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The Supreme Court of Canada in Ottawa is seen Thursday Oct. 7, 2010. (Adrian Wyld/The Canadian Press/Adrian Wyld/The Canadian Press)
The Supreme Court of Canada in Ottawa is seen Thursday Oct. 7, 2010. (Adrian Wyld/The Canadian Press/Adrian Wyld/The Canadian Press)

Harper's plans for federation hinge on securities-regulator ruling Add to ...

With Monday’s health-care funding announcement, we saw how Stephen Harper aims to reshape the federation by reducing Ottawa’s influence over social policy. Thursday morning we learn whether he is able to realize the other half of his ambition: giving the federal government a powerful new voice in regulating things.

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The Supreme Court delivers its decision at 9:45 ET on whether the federal government is within its rights to create a national securities regulator. Quebec and Alberta have led the charge against what they see as encroachment in an area of exclusive provincial jurisdiction.

So Finance Minister Jim Flaherty asked the court to rule on whether Ottawa has the constitutional authority to proceed, provided the provinces were asked to join on a purely voluntary basis.

If the court says no, then that will be that. But if it says yes, then the door opens for a broad strengthening of the federal power.

Ted Morton, who was Alberta’s finance minister when Mr. Flaherty proposed the reference a year and a half ago, complained that “we will be potentially inviting intrusion into other areas of provincial jurisdiction governing finance, such as insurance, pensions and financial institutions.”

He was absolutely right.

The Fathers of Confederation, who could never have imagined the 20th-century welfare state, assigned the provincial governments such mundane tasks as managing hospitals, schools, poor houses and property, while giving the federal government the big jobs like collecting customs duties, which was then the largest source of tax revenues.

This made the provinces the major players in shaping the postwar revolution in social policy, and Ottawa dangerously irrelevant. Liberal governments responded by using the federal spending power to cajole or coerce provincial governments into adopting national standards for public health care, welfare programs, subsidized housing and the like.

Conservatives in general and Stephen Harper especially opposed such federal meddling in provincial concerns. That’s why Mr. Flaherty’s announcement on Monday established a funding envelope for health care out to 2024 with no strings attached.

But that brings back the basic question: What should the federal government do for a living? The Conservatives answer it should act more robustly in its own areas of jurisdiction, such as national defence.

But Mr. Harper also believes that Ottawa could play a major role in promoting and policing the economic union, which is impaired by provincial non-tariff barriers, restrictions on labour mobility and patchwork regulations.

A national securities regulator would be an important first step toward creating a sea-to-sea regulatory environment watched over by the federal government. Already, provinces are starting to come around. Premier Alison Redford has said she is willing to end Alberta’s opposition to a securities regulator. Over time, as the obvious advantages become apparent of allowing businesses and workers to move easily between provinces under a single set of rules, provincial opposition may wither.

This doesn’t have to be a top-down process. Perhaps the single biggest nation-building exercise of the last 20 years is the New West Partnership, under which British Columbia, Alberta and Saskatchewan are creating an open market in goods, services and labour.

Premier Greg Selinger has committed Manitoba to joining the partnership. What if Ontario Premier Dalton McGuinty also signed on to what could then be called The New Canada Partnership? An economic union from the Ottawa River to the Pacific would be a far more powerful national adhesive than any agreement on hip replacement wait times.

Quebec is likely to stand aside, as it always does, though Atlantic Canada might wish to join. But regardless of where French Canada’s brain is at, moving toward a single, co-operative, national set of rules and qualifications for all businesses and workers could be a great advance for Canada and an important addition to the federal government’s job description.

You can understand why the Conservatives are awaiting the ruling from the Supreme Court with such interest.

Follow on Twitter: @JohnIbbitson

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