Intergovernmental Fiscal Relations Commission
There is an urgent need to re-assess federal, provincial and municipal expenditure responsibilities, tax powers, and intergovernmental transfers in Canada to address looming fiscal imbalances.
To address these ongoing concerns, a steering committee made up of academics and policy researchers from across Canada has proposed an Intergovernmental Fiscal Relations Commission. An independent team of academic experts and policy practitioners from a variety of disciplines across the country will recommend practical reforms to the system of intergovernmental fiscal relations in Canada. Like a Royal Commission, it will take a coordinated deep dive into complex questions; unlike a Royal Commission it would be independent of government appointments or political priorities.
Once established, the Commission will publish research papers, policy briefs and op-eds and make recommendations for the reform of fiscal relations among the federal, provincial and municipal governments within the framework of the existing Canadian Constitution.
The Fiscal Relations Challenge in Brief
Fiscal relations challenges have been a long-standing concern of provincial leaders and at times federal governments. It is a complex and controversial subject that contributes to strained federal-provincial relations. Perceptions of fairness and concerns about sustainability of critical health and social programming are at issue. One on-going concern is that federal transfers are determined by the federal government independently of the provinces, despite their impact on provinces who deliver services within their jurisdiction.
The second challenge is that the current mix of expenditure responsibilities, tax powers and intergovernmental grants is unsustainable. Prior to the Covid-19 crisis, provincial governments were running deficits and increasing debt levels over the longer-term (Parliamentary Budget Officer). As we have seen with the current Covid-19 crisis, the federal government is in a much stronger fiscal position compared to provinces-territories and municipalities to deal with the costs of this response.
The third challenge is that Canada’s fiscal relations ignore the increasingly important role of municipalities. While municipalities are the jurisdiction of provinces under the Constitution, the growth of city states means the role of municipalities cannot be ignored any further.
The Steering Committee
Professor and Director
McGill Institute for the Study of Canada
Centre of Excellence on the Canadian Federation
Institute for Research on Public Policy
Canada West Foundation
Former Research Director at the School of Public Policy
University of Calgary
Munk School of Global Affairs and Public Policy
University of Toronto
Department of Economics
University of Calgary
Briefing Notes, Op-eds, Reports
WHAT NOW? Policy Brief
The Need to Review Canada’s Fiscal Stabilization Program for Provinces After COVID-19
Reforming Canada’s Intergovernmental Fiscal Relations in a Post-Pandemic World
Draft Proposal – August 7, 2020