Resources equal power in jurisdictional jigsaw

Klein uses Alberta's resource-based wealth to dominate federal policy

By: Larry Haiven

  Remember the old joke about the essay contest on the mating of elephants: the French person writes about l'amour, the American discusses efficiency and the Canadian ponders whether it's a federal or provincial responsibility? Well, Canada's headed for a jurisdictional crisis, one that threatens to break the country apart. And it's no joke.
  Not Quebec again? Nope.
  This time the culprit's Alberta. Alberta's using its wealth to beat the rest of us into submission or shatter the country trying.
 

As it turned out, now we have rich provinces... and, of course, we have poorer provinces

  When the fathers of confederation divvied up federal and provincial jurisdictions in 1867, a crystal ball would have told them that there was something very important lying under the ground. Something that would lead to great wealth but could tear the country apart.
  But they couldn't see the future. Resources, they must have asked? What are those? Nah, give those to the provinces. We'll keep the post office.
  Too bad. National jurisdiction over resources would have benefitted us all, right across this rich country. As it turned out, now we have rich provinces... and, of course, we have poorer provinces.
  It's true we thought up ways to even out some of those economic differences. The feds used their revenues, most of it from taxes, to help out the poorer provinces. There are equalization payments, federal transfers for health, education and welfare, even unemployment insurance.
  And, much as we like to gripe about Ottawa, much of this money was either part of national programs or it was dependent on provinces adhering to national standards. The provinces knew best how to micro-manage things like health care, but we tried to make sure the level of these programs was roughly similar across the country. It's called fiscal federalism.
 

We failed to finesse the Quebec question and soon the rest of the provinces, especially the wealthier ones, jumped on board. Whatever autonomy Quebec got, why, they'd get it too!

  Problem is, the resource revenues stayed with the provinces and they grew in importance.
  When Quebec flexed its national identity in the 60s, demanding more control over programs, we set in motion a chain of events that would haunt us further. We failed to finesse the Quebec question and soon the rest of the provinces, especially the wealthier ones, jumped on board. Whatever autonomy Quebec got, why, they'd get it too!
  As the federal take of national wealth decreased, the federal transfer system started to come apart as well. Its health, education and welfare payments to the provinces shrunk as a proportion of cost. Then the feds starved unemployment insurance.
  With less federal money at stake, provinces like Alberta are now threatening to pull out of the national consensus on services like health care.
  Then, the coup de grace. The provinces will get the power to set their own personal income tax. Uncoupled from the federal tax, we will now fully join the race to the bottom, with Alberta leading the way. Even Alberta's auditor general has warned that this is high risk behaviour. Except, here's the trick: Alberta's got spare air tanks and the poorer provinces don't.
  So while Alberta increasingly sets the fiscal and social policy for the whole country, 90% of us don't even get to vote for Ralph Klein - or against him. Call that democracy? Who's in charge here anyway and where are we going?

Larry Haiven is Associate Professor of Industrial Relations and Organizational Behaviour at the College of Commerce, University of Saskatchewan. This commentary used by permission of Larry Haiven and CBC Radio.

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