In March 1996, the provincial Premiers released the Report of the Ministerial Council on Social Policy Reform and Renewal. The Council had been mandated by the Premiers to "formulate common positions on national social policy issues" and "draft a set of guiding principles and underlying values for social policy reform and renewal" [Communiqué, 36th Annual Premiers' Conference 1995:2-3]. Quebec did not participate, but all of the other provinces and territories nominated a Minister to be their representative on the Council.

Throughout the fall of 1995, officials were busy meeting and preparing a report. Their drafting was completed in a few months and a Report of the Ministerial Council on Social Policy Reform and Renewal was duly finalized by the Ministers' Council in December 1995. The Report was then sent on to Premiers for their review and decisions. After some delay due mainly to the need to brief new Premiers in BC and Newfoundland, the Report was endorsed by all Premiers of participating provinces and territories and officially transmitted to the Prime Minster.

But long before its official release, an unofficial copy was circulated widely. Based on the bootleg copy, in January 1996 a coalition of social and labour groups in Ontario held a press conference to voice their concerns about the Report [The Provinces' Vision... 1996]. The coalition took issue especially with the lack of any open discussion and consultation during the Report's drafting.

When the Report was finally officially released, it got little media attention. Nevertheless, the Report is being taken very seriously in government circles. It is the talk of the town in Ottawa. In March, copies were being circulated at all kinds of policy meetings. There is a good deal of simple astonishment that the provinces and territories were able to agree on anything at all, let alone a substantive document with some real policy proposals.

Although the Report is largely unknown outside of a small circle of government officials and social policy groups, it could have a significant and lasting impact on the shape of security in Canada. As one of the only substantive documents on social policy ever agreed to by all the provinces (except Quebec), it could be a touchstone for reform over the next several years. Caledon therefore wants to bring the Report and an analysis of some of its important recommendations to the attention of Canadians concerned about social programs.

The Report will not win any literary prizes: It reads like what it is - a document written by a committee on which everyone has an equal vote. There are many elements of the Report obviously meant to gloss over differences among the provinces. Other sections take refuge in obscure bureaucratic language. Nevertheless, Caledon has concluded that the Report offers some positive and significant proposals for social policy reform. While we do not agree with all of the Report, it certainly merits detailed analysis and wider discussion.

Moreover, the Report is important not only because of its specific recommendations. Perhaps the Report's greatest strength is what it is not - it is not simply a self-serving grab for more provincial powers from a weakened central government. In fact, as we discuss later, much of the Report argues for strengthened national programs, although these programs as recommended might not be run by the federal government alone. At the very least, the Report demonstrates provincial openness to new ideas. These fresh approaches could be the basis for meaningful discussion between Ottawa and the provinces and give renewed life to the social security reform process.
 

four good proposals for reform

In the heart of the Report, four social initiatives are recommended for federal-provincial discussion:

i. consolidation of income support for children into a single national program (usually called an 'integrated child benefit')

ii. a national income security program for persons with disabilities

iii. consolidation of income security programs for the working age population within a single jurisdiction, as opposed to the current division between federal responsibility for Unemployment Insurance (now Employment Insurance) beneficiaries and provincial responsibility for welfare recipients

iv. resumption of federal "responsibility for all programming for Aboriginal people, both on and off reserve, with a gradual transfer of authority to Aboriginal communities" [Report 1995:2].

Each of these proposals is discussed in turn below.
 

i. national integrated child benefit

A national integrated child benefit would pay an income-tested benefit to all poor and moderate-income families with children. The new plan would replace the federal Child Tax Benefit, provincial social assistance payments on behalf of children and other income security programs for children. Caledon has consistently advocated such a plan [Battle and Muszynski 1995; Caledon 1995], and we have not been alone. An integrated program to provide income benefits to families with children has been recommended in countless reports, including the Marsh Report [1943] that set out the blueprint for Canada's postwar social security system, Quebec's Castonguay-Nepveu Report [Quebec 1971] and Ontario's Transitions and Turning Point Reports [Ontario 1988; 1993]. In British Columbia, a child benefit called the BC Family Bonus will be introduced this summer. In addition, Saskatchewan is also proposing an integrated child benefit in its new proposals for income security reform [Saskatchewan, 1996].

It is no accident that all these and other reports over the past 50 years have recommended an integrated child benefit. Until such a program is implemented, there is no way to resolve the imbalance between working poor families with children and those on social assistance. If an integrated child benefit were properly designed and implemented, it would be a cornerstone for a much fairer system of income security, addressing the needs of the working poor and making a real impact on child poverty. An ade-quate integrated child benefit would make welfare unnecessary for many families.

As we argued in One Way to Fight Child Poverty:

A stronger child benefit is not just an after-the-fact cash fix for poverty that merely supplements low incomes. An integrated child benefit that replaces provincial welfare benefits for child-ren and the federal Child Tax Benefit with a unified benefit for all low-income families - the working poor as well as those on welfare or Unemployment Insurance - will lower the welfare wall that keeps many families from moving off social assistance and into the labour force. No longer will low-income parents have to rely upon the welfare system to provide for their child-ren: They will be able to work and still receive a badly-needed income supplement to their earnings. An integrated child benefit is a social program that can offer both an incentive to work and necessary income support for families in need [Battle and Muszynski, 1995:29].

The provinces'Report recommends "the possible consolidation of income support for children into a single national program, jointly managed by both orders of government, with options for either federal or provincial/territorial delivery of benefits" [Report 1995:14]. This recommendation falls short of an adequate integrated child benefit. Such a benefit would require additional funding and could not be achieved just through consolidation of existing income security expenditures on children; however, an adequate integrated child benefit could be funded without adding to the deficit by redirecting revenue from other parts of the tax/transfer system.

The federal government seemed to be considering an integrated child benefit as part of its Social Security Review [Canada 1994b], but the idea has subsequently dropped from sight. The provinces' recommendation now provides a good starting point for discussion and gives Ottawa a chance once more to pick up the ball on child benefits reform.
 

ii. comprehensive social insurance for persons with disabilities

Along with becoming unemployed, disability is one of the main causes of economic insecurity for Canadians. There is minimal protection for most ordinary working Canadians against loss of income due to disabling illness or accident, except for those covered by a good private workplace long-term disability plan and those injured in an automobile (who may be eligible for an auto insurance settlement) or workplace accident (who may get workers' compensation). For the rest of the working population, the only benefits potentially available are from the Canada and Quebec Pension Plans and a few tax breaks in the income tax system. This hodge-podge of plans leaves many Canadians with disabilities without adequate income, while a few others in similar circumstances are relatively better off.

For those whose disability occurs when they are too young to be part of the workforce, or who are unemployed in the long term, there is usually nothing at all except welfare. If recipients work, their wages reduce their welfare benefits and may jeopardize their access to health care benefits (e.g., free or subsidized drugs) or needed supports (e.g., attendant care). The result is to discourage employment and reinforce the social isolation of many Canadians with disabilities instead of promoting their full participation in society, including all the rights and responsibilities of citizenship.

The alternative advocated by the provincial Report is 'the possible consolidation of income support for individuals with long-term and significant disabilities into a single national program - jointly managed and federally delivered' [Report 1995:14]. Such a plan could provide adequate income security for those whose ability to earn income is diminished by disability, regardless of cause. Like the integrated child benefit, the idea of a comprehensive, integrated national plan for persons with disabilities has a long history. It was included in the House of Commons' Obstacles report [1981]; it was studied in a joint federal-provincial review [Health and Welfare 1983]; and it was advocated by Ontario's Transitions report [1988] and by The Roeher Institute in its study Comprehensive Disability Income Security Reform [1992], to name just a few among many reports and studies that have been produced over the years.

But the provinces' proposal is short on details, and everything depends on the specifics of such a plan. While there is great potential in a consolidated national program "of income support for individuals with long-term and significant disabilities," it could instead be a big step backward. For example, 'consolidation' could mean getting rid of social insurance benefits such as Canada and Quebec Pension Plan disability benefits and workers' compensation, to replace them with a much less ade-quate welfare-like program. On the other hand, it could mean consolidating several existing programs into a new national (perhaps interprovincial) social insurance plan that would provide more adequate coverage for the majority of Canadians.

The provinces do not offer enough details for us to know what they are actually recommending: Likely they do not yet know themselves. One of the ways to achieve consensus among all the provinces is to leave much unsaid and unresolved. Nonetheless, there is sufficient positive potential in the provinces' recommendation to warrant its being a basis for intensive federal-provincial and public discussion.
 

iii. consolidating responsibility for income security for the working age population

It makes little sense for the federal government to be responsible for Unemployment Insurance which assists some of the unemployed, while the provinces provide social assistance for most other jobless Canadians. For one thing, this arrangement leads to a lot of counter-productive shifting of unemployed people from provincial welfare to UI through short-term make-work jobs. In turn, the provinces get a big added bill each time the federal government tightens Unemployment Insurance because more of the unemployed are forced onto welfare.

But more important than annoyance to governments, the division of responsibility between two jurisdictions has resulted in inconsistency and unfairness in the treatment of the unemployed. Some jobless Canadians get decent income replacement, good training and other opportunities (usually only if they qualify for UI), while many get very little income, and little or nothing in the way of support to become reemployed. Falling off UI onto welfare can now be a very long drop.

The problem of this divided responsibility for the unemployed was foreseen when the idea of unemployment insurance was first being discussed in the 1930s. In 1937, the National Employment Commission, chaired by Arthur Purvis, presented a report to Mackenzie King recommending the federal government set up an Unemployment Insurance plan and assume all financial and administrative responsibility for the unemployed. The Purvis report recommended three components: 1) a national Employment Service, 2) a national Unemployment Insurance program and 3) a national Unemployment Assistance Program. The National Employment Commission argued that:
 
 

...to create an insurance plan without providing for the assistance of those who were not eligible for benefits would 'almost certainly lead to a complete breakdown.' Unemployment Insurance would always leave a large number of unemployed outside its framework. If they were forced to depend on poor relief, 'there would be continued pressure of public opinion to force extended benefits under the Insurance Scheme even though these may not be actuarially sound.' If the provinces and municipalities were left with their care, they would only add their own 'interested pressures' to the 'popular agitation for extended Insurance benefits'...an unemployment assistance scheme 'follows logically ... upon the ... decision to institute a national system of Unemployment Insurance' [Struthers 1983:176].

King ignored this advice, but it was reiterated in the Marsh Report [1943]. Marsh proposed that the federal government set up a program to provide training and income support for all unemployed employables. The federal government finally came around to accepting this proposal and it was reflected in the 1945 Dominion-Provincial Conference on Reconstruction, where Ottawa offered to assume responsibility for all 'unemployed employables' not covered by UI.

However, this offer was not accepted by the provinces since, among other reasons, it was part of a much larger federal proposal involving the division of tax powers which failed to win the support of either Ontario or Quebec. But the logic behind the proposal remains as relevant today as it was then. In fact, if anything, time has proven Purvis correct. UI has become less and less of an insurance program as it has fallen into the inappropriate role of providing more general income support.

Following the same reasoning, Caledon [1995] has recommended that the federal government establish an Employment Assistance program to complement the UI program. This new program would provide income support and employment development services for people who are frequently unemployed or who are unemployed over a long term. An Employment Assistance program would offer an alternative to UI for many of the unemployed who are now entitled to UI only through regionally extended benefits or other special measures which have been grafted onto the UI program. The proposed Employment Assistance program would allow UI to return to its original purpose as a social insurance program providing income replacement for the occasionally unemployed.

Of course, the provincial Report is not exactly proposing transfer of responsibility to a single jurisdiction, let alone to Ottawa. The Report is carefully worded, in extremely bureaucratic language, no doubt to maintain a consensus among provinces - "the possible harmonization or integration of income support for other working age adults (currently provided through UI and provincial social assistance programs). Joint management with options for either provincial/territorial or federal delivery could be considered" [Report 1995:14]. Loosely translated into English, this statement means consolidating delivery while jointly managing programs for the unemployed. But even the provinces admit that they do not know exactly what is meant by 'joint management.'

As with the recommendation for people with disabilities, the provincial proposal to integrate support programs for working-age adults could be good news or bad news, depending on the specifics. If it means getting rid of UI and substituting welfare as the only fall-back for the unemployed, it would cause massive insecurity for most Canadians. But if the provincial proposal means fairer and better access to real opportunities for training and job placements and a national income support program for the long-term unemployed that parallels UI, it would be a big step forward. The provincial Report's recommendation is vague, to say the least. Despite this problem, as with the other recommendations discussed above, the Report provides a good starting point for federal-provincial discussion and public consultation about this promising reform.
 

iv. clarifying federal responsibility for Aboriginal peoples

Over the last several years, the federal government has been withdrawing support for Aboriginal peoples not living on reserves. For example, Ottawa stopped paying for child welfare services off reserve in Saskatchewan. In Manitoba, the federal government no longer pays for social assistance off reserve. Similar steps have been taken in other provinces. The Report calls for the reversal of this policy. The provinces want Ottawa to take full federal responsibility for all Aboriginal programming as a preliminary step to direct Aboriginal assumption of these responsibilities.

Through its withdrawal of support for services off reserve, the federal government would seem to be reneging on its Constitutional duties. According to the Constitution, Ottawa is responsible for "Indians, and Lands reserved for Indians" [The Constitution Act; 91(24)]. This implies that the federal government is responsible for 'Indians' wherever they live and also is responsible for Indian lands - i.e., reserves. Had the framers of the Constitution meant to restrict federal responsibility to Indians living on reserves, Section 91(24) of the Constitution would presumably have instead read: "Indians on Lands reserved for Indians."

The federal government's counter-argument probably would be the following: The Constitution does not impose a positive obligation on Ottawa to provide any particular service and, where the federal government chooses not to furnish a service, Status Indians are as entitled as any other citizen to access provincial services. Moreover, it likely would be argued, the provinces do have a positive obligation to ensure that all services they provide are available to everyone in the province on an equal basis. Therefore, according to this line of argument, if Ottawa decides not to offer a service, providing the service to Status Indians (and even more so to Aboriginal peoples without Status) ends up being the responsibility of the provinces. In this way, despite the wording in the Constitution, the federal responsibility for 'Indians, and Indian Lands' effectively becomes residual to the provinces.

While this chain of legal logic may or may not be compelling in a court, it seems painfully contorted to the lay person. However, the real reason for the withdrawal of federal support is not legal - it is fiscal. But this money-saving policy has some ser-ious unintended consequences. As many members in most Bands now live off reserve, maintaining cohesion requires that Band governments be recognized wherever their members live. Otherwise, the political structures which support the continued existence of Bands will become irrelevant for many of their members. Those living off reserve will gradually but inevitably lose much of their connection with their Bands. Thus, this federal policy is undermining the coherence and perhaps the very existence of Aboriginal communities and governance structures.

As well, federal withdrawal of supports off reserve may have implications for self-government negotiations. If Aboriginal peoples are told that Ottawa will financially support self-government only in areas of federal jurisdiction, the scope of self-government can be narrowed by federal-provincial jurisdictional agreements. For example, the recent Speech from the Throne announced that the federal government "is prepared to withdraw from its functions in such areas as labour market training, forestry, mining and recreation..." [Speech from the Throne, 1996:10]. Does this mean that self-government will not include federal support for Aboriginal self-government in any of these areas of responsibility?

These are serious issues. They demand at least an informed and honest dialogue.

Of course, the provinces also are not innocent of financial motivation in making this recommendation. But it would be unreasonable to expect the federal government to relieve provinces of a substantial expense without negotiation of a trade-off of some kind. In addition, any discussion of Aboriginal affairs must include Aboriginal representatives as a full and equal partner. Therefore, implementing this recommendation requires tripartite negotiations among the federal government, the provincial/territorial governments and Aboriginal representatives.
 

constitutional responsibilities for social programs

Because the provinces' Report makes these four key recommendations, it is not merely a plea for more provincial powers. Were the Report acted upon, it would expand the range of national social programs. But there are some aspects of the Report that are little more than attempts to enlarge provincial rights and diminish those of the federal government. For example, the Report exaggerates provincial responsibilities in the Canadian federation. It argues that "constitutional responsibility [is] assigned to Provinces for social programs" [Report, 1995:4].

This is untrue. The federal government is constitutionally responsible for Unemployment Insurance, jointly responsible with the provinces for pensions and has as much constitutional responsibility as the provinces for programs providing income assistance directly to citizens; for instance, the Child Tax Benefit is a federal program, as were Family Allowances and the refundable and non-refundable child tax credits that it replaced.

The Report also proposes that "federal activity in areas of sole provincial responsibility should occur only after federal/provincial/territorial consultation, and provincial/territorial agreement on how federal spending can be effectively applied" [Report 1995:2]. Presumably, this is meant as a bargaining position, because the proposal cannot be accepted seriously at face value. If taken literally, this would be a much stronger restriction on the federal spending power (the power of the federal government to offer provinces payments in return for meeting conditions) than in the Meech Lake or Charlottetown Accords or any of the constitutional negotiations.

Any proposal to restrict the federal spending power must be carefully spelled out and circumscribed so that the federal government's ability to act in the national interest is not removed altogether. In its most recent Speech from the Throne, which came out after the provinces' Report was written, the federal government has undertaken to restrict its use of the spending power as follows:

The Government will not use its spending power to create new shared-cost programs in areas of exclusive provincial jurisdiction without the consent of the majority of the provinces. Any new program will be designed so that non-participating provinces will be compensated, provided they establish equivalent or comparable initiatives [Speech from the Throne, 1996:9].

This federal position is more balanced than the provincial recommendation in the Report. Majority consent of the provinces is a reasonable test of support, while not imposing an insurmountable barrier. The offer to compensate non-participating provinces is a sensible compromise, reflecting the traditional demands of many provinces. A similar provision was included in Meech, but the Throne Speech provision is more clearly stated.
 

the Canada Health Act

The Report saves its most serious attempt to restrict the federal role for the Canada Health Act. The Report continues a hypocritical game that has been going on too long - attempting to whittle away at the substance and intent of the Canada Health Act, while paying lip service to it.

The Report's recommendations would make the Canada Health Act ineffective by denying Ottawa the ability to enforce it; namely, by setting up a new "federal-provincial/territorial process through which the parameters of the Canada Health Act can be clarified, refined and interpreted" including "a federal-provincial/territorial structure for interpreting the Act to deal with those instances where disagreement arises over issues of interpretation" [Report 1995:11-12]. Translated, this could mean a committee including provincial representatives would be responsible for interpreting and enforcing the basic principles of medicare set out in the Canada Health Act. Since agreement would be impossible in areas of contention, or at least would require years of red tape to unravel, this proposal could declaw the Act and make it effectively inoperable.

Poll after poll shows that Canadians overwhelmingly support universal medicare and the Canada Health Act. But universal medicare is not only attractive politically; it also happens to be good economic policy. Without universal medicare, provinces could respond to increased health costs by allowing more and more services to be charged for privately. This might contain governments' bills for medicare, but Canadians would just end up paying much more out of their own pockets. The result would be a more expensive, less efficient health care system - and many Canadians would find themselves unable to afford care or facing the kind of health bills that confront many families in the US. By keeping as much of the costs as possible within the publicly-funded system, this escape hatch is not available for provincial treasuries, so they must come to grips with making the health system more efficient rather than just dumping the costs of an inefficient system onto Canadians.

For this reason, the Canada Health Act is necessary and helpful in the process of improving and modernizing our health care services within an acceptable budget. But you would never know that from reading what the provinces have to say. For example, in setting up the Ministerial Council, the Premiers said: "Premiers were unanimous in their support for a publicly-funded national health care system and reaffirmed their commitment to the principles of the Canada Health Act. However, Premiers recognized that unrestrained demands on all aspects of the health care system is one of the primary reasons for financial pressures on the system..." [Communiqué, 36th Annual Premiers' Conference, 1995:1].

These two sentences from the Communiqué are a dangerous and misleading non sequitur. They imply that 'unrestrained demand' is caused by the system being publicly funded. In fact, precisely the reverse is true. If not for the publicly-funded system, demand and costs would explode as hospitals, physicians, insurers and a whole host of others would take advantage of new opportunities to make money. It is the public's support for medicare, the provinces' response to that public support and the Canada Health Act which have kept the publicly-funded system intact and prevented costs from exploding.

For the Canada Health Act to work, someone other than the provinces has to play the role of the watchdog of universal medicare and be able to enforce the principles of the Act. Right now, the only watchdog is Ottawa. Rather than suggesting a better and more acceptable enforcement mechanism, the provinces' proposal would make enforcement impossible.

Alberta (e.g., Gray, 1996) has long searched for ways to get around universal medicare. But why did all the other provinces and territories agree to such a thinly-disguised attack on universal medicare? What was the position of Saskatchewan, the traditional guardian of medicare?

In another recommendation on health services, the Report directs "Provincial/ Territorial Health Ministers [to] identify the basic range of services that should be insured in a national health system" [Report, 1995:11]. This proposal addresses one of the key principles of the Canada Health Act - that all 'medically necessary services' be insured and covered for all Canadians under the universal system. But the phrase 'medically necessary services' has never been defined. The provinces complain, with some validity, that they do not know what they are required to cover. Unfortunately, the Report's recommendation conspicuously excludes the federal Minister of Health from the process of identifying the basic range of services that should be insured.

The problem for the federal government is to find a way to be responsive and open to the provinces, while rejecting any attempt by some provinces to set up a two-tier system of health care. Defining which services should be covered, and which not, is a complex issue (see Evans et al, 1994) and we should be constantly aware that we are dealing with a precious but fragile social program. 'Opening up' the Canada Health Act may be necessary to modernize it, but in the current environment we might be forgiven for suspecting this might mean 'closing down' medicare.

Perhaps the best protection for universal medicare would be for sympathetic provinces and the federal government to insist upon an open process, not a closed-door bargaining session between governments. This would mean involving the public and experts in health services, law and ethics, as well as the provinces and the federal government, in any renewal of the Canada Health Act. Taking account of these factors and weighing the risks, Caledon would urge that discussions proceed, but that they do so only with caution, careful deliberation and substantive opportunity for public and expert input.
 

national standards

Implicit in the Report is the idea that 'national' may sometimes be substituted for 'federal.' In this view, the provinces operating in concert can together develop and implement national standards without the help of the federal government. But the track record on interprovincial agreements is very poor. About the only meaningful agreement anyone can point to in the last 50 years is the recent deal on interprovincial trade.

Caledon does not believe that provincial 'national' standards can be an acceptable substitute for standards developed and implemented by the federal government. There are four main reasons for this assertion.

First, the provinces will not agree to national standards with any meaning or substance. What standard will Alberta agree to for medicare? Will BC agree not to impose a provincial residency condition for social assistance? Will Quebec agree to anything at all? If any so-called 'national' standards are developed by provincial consensus, they will almost certainly be vacuous generalities.

The Report itself is, ironically, good proof of this, as can be seen in its list of basic "Principles to Guide Social Policy Reform and Renewal." Caledon has previously written of the difference between objectives, principles, conditions and standards [Torjman and Battle, 1995]. Canadians should not be duped by an agreement on general unenforceable objectives (e.g., reduce poverty) parading as specific enforceable standards (e.g., provide income equal to a certain percentage of the low income cut-offs or of average income).

Second, even in the extraordinarily unlikely event that all provinces did agree to substantive national standards, they could not be enforced. If one province broke the national standard, what could be done about it? National standards implemented by the provinces are perfectly useless because they can be in effect only so long as everyone agrees to them; they will cease to be national standards whenever any province wants to break the standards. The paradox is that national standards are needed precisely when they are opposed by at least one province.

In interprovincial trade, there are some methods of mutual enforcement; one province can retaliate against another, as Ontario did with respect to Quebec construction practices. But what about health and social services? In this case, all any province can do is adopt the lower standards of its neighbours.

Third, in interprovincial meetings, the provinces' decision-making rule has always been 'consensus.' Consensus is almost the same as unanimity except that it admits the possibility that not all agree fully and instead may only reluctantly concede. However, if one province strongly disagrees, nothing can be done. This is an extremely inefficient way to run anything, let alone a complex income security system. It is very unlikely that the provinces could agree on an alternative decision-making rule, as this would mean that some provinces would be giving up a 'veto.'

Fourth, there is no democratic forum and no democratic representation for interprovincial decision-making. All interprovincial decisions are made in private with no records, no legislative debate, no opposition parties and no accountability - as we have seen in the preparation of the provinces' Report. If there were a 'House of the Provinces' or some such second chamber in the federal Parliament, there would be a democratic venue for interprovincial decision-making. But until that time, decision-making by non-constitutional bodies (i.e., the provinces acting collectively) is undemocratic.

While federal-provincial negotiations are also carried on in secret (and should be much more open), the results are subject to the approval of Parliament, so at the end of the day there is some democratic forum where accountability resides. As well, written statutes must be passed and are subject to legal interpretation and enforcement. And, of course, the federal party in power may be held accountable for the results.

Caledon has consistently advocated strengthening - not weakening - national standards where this makes sense for particular social programs [Torjman and Battle, 1995; Mendelson, 1995]. So why, given the above objections, would we think there is much in this Report that is worthwhile?

First, national, and particularly federal, programs are the best possible way to maintain national standards. Programs such as Old Age Security, the Child Tax Benefit and the Canada and Quebec Pension Plans are all examples of federal or federal-provincial programs applying a single standard for the whole country. The same Unemployment Insurance rules apply to regions with the same economic conditions throughout the country.

As discussed above, the provinces' Report recommends three new programs: a national integrated child benefit, a national disability income security plan and integrated delivery of programs for the unemployed. In combination, these proposed programs would greatly enlarge the scope of national programs in Canada.

Caledon has previously argued that: "Only the federal government can ensure consistent benefits for all Canadians wherever they live and move throughout the country. In future, Ottawa should expand its role in income security by delivering bene-fits (e.g., for persons with disabilities, employable welfare recipients and children)..." [Battle and Torjman, 1995:5]. While Caledon's recommendation is for the federal government to take on this role, the issue is not so much what level of government is responsible; rather, it is the programs to be delivered that is most important. And in this regard, the provinces' Report is supportive of the substance of Caledon's approach right down to the list of possible national programs.

Second, it would be easy to criticize the Report for not living up to our fondest ideal for the best possible social security system. But the ideal is not where we were headed before the Report was written. In analyzing the Report, we need to compare its recommendations against what likely will happen to social programs on our present course. Therefore, from the perspective of national standards, the practical question is: Does the Report improve prospects of stronger national standards than we are realistically going to get without the Report?

The legislation implementing the new Canada Health and Social Transfer requires the federal government to discuss with the provinces principles and objectives for social programs to see if these can be agreed to by 'mutual consent.' As discussed above, it is unlikely that anything substantive will arise from this process. But even if something meaningful is agreed upon, the Canada Health and Social Transfer legislation permits only the following conditions to be enforced: the conditions in the Canada Health Act regarding medicare (i.e., comprehensiveness, universality, accessibility, portability and public administration) and the requirement that provinces not impose residency minimums as a condition of receiving social assistance. No other condition is allowed or possible under the Canada Health and Social Transfer legislation [Mendelson, 1995]. Measured against this benchmark, it is clear that it would be difficult to get less out of any federal-provincial process than we will get as a result of the Canada Health and Social Transfer.

The provinces' Report holds out promise to enhance true national standards by developing national programs in critical areas of social policy - for poor children, persons with disabilities and the unemployed. Caledon therefore sees the Report as potentially strengthening rather than weakening national standards.
 

financing and federal-provincial relations

National programs for poor children, persons with disabilities and the unemployed are nice to talk about, but then we have to face up to the usual problem: How to pay for these reforms? The Report is not very clear on this issue, although there is at least one hint. The Report speaks of the need for "ongoing and frank consultation on the [fiscal] impacts of proposed strategies and the possible development of alternative approaches to meet fiscal requirements" [Report, 1995:17].

Should the Report's recommendations be seriously considered, a rebalancing of tax shares and federal transfers to the provinces would need to be part of the negotiations. For example, if the federal government did assume responsibility for a national integrated child benefit, its direct spending would increase while provincial spending would decrease. In this case, it would make sense to consider ceding tax points to the federal government. In short, the provinces cannot expect Ottawa to take over major responsibilities while leaving the money behind.

However, even with a reshuffling of existing revenue sources, there is not enough funding now available in federal transfers to the provinces and direct social programs to achieve all that is recommended in the Report. Other means will have to be found. The source that should be tapped is the plethora of tax expenditures in the tax system. Caledon estimated the total value of social tax expenditures in 1992 at $53 billion for the federal and provincial governments combined [Caledon, 1995]. If any social policy review is to have a hope of success, it must include these hidden costs as part of the 'envelope' for potential reallocation, along with direct program expenditures.

By rejigging the tax/transfer system, it is possible to create a better system without adding to deficits. If the Report's recommendations were fully financed in this way, total personal income would not change; rather, it would be redistributed. Overall it would be a 'wash,' as money gained from one source would be paid back immediately to Canadians through the new programs.

Financing problems can be overcome if governments are willing to consider the entire direct and indirect envelope of social spending. However, what may seem to be an insurmountable barrier is the non-participation of Quebec in these discussions. When Quebec does not take part, Ottawa finds itself in a catch-22. If federal-provincial relations grind to a halt because Quebec is not there, this is taken as evidence that federalism is inflexible and cannot change. But if meetings do take place without Quebec, the federal government and the other provinces may be accused of 'ganging up.'

The new Premier of Quebec has given some positive signals that he will permit his province once again to participate in federal-provincial and interprovincial activities. This would respect the democratic vote of the people of Quebec who, after all, did not vote to separate. The Quebec government therefore has an obligation to continue as a partner in federalism with all the consequent responsibilities. If it does not, the rest of Canada cannot be expected just to give up. The non-participation of Quebec cannot be allowed to act as an effective veto of any attempt to formulate a new deal for Canada's social programs. The federal government, in particular, but the other provinces as well, will have to do their best to recognize the needs of Quebec during any negotiations. It would be much better and more sensible for Quebec to be there to represent its interests.

However, to be realistic, Quebec will object to any new Canada-wide program within the province of Quebec that it does not administer, whether this be a 'national' program or a federal program. It may be necessary to provide Quebec with some form of opting out opportunity, so long as this is fair to people in all of Canada. The Canada and Quebec Pension Plans are a good model in this regard. With an agreement to keep the benefits parallel, the two plans have maintained mobility for all Canadians while meeting the specific needs of Quebec. People in the rest of Canada are no worse (or better) off because Quebec is running its own plan.
 

conclusion

This Caledon review is not meant to be a comprehensive analysis of the provinces' Report. For example, we have not discussed the Report's recommendations on labour market training or the effects on social services such as child care. However, based on what we have reviewed, it is clear that the Report offers some positive approaches to the reform of social security.

When the Liberals were elected, they also initiated a far-reaching and comprehensive review of much of Canada's social security system. For a variety of reasons, the Social Security Review faltered, but the need which inspired it remains. There is a vacuum which the provinces have attempted to fill with their Report. The federal government should see this initiative as a fresh chance to try again.

Michael Mendelson

Senior Scholar, Caledon Institute of Social Policy

References

Battle, Ken and Leon Muszynski. (January, 1995). One Way to Fight Child Poverty. Caledon Institute of Social Policy: Ottawa. Battle, Ken and Sherri Torjman. (1995). Lest We Forget: Why Canada Needs Strong Social Programs. Caledon Institute of Social Policy: Ottawa.

Caledon Institute of Social Policy. (February, 1995). Comprehensive Reform of Social Programs. Brief to the Standing Committee on Human Resources Development. Ottawa.

Canada. (1994a). Improving Social Security in Canada. Ottawa: Department of Human Resources Development Canada.

Canada. (1994b). Income Security for Children: A Supplementary Paper. Ottawa: Department of Human Resources Development Canada.

Child Poverty Action Group, Citizens for Public Justice, Ontario Social Safety Network and the Social Planning Council of Metro Toronto. (1996). <>The Provinces' Vision of the Future of Social Canada. A Preliminary Review of the Report of the Ministerial Council on Social Policy Reform and Renewal. mimeo.

Evans, Robert, Morris Barer and Greg Stoddart. (1994). It's Not the Money, It's the Principle: Why User Charges for Some Services and Not Others? Toronto: Premier's Council on Health, Well-being and Social Justice, Government of Ontario.

Gray, Charlotte. (March, 1996). "Gambling with Medicare". Saturday Night Magazine. Health and Welfare Canada. (1983). Joint Federal-Provincial Study of a Comprehensive Disability Protection Program, Volume 1. Ottawa: Minister of Health and Welfare.

House of Commons. (1981). Obstacles. Report of the Special Committee on the Disabled and the Handicapped. Ottawa: Minister of Supply and Services Canada.

Marsh, Leonard. (1943). Report on Social Security for Canada. Ottawa, King's Printer.

Mendelson, Michael. (1995). Looking for Mr. Good-Transfer: A Guide to the CHST Negotiations. Ottawa: Caledon Institute of Social Policy, October.

Ministerial Council on Social Policy Reform and Renewal. (December, 1995). Report to the Premiers. [Copies available from Newfoundland Information Services, St. John's, Newfoundland: fax 709-729-0584.]

Ontario. Ministry of Community and Social Services. (1993). Turning Point: New Support Programs for People with Low Incomes. Toronto: Ontario Ministry of Community and Social Services.

Ontario. Ministry of Community and Social Services. (1988). Transitions. Report of the Ontario Social Assistance Review Committee. Toronto: Queen's Printer.

Quebec. (1971). The New Plans. Report of the Commission of Inquiry on Health and Social Welfare, Vol. V, Tome II. Quebec: Government of Quebec.

The Roeher Institute. (1992). Comprehensive Disability Income Security Reform. North York: The Roeher Institute.

Saskatchewan. (1996). Redesigning Social Assistance: Preparing for the New Century. Regina: Government of Saskatchewan.

Struthers, James. (1983). No Fault of Their Own: Unemployment and the Canadian Welfare State 1914 - 1941. Toronto: University of Toronto Press.

Torjman, Sherri and Ken Battle. (May, 1995). Can We Have National Standards? Ottawa: Caledon Institute of Social Policy.

June 1996