In the old days (1867-1943), federal governments routinely disallowed provincial laws they didn't like – even when those provincial laws dealt with matters of exclusive provincial jurisdiction. They did so, in fact, 112 times. This "power of disallowance," though not used for almost 70 years, remains in effect to this day, awaiting only the right (or wrong) set of circumstances to set off a constitutional crisis of perhaps cataclysmic consequences. Here is a constitutional conundrum of the first rank. Theoretically at least, exclusive provincial jurisdiction grants sovereign authority – not subordinate authority.
Yet the British North America Act, our legacy constitution, balanced federal and provincial powers rather nicely in other ways. For one thing, the courts helped keep ambitious federal governments mostly honest – ensuring, in the enlightened liberalism of the time, the survival of limited, decentralized government. If we still had such a constitution, the federal government would not now, amidst myriad other absurdities, be paying federal bureaucrats to decide the acceptable distance of a particular unemployed worker's commute in remote, EI-dependent parts of the country.
Why so? The British North America Act specified that employment insurance was a provincial responsibility, an interpretation confirmed during the Great Depression when the Supreme Court of Canada and the Judicial Committee of the British Privy Council, the highest tribunal in the Dominion, said so successively in no uncertain terms. In Lord Atkin of Aberdovey's prescient warning, giving federal governments the right to disperse money at will, across the country, would give them "easy passage" to all provincial powers and prerogatives.
It was, in the end, a moot decision. Although Conservative prime minister R.B. Bennett wasn't able to establish a national unemployment insurance program in 1935, Liberal prime minister Mackenzie King did so five years later – with the unanimous consent of the provinces and a strategic constitutional amendment (approved by the British Parliament). It was a modest program, as federal programs always are to start: covering perhaps 40 per cent of workers but explicitly excluding seasonal workers, public-sector workers and people who earned more than $2,000 a year (or, adjusted for inflation, $30,000).
As Lord Atkin anticipated, the program led, a single surrender of provincial jurisdiction at a time, to a notional constitution that lets federal governments collect taxes and distribute the proceeds to any person, organization or corporation it wants. Quebec aside, the provinces haven't much resisted. They happily swapped provincial responsibility for federal money. Only the courts resisted.
It wasn't hard, of course, to sell national job insurance during the Great Depression. Here was an authentic national emergency. But the federal government didn't need a constitutional amendment, or a national program, to help the unemployed. The federal government voted emergency relief funds to municipalities every year of the Dirty Thirties. It helped, in other words, when help was needed; it kept helping when help was no longer needed. The national program was, simply put, the fashionable ideological thing to do in the emerging Age of Keynes. Naturally, it quickly transformed into a vast social-welfare bureaucracy that now maintains a permanent underclass of federally dependent people.
The federal government can give. It can also take away. Liberal prime minister Paul Martin provided the best example in 1995 when, as finance minister, he arbitrarily cut federal transfer payments to the provinces by billions of dollars. Why? The federal government was spending $170-billion a year and collecting $135-billion. But odd, isn't it, that the federal government can so eagerly help the provinces in the good years and so abruptly sucker-punch them in the bad? Even for dedicated Keynesians, this is perverse.
We now think it absurd that a British aristocrat could have blocked – as illegal – a national unemployment insurance program in Canada. In retrospect, Lord Atkin proved more perceptive than this country's determined centralizers. He perceived that the BNA Act protected Canadians' human rights by protecting their property rights from excessive federal power. In a famous ruling on an entirely separate (but entirely compatible) matter, he explained his cautionary interpretation of constitutional law:
"The question is," said Alice, "whether you can make words mean so many different things."
"The question is," said Humpty Dumpty, "which is to be the master."