The growing tensions between Ottawa and the provinces

When Canada's premiers and territorial leaders meet early next week in Victoria for one of their two annual get-togethers, their attention will be largely focused on health care and how to pay for it.

While the view over the Victoria harbour may be calming, the discussions could be anything but as they reflect divisions among the provinces over how they can influence Stephen Harper's majority federal government, which has shown very little interest in sitting down at the federal-provincial negotiating table.

In particular, the provincial and territorial first ministers, meeting at what's called the Council of the Federation, are concerned about the future costs associated with their share of health-care funding, incarceration and federal government downsizing.  

"I think federal-provincial issues are going to heat up in 2012," says Michael Prince, a social policy professor at the University of Victoria. "I think they're going to become more fractious."

The minority government days of wooing the provinces and talking soothingly about fiscal balance are over, Prince says. The prime minister "has done what he was going to do in that area so those are all now history."

Federal-provincial tensions aren't exactly a new thing, of course. Think back to what it was like when "stagflation" sank the Canadian economy in 1970s, or the years when Quebec nationalism was dominating the agenda. Regional conflicts, the West versus Central Canada, emerged. The word bitter comes to mind.

That bitterness may now have mostly dissipated, but several big issues loom this year and they threaten to ratchet up the federal-provincial stress levels; though probably not to the extent they were during the days of Pierre Trudeau or Brian Mulroney.

"We're in, I think, for reasonably tense times between the levels of government," says Richard Simeon, a professor emeritus of political science and law at the University of Toronto.

"It won't be quite the same as it has been in the past because there won't be this degree of federal involvement in provincial affairs and that's where in the old days a lot of the conflict was."

Health-care bombshell

Topping the list of 2012 stress points is health care and paying for it. Federal Finance Minister Jim Flaherty dropped a health-care funding bombshell in December that split the premiers and set off loud complaints about the lack of any negotiation.

"There was time, everyone thought, for a process of consultation and conversation," says Prince. But "this is a prime minister who has not been very keen on holding first ministers' conferences. He's not into what used to be called summit federalism."

Under the federal plan, the government is guaranteeing six per cent health-care funding increases until the 2016/2017 fiscal year. From then on, annual increases would be tied to the increase in nominal GDP, with a floor of at least three per cent.

That take-it-or-leave-it plan "is obviously going to be very, very controversial," Simeon says.

What's more, it's a slow-brewing debate that could cast a shadow over other federal-provincial discussions.

The cost of fighting crime

One of these discussions is the financial impact on the provinces and territories of Bill C10, the federal omnibus crime bill.

Mandatory sentencing requirements, for example, are expected to lead to more convoluted court cases and longer periods of incarceration, costs that the provinces have a large share in. 

Simeon says that, for most provinces, the crime bill is a "dollars and cents issue."

Not so for Quebec, though, where in addition to cost there is also an ideological component. Quebec has made it very clear the province has a "very, very different approach to how you do criminal justice" and "we are against this very heavy-handed criminal justice policy," Simeon points out.

That difference in philosophy also shows up in the debate over the federal long-gun registry, with the Harper government moving to eliminate it and Quebec, which is expecting an election this year, saying it will take legal action to save the data from the registry for its own security interests.

That action can't be launched until Bill C-19 becomes law, something that is expected later this month.

Role of the court

Two recent decisions by the Supreme Court of Canada — one on the Insite drug injection site in Vancouver and one on whether Ottawa has the power to create a national securities regulator — could also affect the dynamic of the relationship between Ottawa and the provinces.

The decision that Ottawa didn't have the constitutional ability to create a national security regulator to consolidate and oversee stock markets was a big surprise, says Simeon.

"It will be interesting to see how the [federal] government responds to it because really the court has taken a kind of broad view of federalism, which is very different from the broad view of federalism that the federal government is articulating these days."

Who has the upper hand?

This year could also see a continuing shift in who has the power hand in the relationship between Ottawa and the provinces and territories.

"I would have said up until this most recent [federal] election, really the provinces had the upper hand," says Simeon. "They had fairly strong, stable governments and we had a minority government in Ottawa" that didn't have overwhelming public support.  

"Now we have a majority government in Ottawa and quite a few new provincial premiers and more provincial elections coming up and now we know that the feds are in power for five years.

"I don't think the federal government is going to allow itself to be pushed around by the provinces."

Philip Resnick, a political science professor at the University of British Columbia, also sees the power balance lying with the Harper government at the moment, "with most of the provinces bleeding red ink, a minority government in Ontario, an unpopular government in Quebec, etc."

However, Resnick also cautioned that the global economic situation plays into the equation, as it can at times weaken the position of provinces. 

"But the pendulum has been known to shift before, and the Harper government could find itself facing stronger opposition from some of the provinces a couple of years down the line."