Lawrence Solomon
National Post
May 23, 2003

Contrary to the views of Canadian premiers who seek a Triple-E Senate and other provincial powers, contrary to the views of cod fishermen and others whose livelihoods have been extinguished by federal government mismanagement, and contrary to the views of conservative theorists who want political power to devolve to the provincial level, Canada needs weaker, not stronger, provinces.

Of all levels of government, the provincial level is least legitimate. Local governments serve citizens by delivering local services that could not be efficiently delivered from afar. National governments serve the necessary function of national defence and the negotiation of international treaties. But provincial governments, in an era when 80% of the populace lives in cities, have lost all necessary functions, and now serve mainly as redistribution agencies.

Canada’s eight have-not provinces do little more than collect grants from the federal government and taxes from the wealth generated almost exclusively within their cities. After extracting the cost of maintaining the provincial bureaucracy, provincial politicians then reassign the balance of the booty to those they favour. Precious little that most provinces do contributes to wealth because most provinces have squandered most of the wealth within their grasp.

The provincial record of economic mismanagement in the resource sectors they control – agriculture, energy, mining and forestry – is every bit as abysmal as the federal government’s. Where the federal government short-sightedly ensures that fisheries are fished out, provinces short-sightedly force the plunder of old-growth forests – most of the logging of B.C.’s magnificent coastal forest occurs at a loss. Mining, which long ago ceased to be profitable, now extracts more from taxpayers than from ore bodies. And no provincial farm economy runs at a profit – for every dollar that a Canadian farmer earns, society provides $3.50 in subsidies.

Even in energy, the sole resource industry that remains a net contributor to Canada’s economy, most provinces have dissipated their great wealth. The same Newfoundland politicians who rage at the federal government’s mismanagement of fisheries forget their predecessors’ giveaway of the lucrative Churchill Falls project to Quebec. Hydro-Quebec’s great power system? Apart from that Churchill Falls windfall, Hydro-Quebec has operated in the red for the last two decades. Ontario Hydro? It squandered the immense wealth from Niagara Falls and other dams on dim-bulb bets on nuclear reactors. With few exceptions, other provinces fared little better.

Giving provinces a measure of control over fisheries would accomplish nothing laudable: Even without formal power, the provinces almost always pressured the federal government to allow over-fishing. Only one course of action can return our fisheries to sustainability: The federal government will need to fully privatize the fisheries by transferring strong ownership rights to local communities and the private sector, as Iceland, Australia and New Zealand have so successfully done. Provincial governments would not help in this: Provinces have never shown courage in pursuing free-market reforms.

It was the federal government that brought us the Canada-U.S. Free Trade Agreement and NAFTA, and it was the federal government that tried to enshrine property rights in our constitution. Provincial governments, in contrast, vetoed property rights for Canadians and, despite numerous federal efforts, to this day the provinces refuse to allow Canadians to trade freely among ourselves across provincial boundaries.

Unlike the federal government, which summoned up the courage to privatize PetroCanada, CN, Air Canada and a host of lesser operations, the provinces have mostly resisted reform: Even Ontario’s Mike Harris, who was elected with a mandate to privatize, became cowed at the prospect of competitive markets soon after assuming power. The premiers of provincial backwaters would never even flirt with free-market reforms.

Unlike risk-taking, free-trade-oriented governments that try to expand the economic pie, provincial-minded governments play it safe to remain big fish in small ponds. Their fear of competing in a big pond leads them to play zero-sum games in which they demand ever-larger subsidies by claiming ever-greater grievances.

For this reason, Albertans and their premier, Ralph Klein, are mad to argue for a Triple-E senate. Yes, Alberta would become marginally more powerful relative to the federal government. But have-not provinces and territories such as Saskatchewan, Newfoundland and Nunavut would, too, enabling them to hobble federal free-market reforms that would benefit Albertans. More to the point, because Alberta’s Triple-E senate plan would give the have-nots 54 of 66 senate votes, they would become political powerhouses relative to Alberta, one of only two have provinces. The have-not jurisdictions would thus get the upper hand in their continual quest for more subsidies which, disproportionately, would come from Albertans.

Premier Klein would best serve his citizens – among Canada’s most energetic and entrepreneurial – by arguing for policies that would weaken Alberta and other provinces. As I will explain next week, weaker provinces would enrich the nation and expose the myth of regional alienation – in the western provinces, in the eastern Provinces and in Quebec – that many wrongly think afflicts this country.

Lawrence Solomon is executive director of Urban Renaissance Institute, a division of Energy Probe Research Foundation. www.Urban-Renaissance.org, LawrenceSolomon@nextcity.com; Part of a series.

Readers respond

Lawrence Solomon‘s article is right on. It is really quite incredible that Canada does as well as it does, with the dysfunctional federal system we now have. I have lived and worked in three provinces and have never considered myself a British Columbian, an Albertan or an Ontarian, but always a Canadian. Instead of working to improve the lot of their provincial (and let’s not forget territorial) residents, those governments delight in encouraging regional alienation and jealousy by restricting movements of labour and goods and services amongst them and by their unremitting whining about how hard done by and deprived they are by the national government – the government of all Canadians. The current federal government, of course, is far from perfect, but the extra layer of tin pot “leaders” and bureaucrats we currently have do not balance, but willfully destabilize the functioning of Canada. I look forward to Mr. Solomon’s next article on the subject.

As for [the editorial “This is why we need Senate reform”] . . . let’s not tinker with half measures like the Triple E idea. For one thing, it will not happen in any of our lifetimes (see above). By all means, let Leo Kolber resign early. But why stop there? All the other senators could also resign early and, of course, never be replaced.

A Canada without borders and a government without the Senate – sounds good to me!

Greig Birchfield, Ottawa.

Re: “Alberta: Who needs it?”

Who need’s Alberta? Canada, but especially Ontario, needs Alberta. Alberta already foots the lion’s share of massive federal fiscal transfers, official and unofficial, that the Trudeau-Mulroney-Chretien (read: Quebec, Inc.) governments have foisted upon the country. Without Alberta, Ontario, the only other remaining “have province” would become Ottawa’s cheque book. (A decade of NDP governments and court-driven native land claims have pushed B.C. into receivership status.) Between 1961 and 1997, Alberta saw a net $167 billion dollars leave the province to be redistributed by Ottawa. The comparable figure for Ontario was a net loss of $85 billion dollars. The big winner was Quebec, which acquired an additional $202 billion dollars. (Now there’s “fiscal imbalance” for Mr. Charest!) Alberta’s per capita contributions ($2,100) over this 26 year period dwarf’s Ontario’s ($244). In per capita terms, the Atlantic provinces ($3,023 to $4,109 per capita) replace Quebec ($814) as the biggest beneficiaries. Does Mr. Solomon really think that Ontario taxpayers want to pick up Alberta’s share of the tab?

Mr. Solomon is right about one thing: a Triple E Senate based on provincial equality would entrench this productivity killing status quo by giving the seven “have not” provinces (B.C. will recover) 70 percent of the Senate seats. This is why many Canadian Alliance members (including myself) support a model of Triple E Senate reform based on the principle of five equal REGIONS (not provinces). Under this model, Ontario and Quebec together would retain 40 percent of the Senate seats, balanced by 40 percent in the two Western regions (B.C. and the Prairies). Atlantic Canada would be reduced from 40 to 20 percent, but retain the potential to play the role of tie-breaker in the event of regional gridlock. With the less populous provinces now being given effective representation in the Senate, the House of Commons could be reconstituted on a pure “rep by pop” principle, eliminating the 27 “bonus” MPs currently assigned to the seven “have not” provinces. Ontario would be by far the biggest gainer in a reconstituted House of Commons.

All of this, of course, is completely academic, as Quebec would never allow any of it.

Ted Morton, Professor University of Calgary.