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Chretien, Canada's uncrowned monarch

Between elections, a prime minister can now dictate his will to both cabinet and Parliament

Posted with permission:


Canadian federalism does not work.

Hope lies in a refederation of stronger provinces in a new country.




REPORT, March 3, 2003, p. 4

Chretien, Canada's uncrowned monarch

Between elections, a prime minister can now dictate his will to both cabinet and Parliament


fathers_of_confederation_e.jpg (258824 bytes)
Fathers of Confederation, 1867: The prime minister was not a dictator then

Oxford American Dictionary

Democracy: government by the whole people of a country, especially through representatives whom they elect.

Dictator: 1. a ruler who has unrestricted authority... 2. a person with supreme authority in any sphere, one who dictates what is to be done.

Suppose Canada's prime minister decided to appoint an ordinary citizen to his Cabinet. That naive freshman, says political analyst Donald Savoie, would be shocked to learn how government in this country actually operates. "Canadians believe that their elected representatives exercise decisive authority, but they are wrong," comments Professor Savoie, who holds the Clement-Cormier chair in economic development at the University of Moncton. In 1999, he stunned Ottawa's ruling elite with the publication of his intimately detailed book Governing From the Centre: The Concentration of Power in Canadian Politics.

    With very few exceptions, any newly appointed minister receives a mandate letter from the Privy Council Office. The PCO is staffed by roughly 500 professional bureaucrats whose very existence has gone unnoticed by most citizens. In theory, these civil servants act as a support bureau for the Cabinet. Hence, their head is called the Clerk of the Privy Council (a body whose core membership is the Cabinet). But the person who gets the vital post of Clerk and the evaluation of his performance are decisions made by the prime minister alone, not the Cabinet. The prime minister's ability to demand and get co-operation from his vast administration depends on the authority of this key bureaucrat. The Clerk's titles carry weight: secretary to the Cabinet, head of the civil service and, most importantly, deputy minister to the prime minister.

    Suppose the naive new minister suggests that he would like to appoint his own department's deputy minister, just like the prime minister does. Alas, the minister would learn that he cannot do so. Deputy ministers are appointed by the prime minister on the recommendation of the PCO. As it happens, most of those deputy ministers will have worked for the Privy Council Office themselves. To keep tabs on the whole show, the Clerk of the Privy Council chairs a weekly breakfast meeting of all deputy ministers.

    A new minister also discovers that he cannot hire or fire anyone beyond a few of his office staff. After all, permitting elected politicians to make civil-service appointments could easily lead to patronage. Instead, hiring is handled by the Public Service Commission. The members of this powerful central agency are appointed, in theory, by the Cabinet. In practice, however, this power of appointment is again handled by the prime minister with the help of the PCO.

    If a foolish minister ever did protest against not being able to select at least some of his own departmental executives, he would be politely informed that government is a complex, highly professional organization. So it cannot be efficiently managed by doctors, insurance salesmen, small-town lawyers and other sorts of people who typically populate Parliament (and from whose ranks the Cabinet's members by law must be drawn).

    Inevitably, a new minister will plan to take a pet project before his peers in the Cabinet, a prospect which he relishes. After all, these men and women constitute the highest elected council in the land. Here is the cockpit where future policy is steered, or so most voters think. There is one hitch, though. Before an item can come before Cabinet, it must be placed on the agenda by the Privy Council Office. Worse, the minister learns that PCO officials who routinely discuss affairs with the prime minister may well start sticking their knives into the project in question. It's prudent for an elected representative to refrain from antagonizing these bureaucrats. Rather they must be wooed, the age-old privilege of true authority.

    PCO specialists track and frequently initiate the policies and programs carried out by service-delivery departments such as Agriculture, Transportation and so on. Only the Finance Department (another central agency) retains a significant degree of independence, according to Prof. Savoie. "The cabinet ministers and their ministries are both dependent on decisions emanating from the prime minister. No votes are taken in Cabinet meetings, and there is no formal mechanism by which the majority's will can even be calculated, let alone enforced. The prime minister's authority is remarkably concentrated, both in terms of the party and the government."

    The New Brunswick-bred academic is a long-time federal insider. During the 1980s, a report by Prof. Savoie led to the establishment of the Atlantic Canada Opportunities Agency, which has distributed hundreds of millions of dollars. But his insider status was forfeited four years ago with the appearance of Governing From the Centre. "The prime minister is no longer primus inter pares, the first among equals in cabinet and Parliament. He's just primus," the Oxford-educated francophone argues.

    The Prime Minister's Office, or PMO, handles the political side of government in the same centralized fashion that the Savoie.jpg (55978 bytes) PCO manages the civil service. Its staff is typically 80 to 120, all appointed by the prime minister. Prof. Savoie notes that the PMO constitutes the largest pool of partisan political expertise in the country. This agency, jointly with the PCO, manages the thousands of personnel appointments made by the prime minister, from the Senate and judgeships on down. That fountain of patronage provides leverage when dealing with mere members of Parliament. Besides looking after the prime minister's personal arrangements and correspondence, PMO staffers routinely involve themselves in issues ranging from international trade negotiations to local highway contracts.

    Government backbenchers are utterly vulnerable to prime ministerial power, Prof. Savoie says. A Liberal leader can disqualify an election nominee chosen by any party constituency association, even if he is an incumbent member of Parliament. Only the prime minister can promote a backbencher to Cabinet, a lucrative, perk-rich honour which most MPs fervently desire. And careful prime ministers can readily control a party's finances and officials.

    In Britain and Australia, government members of Parliament have one decisive tool: MPs there can turf out a prime minister and replace him with a new party leader. Indeed, this was how the formidable British leader Margaret Thatcher lost her job in 1990. But a Canadian prime minister is chosen by his party through a national voting system, not by its MPs. "Backbenchers here can only unseat a prime minister by defeating their own government in a vote of non-confidence," Prof. Savoie explains, "This strategy usually means triggering a national election. So MPs would face the risk of not being re-elected themselves, especially given their party's turmoil. Furthermore, it takes many months to set up a party leadership convention. These delays cannot be avoided. So, ironically, the dissident MPs would be forced into another election under the same leader who they want to get rid of. MPs really cannot control a Canadian prime minister. Between elections, he functions as a monarch."

    Canadians have long realized that ordinary MPs have little power, whether they sit on the government or Opposition benches. Cabinet ministers, in contrast, retain considerable public prestige and media attention. But this prestige, Prof. Savoie stresses, is based on ignorance. In his interviews with former cabinet members and civil servants, no one disagreed with the statement that the federal Cabinet has become little more than a focus group for proposals originating from the prime minister himself and his personal staff.

    Canada's concepts of government have been inherited from England, whose history shows that power often springs from bureaucracy. During the medieval period, kings travelled the land accompanied by a small band of administrators. The treasury secretary of that period was a clerk who kept accounts. In the U.S., the finance department is still run by the Secretary of the Treasury, but it's hardly a clerical position today.

    The British Parliament slowly evolved as a means for ordinary people to control dictatorial monarchs. Budgets proved to be the key lever. As the modern age dawned five centuries ago, Elizabeth I could not finance the beginnings of the British Empire without the consent of the freely elected House of Commons. Even the most powerful kings were sometimes refused higher tax revenues by parliamentarians—a highly unlikely event in the Canadian Parliament ruled today by Prime Minister Jean Chretien.

    When Canada confederated in 1867, Parliament and the Cabinet functioned as true decision-making bodies. The Clerk of the Privy Council was just a clerk. Cabinet meetings had no formal agendas, and no minutes were kept. Ministers hired whom they pleased (often based on political patronage) and ordered their departments to carry out policies after review by the Cabinet. When the future prime minister Lester Pearson entered government service in 1928, he noted that the PMO had a dozen staff, mostly typists and messengers.

    Governments of the Confederation era were relatively small, as was the economy. The population was about 3.5 million. According to former economics professor O.J. Firestone of the University of Ottawa, Canadian GDP (gross domestic product) was $417 million in 1867. Robin Neill, an economic historian from the University of Prince Edward Island, estimates that public-sector expenditures (both federal and provincial) accounted for perhaps 7.5% of GDP in 1867. Since then, the total population has jumped to 30 million while average GDP per capita has grown by almost 15 times, according to Figures published by the University of Regina. Of this vastly larger economy, federal and provincial governments now consume 41%.

    At Confederation, the national government had a narrow role largely restricted to military and foreign affairs, the post office and canal construction. "The biggest spenders of tax dollars were municipalities, who handled 'outdoor relief [as distinct from indoor relief, or workhouses]," explains Herbert Emery, co-author of An Economic History of Canada. Municipal Affairs, Health, Education and Resource Development were provincial jurisdictions under the British North America Act.

The federal role expanded dramatically in several stages:

  • Central Canada's drive to secure the West involved the construction of three federally subsidized transcontinental railways and a federally promoted wave of immigrant settlers.

  • Prosecution of the First and Second World Wars required federal management of large-scale, military-related manufacturing and the economy as a whole.

  • Provinces and municipalities desperately needed help with welfare during the Great Depression of the 1930s. Following the Second World War, the emergence of the welfare state and higher education multiplied the economic role of the public sector as a whole and the federal government in particular.

The feds and provinces both claim sovereignty

The debate continues whether Canada is a federation or a confederation. At issue is who holds the ultimate sovereignty. In a federation, the federal and provincial governments share authority, each within defined jurisdictions. In that case, Canada's provinces would find their constitutional authority defined by the federal Supreme Court. But the union of Canada which took place in 1867 was officially labelled Confederation.

How a confederacy works is well-illustrated by the Six Nations of the Iroquois. This long-term league, which happens to be North America's oldest still-functioning democracy, comprised the Mohawk, Seneca, Oneida, Onandaga, Cayuga and Tuscarora. The six tribes lived around the Great Lakes. All candidates for tribal chieftainships were nominated by older women but elected by the people at large. The central council could not act without unanimous approval from all six nations. Thus, the Iroquois are a true confederacy—sovereignty lies primarily with regional authorities.

Their warriors, thanks to efficient co-operation, were arguably the most-feared military power in eastern North America when Europeans arrived. For example, the Iroquois all but wiped out the equally numerous Hurons. The argument is made, although not proved, that certain American leaders (notably Benjamin Franklin and John Adams) derived their ideas for a confederacy based on democratic principles from the Iroquois Great League of Peace.

At that time, the concept of letting all men vote remained radical, an esoteric ideal practised only in Swiss cantons and Iceland. But the democratic and revolutionary Articles of Confederation enabled the United States to function as a true confederacy during most of the iroquois.jpg (117053 bytes)1780s. Washington relied on the states for its revenue because it could not collect taxes. (For an examination of the U.S. government today, see the article on page 26.)

Canada's architects from Ontario (then called Upper Canada) intended it to be a highly centralized federation, but resistance from Quebec (Lower Canada), as well as the sprawling size of the new country, dictated a degree of compromise. As a result, the British North America Act, which united the Canadas with New Brunswick and Nova Scotia, encompassed contradictory principles. The provinces retained large legal areas of "exclusive" jurisdiction such as Health, Education, Welfare and Natural Resources. But the federal government was given the right to "disallow" any provincial legislation.

In truth, Quebec and perhaps the Maritimes would not likely have joined a centralist state. Maybe that is one reason why Canada's original high court in constitutional matters—the Judicial Committee of the British Privy Council—tended toward a provincial interpretation of the British North America Act. The Supreme Court of Canada largely confined itself to interpreting Parliament's will rather than setting itself up as an independent constitutional arbiter.

The Supreme Court's practices changed dramatically in that regard after the Canadian constitution was repatriated from British control in 1982. But the issue of ultimate sovereignty still remained muddy because repatriation occurred without the consent of Quebec. (For a description of how the Supreme Court functions now, see the article on page 8. The sovereignty issue is further described on page 44.)


    "Welfare may be a provincial responsibility constitutionally, but some programs are naturally national in scope," Professor Emery suggests. In the 1920s, Ottawa inserted itself into providing old-age pensions. Although Ontario in particular resisted, provinces such as B.C. appreciated help with the burden of dealing with retirees who had spent their working lives elsewhere. Much the same situation occurred in the 1930s, when unemployed workers moved in large numbers from rural to urban areas, again concentrating heavily on the west coast.

    "At the time of Confederation, few people went to school past Grade 8," Prof, Emery continues, "Today, the majority attend post-secondary institutions. That's expensive. And graduates frequently leave the place where they're educated to work in other provinces. Again, a provincial jurisdiction evolved into an inter-provincial situation."

    The Privy Council Office began mushrooming into a major bureaucracy during the Second World War under Prime Minister William Lyon Mackenzie King. The Prime Minister's Office blossomed into a regal organization during the 1970s, when Prime Minister Pierre Trudeau spent lavishly on expanding the welfare state. Cabinet and other parliamentary members have lost influence steadily since then.

    Prof. Savoie says the problem is not really one of national social services coordination, which could be managed by the provinces between themselves. After all, the private sector handles far larger, more complex tasks on an international basis to feed, clothe, house and entertain humanity. "The real problem lies elsewhere." insists the New Brunswick reformer. "The federal government has relatively few constitutional responsibilities and a lot of power to raise bucks from taxpayers. The provinces have the opposite situation—they have more responsibilities than they have revenue. Ottawa uses money to intrude into provincial jurisdictions. It happens constantly. The result is large administrative overlapping between the two levels of government."

    Besides wasting billions of dollars, Prof. Savoie says, federal funding muscle has another effect: "These all-powerful prime ministers, who answer to Ontario and Quebec voters, force themselves into the governance of the Atlantic and western provinces. Canada is still a beautiful house, but the marriage within that house has become very unhappy. A major constitutional restructuring is called for. Unfortunately, there is no way that we in Atlantic Canada can force a real change. The West, on the other hand, has the economic strength to look seriously for alternatives."

Transfer payments hurt all regions

    Albertans and Ontarians pay out billions of dollars to poorer provinces through the federal government's revenue transfer formulas. "From 1997 to 2000, Ontarians provided an annual net transfer of $23 billion or 5% of Ontario's GDP, to the 'have-not' provinces," David MacKinnon, president and CEO of the Ontario Hospital Association, told the federal Commission on the Future of Health Care in Canada last April. "This is not sustainable, given that every type of public institution in Ontario is facing very serious financial problems even while provincial tax levels have historically been very close to the national average."

    In Alberta, the price tag is even steeper. This year, Finance Department spokesman Jerry Bellikka says, the province will transfer $9 billion. That sum is equal to 6% of the province's GDP. "We calculate the net transfer by totalling; how much personal and corporate tax goes to the federal government and then deducting what comes back to us as CHST [Canada Health and Social Transfer] payments from Ottawa," Mr. Bellikka says. The outflow is equal to 43% of the Alberta government's provincial budget.

   Per capita, the federal drain amounts to $2,900 per Albertan. Assuming that sum of money was invested every year for 75 years—a typical lifetime—at an average return of just 2% annually after inflation, the accumulated capital would grow to more than $1 million per couple. For comparison purposes, Statistics Canada reports that Alberta's 1.1 million "family units" had average net assets of $236,000 apiece in 1999. The median net asset value was $95,450 per family (indicating half of all families had less than that amount).

    Market-oriented economists object to inter-provincial transfer payments on the grounds that they encourage self-perpetuating inefficiencies. Without these fiscal props, their formula.jpg (23 kB)reasoning goes, property prices, wages and other factors would fall to the point that a have-not province could attract industry. This market adjustment, although painful, would be ultimately healthy.

Finn Poschmann, a senior policy analyst with the C.D. Howe Institute, objects on a different basis to Ottawa shifting $30 billion a year between provinces. A great deal of that cash funds Medicare, he notes. "So what happens when you complain about medical treatment delays while your cancer may be metastasizing?," Dr. Poschmann queries. "The hospital district blames the province. The province blames Ottawa for not transferring enough money. The federal government blames the province for inefficiency. The budgets passed back and forth. Given this blurring of responsibility, voters find it impossible to identify who's guilty and get reforms."

In principle, Dr. Poschmann suggests, the federal government has more tax-generating authority than constitutional responsibilities. That revenue surplus tempts federal leaders into trespassing on provincial responsibilities and manipulating their policies. 'The present transfer payments damage both Ontario and Alberta.

Albertans identify strongly with their province, but they lack the votes needed to instigate change at the federal level. Ontario does have those votes, but most people here identify with Ottawa more than with their province. They feel that it is their duty to help poorer Canadians."

The C.D. Howe economist says Ontarian rarely recognize that transfer payments add several percentage points to their corporate tax rates, enough to hurt their competitive industrial position vis-a-vis Michigan and other nearby states. Dr. Poschmann concludes, "Until people in Ontario want change, there's not likely to be much change."


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