FEDERALISM IN THE 21ST
CENTURY: DEFINING THE
COMMON ECONOMIC SPACE
Roger Gibbins
Roger Gibbins writes that Canada needs “a new national policy,” under which Ottawa
re-engages in the management of “our common economic space” while
“disengaging itself from from the management of social space” best left to the
provinces. This is the best way, he writes, for Canada to be competitive in a globalized
economy. “What sets federal states apart from other national communities,” he writes,
“is not their values but a number of institutional design principles that include a
division of legislative authority between two orders of government.” But he also
acknowledges that the division of powers in the Constitution “has been blown away
by the federal government’s spending power (the unfettered ability to spend in any
area of responsibility) and by dated constitutional text that understandably fails to
capture contemporary responsibilities and policy interdependencies” in areas such as
the environment and funding of university research.
Le Canada a besoin d’une « nouvelle politique nationale » par laquelle Ottawa
renouvellerait son engagement à gérer « notre espace économique commun », tout
en « se désengageant de l’espace social » dont savent mieux s’occuper les provinces.
Selon Roger Gibbins, ce serait le meilleur moyen de rester compétitif dans une
économie mondialisée. « Les États fédéraux se démarquent des autres communautés
nationales non par leurs valeurs, précise-t-il, mais par une conception institutionnelle
qui prévoit une division du pouvoir législatif entre deux ordres de gouvernement ».
Au Canada toutefois, la division des pouvoirs prévue dans la Constitution a été
anéantie par le pouvoir fédéral de dépenser et un texte constitutionnel désuet qui
n’est plus à même de saisir les responsabilités et interdépendances politiques dans
des domaines comme l’environnement et le financement de la recherche
universitaire, affirme-t-il.
M
y core argument in the following essay is that the
contemporary Canadian federal state is poorly
aligned with the economic challenges and
opportunities of globalization. To address this lack of alignment I recommend that:
●
the Government of Canada re-engage in the management, protection and promotion of our common economic space;
●
the federal government find the policy space and capacity for this re-engagement by disengaging itself from
the management of social space best left to subnational
governments; and
●
the federal government retreat from place-based programming and focus instead on highly mobile human capital.
When these recommendations are bundled together,
they form the case for a new National Policy.
Now this may be an unexpected argument from someone rooted in western Canada, where historical experiences
with iterations of national policies have seldom been positive. However, just as only President Nixon could go to China
in 1972, perhaps only a western Canadian can argue the case
for a new National Policy. At the same time, and acknowledging the regional apprehension that accompanies any discussion of policies with the prefix “national” — cue echoes of the
1879 National Policy and the 1980 National Energy Program
(NEP) — it is important to lodge this argument in the historical experience and current conditions of western Canada.
It is helpful at the outset to clear away some of the conceptual undergrowth that inevitably surrounds discussions of
Canadian federalism in the context of globalization. For example, although Canada is emphatically a federal state, federalism
itself encompasses only a fraction of the values and institutions
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Roger Gibbins
appointment of friends and partisan colengaged in daycare for children, the
that define our political life. Canadians
leagues of the prime minister (Canada).
waiting time for hip replacements and
embrace democracy, representative parOf particular importance to the present
the allocation of scarce infrastructure
liamentary government, individual
analysis, the design of federal states
funding between public transit and
rights and freedoms, the rule of law, the
assumes that national governments
interchanges in local communities.
protection of minority rights and a modshould not do everything; significant
The notion of constitutionally
icum of social and economic equality,
responsibilities are reserved for state or
defined responsibilities has been blown
but none of these are unique to federal
provincial governments.
away by the federal government’s
states or, for that matter, to Canada. They
spending power (the unfettered ability
are not federal values. For the most part
to spend in any area of responsibility);
when we refer to definitive Canadian valhis formal definition of federalism,
by dated constitutional text that underues, we are referring to aspects of our
admittedly, has little resonance for
standably fails to capture contemporary
political life and culture having little to
most Canadians. Debates about how
legislative responsibilities and policy
do with the fact that Canada, like
well the federal system works quickly
interdependencies; by the common
Australia and the United States but unlike
boil down to debates about the division
assertion outside Quebec that national
Britain and France, is a federal state.
of powers or, more prosaically, debates
values and standards should
My exploration of federalism
in the age of globalization thereThe notion of constitutionally defined trump dry constitutional text;
fore focuses on a set of federal
responsibilities has been blown away and by the electoral appetites of
both federal and provincial
principles, institutions and pracby the federal government’s spending leaders who assume that if
tices that even in their totality are
far less than the sum of Canadian power (the unfettered ability to spend something is important for
political life. Federalism is not in any area of responsibility); by dated Canadians, it must necessarily
about democracy, or individual constitutional text that understandably be important for the governments they lead.
rights, or equality; these values
fails to capture contemporary
In short, we live in a federal
are embedded elsewhere in the
legislative responsibilities and policy system that is largely unconcountry’s institutions and values.
The Canadian Charter of Rights
interdependencies; by the common strained by constitutional princiand Freedoms, for example, is assertion outside Quebec that national ples or design, where everything
shy of the armed forces is up for
not a federal document, although
values and standards should trump
grabs. With this comes democratit — like the much earlier
dry constitutional text; and by the
ic confusion with respect to
American Bill of Rights — certainly has implications for the electoral appetites of both federal and accountability and responsibility
operation and evolution of the
provincial leaders who assume that if — should I complain to my MP,
provincial legislative representafederal system.
something is important for Canadians, tive or local health authority if
What sets federal states apart
it must necessarily be important for
I’m unhappy with the medical
from other national communiservices I receive? — and interties is not their values but a numthe governments they lead.
governmental friction as the
ber of institutional design
national and provincial governments
principles that include a division of legabout which government is doing or
jockey for the same programmatic space.
islative authority between two orders of
not doing what. (Although western
government, each of which is elected
Canadians also worry about the federal
directly by citizens, and each of which is
nature of parliamentary institutions,
t their inception, and although
sovereign in at least one legislative
this is not a national concern.) And
they differed from one another in
domain. This division of powers is set out
here it is clear that the formal, written
many ways, all federal states were
in a written constitution that cannot be
constitution, the Constitution Act, fails
engaged in the construction of a comamended unilaterally by either order of
to provide even a proximate guide as to
mon economic space to be shared by
government. In addition, federal states
who does what or should do what.
their constituent provinces or states. Of
provide for the formal representation of
While Canadians might expect some
course, this was not the totality of what
their constituent communities (states or
rhyme or reason, what they see is both
they were trying to achieve; military
provinces) within the national legislathe national and provincial governdefence was another goal, albeit a brief
ture, although the means by which this is
ments involved virtually across the
and transitory one in Canada, and most
done range from direct popular election
board. Provincial governments serve on
federal states rested on the vision of a
(Australia and the United States) to indiinternational trade missions and now
transcendent national community.
rect election through constituent governinternational delegations (UNESCO),
Nonetheless, building a common ecoments (Germany), and even to the
while the national government is
nomic space was a fundamental task,
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Federalism in the 21st century: defining the common economic space
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Parliament, seat of the federal government. Roger Gibbins makes a strong case that Ottawa should “re-engage in the management…of
our common economic space,” while “disengaging itself from the management of social space best left to subnational governments.”
quite literally a foundational task for
new federal states, and Canada was no
exception. They imposed a common currency, common weights and measures,
and a common legal framework for business transactions. Internal tariffs on
trade were prohibited — although success in prohibiting non-tariff barriers to
internal trade was more limited, as the
Canadian experience attests — and uniform tariffs were imposed on imports
from outside the federation. The new
national government spoke with a single
voice in its economic relations with
other states as it defended and promoted
a common space within the international environment.
However, and to go to the core of
my concern, this undertaking has been
largely abandoned by or stripped from
contemporary national governments in
Canada. An important set of responsibilities has fallen through the cracks,
and as a consequence Canadians are less
prepared than they could be to confront
the challenges and reap the opportunities of globalization. Simply put, the
Government of Canada has neglected
an essential responsibility, and that is
the protection and promotion of the
common economic space shared by citizens from sea to sea to sea.
If I can paint with a very broad
conceptual brush, a fundamental prob-
lem for federalism follows from this
neglect. Citizens in well-functioning
federal states live within a common
economic space, but do so in a way that
accommodates community differences
in taste and preference. National governments manage, protect and promote
this common economic space, while
provincial/state and municipal governments manage the constituent communities. Thus, citizens can be part of a
relatively large economic community
while at the same time remaining
attached to the smaller communities
that are so important to their quality of
life. This is the traditional appeal of federalism for francophone Quebecers, but
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Roger Gibbins
Canadians by a new continental economic space imperfectly institutionalized through the North American Free
Trade Agreement (NAFTA). As a consequence, Canada’s economic space is
called into question in an era of
NAFTA, the World Trade Organization
Moreover, just as boundaries
around the national economic space
have been eroded by globalization, just
as the very concept of national economic space has come under attack,
jurisdictional boundaries within the
federation have also been eroded.
Ottawa, for example, and
National values are defined outside the context of federalism; for example only, has
they are articulated in a more partisan context by the national become engaged in the
government of the day. Citizenship rights defined through the design of health care delivcourts trump community distinctiveness. Although historically ery, in daycare and early
childhood development, in
the Government of Canada played an important role in
urban planning and in
managing, protecting and promoting Canada’s common
micro-environmental management. The federal value
economic space, in today’s context of globalization the
of diversity among commufederal government increasingly pins its relevancy for
nities has been discredited
Canadians on involvement in the traditional domain of
or abandoned as the federal
provincial and municipal governments — hence the attention government positions itself
as the defender of an overarpaid to such things as health care delivery and child care in
ching citizenship, presumrecent federal election campaigns.
ably reflected by and
(WTO), increased international trade,
embedded in national standards for
idiosyncratic local communities. Here
truly global corporations, intensifying
program delivery. The federal contract
Americans have nicely captured the
international competition and the
has been redefined from protecting
essence of federalism — E pluribus
instantaneous global flow of finance.
community distinctiveness to ensuring
unum, or “Out of many, one” — but
On the economic front alone,
the uniform application of national
done so in such a way that the distincglobalization presents not only opporstandards, an approach often associattiveness of constituent communities is
tunities but also challenges for
ed with Charter federalism. The drift to
not lost. Although federations are
Canadians. As the Canadian Council of
become less federal, to assume that
greater than the sum of their parts, the
Chief Executives observes: “We live in
national values and standards should
parts still matter.
an increasingly open world. Openness
trump provincial distinctiveness, conI would argue that if federal states
is one of Canada’s greatest strengths,
tributes to our ongoing inability to
are to endure as federations, they must
and we have been a prime beneficiary
come to grips with nationalist sentibe successful on both fronts; they must
of the growing flow of goods, services,
ment in Quebec. It should come as no
nurture the common economic space
money, ideas and people across borsurprise that the sovereignty movewhile at the same time giving someders. Being open to opportunities also
ment has not packed up its tents and
what distinct societies room to breathe
means being open to competition.
silently stolen away, for although one
and the capacity to respond to their
Canada has done well in competition
could argue that Ottawa can do a better
unique demographic and social cirwith other industrialized nations, but
job of managing the common economcumstances. Now at the best of times,
the rise of large developing economies
ic space than could Quebec City, it is
striking the right balance between
such as China and India is transformfar less evident that it can do a better
national economic management and
ing the competitive landscape for comjob of managing Quebec’s social space
community distinctiveness is a diffipanies in every sector.”
than could a sovereign Quebec state.
cult political and institutional task.
National values are defined outToday, however, it is rendered even
side
the context of federalism; they are
more difficult by globalization that
he challenges are then comarticulated in a more partisan context
erodes state boundaries and thus chalpounded as globalization erodes
by the national government of the
lenges the very notion of national ecothe economic underpinnings of
day. Citizenship rights defined
nomic space. For better or for worse —
national governments in federal states.
through the courts trump community
in my mind, for better — we live in an
Their role as managers of the common
distinctiveness. Although historically
era where national barriers to the flow
economic space is reduced as decisionthe Government of Canada played an
of goods, services, finance, ideas and
making shifts upwards to international
important role in managing, protect(less so) people are coming down. This
forums such as the WTO and outwards
ing and promoting Canada’s common
global reality is further reinforced for
to markets.
it is also of more general appeal. For
example, I can simultaneously be a
Canadian, an Albertan, a Calgarian and
a patron of my neighbourhood pub,
enjoying the economic and other benefits of an overarching national citizenship while still enjoying life in more
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Roger Gibbins
tion campaigns, faces inwards to address a
economic space, in today’s context of
●
Second, this essay is written from an
domestic social agenda rather than facing
globalization the federal government
unabashedly western Canadian peroutwards to address the economic chalincreasingly pins its relevancy for
spective. I would argue, however,
lenges and opportunities of globalization.
Canadians on involvement in the trathat regional bias in this case is a
With this domestic agenda has underditional domain of provincial and
virtue rather than a vice, for the
standably come a focus on place-based
municipal governments — hence the
dynamics of federalism in western
policies; greater attention is paid to the
attention paid to such things as health
Canada bring the economic argudistribution of the national economic pie
care delivery and child care in recent
ments of the essay nicely into focus.
than to its growth.
federal election campaigns.
Promoting the common economic
It is important, of course, not to
space has always been of greater
overstate the degree to which this evoluimportance in the West than proetter alignment is needed and can
tionary transformation has been the
tecting community distinctiveness.
be created through a new National
product of conscious design. I am not
The imposition of national stanPolicy built within the policy consuggesting that the Government of
dards and values, which for the most
straints of globalization. The case for
Canada’s expansion into the social and
part western Canadians share, has
this approach will be sketched in by
jurisdictional space of provincial governbeen much less problematic than
first reviewing some of the steps taken
ments was consciously framed as a
has been Ottawa’s management or
by Canadian governments in the past
response to globalization. Many other
mismanagement of the common
to manage, protect and promote the
causal factors have also come into play in
economic space, in part because
common economic space. I will then
this shift in focus, and thus perhaps the
many of today’s highly prized
suggest that the lessons from this past
most that can be said is that the shift
national values spring directly from
experience — and, indeed, many of the
coincides with the growing impact of
the western Canadian experience.
initiatives — can be used to patch
globalization on the Canadian economy.
Saskatchewan’s formative contributogether a new National Policy in
Nor should we read moral reproach into
tion to the public health care system
response to the economic challenges
this transformation, for the elevation of
is widely acknowledged; our nationand opportunities of globalization.
national standards above community
al commitment to multiculturalism
Before embarking on this rather
distinctiveness holds considerable appeal
within a bilingual framework reflects
ambitious — some might say hopelessamong Canadians outside Quebec.
western Canadian political pressure
ly ambitious — quest, I should note
Rather, the point to stress is that we have
in the 1960s; and the federal governthree caveats:
arrived at a situation where the federal
ment’s commitment to deficit-free
●
First, although my focus will be on
balance has been fundamentally altered.
financing — and, for that matter, the
the economic dimensions of federThe protection of the country’s common economic The point to stress is that we have arrived at a situation where
space has been largely aban- the federal balance has been fundamentally altered. The
doned, whereas the federal protection of the country’s common economic space has been
accommodation of commulargely abandoned, whereas the federal accommodation of
nity differences in taste and
preference has been weak- community differences in taste and preference has been
ened as the national and weakened as the national and provincial governments compete
provincial governments com- for social programming. At issue is whether this evolutionary
pete for social programming.
trajectory should be reversed in the context of globalization.
At issue is whether this evolutionary trajectory should be reversed in
similar commitment of provincial
alism and how these have
the context of globalization.
governments west of Ontario —
changed over time, it is not my
The concern driving the present
springs directly from the emergence
intent to reduce questions of govanalysis is that the federal government,
of the Reform Party of Canada in the
ernance and national identity to
by shifting its focus away from our comlate 1980s.
dollars and cents. I recognize there
mon economic space, is failing to equip
are many non-economic factors
●
Third, the highly selective history of
Canadians for the onslaught of global
that create national communities,
federal management of our comeconomic competition. Canada is at risk
hold them together and, in some
mon economic space that follows
of being outflanked and overtaken by its
cases, drive them apart. Economic
has been written by a political scieninternational competitors, in part because
considerations are only part of the
tist and not by an economic historiour federal system is not aligned with the
federalism story, albeit an imporan. Thus, commentaries on specific
new environment. The Government of
tant part as globalization bears
programs and initiatives should be
Canada, along with parties in federal elecdown on Canada.
taken with a large grain of salt.
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Federalism in the 21st century: defining the common economic space
With these caveats in mind, let’s
turn now to the historical record, with
particular emphasis on how it has
played out in western Canada.
T
he national government that came
into being in 1867 was involved in
nation building in a very big and practical way. Quite literally, building a common economic space was the overriding
preoccupation of the new national government; this was the strategy we adopted to ward off the threat of American
Manifest Destiny. Although it may seem
a silly point to make, it is nonetheless
useful to remember that national governments in the late 19th century were
not involved in wait times for surgical
procedures, or in the provision of child
care spaces, or, for that matter, in education at any level or in any form; everything had to do with managing and
promoting the common economic
space that had been created through the
1867 Constitution Act, commonly
known as the British North America
[BNA] Act. With the British government
casting its colony to the continental
wolves, Canada’s political survival could
only be assured through an economic
nation-building strategy. This early history, which contrasts so starkly with the
government scene today, is nicely
brought into focus by the story of agricultural settlement in the prairie west.
The founding relationship between
the prairie west and central Canada was
essentially colonial in character. Note,
for example, a pre-Confederation column in the Toronto Globe:
When the territory [the West]
belongs to Canada, when its navigable rivers are traversed for a few
years by vessels, and lines of travel are permanently established,
when settlements are formed in
favourable locations throughout
the territory, it will not be difficult
by grants of land to secure the
construction of a railway across
the plains and through the mountains…If we set about the work of
opening the territory at once, we
shall win the race [against the
United States, which was pushing
Policy Options Photo
The Langevin Block from the Peace Tower at dusk, home to Ottawa’s two most powerful
central agencies, the Prime Minister’s Office and the Privy Council Office. The West, which
Roger Gibbins calls “the new economic engine for Canada,” now has a voice in running
these powerful offices, and the government, as seldom before in Canadian history.
steadily westward]…It is an
empire we have in view, and its
whole export and import trade
will be concentrated in the hands
of Canadian merchants and manufacturers if we strike for it now.
Indeed, it was difficult to imagine
the relationship in anything but colonial
terms. The land, after all, was virtually
empty except for an Aboriginal population that did not figure heavily in
the nation-building visions of the
Confederation period, and Canada was
competing with the United States in a
settlement race westward across the continent. Central Canadian banks financed
the debtor frontier and the railways linking producers on that frontier to global
markets. The federal government orchestrated both the construction of the rail
system and immigrant settlement in the
late 1800s and early 1900s. Tariffs were
used to direct trade along the country’s
east-west axis and to tie the new western
Canadian consumers to central
Canadian manufacturers. The agrarian
settlement of the prairie west was therefore a national project, albeit a colonial
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Roger Gibbins
pers have hands). Yet in other ways,
regional prosperity was tied directly to
the policy architecture of the federal
government. The National Policy had a
direct impact on the input costs faced
by western producers, and the federal
economic interests of western Canada
be protected and advanced. Greater
decentralization was not the answer
because the policy domains of greatest
concern, including tariffs and interor the new western Canadian popuprovincial transportation, were intrinlation, it was also nation building in
sically responsibilities of the
of Canada and
Western Canadians could not afford to disengage, for only if Government
not provincial governregional political power could be wielded within the national ments. Decentralization
government would the economic interests of western
might work as a strategy to
Canada be protected and advanced. Greater decentralization protect the cultural integrity
of Quebec but not as a stratwas not the answer because the policy domains of greatest
egy to protect the economic
concern, including tariffs and interprovincial transportation,
interests of the West.
were intrinsically responsibilities of the Government of
However, if the federalist
logic
of “the West wants in”
Canada and not provincial governments. Decentralization
was clear, the means by
might work as a strategy to protect the cultural integrity of
which this objective might be
Quebec but not as a strategy to protect the economic
accomplished was not. The
interests of the West.
region’s political history is littered with the wreckage of
failed
attempts
to gain national political
government
sat
astride
the
transportaa global economic context. The emerclout — the early farm parties, including
tion infrastructure that linked western
gent western grain economy was tied to
the United Farmers of Alberta and the
Canadian producers to world markets.
global markets from the get-go.
United Farmers of Manitoba, as well as
Ottawa set freight rates, regulated and
Agricultural producers were necessarily
the Progressive Party of Canada, the Copartially financed the railroads and regdependent on those markets, as the
operative Commonwealth Federation,
ulated the financial institutions that
domestic population was too small to
Social Credit and, more recently, the
provided credit to western producers.
absorb their output, and the United
Reform Party of Canada. The successes
All of this meant that wielding political
States was a vigorous competitor more
were few and brief, with the high-water
power in Ottawa was critically importhan it was a market. Globalization was
marks coming with the minority governtant for the economic interests of westa fact of life, if not a term used at the
ment election of the John Diefenbaker
ern Canadians. Although they were
time. And, in global markets, national
Progressive Conservatives in 1957 and
largely indifferent to the role that federtariff policies provided no protection for
their landslide win in 1958; the first term
alism might play in protecting commuwestern producers. Tariffs could and did
of Brian Mulroney’s Progressive
nity distinctiveness, they were hugely
protect the infant central Canadian
Conservative government from 1984,
concerned about the management of
manufacturing industries, but agriculturculminating with ratification of free trade
the country’s common economic space.
al producers were left on their own in
with the United States and the abolition
the international marketplace, while at
of the NEP; and Stephen Harper’s minorthe same time having no choice but to
he fact that Ottawa mattered very
ity government.
absorb the costs imposed by tariffs on
much spawned the logic of what
the machinery they used. This is why
eventually became a regional mantra:
the 1879 National Policy of tariff protec“The West wants in.” Although this
he more general point is that
tion had few fans in western Canada. In
was the founding slogan of the Reform
Canadian federalism, and particularfact, it triggered a regional aversion to
Party of Canada, created in 1987, the
ly the national government and its polithe policy adjective “national,” an aversentiment (if not the slogan) has much
cy architecture, was highly relevant to
sion reinforced by the NEP in 1980 and
deeper roots in the West as the logical
western Canadians even though, in their
one that arises when national governimperative for political action, and as
eyes, it was badly flawed. Hence the
ments that are not truly national in their
an explanation for why western politireform impulse in western Canada, an
composition impose “national policies.”
cal discontent has not been associated
impulse reflecting the reality that what
In some ways, of course, prosperity
with a withdrawal from national poliOttawa did and did not do had a very sigin the early prairie west lay beyond the
tics. Western Canadians could not
nificant impact on regional prosperity.
reach of public policies; it was in the
afford to disengage, for only if regional
The West was the most globalized part of
hands of the weather, international
political power could be wielded withthe early Canadian economy, and success
markets and grasshoppers (if grasshopin the national government would the
in global competition was tied directly to
one, and undoubtedly a successful one.
It was nation building in the literal sense
of the word.
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Federalism in the 21st century: defining the common economic space
the policies and actions of the federal
government. It is no wonder, then, that
western Canadians wanted in; they had
little choice. It is also no wonder that
they championed institutional and political reforms, albeit with no success. The
core of western Canadian discontent lay
with this sense of impotence, of being
unable to influence the public policy
determinants of regional prosperity. Yes,
the federal government was important,
but it was also remote, seemingly indifferent and occasionally hostile to western
Canadian aspirations.
B
cent to 18.9 percent. Although eastwest trade is not unimportant, it is progressively less important.
International trade has become
more important to the regional economy. In the 20 years between 1981 and
2000, international exports as a proportion of the western Canadian GDP
rose from 18.8 percent to 35.8 percent;
in the rest of Canada the change was
even more pronounced, increasing
from 20.8 percent to 48.2 percent.
Against the backdrop of these
changes, the West has emerged as the
new economic engine for Canada. The
region has vast energy supplies, energy
markets are robust and natural resource
markets
are
generally
strong.
ern Canadians is that they decrease the
relevance of the federal government.
The economic realignment spurred
by prosperity in the West also turns the
traditional “the West wants in” crusade
on its head. For generations, western
Canadians have sought a more effective
voice in Ottawa to call attention to
regional aspirations and needs. Now,
instead of western Canadians pleading
their relevance to Ottawa, the challenge
will be for the national government to
show that it is relevant for the West.
The discussion of “who wants into
what” has been transformed.
ut that was then and this is now.
In recent decades the linkages
he federal government also seems
between federal policy and economic
less able, or less relevant, or both, in
prosperity in the West have
protecting
and
promoting
The economic realignment spurred regional economic interests on
been substantially weakened.
For example:
by prosperity in the West also turns the international stage. On softThe tariffs that were so
the traditional “the West wants in” wood lumber and bovine spongiintegral to the National Policy
form encephalopathy (BSE), the
crusade on its head. For generations, federal government’s clout with
and that served as a lightning
western Canadians have sought a
rod for agrarian discontent are
the United States has been somegone. In most respects (some
where between modest and nonmore effective voice in Ottawa to
see the Canadian Wheat Board
call attention to regional aspirations existent. In the broader
as a significant exception), the
international arena, Canada’s
and needs. Now, instead of western position in the latest round of
federal government no longer
Canadians pleading their relevance WTO agricultural negotiations
stands
between
western
Canadian producers and the
to Ottawa, the challenge will be for has been determined primarily
global trading system.
by the supply management conthe national government to show
The federal government
cerns of central Canadian dairy
that it is relevant for the West. The and poultry producers; commodnow plays little role in the
transportation systems linking discussion of “who wants into what” ity producers in western Canada
western Canadians to global
have been largely shunted aside,
has been transformed.
markets. Ottawa is neither an
sacrificed to Canada’s defence of
Unemployment rates are low and pubinvestor nor a builder, and deregulaprotectionism. While it may be possible
lic finances are in excellent shape. The
tion has further reduced the federal
to argue that western Canadians would
national economy’s centre of gravity is
government’s role. Freight rates are set
be even worse off were it not for the
shifting west, and the region’s share of
by markets, not by Parliament. Ottawa
intervention of the federal government,
the national population is steadily
today is little more than a collector of
this is not an easy argument to make.
increasing; just over 30 percent of
taxes (e.g., the fuel tax) and rents (e.g.,
The basic reality is that Canada is a small
Canada’s population now lives in the
airports). The transportation system is
and proportionately shrinking player in
four western provinces, compared with
unfortunately seen more as a revenue
the international trading system, where
slightly less than 24 percent in Quebec.
source than as the foundation for ecowe speak softly and carry a small stick. As
nomic growth and prosperity.
international trade becomes increasingly
The relative importance of eastimportant, Ottawa’s international influost of these changes in the ecowest
interprovincial
trade
has
ence and domestic relevance decline.
nomic landscape, with the posdecreased. During the 20 years between
Senator Pat Carney, former minissible exception of the last, have played
1981 and 2000, interprovincial exports
ter of energy in the Mulroney governout across the country; the 1989 Free
in the West fell slightly, from 22.5 per
ment, was essentially right when she
Trade Agreement (FTA) and NAFTA, for
cent of regional gross domestic product
argued in Calgary during the 1988
instance, have had a profound impact
(GDP) to 19.4 per cent, while in the
federal election campaign that western
on the national economy. The particurest of Canada they fell from 25.7 perCanadians should support the
lar relevance of these changes for west-
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Roger Gibbins
increasingly irrelevant for economic
the border onto American routes. The
proposed FTA because, once it was
prosperity in western Canada.
Trans-Canada Highway still has twoimplemented, the American governlane sections in Newfoundland and
ment would then protect western
Labrador, New Brunswick, northern
Canadians from their own national
he western Canadian experience
Ontario, Saskatchewan and British
government (an extraordinary arguillustrates the role that the
Columbia. Sometimes we dream big
ment for a minister of the Crown to
Government of Canada has played in
but execute small.
make!). There is no need to “get in,”
helping to create the infrastructure linkthe then minister implied, so long as a
ing Canadian producers to domestic,
foreign power can be relied upon to
continental and global markets. That
e do not have to go back to the
protect regional economic interests.
role, however, was by no means limited
National Policy of 1879 or to the
Washington would ensure that future
to the prairie west. Note, for example,
construction of the St. Lawrence
Ottawa governments would not resurthe federal government’s contribution
Seaway to find examples of how the
rect the notorious NEP. Here it can also
to the construction of the St. Lawrence
Government of Canada has acted with
be argued that business interests in
Seaway, a monumental engineering
vigour to protect and promote Canada’s
western Canada have become increasproject that linked the continental
common economic space. More recent,
ingly indifferent to conventional
heartlands of Canada and the United
if somewhat contentious, examples
methods of political representation.
States to Atlantic markets. The federal
come from the FTA in 1989 and NAFTA
They exercise sufficient clout to have
government was a player in the conin 1994. These initiatives by Brian
direct access to the federal governstruction of the Trans-Canada Pipeline,
Mulroney’s Progressive Conservative
ment; there is no need to channel their
which created a central Canadian margovernment were designed to transconcerns through a local MP or senaket for Alberta energy resources. The
form the Canadian economy by opentor. “Getting into the federal governconstruction of the Trans-Canada
ing it up to more robust continental
ment” does not require institutional or
Highway, carried out on a cost-shared
competition, but also opening it up on
political reform; it is a matter of pickbasis with provincial governments,
a more secure basis to American and
ing up the phone or hitting “send.”
should also be noted, along with John
Mexican markets. Now admittedly, to
In summary, the agricultural setDiefenbaker’s visionary — if weakly
some this continental approach might
tlement of the prairie west illustrates
implemented — “roads to resources”
appear to fly in the face of protecting
the historical role played by the
program, designed to open up the minCanada’s national economic space;
Government of Canada in building,
eral wealth of northern Canada. Ottawa
they might see it as an abandonment of
protecting and promoting a common
was a builder, and a builder that helped
this very notion. Others, however,
economic space. The national governopen up global markets.
including this author, see the FTA and
ment was directly involved in promotUnfortunately, the Trans-Canada
NAFTA as bold steps to reform and ultiing immigration, in the construction
Highway is also an example of how
mately strengthen the Canadian econoof the infrastructure needed
to link western Canadian Unfortunately, the Trans-Canada Highway is also an example of
producers to world markets how policy implementation has fallen short of visionary goals.
and in the establishment of We still lack a divided, four-lane highway that stretches from
the treaties with Aboriginal
coast to coast (never mind the third coast). There is no
peoples that paved the way
for agricultural settlement. Canadian parallel to the interstate highway system in the United
That role, of course, was States, a fact that diverts a great deal of east-west traffic south
also contentious, as the of the border onto American routes. The Trans-Canada Highway
effects of national economstill has two-lane sections in Newfoundland and Labrador, New
ic policies were not evenly
distributed across regional Brunswick, northern Ontario, Saskatchewan and British
communities; tariffs were a Columbia. Sometimes we dream big but execute small.
golden goose for central
Canadian manufacturers and a cross to
policy implementation has fallen short
my in the face of growing international
bear for agricultural producers on the
of visionary goals. We still lack a dividcompetition. At the very least they proPrairies. Nonetheless, the activism of
ed, four-lane highway that stretches
vide examples of a national governthe national government is undenifrom coast to coast (never mind the
ment prepared to act decisively in
able, as is its broad success in helping
third coast). There is no Canadian parpursuit of an economic vision informed
to foster Canadian economic progress.
allel to the interstate highway system
by the new realities of globalization.
Now, however, the federal government
in the United States, a fact that diverts
A less dramatic but still significant
and its policy architecture appear
a great deal of east-west traffic south of
move came from the efforts of
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Federalism in the 21st century: defining the common economic space
reduced engagement in the social
space occupied by provincial governments is important, if not immediately obvious. Reduced engagement is
essential if Ottawa is to have sufficient
policy focus and capacity. It
The link between a renewed focus on our common economic is imperative that the
space and reduced engagement in the social space occupied Government of Canada not
be seen as the hammer for
by provincial governments is important, if not immediately
obvious. Reduced engagement is essential if Ottawa is to have every conceivable policy
nail. Just because somesufficient policy focus and capacity. It is imperative that the
thing is important for
Government of Canada not be seen as the hammer for every Canadians does not necessarily mean that it should
conceivable policy nail. Just because something is important
be important for the federal
for Canadians does not necessarily mean that it should be
government. To be effective
important for the federal government. To be effective the
the federal government
federal government needs to constrain its appetite; it needs to needs to constrain its
appetite; it needs to be a
be a nimble, not bloated, player on the international stage.
nimble, not bloated, player
on the international stage.
tal and global markets. As a conseemerging drivers of successful internaquence, transportation infrastructure
tional competition, and it had a
— the “ties that bind” — is as impormarked impact on the university
recurrent theme of this essay is
tant today to economic prosperity as it
research community. Whether the dolthat the federal government must
was during the construction of the
lars matched the needs is not clear, but
be strategic in meeting the challenges
Canadian Pacific Railway across the
once again it provides an illustration
and opportunities of globalization,
West. Another example of continuity
of national leadership.
and then must be bold in pursuing its
comes from immigration, which was
strategic choices. In the league of globso
critically
important
to
the
agrarian
al economic competition, it is a matter
inally, it is impossible for an
settlement of western Canada and
of “go big or go home.” Canada’s popAlbertan to resist mentioning the
remains important today as the
ulation is smaller than California’s,
NEP, which was another bold although
Canadian economy faces growing
and Canadian influence within the
deeply flawed attempt by the national
labour shortages brought on by an
global economy is diminishing over
government — in this case a Liberal
aging population and birth rates well
time as our proportionate share of the
government led by Pierre Elliott
below the replacement rate.
global economy shrinks. These realiTrudeau — to move the national econMore generally, my reading of histies support the case for a stronger
omy along a somewhat different tratory suggests that Canadian governnational government, a case that I also
jectory than market forces might have
ments in the past often acted with
support. If the Government of Canada
dictated (unlike NAFTA, which was
boldness and success in managing, prorefuses to limit its terms of policy
clearly aligned with market forces).
moting and protecting Canada’s comengagement, if it keeps a finger in
The important thing to note about the
mon economic space. It is only in recent
every conceivable policy pot, then we
NEP in the present context is that it
years that national governments have
will continue to do many of the right
was place-based, designed to shift oil
become more hesitant, more preoccuthings, but without enough commitand gas exploration outside Alberta
pied with a social agenda, although
ment or resources to make a difference.
and onto “Canada lands” in the North
even here Chrétien’s innovation agenda
We need focus and boldness, and we
and off the east coast. The goal was not
and the Asia-Pacific Gateway initiative
need a new National Policy. The alterto strengthen the national economy
offer hope that the creative spark has
native is to sit on the curb, waving our
but rather to realign that economy to
not been completely extinguished. The
flag as a global parade passes by.
the benefit of some regions and the
critical question is whether the federal
detriment of others. The NEP is a clasgovernment can again find its groove —
Roger Gibbins is president and CEO of
sic example of what not to do.
whether its economic relevance can be
the Canada West Foundation in Calgary.
What, then, are the more positive
rebuilt in the new circumstances of
Excerpted from “Canada by Picasso,” the
lessons that might be drawn from this
globalization.
2006 CIBC Scholar-in-Residence Lecture
very brief historical sketch? The first is
The link between a renewed focus
under the auspices of the Conference
that many of the economic initiatives
on our common economic space and
Board of Canada.
undertaken by Canadian governments
Jean Chrétien’s Liberal government to
strengthen federal investment in
Canada’s research and development
capacity. This innovation, or prosperity, agenda was well tuned to the
in the past are relevant today. For
example, Canadian producers of all
stripes, and particularly those located
outside central Canada, still find
themselves a long way from continen-
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