Local Government

Federalism in Canada: Basic Framework and Operation

Jay Makarenko — Fri, 11 Jan 2008 14:08:30 -0700

Central to the organization of government in Canada is the principle of federalism. Under this principle, Canada is divided into two constitutionally autonomous levels of government: the federal or central government, and the provincial governments. The nation’s basic division of government plays an important role in public finances and public policy. The basic framework and operation of Canadian federalism are discussed in this article with specific emphasis on the concept of federalism, the different levels of government, the formal division of powers, the operation of fiscal federalism, and the key means of interaction between different governments.

Introduction to the Concept of Federalism

What is federalism? How does it compare to other forms of government?

Levels of Government in Canadian Federalism

Federal, provincial, territorial, and local governments

Canadian Federalism and the Divisions of Powers

Federal and provincial powers under the Canadian Constitution

Spending Powers and Canadian Fiscal Federalism

Federal and provincial/territorial financial relations

Canadian Federalism and Inter-Governmental Interaction

Departmental and ministerial relations between governments

Sources and Links to More Information

List of article sources and links for more on this topic

Introduction to the Concept of Federalism

What is federalism? How does it compare to other forms of government?

Division of Powers between Levels of Government

In basic terms, federalism refers to “a division of jurisdiction and authority between at least two levels of government” (Jackson & Jackson: p. 189). This division usually occurs between two or more constitutionally recognized levels of government; that is, levels of government separated under the nation’s constitution and with their own autonomous (or semi-autonomous) constitutional powers.

In most instances of federalism there is a single national government, often referred to as the “federal government,” which exercises its particular powers across the whole country. In addition, there are multiple regional governments, often referred to as “provincial” or “state” governments, which exercise their powers within their particular regional territory.

Moreover, each level of government usually has its own particular jurisdiction; that is, areas of public policy in which it, and only it, may exercise authority (or have the final authority). For example, typically the national government will have final authority over “national” issues, such as national defence, foreign policy, and treaty-making, just to name a few. By contrast, the regional governments will have power over more “regional” issues, though this can vary widely from one federation to another.

How jurisdiction and power is divided among each level of government can lead to assessments of a centralized or decentralized federation. In its highly centralized form, jurisdiction and authority lies mainly in the hands of the national level of government, while the multiple regional governments have very little power. Power is thus “centralized” in the hands of a single national government. In its highly decentralized form, jurisdiction and authority lies mainly with the various regional governments, while the national government has very little power. Here, power is “decentralized” in the sense that it is spread out amongst multiple regional governments. Federations in the world differ significantly in terms of where they fall on this spectrum between the centralization and decentralization of power.

There are numerous examples of federalist governments in the world today, including (but not limited to) Canada, the United States, Australia, Argentina, Brazil, Mexico, Nigeria, the Federated States of Micronesia, and the United Arab Emirates.

Federal versus Unitary Governments

Federalism, as a form of government, can be contrasted to unitary government. Unitary governments are those which have only one level of government, or only one level of government which has its own autonomous constitutional powers. In some cases of unitary government, there is only one national government that makes all political decisions. In other cases, state, provincial, or local governments may exist, although these regional levels have no constitutional autonomy and are dominated by the national government.

Most countries in the world are organized as some form of unitary government. Examples include (but are not limited to) the United Kingdom, France, Italy, Japan, the People’s Republic of China, Singapore, and South Korea.

Potential Benefits and Detriments of Federalism

Why, precisely, do federal states exist? Why aren’t all nations organized as unitary governments? There are many different reasons why federalism is preferable, and usually varies from one federal country to another.

One of the most often cited benefits of federalism is that it acts as an additional check on government power. In unitary states, governmental power is usually highly centralized within a single level of government. In federal states, by contrast, power can be dispersed amongst multiple levels of government. Accordingly, it is much more difficult for one set of political elites to control the power and direction of government. The different levels, instead, can act as a check on one another in the exercise of political authority.

Another oft cited benefit of federalism is that it can protect local or regional interests to some extent. Many modern nation-states are very large and have highly diverse populations. In some cases, regional groups in one part of the nation can have very different political needs and views than those in other regions. It may be that a region is dominated by a particular religious, ethnic, or linguistic group, which is a minority within the larger nation (such as the French Quebecois in Quebec). Federalism can prevent geographically-based minorities from being at the total mercy of the larger national majority by giving them their own level of government, with their own autonomous political jurisdictions and powers.

Another possible benefit of federal, as opposed to unitary, states is their ability to manage and administer large geographical areas. This was particularly true in the past, when the central government faced huge communication and transportation issues in administering large nations. The presence of regional governments administering local issues made such nations much easier to manage. Today, however, this is much less of an issue, as technology allows a central government to effectively administer very large and diverse geographical areas.

Federalism, as a form of government, can also have several potential weaknesses. While federalism can act as a check on government power, it can also lead to paralysis and an inability for government to deal with difficult national issues. During the Great Depression in Canada, for example, the federal government was unable to institute national policies to address mass unemployment and poverty, as it did not have the constitutional authority to do so (these powers, instead, were dispersed amongst the provinces).

Moreover, as federalism often protects regional interests, it can reinforce and entrench divisions within a country, and contribute to ongoing political instability between groups. One might wondered whether Quebec nationalism would be so strong today if Canada had been a unitary, as opposed to federalist, state. On the other hand, one could also argue that Canadian federalism has been a major factor in keeping the country together, as it is has permitted the protection of Quebec’s interests within Canada.

It is important to note, however, that whether a particular federal state exhibits these possible benefits and detriments depends in large part on how it divides power between levels of government. A highly centralized federal state, for example, may not act as a check government power or protect regional interests, due to the fact that most powers (or at least, the most important ones) are given to the central government.

Levels of Government in Canadian Federalism

Federal, provincial, territorial, and local governments

Canadian federalism has two constitutionally recognized levels of government: federal and provincial. The country also has two further forms of government, territorial and local, which are not constitutionally recognized. The following section introduces each level of government and its status within Canada’s federal framework.

Federal Level of Government

The first constitutionally recognized level of government is the federal or national government. This level is responsible for enacting and implementing laws for the whole country. In doing so, the federal government is provided with its own constitutional powers and jurisdictions, which it may exercise independently from the provincial level of government.

See the Canadian Federalism and Division of Powers section of this article for more information on federal constitutional powers and jurisdictions.

Canada’s national Parliament located in Ottawa, the nation’s capital, is the premier institution of the federal government. It consists of the Monarchy (and his/her federal representative, the Governor General) and two legislative chambers, the House of Commons and the Senate.

For more information on Canada’s system of parliamentary government:

Mapleleafweb: Parliamentary Government in Canada: Basic Organization and Practices

The head of state for the federal government is the Monarchy; however, his/her role is primarily ceremonial under Canada’s contemporary system of government. The bulk of federal power lies with the federal head of government and his/her executive council, which are officially referred to as the Prime Minister and Cabinet, as well as the elected legislative chamber, the House of Commons. The second federal legislature, the Senate, is an appointed body and exercises considerably less power relative to the elected House of Commons.

Another key federal institution is the federal judiciary. This includes the Supreme Court of Canada, which is appointed by the federal government and is the highest court in the country. Other important federal-level courts include the Federal Court of Appeal, the Federal Court, the Tax Court of Canada, the Court Martial Appeal Court, and the Courts Martial (the latter two are military courts). Another important federal institution is the national public service. This includes all of the federal government departments and agencies, which are responsible for helping the federal government form and implement policy within its jurisdictions.

Provincial Level of Government

Provincial governments form the second constitutionally recognized level of government in Canada. There are 10 provinces in Canada, each with their own provincial government: British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Newfoundland and Labrador, Nova Scotia, New Brunswick, and Prince Edward Island. These provincial governments enact and implement laws within their particular provincial territory, and are provided with their own constitutionally recognized powers, which they may exercise independently from the federal government, and from each other.

See the Canadian Federalism and Division of Powers section of this article for more information on provincial constitutional powers and jurisdictions.

Each provincial government has its own legislative assembly, which is located in its respective provincial capital. The Monarchy (or the Lieutenant-Governor, his/her provincial representative) is the provincial head of state. However, as is the case at the federal level, this office is primarily ceremonial. Real provincial power lies, instead, in the hands of the provincial heads of government and their executive councils (Premiers and their Cabinets), and the provincial elected legislature.

There is also a provincial-level court system, which includes provincial courts of appeal and provincial trial courts. These courts are inferior to the federal Supreme Court of Canada (meaning the Supreme Court may overrule them), and typically hear criminal, constitutional, civil, family, traffic, and bylaw cases. In addition, each province has its own provincial public service, which includes government departments and agencies that are responsible for assisting their respective governments in forming and implementing policy within provincial jurisdictions.

Territorial Governments

Canada also has three territories, each with their own governments: the Yukon, the Northwest Territories, and Nunavut. Like their provincial counterparts, these are regional governments, which are responsible for enacting and implementing laws within their particular territorial area. Unlike the provinces, however, territories are not constitutionally recognized entities, with their own autonomous powers and jurisdictions. Instead, the territories fall under the legislative jurisdiction of the federal government, whom is responsible for creating territories and setting out their basic framework.

In practice, territories are usually accorded many of the privileges associated with being a province. Each has its own legislative assembly, which has the power to enact laws within its own territory. The head of state is a territorial Commissioner, which performs many of the same roles as a provincial Lieutenant-Governor. As is the case with provincial and federal governments, however, real power lies in the hands of the territorial head of government and his/her executive council (the Premier and Cabinet), as well as the elected legislative assembly. Each territory has a public service and court system (although, in some cases, a territory will share a court with a neighbouring province).

As territories are not constitutionally recognized as autonomous governments, their status within Canadian federalism is technically inferior. As such, territories do not have a legal say in constitutional amendments regarding the separation of powers between the federal and provincial levels of government. Nevertheless, it is common practice to include territorial governments in inter-governmental meetings and decision-making processes.

Local Governments

The final type of government in Canada is local government, which includes municipal, county/parish, and semi-regional councils, boards, and agencies. Like the territories, local governments are not constitutionally recognized entities with their own autonomous powers and jurisdictions. Instead, local governments fall under the jurisdiction of the provinces and territories, which are responsible for creating local governments and setting out their basic frameworks.

In practice, local governments are usually highly dominated by their respective provincial or territorial government. Provincial/territorial governments often restrict the sorts of laws a local government may pass, how much money the may spend, and how they may implement long-term development strategies. Consequently, local governments are usually non-factors in inter-governmental relations and decision-making. However, the issue of cities, particularly Canada’s large metropolitan centres, can often be a contentious one between the federal and provincial/territorial levels of government.

For more information on local government in Canada:

Local Government in Canada: Organization and Basic Institutions

Canadian Federalism and the Divisions of Powers

Federal and provincial powers under the Canadian Constitution

Confederation and the Division of Powers

The fundamentals of Canadian federalism were first provided at the time of Confederation via the 1867 British North America Act (which, in 1982, was renamed the Constitution Act, 1867). This Act set out the jurisdictional powers of both the federal and provincial levels of government.

For the full text of the Constitution Act, 1867:

Government of Canada: Constitution Acts 1867 to 1982

In regard to the provinces, Section 92 of the Act granted each province 16 enumerated powers. This includes legislative control over such things as hospitals, asylums, charities, municipal institutions, prisons, and property and civil rights, just to name a few. Section 92 granted the provinces sole jurisdiction in these areas, meaning that only they, and not the federal government, could constitutionally legislate in them.

Section 93 of the Act grants the provinces exclusive jurisdiction over education, allowing provincial governments to structure and manage their own education systems.

In addition to these areas of sole jurisdiction, Section 95 of the Act provided for two concurrent powers in agriculture and immigration. The term “concurrent powers” here means that both levels of governments are constitutionally permitted to legislate in these areas. In other words, it is a shared area of jurisdiction in which the federal government and provinces may both enact laws.

In the context of financial powers, the provinces were given only limited powers of taxation. Section 92 of the Act confined the provinces to only “direct taxation” in order to raise revenue for provincial purposes. The question of what counts as “direct taxation” for the purposes of the Act has been a major issue in Canadian federalism, and has been reviewed numerous times by the Canadian judiciary. Currently, most provinces charge an income and corporate tax, a sales tax on the exchange of goods and services, as well as raise revenues through licensing and other fees.

Section 91 of the Act deals with federal powers, and has two parts. First, the Peace Order, and Good Government clause (commonly referred to as the “POGG clause”) says that all powers not given to the province in Section 92 are left with the federal government. Only the federal government, and not the provinces, could constitutionally legislate in these areas.

Section 91 of the Act goes on further to list 29 examples of federal powers. These include the regulation of trade and commerce, postal service, census and statistics, the military, navigation and shipping, sea coast and inland fisheries, Indians and reserve land, and the criminal law, just to name a few. Finally, Section 132 of the Act provided the federal government with the power to implement international treaties.

Unlike the provinces, the federal government was granted very wide taxing powers. Section 91 of the Act states the federal government may raise revenues by any mode or system of taxation. This may include forms of direct taxation, such as income or corporate taxes, as well as indirect taxation, such as duties and fees.

In addition to its jurisdictional and financial powers, the Act also provided the federal government with special powers for controlling the provinces. The first of these was the power of reservation, which allowed the Lieutenant Governor of a province (a federal appointee) to reserve provincial legislation for the consideration of the federal Cabinet. The federal Cabinet could then approve or reject the legislation. Even if the Lieutenant Governor granted assent to a piece of provincial legislation, the federal Cabinet could subsequently disallow it with through their power of disallowance. Furthermore, the federal government could use its declaratory power to place any local work or undertaking, which it deemed to be for the general advantage of Canada, under its control. While the federal government has used these powers in the past, it is now an unwritten convention of the Constitution, superseding the written words of the Constitution Act, 1867, that these federal controls not be used.

Constitutional Amendments and Division of Powers

Since Confederation there have been several constitutional amendments related to the division of powers between the federal and provincial governments.

The bulk of these amendments dealt with federal-provincial control over social benefits, and resulted in an expansion of federal power. In 1940, power over unemployment insurance was added to the list of exclusive federal powers under Section 91 of the Act. Previously, the courts had ruled that unemployment insurance fell under provincial jurisdiction. In 1951, old-age pensions were made a concurrent power, meaning that both levels of government were permitted to legislate in this area. Previously, control over pensions had been a solely provincial power under Section 92 of the Act. Federal powers over pensions were further extended in 1964, when it was permitted to legislate in the areas of widows’ and survivors’ benefits and disability pensions.

Another important area of constitutional change centres on the process of constitutional amendments themselves. In 1949, the federal Parliament was allowed to amend the Constitution unilaterally in areas of purely federal concern. This power had been previously held by the British Parliament. The amendment, however, was appealed in 1982 when the federal government and the provinces adopted new constitutional amending formulas. These new formulas are significant in the context of federalism, as they stipulate the rights of each level of government when it comes to changing the Constitution. Any change to the Constitution that impacts one or more provinces, for example, now explicitly requires some level of consent from those provinces affected.

For more information on Canada’s constitutional amending formulas:

Mapleleafweb: The Canadian Constitution: Introduction to Canada’s Constitutional Framework

In addition to the new amending formulas, the 1982 constitutional reforms also impacted Canadian federalism in the areas of natural resources and regional disparities. Under those reforms, provincial powers over their natural resources were expanded, although, the federal government still maintained some power in this field. Furthermore, Section 36 of the Constitution Act, 1982 included a commitment by both levels of government to reducing economic disparities and unequal access to public services between regions in Canada. Moreover, the Act also included a commitment on the part of the federal government to the principle of making equalization payments to ensure provincial governments have sufficient revenues to provide comparable levels of public services.

Judicial Interpretation and Division of Powers

Constitutional amendments are not the only source of changes to the division of powers between the federal and provincial levels of governments. Another key source of federal evolution has been judicial interpretations of the basic federal framework in the Constitution. It is important to note here the constitutional role of the courts. While the Constitution sets out the basic rules of Canada’s system of government, the courts interpret those rules whenever conflicts arise. In the context of federalism, the courts are asked to rule on disagreements between the different levels of government over such things as the division of powers. These judicial decisions can, in turn, have important impacts on the nature and operation of Canada’s federal system.

In this context, two courts are of particular significance. Prior to 1949, the Judicial Committee of the Privy Council (JCPC), in London, England, was Canada’s final court of appeal, and it rendered most constitutional decisions. After 1949, this responsibility was transferred from the JCPC to the Supreme Court of Canada. Over their histories, these courts have had a great impact on how Canada’s federal system operates.

Between 1867 and 1949, the JCPC effected a major change in the basic divisions of powers between the federal and provincial governments, due in large part to its particular interpretation of Section 91 of the Constitution Act, 1867. As discussed above, this section outlined federal powers in two parts. The first part, the POGG clause, states that all powers not given to the provinces in Section 92 were to be left to the federal government. The second part, the enumerated powers, provided specific examples of what those federal powers would include. In a series of cases, however, the JCPC interpreted Section 92 very differently. It viewed the enumerated powers not as examples of federal jurisdiction, but as a list of the real federal powers. Furthermore, it transformed the POGG clause from a declaration of normal federal power, to an emergency powers provision. As a result, federal powers were limited to simply those enumerated in Section 92, while the POGG clause only allowed the federal government to exceed those powers in times of national emergency.

In addition to limiting the scope of federal powers under Section 91 of the Act, the JCPC expanded provincial powers, particularly in regard to the provincial power over civil and property rights under Section 92. For example, Section 91 stipulated that responsibility for regulated trade and commerce fell solely under federal jurisdiction. The JCPC, however, limited this federal power to just international and inter-provincial trade, meaning that the federal government could only control trade between Canada and other countries and between provinces/territories. The JCPC placed intra-provincial trade, or trade that occurs within a province, under provincial jurisdiction via the provinces’ power over civil and property rights. Another example was federal jurisdiction over international treaties. The JCPC limited this federal power to just treaties that dealt with subject matters under federal jurisdiction. The JCPC granted the provinces the power to make international treaties that dealt with provincial jurisdictions. Again, this power was extended through the provinces’ control over civil and property rights.

After 1949, the Supreme Court of Canada replaced the JCPC as Canada’s highest court. In some cases, the Supreme Court backtracked from the JCPC’s tendency to expand provincial jurisdiction at the expense of federal power. Under the POGG clause, for example, the Supreme Court has recognized federal control over many key areas, such as aviation and airports, offshore minerals, telephones and telecommunications, and pollution (in cases of extra-provincial implications). Moreover, the Supreme Court has recognized these federal POGG powers on a permanent, rather than simply emergency, basis.

Spending Powers and Canadian Fiscal Federalism

Federal and provincial-territorial financial relations

Spending Powers under the Constitution

As discussed in the previous section, the Canadian Constitution sets out the powers and jurisdictions of each level of government; that is, the areas in which the federal government and provinces may legally pass laws. There is, however, another power – governmental spending powers – which is not explicitly discussed in the Constitution, but nevertheless plays an important role in the operation of Canadian federalism. Spending powers simply refers to the right of a government to spend its own money in areas outside of its normal constitutional jurisdictions. While the Constitution forbids one level of government from passing laws that regulate areas outside of its jurisdiction, it does not explicitly forbid them from spending money in those areas.

Federal Government and the Spending Power

While the spending power is available to both levels of government, it is a much more powerful tool in the hands of the federal government. This is due to the fact that the federal government usually has a larger financial capacity than it needs for its own areas of jurisdiction. As a result, the federal government has excess funds which it may direct towards provincial jurisdictions. Provincial governments, by contrast, usually do not have this sort of financial capacity; although, certain provinces, such as Alberta, British Columbia, and Ontario, do to some extent. As a result, provincial governments do not generally spend their financial resources in areas of federal jurisdiction.

This federal spending power and capacity has come to play a crucial role in federal-provincial relations, especially since the 1940s and 50s and the creation of the Canadian welfare state. Under the Constitution, key aspects of the welfare state, such as public health care, education and welfare, fall under provincial jurisdiction. This means that only provincial governments may legislate and regulate in these areas. Nevertheless, the federal government has been able to use its spending power to create national policies and programs within these provincial jurisdictions.

There are two key ways in which the federal government may do so. First, it may provide funds directly to Canadians in support of certain social policies. The Millennium Scholarship Fund, introduced by the Liberal federal government in 1998, is a perfect example in this context. The Fund is a federal program which provides funding to students in order to reduce the cost of post-secondary education. The federal government uses its spending power to do so, even though post-secondary education falls under exclusive provincial control. Another example is the Universal Child Care Benefit, introduced by the Conservative federal government in 2006. This Benefit provides funds directly to parents in support of child care costs, even though child care falls under the sole jurisdiction of the provinces.

The second way in which the federal government may use its spending power is to fund programs through the provinces. Under this approach, the federal government transfers funds not directly to Canadians, but to provincial governments. The use of federal spending powers in this context forms a critical aspect of what is commonly referred to as fiscal federalism, the complex interrelationship between the federal government and the provinces in the area of finance. Federal tax and funding transfers to the provinces in support of provincially-provided health care, education, child care, and welfare programs are all examples of this sort of federal action.

It is important to recognize, however, that the federal government does not simply give its money away to the provinces. Instead, it often (but not always) uses its spending power to gain provincial compliance with federal initiatives. It will use the promise or denial of federal funds as a means of getting the provinces to adopt federal policies and programs in areas of provincial jurisdiction. Hence, while the federal government does not have the constitutional authority to legislate in provincial jurisdictions, it can nevertheless use its spending power to influence provincial action in these areas.

Key Elements of Fiscal Federalism

As stated above, fiscal federalism refers to the complex interrelationship between the federal government and the provinces in the area of finance. Three elements are central to this financial interrelationship: federal-provincial taxation agreements, federal conditional and block grants, and equalization payments.

Both the federal government and the provinces/territories have the constitutional power to impose direct forms of taxation, such as income and corporate tax. In doing so, the different levels of government usually coordinate their efforts through federal-provincial/territorial taxation agreements. This is due to many reasons. First, some level of coordination is required in order to ensure that governments, as a whole, do not over tax individuals and businesses. Second, the federal government often uses the tax system as a means of transferring funds to the other level of government. The federal government will provide “tax points” or “tax transfers” to the provinces and territories, which reduce federal tax room in order to make more room for provincial or territorial governments. Tax transfers are provided for in formal agreements between governments, and are often used as a means of federal support for provincial and territorial services (such as health care or education).

In addition to taxation agreements, the federal government also provides conditional and block grants to the provinces and territories. These are sums of money which the federal government provides each year in support of provincially and territorially provided programs, such as health care, child care, education, and welfare. In some cases, these grants are conditional, meaning that the federal government places significant conditions in order to receive the money, thereby promoting federal policies in areas of provincial jurisdiction. Federal grants for health care fall under this category, with federal conditions for funding being outlined in the Canada Health Act. In other cases, federal grants are unconditional (or “block” grants), which means the provinces and territories have a high level of discretion in how they use the funds.

The final key element of fiscal federalism in Canada is the system equalization payments. First introduced in 1957, equalization payments are a system of unconditional grants provided by the federal government to “have-not” provinces based on provincial need. The purpose of these payments is to ensure that all provinces can offer a relatively equal standard of public services, regardless of their population or revenue base. Typically, all of the provinces, except Ontario, British Columbia, and Alberta, receive some level of equalization payments each year.

Fiscal Federalism and Federal-Provincial/Territorial Conflict

While the provinces accept (and even encourage) federal spending in areas of provincial jurisdiction, this relationship often has conflicts. Some provinces, especially those that are more financially self-sufficient, often take issue with the conditions that the federal government places on them in order to receive federal funding. They would, instead, prefer to have complete discretion in how they use the federal funds.

Another key issue is the perception (true or not) that an imbalance exists in federal and provincial financial situations, commonly referred to as a “fiscal imbalance”. Proponents of the fiscal imbalance thesis argue that the federal financial capacity is too large relative to its jurisdiction responsibilities, while provincial financial capacities are too small. As such, provincial governments should be allowed to collect greater revenues, at the expense of the federal government, in order to properly balance the finances of the two levels of government. Such a change would, of course, render the federal spending power less effective, as the provinces (or at least some of them) would be more financially self-sufficient and the federal government would have a reduced capacity to spend outside of its own jurisdictions.

For more information on the fiscal imbalance argument:

Mapleleafweb: Fiscal Imbalance Debate: Origins and Perspectives

Some of these ongoing conflicts led to the 1999 Social Union Framework Agreement (SUFA), signed by the federal and provincial governments (except Quebec). Under SUFA, governments agreed to give one another advance notice before implementing a major change in a social policy or program that would substantially affect another government. While this provision did not prohibit governments from developing and implementing social policy independently from one another, it did require them to provide some advance notice to other governments.

The most significant aspect of SUFA centred on the use of federal spending powers. The federal government agreed not to introduce new social programs that are funded through intergovernmental transfers without the agreement of a majority of provincial governments. This represented a major limiting of the federal spending power. The federal government did, however, retain the right to use its spending power to make transfers directly to Canadians. In that context, it promised to give notice and offer to consult with the provinces and territories before implementing such programs.

It is important to note, however, that SUFA is not constitutionally binding, nor does it have any robust enforcement mechanism. Participating governments can opt-out of the agreement at any time, and there is very little in the way of punishment if a government fails to live up to its commitments.

Canadian Federalism and Inter-Governmental Interaction

Departmental and ministerial relations between governments

Governments in Canada do not simply go about their business independently and without contact with each other. Instead, all governments regularly meet and communicate with one another through formal and informal means. The following provides a brief summary of some these key means of interaction.

Departmental Relations between Governments

Intergovernmental relations in Canada are characterized by a high level of day-to-day communication between personnel from different governments. Ministers, political staff, and regular public service personnel talk to their counterparts in other governments regularly in order to share information and to coordinate their activities. This is especially the case in areas where there is a high level of governmental interdependence, such as health care or taxation.

In order to manage these regular intergovernmental contacts, many governments (both provincial/territorially and federally) have created their own departments of intergovernmental affairs. These departments are often well staffed and funded and have their own Minister, who sits in Cabinet. The primary responsibility of such departments is to manage contacts and communications with other governments in Canada, as well as report to Cabinet on intergovernmental business and priorities.

For more information on intergovernmental relations and conferences:

Canadian Intergovernmental Conference Secretariat

First Minister’s Conferences

One of the most high-profile, although not necessarily productive, means of interaction between governments are the First Minister’s Conferences. These are meetings between the federal Prime Minister and the provincial and territorial Premiers (hence, the term “first ministers”), which are called by the Prime Minister and have typically been held annually. Meetings of first ministers can trace their origins back to the mid-1860s, when the various Canadian governments (then British colonies) met to discuss Confederation.

Today, these conferences represent an opportunity for the Prime Minister and Premiers to discuss important intergovernmental issues and business. In some cases, these meetings are called to discuss specific policy issues. First Minister’s Conferences in the 1990s, for example, led to the Meech Lake and Charlottetown Accords on constitutional reform. In 2004, the federal government called a First Minister’s Conference on the Future of Health Care. It resulted in significant intergovernmental agreements on public health care services and funding.

In other cases, these meetings are used for the heads of each government to meet face-to-face, share information, and lobby one another on regular intergovernmental business. The provinces and territories often use the meeting to push the federal government for increases in federal fiscal transfers or to discuss issues of contention regarding federal action. The federal government, by contrast, will use the opportunity to lobby for its own national initiatives.

Council of the Federation

Another important intergovernmental forum is the Council of the Federation. First created in 2003, the Council is a provincial/territorial forum constituted by the Premiers of each province and territory in Canada. The federal government is not a member of the Council, although it is permissible for the members of the Council to invite the Prime Minister (or a Cabinet Minister) to attend a Council meeting when deemed necessary. The Council’s purpose is to promote inter-provincial/territorial cooperation, both between members, as well as in their relations with the federal government.

The Council in no way takes away from the powers of individual provinces and territories. It is, instead, simply a forum for discussion and information sharing between members. Nevertheless, the Council has played a role in some key events in Canadian federalism. In 2003-2004, for example, the provinces and territories used the Council to form a common position against the federal government in negotiations on health care funding and reforms.

For more information on the Council of the Federation:

Mapleleafweb: Council of the Federation

Sources and Links to More Information

List of article sources and links for more on this topic

Sources Used for this Article

“Constitution Acts 1867 to 1982.” Government of Canada. 17 November 2007. <http://laws.justice.gc.ca/en/const/index.html>
“A Framework to Improve the Social Union for Canadians.” Government of Canada. 17 November 2007. <http://www.socialunion.ca/news/020499_e.html>
Dunsmuir, M. “The Spending Power: Scope and Limitations.” Parliament of Canada. October 1991. 17 November 2007. <http://www.parl.gc.ca/information/library/PRBpubs/bp272-e.htm>
Makarenko, J. “Council of the Federation.” Mapleleafweb.com. 01 July 2006. 17 November 2007. <http://www.mapleleafweb.com/features/council-federation>
Dyck, R. Canadian Politics: Critical Approaches, 3rd Edition. Scarborough, Ontario: Nelson Thomson Learning., 2000.
Jackson, R. & Jackson, D. Politics in Canada: Culture, Institutions, Behaviour and Public Policy, 6th Edition. Toronto: Pearson Education Canada Inc., 2006.

Links to More Information

Local Government in Canada: Organization & Basic Institutions

Jay Makarenko — Thu, 29 Nov 2007 12:16:16 -0700

Local government plays a significant role in the everyday lives of Canadians. This feature provides an introduction to the organization and institutions of local government. In particular, it offers a general discussion of what local governments are and their relationship to other levels of government in Canada. Moreover, this article also provides a detailed examination of basic political and bureaucratic structures in municipalities, the most common form of local government.

Introduction to Local Government in Canada

What are Local Governments & What Do They Do?

Local Government & Intergovernmental Relations

Relationship Between Local, Provincial & Federal Governments

Comparing Types of Local Government in Canada

Municipalities, Boards, Commissions & Regional Governments

Political Structures in Municipal Government

Municipal Councils, Political Leaders & Elections

Administrative Structures in Municipal Government

Organization & Oversight of Municipal Bureaucracies

Sources & Links to Further Information

List of Article Sources & Links for More on this Topic

Introduction to Local Government in Canada

What are Local Governments & What Do They Do?

Local Government as a Level of Government

In Canada, there are several different levels of government: federal, provincial, territorial, and local government. The federal or national government, which includes institutions such as the Prime Minister and Parliament, is responsible for areas of jurisdiction affecting all Canadians, such as national defence, foreign policy, criminal law, and citizenship. The federal government (also known as the Government of Canada) also has the authority and responsibility of governing the Territories (though it usually delegates this role to elected territorial governments).

At the provincial level, there are provincial governments, such as the governments of Ontario, Quebec, Nova Scotia, British Columbia, and so forth. This level of government has its own political institutions and leaders, such as provincial premiers and legislatures. Moreover, provincial governments have their own jurisdictions (which are provided for under the Canadian Constitution), such as health care, education, transportation (highways), and property and civil rights.

Finally, there is the local level of government. This level usually has responsibility over policy fields directly related to local communities (see below for more on the jurisdictions of local government). Moreover, like the other levels of government, local governments have their own political leaders and institutions, such as mayors/reeves, councillors/aldermen, directors, agencies, boards, and commissions.

What Do Local Governments Do?

The precise functions of local governments vary significantly from one province to the next, and even between regions within a province (rural local governments, for example, often perform different functions than large urban governments). Generally speaking, however, local governments are usually responsible for the following:

Protection of persons and property, which includes the management of local policing and firefighting services
Local transportation, such as management of public bus and rail services, as well as municipal roadway construction and maintenance
Planning and development, including municipal zoning and industrial/economic development
Public utilities, including the management of local sewage systems, water treatment, and electric utilities
Local social-welfare services, such as management of local health, library and educational facilities, and social assistance services.
Parks, recreation, and culture, including the development and management of local parks and green spaces, public recreation facilities, as well as local art and cultural programs and events.

Local Government & Powers of Taxation

Local governments, like other levels of government, also have the power of taxation. The main form of taxation at the local level is through property or real estate taxes. These are annual or semi-annual taxes paid by community residents and businesses, which are based on the value of privately owned properties (usually places of residence, land holdings, or places of business). Another form of taxation involves fees relating to the issuance of permits and licences, including building permits and business/establishment licences. In some rare cases, local governments are also permitted to collect consumption taxes (taxes levied on the consumption of goods and services, such as a sales tax or gasoline surtax).

Other Forms of Revenue

Taxation, however, is not the only source of revenue. Local governments also collect monies on the public services they provide (such as public transit fares and parks and recreation fees), as well as through the assessment of fines (such as parking tickets). Local governments also receive large funding transfers from other levels of government, in particular their respective provincial government. These come in the form of General Purpose Transfers (which the local government may use for any purpose) or Specific Purpose Transfers (which must be used for specific local services or capital projects).

Local Government & Intergovernmental Relations

Relationship Between Local, Provincial & Federal Governments

Local Government & the Provinces

Canada’s written constitution recognizes federal and provincial governments as relatively independent entities with their own powers and policy jurisdictions (which cannot be altered without their consent). Local governments, by contrast, are simply recognized as creatures of the provinces, and derive their powers from provincial law (usually in the form of a Municipal Act created by the provincial legislature). This means the provinces have the right to alter local governments in their jurisdiction at any time, be it to abolish or amalgamate municipalities, change their financial structures, alter their powers and responsibilities, or change the methods of electing their officials. Moreover, the province may do so without the consent of the local government(s) it is altering.

The provinces also often play a large role in the day-to-day operation of local governments. Many local by-laws, for example, require provincial approval before they can be formally implemented, and it is often the case that local planning decisions can be appealed to the provincial government. Customarily, the provinces also control municipal borrowing for capital projects; either directly through provincial ministries of municipal affairs or indirectly through provincially appointed municipal boards. Finally, local governments are dependent upon provincial transfers for a large portion of their revenues. Moreover, these transfers often come with restrictions concerning how, and where, the municipality may spend the monies.

Local Government & the Federal Government

Local governments also have a significant relationship with the federal level of government. The federal government often provides direct funding to communities for infrastructure projects, local events, or the development and implementation of social-welfare programs. Additionally, the federal government participates in local politics through the exercise of its own powers and jurisdictions. The Canada Mortgage and Housing Agency, for example, is a federal agency that works closely with municipalities in the area of housing policy. Similarly, Transport Canada (the federal department of transport) works with local governments in the development of airports, harbours, and railroads, which have a critical impact on the economic life of communities. One of the clearest examples of federal-local relations is the Royal Canadian Mounted Police, a federal policing agency that operates in many small and rural communities across Canada.

Relationships Between Local Governments

Finally, local governments also have close relationships with one another. Most municipalities in Canada belong to provincial and federal associations, such as the Federation of Canadian Municipalities. The purpose of these associations is to promote cooperation and assistance amongst member municipalities, in addition to providing a unified voice in municipal relations with other levels of government. In addition to provincial- and federal-based associations, there are also international municipal organizations, which promote the sharing of knowledge and cooperation between municipalities in different countries (such as the International Council for Local Environmental Initiatives).

Comparing Different Types of Local Government in Canada

Municipalities, Boards, Commissions & Regional Governments

There are several different types of local government, ranging from municipalities, to regional governments, to specialized agencies, boards and commissions. This section offers a general overview of each, with the qualification that their precise nature can differ from province to province.

Municipal Governments

The most common types of local government are municipalities, which include such entities as cities, towns, villages, and parishes. The particular classification of a municipality is usually based on its population size. Cities, for example, are municipalities with large populations, while towns have medium-sized populations, and villages and parishes have only a minimal number of residents.

All municipalities have a local council, which has responsibility for overseeing the day-to-day operation of the municipality. This council is usually comprised of elected members, known as councillors or aldermen, and is headed by a mayor or reeve. In most cases, the council is charged with a wide range of powers and responsibilities, such as taxation, budgeting, municipal planning and development, parks, and the provision of local public services.

See the Political Structures in Municipal Government section of this article for more information on municipal councils and political leaders.

Agencies, Boards & Commissions

In some cases, certain powers and responsibilities in local government are delegated to specialized agencies, boards, or commissions. Such bodies tend to enjoy a certain degree of autonomy from municipal councils, and are mandated to carry out a limited number of government-like functions. Common examples of such entities include police commissions (which oversee municipal police forces), school boards (which oversee the local public schools), health boards (which oversee hospital, home care, and ambulance services), parks and recreation boards, and transit authorities (which manage local bus and light-rail services).

Regional Local Governments

Another common type of local government is regional government. These are entities created by provinces in which several municipalities are grouped under a single regional administrative and political structure. The purpose of these regional governments is usually to provide area-wide municipal functions more efficiently, and, in that they encompass several municipalities, to provide a tax base sufficient enough to undertake expensive services or capital projects. In some circumstances, a regional government will have some limited autonomy from their constitutive municipalities, while in other cases municipal leaders will govern the regional government directly.

One of the clearest examples of this type of local government is the Greater Vancouver Regional District (or “GVRD”), which has 21 member municipalities in the Lower Mainland of British Columbia. The GVRD is responsible for overseeing essential utilities for these municipalities (such as drinking water, sewage treatment, recycling, and garbage disposal), managing and planning regional growth and development, as well as protecting air quality and green spaces. The GVRD’s board of directions is comprised of mayors and councillors from each member municipality.

Other examples of regional governments are the county systems found in Atlantic Canada, Ontario, Quebec, and Alberta. Like the GVRD, these regional governments group several municipalities (often in rural areas) into a single regional structure for the purpose of providing certain region-wide services.

Political Structures in Municipal Government

Municipal Councils, Political Leaders & Elections

While heavily influenced by the provincial level of government, local governments have their own political officials and structures. This section examines the political organization of one type of local government – municipalities, which include cities, towns, and villages.

Municipal Councils

The most important political structure in any municipality is its council. These councils usually operate according to provincial legislation, which sets out their membership, powers and responsibilities, and methods for electing members.

Municipal councils in Canada usually perform both legislative (enacting law) and executive (executing law) functions. In its legislative role, the council is responsible for developing and enacting municipal by-laws that govern local residents. In its executive role, the council is also responsible for administering and executing these by-laws, as well as overseeing the day-to-day operation of local government. This differs from senior levels of government in Canada (such as the federal government and provinces), where the legislative and executive responsibilities are more clearly divided between different political institutions (such as the legislature and the Cabinet respectively).

Finally, councils usually operate under some form of a majority-rule in their legislative and executive decision-making. For a by-law to be enacted, or an executive decision to be executed, it must receive majority support by the members of the municipal council.

Council Membership

Municipal councils consist of political officials, usually called councillors. These are elected office-holders who may either represent a particular geographical area of the municipality, or are elected at large in city-wide elections. In addition to councillors, councils also have a leader or head of council, usually referred to as a mayor. This leader is generally elected city-wide and is given the responsibility of presiding over council meetings. It is important to note that Canadian mayors tend to have very little power independent of their councils. The significance of the office, instead, stems from its high profile in the local community. This serves in sharp contrast to the American experience, where mayors often exercise considerable independent power in local government.

Municipal Elections

Municipal councils in Canada are elected bodies, and are usually selected through one of two types of electoral systems. Smaller communities tend to utilize an at-large electoral system, in which council members are chosen in city-wide votes. Larger cities tend towards a ward- or constituency-based electoral system, in which the city is divided into separate districts, and where each district elects their own councilors. Mayors are usually elected in separate, at-large mayoral elections.

Municipal elections in Canada are generally non-partisan, meaning that candidates usually run as independents and are not affiliated with a political party. In some cases, such as Ontario, provincial legislation explicitly prohibits the formation of political parties for the purpose of fielding candidates in local elections. This is very different from federal and provincial politics in Canada, as well as local politics in the United States, where political parties dominate the electoral and governing process. There are, however, some important exceptions; both Vancouver and Montreal, for example, have histories of political party affiliations in their local politics.

The franchise in Canadian municipal elections has changed greatly over time. Traditionally, the right to vote was reserved only for male property owners. This meant that women and the lower economic classes were generally excluded from municipal elections. Since the mid-1960s, however, the provinces have gradually expanded the franchise. Today, voters in municipal elections are usually only required to be a resident of the community and of a certain age (usually 18).

Administrative Structures in Municipal Government

Organization & Oversight of Municipal Bureaucracies

Municipal government is also characterized by important administrative structures, which are concerned with the municipality’s public service or bureaucracy. These structures vary widely from one municipality to another, due to local/provincial circumstances and choices. In small villages, the bureaucracy might consist of a single person, who acts as municipal clerk, treasurer, tax collector, by-law officer, and otherwise. In large cities, by contrast, the public service may consist of thousands of employees divided into many departments, offices, and agencies. This section highlights some common bureaucratic styles in Canadian municipalities.

Municipal Departments

Bureaucracies in Canadian municipalities are usually organized into various departments, each with specific public policy functions (for example, public works, finance, human resources and payroll, parks and recreation). Each of these departments will consist of public service employees with specific job descriptions and responsibilities. Moreover, there will be a department head or manager, who, depending on the circumstances, will report to a general administrative officer or committee.

Council Committee System

Many municipalities, predominantly those that are small and medium-sized, operate under some form of a Council Committee System, in which the municipal council establishes a series of committees to direct and control all of the municipal departments. The number and nature of these committees depends on the particular circumstances and priorities of a given municipality. Each committee is made up of elected members of the municipal council, who oversee and direct department heads or managers, in addition to making recommendations concerning their respective departments to the municipal council.

Chief Administrative Officer System

An alternative bureaucratic style common in Canada is the Chief Administrative Officer System, in which the municipal council delegates day-to-day oversight of the municipal public service to an appointed senior official (whom usually has strong credentials in city planning and management). This official (referred to as a chief administration officer, city administrator, municipal manager, or city commissioner) will manage all of the municipal departments and their employees, and then provide reports and updates to the municipal council. This type of administrative style is common in most large Canadian municipalities.

Board of Commissioners System

Another form of administrative organization is the Board of Commissioners System, where municipal council appoints a management board (or group) of three or four commissioners (one of whom becomes the chief commissioner). Each member of this management group is responsible for their own set of interrelated public policy fields and departments. The board then, collectively, reports to the municipal council on the administration of the entire municipal bureaucracy.

Sources & Links to Further Information

List of Article Sources & Links for More on this Topic

Article Sources

Tindal, R & Tindal, S. Local Government in Canada: Fifth Edition. Scarborough, Ontario: Nelson Thompson Learning, 2000.
Siegel, D. “The ABCs of Local Government: An Overview” Agencies, Boards, and Commissions in Canadian Local Government. Ed. Dale Richmond & David Seigel. Toronto: The Institute of Public Administration of Canada, 1994.
Lightbody, J. “Regional Government.” The Canadian Encyclopedia. 20 November 2006. <http://www.canadianencyclopedia.ca/index.cfm?PgNm=TCE&Params=A1ARTA0006748>
O’Brien, A. “Municipal-Provincial Relations.” The Canadian Encyclopedia. 20 November 2006. <http://www.canadianencyclopedia.ca/index.cfm?PgNm=TCE&Params=A1ARTA0005519>
Plunkett, T.J. “Municipal Government.” The Canadian Encyclopedia. 20 November 2006. <http://www.canadianencyclopedia.ca/index.cfm?PgNm=TCE&Params=A1ARTA0005517>

Local Government

Federalism in Canada: Basic Framework and Operation

What is federalism? How does it compare to other forms of government?

Federal, provincial, territorial, and local governments

Federal and provincial powers under the Canadian Constitution

Federal and provincial/territorial financial relations

Departmental and ministerial relations between governments

List of article sources and links for more on this topic

Introduction to the Concept of Federalism

Division of Powers between Levels of Government

Federal versus Unitary Governments

Potential Benefits and Detriments of Federalism

Levels of Government in Canadian Federalism

Federal Level of Government

Provincial Level of Government

Territorial Governments

Local Governments

Canadian Federalism and the Divisions of Powers

Confederation and the Division of Powers

Constitutional Amendments and Division of Powers

Judicial Interpretation and Division of Powers

Spending Powers and Canadian Fiscal Federalism

Spending Powers under the Constitution

Federal Government and the Spending Power

Key Elements of Fiscal Federalism

Fiscal Federalism and Federal-Provincial/Territorial Conflict

Canadian Federalism and Inter-Governmental Interaction

Departmental Relations between Governments

First Minister’s Conferences

Council of the Federation

Sources and Links to More Information

Sources Used for this Article

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Local Government in Canada: Organization & Basic Institutions

What are Local Governments & What Do They Do?

Relationship Between Local, Provincial & Federal Governments

Municipalities, Boards, Commissions & Regional Governments

Municipal Councils, Political Leaders & Elections

Organization & Oversight of Municipal Bureaucracies

List of Article Sources & Links for More on this Topic

Introduction to Local Government in Canada

Local Government as a Level of Government

What Do Local Governments Do?

Local Government & Powers of Taxation

Other Forms of Revenue

Local Government & Intergovernmental Relations

Local Government & the Provinces

Local Government & the Federal Government

Relationships Between Local Governments

Comparing Different Types of Local Government in Canada

Municipal Governments

Agencies, Boards & Commissions

Regional Local Governments

Political Structures in Municipal Government

Municipal Councils

Council Membership

Municipal Elections

Administrative Structures in Municipal Government

Municipal Departments

Council Committee System

Chief Administrative Officer System

Board of Commissioners System

Sources & Links to Further Information

Article Sources

Links for Further Information