Federal Government in Canada: Organization, Institutions & Issues

Feature by Jay Makarenko || Mar 4, 2009

The federal or national government is the central level of government in Canada, and is involved in many aspects of Canadians’ lives. The federal government plays a role in such things as the provision of social services, the economy, national defence and security, criminal law, foreign affairs and First Nations policy. This article provides an overview of the federal government in Canada, including its role and powers, its central political, financial and administrative processes, as well as key issues and debates in federal government.

Federal Level of Government in Canada

Introduction to the Canadian federal government

Political Institutions of the Federal Government

Overview of key federal political institutions

Federal Fiscal and Administrative Systems in Canada

Overview of federal financial and administrative institutions

Issues in Canadian Federal Government

Key federal government issues and debates

Sources and Links to Further Information

Lists of article sources and links to more on this topic

Federal Level of Government in Canada

Introduction to the Canadian federal government

Federal Government and National Governance

Canada is a federation, governed not by a single level or order of government (which is the case in a unitary system), but by several different levels of government. These various levels of government differ not only in their geographical scope (local, regional and national), but also in their powers and responsibilities.

There are thousands of local governments in Canada, including municipalities, local boards and agencies (for example, school boards, police commissions, transit agencies), and semi-regional governments (for example, counties). While the precise powers of these local forms of government range from province to province, they tend to be responsible for such things as local planning and development, protection of persons and property, transportation, utilities, and local parks and recreation.

Canada has 13 regional governments, which are divided into provinces and territories. Currently, there are 10 provincial governments: British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec, Newfoundland and Labrador, Nova Scotia, New Brunswick and Prince Edward Island. In addition, there are three territorial governments: the Northwest Territories, the Yukon and Nunavut. These governments are authorized to legislate only within their regional geography, but enjoy a wide range of powers and responsibilities. This includes power over Crown lands and natural resources, many social services (such as health care and education), administration of justice, and property and civil rights.

For more information on provincial governments in Canada:

  • Mapleleafweb: Provincial Government in Canada [insert link when published]

Finally, at the national level, there is the federal government, which is authorized to enact legislation across the entire nation, and enjoys its own powers and areas of responsibility. In many cases, these federal responsibilities are related to areas deemed to be of national interest as opposed to simply regional or local interests. Examples include national defence, interprovincial trade and transportation, foreign affairs, banking and currency, and criminal law (see below for a complete list of the division of powers in Canadian federalism).

Federal Government as Constitutionally Autonomous

The federal government is recognized as being constitutionally autonomous. Under Canada’s Constitution, the federal government is granted its own powers and responsibilities, which cannot be altered unilaterally by another level of government. This is also the case for provincial governments, which are similarly recognized as autonomous entities under the Canadian Constitution. As such, the federal and provincial governments constitute the premier levels of government in Canada, and represent the pinnacles of political power within their respective jurisdictions.

By contrast, local governments and the territories are not constitutionally autonomous, but are instead subordinate to the other two levels of government. Local governments are subordinate to their respective provincial counterparts. As such, the latter may unilaterally create and abolish local governments, and alter their particular powers and responsibilities. Similarly, territories fall under the jurisdiction and authority of the federal government.

Federal Powers and Jurisdictions

The Constitution Act, 1867 sets out the division of powers between the federal and provincial governments. Three types of jurisdictions are important here:

  • Exclusive federal jurisdiction: includes areas in which only the federal government may pass laws (the provinces are prohibited from enacting legislation in these areas).
  • Exclusive provincial jurisdiction: refers to areas in which only the provinces are allowed to pass laws (as such, the federal government is prohibited from enacting legislation in these areas).
  • Joint powers/jurisdictions: refer to areas in which both the provinces and the federal government may pass laws.

The following table provides a summary of exclusive and joint federal jurisdictions, as well as exclusive provincial jurisdictions:

Federal-Provincial Division of Powers

Exclusive Federal

Joint Federal & Provincial Powers

Exclusive Provincial

  • Immigration
  • Agriculture
  • Pensions
  • Anything local or private in nature
  • Direct taxation
  • Crown lands and natural resources
  • Hospitals (health sector)
  • Education
  • Welfare
  • Municipalities
  • Local works
  • Intraprovincial transportation and business
  • Administration of justice
  • Property and civil rights
  • Cooperatives and savings banks

Source: Claude Bélanger, 2007

In examining this division of powers, it is important to recognize that Canada is a highly decentralized federation. In other words, powers and jurisdictions are not concentrated in the hands of the federal or national government (centralized federalism), but are instead highly diffused, with the provinces controlling primary areas of public policy. This is not to suggest that the federal government is inconsequential in Canadian politics; in fact, it plays a critical role in Canadian governance. It is simply to note that the federal government constitutes only one pillar of Canadian government, with the provinces being the other.

A key source of federal power stems from its exclusive jurisdiction over critical areas of Canadian public policy, such as international/interprovincial trade and commerce; communications and transportation; national defence and foreign affairs; unemployment insurance and old age pensions; criminal law; and First Nations.

The Constitution further provides for several federal controls over the provinces: the declaratory power and the powers of disallowance and reservation. Declaratory power allowed the federal government to assume control over local works that were deemed to be in the national interest or the interest of two or more provinces, regardless of whether they fell within exclusive provincial jurisdiction. The powers of disallowance and reservation allowed the federal government to review and reject legislation passed by provincial legislatures. For the first 30 years after Confederation, all three powers were actively used. Over time, however, their use gradually declined and then ceased completely in the mid-1900s. (The power of disallowance was last exercised in 1943, while reservation and declaratory powers were last used in 1961.)

Another important source of federal authority is its power over appointments to key political institutions. The federal government, for example, has the power to appoint to justices to the Supreme Court of Canada, which is the highest court in the country. This allows the federal government to have a large impact on the make up of the judiciary and, in turn, judicial interpretation and application of law across the country.

The spending power is another of the most important sources of federal power. While the Constitution forbids the federal and provincial governments from passing laws in areas that are under the other’s exclusive jurisdiction, it does not prohibit them from spending money in those areas. The federal government has actively used this spending power to influence provincial policies and programs, particularly in the areas of health care and social services. With health care, for example, the federal government transfers billions of dollars annually to the provinces in support of their public health care systems. Moreover, the federal government places important conditions on the provinces, which are stipulated in the Canada Health Act, in order to receive this money. If a province fails to meet these conditions, then the federal government withholds portions of their federal transfers. In this way, the federal government can indirectly influence provincial policies in areas that are outside federal jurisdiction.

Limits on Federal Powers

While the federal government is Canada’s central level of government, there are important limits on its powers and jurisdictions.

The Constitution disallows the federal government from legislating in a wide range of significant areas of public policy, such as health care, education and welfare. Even though the federal government may use its spending power to influence the provinces in these areas, at the end of the day it is the provincial level of government, and not the federal government, that determines the rules and operation of these critical areas of governance.

The Canadian court system, particularly in the context of Canadian federalism and the Canadian Charter of Rights and Freedoms, is yet another key limit on federal power (as well as on the powers of other levels of government). In regard to federalism, the courts are responsible for interpreting and adjudicating conflict between levels of government over the constitutional division of powers. The Charter is a constitutional document that sets out citizen rights vis-à-vis their governments (federal, provincial, territorial and local). With the Charter, the federal government is obliged to respect these citizen rights and freedoms when passing laws and implementing programs. The courts play a vital role in this context, as it is the judiciary that decides whether the federal government has unconstitutionally violated a Charter right or freedom. Since the enactment of the Charter in 1982, there have been hundreds of cases in which the courts have rejected federal laws and programs on the grounds they failed to properly respect citizens’ constitutional rights.

Theoretically, the Canadian Senate is supposed to act as a regional check on federal power. While the Senate is a federal institution, one of its mandates is to provide a strong regional voice in the federal Parliament. In this context, each province and territory is given a specific number of seats in the Senate, and the legislative body theoretically has the power to reject legislation passed by the federal House of Commons. In practice, however, the Senate places minimal limits on the federal government. Rarely does the Senate oppose legislation passed by the House. This is due to the fact that the Senate is an appointed body, as well as the recognition that it should not overly undercut the authority of the democratically elected House. Moreover, it is the federal government, and not the provinces and territories, that appoints senators. As such, senators tend to represent the interests of those who appointed them (in particular, the federal political party that appointed them), as opposed to the interests of the provincial/territorial governments.

Political Institutions of the Federal Government

Overview of key federal political institutions

The Federal Political Executive

The executive branch refers to the part of government responsible for directing government and implementing policy and legislation. By contrast, the legislative branch of government is responsible for debating and passing legislation and, in Canada, holding the executive accountable. The executive branch comprises the monarchy and the prime minister/cabinet.

The federal government operates as a constitutional monarchy, in which the Canadian Monarch plays an important role in executive governance. The Monarch is the national head-of-state and has significant, albeit mainly ceremonial, powers. The Monarch, for example, must grant Royal Assent to all federal legislation before it becomes law. Moreover, the Monarch has the power to appoint key legislative and government officials, as well as to open and close parliamentary sessions and to dissolve Parliament. At the federal level, the Monarch’s day-to-day duties are performed by his/her representative in Canada, the Governor General of Canada.

The Monarch’s powers, however, are mainly ceremonial. In practice, they are exercised by the second key component of the political executive, the prime minister and cabinet. The federal cabinet represents the pinnacle of federal power, and consists of office holders called “ministers,” who are responsible for particular areas of public policy and oversee large government departments. The cabinet typically determines government priorities, sets the levels of taxation and spending, makes key appointments and oversees the administration of government departments.

In theory, cabinet ministers are individually responsible for their departments and collectively responsible for government policies. In practice, however, the cabinet is dominated by the Prime Minister. This power stems in large part from the Prime Minister’s authority to appoint and dismiss other cabinet ministers. This, in turn, provides a prime minister with considerable influence over who sits in the cabinet, and what priorities and policies the cabinet will pursue.

The Federal Legislatures

Another important element of the federal government is its legislative branch, which includes bodies that have the authority to pass legislation and make laws. At the federal level there are two such legislatures: the House of Commons and the Senate. The former is an elected body and represents the premier legislature in Canadian federal politics. The Senate, by contrast, is an appointed body, and tends to play a much more limited role in the federal government. In order for a piece of legislation to become law, it must first be passed by both the House and the Senate, although, passage in the Senate tends to be automatic.

The House of Commons also plays a major role in Canada’s parliamentary system and the process of responsible government. Under this system, the executive branch of government is fused with the legislative branch in two important ways. First, the prime minister and cabinet ministers are usually elected members of the House of Commons (although, in some rare occasions the prime minister may appoint a member of the Senate to the cabinet). Moreover, the prime minister and cabinet are held responsible for their actions by the other members of the House. This is commonly referred to as maintaining the “confidence of the House,” in which the prime minister and cabinet must hold majority support in the House in order to stay in power. Loss of this support results in the defeat of the prime minister’s government and the resignation of the cabinet. In most cases, this triggers a general election and an opportunity for citizens to select new representatives to the House.

Federal Electoral and Party Systems

The federal electoral system refers to the process by which representatives in the House of Commons are selected by citizens. In this context, two principles are central: single-member constituencies and the first-past-the-post electoral system. Regarding the single-member constituencies, the country is divided into geographically based electoral districts each with their own elected representative. At the federal level, these representatives are officially referred to as Members of Parliament or MPs. These electoral districts are single-member constituencies in the sense that only one MP may be elected per electoral district, whereas in other electoral systems there may be two or more representatives for each district. First-past-the-post refers to the rules by which that single member is elected. During an election, the candidate in an electoral district that receives the most votes wins, regardless of whether s/he won a majority of the votes.

For more information on provincial electoral systems:

Following an election, the forming of a government is dictated by the political party system. In most cases, the leader of the political party with the most elected MPs becomes prime minister. The prime minister then selects other MPs from his/her political party to join the cabinet (in some rare cases, the prime minister may select a senator from his/her party for the cabinet). In this context, several different types of governments may arise. The most common form is a majority government, in which the governing political party not only has the largest number of seats in the House, but also holds an overall majority. Other possibilities include minority governments, in which the governing political party does not hold a majority in the House, as well as coalition governments, where two or more parties agree to form a government together.

Traditionally, Canadian federal politics has been dominated by two political parties: the Liberal Party of Canada and the Conservative Party of Canada (or some variant of the Conservative Party). Unlike its American counterpart, however, the Canadian party system is not limited to just two political parties. The New Democratic Party of Canada, a social democratic party, has consistently held seats in the House of Commons throughout Canada’s modern political history. The Green Party of Canada has also gained a much larger national profile in recent years, although, as of January 2009, it had not yet elected a member to the House. Another important characteristic of the Canadian party system has been the rise of regional political parties, the key examples being the western-based Reform Party during the 1990s (which eventually merged into the Conservative Party) and the Quebec-based Bloc Québécois.

Federal Fiscal and Administrative Systems in Canada

Overview of federal financial and administrative institutions

Federal Government Finances

Each year, the federal government collects and spends hundreds of billions of dollars. In the fiscal year 2007/2008, federal revenue totaled over $250 billion (Statistics Canada, June 25). By far, the largest portion stems from income taxes, which accounted for approximately 67 percent of federal revenues. Other important sources of income include consumption taxes (such as the Goods and Services Tax), contributions to social security plans and investment income. The following table provides an overview of key sources of federal government revenue.

2007/2008 Federal Government Revenue by Type (billion $)


Income Taxes

Consumption Taxes

Social Security Contributions

Sales of Goods & Services

Investment Income







Portion of Total






Source: Statistics Canada, June 2008.

In the fiscal year 2007/2008, federal government expenditures totaled $237 billion (Statistics Canada, June 25). Of that total, spending on health care, education and other social services accounted for almost half of federal expenditures (44 percent). Other key areas of federal spending included the protection of persons and property, general purpose transfers to other levels of government, debt maintenance charges, resource conservation and industrial development. The following table provides a summary of key areas of federal spending.

2007/2008 Federal Government Spending by Area (billion $)


Social Services*

Debt Charges

Protection of Persons & Property**

General Purpose Transfers to Other Govts






Portion of Total





*Includes spending on health care, education and other social services.
**Includes spending on policing, crime prevention, national defence and other security areas.
Source: Statistics Canada, June 2008.

In regard to overall financial debt, the federal government owed approximately $620 billion in total financial liabilities, as of March 31, 2007. The largest portion stems from bonds and debentures, which accounts for approximately 43 percent of total government debt. Other key sources of debt include liabilities to pension plans (21.8 percent), and government treasury bills and savings bonds (24.1 percent).

Federal Financial Processes and Institutions

In managing these large sums of public monies, the federal government has developed a complex financial system. Central to this system is the annual federal budget process, in which the government develops budget priorities and strategies and estimates total revenues and expenditures. This process culminates in the presenting of the official budget by the government to Parliament for approval.

Central to this budget process is the federal Department of Finance, which is helmed by the minister of finance (a senior cabinet minister). The Department of Finance, in counsel with the prime minister and cabinet, is responsible for planning and preparing the federal government’s annual budget. The department analyzes and designs federal tax policies, and also administers the transfer of federal funds to the provinces and territories.

For more information on the federal Department of Finance:

The Department of Finance is supported by the federal Treasury Board, which is a cabinet committee comprising senior cabinet ministers. The Treasury Board is responsible for financial accountability and ethics; financial, personnel and administrative management; and approving most regulations and orders relating to government finances.

For more information on the federal Treasury Board:

In addition to government departments, there are also several independent institutions and agencies which play a significant role in federal finances. The Bank of Canada, for example, is a semi-autonomous agency within the federal government that is responsible for national monetary policy, such as regulated credit and the Canadian dollar, as well as using monetary policy to mitigate fluctuations in the Canadian economy. Another important agency is the Auditor General of Canada, whose primary purpose is to provide independent and reliable information concerning the federal government’s use of federal tax dollars. In fulfilling this role, the Auditor General regularly reviews how the federal government collects and spends public monies, and provides reports to the public and Parliament.

Federal Public Service

Another key element of the federal government is the national public service or bureaucracy. This includes personnel within general government departments and agencies, as well as federal government business enterprises, such as Crown Corporations. In 2007, the federal government employed approximately 487,000 persons (Statistics Canada, November 2008). Of that total, 388,000 were employed in general government departments and agencies (80 percent), while 99,000 were employed in government business enterprises (20 percent).

Political control over the public service flows through the cabinet and senior bureaucrat system. Cabinet ministers are responsible for particular government departments and ministries, and are supported in this capacity by senior bureaucrats, such as deputy ministers. These senior bureaucrats are, in turn, responsible for overseeing the personnel within their particular departments, as well as those employed by government agencies and business enterprises that fall within their departments.

Central to the administration of the bureaucracy is the federal Public Service Commission of Canada (PSCC), which is an independent agency with the federal government. The PSCC is responsible for ensuring professionalism in the public service and, in doing so, oversees the hiring of most federal personnel, delivers training and development programs and administers the Public Service Employment Act, which governs staffing and other employment issues in the federal public service.

Another important piece of federal legislation is the Employment Equity Act, which prohibits discrimination by employers that fall under federal jurisdiction, including the federal public service. The Canadian Human Rights Commission, a semi-independent federal agency, investigates claims of discrimination under the Act.

Issues in Canadian Federal Government

Key federal government issues and debates

There are many issues and debates surrounding the structure and operation of the federal government in Canada. The following provides a brief introduction to several commonly cited issues.

Role of the Federal Government in Canada

A very basic issue centres on the raison d'être of the federal government. Central here is conflict over the nature of federalism in Canada, and the roles and powers of the various levels of government. We may categorize the various arguments into two camps: centralists and decentralists.

Centralists tend to advocate a very robust role for the federal government in Canadian political, social and economic life. In its more extreme form, centralists will go so far as to argue that the federal government should be the premier level of government in Canada and, as such, should have the power to influence most areas of public policy. Arguments in favour of this position often stress the importance of the federal government as a “uniting force” in Canadian political culture, or as a mechanism for bringing social equality to all citizens (regardless of where they live in the country), or as an avenue of more efficient governance (for example, having one government providing a service instead of 13 provincial/territorial governments). In this context, centralists will often advocate for strong national programs, such public health care, which are implemented and administered by the national government. The implication, however, is that such an approach envisions a much weaker role for the provinces in many key areas of public policy.

Decentralists, by contrast, tend to advocate a more limited role for the federal government in Canadian society. Such a position is often grounded in a suspicion of the federal government as a mechanism for recognizing and respecting regional and/or local interests. In Western Canada and Quebec, for example, there is often the view that the federal government is beholden to the interests of “Central Canada” or “English Canada,” and, as such, will pursue policies and priorities that favour these areas over local needs. Decentralists thus tend to support greater power and authority for more localized levels of government, in particular provincial and territorial governments. The line of reasoning is that provincial and territorial political institutions are better situated to recognize and promote local interests.

Concentration of Power in the Federal Government

Another important issue is the increasing concentration of political power at the federal level. The issue here is not the division of power between the federal and provincial levels of government, but the distribution of power within the federal government itself. This concentration is due to two factors in federal politics: party discipline and dominance of the prime minister.

Party discipline refers to the process by which leaders of a political party control the conduct of their parliamentary caucuses. Membership in a political party is very important to the success of a Member of Parliament, both in terms of being elected to the House of Commons, as well as gaining experience and a public profile on the national stage. This, in turn, provides leaders of a political party with considerable influence over their caucuses. Party leadership may use tactics such as promotion or demotion within the party ranks, or expulsion from the party altogether, in order to ensure that caucus members “tow the party line,” particularly in terms of how they vote in the House. The result is that Members of Parliament tend not to vote according to their own views, or even the interests of their constituency, but according to the desires of their political party.

When used by the governing political party, party discipline tends to severely undercut the process of responsible government, especially in the context of a majority government. Under Canada’s system of parliamentary government, the House of Commons is responsible for holding the government (that is, the prime minister and cabinet) accountable for their actions. With party discipline, however, the prime minister can use the threat of party promotion, demotion or expulsion to ensure that all of his/her party members vote in support of government legislation. Party discipline thus allows the government to maintain the support of the House even if it pursues policies and programs which are not supported by MPs or their constituents.

This concentration of power is exacerbated further by the prime minister’s dominance in the cabinet. Originally, cabinet ministers had great independence in the direction of their particular ministries. Moreover, government decisions were often arrived at through group deliberation and collaboration in the cabinet. In this context, the prime minister was simply viewed as the “first amongst equals.” In contemporary Canadian politics, however, successive prime ministers have used their power to appoint and dismiss cabinet ministers to exert greater and greater control over cabinet decision making. Today, prime ministers will often promote MPs to cabinet that are loyal and/or share similar political views. Cabinet ministers that oppose the prime minister, be it publicly or within the cabinet itself, will often find themselves demoted to the backbenches.

Supporters of this concentration of power tend to emphasize its benefits for a more effectively coordinated and stable government. Critics, however, contend that it raises the spectre of tyranny and corruption, in which the prime minister is able to govern with very little in the way of checks and balances, at least between general elections.

Senate Reform in the Federal Parliament

Another federal institution that often receives considerable attention is the Canadian Senate. Originally, the Senate was designed as an important legislative body, with the purpose of bringing regional voices into the federal Parliament, as well as to provide sober second thought on government legislation. Over time, however, the Senate has become highly irrelevant in federal politics. This is due in large part to its perceived democratic illegitimacy. Unlike members of the House of Commons, which are democratically elected by citizens, Senators are appointed by prime minister and cabinet. The Senate’s reputation has further been tarnished by the traditional use of patronage appointments, in which Senators are appointed by the prime minister and cabinet not on merit, but on partisan service to the prime minister or the governing political party.

The question of Senate reform dates back to 1874, when the House of Commons heard, and rejected, a proposal to allow each province to select its own senators. In more recent history, the concept of a “Triple-E” Senate has gained widespread attention. Under such a proposal, the Senate would be reformed to be 1) democratically elected, 2) equal in the sense that each region enjoys greater equality in the distribution of Senate seats, and 3) effective in that the Senate would play a greater role in the federal legislative process.

To date, however, little has been done to reform the Senate. In 2006, the new Conservative government of Stephen Harper put forth several proposals to amend the operation of the Senate through non-constitutional means, including limiting the terms of Senators and introducing non-binding elections for new Senators. In December 2008, however, the Conservative government returned to the traditional senatorial selection process, appointing 18 new senators without holding elections.

For more information on the Senate:

Sources and Links to More Information

Lists of article sources and links to more on this topic

Sources Used for this Article

Links to More Information