Defeat in 1957 came as a great shock to the federal Liberals, who had come to believe that only they could govern Canada. They soon replaced the aging St. Laurent with Lester “Mike” Pearson, the Minister of Foreign Affairs. He was intelligent, friendly, and a great compromiser and deal-maker, but he had no particular views on where Canada should go or what the federal government should do, though he understood that relations between English and French Canadians were strained.
Co-operative or Confrontational Federalism?
The federal Liberals decided to outflank the Conservatives on the left by promising Medicare, a contributory pension plan, and a number of programs to provide more assistance for welfare, health, education, and local infrastructure. The proposed pension plan and Medicare scheme would be the biggest and costliest programs ever launched by Ottawa in provincial jurisdiction. Pearson also announced his intention to create better relations with the provinces, to practise “co-operative federalism,” to respect provincial jurisdiction, and to have consultations and input into the drafting of new programs, plus better co-ordination in their implementation. One such statement came in a speech in December 1962, where he called for “the greatest possible constitutional decentralization,” in light of the fact that “it is now clear . . . that French-speaking Canadians are determined to become directors of their economic and cultural destiny in their own . . . society.”
The two sets of promises—more federal welfare and health programs and better relations with the provinces—were completely incompatible. The Liberal government of Quebec had demanded an end to new shared-cost programs, the right to opt out of existing ones with full compensation, and a better balance between federal and provincial revenue. These views were increasingly shared by other provinces, particularly Ontario. The platform the Liberals adopted for the 1962 and 1963 elections called for a sharp increase in the very types of policies that were poisoning federal-provincial relations.
In the next five years, Pearson was very successful in achieving the first set of goals, the expansion of the Canadian welfare state. But that was at the expense of better relations with the provinces, especially Quebec. When Pearson’s Liberals won office in 1963, less than 5 per cent of Quebec’s population supported separatism, and there were no separatist parties. By the late 1960s, support for separatism had more than doubled, over a quarter of Quebec’s population or roughly one-third of the Québécois were becoming strongly nationalist, and there were three official separatist parties, plus one terrorist group.
Ottawa misjudged the Quebec government’s attitude towards federalism and the strength of its commitment to protecting Quebec’s autonomy and regaining control over provincial responsibilities. It also misjudged Quebec nationalism, a problem that seems endemic in Canadian history. In fact, Premier Lesage was as determined as Duplessis to resist federal incursions into Quebec’s jurisdiction, and Ottawa would find him a tougher opponent than Duplessis had ever been. The scene was set for a showdown on federalism, or rather, for a number of showdowns.
On April 5, just three days before the 1963 federal election, Lesage laid down an ultimatum: whichever government was elected would have twelve months to meet Quebec’s demands. If it failed, Quebec would unilaterally increase its rate of income tax. The 1963 Quebec budget debate highlighted the problems Ottawa’s shared-cost programs were causing the province. A major example was the federal program to support technical and vocational training. Quebec’s programs in this field were not nearly as extensive as those of other provinces, a clear reflection of cultural differences, values, and priorities. As a result, in 1962, Ontario had qualified for over $200 million of Ottawa’s matching funds, while Quebec had only received $28 million. Lesage said that the system was unfair, unjust, and a violation of the spirit of Confederation. He demanded the same amount as Ontario had received and said the real solution was to abolish such programs, and let the provinces get on with the job of managing their responsibilities.
Lesage’s statement in the budget debate was unequivocal: “This situation is totally unacceptable to Quebec.” Opposition Leader Daniel Johnson went much further: “We now have to see whether this freedom of action [Pearson’s promise of decentralization] can be had within a Canadian Confederation, or whether we must turn to the solution offered by the movements for independence.” Johnson pointed out that in 1942 Ottawa seized 100 per cent of income taxes as a temporary wartime measure, but since then had forced the provinces to beg to get back a share of a tax that was rightfully theirs. Ottawa alone was deciding what share of income taxes could be collected by the provinces. “This situation is wholly incompatible with the political sovereignty . . . of Quebec.” He supported Lesage’s demand that Ottawa withdraw from social services and allow the province to collect more taxes. Those two measures, he said, would end the quarrelling.
After winning the 1963 election, Pearson called a federal-provincial conference for July. At that meeting, Lesage repeated all of Quebec’s objections to Ottawa’s policies and programs. He argued that all federal joint programs should be terminated with compensation, and that Quebec should receive 25 per cent of personal and corporate income taxes and 100 per cent of succession duties. Lesage stated that Quebec would oppose any new federal policies “because each [encroachment] is a threat to the autonomy of the province [and sets a precedent for the next one].” In effect, he rejected the two main federal Liberal promises—the contributory pension plan and Medicare. He added that Quebec should receive $15 million in compensation for the programs Duplessis had not joined. At that conference, Ontario Premier John Robarts also complained about shared-cost programs and proposed that provinces be given a list of them and allowed to choose which ones they wanted to join. Ottawa rejected that proposal.
The new Pearson government had no intention of abandoning its ambitious plans for completing the welfare state. That resolved the contradiction between pursuing those programs and having better relations with the provinces; the winner was the federal welfare state, the loser federal-provincial relations. From then on, “co-operative federalism” would consist largely of meetings and rhetoric, while Ottawa’s actual policies would be in the direction of more interference in provincial jurisdiction.
English Canadians accepted the idea that “co-operative federalism” was in effect because many of them, including their nine provincial governments, approved the shared-cost programs. The Québécois and their government in Quebec City overwhelmingly rejected these new initiatives, and for them, Pearson’s proposal, which was hardly new, represented “confrontational federalism.” English-speaking Canadians, including academics, regarded new federal initiatives as quite acceptable and indeed desirable; the Québécois and their elites regarded them as a massive threat to the goal they had been pursuing since the Conquest, la survivance as a distinct culture, the avoidance of domination and assimilation by English-speaking Canadians.
One new policy was the Municipal Development and Loan Plan. Municipalities and local infrastructure were provincial responsibilities, but Finance Minister Walter Gordon said that measures that promoted employment were federal, a principle that could apply to any local project that required any amount of labour. The statement indicated ignorance of both the constitution and history, because the constitution did not assign employment to Ottawa and history showed that the provinces had always been involved in creating jobs. The federal plan was to be implemented directly by MPs in the municipalities within their constituencies, cutting out the provincial governments altogether. The provinces were not enthused; Quebec threatened to penalize any municipality that accepted such funds, and Ottawa was forced to abandon its plan. Instead, the $400-million budget was allocated to the provinces on a per-capita basis for them to administer however they wanted, if they chose to manage the funds themselves. Saskatchewan, Manitoba, Ontario, and Quebec opted to administer the funds; the other six provinces allowed Ottawa to administer the new program for them.
The Quebec and Canada Pension Plans
The first major confrontation was over the proposed federal pension plan. Judy LaMarsh, the new Minister of Health and Welfare, established a committee to examine the questions involved in a federal-provincial contributory pension plan. The resulting hastily and poorly drafted plan was introduced into the House of Commons on June 19, 1963, released as a white paper on July 18, and discussed at a conference on July 21–27. The plan was pay-as-you-go, with companies and their employees both contributing 1 per cent of salaries into a federal fund, of which 50 per cent could be loaned to the provinces. It would be portable between companies and between provinces, and Ottawa would administer it.
Inexplicably, the federal side did not expect problems. Quebec had been working on its own plan since 1962, and Lesage had warned Ottawa before the election against unilateral action on the issue. It was not, however, high on the list of Quebec’s political, social, economic, or budgetary priorities. Ottawa’s actions made it a top priority with the resulting annoyance that once more, and right after the election promise of fostering better relations, Quebec’s priorities were being determined unilaterally by Ottawa’s political agenda.
It was Ontario, however, that fought the first battles with Ottawa over the pension plan. Conservative Premier Robarts had set out to complete the welfare platform his party had adopted in 1942, and his plan ran head-on into the decision of the new federal Liberal government to do the same for the whole country. The Ontario government believed that most people could and should continue to handle pensions through voluntary private insurance schemes. The only role government should play was to help those who could not participate in private insurance. Private insurance had worked well in the past and worked well for other services such as dental costs, and it was how all governments had handled hospital insurance with government programs allowing poorer citizens to be included. In the spring of 1963, the Robarts government passed legislation requiring all companies to establish private, portable insurance schemes, and Ontario was working on a program to cover those unable to participate in the private ones. There was thus an unbridgeable gulf between Ottawa and Ontario, a classic political division of left-versus-right in terms of views, values, and politics; of federal-versus-provincial in terms of responsibility; and of Liberals-versus-Conservatives in terms of the political theatre.
Nothing was resolved at a federal-provincial conference on September 9–10, and the issue became a major focus of the September 25 Ontario election. LaMarsh’s decision to enter the provincial campaign backfired when Robarts increased both his popular vote and the number of Conservative seats. A second draft of Ottawa’s Canada Pension Plan, the CPP, was discussed at a conference on November 26–29, with Ontario still the main opponent of the plan. At that conference, Lesage announced that, after the 1960 election, he had reversed the Duplessis policy of refusing to participate in the building of the Trans-Canada Highway, but now he regretted that decision as Ottawa had used the highway to enter a field of provincial responsibility. There were no responses to any of these points, and a third draft of the federal CPP plan was issued on March 17, 1964.
Lesage hosted the next conference, beginning on March 31, 1964. He and his government were tired of the battle over taxes and shared-cost programs, and they wanted a showdown. The stridency and determination of Lesage’s opening statement took the guests by surprise. That itself was surprising, as Quebec had been complaining about these issues for decades. Lesage repeated his earlier threat that Quebec would raise taxes if Ottawa did not yield more tax points and would do so in its upcoming budget, which was due in just five days. Given that public opinion was on Lesage’s side, Ottawa would have to concede or take political responsibility for the double taxation.
The main issue at the meeting, however, was pension plans. Quebec’s had been completed just days before the conference, and Lesage decided to present it. The audience, which had just been briefed on the third draft of the CPP by Judy LaMarsh, was astonished. It was immediately obvious that the draft Quebec Pension Plan, the QPP, was far superior to the draft CPP. It was fully funded with contributions of 2 per cent from both employers and employees and with payments starting in twenty years rather than ten. Quebec would have complete control of a huge fund of forced private savings. The Quebec plan also included higher payments and good provisions for survivor, death, and disability benefits. The provincial delegates were overwhelmed, the federal ones embarrassed and humiliated. The federal plan could not be salvaged as it was impossible to have two radically different plans in Canada. The meeting was a shambles with Ottawa’s pension plan in ruins, no agreement on taxes, no resolution of the opting out issue, and no clear indication of how Ottawa could proceed.
The mood of the federal delegation on the trip back to Ottawa was sombre and depressed, and some wondered whether Canada would even survive. That was another striking indication of how out of touch the federal government was. There was, in fact, no threat to the survival of Canada. Ottawa had backed down before on taxes, would back down this time, and would back down again in the future. Ottawa could not win on the pension issue because it could not use the spending power to force provincial acceptance, since the pension plan would be based on contributions and not federal money. There was no pressing need for contributory pension plans, and the provinces had been slowly moving into the field. The only crisis was in the federal Liberal party when it realized that a Quebec government would succeed in defending provincial responsibility for pensions. Quebec’s plan posed no problem to Canadian unity or to federalism; what it challenged was Ottawa’s capacity to dictate social policy to Quebec.
The only solution to the problem was for Ottawa to copy the QPP and try to find some face-saving changes. Three people recognized that fact: Prime Minister Pearson; his principal secretary, Tom Kent; and Maurice Sauvé, a junior minister from Quebec. Without the knowledge of LaMarsh, Kent and Sauvé began secret negotiations with civil servants in Quebec City, which led to Pearson adopting a modified QPP and calling it the CPP. Quebec agreed to allow payments to begin in ten years instead of twenty. The contributions would be 1.8 per cent instead of Ottawa’s proposed 1 per cent or Quebec’s 2 per cent, another Quebec victory. The CPP could only be changed by agreement between Ottawa and two-thirds of the provinces containing two-thirds of Canada’s population. Ottawa also agreed that neither plan could be changed without the agreement of Quebec, which gave Quebec a veto even though it did not contain one-third of the population. Those agreements made it almost impossible for political parties to play politics with either the CPP or the QPP, and within a year, contributory pensions ceased to be much of an issue in Canadian politics or in federal-provincial relations.
On April 16, Pearson informed the other provinces of the deal. The announcement meant that Ottawa and Quebec were making the big decisions by themselves and in secret. That was a matter of annoyance to other provinces, not to mention all the federal cabinet ministers who knew nothing of the secret negotiations. Ottawa achieved its goal of a “nation-wide” program, and the public announcement of both the CPP and the QPP on April 20 meant that the pension part of the crisis was over. Health and Welfare Minister LaMarsh knew nothing of the developments on the most important issue she and her department had been working on since the election. When told, she smashed the picture of Pearson that had sat proudly on her desk.
Robarts recognized that Ontario’s plan for a mainly private pension system was dead. The question for him was whether Ontario should have a separate plan similar to Quebec’s or join the CPP as the other English-speaking provinces were contemplating. This was one of the tougher decisions any Ontario government has ever had to make. Copying the QPP would give Ontario all the advantages that Quebec was deriving. But the exclusion of both Quebec and Ontario would severely weaken a national plan. Ultimately Premier Robarts was a Canadian nationalist, and he joined the CPP even though he never decided whether he had made the right decision.
The myth was created that Quebec had been “allowed” to “opt out” of the CPP and that Ottawa and the rest of Canada had made major “concessions” to the insatiable nationalistic demands of the Québécois. In fact, Quebec was setting up a plan for which it had every constitutional and legal authority and had not opted out of anything. In effect, the nine English-speaking provinces “opted in” to the CPP. The CPP/QPP was one of the most important programs in Canadian history and became a significant factor in old age security. Politically, the biggest loser was Ontario, although many English-Canadians in all provinces felt they had lost something because Quebec had not been forced to join the federal plan. Financially, the CPP/QPP was a huge success, with funds exceeding $500 million by 1966, the beginning of an enormous asset for the provinces to invest.
The fact that it was Quebec and not Ontario that forced Ottawa to back down reflected a major change that was underway in the country’s political landscape. In the nineteenth century, Ontario had led and won the battles for provincial rights, preventing Macdonald from making Canada a quasi-federal state. It remained the main provincial obstacle to Ottawa’s attempts to dominate the country in the first half of the twentieth century. But in the 1960s, the task of restraining Ottawa passed to Quebec, partly because Ontario failed in its traditional role. Robarts opposed Pearson’s two main policies, contributory pensions and Medicare, but he lost both those battles. Control of taxation was a major factor. Ontario allowed Ottawa to collect taxes on its behalf, so its financial administration was not as competent and powerful as it had been before the Second World War. More important was Ottawa’s relentless use of the spending power. As Canadian nationalism grew, Canadians outside Quebec tended to accept Ottawa’s arguments in favour of pan-Canadian standards and programs, and Ontarians were increasingly comfortable with policies that were made in Ottawa rather than in Toronto. That comfort level was facilitated by the fact that Ontarians accounted for over half of Canada’s English-speaking population, and they dominated decision making in Ottawa.
Opting Out of Shared-Cost Programs
The Ottawa-Quebec City deal on pensions included the solution to Lesage’s demands for tax abatements. Ottawa agreed to increase the abatement to 24 per cent of income tax and 75 per cent of succession duties, most of what Quebec had demanded. On the third issue, opting out, Lesage failed to achieve his goal, but won a small and confusing symbolic victory, one that has been seriously misunderstood ever since. Lesage’s demand was that provinces be allowed to opt out of federal programs in provincial areas of jurisdiction and receive full compensation, that is, the amount of money Ottawa was spending on those programs. Quebec wanted to spend that money on any program and not necessarily on a similar program because, in its view, Ottawa had no right to launch programs in any area of provincial jurisdiction and set priorities for provincial spending. If other provinces wanted to spend their money on programs identified by Ottawa, that was their business, and Quebec had no interest in telling other provinces how to manage their affairs. But it had no intention of allowing Ottawa and the nine English-speaking provinces to tell it how to manage its own affairs. At the March 31 meeting, Pearson stated that Ottawa would continue to require national standards for shared-cost programs. “National standards” was the code word for Ottawa’s view on any issue, and the statement meant that Quebec could not opt out of the federal programs. There was no change in Ottawa’s policy of using the spending power to launch new programs in provincial areas of jurisdiction and to impose its priorities on the provinces. Pearson agreed, however, that Quebec could finance them differently. Under this arrangement, Ottawa increased its tax abatement to Quebec by twenty points, and Quebec collected that money itself and used it to pay its share of the same programs. The new system was made available to every province to avoid the impression that Quebec was being treated differently, but only Quebec took advantage of it. From then on, the term opting out referred to the way Quebec financed shared-cost programs, but many misinterpreted it to mean that Quebec was being allowed to opt out of the programs themselves.
Ottawa only applied the new arrangement for financing to programs that were deemed to be well established and unlikely to be cancelled. This was embodied in the Established Programs Act, the EPA, of April 1965. Accordingly, Quebec “opted out” of the federal tax system for twenty-nine well-established programs, but not for seventeen others, which were temporary or in areas of shared jurisdiction. The reason no other province followed Quebec’s lead was that the change did not affect the programs themselves, and English Canadians did not care which order of government collected taxes for these programs. Quebeckers were not fooled—Ottawa was still determining how Quebec spent its own money, and Lesage had failed to change that situation.
The fact that Ottawa was still on the offensive in terms of encroaching on provincial responsibilities became evident at a meeting in March 1965. Ottawa announced new programs to provide loans to university students and extend the family allowance to sixteen- and seventeen-year-olds who were still in school or university. The family allowance had been an unconditional grant that had nothing to do with education, and the new proposal made it dependent on going to school, which discriminated against those who did not or could not, which was hardly the business of the federal government. Quebec threatened to go to court to block the new program. Quebec already had a similar program, which demonstrated that other provinces could also have them if they so desired. There was, in fact, no compelling reason for federal involvement other than political advantage, and the program was announced during an election. A compromise was reached by which Quebec received an additional tax abatement of 3 per cent and administered the program, while Ottawa administered it directly in the other provinces. Quebec could claim that it had defended its jurisdiction, Ottawa could claim that it had introduced yet another pan-Canadian plan, and another example of “special status” and conditional grants had been created.
The federal government and the English-speaking provinces had not come to terms with the fact that it was initiatives such as this that were making Quebec more and more distinct from the other provinces. In the first hundred years of Confederation, all the provinces handled these sorts of matters as they wished, and when they did things differently, none of them were “special” and none of those differences affected other provinces. Quebec had not changed, because it was still administering its responsibilities; it was the other nine provinces that were becoming different and “special” by allowing Ottawa to manage more and more provincial matters for them. Quebec was trying to maintain a genuine federal system; Ottawa and the other nine provinces were moving steadily and perhaps quickly towards a unitary form of government.
Perhaps more importantly, there was a growing feeling in English Canada that Quebec should, indeed, be a “province like the others.” That meant that the one French-Catholic province should do things the same way as the English-Canadian provinces and not the other way around; it should have the same priorities and goals, implement the same programs to achieve them, and allocate the same proportion of resources to them. That was the twentieth-century version of assimilation, the goal of the Proclamation Act of 1763 and of the Act of Union of 1840, the very thing Confederation was designed to avoid. Resisting assimilation had been the main objective of most French-Canadian politicians since 1791, of all Quebec governments since 1867, and especially of the Lesage government since 1960, namely to ensure la survivance of French culture in North America, to be maîtres chez nous, masters in their own house of Quebec. In as much as English Canadians understood the historical background to Quebec’s determination to manage its own affairs, they increasingly disagreed that it should be permitted to do so. And in that, they were abandoning both the constitution and the rule of law.
The conflict between Quebec City and Ottawa continued to worsen throughout the 1960s. On April 5, 1965, Ottawa announced a “war on poverty” and a conference was called for December 7–10 to discuss it. The Quebec delegation headed by Premier Lesage and Ministers Eric Kierens and René Lévesque opposed it, because such a program would clash with a series of existing provincial programs that had the same goal. Another federal proposal for a health care program touched off such a bitter battle that federal and provincial civil servants ceased talking to each other.
Pressure mounted to deal with the complexity of all the programs Ottawa had launched over the years. Provincial criticism had been growing concerning the ad hoc approach that had been adopted to implementing new welfare programs and to the wide variety of conditions among those programs and between different provinces. Lévesque announced that Quebec was planning to integrate all of its social assistance, including family allowances, into a single whole. Quebec repeated the demand that Ottawa end its involvement, stop introducing shared-cost programs, stop abusing the spending power, and stop making payments directly to citizens on matters within provincial jurisdiction.
Ottawa rejected Quebec’s position, arguing that its previous “concessions” only whetted Quebec’s appetite for more, and said that Quebec had to accept that Ottawa had a responsibility to preserve national unity. Ottawa’s arguments reflected the vicious circle that had come to characterize federal-provincial relations by the mid-1960s. It was Ottawa’s continued interference in provincial jurisdiction that was fostering the rapid growth of nationalism and separatism, and driving Quebec towards increasingly intransigent stands on provincial rights. That in turn led Ottawa to insist that it needed more such programs to preserve national unity.
Some of these issues were resolved with the adoption of the Canada Assistance Plan, or CAP, in July 1966, with the approval of all the provinces. CAP united programs for old age assistance, blind persons allowances, and disabled persons allowances, plus the welfare aspects of unemployment insurance, into a single comprehensive program. It was subject to fewer conditions than the individual programs and marked the beginning of a trend away from detailed federal supervision. By uniting, simplifying, and rationalizing some of these programs, CAP proved to be one of the most successful federal-provincial initiatives of the Pearson years.
English- and French-Canadian Nationalism and the Rise of Separatism
The fundamental problem causing these tensions was that both English-speaking Canadians and the Québécois were becoming more nationalistic, and by then Canadians of English, Irish, Scottish, and other ethnic backgrounds had essentially merged into a single nation that could correctly be called “English Canadian.” A fundamental characteristic of nationalism is the assumption that your national group is right and the others are wrong; that your group has solutions while the others cause problems; and that everything would be fine if others abandoned their misdirected and unjustified beliefs, values, and goals and adopted your correct ones. English-speaking Canadians increasingly believed that there was only one Canadian nation, that it included the French Canadians or Québécois, and that its members should enjoy common standards across Canada. The common standards, values, and rights they were advocating were, of course, their own, not the ones of the groups that had been assimilated or the ones of the Québécois, who had definitely and defiantly not been assimilated. English Canadians not only tolerated federal programs in provincial areas of responsibility, but they pressured the federal government to introduce more, and they believed that Ottawa had the right and indeed the duty to insist on common standards. That also meant that English Canadians were increasingly opposed to anything that smacked of “concessions” to Quebec, of “special status” for Quebec, or the recognition that Quebec was “distinct” or “a province not like the others.”
English-Canadian misinterpretations of federalism, the BNA Act, the history of federalism after 1867, and the way it was evolving in the 1960s were reflected in the view that federalism was becoming “asymmetrical,” and that this was a serious problem. In fact, the provinces had never been symmetrical and, with nine of them opting in to uniform federal policies, Canada was actually becoming more symmetrical. The problem was that federal politicians and civil servants and many English Canadians wanted policy to be completely symmetrical, the same in every province. They argued that policies should be uniform “from sea to sea,” that the country needed “national standards,” and that every citizen should be treated the same or was “entitled” to the same level of social services. Later, those arguments would be translated into rights, suggesting that anyone who disagreed was denying Canadian rights. All of these slogans denied the principle of federalism, and uniformity could only be achieved if the Québécois accepted the ideas, views, values, and priorities reflected in federal programs.
It was impossible for both Ottawa and Quebec City to be maîtres chez nous in terms of setting policies, objectives, standards, and priorities for health, welfare, and other matters in the province of Quebec, and of the two, it was Ottawa that was gaining in strength. It was gradually forcing Quebec’s objectives into conformity with those of the rest of Canada. The failure to preserve its autonomy over provincial jurisdiction was increasingly clear to the Québécois. Duplessis had stood up to Ottawa by refusing to co-operate. Lesage had co-operated with Ottawa as a short-term expedient, pending Ottawa’s withdrawal from the programs. Ottawa had refused, and the concessions he obtained were largely symbolic.
Lesage’s failure to resist the tide of centralization was reflected in growing support for nationalism, for separatism, and for new ways to ensure la survivance against a seemingly all-powerful federal government. Key ministers such as René Lévesque and Paul Gérin-Lajoie were increasingly frustrated with Quebec’s powerlessness, as were senior civil servants such as Claude Morin and Jacques Parizeau. By 1966, the Quebec Liberal regime was facing growing problems dealing with the rise of nationalism within its own ranks. A new party, the Rassemblement pour l’Indépendance Nationale (RIN), emerged to represent the nationalists. It was the first party to use the word “independence” in its name, another indication that Quebec and the rest of Canada were moving further apart. Another new party, the Ralliement National (RN), was also separatist but more conservative. At the same time, the most radical nationalists joined the Front de Libération du Québec, the FLQ, whose campaign of bombings and kidnappings gained sympathy, support, and strength throughout the 1960s.
Most importantly, the Union National reinvented itself under the leadership of Daniel Johnson. He had been in the Duplessis government and knew that the policy of refusing to participate in federal programs had failed. He had watched for six years as Lesage’s attempt to gain the right to opt out of programs had also failed. Johnson was very aware of the strong nationalist winds blowing through the province and the dangers they posed for draining traditional UN support to the new, more extreme nationalist parties. He captured the spirit of the times in the title of his book, Equality or Independence. If Canada was based on two founding nations, if Quebec was the homeland of one of them, and if the federal government would not respect Quebec’s jurisdiction, then what was needed was a redefinition of federalism to create a sort of bi-national country based on equality between Quebec and the rest of Canada. And if English Canada would not agree, then there were only two options left—the status quo, which few Québécois accepted, or independence, which more and more were endorsing.
Medicare
While the gulf between English Canadians and the Québécois was rapidly widening, Pearson moved to implement the second major promise of the 1963 election campaign, Medicare. That would touch off more battles with the provinces, the main opposition coming once more from Ontario, with Alberta as a close second. Saskatchewan had introduced a public Medicare system in 1959, the first such program in North America. The federal CCF naturally wanted a federal program, the Diefenbaker government appointed a Royal Commission to gather the facts, and the federal Liberals also endorsed Medicare.
Provinces other than Saskatchewan were also moving towards Medicare. When Medicare was announced in the 1963 federal budget, the provinces regarded it as inevitable because “free” Medicare would be politically irresistible. Diefenbaker’s Royal Commission continued its investigation, and civil servants worked on a plan. In March 1965, Quebec set up a committee to study the issue. There were no federal consultations with the provinces, and at a conference on June 19, 1965, Pearson told a surprised group of premiers that Canada was to have a shared-cost Medicare program. Not all of the province’s health programs were covered, and Ottawa’s share would amount to around 40 per cent of provincial spending once Medicare was implemented.
Only Saskatchewan agreed. Alberta’s Premier Ernest Manning said it was unnecessary, as well as being questionable constitutionally—he became the most articulate critic of the plan. Ontario’s Premier Robarts was predictably angry and stated that it was “one of the greatest frauds that has ever been perpetuated on the people of this country.” Quebec regarded it as yet another massive incursion into provincial jurisdiction: Minister of Health Eric Kierens was furious, as was another key minister, René Lévesque. The shared program would cost $1 billion annually, a quarter of it in Quebec, which meant that the Quebec government’s spending on health would mount sharply. Its budget had already been prepared, citizens were resisting further tax increases, and once more Ottawa was attempting to dictate Quebec’s priorities.
The provinces would be paying half the bill for the new health programs, and they had to meet four federal conditions: that the program be portable, comprehensive, universal, and government-run. Ontario had private plans, which did not meet these criteria, and by 1965, it had a government plan to cover those too poor to participate in the private ones. It did not believe that a national plan was needed and vehemently objected to the federal government’s attempt to impose such a massive plan in an area of provincial jurisdiction. Alberta, by then the bastion of laissez-faire capitalism and “small government,” did not believe in any government-run scheme. Manitoba agreed with Ontario and Alberta, but BC started to move towards Saskatchewan’s position.
On July 27, 1965, Premier Robarts strongly condemned Ottawa for failure to consult the provinces and for using the spending power to force provinces to accept its dictates. He argued that the discussion of Medicare should be postponed until the completion of several major studies that were underway. He asked Ottawa to share the studies it had done, but Ottawa refused. Robarts did not believe Ontario could afford the plan and was upset that it would lead to the cancellation of private plans that had worked well for decades. That same month, Lesage once more demanded that Ottawa stop using its spending power to invade provincial jurisdiction.
Ottawa was also abandoning some other shared-cost programs that imposed federal standards. Pulling out of them would double the provinces’ costs for those programs, since the public was accustomed to them and would demand that they be maintained. Ottawa was, in effect, jumping in and out of provincial areas of jurisdiction with its shared-cost programs, without any overall plan, imposing conditions and cherry-picking where and when it would become involved, change conditions, or withdraw, to the consternation of provinces that were trying to plan coherently for all of their responsibilities. Those were the complaints the provinces had levelled in 1960, and the problems had grown more severe. By 1966, seven of ten provinces still opposed the federal Medicare plan, and their opposition was growing because Ottawa had announced that it would make no more increases to the tax abatements. Ottawa’s plan would therefore force the provinces to increase taxes, transfer resources from other programs to Medicare, or wait several years until they were in a position to participate.
Public opinion was strongly in favour of the single plan for the whole of Canada, and the Medical Care Act was passed by the Commons in December 1966, by a vote of 177–2. Pearson wanted the program to begin on July 1, 1967, the centennial of Confederation. Finance Minister Mitchell Sharp told him that Ottawa could not afford to launch the program that year, and it was postponed until July 1, 1968. Ottawa then cancelled other shared-cost medical programs, including cancer care and medical research, putting more pressure on the provinces to join. Saskatchewan and BC were the only provinces that joined Medicare at the beginning, but all provinces had joined by 1971. By 2000, Medicare was certainly one of the most successful and popular programs ever launched by any government in Canada.
The January 1966 Throne Speeches in Ottawa and Quebec showed that the differences between them were growing. The federal Speech said that Ottawa should expect “some assurance . . . that [Quebec] desired to preserve and strengthen Canadian unity . . . [and] if federal compromises merely increased the appetite for concessions, then the country was in for trouble . . .” One week later, the Quebec Throne Speech referred to two concepts of Canada, one favouring “a more and more unitary type of Canada with powers centralized in Ottawa . . .”, the other “a healthy and constructive division of powers” that would enable French-speaking Canadians “to develop according to their aspirations . . .”
These issues formed an important backdrop to the 1966 Quebec election, which most people expected Lesage to win. The outcome was a shock. The Union National won and the two new separatist parties, the RIN and the RN, polled almost 10 per cent of the vote. A very substantial majority of the Québécois had voted nationalist, including many Liberals, and a significant part of that nationalist vote was either separatist or willing to consider separatism. The new premier, Daniel Johnson, said that Quebec would not participate in any more federal programs in provincial areas and that Ottawa should withdraw from all the programs it was involved in. That, of course, was what Lesage had said in 1960, and his failure to protect Quebec’s autonomy was a major factor in his defeat.
At the same time, Ottawa was beginning to change its views on several aspects of its relations with the provinces. Since 1954, it had yielded to provincial pressure to allow the provinces a larger and larger share of the income taxes and succession duties that Ottawa alone had collected under the wartime agreements. By 1966, nine provinces were receiving 25 per cent of the personal and corporate income tax collected by Ottawa, and Quebec was receiving 45 per cent. Ottawa decided that it was time to put an end to its reluctant retreat from the wartime collection of 100 per cent of those taxes. Ottawa was also becoming concerned that provincial dependence on federal programs was destructive of good government. If left unchecked, that trend would suck Ottawa further and further into the detailed administration of programs and into increasing conflict with all provinces, especially Quebec.
Federal Finance Minister Mitchell Sharp therefore announced at a conference in September 1966 that Ottawa intended to make all the provinces opt out of the system whereby the federal government collected taxes for their portion of the shared-cost programs. The nine English-speaking provinces would thus be forced to collect the taxes themselves, as Quebec had been doing. They would receive a final tax abatement of seventeen points, which would eliminate the impression that Quebec was achieving “special status,” but federal conditions would still apply to the programs. From then on, any increase in provincial tax would have to come from their taxpayers and not out of Ottawa’s share.
The main debate at the October meeting, however, was over education. Since 1950, Ottawa had been giving grants to universities, but it decided to replace that program by paying half the operating costs of universities and to do so by giving the provinces a further abatement of four points of personal income tax and one point of corporate income tax. It also decided to cancel the shared-cost program for technical and vocational education and pay the full amount. It argued that manpower training prepared people for work and was thus an economic matter and hence federal. By that definition, almost any school course could be defined as federal, and Premier Johnson flatly rejected the argument: training was education and education was provincial.
The federal proposals were vague, hastily prepared, and poorly presented. There had been no warning that these changes were coming, and the provinces were given one day to reply, prompting many panicky phone calls back to provincial capitals. All the provinces were upset with the proposals and the way they were announced, as these programs had been very valuable to them. Johnson gave a detailed presentation of Quebec’s position, demanding full control of social policy, a massive reallocation of resources, and recognition in the constitution that Canada was based on two nations. There was little support from the other provinces, and none from Ottawa.
After several days of rancorous debate, Ottawa refused to alter the thrust of its policies, but Pearson sweetened the pot by increasing the amount of the equalization grants. That was the politics of “divide and conquer” as the deal pitted the poorer provinces against the richer ones. Since debate was proving futile, some premiers started to leave, and Pearson quipped that he supposed the meeting was adjourned. One provincial representative said he had never been to a meeting where federal positions were so poorly prepared and presented. In March 1967, Parliament passed legislation implementing its new policies on manpower and training at the same time as Medicare was being put into effect. These changes all reflected the fact that the struggle was really over power, and Ottawa was still determined to use its fiscal power to dominate Quebec. The stage was set for even more bitter battles between the two governments and for the sequel of rapidly increasing support for Quebec separatism.
The Constitution and Foreign Affairs
In 1967, the centennial of Confederation, Premier Robarts took a leadership role in easing federal-provincial tensions by hosting a meeting of premiers to celebrate the work their predecessors had done a century before and discuss the current state of the nation. It was called the Confederation of Tomorrow Conference. The Union National had been demanding constitutional change, and while Robarts had no similar demands, he saw a need for a thorough discussion of the issues. Ottawa definitely did not want such a discussion, but other provinces wanted some changes. The main result of the Conference was that Ottawa was forced to accept that constitutional change was now on the national agenda, which led to the first of many constitutional conferences in February 1968.
Another issue of increasing importance in the 1960s was the desire to agree on a formal amending process for the BNA Act, so the Act could be patriated from London and become a purely Canadian document. Work had proceeded well under the chairmanship of Diefenbaker’s Minister of Justice Davie Fulton, and was continued after the 1963 election by the new Liberal Minister of Justice Guy Favreau. By October 14, 1964, there was agreement with all the provinces on what was called the Fulton-Favreau formula.
Nationalist Québécois wanted the constitution to state that Canada was a compact between two races, to recognize that Quebec was the homeland of the French-Canadian nation, and to recognize “special status” and the fact that Quebec was “not a province like the others.” They forced Lesage to withdraw his agreement to the formula he had just accepted. Tactics then became crucial, because if the Quebec nationalists won recognition of Quebec’s status first, both sides could get much of what they wanted—recognition of Quebec’s special status, constitutional reform, an amending formula, and patriation. But if English-speaking nationalists had their way, Canada would have an amending formula and patriation first, and then Quebec would not likely be able to obtain the constitutional reform it wanted because the English-speaking provinces would be able to veto it.
Later in the decade, the position of some other provinces hardened on the related issue of appointing Supreme Court justices. There was no clear pattern of pro-federal decisions by the Court, but the belief that it was pro-federal was considerably strengthened in 1967 when it had to determine whether the resources off the coast of BC belonged to the province or to the whole country. Ottawa’s case was not particularly strong because natural resources on the mainland were provincial, and those under the Pacific would not have belonged to Canada if BC had not joined Confederation. BC was supported by Ontario and the Atlantic provinces, and Premier Lesage argued that the issue was political and should be settled by negotiation. The Supreme Court found for Ottawa, and the decision strengthened provincial demand for a role in the selection of Supreme Court justices.
In the last year of the Pearson era, the constitution replaced the welfare state as the main battleground in federal-provincial relations. On the Quebec side, the replacement of Lesage by Daniel Johnson marked a very significant shift. Neither Duplessis nor Lesage had questioned the BNA Act; what they demanded again and again was simply that Ottawa respect it and obey the rule of law. Johnson, however, wanted the Act fundamentally changed to recognize Quebec as the government of the Québécois, that is, to recognize the equality and duality of the two races. He argued that Quebec must regain full powers over social security, family allowances, education, culture, municipal affairs, and regional economic development, and have the right to sign agreements with foreign countries and a role in communications policy if the matter was provincial. He also argued that the Supreme Court should not be the final court of arbitration since it was appointed by Ottawa and was two-thirds English Canadian.
On the federal side, Pierre Elliott Trudeau had become Minister of Justice, and he was one of the most anti-nationalist of all Quebeckers. He rejected separatism, special status, and nationalism, and argued that the best protection for French culture and language was a partnership of French and English within a strong federal government. He rejected the argument that French Canadians outside Quebec had been assimilated and that the Québécois constituted a nation separate from the other French Canadians. He wanted a guarantee of rights for French Canadians everywhere, to be enshrined in a charter within the constitution, which was then to be patriated from London. His concern was with the rights of French Canadians as individuals, not as a group, and certainly not as Québécois. Trudeau wanted a stronger Ottawa and weaker provinces, especially a weaker Quebec. There was little room for compromise between his position and that of Johnson.
These differences came to a head at the federal-provincial conference in February 1968, shortly before Prime Minister Pearson retired. In several speeches, Trudeau had taken a very hard line with the UN and other nationalists. Pearson was not pleased with that approach, but Trudeau received a strong and positive response in English Canada and some support in Quebec. Pearson opened the conference with the warning that the survival of Canada was at stake, but the main confrontation was between Trudeau and Johnson. While Johnson argued that the constitution should be changed dramatically, Trudeau replied that there was nothing wrong with the BNA Act as long as Ottawa respected provincial jurisdiction.
The problem with that, of course, was that Ottawa had not respected provincial jurisdiction for decades, and any debate over the division of powers between Ottawa and the provinces was bound to demonstrate clearly that Ottawa was involved in a wide range of fields of “exclusive” provincial responsibility. Johnson failed to make a good case, and Trudeau won a clear victory. The fact that the debate was televised made him the main contender to replace Pearson—who better to stand up to the “insatiable demands” of Quebec nationalists for “concessions,” “opting out,” and “special status” than a tough, informed, perfectly bilingual, and highly articulate Québécois? The conference was, of course, a failure, a harbinger of another decade and a half of such failures.
In one particular area, Quebec was clearly on the offensive, and that was foreign affairs. The BNA Act left control of foreign affairs in the hands of Great Britain, where it had remained until Canada became independent in 1931. Many people assumed that Ottawa inherited control of foreign affairs from Britain and that only the federal government could conduct relations with other countries, but the constitution was never amended to state that. In fact, a number of provinces had maintained offices abroad for years, promoting their interests, including trade, which was constitutionally a federal monopoly.
As part of the Quiet Revolution, Quebec followed the English-speaking provinces into a more active role abroad, but it also upped the ante. In 1961, it opened the Maison du Québec in Paris, catching up to a number of English-speaking provinces that had offices in the UK and the US. Quebec also demanded the right to negotiate agreements with foreign countries and to send delegates to international conferences if the subjects were provincial under the BNA Act. Ottawa insisted that it alone had such authority. Both sides were half right and half wrong—relations with foreign countries had to be federal, but Ottawa had neither authority nor expertise to handle matters that were provincial.
After considerable tension, gamesmanship, clashes, rhetoric, and embarrassments, the two sides were driven to compromise by politics, mutual interest, and common sense. It was agreed that delegations to international conferences would be headed by federal officials but could be staffed with provincial ones, that provinces could negotiate agreements with foreign countries but Ottawa had to sign them, and that Ottawa could negotiate umbrella agreements covering culture and education under which provinces could work out formal agreements with those countries.
Agreements between Ottawa and France in 1964 and 1965 allowed Quebec to develop student exchanges and to train civil servants in France. In 1967, these programs were furthered when Ottawa and the new Johnson government signed a seventeen-point agreement on education, culture, and research. These agreements, however, were overshadowed by the crisis produced by Quebec’s drive for international recognition during the 1967 centennial celebrations. Foreign heads of state were invited to visit Canada, including French President Charles de Gaulle. Premier Johnson had been cultivating Quebec’s relationship with France, and de Gaulle had been all too happy to encourage him. After a royal reception, de Gaulle addressed a large rally from the balcony of Montreal City Hall, enthusiastically shouting, “Vive le Québec libre!” An infuriated federal government terminated the visit, and Canada’s relations with France reached a new low.
De Gaulle’s hasty departure did not put an end to the problems. In February 1968, the tiny African country of Gabon invited Quebec to a conference on education and treated the delegation as though it were from a sovereign state. Canada broke relations with Gabon and launched a full-scale diplomatic campaign to ensure that no country treated provincial delegations as though they represented Canada. By the end of Pearson’s regime, however, this problem had been largely put to rest.
Pearson, the Maritimes, and the West
In the Pearson years, peace and harmony reigned between Ottawa and the Atlantic provinces. The Pearson government continued the basic thrust of the Diefenbaker regime, which had begun treating the region as a full-fledged but disadvantaged part of the country. The four provinces continued to lag far behind the rest of Canada, a gap that would have increased greatly were it not for equalization grants. These were unconditional, so the provinces spent them according to their priorities and felt a great deal of gratitude towards Ottawa. The shared-cost programs with their federal standards and qualifications also created few problems.
Unlike some other provinces, the Atlantic ones did not have any option but to accept the grants with whatever strings were attached, and the fact that these grants distorted their priorities was just a political and administrative price to pay for “fifty-cent dollars.” Indeed, none of them had enough revenue to cover any of their responsibilities, so if a federal shared-cost program helped them with one area but not another, that at least meant progress on one front. They could also use the large, unconditional equalization grants to cover their portion of the shared-cost programs. The main problem with this situation was a long-term one—these four provinces were losing their independence to the politicians and civil servants in Ottawa. They were becoming, as Sir John A. Macdonald had wanted, glorified municipalities administering federal programs. At the time, that seemed a small price to pay or, rather, one that had to be paid no matter the long-term consequences.
During the Pearson years, the relations between Ottawa and the western provinces were largely peaceful. Saskatchewan, of course, was delighted when Ottawa applied its Medicare system to the whole of the country; Alberta protested but was powerless to stop it. The main complaint of the western provinces was that Ottawa seemed to be obsessed with the problems of Quebec at the expense of attention to Western issues.
The Pearson era had begun on an optimistic note, with a new and invigorated national government replacing one that had descended into confusion and chaos. Pearson set out to complete the welfare state, and six years later, Canadians enjoyed a superb pension program and a Medicare system. A plethora of other programs provided assistance to educational facilities and students, to areas of health and welfare that had fallen through the cracks of previous programs, and to local infrastructure and municipalities. Pearson did achieve his goal of completing the Canadian welfare state.
These initiatives, however, produced continuous conflict with the provinces and with the two largest, Ontario and Quebec, in particular. The Government of Ontario could be, and was, brushed aside. Quebec City could not be ignored, because the Québécois still insisted on being in charge of their own lives. But Premier Lesage lost almost every battle to stop Ottawa from encroaching on Quebec’s constitutional responsibilities. The result was growing nationalism, the appearance of separatist parties, and a wave of terrorist bombings. Paradoxically, English Canadians were increasingly of the opinion that Pearson had made too many “concessions” to Quebec and were less and less willing to accept what had been reality since 1867, namely, that Quebec was not “a province like the others.” Pearson was replaced by the man many English Canadians and some Québécois thought could rein in Quebec, a Quebecker of half-French and half-Scottish ancestry named Pierre Elliott Trudeau. He would have to deal with Pearson’s legacy—a superb welfare state that could not be sustained financially and a deepening crisis in federal-provincial relations.