Majesty the Queen in Right of Canada. Of course, the Queen herself takes no more role in such an affair than in any other business of government. Indeed, in cases in which, for example, a province sues the federal government, it would formally be Her Majesty the Queen in Right of Prince Edward Island v. Her Majesty the Queen in Right of Canada.

As in the UK, the Queen’s role is almost entirely symbolic and cultural, and the powers that are constitutionally hers are exercised wholly upon the advice of the elected government. In exceptional circumstances, however, the Queen or Governor General may act against such advice based upon her reserve powers as when Governor General Byng refused a demand by Prime Minister W.L. Mackenzie King for a dissolution of Parliament and call for new elections, because King’s request was blatantly unconstitutional, and it is the first order of the Crown to defend the constitution (see King-Byng Affair). For the most part, however, the monarch functions as a rubber stamp and a symbol of the legal authority under which all governments operate. It has been correctly said since the death of Queen Anne (1714), the last monarch to head the British cabinet (when almost all of Canada was still French colonial territory), that the monarch “reigns” but does not “rule”. In Canada, this has been true since the Treaty of Paris (1763) ended the reign of Canada’s last absolute monarch, King Louis XV of France.

Queen Elizabeth II, as is common for all her other non-UK realms, is generally regarded as “Queen of Canada” only when she is actually present in Canada or when she otherwise performs ceremonies relevant to Canada, such as conferring Canadian honours in the UK or participating in the Canadian World War II memorial ceremonies in France. Except for a few duties which must be performed by the Queen (e.g., signing the appointment papers of governors general and lieutenant-governors, which no governor general can do), or which require assent by the Queen as well as the Governor General (as when Prime Minister Brian Mulroney expanded the number of Senate seats to assure passage of the Goods and Services Tax), all of the Queen’s federal duties are performed by the Governor General and all of her provincial duties are performed by the pertinent Lieutenant-Governor.

For Further Reading:

Related Posts:

Preferential voting isn’t the solution some think it might be

There have been a growing number of columns and articles in various Canadian media over the past few months bemoaning the state of our parliamentary democracy and proposing various changes which might improve the situation. More often than not, electoral reform is mentioned – either in the column itself, or by a reader commenting on the piece.

There does seem to be a growing recognition or acceptance that the First-Past-the-Post voting system doesn’t quite work the way people would like. I won’t say it doesn’t work the way it should because it works exactly as it should. It simply isn’t the ideal system for multi-party democracies.

Inevitably, in these discussions, someone proposes some form of proportional representation, usually Mixed-Member-Proportional, where most MPs would be elected the usual way, but then each party’s numbers would be topped up with list MPs to more closely reflect the party’s actual percentage of the vote. And also inevitably, many other people chime in denouncing any form of PR because it leads to coalition government which is of course completely unstable – just look at (insert name of favourite basketcase country here).

The voting system change that seems to garner (or be garnering) the most support is the very one the UK rejected in the 2011 referendum – the Alternative Vote (AV), or preferential voting. As I’ve explained in the very, very many posts I wrote during the lead-up to that referendum, under AV, voters rank the candidates in order of preference. To be elected, a candidate has to get over 50% of the votes cast. If no candidate tops 50% after the first count, then the candidate with the lowest vote total is dropped from the ballot and the votes for that candidate are redistributed based on the second preferences indicated by voters. This process continues until someone ends up with over 50%. See this post I wrote back in 2011 to explain to British readers how the vote would work.

AV isn’t used in a lot of places. Australia is the best example available of a western democracy which uses it. At the federal level, they use “full prefential voting” to elect the House of Representatives (a completely different system is used to elect Senators – see this handy guide to voting systems used in Australia). That simply means that voters have to rank every single candidate on the ballot. I believe they can leave one candidate unranked, and that will be counted as their last choice, but if they leave more than one candidate unranked, the ballot is rejected. At the State level, some states also use full preferential to elect their Legislative Assemblies, while others use “optional preferential”. Under this variant, voters can rank as many or as few candidates as they want – this was the model proposed in the UK. Under optional preferential, voters can treat their ballot as a FPTP ballot if they so desire – voting for one candidate and one candidate only.

The Alternative Vote appeals to many because it is fairly simple (not quite as simple as FPTP, but certainly far less complex than other voting systems out there), and it would address the issue of MPs being elected with minority support. As I’ve also repeatedly blogged, the majority of MPs in Canada win their seat with less than 50% of the vote cast in their riding – sometimes a lot less. AV would put an end to that, in theory, at least.

It is really important to understand that this is the only advantage or benefit AV has over FPTP. In many ways, it can lead to even more distorted results than FPTP currently does, e.g. a single party winning even more seats than it might have under FPTP. It is not at all proportional, so it won’t put an end to majority governments formed by a party with much less than majority support, meaning many voters will continue to feel as if their votes don’t count.

Each form of AV also presents other problems. Full preferential, where a voter would have to rank every single candidate on the ballot paper, would force many – probably most voters -  into making what can only be described as artificial choices. Some voters simply don’t have a second choice – they vote for one party and one party only, and would have no desire to even attempt to rank any other candidates. Other voters might have an easier time ranking the two or three major parties on the ballot, but here’s the big problem. Most ballot papers in Canada have several candidates listed, often as many as 10 or so. Apart from the candidates representing the three or four major parties in the country, there are also a large number of candidates representing fringe parties most people have never heard of, as well as candidates running as independents. Leaving aside the one-party-only people, for everyone else, it would be a very trying experience, if not even a complete joke, to try to rank the fringe and independent candidates. And never mind trying to rank candidates you’ve never heard of, what about having to rank candidates you dislike equally? Think about this for a minute, about how many candidates were actually listed on your ballot the last time you voted. Now imagine having to rank every single one of those individuals in order of preference in order for your ballot to count.

So go with optional preferential – problem solved. Indeed. But let’s remember that the only advantage AV has over FPTP is that it is supposed to ensure that the MP elected is elected with over 50% support in that riding. While most think that means “50% of the votes cast”, if you’re using optional preferential, what you end up with is someone elected with 50% of the votes still in play, which may be a very different number from the total number of votes cast. Under optional preferential, voters can choose to cast their vote for one candidate only, and indeed, many do just that. This is a phenomena known as “plumping”. Optional preferential has been used in Canada in the past, in three different provinces, and I have a post looking at what happened in those provinces during the time they used optional preferential. As you can see, the plumping rate was quite high – sometimes over 60%. That means only a minority of people were actually ranking more than one candidate. I am willing to guess that at best, most voters who do bother to rank will rank only two or three candidates. If the majority of ballots can’t be transferred after the first count, the one advantage AV has over FPTP pretty much disappears.

As well, optional preferential can end up costing parties seats because of voters treating their ballot as a FPTP ballot. See this post by Australian elections expert Antony Green on the recent election in Queensland. There is also evidence that optional preferential disadvantages smaller parties (and independents) – just as FPTP does. As Green points out in this post, wherein he re-does the 2010 Australian federal election using optional preferential rather than full preferential, “optional preferential voting always advantages the party with the highest first preference vote.”

It may interest some proponents of AV to know that the State of Queensland is currently conducting an inquiry into its electoral law, and an important focus of that is whether optional preferential should be retained (discussion paper PDF here). From page 37 of that discussion paper (emphasis added):

A key issue with OPV is that it has the potential to become a de facto ‘first past the post’ system. Preferences can be quickly exhausted where a large number of voters choose to vote ‘1’ only. This is particularly problematic where a large number of candidates are contesting a seat. In such a circumstance, it would be possible for a candidate to be elected with only a small proportion of the vote, which could leave the majority of the population unrepresented.

As part of its analysis of a survey of ballot papers from the 2009 state election, the ECQ found that approximately 63.03% of ballot papers were marked ‘1’ only. At the 2006 election, 62.15% of surveyed ballot papers fell into this category. Up until the 2001 election, the number of ballot papers marked ‘1’ only had been significantly lower (20.7% in the 1995 election).

Meanwhile, others in Australia are calling for a move towards proper proportional representation.

While I agree with most that AV/preferential voting might be the easiest electoral reform to implement here in Canada because it isn’t that different from FPTP, there are some very important issues associated with it that need to be carefully considered. It won’t be the panacea many seem to think it might be.

Related Posts:

A Short History of Equalization, Part 2

As discussed in Part 1, the equalization program was significantly overhauled in 2007. This was largely because it had become, in the minds of many critics, an overly-complex mishmash of special deals and formulae that benefited some more than others and pleased no one. From 1982 to 2004, in general terms, the program used a complex but consistent formula of an equalization standard that was based on the average of the fiscal capacities of five provinces (British Columbia, Saskatchewan, Manitoba, Ontario and Quebec), using 33 different tax bases (including 100% of natural resource revenue). In 2004, the Fixed Framework was adopted, which replaced that formula with a fixed pool of funds that was set in legislation (at a minimum of $10 billion for 2004–05), which would grow by 3.5% each year. As well, each province was guaranteed that its equalization entitlements would not be lower than the amount announced for 2004–05.

However, many provinces believed the 5-province standard didn’t provide for a realistic national benchmark since not included in that calculation was Alberta and its oil-rich economy. There was growing demand for a return to the 10-province standard that had been used before 1982.

Also, the 2005 Atlantic Accords signed by Nova Scotia and Newfoundland and Labrador, which essentially protected their equalization entitlements from clawback due to rising revenue from their offshore oil and gas industries upset other resource-rich provinces such as Saskatchewan. Neither the federal government nor the provinces were satisfied with the equalization program. The federal government gave the provinces a year to try to reach some sort of consensus on how the program should be improved, but despite many first ministers meetings held throughout 2006, the provinces were unable to achieve any sort of agreement, leaving the federal government free to modify the program, which it did in 2007.

Budget 2007 (tabled in the House of Commons on 19 March 2007) included a new equalization program that was principle-based and formula-driven. Following on the recommendations of the Expert Panel on Equalization in Achieving a National Purpose: Putting Equalization Back on Track, commonly known as the O’Brien Report, the new program includes the re-establishment of a ten-province standard, simplified measures of capacity through a reduction in the number of equalization bases in the formula from 33 to 5, and a more predictable and stable payment system. Equalization payments are also constrained by a fiscal cap so that the total fiscal capacity of a receiving province cannot rise higher than that of the lowest non-receiving province.

Complicating matters somewhat was that the new program included special provisions for Newfoundland and Labrador and Nova Scotia, the two provinces covered by the equalization offset programs under the Atlantic Accords, which compensate for reductions in equalization payments associated with oil and gas revenues. Both provinces were given the option of remaining under the previous Fixed Framework, with an opportunity to permanently opt into the new Equalization program at a future date. However, if either province opted to switch to the new equalization formula, that choice was to be permanent.

What follows is an overview of the major changes to the program.

1. The Equalization Standard

The equalization standard is the level to which equalization payments raise the fiscal capacity of receiving provinces. From 1982 to 2004, the standard was based on the average of the fiscal capacities of five provinces: Ontario, British Columbia, Quebec, Saskatchewan and Manitoba. Alberta’s oil-rich economy and the poorer Atlantic Canada provinces were not included in the calculation.

The equalization standard in the new program reflects the recommendation in Achieving a National Purpose: Putting Equalization Back on Track (the O’Brien report) and is based on the fiscal capacity of all 10 provinces. The overall program cost will be determined by the application of a complex formula, which is detailed in the Budget Implementation Act. Annual volatility associated with a 10-province standard will be addressed through the use of a weighted three-year moving average calculation for payments.

2. Natural Resources Revenue

The treatment of natural resources has long been one of the most contentious issues in the equalization program. This is due in part to the uneven distribution of natural resource wealth across provinces. Debate about natural resources has focused on two key issues—the appropriate inclusion rate and how to measure fiscal capacity. Under the system used from 1982 to 2004, 100% of resource revenue was included. However, provincial resource royalty regimes are quite specific to each province and industry, given the varying amount of economic rent different natural resources will generate. This made it a challenge to use the Representative Tax System (RTS) approach that is used for other tax bases, which simulates how much revenue a province could raise if it levied the national average tax rate using a typical tax system. Often, when average tax rates were applied to these bases, without taking into account differences in the economic rent generated by a given dollar or volume of production, the result is a measure of capacity that is very different from what the provinces can actually collect.

The new program adopted the O’Brien report’s recommendation to exclude 50% of provincial natural resource revenues, and provides provinces with the benefit of full exclusion without reducing payments to any province. The use of actual revenues also permits an important program simplification, as the 14 separate bases used previously can be consolidated into a single natural resource revenue base.

3. The Fiscal Capacity Cap

The new program includes a fiscal capacity cap, as recommended by the O’Brien report, to ensure that equalization payments do not raise a province’s total fiscal capacity above that of any non-receiving province. The definition of total fiscal capacity for the purpose of the cap will include fiscal capacity for non-resource revenue sources, 100% of natural resource revenues and equalization offset payments made pursuant to the Offshore Accords with Newfoundland and Labrador and Nova Scotia.

4. Simplified Measurement of Fiscal Capacity

The measurement of provincial fiscal capacity is simplified based on the recommendation of the O’Brien report. Instead of 33 tax bases, provincial fiscal capacity will be measured using 5 tax bases — personal income tax, business income tax, consumption tax, property tax and natural resource revenues.

5. The Commitment to Exclude Non-Renewable Resource Revenue

The new program allows provinces to receive the greater of their equalization payments under the new formula using 50% resource exclusion and the amounts they would receive under the same formula with full exclusion of natural resource revenues.

6. Nova Scotia and Newfoundland and Labrador

Newfoundland and Labrador and Nova Scotia were given the option of opting into the new program, or remaining with the Fixed Framework and the Atlantic Accord. If they opted for the new program, they forfeited the benefits of the Atlantic Accord. However, even if they opted to remain in the old system, the Atlantic Accord was still compromised because the fiscal cap introduced in the new program applies to all provinces, including Newfoundland and Labrador and Nova Scotia even if they aren’t part of the new system (section S.3.4. of the Budget Implementation Act).

Summary

Provincial equalization payments are now calculated using a 10-province standard based on 5 tax bases. A province receives the greater amount using 50% resource exclusion or full exclusion. A fiscal capacity cap ensures that equalization payments will not raise a province’s total fiscal capacity above that of the lowest non-receiving province. Nova Scotia and Newfoundland and Labrador were given the option of remaining with the old Fixed Framework system and retaining most of the benefits of the Atlantic Accords, or opting into the new system and losing the Atlantic Accords. Nova Scotia opted for the new system. Newfoundland and Labrador no longer receives equalization payments.

The new equalization program, while addressing some of the issues and problems that had arisen over the years, also introduced a new round of issues and complaints, which will be discussed in a future post.

Related Posts:

A Short History of Equalization, part 1: 1930-2006

The Rowell-Sirois Commission

In the 1930s, after several provinces had gone bankrupt trying to cope with effects of the Great Depression, the federal government established a Royal Commission on Dominion-Provincial relations (the Rowell-Sirois Commission). In its 1940 report, the Commission concluded that the Constitution did not give the provinces sufficient taxing power to meet their constitutional responsibilities across the social policy areas for which they were responsible (outlined in sections 92 and 93 of the Constitution Act, 1867). The Report of the Rowell-Sirois Commission concluded that while the Depression certainly did make matters worse for the provinces fiscally-speaking, the difficulties the provinces and territories faced were inherently systemic in nature. When they established the Canadian federation, the founding fathers could not have anticipated how costs in these areas would skyrocket. For example, between 1874 and 1937, the costs associated with running education and public welfare systems rose from $4 billion to $360 billion (Royal Commission on Dominion-Provincial Relations, pp. 244-245, in Equalization: Its Contribution to Canada’s Economic and Fiscal Progress, p. 180).

In exploring the notion of making fundamental changes that would better position the provinces and territories vis-à-vis their funding commitments as outlined in the Constitution Act, the Rowell-Sirois report considered and rejected any constitutional changes that would alter the division of powers, or give the provinces greater fiscal capacity. Instead, the Commission recommended centralizing taxation powers with the federal government, and the provision of a guaranteed annual income to the provinces and territories by the federal government.

The Commission’s report included three key recommendations:

  • The federal government take over control of unemployment insurance and old age pensions;
  • The federal government take over the collection of all major taxes, including personal income tax and succession duties (taxes placed on property or assets of an individual following their death, generally paid by the heirs to the estate); and,
  • The federal government should compensate the provinces for the lost tax revenue (and the removal of previous subsidies), by paying annual “National Administration Grants.” These Grants would help provinces “provide adequate services (at the average Canadian standard) without excessive taxation (on the average Canadian basis).” Essentially, these were the foundations of what we now know today as equalization.

Tax Rental Agreements

In 1940, the provinces agreed to a constitutional amendment giving the federal government control of unemployment insurance. The federal government did not, however, adopt the other principal recommendations of the Rowell-Sirois Commission. The fact is that provincial governments refused to give up their taxation powers, even with the promise of extra funding from the federal government. This resulted in a new course of action, with the federal government entering into ‘tax rental agreements’ with the provinces. These agreements meant that each province ‘rented out’ its right to collect taxes to the federal government. Under this arrangement:

  • The federal government took over the collection of personal income taxes, corporate income taxes, and succession duties from participating provinces;
  • The federal government paid annual compensation to the provinces to make up for the income each province lost by not collecting these taxes;
  • The terms of the tax rental agreements were renegotiated every five years; and,
  • Federal compensation was unconditional, meaning that provinces could spend the money as they saw fit.

First implemented during World War II, the tax rental agreement arrangement between the two levels of government ran until 1956. Throughout this period, several provinces remained uncomfortable with the idea of ceding taxation powers to the federal government, even as part of a temporary rental agreement. Ontario did not participate until 1952, when the federal government changed the way payments were calculated, and Quebec never participated in the tax rental agreements.

Initially, the principle of equalization was not found in the tax rental agreements. Indeed, the arrangements were designed solely to compensate a province for lost tax revenues, not to increase the revenue of the provinces to a higher level based on a national norm. In 1957, however, poorer provinces whose per capita tax revenues fell below a national standard found themselves eligible for additional federal compensation. This marked the beginnings of ‘equalization’ and its implementation. In 1967, provinces resumed collecting their own taxes.

The Birth of Equalization

In 1957 the equalization program included only three revenue sources: personal income taxes, corporate income taxes, and succession duties. These revenue sources were equalized to a high standard, namely, the weighted average of the per capita revenue of the two richest provinces (at the time Ontario and British Columbia), based on tax rates determined by the federal government.

In 1962, 50% of natural resource revenues were added to the list of revenues to be equalized; the same year, the standard was changed to the average of the ten provinces. The inclusion of natural resource revenues disqualified Alberta and British Columbia from receiving equalization payments. After the 1963 federal election, the incoming Liberal government changed the formula and returned to the weighted average of the top two provinces. Resource revenues were no longer included. However, 50% of natural resource revenues were deducted from the equalization payments, once again eliminating Alberta and British Columbia as recipient provinces.

The formula for determining equalization payments was overhauled yet again in 1967 when the fiscal arrangements were renewed for another five years. First, there was a major expansion, from four to sixteen, in the number of revenue sources included in the formula. Second, the revenues to be equalized were the actual revenues collected by each province. Third, the standard was changed once again from the average of Ontario and British Columbia to the average of the ten provinces.

Between 1972 and 1981, a number of ad hoc adjustments to the formula were introduced, largely for the purpose of dealing with volatile oil revenues. For example, soaring energy prices from 1973 put enormous pressure on the cost of equalization and placed Ontario as a recipient province from 1977-82. In 1973 and 1974 some ad hoc measures were taken to dampen the impact of energy on equalization.Then in 1977 only 50 per cent of resource revenues were made eligible.  But still Ontario qualified. Ontario’s economy was extremely hard hit by the recession of the early 1980s brought on in good part in the wake of the energy price boom. Ontario was only retroactively excluded from receiving payments through the “personal income override” whereby no province could be eligible if its per capita income exceeded the national average. With increasing oil prices raising equalization payments, this was creating a fiscal problem for the federal government. It was time to rethink the program, and the time for action came in 1982, when the fiscal arrangements were renegotiated.

The revisions to the equalization formula followed the format already employed in 1967. First, the list of revenues to be equalized was substantially expanded to thirty. Through this broad coverage of provincial revenues, the equalization formula was based on a “representative tax system” (RTS). Second, since it was based strictly on relative revenue capacity, the equalization formula implicitly assumed that the per capita provincial and local government expenditures financed by these federal transfers were equal across the country. Third, the standard was further modified by equalizing the per capita yields of the provincial revenues to the average of five provinces: Ontario, British Columbia, Saskatchewan, Quebec, and Manitoba, what became known as the five-province standard. The exclusion of Alberta from the standard eliminated the problem created by the inclusion of natural resources. The Atlantic provinces, which had no oil revenue at that time, were excluded as a counterbalance to the exclusion of Alberta; a wealthy province was offset by a less affluent region with a – at the time – comparable population. This formula, with some adjustments made over time, served as the foundation for equalization payments from 1982 until the 2005-06 fiscal year.

It should be noted that also in 1982, on March 2, the Government of Canada and the Government of Nova Scotia signed the Agreement on Offshore Oil and Gas Resource Management and Revenue Sharing. While the Agreement as such is not part of the equalization program, it is still important to mention it at this point since it would eventually have implications for the equalization program. The Agreement stemmed from the discovery of a large deposit of natural gas, known as the Venture well, near Sable Island offshore of Nova Scotia. The agreement provided that Nova Scotia’s share of the offshore revenues “shall equal 100 per cent, provided in that year the Nova Scotia government’s per capita fiscal capacity, including its share of off­shore revenues, does not exceed 110 per cent of the national average per capita fis­cal capacity plus 2 percentage points for every percentage point by which Nova Scotia’s average annual unemployment rate exceeds the national average annual unemployment rate.” What this meant was simply that the province would keep all the revenue it received from the development of this offshore resource until such time as its economy exceeded the national provincial average.

Most notably, however, in 1982, Canada enshrined the principle of equalization in the Constitution. The commitment to equalization is found in Section 36 (2) of the Constitution Act, 1982, which states:

Parliament and the Government of Canada are committed to the principle of making equalization payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public service at reasonably comparable levels of taxation.

1982 to present

The Atlantic Accords

As mentioned briefly above, in March 1982, the governments of Canada and Nova Scotia signed the Agreement on Offshore Oil and Gas Resource Management and Revenue Sharing which was drafted to allow Nova Scotia to keep 100% of its revenue from expected offshore natural gas developments following their discovery in 1979. Oil had also been discovered off the coast of Newfoundland in 1979 – the Hibernia field. In 1984, the Supreme Court of Canada declared that the oil and gas resources off the Newfoundland coast belong to the jurisdiction of the federal government. In the wake of the decision, the federal government initiated discussions with Newfoundland and Labrador and Nova Scotia in an effort to develop some guidelines to govern the development of the offshore petroleum industry. Taken together, these guidelines or agreements are loosely referred to as the Atlantic Accords. The purpose of the Accords, as they were developed, was to protect the two provinces from losing any revenues gained from petroleum revenues at the expense of equalization payments, until each of the provinces was sufficiently able to establish its respective offshore petroleum industries.

The reason for this protection was because one of the key issues that arose in the context of factoring revenues from natural resources into the equalization equation. When an equalization-receiving province realized big gains in natural resource revenues, it was then penalized through a reduction of its equalization payments, commonly referred to as equalization clawback. As a province’s revenue from natural resources (or any other source) increased, that province saw a comparable reduction in the amount of equalization it received. The Atlantic Accords provided for time-limited, partial compensation for any reductions in equalization payments to these two provinces as a result of increasing revenues from offshore developments. In effect, the Accords meant that the two provinces would receive separate offsetting payments from the federal government if increasing revenues from offshore developments led to decreases in their equalization payments. However, this was not what occurred, as will be discussed further on.

1992 Charlottetown Accord

Constitutional experts have argued that Section 36 of the Constitution Act, 1982, does not clearly spell out the federal government’s responsibilities regarding equalization; in fact, it has been suggested that the stipulation in the Act would be unlikely to survive a legal challenge.

Interestingly enough the proposed 1992 constitutional amendment (better known as the Charlottetown Accord), would have resulted in an altered Section 36, one that would have clearly committed the federal government to equalization – not only in principle but in practise. Further to this, the Charlottetown Accord committed the federal government to consulting with provincial governments on a meaningful basis before making any alterations to the legislation governing equalization payments. The Charlottetown Accord, however, died after 54 percent of Canadians voted it down in a national referendum that same year.

The Generic Solution

The generic solution, introduced in 1994, has been applied to the provinces of Newfoundland and Labrador (offshore revenues), Nova Scotia (offshore revenues), Quebec (asbestos), and Saskatchewan (potash). Under the generic solution, provinces lose only 70% of a major increase in fiscal capacity resulting from the development of non-renewable natural resources. Previously, for every $1.00 increase in a province’s fiscal capacity, its equalization payments decrease by $1.00. Under the generic solution, in very specific circumstances, for every $1.00 increase in a province’s fiscal capacity, its equalization payments are reduced by only 70 cents. This, of course, completely undermined the intent of the Atlantic Accords.

The Fixed Framework

Before 2004, equalization payments were driven by a complex but consistent formula. The formula determined both the overall amount the equalization program would pay out to receiving provinces and the amount each province would receive.

The formula measured the per capita fiscal capacity of provinces using the Representative Tax System (RTS). The RTS measured the amount of money provinces could raise from 33 different tax bases if they taxed those bases at national average tax rates. A province’s fiscal capacity on each of the 33 bases was then summed up and compared to a five-province average standard. If the formula determined that a province’s overall fiscal capacity across all of the tax bases combined was below the standard, that province received an equalization grant to bring it up to the common standard.

With the formula still in place, equalization payments had started to decline from their highest peak of $10.9 billion in 2000–01 to $8.9 billion in 2004–05. This was due to the combined impact of a slow-down in Ontario’s economy and tax reductions in several provinces. As well, since economic performance data on each province was updated constantly – several times a year, and since Ottawa used population estimates rather than actual population figures when doing its long-range planning, provinces occasionally either received adjustments (more money than previously announced) or had to repay over-payments. This uncertainty sometimes played havoc with a province’s fiscal planning, since money for which  it had budgeted sometimes did not materialise, or it found itself having to repay the federal government for a previous over-payment.

At the same time, the financial position of the federal government had improved dramatically and resulted not only in balanced budgets but also significant surpluses. A number of federal transfer programs had been reduced by a substantial amount in the mid 1990s and the provinces were demanding that Ottawa increase equalization as well as other transfers, particularly in the case of health care.

In response to that pressure, a new framework for both equalization and territorial funding was announced at a First Ministers’ Meeting in October 2004. Called the Fixed Framework, it featured the following elements:

  • The formula was no longer used to determine the overall amount of funding to be allocated for equalization and territorial funding. Instead, a fixed pool of funds was set in legislation.
  • The pool of funds to be available for equalization was set at a minimum of $10 billion for 2004–05, effectively stopping the decline in equalization payments.
  • Each province was guaranteed that its equalization entitlements would not be lower than the amount announced for 2004–05 and included in the 2004 federal budget.
  • A guaranteed growth rate of 3.5 percent per year was set in legislation, ensuring that the overall pool of funds available for equalization would continue to increase over 10 years.
  • Fixed shares for receiving provinces were set out in advance for the first two years of the Fixed Framework, replacing the normal operation of the equalization formula with a negotiated allocation.
  • The allocation in the Fixed Framework was legislated on an interim basis pending the outcomes of the work of a special Panel set up to review the equalization program and the development of a new allocation method.
  • On November 8, 2005, the federal government announced that the same approach would be extended to determine equalization entitlements for 2006–07.

There were some important implications of this new framework.

The interim allocation did not have a common standard to which all provinces were compared and raised. Instead, the standard varied for individual provinces depending on their former shares (over the last three years) of total equalization funding, regardless of changes in their relative fiscal capacity. As a result, some receiving provinces received more and others less than they would have if the previous equalization formula had been applied.

  • For example, in 2005–06, with the exception of Quebec, the per capita fiscal capacities of the receiving provinces were higher under the Fixed Framework than they would have been under the former five-province standard.
  • The Fixed Framework resulted in Newfoundland and Labrador having a higher fiscal capacity after equalization than Ontario (even without the Offshore Accords being taken into account).
  • Because the total equalization pool was fixed in advance, changes in one province’s fiscal capacity, up or down, would have a direct impact on the amounts other provinces received.
  • The Fixed Framework guaranteed a known and growing amount of funds for equalization. In this way, it improved stability and predictability, particularly for the federal government. On the other hand, the shares each province received under the Fixed Framework were not necessarily any more stable or predictable than they were in the past.

The 2005 Atlantic Accords

In February 2005, new Offshore Accords (Arrangement between the Government of Canada and the Government of Newfoundland and Labrador on Offshore Revenues, 2005 and Arrangement between the Government of Canada and the Government of Nova Scotia on Offshore Revenues, 2005) were signed with the two provinces. Those Accords extended protection to 2012 and provided full compensation for any reductions in equalization payments as a result of increased revenues from offshore developments. Generally speaking, in order to qualify for the full offset payments (made outside of the equalization program) and a potential extension to 2020, the two provinces would have to continue to qualify for equalization and continue to have a higher-than-average per capita net debt burden. Both provinces received guaranteed advance payments of a part of the benefits they were expected to receive over the first eight-year term of the 2005 Accords.

The impact of these Accords on the equalization program was controversial. Both Newfoundland and Labrador and Nova Scotia contend that the Accords have nothing to do with equalization and are intended to support economic development and debt reduction in the two provinces. On the other hand, others have argued that these so-called “side deals” have broken the fundamental, underlying nature of the equalization program and opened the door to calls for similar deals with other provinces.

It was against this backdrop that the federal government set out to reorganize the federal equalization program, as will be discussed in Part 2.

Related Posts:

Equalization Questions and Misconceptions

(If you are looking for information about federal transfers to a certain province, or federal expenditures vs revenues in the provinces, please go to either this post for information about all federal transfers to all the provinces, and this post for a closer look at federal revenues and expenditures by province. For some reason, Google always directs people to this post only, which doesn’t really address those issues in detail.)

Equalization is the Government of Canada’s transfer program for addressing fiscal disparities among provinces. Equalization payments enable less prosperous provincial governments to provide their residents with public services that are reasonably comparable to those in other provinces, at reasonably comparable levels of taxation. Not every province receives equalization transfers. Six provinces will receive equalization payments in 2012-13: Prince Edward Island, Nova Scotia, New Brunswick, Quebec, Ontario and Manitoba. The provinces that don’t receive equalization are frequently referred to as the “have” provinces and those that do receive money under this program as the “have-not” provinces. There are also a number of misconceptions about the equalization program. Here I will address some of the most common.

1. Alberta pays for equalization

One of the common misconceptions is that equalization is entirely paid for by the so-called “have provinces”, notably Alberta. The keyword search activity on this blog regularly shows people searching for things such as “how much does each province pay for equalization”, “how much does province X contribute to equalization”, “province Y receives equalization money from province Z”, etc.  It isn’t uncommon to see comments on blogs or online media stories calling for Alberta to “pull out” the equalization program, or about how other provinces are spending the money they get from Alberta via transfer payments from that province. For example, on the Alberta Wild Rose Party website, we find the following:

Federal equalization and other wealth transfer programs were ostensibly intended to balance the quality of social programs across the country. Instead, what has happened is that the provinces benefiting most from these programs are now able to offer significantly more generous services to their citizens than the two or three provinces who are the actual net contributors (primarily Alberta and Ontario). It is no small irony that the biggest single beneficiary of such transfers, Quebec, provides cheap university tuition and inexpensive provincial day care, while Albertans pay high prices for, and have severe shortages of both in their own province. These annual wealth transfers also create the perverse incentive for ‘have-not’ provinces to retain fiscally irresponsible taxation and spending levels thereby remaining on the transfer dole in perpetuity.

Everything in that passage is simply incorrect (as will be explained in the rest of this post) and it is worrying that the party does not understand how equalization actually works. While some talk about money being transferred from one province to another, in fact, all the money for equalization comes from Canadian taxpayers across the country and is shared among the less wealthy provinces. Equalization is paid by the federal government to provincial governments and does not include any sharing of provincial revenues among provincial governments. Equalization funding is paid out from the federal government’s general revenues. The general revenues are the revenues the federal government collects from a wide variety of sources including: the federal personal income tax paid by all taxpayers in the country, the federal corporate income tax paid by all businesses in the country, GST revenue, revenue from customs and duties, resource revenue from federal sources, the federal portion of gasoline, alcohol and other taxes, etc. Provinces keep all the money they raise from resources and all their other tax bases. No provincial government funds go to support equalization. There is no special “equalization tax” or levy paid to the federal government by richer provinces such as Alberta, and even if the equalization program were cancelled tomorrow, this would not affect how much money the federal government collects from individuals and businesses in the forms of taxes, duties, etc. This can’t be stressed enough: no province “pays into equalization” – all individual taxpayers and businesses pay into the federal government’s general revenue fund, from which equalization is just one of many programs funded. So in answer to questions such as, how much money does Alberta transfer to Quebec or how much money does Alberta pay to equalization, the answer is simply “$0.00″. No province transfers any money to any other province. Individuals and corporations transfer money to the federal government.

In terms of federal government revenue collection by province, it is important to note that the federal government collects tax revenue in the provinces, not from the provinces. This distinction may appear subtle, but it has important implications. To say that the federal government collects taxes from provinces suggests either that the level of federal taxes people pay is related to their province of residence, or that the fiscal capacity of individual provincial governments is affected by how much federal tax is collected in their jurisdiction.

Neither of these statements is true, however. In fact, from the point of view of federal revenue collection, the very notion of “provinces” is irrelevant. Federal taxes do not differ by province; all Canadians pay federal tax at the same set of rates regardless of where they live.

Granted, Ottawa does collect more money in the form of personal and corporate incomes taxes, GST, etc. in provinces with larger populations and stronger economies than it does in provinces with smaller populations and weaker economies. I strongly encourage you to read this post for a closer look at federal revenues and expenditures by province in order to gain a better sense of what has been explained here, especially if you’re one of the many people who are looking for the answer to “Does Quebec pay more in federal tax than it receives in equalization?”

If you want to try to get a sense of how much tax revenue the federal government collects in each province from various sources (personal income, corporate, etc.), you can look at the various statistics available on the Canada Revenue Agency (CRA) website. Please note that the data is never current (e.g. data is available for tax years 2006-2009, depending on the tax source).

2. How much has a province (e.g. Ontario or Alberta) contributed to equalization?

Again, as explained above, provinces don’t directly contribute to the equalization program. By that I mean, no province sends a specific amount of money to Ottawa to be used ONLY for equalization. The equalization program is paid for out of the federal government’s general revenues, which are collected in (not from) each province, including those that end up receiving equalization. The general revenues are the revenues the federal government collects from a wide variety of sources including: the federal personal income tax paid by all taxpayers in the country, the federal corporate income tax paid by all businesses in the country, GST revenue, revenue from customs and duties, resource revenue from federal sources, the federal portion of gasoline, alcohol and other taxes, etc. The existence of the equalization program has no effect on how much money is transferred from individuals and businesses in any province to the federal government.

3. When did Alberta (or any other province) start contributing to equalization?

As the explained in the previous two answers, provinces do not contribute to equalization. It is a federal program, paid for by the federal government, from its general revenues. All taxpayers in the country contribute to the general revenues of the federal government when they pay their personal income tax, sales tax, duties, corporate income tax, etc. Therefore, taxpayers in every single province have been contributing funds used for equalization from the very day the program started. There aren’t separate start dates for individual provinces, because Ottawa does not collect tax income from provinces, but from individuals.

4. Provinces which receive equalization are simply lazy/spend too much/just need to develop a work ethic and pay off their debts, are mismanaged economically, etc.

Eligibility for equalization is based on a province falling below a national per-capita income standard based on revenue from five different tax sources. It is not based on how much a province spends, if it runs a deficit, or if it has budgetary surpluses. A province can consistently have a balanced budget, and budgetary surpluses, yet simply not be able to generate enough own-source revenue to meet the national standard for a multitude of reasons – smaller population, smaller tax base, lower average incomes, less corporate tax income, a downturn in international commodity prices for mineral resources, etc.

Even if a recipient province paid off its provincial debt, it is quite likely, under the current equalization scheme, that it would still qualify for equalization because it still would not raise enough own-source revenue from the five tax bases to meet the national standard. Prince Edward Island, for example, has a population of only 146,000. It is inconceivable that it will ever be able to generate enough own-source revenue from personal income tax, business income tax, consumption tax, property tax and natural resource revenues to meet a national standard based on provinces that have much larger populations and larger, more diversified economies such as Alberta, Ontario, British Columbia and Quebec. This has nothing to do with Islanders being lazy, not having work ethics, being “moochers” or not managing their provincial finances effectively. It is simply because they are a very small province and are thus limited in how much own-source revenue they can generate.

Similarly, the province of Ontario became eligible for equalization transfers for the first time in the province’s history in 2010-11. While the opposition parties in Ontario were quick to blame this situation on mismanagement by the governing Liberal Party, the real reason why Ontario now qualified for equalization was because the formula had changed to a true national standard, one which included all 10 provinces, and the inclusion of oil-rich Alberta into the calculation raised the national standard significantly. Under the old five-province formula, Ontario was the top-performing province. Other reasons explaining Ontario’s shift from “have” to “have-not” status included: booming commodity prices which benefited the resource-rich Western provinces, soaring energy prices and the soaring Canadian dollar, which both negatively impacted the manufacturing sector. These were all factors beyond the control of the Ontario government.

5. The recipient provinces could meet the national standard if they simply raised their taxes.

Again, as touched on above, this isn’t true. A small province such as Prince Edward Island simply doesn’t have the population to compete with a large province such as Ontario, or the resource base to compete with Alberta. And one of the key goals of the equalization program is to  enable less prosperous provincial governments to provide their residents with public services that are reasonably comparable to those in other provinces, at reasonably comparable levels of taxation. Also, in a highly competitive global market, provinces can’t raise taxes too much without hurting themselves and driving away investment and jobs. The recipient provinces already do tax their citizens and corporations more in many areas, as the chart below demonstrates (see point 9). Raising these various taxes even more would most likely have a negative effect on their economies, and still not be enough for them to not qualify for equalization.

Similarly, there are some critics of equalization who argue that equalization allows the recipient provinces to have higher taxes, which kills jobs and investments, so if we got rid of equalization, they’d have to lower their taxes to attract more investments and create jobs. This doesn’t even make any sense. Provinces aren’t deliberately overtaxing people and companies – provinces are constitutionally obligated to provide certain services such as education, healthcare, social welfare, etc. These are very expensive programs, in particular healthcare, which accounts for the biggest percentage of spending in every single province. Getting rid of equalization would simply make it more difficult for some provinces to pay for these services. Also, there are realistic limits to how much investment certain provinces will ever be able to attract. People may wish to debate the logic of having a province as small as Prince Edward Island, for example, but PEI is a province and it could declare itself a tax-free haven – it still wouldn’t be able to attract enough jobs and investment to fully fund the programs it needs to provide.

6. Equalization allows the poorer provinces to provide all kinds of social programs they couldn’t otherwise afford – subsidised by the rich provinces.

This argument usually refers to social programs that many consider “luxuries” rather than the social programs that all provinces are constitutionally obligated to provide such as healthcare, education, welfare, etc. and the criticism is normally aimed at the province of Quebec, which offers its citizens subsidised $7/day daycare, and the lowest university tuition rates in the country, for example.

However, as explained above, equalization eligibility is based on a province falling below a national per-capita income standard based on revenue from 5 different tax sources — personal income tax, business income tax, consumption tax, property tax and natural resource revenues. The provinces that receive equalization do so not because of how much they spend (or don’t spend) on social and other programs, but because they don’t raise enough own-source revenue from those five tax bases to reach the national standard. Remember that provinces also raise funds from many other sources of revenue not included in the equalization formula. The current equalization formula only considers 5 sources of revenue (the previous formula included 33 different tax bases). Quebec would still receive the same amount of equalization it currently gets even if it didn’t offer $7/day daycare or raised tuition fees significantly.  The issue isn’t really that Quebec does offer these programs to its citizens, but that richer provinces such as Alberta, which can better afford them, choose not to offer such programs to its citizens.

7. Why does Quebec get so much equalization?

Of the six provinces receiving equalization in 2012-13, Quebec does receive the most in terms of total equalization payment, $7.9-bn. However, on a per capita basis, Quebec actually receives the second least amount of equalization. Quebec, like all recipient provinces, receives equalization based on two factors: its population, and because its fiscal capacity is below the average fiscal capacity of all provinces – known as the “10 province standard”. However, while Quebec’s fiscal capacity is below the 10 province standard, it is not that as far below the standard as some of the other recipient provinces since it has a fairly diversified and large economy, as well as being quite populous. On a per capita basis, Quebec gets only $926 per citizen from equalization. Ontario gets $243 per citizen. Ontario’s fiscal capacity is better than Quebec’s, and so it receives less equalization overall ($3.2-bn) and it has a much larger population – 13,373,000. Prince Edward Island is actually the province which benefits the most from equalization. It receives the smallest overall amount, $337-mn, but with a population of only 146,000, that works out to $2,308 per Islander. This chart shows how much equalization each province receives total, and per capita:

Province Population Total Equalization
2012-2013
(millions of $)		 Equalization per capita
Quebec 7,979,700 $7,391 $926
Ontario 13,373,000 $3,261 $243
Manitoba 1,250,600 $1,671 $1,338
New Brunswick 755,000 $1,495 $1,980
Nova Scotia 945,500 $1,268 $1,342
PEI 146,000 $337 $2,308


8. How does each province spend the equalization money it receives?

It isn’t possible to know this. Equalization transfers are unconditional, meaning that there are no conditions attached to the money dictating how a province must allocate the funds. Receiving provinces are free to allocate the money according to their own priorities.

9. Equalization allows the recipient provinces to have much lower tax rates at the expense of the non-recipient provinces

If one compares the various income, sales and other tax rates of the provinces, it quickly becomes very clear that this argument simply does not hold up.

Major Provincial Tax Rates, 2013
(Source: Government of Alberta Budget documents and Ernst and Young Provincial Budget Reports)
(Rates as of 27 March 2013)

Type of Tax AB BC SK MB ON QC NB NS PEI NL
Personal Income Tax
Statutory rate range
Lowest rate (%) 10.00 5.06 11.00 10.80 5.05 16.00 9.68 8.79 9.80 7.70
Highest rate (%) 10.00 14.70 15.00 17.40 13.16 25.75 17.840 21.00 16.70 13.30
Surtax (%) — — — — 20.0/
36.0		 — — — 10.0 —
Personal Amount ($) 17,593 10,276 15,241 8,884 9,574 11,195 9,388 8,481 7,708 8,451
Spousal Amount ($) 17,593 8,860 15,241 8,884 8.129 11,195 7,971 8,481 6,546 6,906
Corporate Income Tax
General rate (%) 10.0 11.0 12.0 12.0 11.5 11.9 11.0 16.0 16.0 14.0
M&P rate (%) 10.0 10.0 10.0 12.0 10.0 11.9 11.0 16.0 16.0 5.0
Small business rate (%) 3.0 2.5 2.0 0 4.5 8.0 4.5 3.5 4.5 4.0
Small Business threshold ($000) 500 500 500 400 500 500 500 400 500 500
Capital Tax
General (max. %) — — — — — — — — — —
Financial institutions (max. %) — — 3.25 4.0 — — 4.0 4.0 5.0 4.0
Other Taxes
Retail Sales Tax (%) — 7.0 5.0 7.0 8.0 9.975 8.0 10.0 9.0 8.0
Gasoline Tax (cents/litre) 9.0 21.2 15.0 14.0 14.7 18.2 13.6 15.5 13.1 16.5
Tobacco Tax (dollars/carton) 40.00 44.60 42.00 50.00 24.70 25.80 38.00 43.04 45.00 38.00
Payroll Tax (max. %) — — — 2.15 1.95 4.26 — — — 2.00

 

Related Posts:

Keyword post: Do ministers continue to hold office during an election?

During an election campaign, the ministry continues to hold office until a new ministry is sworn in. There are, however, limitations on what a minister can do during both the election campaign and the period of government formation following a general election. This is commonly referred to as the “caretaker convention”.

The Government of Canada’s Guidelines on the Conduct of Ministers, Secretaries of State, Exempt Staff and Public Servants During an Election provides a good explanation of the caretaker convention. As has been discussed many times on this blog, the government must command the confidence of the legislature at all times. Constitutionally, a government retains full legal authority to govern during an election and has the responsibility to ensure that necessary government activity continues. However, during an election period, a government must exercise restraint in its actions. The reason for that is quite simple – because the legislature has been dissolved for the election, there is no elected chamber to hold the government to account, and the government can’t assume that it could command the confidence of the legislature in the next parliament.

So while a government must exercise restraint during an election period and the transition period following an election, it can and must continue to make decisions and take actions ” where the matter is routine and necessary for the conduct of government business, or where it is urgent, and in the public interest – for example, responding to a natural disaster.”

In some instances, if a major decision might be required, for example due to an emergency situation that arises, it might be necessary for the government to consult with the opposition before proceeding. This would be especially necessary in instances where the decision taken might be controversial or difficult for a new government to reverse.

The Government’s guidelines enumerate the activities to which a government should limit itself during an election campaign. These should be activities which are:

  1. routine; or
  2. non-controversial; or
  3. urgent, and in the public interest; or
  4. reversible by a new government without undue cost or disruption; or
  5. agreed to by the Opposition (in those cases where consultation is appropriate).

For example, such a circumstance occurred in the United Kingdom following the 6 May 2010 general election, which resulted in a hung parliament. On 9 May 2010, at a time when party negotiations to form a new government were still ongoing, the Rt Hon Alistair Darling MP, the incumbent Chancellor of the Exchequer, attended an emergency meeting of the European Council of Finance Ministers in Brussels, called to address financial stability in Europe. At that meeting, the Chancellor agreed to the creation of a new European Financial Stabilisation Mechanism, as part of a comprehensive package of measures to preserve financial stability in the EU, providing for the EU Budget to guarantee EU borrowing to support Member States in need, up to the level of €60 billion. Other commitments reached at the meeting did not involve any financial commitment from the United Kingdom.

However, before attending the meeting, Darling consulted the Rt Hon George Osborne MP and the Rt Hon Vince Cable MP, at the time the Conservative and Liberal Democrat Treasury spokesmen. Darling later explained to a Select Committee: ”Whilst there is no formal obligation to consult, I believe it is a matter of courtesy that it was right to ensure that the then Opposition was fully informed”.

Contrast that to the Pearson Airport Agreements which occurred in Canada. In 1993, the Government of Brian Mulroney initiated a project to privatize Terminals 1 and 2 of Pearson International Airport in Toronto against the advice of Air Canada, Canadian Airlines International and the rest of the Canadian airline industry. It was proceeded with against the advice of public servants, and in the face of concerns expressed both openly in Parliament by the Rt. Hon. Jean Chrétien, then leader of the Official Opposition, and privately in correspondence between a Conservative Member of Parliament for Mississauga (where the airport is located) and the Minister of Transport.

Officials negotiating the deal were under great pressure to meet a deadline that was imposed by Prime Minister Mulroney so that the deal could be closed before he left office in June, 1993. Ultimately, the deadline could not be met. The agreements were finally signed in the middle of the election campaign, and at the express direction of the new Prime Minister, the Rt. Hon. Kim Campbell.

Opposition Leader Jean Chretien had repeatedly warned that if the Liberals formed the next government, they would cancel the deal, and that is exactly what happened. As discussed above, the caretaker convention imposes certain restrictions on what a government can do during an election, largely confining it to routine matters. This rule was not observed in the case of the Pearson Airport deal. The signing of the Pearson agreements “was a constitutionally inappropriate exercise of power… [that was] enough to justify whatever steps have to be taken to terminate the agreement.” As the Senate Committee which investigated the matter acknowledged:

These contracts would have established a precedent dangerous to Canada’s democratic process, a precedent whereby a government could conclude controversial agreements during an election campaign — even when it is clear that Government is about to lose. These contracts would have bound the Canadian government to a 57-year lease under terms that, as a matter of responsible business management, were not in the country’s best interest. Furthermore, the privatization of Canada’s largest, busiest and most profitable airport was inconsistent with the stated Government public policy and the policy which was being applied at all other major airports in Canada.

Under the caretaker convention, a government cannot take actions which are controversial (which the Pearson deal was), which binds a future government, or that will entail significant costs to reverse. Therefore the decision taken by the new Liberal Government to cancel the Pearson Airport Agreements was entirely justified.

 

Related Posts:

Page 1 of 212