Heavy Traffic: Trucking Deregulation, Federalism, and Canadian-U.S. Trade

Trucking deregulation, in the interest of competition and efficiency,removes rate controls and grants free entry to the market. Whenthe United States deregulated trucking in 1980, it opened theinterstate market to Canadian carriers. Heavy volumes of tradeby trucking between the two countries make entry conditionsan important bilateral issue. Deregulatory symmetry betweenthe two countries would produce a de facto regime of free tradein trucking services. In 1987 the Canadian federal governmentadopted deregulatory measures similar to those of the UnitedStates, but with more complex and problematic results. The reasons,broadly characteristic of the evolution of Canadian federalism,lie in the ability of the provinces to thwart federal initiatives.Trucking regulation is under provincial control, and to achievea practical effect, the federal government depends upon theprovinces to bring their practices into accord with its policy.Because of differing provincial views about deregulation andpressures from Canadian truckers for continued protection fromAmerican competition, much diversity and contention have delayedand compromised the federal governments purpose. Regulatoryreciprocity is also a question of the provinces and states,with a mixture of strict and easy entry policies complicatingthe achievement of bilateral balance and equity. The largerimplications of deregulation and transborder trucking for Canadalie in the ability of a decentralized federal system to pursuenecessary initiatives coherently.     

Two political worlds?: The influence of provincial party loyalty federal voting in Canada

Scholars have known for years that many Canadian voters hold different partisan loyalties at the federal and provincial level. In this paper, I address the question of whether provincial party loyalty has an effect on federal level vote choice above and beyond the effects of federal level party loyalty. I also examine whether provincial party loyalty is enough to explain the persistence of the ‘two-party-plus’ system in Canada. In order to address these questions I construct a series of multinomial logit models of federal vote choice in the 1993 and 2000 Canadian elections. I conclude that provincial party loyalty does have an effect on federal level vote choice, but that this influence is not enough to explain the persistence of the ‘two-party-plus’ system.     

Local Taxation in the Netherlands

Provincial governments in the Netherlands have only one general tax at their disposal. However, it has become an insufficient source of revenue for this level of government in the Dutch system. To increase the revenue raising capacity of the provincial governments, thirteen broad-based general tax proposals not used at the local level were examined. The objective was to find a fair and equitable tax that could easily be collected and would result in fl. 200 million in additional revenue for the provincial governments.     

Public Managers as the Missing Variable in Policy Studies: An Empirical Investigation Using Canadian Data

The article draws on survey data from a 2007–09 study of Canadian policy analysts to assess several propositions concerning the role of public managers in policy‐making. It is argued that little is known and much taken for granted concerning the role public managers play in policy making. The discussion begins with a conceptual discussion of the nature of policy advice systems in modern governments and situates public managers among the range of actors who affect different stages of policy making activity. Propositions derived from this conceptual discussion are then subject to empirical analysis using a large‐n 2007–09 Canadian federal, provincial, and territorial dataset.     

The Macdonald Commission Report and Canadian Federalism

The Macdonald Commission report is the latest in a series ofreports on Canadian federalism. Its proposal for free tradewith the United States has attracted the most public attentionand has already raised the issue of the appropriate role ofthe provinces in the negotiations. This proposal, together withproposed domestic economic and social policies directed at greaterreliance on market forces, would have a significant impact onthe relative roles of the federal and provincial governments.The institutional reforms advocated are intended to make thecentral institutions more representative and responsive, toensure federal leadership within the economic union, to clarifythe distribution of responsibilities between governments, andto facilitate intergovernmental relations. The proposals arebased on an underlying conception that while interdependencebetween governments in a federation is unavoidable, federalismis essentially competitive rather than cooperative in character.     

CANADA'S INTERGOVERNMENTAL RELATIONS SPECIALISTS*

Abstract: Over the last decade the federal government and each of the ten provincial governments in Canada have put in place in their administrations significant numbers of intergovernmental relations specialists. These specialists are public servants up to departmental head level who work solely on intergovernmental business. They are located in separate departments or as separate units within central agencies, and are responsible for the coordination of relations with other governments and of intergovernmental activities within their own government. Coming at a time of increasing intergovernmental tension within the Canadian federation, these specialists have been subject to a great deal of criticism. The critics have charged that the specialists have exacerbated and even produced intergovernmental conflict. Lately, some scholars have come to their defence, emphasizing the positive functions that the specialists perform, and arguing that their influence has, in any case, been exaggerated. Australia has its own relatively small number of intergovernmental relations specialists at both the federal and state levels. And it is possible that in the future additional positions will be created. The variety of the Canadian experience means that there are a number of models from which each Australian government, of whatever size, can learn.     

Managing Fiscal Federalism: Revenue Allocation Issues

Like most federal systems, Nigeria has a revenue distributionsystem in which the national government shares revenues withstate and local governments. Since the early 1970s, the bulkof revenue has been collected by the national government. Muchof this revenue has been derived from petroleum taxes and miningrents and royalties. Various proportions of this revenue havethen been distributed to state and local governments under arevenue allocation system (RAS) using different formulas. Akey problem, however, is that revenue allocations since 1970have been driven largely by political considerations and byformula factors, such as jurisdictional population and stateequality, rather than by factors associated with economic developmentimperatives.     

Seat-vote curves, loyalty effects and the provincial distribution of Canadian government spending

Federal government spending in the Canadian provinces for 1962–2002 is examined with emphasis on the role of seat-vote elasticities in majoritarian electoral systems. Fixed effects regressions establish that per capita federal spending in a province increases with political competition, as measured by provincial seat-vote elasticities, and with loyalty to the federal government as measured by the degree of provincial support for the federal government. However, too much loyalty can be counter-productive because very loyal provinces are uncompetitive with low seat-vote elasticities.     

The Canada Pension Plan's experience with investing its portfolio in equities

For the past few years, the Canada Pension Plan (CPP) has been investing some of its assets in equities. Without changes, an imbalance between revenues and outlays would exhaust the CPP reserve fund by 2015. Creating an entity that was independent of government was one of several changes the federal and provincial governments enacted to achieve fuller funding. The governments created an independent Investment Board (the CPP Investment Board, or "CPPIB") to oversee the new investments. Because the plan already owned a large government bond portfolio, the CPPIB decided to invest new CPP funds in broad equity indices in March 1999. In 2000, the CPPIB began actively investing a portion of the CPP funds. Key features of that policy and some observations about its implementation include the following: In addition to investing CPP revenues in equities, reform also included contribution rate increases, benefit reductions, and a financing stabilizer. The new investment policy accounted for 25 percent of the total effect of all the reforms. It is premature to know if the investments will achieve their long-term performance objective. The new equity investments are projected by the Chief Actuary, in his most recent Actuarial Report, to earn a 4.5 percent real rate of return on Canadian equity and 5.0 percent real return on foreign equity for a blended real return of 4.65 percent based on an equity mix of 70 percent Canadian and 30 percent non-Canadian. However, it is too early to tell if the equity investments will achieve that goal over the long run. The Investment Board's mandate is to maximize returns. The Investment Board, which oversees the CPP's new investments, has broad discretion to pursue maximum returns on its assets without incurring undue risk of loss while keeping in mind the financial obligations and other assets of the CPP. Furthermore, it has developed into a professional investment organization staffed with private-sector experts in finance and investment. The board is designed to be independent of government. The federal and provincial governments designed the board to operate at arm's length from themselves. The process for selecting directors includes public- and private-sector participation, and the board is in compliance with several sets of governance guidelines for corporations. CPPIB management, with the support of its board of directors, has decided to implement a virtual corporation model involving a small team of senior executives setting strategies for implementation primarily by external professional firms. Consequently, as a virtual corporation, the board currently relies on external fund managers to make investments and vote proxies. Several measures are designed to ensure accountability to the public. The investment legislation subjects the board to overlapping layers of oversight to ensure accountability to the public. The features of this oversight include public meetings in each province as well as quarterly statements and annual reports to Parliament, the federal and provincial finance ministers, and the public. The 10 finance ministers review the CPPIB's mandate and regulations every 3 years, and the CPPIB is subject to a special examination every 6 years by an auditor appointed by the Federal Minister of Finance.     

Municipal Communications Tax Revenue Reliance and Fiscal Impact of Possible Federal Preemption

This paper presents empirical evidence of the extent to which municipal governments might be affected by federal preemption in the communications sector in light of the substantial variation in municipal governments' reliance on communications tax revenues. The results suggest that the federal preemption would have a negative fiscal impact on the majority of municipal governments, and the extent of the impact would vary substantially. The analysis also indicates that it would be challenging or legally impossible for some city governments to make up for the magnitude of revenue loss due to the states' constraints on municipal revenue‐raising capacity.     

State support under the new federalism

The new federalism will reduce total intergovernmental revenues to local governments. The reduction will be due to both the transfer to the states of much of the federal aid which previously flowed directly to local governments and reductions in total federal aid levels. Pass-through requirements on the shifted aid will not affect this general result but may soften the impact in many states. Because of differences in the extent to which state governments substitute federal pass-through aid for state aid from own-source revenues and in the degree to which different sources of revenues are treated differently by the states, local revenue reductions will vary greatly from state to state. The losses for local governments will range from 100% of the shifted aid in some states to as little as 15–20% in others.     

Public Sector Politics, Modernization, and Federalism: The Canadian and American Experiences

The focus of this analysis is an attempt to compare Canadianand American federalism in terms of Samuel Beer's modernizationtheory. In Canada, it is argued that modernization had led tothe enhancement of provincial power rather than the centralizationof the federal system. The Westminster model of parliamentarygovernment contributed to these developments, although the wayin which power is organized in government has been even moreimportant in determining the directions taken by Canadian federalism.     

MANAGING MUNICIPAL SERVICES IN AN ERA OF DECUNING FEDERAL ASSISTANCE

Federal aid to local governments was cutback throughout the Reagan administration. In dealing with these revenue cutbacks, ex-recipients have a variety of options, to find new sources of revenue or reduce expenditures. Based on the perspectives of local government budget officials and environmental data, this study attempts to determine which governments will be most successful in minimizing service cutbacks in this environment. Using a cross-sectional analysis and data concerning federal revenue sharing, we find both support and differences for many predictors found in previous case-studies of fiscal stress. The differences likely stem from the new cutback environment. This study illustrates that management strategies under fiscal decentralization are strategic and not haphazard.     

Multi-Sphere Governance in South Africa: An Interim Assessment

After considerable debate about whether a democratic South Africashould be constituted on federal lines, the 1996 Constitutionadopted three "distinctive, interdependent and interrelated"spheres of government. "Co-operative government" followed theGerman model, emphasizing concurrency, provincial delivery ofnational policies, and provincial representation at the center.Implementing this model, with new institutions, actors, andprocesses, has proved difficult because the governing partystrongly favors a relatively centralized polity, and becauseprovinces and local governments have weak political, administrative,and fiscal capacities. The analysis concludes that while thenew system has become fairly well established in a short time,its long-term success in promoting the values of democratization,effective governance, and conflict management remains uncertain.     

Holes in the safety net,leaks in the roof: Changes in Canadian welfare policy and their implications for social housing programs 1

Abstract

This article surveys recent reforms to Canadian social policy at the national level and welfare programs at the provincial level to determine how social housing policy and programming are being affected. The survey considers Canada's Social Security Review consultation process, which played out over 1994 and 1995. The article outlines various concerns raised over the Canada Health and Social Transfer, a fundamental reform to intergovernmental fiscal and policy relations announced in the 1995 federal budget and elaborated on in the 1996 budget.

The transfer of administrative responsibility for federally funded social housing to provincial and territorial governments is discussed and recent developments in welfare programs across Canada are described, noting housing elements within these programs.     

Federalism and the Strong-State/Weak-State Conundrum: Canadian Economic Policymaking in Comparative Perspective

The areal dispersion of power and constitutional division ofresponsibilities in federal arrangements are generally feltto limit the ability of federal systems to improve economicperformance. Examining Canada within a comparative framework,we assess "the federations as weak states" hypothesis as wellas the utility of the "strong-state/weak-state" model itself.Although some aspects of the Canadian federal system—namelythe combination of federal with parliamentary traditions andthe resulting adverse policy styles—inhibit the adoptionof effective economic adjustment policies, these features arenot necessarily found in other federal arrangements. Comparisonswith Switzerland, Austria, and West Germany suggest that, undercertain circumstances, federal power sharing may be conduciveto bringing about broad agreement on both goals and policiesamong national, regional, and local governments and major economicactors.     

Administrative problems of the provincial sales tax on beer in Papua New Guinea

With the establishment of provincial government in Papua New Guinea, the Organic Law has conferred on the provincial governments the authority to raise revenue using local revenue bases including retail sales taxes. These taxes have significant advantages and a sales tax on beer has particular benefits in P.N.G. in terms of potential yield and ease of administrative management. The tax is levied on the two breweries and the breweries collect the tax at their breweries and wholesale warehouses on behalf of the provincial governments. For the brewery with the dominant share of the market the arrangement under which it collects the tax for a commission and pays over quarterly to the provincial governments brings financial advantage. The brewery with a smaller share of the market and localized sales is less likely to be benefitting by the arrangement. For the future given expected beer consumption a change from a quantity based tax to ad valorem rates would be financially advantageous to the provincial governments, and would reduce the need for some provinces to seek tax sources elsewhere, but experience shows the general benefit of raising the tax, not at the point of final sale, but on the wholesaler or manufacturer.     

Government Responsibility and Electoral Accountability in Federations

Because federalism can be a threat to accountability, a modelof voting behavior in federations must accommodate voters' attributionsof responsibility to each order of government for policy outcomes.This study uses a panel survey of Canadians in both federaland provincial elections to ask whether voters are able to holdgovernments accountable in a federal context. Voters may ignoreissues where responsibility is unclear, they may reward or punishboth the federal and provincial governments to the same degree,or the confusion of jurisdiction may sour them on the governmentor even the political system. Canadians who blamed both governmentsfor problems in health care did not lake this judgment to theirvoting decision in either the 2000 federal election or the 2001elections in Alberta and British Columbia, while those who couldidentify primary responsibility did so. Federalism and intergovernmentalpolicymaking may reduce voters' ability to hold their governmentsaccountable.     

The Impact of Federalism on the Organization of Canadian Foreign Policy

The international activities of Canadian provinces—mainlyAlbert, British Columbia, Ontario, and Québec—challengeconventional concepts of sovereignty and the federal view ofa national monopoly in foreign policy. These provincial activitieshave become more important since the early 1970s and have yieldedoutcomes in the field of foreign policy that would not haveoccurred otherwise. Provinces engage in international activitiesfor a number of reasons. They have the capacity, jurisdictionalobligation, and political desire to do so. Economic necessity,especially the international economic environment, is importantmotivation. Both conflict and cooperation with Ottawa also encourageprovincial involvements in international activities. Occasionally,foreign governments invite such activity as well. Present trendscoupled with the constitutional division of responsibilitiesin Canada suggest that territorial transgovernmentalism willhave greater consequences for Canadian foreign policy, therebygiving to Canada's international presence a character similarto the complexities and contradictions of the country's domesticmosaic.     

Effects of Federal Tax Reform on Local Finances

The federal Tax Reform Act of 1986 promised to be fair, simple,and revenue neutral to the federal treasury. Tax reform, however,was not revenue neutral with respect to all state and localtreasuries. Indeed, tax reform entailed a restructuring of thebalance of power in federal-state-local relations. In particular,new restrictions on the tax-exempt bond authority of state andlocal governments are requiring significant shifts in traditionallocal debt policy. Furthermore, the Supreme Courts recent decision,South Carolina v. Baker, raises additional concerns about thestatus of state and local tax-exempt bond issues. The natureof future relations between the federal government and localgovernments is likely to be molded more by the federal tax codeand by erosion in state authority over fiscal matters than byfederal grant-in-aid programs of the kind that have characterizedthe past quarter century of intergovernmental relations.