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Peter Shawn Taylor

Harper's fourth pillar of federalism? Add to ...

Panic over shovel speed appears to have subsided across the land. The dubious claim that 80 per cent of the federal government's stimulus package is "already being implemented," despite the fact many of the alleged projects are still application forms or empty fields, was enough to quell political outrage in Ottawa.

But regardless of grammatical conventions or practical implications, Prime Minister Stephen Harper's stimulus plan has done much more than simply put off a summer election. It's actually remaking Canadian federalism in a surprising and unexpected way. And it's entirely to the Prime Minister's advantage.

The relationship between Ottawa and the provinces has changed several times since Confederation. Back in the 1970s, cost-sharing was the dominant model: The feds established objectives and paid half, the provinces dutifully paid the other half. This was gradually replaced with block funding - lump sums provided by Ottawa to the provinces. This system is considered more efficient since it allows provinces to set their own priorities. The $24-billion Canada Health Transfer is a current example.

Ottawa also provides the provinces with equalization money and a series of tax-sharing agreements. Together, the cash transfers, equalization and tax collection deals make up the generally recognized three pillars of Canadian federalism.

Now Mr. Harper is creating a fourth pillar: infrastructure funding.

In his 2007 budget, Mr. Harper committed $33-billion over seven years to his Building Canada Plan. This has been topped up with another $4-billion of the current stimulus money. This fiscal year, there's more than $7-billion in cost-shared infrastructure funding available - it's like a disco revival night for federalism.

And there are some important implications to the return of the cost-sharing hustle.

The most obvious is that it forces provinces to follow the Prime Minister's lead. If a province wants its share of all that new stimulus money sloshing around, it must align its spending plans with those of the federal government. Provinces may even forgo spending in other areas to access this new cash. And Ottawa has a new and direct say on municipal budgets as well. It is all the Conservative government's advantage.

Ever wonder why Mr. Harper resisted for so long Liberal demands to expand employment insurance? Because spending more money on "soft" social programs doesn't fit with his vision of Canada. Natives, health and child care, those were the priorities of Jean Chrétien and Paul Martin.

Mr. Harper's preferences have a harder edge to them: building a national economic union and making concrete productivity enhancements in things such as bridges and schools. Infrastructure funding gives him a way to make sure that other levels of government line up to share his priorities.

Acadia University economics professor Paul Hobson proposed this fourth pillar argument last month at an academic conference at Queen's University with co-author Tracy Snoddon of Wilfrid Laurier University. (Full disclosure: Prof. Snoddon is married to your correspondent.) By their calculations, Mr. Harper's spending on infrastructure dwarfs that of his predecessor, Mr. Martin, by a factor of five.

Of course, creating a new pillar isn't much good if it's only temporary. Mr. Harper has gone to lengths to emphasize that his infrastructure stimulus money is limited in time and amount. His stimulus update claimed a "use it or lose it" approach to the plan.

But this claim to ephemera is not altogether convincing. Professors Hobson and Snoddon note that Mr. Harper has already been hard at work creating a permanent superstructure for his infrastructure plans.

It's true that the GST rebate for cities and the gas-tax fund, worth a combined $2.8-billion this year, were introduced under Mr. Martin as a way to provide cities with temporary infrastructure funds. But Mr. Harper expanded and formalized both programs, turning them into what is now called the "municipal base funding" component of his Building Canada Fund. They're not going away any time soon.

It seems unlikely the Prime Minister would dismantle a funding system that perfectly meets his own needs and, as an added bonus, weakens the long-term objectives of his political rivals. And it would hardly make sense for Liberal Leader Michael Ignatieff to undo Mr. Harper's infrastructure creation after he's spent so much time complaining it wasn't working fast enough.

The fate of minority governments is never certain. The fourth pillar of federalism looks to be much safer.

Peter Shawn Taylor is a writer based in Waterloo, Ont.

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