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FROM OLD , THE NEW EAST: ADJUSTING TO THE CHANGING FEDERAL ENVIRONMENT

Christopher Dunn

We all know the drill: we have , the Prairies, four and big, bad in the middle. Or do we? It’s time, Christopher Dunn argues, to cast the existing terms of Canadian regionalism into larger, more functional approaches that catch commonalities and possibilities among unlikely partners. The concept of “Old Canada” and “New Canada” is one approach. Old Canada (the five easternmost provinces) can benefit itself and the country by forming a new intergovernmental relationship: the “New East.”

Tous connaissent la rengaine : il y a la Colombie-Britannique et les Prairies, les quatre provinces atlantiques et, au beau milieu, l’affreux Canada central. Est-ce vraiment en ces termes que nous concevons le Canada ? Christopher Dunn croit qu’il est urgent d’envisager le régionalisme canadien selon des catégories plus fonctionnelles — des catégories comme l’« ancien Canada » et le « nouveau Canada », par exemple — qui mettent à profit les similitudes entre partenaires trop longtemps jugés improbables. Ainsi l’« ancien Canada », comprenant les cinq provinces les plus à l’est, aurait tout intérêt à former le « nouvel Est » en tissant de fructueux liens interprovinciaux, dont bénéficiera l’ensemble du pays.

he language of Canadian regionalism has become Europeans largely around the early 17th century, Old tired and increasingly less useful. We are accustomed Canada has the longest historical memory in the country. T to thinking in terms like eastern, western, and cen- Its provinces have significant political, economic and social tral Canada in general, and then imagining increasingly characteristics in common that distinguish them collective- finer distinctions: , the Prairies, , ly from the rest of the country. — the list goes on. At certain junctures, however, it It is not merely quaint reflections on the past that propel becomes more useful to cast regionalism in larger, more an interest in the , however. Old Canada has the poten- functional categories that catch commonalities and possi- tial either to synergize its component parts or to drag them bilities among unlikely partners. One possible category is down. In 2010, Old Canada spent 26 percent of the country’s the dichotomy of “Old Canada” and “New Canada.” expenditure-based gross domestic product. Thirty-eight per- Currently overlooked, it may hold the key to a more cre- cent of the undeveloped hydro potential in Canada rests in ative interprovincialism and federalism in Canada. Old Canada; the entire West, all four provinces, had 35 per- Old Canada is composed of Quebec, , cent of the Canadian total. The Atlantic margin has 18 per- , , and and cent of Canada’s estimated conventional hydrocarbon . , which for decades has seen itself resources, the largest proportion after the as an entity apart from the rest of the country, now increas- Sedimentary Basin, excluding oil sands bitumen. The part- ingly sees itself as a subset of Old Canada. ners in Old Canada can help each other: Newfoundland and When all the provinces in Old Canada don’t work togeth- Labrador and Nova Scotia have offshore capabilities that er, the region as a whole doesn’t work. It is not working now. Quebec needs as it attempts to develop resources We propose a new working relationship among the partners we in the Gulf of St. Lawrence; Quebec has hydro expertise and call “the New East,” which we discuss later in the article. marketing ties that could be useful for the Atlantic provinces. We call the region “Old Canada,” because it is the ori- Pitted against each other, as they have been in some areas gin, the root, of what we now call Canada. Settled by and some eras, the region’s provinces suffer. Newfoundland and

78 OPTIONS POLITIQUES JUIN-JUILLET 2012 From old Canada, the New East: Adjusting to the changing federal environment

Labrador needs markets in central the early 1990s, it has consistently for- rapidly, like New Canada, favour less Canada but cannot get access to them saken its alliance with Ontario and interventionism and more liberal asym- through Quebec. Development in the voted for parties in . metry in the federal makeup. In addition, Gulf of St. Lawrence has suffered from a The power centre has shifted. A these “like” are more likely to half-century disagreement over offshore new alliance is apparent. An Ontario- strike alliances at the national and supra- boundaries. Broad labour market policy West alliance has replaced the national levels than are regions that dif- and industrial subsidies in the area Laurentian axis. In Parliament the fer. At the same time, a remain segmentalized, to the detriment lion’s share of the seats from Ontario, “denationalization” dynamic is at work of the area’s business. This is to say noth- , , and introducing cleavages among the dissim- ing of the loss of social capital and British Columbia have gone to the ilar regions. If this argument holds, it is regional cultural life, which is the bitter Conservatives; in Atlantic Canada this likely that Quebec will have more in fruit of the loss of economic interchange. can be said only of New Brunswick. common with the provinces of the Atlantic than with the others. Pitted against each other, as they have been in some areas A “vertical decoupling” and some eras, the region’s provinces suffer. Newfoundland of the federal and Quebec and Labrador needs markets in central Canada but cannot get governments is in train. access to them through Quebec. Development in the Gulf of Increasingly, Quebec is ignored in - St. Lawrence has suffered from a half-century disagreement making. Largely of necessi- over offshore boundaries. ty, rough proportionality among members of the fed- Perhaps it is time to consider what The shift may be long-lasting, in light eral cabinet from Quebec is not the brings Old Canada together and to see of the disintegration of the Liberal working principle of federal cabinet- if there are modalities for ending, or at Party, which has lost vote share in making as it was a few generations ago. least modifying, what separates its every and territory since Evidence of this decoupling component parts. mid-decade, and of shifting regional abounds. The long gun registry, the population figures. Federal govern- omnibus crime bill, changes to health here are, first of all, some shared ments will be formed from Ontario funding, unilingual appointments to the T political characteristics. The and the West for the foreseeable and Office of the Auditor “Laurentian axis,” the historic commit- future, and those regions will have the General, and renaming of the Canadian ment by Ontario and Quebec to a com- most important portfolios. The gov- Forces have been decided over the mon front in national development, erning Conservative Party garnered protests of Quebec. Quebec has some has foundered. Most of the early com- two-thirds of the seats in Ontario, but victories, but a longer list of defeats. mercial policies of the country were for only 7 percent of the seats in Quebec. This lack of a voice in national the benefit of central Canadian inter- Could Quebec could throw in its policy-making is something the ests in Ontario and Quebec. lot with the new Ontario/West alliance Atlantic provinces have in common In recent times, the policies of the to offset its strategic disadvantages? with Quebec. Since the beginning of Liberal Party and the old Progressive Conceivably. However, this is unlikely the 20th century, cabinet members Conservative Party in areas like constitu- to happen; as one goes westward, more from Atlantic Canada have formed a tional politics, national unity symbols liberal-individualist political philoso- decreasing proportion of the total (, bilingualism), the phies are predominant, and as one number of cabinet members. Where Charter and the social welfare programs moves eastward, social democratic once they formed close to one-third of that balanced the concerns of Quebec ones are stronger. Small wonder the cabinets, now they are lucky if they get and (pensions, health West has historically been unfriendly 15 percent of cabinet memberships. care, welfare) carried on the legacy of the to Quebec’s aspirations. Ottawa is likely to ignore one or Laurentian consensus. In their article in Spatial Aspects of another province. Not five. This is one The Laurentian axis has lost its Federative Systems, Christian Leuprecht reason for the New East. hold. As John Ibbitson notes in a recent and Nicolette O’Conner argue that Literary Review of Canada essay, it has demographic differentiation is leading to hared characteristics are abundant been weakened by the trade agree- vertical and horizontal “decoupling” in S in Old Canada. One is diminishing ments, Ontario connecting to the Great federations. Substates that are aging more demographic clout. Like the shifting Lakes region, and the West increasingly rapidly (like, say, Old Canada) tend to political centre, there is a shifting popu- orienting itself toward Eastern . resist departures from the more central- lation centre of gravity in Canada. Most importantly, Quebec opted ist, redistributive, social-democratic poli- Census figures for 2011 show that for out of the governing consensus. Since cies and regimes; those that are aging less the first time, Old Canada’s population

POLICY OPTIONS 79 JUNE-JULY 2012 Christopher Dunn

is less than that of the West (30.6 per- ible minority populations, indicating a debt was equivalent to 53.8 percent of cent versus 30.7 percent of the narrative of multiculturalism, not GDP — nearly 26 percentage points more Canadian population). In the last 60 national unity. than the average of the other provinces (it years, British Columbia and the Prairies’ Old Canada’s share of the nation- was 39.9 in Newfoundland, 39.0 in share of population has increased (from al population will decline steadily. By Ontario, 38.9 in Nova Scotia, 31.8 in 26.5 percent to 30.7 percent), while that 2031, Quebec’s share of the total pop- Manitoba, 28.2 in Prince Edward Island of Quebec and the Atlantic provinces ulation will have fallen from 23.5 per- and 25.4 in New Brunswick according to has declined (from 40.5 percent to 30.6 cent (in 2005) to 21.6 percent at best. figures in the Quebec budget. The next percent). Quebec and Ontario have For its part, Atlantic Canada would fiscal year, matters had not improved much for Quebec and most A “vertical decoupling” of the federal and Quebec of the other Old Canada governments is in train. Increasingly, Quebec is ignored in provinces. As of March 31, national policy-making. Largely of necessity, rough 2011, the gross debt in Quebec had increased to 54.3 proportionality among members of the federal cabinet from percent of GDP, Prince Quebec is not the working principle of federal cabinet-making Edward Island’s had as it was a few generations ago. increased to 28.6 percent and New Brunswick’s to 28.4; gone from rough parity in population decline as well. Between 2.3 and 2.5 Nova Scotia’s held at 38.3 percent, and 60 years ago, differing by only four per- million people, or between 5.9 percent Newfoundland and Labrador’s declined centage points in 1951 (28.9 percent and 6.4 percent of , would to 36.4 percent due to oil revenues. versus 32.8 percent respectively) to a be living in one of the four Atlantic Old Canada consumes most of the nearly 15 percentage point difference in provinces in 2031, compared with 2.3 Equalization fund. In 2011/12, Quebec 2011 (23.6 percent versus 38.4 percent). million, or 7.3 percent of the popula- accounted for 53 percent of The census figures show a likely shift tion, in 2005. East of the Ottawa River, Equalization. Counted together, in favour of the political fortunes of the therefore, Old Canada will have a max- Quebec, Prince Edward Island, Nova Conservative Party. It has provoked a imum of 28 percent of the population, Scotia and New Brunswick accounted major distribution of Commons seats in perhaps less, down from nearly 31 per- for 74 percent of the fund. provinces where the Conservatives are cent of the population 25 years earlier. Old Canada has been relatively already strong. On October 27, 2011, the Old Canada interprovincial migra- poor compared to the rest of Canada. Harper government introduced the the tion is negative. From 2001 to 2010, it The GDP per capita in Quebec, Prince Fair Representation Act. This would see lost close to 120,000 people. It is not Edward Island, Nova Scotia and New Ontario gain an additional 15 seats (to alone in this phenomenon, but there Brunswick was consistently lower than 121), British Columbia 6 (to 42), Alberta the degree of population loss is greatest. that in Canada as a whole from 6 as well (to 34) and Quebec 3 additional Aging populations will character- 2002/03 to 2008/09, and the gap seats, bringing its total to 78. The new ize Old Canada’s provinces in particu- widened as the decade continued. House grows from 308 seats to 338. lar. Statistics Canada projections show Old Canada ranks as the highest- Although the new seat totals simply that in almost every scenario, the taxing area in Canada. The highest tax make these provinces’ shares of the Atlantic provinces would continue to levels for personal income tax in the Commons seats proportionate with their present the highest median ages in first, second and third brackets are in share of population, it is the likely Canada in 2031, and the median age Quebec, which in April 2011 joined the intraprovincial effect of the 30 new seats would be higher than the national Atlantic provinces as relatively high- that is notable. Political commentators average in Quebec. taxing provinces, according to the observe that the new seats are likely to Nova Scotia Department of Finance. be in suburban areas surrounding cities ld Canada’s provinces are alike in The disposable personal income like , , and O another aspect: they are, or have per capita in Quebec was virtually Edmonton, where the Conservatives are been, fiscally and economically chal- identical to those of the three largest already strong. Conservatives hold 26 of lenged. This gives them a different out- Atlantic provinces in 2002 to 2011, the 30 largest ridings in the country, rid- look on prospects for the future. It according to the Institut de la statis- ings from which the newer ones are like- might argue for common cause on tique du Québec, in November 2011. ly to be carved out by redistribution. projects for the future. However, it was consistently behind More Conservative seats will mean more Old Canada has the highest debt Ontario and Western provinces. stacking of the Commons against load of all the provinces. The 2011/12 Similar news was found in the Quebec (and perhaps Atlantic Canada). Quebec budget noted that, at $163.3 bil- matter of social assistance beneficiar- And they will have disproportionate vis- lion as at March 31, 2010, Quebec’s gross ies. Except for in the early to mid-

80 OPTIONS POLITIQUES JUIN-JUILLET 2012 From old Canada, the New East: Adjusting to the changing federal environment

1990s, the highest percentage of such generating facility, once New Brunswick (1972) and the Council of Atlantic Pre- beneficiaries has been found in had refurbished it. New Brunswick would miers (2000). Faced with decline in eco- Newfoundland and Quebec. keep ownership of fossil-fuelled power nomic matters, they ramped up plants, NB Power distribution and NB economic intelligence (Atlantic Provinces ll these similarities might suggest Power customer sales. But the deal was Economic Council [APEC], 1956), com- A need for unity or common fronts called off in March 2010. mon procurement agreements (1989, — but there is no such common front The deal raised a number of issues. 2008), energy alliances (New in Old Canada. Tension between Hydro-Québec was to sell bulk electric- Governors-Eastern Canadian Premiers Quebec and Atlantic provinces on ity to New Brunswickers at a locked-in Conferences, 1973, and Atlantic Energy Gateway, 2007). Faced with Ottawa announces it will play no future role in health, will declining population, they continue commitment to a classical, federalist, “open participated in the Atlantic federalism” and hints at downloading selected federal Population Table (2006). responsibilities to the provinces. Quebec has been leaving for Faced with a decline in work- ing-age population, they years and is still in the process of cutting ties. There is no cooperated on immigration current strategy for the engagement of Quebec to counter and human capital initiatives the trend. The New East would, however, be one. (Maritime Provinces Higher Education Commission,1974; major policy questions has been the rate, regardless of the market, busi- Maritime Provinces Education Founda- order of the day. The question is, will ness’s rate was better than consumers’, tion, 1982; and the Council of Atlantic these tensions be fatal to future coop- the deal seemed more for Hydro- Ministers of Education and Training, eration in the region? Québec’s benefit that NB Hydro’s, and 2004). The first issue causing tension is there was a possibility that the agree- In short, there has been five to six economic designs. Hydro-Québec’s ment could affect Newfoundland’s and decades of cooperation among these province-building design clashes Nova Scotia’s access to the New provinces, brought together by the directly with those of Newfoundland England electricity market. It was one logic of shared political, social and Hydro and others in Atlantic Canada. thing to work in partnership with a fel- economic circumstances of the sort Hydro-Québec has a policy of low low Crown, but still another to take chronicled at the beginning of this residential, commercial and industrial over its core business lines for profit. article. These forms of cooperation, rates, which are subsidized by windfall Are such histories fatal for future while valuable, are on lower-level mat- profits from the Upper Churchill New East alliances? Not necessarily. Bad ters and do not concern the big-ticket (Churchill Falls) hydro development history wasn’t enough to prevent policies that could make Old Canada under a 1969 contract that is due to Premiers Lucien Bouchard and Brian more competitive. expire in 2041. Attempts with Tobin from inking the Lower Churchill- Now it may be possible to work with Transenergy to allow Newfoundland La Romaine hydro deal of 1998, the Quebec in a new paradigm of regional Energy wheeling rights through Quebec terms of which would have turned back cooperation. Let’s call it the New East, in for exploitation of the Lower Churchill some of the disadvantages of the 1969 the spirit of new beginnings. have been unsuccessful. In addition, deal. Furthermore, it is virtually incon- Quebec will not negotiate directly with ceivable to imagine transmission of ener- here is a logic of cooperation that Newfoundland over the Old Harry gy from a future Gull Island project — T over time is looming larger for the prospect, which straddles the so-called which could produce 2,250 MW, three provinces of Old Canada. It speaks to a Quebec-Newfoundland Stanfield Line times Muskrat Falls — except through larger sphere of interaction and boundary, in the Laurentian Channel Quebec, at mutually beneficial rates. expanded institutional relationships in of the Gulf of St. Lawrence. Even a less exploitative Hydro- a new framework, the New East. Newfoundland and Labrador is not Québec/NB Hydro deal can be imagined. The first element of the logic pro- the only province to disagree with moting potential intergovernmental- Quebec over its economic designs. In vailable to Old Canada, however, is ism in Old Canada is the changing 2009, Premiers of New A a model of cooperation and inter- federal environment. The change is Brunswick and of Quebec provincialism. The Atlantic provinces of toward simultaneous disengagement by announced a deal, as the “Ganong Old Canada tend to combine or cooper- Ottawa and Quebec. This is what the Report” noted, that would have seen ate on the matters that affect them most. demise of the Laurentian Axis looks like Hydro-Québec acquire most of the hydro For example, faced with declining politi- in practice. Ottawa announces it will generation facilities, two diesel peaking cal influence, the premiers combined to play no future role in health, will con- plants, and the Point Lepreau nuclear form the Council of Maritime Premiers tinue commitment to a classical,

POLICY OPTIONS 81 JUNE-JULY 2012 Christopher Dunn

federalist, “open federalism” and hints urers. A more cooperative approach to duction, transportation and consump- at downloading selected federal respon- health delivery would help. tion of energy. Whatever it turns out to sibilities to the provinces. Quebec has These developments on the trans- be, without the needs of the five eastern been leaving for years and is still in the fer front are made more significant by provinces factored in, it isn’t going to process of cutting ties. There is no cur- the likely effects of the federal govern- happen. And at present, there is no rent strategy for the engagement of ment’s four-year austerity program. mechanism to promote all five talking to Quebec to counter the trend. The New APEC estimates significant negative fall- each other. The New East would be one East would, however, be one. out from federal program reductions. such mechanism. The second point is that it makes The fourth aspect of the logic is The sixth point in the logic is that the economic sense. Haute-études commer- that the provincial governments of Old area is very familiar with regional intergov- ciales professor Pierre-Olivier Pineau Canada are either in deficit or heading ernmentalism. In addition to the many examples of multilateral This lack of a voice in national policy-making is something the Atlantic or Quebec-Atlantic Atlantic provinces have in common with Quebec. Since the relations in the meetings and beginning of the 20th century cabinet members from Atlantic initiatives of the governors and have formed a decreasing proportion of the total Canadian premiers, there are number of cabinet members. Where once they formed close many examples of bilateral to one-third of cabinets, now they are lucky if they get 15 relations involving provinces percent of cabinet memberships. in Old Canada. I counted 10, of which 7 involve the govern- notes in a March 2012 “Federal Idea” for it, adding to significant debt. The ment of Quebec. It is possible to envisage study that integrating electricity sectors other provinces are currently in deficit. new initiatives — an eastern Trade, (in Old Canada) could improve reliabili- APEC reports that Nova Scotia’s budget Investment and Labour Mobility ty, reduce investment costs, improve forecast in December 2011 was for a Agreement (like the BC-Alberta Trade, load factors and lead to economies of $365 million deficit and a $13.7 billion Investment and Labour Mobility scale in new construction and lower- debt, New Brunswick’s $546 million Agreement), expanded energy cooperation cost but distant power sources. One can deficit with a $10.3 billion debt, and — building on these. Quebec is no stranger imagine analogous fields with similar Prince Edward Island’s at a $73 million to cooperation in the Atlantic area. economic advantages. deficit with a $1.9 million debt. A seventh and related point in the The provinces, at the European Newfoundland and Labrador will be in logic is that provincial intergovernmen- Union’s insistence, are in the Canada/ deficit in 2012 and 2013 due to the end talism is common in many federations, European Union Comprehensive Eco- of Atlantic Accord payments, reduced from which Old Canada could learn. nomic and Trade Agreement talks, volume of oil production and the tak- For example, Swiss regional intergov- because provincial labour, procure- ing offline of two offshore platforms. ernmental power-sharing arrange- ment and resource matters affect the ments, which balance national power, discussions. Accordingly, there may he upshot of this is that economic are numerous. There are over 30 region- also be an opportunity to draft a New T health is not robust enough for al conferences in areas of cantonal East “European rim” approach analo- Atlantic provinces to engage in more responsibility. There are also several gous to the Pacific Rim strategies of functional area initiatives by themselves, regional groupings in the . western provinces. but with another partner — Quebec –— The Council of State Governments has The third point relates to the may be better placed to do so. Such coop- four regional conferences of state legis- implications of announced federal eration could take place with Quebec in lators, state courts and most regional transfer cuts. There are serious implica- many areas, the most pressing of which governors. Other regional groupings tions for Atlantic Canada in the are big-ticket items like , pro- involve the states and provinces that health, social and equalization transfer curement and energy developments. are involved in North American trade, reductions announced in 2011. The fifth point in the logic is that environmental and economic matters. The fact that Old Canada is, well, most provinces want a national energy Earl Fry has listed 10 of these that strad- older, means that health costs will be strategy, and it needs Old Canada to dle the US border to the north and higher per capita than in the rest of reach an accord on it. Versions of it dif- south in his IRPP publication “The Role the country. The fact that the Canada fer. Industry emphasizes matters like of Subnational Governments in the Health Transfer and Canada Social streamlining regulatory reform, the seek- Governance of .” Transfer entitlements are allocated on ing of new markets and establishing new Looking at the successful environ- a per capita basis does not lead to a infrastructure. Conservationists tend to mental achievements of the Council of sense of optimism for provincial treas- call for increased safeguards in the pro- the Australian Federation leads David

82 OPTIONS POLITIQUES JUIN-JUILLET 2012 From old Canada, the New East: Adjusting to the changing federal environment

Gordon and Douglas Macdonald to con- Atlantic area. These point to a more for discussion. A critical examination of clude in their 2011 paper “Institutions formal intergovernmental arrange- the federal government’s role, or in and Federal Climate Change Governance: ment in the New East. Intergovern- some cases lack of one, would also be A Comparison of the Intergovernmental mental collaboration, as shown by discussed. An examination of options Coordination in and Canada” national and international examples, for institutionalization — the role of that successful intergovernmental policy is helped along by involvement of first first ministers, the advisability of a sec- is most likely when there are strong insti- ministers, permanent secretariats and retariat and what decision rules are tutions of intergovernmental relations; codification of decision-making rules. advisable — could emerge. those with participation rules that man- What is to be done? I suggest a cou- That is for the long term. In the date inclusion of first ministers, codifica- ple of steps: 1) Name the entity. If the interim, some medium-term wins: tion of rules and procedures and a “New East” is too figurative, provinces common fronts on Senate reform, fis- permanent secretariat enable the emer- may prefer options like the Council of cal negotiations, or dairy supply man- gence of collaborative norms and joint Eastern Canada, the Council of Eastern agement in the face of Trans-Pacific expectations. In short, a body like one Canadian Premiers or the Eastern Partnership talks. could have for the New East. Premiers Conference. 2) Have a non- Something like what is proposed aligned think tank do a study on the here will be an accomplished fact in 10 o the picture is relatively clear. economic trade and political connec- years. The past 50 years has been spent S Historic alliances are dissolving. tions and possible synergies between digging us into the hole we are in now; The provinces of the broader Eastern the provinces of the Quebec and we don’t want this to continue for anoth- Canada, Quebec and Atlantic — Old Atlantic Canada area. The idea would er 50. That is why we need a New East. Canada — are becoming more similar be to aim higher than the lower-level that dissimilar. The federal government partnerships currently practiced in the Christopher Dunn is a professor of politi- is changing the game rules and making area — bigger ticket items, if you will. cal science at Memorial University. He fiscal realities somewhat starker for Old One would expect that energy, has written and edited books, and pub- Canada than they were before. transportation, subsidies, trade, labour lished several articles, on Canadian poli- Meanwhile, there is a model of mobility, health services rationaliza- tics, federalism, public policy, public common fronts and intergovernmen- tion, Aboriginal affairs and demograph- administration and constitutional issues. tal cooperation beckoning from the ic policies would rank highly as topics [email protected] ✂ FORMULAIRE D’ABONNEMENT OPTIONS POLITIQUES

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POLICY OPTIONS 83 JUNE-JULY 2012