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Federal Spending Power

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Spending power is the power of the federal governments to use or spend their resources in any area, even in areas of provincial jurisdiction in which conditions for provinces to follow can be applied. The spending power of the federal government can be seen as an invasive but necessary step to achieving policy goals and national ambitions without imposing a severe financial burden on the provinces, this allows Canada to be viewed as a “textbook best-practice system of fiscal federalism” (Ouiment, 2014).
Spending power is outlined in section 94 of the constitution and was first used in 1912 for the funding of agricultural education and has now vastly expanded and is often used for payments of federal-provincial cost-sharing programs (Grewal, …show more content…

The issue of federal spending power is rooted in the constitution in which provinces are given money raising powers but their provincial responsibilities and service requirements greatly outweigh the revenue they collect creating a vertical fiscal gap which provides the need or reliance for federal revenues (Ouiment, 2014). Had provinces been given greater financial authority or fairly equal levels of spending to their budgetary requirements then there would be less of a need for federal transfers and federal spending in areas of provincial jurisdiction (Grewal, 2010). As noted above, transfers such as equalization are used to bring all provinces to a national standard addressing horizontal gaps. Federal transfers and spending power then cause conflict within jurisdictions, particularly when transfers are restrictive, infringe on the provinces sovereignty or are inadequate, leading provinces to battle for separate deals to adjust persistent regional gaps, furthering the system of structural fiscal imbalance (Ouiment, 2014). The ability and intentions behind the federal governments spending power in areas of provincial jurisdiction create province wide tension with the federal government however it is maintained that spending power is a constructive force required to help provinces adapt and be flexible to the …show more content…

Historically, French Canadians along with Aboriginals have always sought the respect of their distinct societies to be incorporated in governmental policy and the federal fiscal framework is no exception. Quebec has maintained a prominent stance from the time of Confederation to the Quiet Revolution, the province has advocated for “sovereignty in their sphere of jurisdiction and on sufficient revenue to make that sovereignty meaningful” (Telford, 2003). This generates tension not simply because Quebec wants to be recognized for its distinct territorial and linguistic characteristics which burden the boundaries of federalism but also because many Canadians outside of Quebec have developed a Pan-Canadian political identity that constrain federalism and cause interprovincial alienation (Telford, 2003). Quebec was a strong proponent against federal spending power, noting in particular its discontent with federal grants to universities and the Canada Pension Plan (Grewal, 2010). In aims to calm this discontent the federal government has accommodated Quebec’s heterogeneity and status as a distinct society by participating in asymmetrical intergovernmental engagements with the province

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