First: an apology: this post is a bit long and it covers a lot of ground and it is not, almost certainly, as well organized as it could be … I thought of making it two or three or even four posts, but I believe there is a (coherent, I hope) thread that runs through it all ~ something about the nature of federalism and how it should work in Canada.
Second: Murray Mandryk, a local (provincial) political observer and columnist, says, in the Regina Leader Post, à propos the demise of the Energy East pipeline proposal, that “What the Energy East pipeline needed was a vision that extended somewhat beyond the length of a prime minister’s selfie stick.“
“Yes,” Mr Mandryk continues, “it is true that TransCanada cancelled the project based on today’s economics. There is the ongoing decline in overall oil prices and the $9.58/barrel differential between light and heavy oil (making heavy Western oil less economical everywhere). There’s also the increased eastern demand for natural gas accompanied by a National Energy Board pricing agreement that greatly reduced the cost of of piping western natural gas to Ontario. (Approximately 70 per cent of the Energy East pipeline would have been repurposed, already-existing natural gas pipeline.) … [and] … Yes, there’s that violent shift in U.S. politics from Barack Obama to President Donald Trump resulting in the possible go-ahead of the Keystone XL pipeline, meaning western Canadian oil potentially having a better route to tidewater. Many saw Energy East as nothing more than TransCanada’s backup plan if Keystone didn’t go through.“
It is even true that if, and it is still and if, Keystone XL gets built Canadian oil will have access to “tide water, but it will not be Canadian tidewater ~ Canadian producers will have to sell to American middle-men who will then reap the profits from selling Canadian petroleum on world markets.
But on the political left, amongst the progressives and, especially the naive young “greenies” who actually still believe Justin Trudeau and Catherine McKenna, Murray Mandryk says that they are “tickled pink about [their] own delusion that the 1.1 million barrels of oil a day that would have flowed through Energy East will now magically stay in the ground. No more oilsands. No more oil industry, whose royalties happened to help pay for schools, hospitals and social programs here … [but, of course] … Energy East won’t stop the flow of oil. It will just mean more oil going to Louisiana and Texas refineries, leaving us at the mercy of the next hurricane … [thus] … the environmental forward-thinkers will just have to sit and watch more oil move by rail, hoping it doesn’t result in another Lac Megantic. And they will dutifully try to ignore that we live in a freeze-your-arse-in-the-winter country where our livelihoods — our very survival, for that matter — depend on leaving somewhat of a carbon footprint. After all, even your organic (or non-organic) produce gets here courtesy of oil … [and] … They will ignore that we’re a net oil exporter … even though, bizarrely, almost half the country relies on the whims of foreign oil.“
“So how has Prime Minister Justin Trudeau — who came into office opposing Keystone XL, but supporting Energy East under the banner of energy self-sufficiency — really unified the nation? Or made it better off?” Mr Mandryk asks. “By threatening a carbon tax on both ends of this pipeline? By tinkering with NEB rules to make Energy East less feasible? … [while] … One can rightly criticize some of Premier Brad Wall’s overblown rhetoric this week about western alienation (read: separation) … there are good reasons why he, governments as far away as New Brunswick and even the provincial NDP in Alberta and Saskatchewan argued for energy independence … [and] … Trudeau the younger had a chance to rewrite his father’s legacy of East-West division. Instead, he opted to appease voters in Denis Coderre’s Montreal … [in sum] … He needed to look beyond the selfie, at the bigger picture. He didn’t.“
Meanwhile, over at iPolitics, Liberal heavyweight Jamie Carroll explains that “Like it or lump it, Canada is a petrol-economy with a petrol-dollar and a lot of petrol-jobs. Canada is home to the second-largest recoverable source of hydrocarbons in the world. Every woman, man and child in Canada benefits from the oil industry through the billions it pays in royalties, corporate taxes and other levies. That includes the women, men and children living in British Columbia and Quebec … [and] … According to Natural Resources Canada, 15 per cent of Canada’s GDP, $25 billion dollars in royalties/taxes annually and 1.7 million jobs are direct results of Canada’s resource industry, the largest component of which is the energy sector … [but] … That’s not to say that oil companies shouldn’t be paying more, or that we as citizens shouldn’t be pushing governments to move towards greener solutions (disclosure — I spend much of my professional life working on green energy projects).“
“But,” he goes on, “there are two hard facts that folks on the left of the green energy debate like to ignore:”
- “First fact: We’re not ready to stop using oil as a significant part of our energy mix, and we won’t be ready for a long time. That’s particularly true of the transportation sector, which represents about two thirds of consumption;” and
- “The second hard fact Canadians need to understand is also about fairness.“
Mr Carroll goes on, at some length, to explain why both economics and technology mean that petroleum remains, for a long time to come, the most effective fuel for mobile applications. He then adds that “Like almost everything, the growth in demand in this sector is driven by the emergence and growth of robust middle classes in countries like China, India, Brazil and elsewhere … [and] … These huge masses of global citizens are demanding access to the same goods and services that we in the west have enjoyed for decades — and at the same relatively affordable prices we’ve also enjoyed … [and it’s] … Hard to argue against the fairness in that — but for the fact that letting them have it may destroy the planet.“
“We now have a situation,” Jamies Caroll says, getting to the crux of his argument, “where two provinces — British Columbia and Quebec — are preventing the other eight provinces from realizing the revenues they would otherwise receive from increased sales of oil and gas products to new markets … [and] … Right now, more than 97 per cent of all Canadian oil exports go to one place: the United States. That’s for the simple reason that our pipelines — usually the cheapest way to move oil products — only run south to the Gulf of Mexico … [and, further] … As anyone with even a basic understanding of economics will know, if you only have one possible buyer for your product, that buyer more or less gets to set the price. As a result, Canadian oil sells for between $15 and $20 less per barrel than its chemically identical American cousin. All day. Every day … [and] … That represents a loss to the Canadian economy of billions and billions of dollars every year. To be specific, with about 3.4 million barrels per day leaving Canada for the U.S., that’s $18.6 billion per year that Canadians are giving away to the U.S. for free … [and, again] … With only one customer, this spread will only continue. But if pipelines can be built to one of both coasts, new customers can be found in the energy-hungry global markets and Canadian oil can start to achieve parity with other, similar products.“
Third: How have we gotten to what I can only describe, charitably, as an insane situation?
My answer is: the late Pierre Trudeau’s bastardization and corruption of an established economic theory: fiscal federalism. Fiscal federalism describes how federal states share revenues and expenses … hopefully in a productive way. Fiscal federalism is an artefact of (almost) every federal state but it is more developed in e.g. Australia than in Canada because in the 1970s Pierre Trudeau decided that the only way to keep Canada together was by buying Quebec’s loyalty ~ bribery replaced the values of cooperation and coordination and sharing. At first Pierre Trudeau’s ploy seemed to work ~ certainly Brian Mulroney and, especially, Jean Chrétien did not challenge the basic precept, in fact, one might argue, it led to the Chrétien Liberals’ criminal “Adscam” crisis …
… But, in fact, I believe that it fuelled the fires of separatism because I have been told by some former Quebec “soft nationalists” that they turned towards full fledged separatism because they were personally disgusted at the notion that Pierre Trudeau and “official Ottawa” thought that they, Québecois, could have their loyalty bought for a new airport or some other financial grants while it was understood that Albertans and Ontarians would not fall for such crass inducements. Les Québecois and Québecoise were assumed, by Pierre Trudeau and his team, to be morally weaker than Anglo-Canadians. It’s hard to blame them for turning against a government that thought that way, isn’t it?
Pierre Trudeau’s corrupted version of fiscal federalism is what still drives Montreal Mayor Denis Coderre to think that it is “good” to force an important, productive, nation building project out of contention just because Montreal didn’t get enough of a payoff for not opposing it. He demanded a bribe because he is steeped in the political culture created by Pierre Trudeau’s distorted view of “fiscal federalism.” Mayor Coderre, a long time federal Liberal cabinet minister, was a major part of Jean Chrétien’s attempt to continue Pierre Trudeau’s plan to buy Quebec’s allegiance.
The simple answer is that Pierre Trudeau could not make an intellectual or emotion argument FOR Canada because, in my opinion, he neither knew about nor, really, cared about Canada … it’s the old ignorance/apathy joke. He understood and cared deeply about Québec, and his understanding came from a time when people were talking about la revanche du berceau (the revenge of the cradles), a 20th century French-Québecois-Catholic notion based on the idea that French Canadians were a conquered people who should not be under English domination (and, as late as 1999, many Quebecers, including Prime Minister Chrétien were still saying ~ as they had been taught in parochial schools ~ to wish that France had won the Battle of the Plains of Abraham). If our national leaders do not believe in the nation they lead it is hard to fight against separatists.
Make no mistake, political chicanery in the name of national unity has a long, sorry history in Canada, going all the way back to Sir John A Macdonald”s Pacific Scandal in the 1870s …
But there was a difference between the great Sir John A and Pierre Trudeau: Macdonald made a corrupt compact with Sir Hugh Allen’s Canadian Pacific Railway Company because he was trying to build a country, he was being FOR something; Pierre Trudeau made a corrupt compact with (some) Quebecers because he didn’t want to go down in history as being the man who “lost” Canada. He was AGAINST something ~ separation ~ and it is always easier to oppose than to propose. (His motivations were, of course, complex. As I have explained before, Pierre Trudeau embraced anti-nationalism in the late 1940s as his life’s cause ~ his opposition to Quebec nationalism and separatism was, in that sense, honestly grounded.) Further, I suspect, he heard (even if he didn’t really comprehend) the argument that a sovereign Québec would, quickly, sink into a sort of 2nd world, banana republic status because it is not (unlike, say, Ontario or some sort of Western federation) a likely prospect to be a successful sovereign state; finally, I think, also, that he was led by (as much as he ever really led) the Liberal Party which did believe in a unified Canada.
The point is that, almost 50 years ago, Pierre Trudeau set Canada upon a path that made cooperative, constructive federalism more difficult because he replaced it with crass bribery.
Let me be clear: national unity, in Canada, is a fragile thing. Many, many, many Quebecers are not, in any meaningful, emotional sense Canadians ~ they are, first and foremost, Québécois and Québécoise and Canadians only when it is necessary or convenient. Quebec’s attitude has infected other regions, too. Equalization began in the earliest days of Confederation, as federal subsidies, but the programme was formalized in 1957 as a way, according to the Department of Finance (previous link) to “enable less prosperous provincial governments to provide their residents with public services that are reasonably comparable to those in other provinces, at reasonably comparable levels of taxation, ” and, in 1982, it was enshrined in the new Constitution (§36(2)). Language rights and official bilingualism are another “national unity” tool, as are sundry other federal programmes and initiatives. That they appear, at least, to not work well enough is, I believe, because they are, essentially, AGAINST separatism ~ the easy fix, rather than being FOR Canada ~ a harder case to make.
For much of Canada’s history the national unity debate was, essentially, English-French or Québec vs the rest of Canada. In the early 1980s, partially, at least, in response to Pierre Trudeau’s bastard version of fiscal federalism which seemed to over-favour Quebec in everything, Western Canadians began to flirt, openly, with the idea of separatism. I agree with some critics that Premier Brad Wall is fanning embers of Western separatism when he equates the demise of the Energy East project with a Quebec led campaign to hold Alberta and Saskatchewan for ransom … but I do not disagree with his basic thesis ~ that the West is paying too much for too long, and thoughtful commentators like Jack Mintz, writing in that Financial Post, have noted that “Today, Western Canada is nowhere close to the separation push of Catalonia. However, if Ottawa’s public policy keeps handing Canada’s Coderres their “victories” by hurting Western opportunities, this country’s regional conflicts of claim will bring consequences difficult to predict.” If renewed Western separatism is the price that the Trudeau Liberals must pay for their cynical actions then they have brought that on themselves.
Back in the heyday of Pierre Trudeau’s fiscal federalism we saw massive infusions of money pour into Quebec. I well recall two example, because i was in HQ in Ottawa at the times:
- During the 1970s and ’80s the governments (both Trudeau’s and Mulroney’s) ordered a massive shift of workers from Ottawa to Gatineau (the Hull) Quebec. Large new office complexes were built (sometimes with some controversy because of some builders’ close ties to the Liberal Party) which are still called “Place du patronage” and tens of thousands of civil servants were relocated; and
- In the 1980s the government decide to refit and upgrade the Iroquois class destroyers, known in the Navy as ‘Tribals’ after their 1940s vintage predecessors. The project was known as TRUMP (TRibal class Update and Modernization Project) but soon after the contract was awarded to Litton Systems cabinet intervened and directed that the at least 25% of the contract value had to be spent in Quebec. Wags watched as the costs began to spiral out of control and it soon became known as “One No Trump” (after the bridge bid) because the budget for four ships was exhausted before the first three were completed.
Given the history it is hard to fault Western Canadians for feeling that they have been the unappreciated paymasters of Confederation since the 1970s.
Prime Minister Justin Trudeau has put Quebec’s interests and winning seats in Montreal for the Liberal Party ahead of Canada … he needs to pay a price for that, beginning, I suggest, with the loss of every single Liberal seat in Albert and Saskatchewan and reducing the Liberals to third or even fourth party status in BC, Manitoba and even in Ontario.
Fourth, and in conclusion: But thats not all that’s needed …
Canada needs leaders who care FOR Canada; leaders who want to build a renewed, stronger, more united Canada; leaders who want to put Canada before petty, parochial, provincial concerns.
We need a new CCF. The old Cooperative Commonwealth Federation, which existed from 1932 until 1961 (when it merged with the Canadian Labour Congress to form the modern NDP), was based on ideas and ideals that sprang from from the prairie co-op movement and it eventually gave us leaders of national stature like Tommy Douglas, Stanley Knowles and M.J. Coldwell … but what Canada needs today, in 2017, is a political party that will preach and practice Constructive, Cooperative Federalism. The existing federalist approach, which appears to me to be still based on trying to buy Quebec’s loyalty, has failed, is failing, today, and will fail until it is replaced. We can and must do better. Leaders must be FOR Canada, not just against pipelines or oil sands or whatever the current children’s crusade is all about.
I don’t think we need a new political party, I think we have a party that can preach and practice constructive, cooperative federalism … and I think Andrew Scheer is leading it. That party, the Conservative Party of Canada, must have a programme and platform that will help it to win big in New Canada (everything West of the Ottawa River) and make a few gains, even if they must be small gains, in Old Canada (Quebec and Atlantic Canada). The Conservatives need to get, say, 20 to 40 of the 110 seats in Old Canada and, therefore, 130 to 150 of the 228 seats in New Canada. That’s a challenge, but it’s one that can be accomplished.
Every seat will count in 2019 but the Conservatives must, first and foremost, secure their base ~ which is in New Canada, then expand it in vote rich New Canada, and then make inroads in Old Canada. The Conservatives need to be a truly national party that governs in the interests of ALL Canadians but it also needs to recognize that it’s firm base is West of the Ottawa River.
There’s a lot more to renewing federalism than just making it less venal, but that’s a key place to start. Fiscal federalism is not the problem; in fact honest fiscal federalism is, probably, part of the solution; the whole of confederation must be made to work for the benefit and to the satisfaction of all Canadians.