Canada is undergoing a welfare-state boom financed by the federal government. Since taking office in 2015, Prime Minister Justin Trudeau’s Liberals have substantially increased major transfers to individuals as well as to provincial and territorial governments.

Payments to individuals are to rise to $135.l3 billion in 2024-25 from $76.5 billion a decade ago. These include seniors’ benefits (old age security and the guaranteed income supplement), the Canada child benefit and employment insurance.

Funding to other governments during the same period is to climb to $105.5 billion from $68 billion. That includes health and social transfers, as well as money from the equalization program.

These figures exclude the more than $261 billion in stimulus provided by the federal government during the COVID-19 pandemic.

These increases are welcome as a means to address growing inequality and retrenchment in Canada over the last 40 years. However, they have also been accompanied by a greater tendency to view social policy as political because they inadvertently foster competition among provinces and revive past tensions.

Ottawa needs to change its approach

Canada’s welfare state needs reform to remain viable and address the changing socioeconomic needs of its citizens. But the way these policies have been announced and implemented does not reflect a cohesive and collaborative vision in which orders of government work together to resolve challenges.

The Trudeau government has instead reshaped social policy through an unabashed use of its spending power – that is, Ottawa’s ability to fund policy beyond its jurisdiction.

This strategy can be interpreted as the federal government acting decisively, but it can also be seen as an attempt to press provincial governments to adopt its policy priorities to receive much-needed funding.

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The shift includes significant national initiatives such as a national early-learning and child-care policy and the introduction of dental and pharmacare plans.

These programs rightly put social issues in the public eye. But they also pit the federal and provincial governments against each other by reinforcing fiscal inequities, and thus power dynamics, within the federation.

Federal-provincial imbalance 

The situation is both structural and political. The provinces and territories are constitutionally responsible for providing most welfare programs but face significant challenges.

Provincial debt is rising at an unsustainable rate, notably due to disproportionately high costs of services such as health care. Recent budgets have only heightened concerns over provincial fiscal sustainability. This is compounded by the high visibility of social programs, making them politically sensitive to cut and easy targets for federal spending announcements.

The federal government, in contrast, has relatively more room to manoeuvre. Its programs are less costly to maintain and it has superior revenue-generating capabilities. This contributes to the ongoing fiscal imbalance wherein the governments with the authority to legislate on social issues must rely on Ottawa for access to the public purse.

These fiscal realities and intergovernmental dynamics are important when evaluating the Trudeau government’s increased support for social programs and use of its spending power as it tries to secure centre-left votes and maintain power as a minority government.

One-on-one talks leave policies wanting

Another noteworthy consideration is that these policies have been mainly negotiated through bilateral “take-it-or-leave-it” discussions with each province. The federal government has shown reluctance to pursue multilateral agreements with more than one province.

But there is another side to the coin. While increasingly resistant to federal “meddling,” the provinces have not actively sought to forge a cohesive coalition – with the exception of their stand on increases to federal health transfers.

Negotiations and resulting agreements often seem to serve as fodder for government promises of substantial change, yet they yield incremental results and lead to mutual blame between orders of government.

The pharmacare program is a prime example. Taking a cue from Quebec – a province with a long-standing history of asserting its right to opt out of federal initiatives – Alberta has declared its refusal to participate in the new program but still wants funding. Saskatchewan appears to be contemplating the same approach.

A matter of fairness

A lack of intergovernmental co-operation can lead to unequal coverage nationwide and raises questions of fairness for individuals.

Consider the implementation of the Canada emergency response benefit (CERB). Research by Gillian Petit and Lindsay M. Tedds highlights disparities among Canadians receiving the benefit.

Some provinces exempted it from their income-assistance programs while others did not. For instance, a CERB beneficiary receiving income assistance in British Columbia had full access to all benefits, whereas someone in a similar situation in Nova Scotia did not.

Citizenry must be part of the solution

The public’s perspective is particularly relevant given that we live in a time when fewer people show an interest in politics.

Statistics from Elections Canada show a drop in voter turnout between 2019 and 2021 across all age groups, continuing a downward trend since the 1990s.

Public-opinion research by the Consortium on Electoral Democracy shows Canadians rarely discuss politics with their families or friends. Moreover, young people around the world increasingly express dissatisfaction with their democratic systems.

In a healthy democracy, public participation in political life is fundamental. A first step is to become aware of social policies and informed about how they function. For this to occur, public interest is a fundamental necessity, but this is being hindered by the narrow politicization of social policy.

To govern effectively, politicians must demonstrate genuine co-operation before making announcements. Such an approach would foster the public’s trust by demonstrating a government’s willingness to bridge intergenerational and socioeconomic divides.

Provinces must work together

Given the rarity of institutional change – as evidenced by unsuccessful attempts to reform the electoral system – the ability to fulfil policy promises holds significant importance.

Instead of merely insisting on unconditional funding and inadvertently playing into the federal government’s strategy of divide and conquer, provinces must adopt strategies that promote collaboration.

They could achieve this through regular meetings among ministers responsible for portfolios including health, education and social services. Common priorities and objectives could be discussed and the focus shifted from budgets to problem-solving and solutions.

Given Canada’s cultural, economic and political diversity, a collaborative approach would give the provincial ministers the room to discuss the unique needs and constraints of their jurisdictions.

Instead of being forced into a one-size-fits-all policy, they could actively pinpoint areas for collective reform while respecting the autonomy of individual provinces to address specific concerns.

Only by joining forces can the provinces assertively advocate for federal support that acknowledges and respects the diversity inherent in Canadian federalism. Standing together can also serve as a safeguard against changes in federal governments and any attempts to diminish funding for social programs.

This article is based on a presentation delivered on March 25 at the workshop “The State and Future of Democracy” co-organized by the Centre for the Study of Democratic Citizenship, the Consortium on Electoral Democracy, and the McGill Institute for the Study of Canada.

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Shannon Dinan
Shannon Dinan is an assistant professor in the department of political science at Université Laval and the co-director of the Centre for Public Policy Analysis. She is an expert on the comparative welfare state and public finance, and has numerous publications, including in the Journal of Social Policy, Social Policy and Administration, and Policy and Society. She has also held visiting positions at Science Po Paris and the Copenhagen Business School. X: @shannondinan

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