There has of late been much discussion of a ”œnew urban agenda” supposedly being developed by the federal government. Much of the discussion surmis- es that new federal initiatives will likely be felt in policy areas like transportation, infrastructure, housing and abo- riginal services, but there are a variety of other functional areas implicated. This immediately raises the question of what role the provincial governments would play, or attempt to play, in this possible new arrangement. Not much, is the answer, so far. That is because intergovern- mental relations are now set in a context of sub-provincial partnerships, and provinces find themselves competing with new actors, not always successfully.

There is a new day dawning in intergovernmental relations, and federal-provincial-municipal relations cannot be considered in isolation from the developments in federal theory and practice on the national scene. What has tran- spired nationally is complex and interesting. There has been a collapse of federal-provincial trust relations and the growth of direct federal relations with sub-provincial part- ners. So the term ”œfederal-provincial-municipal relations” has to be rethought, or taken in a larger context. Municipal partners are only one kind of sub-provincial partner with which Ottawa now wishes to establish relations.

Near the end of the 20th century there was an epic strug- gle in Canada between two opposing theories of federalism " symmetrical and asymmetrical federal- ism. Asymmetry lost. It lost for a variety of reasons, not the least of which were that it was alleged to permit a checker- board pattern of public services, to harm national standards in federal- provincial programs, to countenance unequal citizenship, to encourage sepa- ration, and to possess no natural limit or boundary. In fact, treating provinces alike has been the dominant federal theory of the reigning federal Liberal Party since the mid-1960s, and it has managed to inculcate the provincial equality doctrine as part of the political culture, at least in English Canada.

Some would argue that federal- provincial relations were and still are predicated on asymmetrical princi- ples. In 1997, for example, the federal minister of finance accepted the provinces’ request that they be allowed the option of applying provincial tax directly on taxable income, rather than as a percentage of Basic Federal Tax, in order to facilitate province-specific social and economic objectives. Also in 1997, New Brunswick, Nova Scotia and Newfoundland signed on with the fed- eral government to harmonize their provincial sales taxes with the goods and services tax (GST), thus creating the harmonized sales tax (HST); there are separate provincial sales taxes and GST in all other provinces, save Alberta. Plus, of course, equalization is by definition a program that treats all provinces differently, based on their respective fiscal capacities.

However, these are revenue-side matters that, by their nature, tend to asymmetry. In other areas, symmetry has been the norm. Ottawa under the Liberals has resisted suggested broad constitutional reforms with asymmet- rical overtones. It resisted changes in the division of powers. It has not allowed provinces the opportunity, in the Social Union Framework Agreement, to opt out of new shared- cost programs with compensation. Paul Martin is reluctant to engage in non-constitutional Senate reform, a reluctance stemming from the fact that asymmetry in senatorial represen- tation per province would continue.

It is a profound irony then, that the Liberal government has been pursuing a kind of asymmetry in its dealings with the municipalities and sub-national bodies of the country. This ”œurban asymmetry” has effects not unlike those of the provincial asymmetry the- ory, namely that provinces are in fact treated unequally. Smaller provinces, especially, experience the tail end of a number of initiatives designed for larg- er urbanized provinces, a series of disag- gregated federal initiatives with few overarching themes.

Of course, specifying what asym- metry means has not always been one of the easier tasks for academics and other observers of intergovern- mental relations. Some, such as Peter Hogg would (in effect) see it as differ- ences in the constitutional status of the provinces, with special provisions, or special status, or larger powers for one province (or more) that are unavailable to other provinces. These constitution- al differences are more fundamental than mere differences in the ways that they entered Confederation, or than language or denominational education provisions that apply unevenly to some but not other provinces. On the other hand, some have looser criteria, like David Milne who sees significant asymmetries in ”œformal differences in law among units [of a federal system] either with respect to jurisdictional powers and duties, the shape of central institutions, or the application of national laws or programs.” Jennifer Smith prefers to concentrate on the forms of equality (and therefore, by consequence, the inequali- ties or asymmetries that may flow from deviations from these ”œequalities.” There is jurisdictional equali- ty (member states are equals as to jurisdiction), represen- tational equality (equal state or provincial representation in nation- al institutions) and economic equality (efficient horizontal competition, with smaller units being able to compete on an equal footing with the larger units, due to the intervention of the natural monitor, the central government, which by several mechanisms " like equalization payments " engages in province-building and the enhance- ment of each province’s ability to com- pete with others).

There is much of value in all these approaches, but mine is a little dif- ferent. I define asymmetry as the dif- ferent treatment of provinces in terms of funds, special attention, matters appearing on the federal agenda, and comprehensive planning, but treat- ment which is the aftereffect of dealing increasingly with partners at the sub- provincial level. One important aspect of unequal treatment is ”œurban asym- metry.” This term means that the fed- eral government has special relationships with larger urban centres and agglomerations across the country based on what it considers to be their needs and economic potential. The relationships are not only with cities and metropolitan areas, but with other regional and local actors like universities, community economic development agencies, special purpose bodies (SPBs), industry associations, research insti- tutes and so forth. An important impli- cation of the term " indeed it is implied in the expression itself " is that the federal government does not have to treat the actors equitably. It may not even choose to deal with any but a handful of them in certain provinces, for special programs. Urban asymmetry has special implications for both smaller provinces and the munic- ipalities of smaller provinces.

We have come to the era of urban asymmetry by a complicated chain of events having to do with the growing estrangement of the senior levels of gov- ernment. For the federal government, the golden age of federal-provincial rela- tions has passed and will probably not return. This is because the provinces have sought to constrain the federal marge de manœvre at every turn, by a combination of constitutional and inter- governmental mechanisms; because Ottawa has realized the fundamental incompatibility between its economic vision and those of some provinces; because it has interpreted the impact of globalization as requiring flexible part- nerships, including those with cities; because the federal spending power is increasingly being used as an economic instrument rather than a primarily social one; and, for our purposes most impor- tantly, it has found in the urban govern- ments and other local actors willing partners which don’t have the jurisdic- tional worries of the provinces.

The defining element of the federal golden age would have to be the use of conditional grants under the aegis of the federal spending power. From the end of the Second World War to the mid-1960s, this grant mecha- nism provided a method to circum- vent constitutional rigidities and allow rapid expansion of state economic and social programs. As Donald Smiley explained at the time, ”œwith all their defects, conditional grants have brought an invaluable element of adaptability to a federal structure which has proved remarkably resistant to change through constitutional amendments or evolving patterns of judicial review.” Adaptability became a secondary consideration however after the 1960s when a combination of dwindling federal fiscal leeway and provincial opposition proved condi- tional grants to be an option unattrac- tive to both orders of government.

The last three decades of the twentieth century saw the provinces united in a grand effort to reign in the federal leviathan. This was expressed first by a series of constitutional pack- ages, then by a series of non-constitutional frameworks most of which, among other things, would have constrained the use of the feder- al spending power. The Social Union Framework Agreement committed the first ministers to joint planning and collaboration, a dispute avoidance and resolution procedure, and advance notice and a decision rule regarding the use of the spending power. Nor has the advent of a new century muted the provincial voices calling for reformed federal decision making. At their annual Premiers’ Conference of July 2003, the premiers agreed to the establishment of a Council of the Federation, with as-yet vague powers, other than to provide leadership and to act as an umbrella for provincial/territorial coordinating bodies. However, big things are fore- seen for the body, at least from the standpoint of its main progenitors, Premier Jean Charest of Quebec, and his intergovernmental affairs minis- ter, Benoît Pelletier. Ultimately, The Globe and Mail forecast at the time, it would be a joint decision-making body, which would oversee areas of overlapping jurisdictions such as health, education, social policy and interprovincial trade. Mr. Pelletier said it would be funded first by the provinces, which would appoint rep- resentatives, with the federal govern- ment signing on later. So far its ambit has seemed relatively restrained, its workplan estab- lished in 2004 focusing mostly on research regarding fiscal imbalance, health care reform and interprovincial trade.

Ottawa has also realized the fundamental incom- patibility between its econom- ic vision and those of some provinces. Its philosophy is not unlike that enunciated by the Macdonald Commission Report which noted that regional eco- nomic development was principally the purview of provincial and local governments.

The emphasis on place prosperi- ty is both understandable and defensible when it comes from a provincial government. It should not, however, unduly concern the federal government. Commissioners believe that community preservation, to the extent that people want it, is ultimately the responsibility of citizens and of their local and provincial governments.

As Donald Savoie has noted, the continuation of federal regional development programs stems not from philosophical commitment, as it once did, but as compensation for Ottawa’s Central Canada-centred industrial policy.

In fact, provinces have continued the emphasis on place prosperity and community preservation. One such example was Newfoundland’s Renewal Strategy for Jobs and Growth in 2001, a high profile economic plan that was begun in the Liberal Tobin-Tulk gov- ernments and was the mainstay of the government of Roger Grimes. Regions were given the impression that they will be able to share equally " or at least fairly " in the economic recovery foreseen by the Renewal Stategy. This regional equity theme has also been an important thread in policy documents of the new Danny Williams Conservative government. The 2004 budget allocated $1.7 million for the establishment of a Rural Secretariat, an overriding goal of which is ”œto strengthen our rural communities and develop strong regions.”

Such is not the concern of the fed- eral government, which has a com- peting agenda. The predominant concern of the Liberal government has been what might be called ”œthe inno- vation agenda.” This agenda sees the world more in terms of clusters and less in terms of provinces. There has been a series of Liberal government policy documents, such as the Red Book (1993), The 1994 Jobs and Growth Agenda: Building a More Innovative Economy (1994), the Innovation Strategy (2002), and a host of throne speeches and budget addresses. The Atlantic Liberal Caucus, reflecting mainstream thought in the party, spoke in 1999 of the need for ”œknowledge-based indus- trial clusters” as the wave of the future.

Development of a strong knowledge-based economy is not a function of the establishment of one or more individual firms, however independently successful. The emerging body of experience internationally is that a strong knowledge-based economy depends on the existence of a group of institutions at different levels and stages of the innova- tion process, who interact to feed upon and spur each others’ development.

These clusters consist of manufacturers, suppliers in various industrial sectors acting in concert with educa- tion institutions, research insti- tutes, financing bodies and communications and trans- portation systems. (Counter- intuitively, they suggest considering the whole of the Atlantic area as a cluster.)

Ottawa has interpreted the impact of innovation in the context of a globalizing econo- my as requiring flexible part- nerships, including those with cities. Provinces, revealingly, receive compar- atively little consideration. The federal government follows the ”œinnovation systems approach,” the central ele- ments of which are ”œinteraction, co- evolution, value flows, institutional adaptation, knowledge creation and sharing (science, technology, and innovation), networks, partnerships, alliances and institutional learning.” It is significant that even before he became prime minister, Paul Martin placed special emphasis on cities as a focus of innovation and influenced the Canadian Advanced Technology Alliance (CATA) to hold a series of TechAction Town Meetings to encour- age cities such as St. John’s, Halifax, Montreal, Ottawa, Toronto, Markham, Richmond Hill, Calgary and Vancouver to visualize their innova- tive potential in terms of leadership, capital, infrastructure and people.

One way of forging these net- works, alliances and partnerships in pursuit of knowledge and innovation is to use the spending power of Parlia- ment. The federal spending power is now seen as primarily an economic instrument rather than a social one. The spending power is not just about conditional and unconditional grants, it will be remembered; it is also about grants to individuals and corporations and universities and municipalities for purposes over which Parliament may not always have direct jurisdiction.

So enter, stage left, the often numb- ingly complicated variety of part- ners involved in the federal ”œinvestments” of the last half-decade (1998-2003), under a number of pro- grams. These include the Canada Research Chairs " $900 million; National Sciences and Engineering Council (NSERC) " $536 million; Social Sciences and Humanities Research Council (SSHRC) " $189 mil- lion; Canadian Institutes for Health Research (CIHR, formerly the Medical Research Council, or MRC) " $767 mil- lion; Networks of Excellence " $120 million; National Research Council (NRC) " $389 million; Canadian Foundation for Innovation (CFI) " $3.15 billion; Genome Canada " $300 million; Biotechnology R&D "$165 million; Trudeau Fellowships "$125 million; the Connectedness Agenda " $346 million; CA Net 4 " $110 million; SchoolNet and Community Access Program (CAP) "$40 million; Sustainable Development Technology Fund " $100 million; Canada’s National Research and Innovation Network " $110 million; Pre- Competitive Applied Research Network (PRECARN) " $20 million. The 2004 federal budget boosted spending for NSERC, SSHRC and CIHR by $90 mil- lion and Genome Canada by $60 mil- lion. Green Municipal Funds, provided to municipalities by Ottawa, have been operating for some years now, using not the provinces but the Federation of Canadian Municipalities (FCM) as intermediary.

Complicated, that is, until one real- izes that the partners ultimately engaged through these innovation and knowledge ventures are not the provinces, which the traditional use of the spending power would have involved. They are the individuals and corporations and universities and municipalities mentioned above.

It is true that some degree of partner- ship with the provinces is involved in some of these endeavours. For exam- ple, the CFI funds up to 40 percent of a project’s infrastructure costs and the funded institution depends on provin- cial governments and the private sector and its own resources to generate the remaining 60 percent. However, despite having to cough up some money, the provinces play no part in the decision-making process. The CFI proclaims itself as at arm’s length from government, and investment decisions are made solely by a board of directors from the research communities, academia and the private sector.

Ottawa has found in the subprovincial entities willing partners which don’t have the jurisdictional worries of the provinces. Urban asym- metry has not only cities and towns nvolved, but other regional and local actors like universities, research bodies, community economic development agencies, SPBs, industry associations and so forth. Each side sees advantage. The federal government likes urban asymmetry because it has overtones of the cooperative federalism of the fifties and sixties; it can tailor its programs as a response to the size of jurisdiction; building the knowledge economy is a new form of nation- building; and it allows the federal government to have high visibility. The politics are also important. The fed- eral Liberal Cabinet courts votes where there are a lot of them; has a way of picking ”œwinners and losers” in a seemingly technical, non-obvious fashion; and establishes a process which provides for an immense information cost for critics who want to compare on a regional or provincial basis. For the subnational entities, they get a federal partner with deep pockets who isn’t concerned with spreading the money around and thus diluting its efficacy.

So it is a new intergovernmental relations nested in an increasingly complex set of sub-provincial partner- ships that Canadians now witness. Much has changed in comparatively few decades. Can one imagine Maurice Duplessis standing still for the amount of federal interference in the universi- ty sector that Ottawa has engaged in? Or premiers of the 1960s and 1970s allowing Ottawa to ignore the regional economic development ethic and design its own winners-oriented strate- gy? Or premiers of provinces who brought the Ministry of State for Urban Affairs first to its knees and then to oblivion in the 1970s, allowing the types of direct relationships to be established with cities under the guise of a ”œNew Urban Agenda”? Not really.