Charest and Harper have two ways to play fiscal-imbalance issue

Premier could ask voters for mandate to negotiate, or present a done deal

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The Gazette, Friday, January 12, 2007

As Jean Charest ramps up to an election, he has two ways to play the fiscal imbalance between Ottawa and the provinces.

He can drop a writ asking for a mandate from the voters to negotiate a deal with Stephen Harper. Or he can make a deal, and put it in the window for the campaign.

Deal or no deal, that is the question. If he's seeking a mandate, then he's spared the criticism from the Parti Quebecois and the Bloc Quebecois that a deal is inadequate. The Bloc has been posting a ridiculous number, $3.9 billion, as Quebec's purported share of the gap between Ottawa's ability to fund programs and the provinces' capacity to provide them.

If Charest is concerned about the Bloc's estimate resonating with the voters, asking for a mandate to negotiate a deal is one way to take it off the table.

But it's hard to see him making the fiscal imbalance the ballot question. It's simply too complex an issue to take on the hustings.

It would be much better for Charest and Harper, as premier and prime minister, to make an agreement the centrepiece of functional federalism. Both would be seen to be delivering the goods.

Let's suppose, for the sake of argument, that Charest and Harper agree on a number that begins with $1 billion as Quebec's share. Then let's assume Harper would come to the Salon Rouge of the National Assembly, and sign a deal with a flourish. Even better, from Charest's perspective, what if all the other premiers, assuming they were on board, came for a signing hosted by the Council of the Federation, whose creation he suggested in the last campaign?

Either kind of event would be orchestrated to demonstrate, going into a Quebec campaign, that federalism works.

Two speeches by Charest and Harper are perfectly matched bookends on federalism. The first is Charest's Toronto speech at the 25th-anniversary dinner of Policy Options magazine in April 2005. He laid out five principles for renewing federalism, including "fiscal and political balance." And he added: "Federalism is the addition of voices. It is not reducing them to one."

Harper's reply came in what is now known as the Quebec City speech in December 2005. He made three significant commitments - to give Quebec an appropriate role in such cultural organizations as UNESCO, to recognize and redress the fiscal imbalance, and, finally, not to invoke the federal spending power in areas of exclusive provincial jurisdiction without the support of a majority of provinces.

In conceptual terms of federalism, the last is the most important.

The Martin government's top domestic priorities - health-care waiting times, daycare and cities - were all driven by focus groups and polls describing voter priorities. Rather inconveniently for the Liberals, they all happened to be in provincial jurisdiction.

Then along came Harper saying he would respect the basic bargain of confederation - the division of powers in the constitution. Ottawa's powers in Section 91 on Peace, Order and Good Government, and the powers of the provinces in Section 92, including all of the Martin priorities. "We will respect jurisdictions, as defined by the Canadian constitution," Harper said at the time.

This is the kind of differentiation from the federal Liberals that will work to Harper's advantage in the 50 Quebec ridings outside the Liberal stronghold of Montreal. Liberals are the party of strong central government, or domineering federalism, according to the critique in Quebec. Harper is positioning the Conservatives as the party of classical federalism, indeed as the party of confederation.

It isn't just Quebec where Harper would find strong support for limiting federal spending power. This question resonates equally in his adopted province of Alberta, where they still have bad memories of the invasive National Energy Program of the 1980s.

So a conversation on federal spending power would be a logical follow-up to a deal on the fiscal imbalance.

For Harper, a deal works better than no deal in the sense that it would give him a wedge against both the Bloc and the Liberals.

The Bloc would decry the inadequacies of an agreement, but how could they vote against more money for Quebec in a budget? Let's see Gilles Duceppe explain that to the voters.

As for Stephane Dion, when he was intergovernmental affairs minister in the Chretien government, he made learned presentations denying the existence of the fiscal imbalance. There is no evidence he has changed his position. And while Quebecers might not understand it, they believe it exists.

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