Whose file is it anyway? The feds, the provinces, and who controls what

ANALYSIS: Can the federal government do that? Isn’t that a provincial thing? TVO.org breaks down how responsibilities get divided up — and what happens when there’s a conflict
By John Michael McGrath - Published on Sep 07, 2021
(Left) Federal Liberal leader Justin Trudeau; (right) Ontario premier Doug Ford. (Sean Kilpatrick/CP; Nathan Denette/CP)

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Liberal leader Justin Trudeau wants to deter “renovictions” and ban blind-bidding on real-estate sales. He also wants to hire doctors and nurses. NDP leader Jagmeet Singh wants to nationalize private long-term-care companies and restore the Northlander train between Toronto and northern Ontario. Conservative leader Erin O’Toole wants to knock down interprovincial trade barriers.

What do all these promises have in common? None is within the federal government’s power to keep. The Constitution sets out reasonably clear boundaries demarcating what Ottawa can do, what the provinces can do, and what happens when there’s a conflict.

The division of powers in the Canadian Constitution is almost entirely spelled out in Sections 91 and 92 of the Constitution Act 1867 (formerly the British North America Act). Section 91 lists the powers of the federal government (or, in the language of the Constitution, “Parliament”). Section 92 lists the powers of the provinces (“provincial legislatures”).

Federal jurisdiction includes: Public debt and property; regulation of trade and commerce; “the raising of money by any mode or system of taxation”; the postal service; the census; the armed forces; navigation and shipping; coastal and inland fisheries; ferries between provinces or between any province and foreign countries; currency; banks; weights and measures; copyright; marriage and divorce; “Indians, and lands reserved for the Indians”; penitentiaries; and criminal law.

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Provincial jurisdiction includes: “direct taxation”; management and sale of public lands belonging to the province; “Hospitals, Asylums, Charities, and Eleemosynary Institutions” (health care); municipalities; “local works,” with the exception of steam ships, railways, canals, telegraphs, and other systems that cross provincial or national boundaries; “local works,” except for those Parliament has declared to be “for the general advantage of Canada”; solemnization of marriage; property and civil rights; “generally all matters of a merely local or private nature in the province.”

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Section 93 of the Constitution also gives provinces the sole jurisdiction for education, with the proviso that the respective schools systems that existed at the time of Union (1867 and before) need to be maintained to preserve minority rights in the various provinces. This is why Ontario would need to amend the Constitution if a government were to decide to abolish Catholic schools. (This would be easier to do than the province’s political parties like to pretend, but that’s a matter for a different column.)

But there are the words on the page, and then there’s how those words have been interpreted by Canada’s courts in disputes between the federal and provincial governments — or rather, Canada’s courts and the Judicial Committee of the Privy Council, a British tribunal that functioned as Canada’s court of final appeal until 1949 and whose precedents continue to guide judicial interpretation.

On paper, the federal government looks as if it ought to be more powerful than the provinces. It can raise taxes on anything and by any method, while provinces can use only “direct” taxation, which was originally understood as a much more limited power. But, today, both the provinces and the federal government rely on the same basic taxes: corporate and personal income taxes, sales taxes, and payroll taxes. So what happened? The courts expanded the definition of what constituted a “direct” tax to allow more provincial money-raising. In Atlantic Smoke Shops Ltd. v. Conlon, for example, the JCPC declared that a New Brunswick tobacco tax was a direct tax because the seller of tobacco products was not serving as a middle-man between the government and the customer but, instead, as an agent of the provincial government.

Even apart from judicial interpretation, the relative importance of different powers has changed as the country has changed. Prior to the 1950s, education and health care were relatively small parts of overall public spending; national defence (obviously) consumed a huge proportion of tax dollars in the 1940s. The expansion of both education and health care — and a long stretch of relatively peaceful global affairs — has caused the role of the provinces to grow and the importance of the federal government to shrink.

Which isn’t to say that the federal government is weak. It still has broad powers when it chooses to use them. The criminal power vested in Parliament can be used very broadly — the Supreme Court upheld the validity of the Canada Environmental Protection Act as a valid use of the criminal power, even though it didn’t establish a “crime” per se and expressly declared that “the environment” wasn’t properly a matter of federal jurisdiction. 

The power to tax literally everything is also a big deal. Federal authority over telegraphs became authority over telephones and eventually authority over radio and TV — that’s why the federal government has jurisdiction over the internet today. Aviation is mentioned nowhere in the Constitution, but it ended up as a federal responsibility because the courts decided it wasn’t purely a local matter. And, most recently, the court declared that the federal government had the power to enforce minimum national standards in carbon pricing, saving the Liberal carbon tax from the provinces that had launched appeals.

One thing that might sound obvious but is worth stating clearly: the lines separating the federal government from the provinces also separate the provinces from one other. To take a real historical example: if Saskatchewan and Ontario are allowing an industry to legally pollute rivers that flow into Manitoba, Manitoba can’t legislate against the other provinces or the polluting industry and has no claim it can take to court. (Cross-border pollution is an area of exclusive federal jurisdiction.)

It’s also worth remembering in this context that municipalities, as “creatures of the province,” have no power to regulate federal matters unless Parliament explicitly gives them that right by passing a law. Back in 2015, TVO.org covered the Milton’s objections to a planned CN Rail facility, which involved the claim that it conflicted with local city planning. The federal government approved the project earlier this year; Milton and other municipalities have challenged the decision in court, but it’s going to be tough going for them — municipal planning powers come from the province and do not bind federally regulated railways.

The federal government can, however, intrude on matters of provincial jurisdiction in totally Constitutional ways — and has before. Section 92.10 (c) says the federal Parliament can declare a work to be “for the general advantage of Canada,” and such a work then becomes federal jurisdiction, even if it would otherwise belong to the provinces. 

Nuclear power is an example of this: the provinces do all the other electricity planning and procurement in Canada — they build hydroelectric dams and coal plants, as well as transmission lines — but, after the Second World War, the federal Parliament passed the Atomic Energy Control Act, which used the power in 92.10 (c) to declare that all nuclear power everywhere in Canada is a matter of federal jurisdiction and subject to federal regulation. That language still exists in the successor legislation, the Nuclear Safety and Control Act. So that’s why, in 2021, the Ontario government owns the Pickering, Bruce, and Darlington nuclear stations (Bruce is leased to Bruce Power, a private company), but the operating licences for those reactors are issued by the feds.

The other way that the feds can invade provincial jurisdiction is through the so-called POGG power —Section 91 includes the sentence “It shall be lawful for the Queen, by and with the Advice and Consent of the Senate and House of Commons, to make Laws for the Peace, Order, and good Government of Canada” — which, through the alchemy of court and JCPC decisions over a century, has come to mean that, in some specific cases, the federal government can act in areas of provincial jurisdiction. Those cases are: an emergency such as wartime (or, as in the 1970s, inflation); a matter that is provincial jurisdiction but has risen to the level of “national concern” (the Trudeau government won its argument for the carbon tax on this basis); or the “gap” or “residual” case that sees something truly novel (such as aviation) end up in federal hands because the Constitution is silent, and the courts don’t want to create a legal vacuum.

What happens when a topic touches on multiple areas of jurisdiction? Housing is an issue that has already featured prominently in this election. The provinces (and through them, municipalities) are responsible for regulating the use of lands, “local works” (such as roads and sewers), and property rights (including the right to build on property). The federal government has taxation powers and regulates banks, which is how it ended up creating the Canada Mortgage and Housing Corporation after the Second World War — and becoming deeply enmeshed in the development industry. But both the federal and provincial policies largely act in concert, or at minimum don’t directly conflict with each other, so there’s no reason for either to take the other to court or for any private individual to complain.

So what happens when there’s a conflict, as would happen in the case of, say, a Liberal (or NDP) promise to deter “renovictions” or to ban blind bids on real-estate sales? Could the federal government use its powers to deliver on these promises?

It’s dangerous to be too certain when it comes to the courts, but it’s doubtful. The question isn’t “Could a federal government figure out a way to use its powers to get the results it wants?” It’s “Will the Supreme Court of Canada allow it?” 

In theory, the federal government could use its criminal power to prohibit blind bids, but the first realtor to face a federal charge for breaking the law would argue in court that the law in invalid. Years later, the Supreme Court would have to subject the federal law  to a “pith and substance” analysis, which basically asks what the law is trying to achieve and whether that’s properly a subject for provincial or federal policy. The problem with trying to interfere with real-estate sales or rental tenancies is that these are pretty clearly the purview of the provinces (property and civil rights), and the fact that the federal government disagrees with a province’s policy choice doesn’t give it the right to step in. Any federal government that tried would have to convince the court that there was a valid federal purpose here or perhaps that some aspect of the POGG power was in play. Is there a housing emergency in Canada? Many people would say yes. But whether it rises to the level of requiring the rewriting the Constitution is another matter.

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Trudeau has also pledged $3 billion to “hire 7,500 family doctors, nurses, and nurse practitioners over four years.” Leaving aside the question of how many medical professionals are currently unemployed in Canada (they seem pretty busy!), unless the Liberals propose to hire these people through the Canadian Forces, that’s not really going to work. The provinces, with their jurisdiction over health care, fund both hospitals and family practices (think OHIP). The medical professions are regulated by provincially created colleges, such as the College of Physicians and Surgeons of Ontario, which determines who’s legally allowed to practise medicine in Ontario. There’s really not a federal lever available here.

So a promise from the federal government to “hire doctors” is, in reality, a promise to give provinces a bunch of money and hope that they use that money to hire doctors. Which they’re not really required to do. (The federal government can try to impose conditions on things like the Canada Health Transfer, but the enforcement of those conditions is another matter entirely.) The same goes for the NDP’s promise to restore the Northlander: it’s unclear why the Government of Canada should care about the operation of an Ontario Crown corporation (Ontario Northland) and the specific rail services it provides to northern Ontario, but if it wants to hand Premier Doug Ford or his successors a big bag of money and ask them nicely to restore the Northlander, it’s welcome to try.

Which brings us to the Conservatives, whose platform is chock full of promises to “work with the provinces” to accomplish big things. This is, at least, the correct language to use, but it also shows how limited these kinds of promises are. To put it briefly: What if the provinces say no? Why include a promise in your cornerstone election document when the outcome really isn’t within your control?

The Conservatives do have one intriguing promise (for policy dorks, anyway) that could affect provincial decisions: O’Toole vows to introduce federal legislation to clarify “federal intention with respect to interprovincial trade and S. 121 of the Constitution.” That section of the Constitution is effectively a free-trade clause; it says that everything grown, produced, or manufactured in one province should be allowed freely into all the others. Section 121 went before the Supreme Court in 2017 over Gerard Comeau’s cases of beer and wine: the court eventually sided with the provinces and their thicket of rules preventing Ontario plumbers from unclogging toilets in Quebec or Manitoba. But perhaps an assertion of Parliament’s powers to regulate trade and commerce could change things?

Canada is, by historical accident as much as anything else, one of the most decentralized federal systems in the world.  To get big things done, the federal government needs to work with the provinces at least some of the time. But it might be healthier for our elections — the brief window when voters get to decide who they want to fill the 338 chairs on Parliament Hill — if political parties were to stick to the promises that would be easiest for them to deliver on. The promises that don’t involve either premiers or the courts.

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