It’s time to cast the existing terms of Canadian regionalism into larger, more functional approaches that catch commonalities and possibilities among unlikely partners.
The language of Canadian regionalism has become tired and increasingly less useful. We are accustomed to thinking in terms like eastern, western, and central Canada in general, and then imagining increasingly finer distinctions: the Maritimes, the Prairies, Ontario, Quebec — the list goes on. At certain junctures, however, it becomes more useful to cast regionalism in larger, more functional categories that catch commonalities and possibilities among unlikely partners. One possible category is the dichotomy of “Old Canada” and “New Canada.” Currently overlooked, it may hold the key to a more creative interprovincialism and federalism in Canada.
Old Canada is composed of Quebec, New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland and Labrador. Atlantic Canada, which for decades has seen itself as an entity apart from the rest of the country, now increasingly sees itself as a subset of Old Canada.
When all the provinces in Old Canada don’t work together, the region as a whole doesn’t work. It is not working now. We propose a new working relationship among the partners we call “the New East,” which we discuss later in the article.
We call the region “Old Canada,” because it is the origin, the root, of what we now call Canada. Settled by Europeans largely around the early 17th century, Old Canada has the longest historical memory in the country. Its provinces have significant political, economic and social characteristics in common that distinguish them collectively from the rest of the country.
It is not merely quaint reflections on the past that propel an interest in the region, however. Old Canada has the potential either to synergize its component parts or to drag them down. In 2010, Old Canada spent 26 percent of the country’s expenditure-based gross domestic product. Thirty-eight percent of the undeveloped hydro potential in Canada rests in Old Canada; the entire West, all four provinces, had 35 percent of the Canadian total. The Atlantic margin has 18 percent of Canada’s estimated conventional hydrocarbon resources, the largest proportion after the Western Canada Sedimentary Basin, excluding oil sands bitumen. The partners in Old Canada can help each other: Newfoundland and Labrador and Nova Scotia have offshore capabilities that Quebec needs as it attempts to develop petroleum resources in the Gulf of St. Lawrence; Quebec has hydro expertise and marketing ties that could be useful for the Atlantic provinces.
Pitted against each other, as they have been in some areas and some eras, the region’s provinces suffer. Newfoundland and Labrador needs markets in central Canada but cannot get access to them through Quebec. Development in the Gulf of St. Lawrence has suffered from a half-century disagreement over offshore boundaries. Broad labour market policy and industrial subsidies in the area remain segmentalized, to the detriment of the area’s business. This is to say nothing of the loss of social capital and regional cultural life, which is the bitter fruit of the loss of economic interchange.
Perhaps it is time to consider what brings Old Canada together and to see if there are modalities for ending, or at least modifying, what separates its component parts.
There are, first of all, some shared political characteristics. The “Laurentian axis,” the historic commitment by Ontario and Quebec to a common front in national development, has foundered. Most of the early commercial policies of the country were for the benefit of central Canadian interests in Ontario and Quebec.
In recent times, the policies of the Liberal Party and the old Progressive Conservative Party in areas like constitutional politics, national unity symbols (public broadcasting, bilingualism), the Charter and the social welfare programs that balanced the concerns of Quebec and English Canada (pensions, health care, welfare) carried on the legacy of the Laurentian consensus.
Pitted against each other, as they have been in some areas and some eras, the region’s provinces suffer. Newfoundland and Labrador needs markets in central Canada but cannot get access to them through Quebec. Development in the Gulf of St. Lawrence has suffered from a half-century disagreement over offshore boundaries.
The Laurentian axis has lost its hold. As John Ibbitson notes in a recent Literary Review of Canada essay, it has been weakened by the free trade agreements, Ontario connecting to the Great Lakes region, and the West increasingly orienting itself toward Eastern Asia.
Most importantly, Quebec opted out of the governing consensus. Since the early 1990s, it has consistently forsaken its alliance with Ontario and voted for parties in Ottawa.
The power centre has shifted. A new alliance is apparent. An Ontario-West alliance has replaced the Laurentian axis. In Parliament the lion’s share of the seats from Ontario, Manitoba, Saskatchewan, Alberta and British Columbia have gone to the Conservatives; in Atlantic Canada this can be said only of New Brunswick.
The shift may be long-lasting, in light of the disintegration of the Liberal Party, which has lost vote share in every province and territory since mid-decade, and of shifting regional population figures. Federal governments will be formed from Ontario and the West for the foreseeable future, and those regions will have the most important portfolios. The governing Conservative Party garnered two-thirds of the seats in Ontario, but only 7 percent of the seats in Quebec.
Could Quebec could throw in its lot with the new Ontario/West alliance to offset its strategic disadvantages? Conceivably. However, this is unlikely to happen; as one goes westward, more liberal-individualist political philosophies are predominant, and as one moves eastward, social democratic ones are stronger. Small wonder the West has historically been unfriendly to Quebec’s aspirations.
In their article in Spatial Aspects of Federative Systems, Christian Leuprecht and Nicolette O’Conner argue that demographic differentiation is leading to vertical and horizontal “decoupling” in federations. Substates that are aging more rapidly (like, say, Old Canada) tend to resist departures from the more centralist, redistributive, social-democratic policies and regimes; those that are aging less rapidly, like New Canada, favour less interventionism and more liberal asymmetry in the federal makeup. In addition, these “like” regions are more likely to strike alliances at the national and supranational levels than are regions that differ. At the same time, a “denationalization” dynamic is at work introducing cleavages among the dissimilar regions. If this argument holds, it is likely that Quebec will have more in common with the provinces of the Atlantic than with the others.
A “vertical decoupling” of the federal and Quebec governments is in train. Increasingly, Quebec is ignored in national policymaking. Largely of necessity, rough proportionality among members of the federal cabinet from Quebec is not the working principle of federal cabinetmaking as it was a few generations ago.
Evidence of this decoupling abounds. The long gun registry, the omnibus crime bill, changes to health funding, unilingual appointments to the Supreme Court and Office of the Auditor General, and renaming of the Canadian Forces have been decided over the protests of Quebec. Quebec has some victories, but a longer list of defeats.
This lack of a voice in national policy-making is something the Atlantic provinces have in common with Quebec. Since the beginning of the 20th century, cabinet members from Atlantic Canada have formed a decreasing proportion of the total number of cabinet members. Where once they formed close to one-third of cabinets, now they are lucky if they get 15 percent of cabinet memberships.
Ottawa is likely to ignore one or another province. Not five. This is one reason for the New East.
Shared characteristics are abundant in Old Canada. One is diminishing demographic clout. Like the shifting political centre, there is a shifting population centre of gravity in Canada. Census figures for 2011 show that for the first time, Old Canada’s population is less than that of the West (30.6 percent versus 30.7 percent of the Canadian population). In the last 60 years, British Columbia and the Prairies’ share of population has increased (from 26.5 percent to 30.7 percent), while that of Quebec and the Atlantic provinces has declined (from 40.5 percent to 30.6 percent). Quebec and Ontario have gone from rough parity in population 60 years ago, differing by only four percentage points in 1951 (28.9 percent versus 32.8 percent respectively) to a nearly 15 percentage point difference in 2011 (23.6 percent versus 38.4 percent).
The census figures show a likely shift in favour of the political fortunes of the Conservative Party. It has provoked a major distribution of Commons seats in provinces where the Conservatives are already strong. On October 27, 2011, the Harper government introduced the Fair Representation Act. This would see Ontario gain an additional 15 seats (to 121), British Columbia 6 (to 42), Alberta 6 as well (to 34) and Quebec 3 additional seats, bringing its total to 78. The new House grows from 308 seats to 338.
A “vertical decoupling” of the federal and Quebec governments is in train. Increasingly, Quebec is ignored in national policy-making. Largely of necessity, rough proportionality among members of the federal cabinet from Quebec is not the working principle of federal cabinet-making as it was a few generations ago.
Although the new seat totals simply make these provinces’ shares of the Commons seats proportionate with their share of population, it is the likely intraprovincial effect of the 30 new seats that is notable. Political commentators observe that the new seats are likely to be in suburban areas surrounding cities like Toronto, Vancouver, Calgary and Edmonton, where the Conservatives are already strong. Conservatives hold 26 of the 30 largest ridings in the country, ridings from which the newer ones are likely to be carved out by redistribution. More Conservative seats will mean more stacking of the Commons against Quebec (and perhaps Atlantic Canada). And they will have disproportionate visible minority populations, indicating a narrative of multiculturalism, not national unity.
Old Canada’s share of the national population will decline steadily. By 2031, Quebec’s share of the total population will have fallen from 23.5 percent (in 2005) to 21.6 percent at best. For its part, Atlantic Canada would decline as well. Between 2.3 and 2.5 million people, or between 5.9 percent and 6.4 percent of Canadians, would be living in one of the four Atlantic provinces in 2031, compared with 2.3 million, or 7.3 percent of the population, in 2005. East of the Ottawa River, therefore, Old Canada will have a maximum of 28 percent of the population, perhaps less, down from nearly 31 percent of the population 25 years earlier.
Old Canada interprovincial migration is negative. From 2001 to 2010, it lost close to 120,000 people. It is not alone in this phenomenon, but there the degree of population loss is greatest.
Aging populations will characterize Old Canada’s provinces in particular. Statistics Canada projections show that in almost every scenario, the Atlantic provinces would continue to present the highest median ages in Canada in 2031, and the median age would be higher than the national average in Quebec.
Old Canada’s provinces are alike in another aspect: they are, or have been, fiscally and economically challenged. This gives them a different outlook on prospects for the future. It might argue for common cause on projects for the future.
Old Canada has the highest debt load of all the provinces. The 2011/12 Quebec budget noted that, at $163.3 billion as at March 31, 2010, Quebec’s gross debt was equivalent to 53.8 percent of GDP — nearly 26 percentage points more than the average of the other provinces (it was 39.9 in Newfoundland, 39.0 in Ontario, 38.9 in Nova Scotia, 31.8 in Manitoba, 28.2 in Prince Edward Island and 25.4 in New Brunswick according to figures in the Quebec budget. The next fiscal year, matters had not improved much for Quebec and most of the other Old Canada provinces. As of March 31, 2011, the gross debt in Quebec had increased to 54.3 percent of GDP, Prince Edward Island’s had increased to 28.6 percent and New Brunswick’s to 28.4; Nova Scotia’s held at 38.3 percent, and Newfoundland and Labrador’s declined to 36.4 percent due to oil revenues.
Old Canada consumes most of the Equalization fund. In 2011/12, Quebec accounted for 53 percent of Equalization. Counted together, Quebec, Prince Edward Island, Nova Scotia and New Brunswick accounted for 74 percent of the fund.
Old Canada has been relatively poor compared to the rest of Canada. The GDP per capita in Quebec, Prince Edward Island, Nova Scotia and New Brunswick was consistently lower than that in Canada as a whole from 2002/03 to 2008/09, and the gap widened as the decade continued.
Old Canada ranks as the highest taxing area in Canada. The highest tax levels for personal income tax in the first, second and third brackets are in Quebec, which in April 2011 joined the Atlantic provinces as relatively high taxing provinces, according to the Nova Scotia Department of Finance.
The disposable personal income per capita in Quebec was virtually identical to those of the three largest Atlantic provinces in 2002 to 2011, according to the Institut de la statistique du Québec, in November 2011. However, it was consistently behind Ontario and Western provinces.
Similar news was found in the matter of social assistance beneficiaries. Except for in the early to mid-1990s, the highest percentage of such beneficiaries has been found in Newfoundland and Quebec.
All these similarities might suggest need for unity or common fronts — but there is no such common front in Old Canada. Tension between Quebec and Atlantic provinces on major policy questions has been the order of the day. The question is, will these tensions be fatal to future cooperation in the region?
The first issue causing tension is economic designs. Hydro-Québec’s province-building design clashes directly with those of Newfoundland Hydro and others in Atlantic Canada.
Hydro-Québec has a policy of low residential, commercial and industrial rates, which are subsidized by windfall profits from the Upper Churchill (Churchill Falls) hydro development under a 1969 contract that is due to expire in 2041. Attempts with Transenergy to allow Newfoundland Energy wheeling rights through Quebec for exploitation of the Lower Churchill have been unsuccessful. In addition, Quebec will not negotiate directly with Newfoundland over the Old Harry prospect, which straddles the so-called Quebec-Newfoundland Stanfield Line boundary, in the Laurentian Channel of the Gulf of St. Lawrence.
Newfoundland and Labrador is not the only province to disagree with Quebec over its economic designs. In 2009, Premiers Shawn Graham of New Brunswick and Jean Charest of Quebec announced a deal, as the “Ganong Report” noted, that would have seen Hydro-Québec acquire most of the hydro generation facilities, two diesel peaking plants, and the Point Lepreau nuclear generating facility, once New Brunswick had refurbished it. New Brunswick would keep ownership of fossil-fuelled power plants, NB Power distribution and NB Power customer sales. But the deal was called off in March 2010.
Ottawa announces it will play no future role in health, will continue commitment to a classical, federalist, “open federalism” and hints at downloading selected federal responsibilities to the provinces. Quebec has been leaving for years and is still in the process of cutting ties. There is no current strategy for the engagement of Quebec to counter the trend. The New East would, however, be one.
The deal raised a number of issues. Hydro-Québec was to sell bulk electricity to New Brunswickers at a locked-in rate, regardless of the market, business’s rate was better than consumers’, the deal seemed more for HydroQuébec’s benefit that NB Hydro’s, and there was a possibility that the agreement could affect Newfoundland’s and Nova Scotia’s access to the New England electricity market. It was one thing to work in partnership with a fellow Crown, but still another to take over its core business lines for profit.
Are such histories fatal for future New East alliances? Not necessarily. Bad history wasn’t enough to prevent Premiers Lucien Bouchard and Brian Tobin from inking the Lower Churchill-La Romaine hydro deal of 1998, the terms of which would have turned back some of the disadvantages of the 1969 deal. Furthermore, it is virtually inconceivable to imagine transmission of energy from a future Gull Island project — which could produce 2,250 MW, three times Muskrat Falls — except through Quebec, at mutually beneficial rates. Even a less exploitative HydroQuébec/NB Hydro deal can be imagined.
Available to Old Canada, however, is a model of cooperation and interprovincialism. The Atlantic provinces of Old Canada tend to combine or cooperate on the matters that affect them most. For example, faced with declining political influence, the premiers combined to form the Council of Maritime Premiers 1972) and the Council of Atlantic Premiers (2000). Faced with decline in economic matters, they ramped up economic intelligence (Atlantic Provinces Economic Council [APEC], 1956), common procurement agreements (1989, 2008), energy alliances (New England Governors-Eastern Canadian Premiers Conferences, 1973, and Atlantic Energy Gateway, 2007). Faced with declining population, they participated in the Atlantic Population Table (2006). Faced with a decline in working-age population, they cooperated on immigration and human capital initiatives (Maritime Provinces Higher Education Commission,1974; Maritime Provinces Education Foundation, 1982; and the Council of Atlantic Ministers of Education and Training, 2004).
In short, there has been five to six decades of cooperation among these provinces, brought together by the logic of shared political, social and economic circumstances of the sort chronicled at the beginning of this article. These forms of cooperation, while valuable, are on lower-level matters and do not concern the big-ticket policies that could make Old Canada more competitive.
Now it may be possible to work with Quebec in a new paradigm of regional cooperation. Let’s call it the New East, in the spirit of new beginnings.
There is a logic of cooperation that over time is looming larger for the provinces of Old Canada. It speaks to a larger sphere of interaction and expanded institutional relationships in a new framework, the New East.
The first element of the logic promoting potential intergovernmentalism in Old Canada is the changing federal environment. The change is toward simultaneous disengagement by Ottawa and Quebec. This is what the demise of the Laurentian Axis looks like in practice. Ottawa announces it will play no future role in health, will continue commitment to a classical, federalist, “open federalism” and hints at downloading selected federal responsibilities to the provinces. Quebec has been leaving for years and is still in the process of cutting ties. There is no current strategy for the engagement of Quebec to counter the trend. The New East would, however, be one.
The second point is that it makes economic sense. Haute-études commerciales professor Pierre-Olivier Pineau notes in a March 2012 “Federal Idea” study that integrating electricity sectors (in Old Canada) could improve reliability, reduce investment costs, improve load factors and lead to economies of scale in new construction and lower cost but distant power sources. One can imagine analogous fields with similar economic advantages.
The provinces, at the European Union’s insistence, are in the Canada/ European Union Comprehensive Economic and Trade Agreement talks, because provincial labour, procurement and resource matters affect the discussions. Accordingly, there may also be an opportunity to draft a New East “European rim” approach analogous to the Pacific Rim strategies of western provinces.
The third point relates to the implications of announced federal transfer cuts. There are serious implications for Atlantic Canada in the health, social and equalization transfer reductions announced in 2011.
The fact that Old Canada is, well, older, means that health costs will be higher per capita than in the rest of the country. The fact that the Canada Health Transfer and Canada Social Transfer entitlements are allocated on a per capita basis does not lead to a sense of optimism for provincial treasurers. A more cooperative approach to health delivery would help.
These developments on the transfer front are made more significant by the likely effects of the federal government’s four-year austerity program. APEC estimates significant negative fallout from federal program reductions.
The fourth aspect of the logic is that the provincial governments of Old Canada are either in deficit or heading for it, adding to significant debt. The other provinces are currently in deficit. APEC reports that Nova Scotia’s budget forecast in December 2011 was for a $365 million deficit and a $13.7 billion debt, New Brunswick’s $546 million deficit with a $10.3 billion debt, and Prince Edward Island’s at a $73 million deficit with a $1.9 million debt. Newfoundland and Labrador will be in deficit in 2012 and 2013 due to the end of Atlantic Accord payments, reduced volume of oil production and the taking offline of two offshore platforms.
The upshot of this is that economic health is not robust enough for Atlantic provinces to engage in more functional area initiatives by themselves, but with another partner — Quebec –— may be better placed to do so. Such cooperation could take place with Quebec in many areas, the most pressing of which are big-ticket items like health care, procurement and energy developments. The fifth point in the logic is that most provinces want a national energy strategy, and it needs Old Canada to reach an accord on it. Versions of it differ. Industry emphasizes matters like streamlining regulatory reform, the seeking of new markets and establishing new infrastructure. Conservationists tend to call for increased safeguards in the production, transportation and consumption of energy. Whatever it turns out to be, without the needs of the five eastern provinces factored in, it isn’t going to happen. And at present, there is no mechanism to promote all five talking to each other. The New East would be one such mechanism.
The sixth point in the logic is that the area is very familiar with regional intergovernmentalism. In addition to the many examples of multilateral Atlantic or Quebec-Atlantic relations in the meetings and initiatives of the New England governors and Eastern Canadian premiers, there are many examples of bilateral relations involving provinces in Old Canada. I counted 10, of which 7 involve the government of Quebec. It is possible to envisage new initiatives — an eastern Trade, Investment and Labour Mobility Agreement (like the BC-Alberta Trade, Investment and Labour Mobility Agreement), expanded energy cooperation — building on these. Quebec is no stranger to cooperation in the Atlantic area.
A seventh and related point in the logic is that provincial intergovernmentalism is common in many federations, from which Old Canada could learn. For example, Swiss regional intergovernmental power-sharing arrangements, which balance national power, are numerous. There are over 30 regional conferences in areas of cantonal responsibility. There are also several regional groupings in the United States. The Council of State Governments has four regional conferences of state legislators, state courts and most regional governors. Other regional groupings involve the states and provinces that are involved in North American trade, environmental and economic matters. Earl Fry has listed 10 of these that straddle the US border to the north and south in his IRPP publication “The Role of Subnational Governments in the Governance of North America.”
Looking at the successful environmental achievements of the Council of the Australian Federation leads David Gordon and Douglas Macdonald to conclude in their 2011 paper “Institutions and Federal Climate Change Governance: A Comparison of the Intergovernmental Coordination in Australia and Canada” that successful intergovernmental policy is most likely when there are strong institutions of intergovernmental relations; those with participation rules that mandate inclusion of first ministers, codification of rules and procedures and a permanent secretariat enable the emergence of collaborative norms and joint expectations. In short, a body like one could have for the New East.
So the picture is relatively clear. Historic alliances are dissolving. The provinces of the broader Eastern Canada, Quebec and Atlantic — Old Canada — are becoming more similar that dissimilar. The federal government is changing the game rules and making fiscal realities somewhat starker for Old Canada than they were before. Meanwhile, there is a model of common fronts and intergovernmental cooperation beckoning from the Atlantic area. These point to a more formal intergovernmental arrangement in the New East. Intergovernmental collaboration, as shown by national and international examples, is helped along by involvement of first ministers, permanent secretariats and codification of decision-making rules.
What is to be done? I suggest a couple of steps: 1) Name the entity. If the “New East” is too figurative, provinces may prefer options like the Council of Eastern Canada, the Council of Eastern Canadian Premiers or the Eastern Premiers Conference. 2) Have a nonaligned think tank do a study on the economic trade and political connections and possible synergies between the provinces of the Quebec and Atlantic Canada area. The idea would be to aim higher than the lower-level partnerships currently practiced in the area — bigger ticket items, if you will.
One would expect that energy, transportation, subsidies, trade, labour mobility, health services rationalization, Aboriginal affairs and demographic policies would rank highly as topics for discussion. A critical examination of the federal government’s role, or in some cases lack of one, would also be discussed. An examination of options for institutionalization — the role of first ministers, the advisability of a secretariat and what decision rules are advisable — could emerge.
That is for the long term. In the interim, some medium-term wins: common fronts on Senate reform, fiscal negotiations, or dairy supply management in the face of Trans-Pacific Partnership talks.
Something like what is proposed here will be an accomplished fact in 10 years. The past 50 years has been spent digging us into the hole we are in now; we don’t want this to continue for another 50. That is why we need a New East.