The Government of Canada recently gave a $204,000 grant to a Winnipeg women’s shelter. That money will almost certainly do some good — both for women in need, and for the Conservative Party of Canada’s image. Spreading money around for things like community centres, water treatment plants, and social housing is a common practice for the federal government, and is rarely met with opposition.
It’s hard to oppose dedicating money to good causes. However, those are clearly issues of provincial and municipal responsibility. There is good reason for that: they are better positioned to solve local problems than the federal government. As tough as it is to criticize the federal government for spending money on worthwhile causes, it has to be done. Creeping federalization of every policy area is inefficient, and is eroding accountability. It’s time for politicians at the sub-national level to stand up, and reclaim their territory — even if that means opposing the un-opposable.
The constitution lays out a relatively clear division of responsibilities between the provincial and federal government. The balance struck by the constitution is very practical. The federal government is charged with issues such as national defense and patents, since it would be extremely inefficient to have the provinces attempt to co-ordinate these functions. The provinces are responsible for issues such as healthcare and education, since having a different system in each province allows for experimentation, which helps to identify best practices. Provinces subdivide some of those responsibilities through their municipal acts, which allow for the creation of municipalities to provide services more efficiently delivered at the city level, such as roads and sewers.
Unfortunately, the division of responsibilities outlined by the constitution is consistently flouted by federal politicians. Temptation to constantly announce minor spending initiatives is likely driven in part by the 24 hour media cycle. After all, throwing a few hundred thousand dollars at a park or a swimming pool won’t break the federal bank, but will satiate the media for a few hours. But all these expenditures add up.
According to a recent Frontier Centre study, in 2009 the federal government controlled 43.33 percent of revenue, leaving provincial governments with 40.69 percent, and municipalities with 15.87 percent. The municipal share is much lower if we ignore user fees, though this would be arbitrary, since municipalities use them instead of taxes. The distribution of spending power is completely out of line with the needs of the three levels of government. For instance, health, education, and social services — clearly subnational issues — consume roughly two-thirds of total government spending. Our top heavy tax system results in complex transfers from the federal to provincial governments.Municipalities received 42.7 per cent of revenue from upper levels of government in 2011. The ensuing paper trail is difficult for policy analysts to follow, let alone people who don’t have forty-odd hours per week to research government spending. Decoupling taxes from expenditures obfuscates decision making, and undermines political accountability.
Federal encroachments on provincial and municipal jurisdictions results in less efficient service delivery, and breeds dependence. The push for federal transit funding is a prime example. Because the federal government raises more revenue than it requires, municipalities and provinces can’t raise as much as they require to operate. After all, there is a limit to how much Canadians are willing to pay in taxes. This forces sub-national governments to go cap in hand to the federal government.
It is difficult for municipalities and provinces to bite the hand that feeds them. But until sub-national politicians begin to assert themselves, they will continue to eat whichever crumbs the federal government tosses them. The Council of the Federation and Canadian Federation of Municipalities are powerful vehicles for the provinces and municipalities to push back against top-down federalism. These organizations should pressure the federal government to stop treating municipal and provincial governments like junior partners in the federation. They should insist that the federal government cut taxes and reduce transfers to municipal and provincial governments, so that they themselves can raise the revenue they need to fund their own obligations. The federal gift horse has a belly full of bureaucrats eager to do the bidding of the federal politicians. It’s time to secure the city walls.