Liberals will have a struggle with PM's decentralizing ways

Dion is portrayed as a centralizer, but he has shown flexibility in the past

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The Gazette, Monday, October 22, 2007

There's a vision thing in the Throne Speech, and it's the Harper government's proposal to limit the federal spending power in areas of exclusive provincial jurisdiction.

It's also a guided missile that might splinter the Liberal caucus, between Quebec and the rest of Canada like nothing since Meech Lake.

In philosophical terms, Stephen Harper is very comfortable with what he's proposing. He believes strongly in classical federalism and the division of powers between Ottawa and the provinces. This is the bargain struck by the Fathers of Confederation - the powers of Ottawa in Section 91 of the constitution, and the powers of the provinces in Section 92. Until the Charter of Rights came along in 1982, the division of powers was the heart of any federal question, from federal-provincial conferences to Supreme Court rulings.

In terms of tactics, the Liberals could be torn apart over limiting the federal spending power in exclusive provincial jurisdiction. This is a traditional agenda item of all Quebec governments, very much including the present Liberal government of Jean Charest. But in Ontario and the Atlantic, Liberals generally belong to the strong central government school of federalism.

As if Stéphane Dion didn't have enough challenges managing party unity, especially in the Quebec caucus. But at least he knows this file as well as anyone, from his days as a political-science prof and later as minister of intergovernmental affairs in the Chrétien government.

Dion is unfairly portrayed as a centralizer when, in fact, he has shown both flexibility and deep respect for the division of powers.

In any event, it's a very healthy and legitimate debate - how the parties in the House see the role of Ottawa and the provinces in the federation.

The New Democrats will vote against any bill limiting the federal spending power, simply because they regard Ottawa as a cash box for everything from daycare to homelessness. And with the NDP, it's also the medicare thing, Tommy Douglas and all that.

The Bloc Québécois would "eliminate" rather than simply limit the federal spending power in exclusive provincial domains. So, they will oppose it for different reasons, but they will have difficulty voting against it in the end. As with enhanced equalization and transfer payments to address the fiscal imbalance in the March budget, the Bloc would be hard pressed to explain why they opposed such an historic move.

But it's the Liberals who will have the most difficulty dealing with this issue. They are, after all, the party of the Canada-Quebec Pension Plan and medicare, negotiated by the Pearson government four decades ago. In both cases, the feds occupied provincial jurisdiction. But it has generally been forgotten that Lester Pearson had to negotiate both deals with Jean Lesage.

The crucial moment was the devising of opting out with compensation, which on pension funding gave birth to the Caisse de dépôt et placement du Québec, today a $150-billion powerhouse.

Head waiter to the provinces? Nobody ever said that about Mike Pearson. What they do say is that his two-term minority government in the 1960s was the most creative in federal-provincial relations in Canadian history.

Flash forward to the 2004 campaign. The Liberals learned through their focus groups and polls that the top three concerns of Canadians were health-care waiting times, daycare and cities.

Rather inconveniently, all three happened to be in provincial jurisdiction. But Paul Martin went ahead on them anyway, signing over billions and billions of dollars in agreements on all three. He did look like a head waiter to the provinces. Even Jean Chrétien negotiated the Social Union Framework Agreement, but no one ever called him a head waiter, either.

Harper is proposing an opting out with "reasonable compensation" for any province, read Quebec, that resists federal invasion of its jurisdiction. Moreover, Harper pledged in his famous Quebec City speech in the 2006 campaign there would no new such federal programs without the support of a majority of provinces. Again, read Quebec.

But he's also saying federalism is a two-way street, and demanding the reduction of barriers to inter-provincial trade, the famous BITs, of which there are hundreds.

This is very timely, inasmuch as Jean Charest has proposed a free-trade agreement with Ontario along the lines of the one between Alberta and British Columbia.

Harper has the constitutional means to get this done, in the Common Market Clause or Section 121. If we can have a free- trade agreement with the United States and Mexico, maybe it's time we had one in Canada.

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