The Canadian government has long used federal funding to advance its policy agenda in areas that fall under provincial and territorial control, such as health care and child care. A new study from the IRPP’s Centre of Excellence on the Canadian Federation describes how the use of this practice, known as “the spending power,” has changed in recent years, and cautions that these developments may push the provinces and territories to resist its use in the future.

After a hiatus under the Conservative governments of Stephen Harper, the use of the spending power returned with the election of Justin Trudeau’s Liberals in 2015 and has been central to the architecture of several major social policy initiatives in recent years. In the study, McMaster University political science professor Peter Graefe and policy specialist Nicole Fiorillo undertake one of the first comprehensive analyses of the use of the spending power by the Trudeau Liberals.

“We found that the present trend is toward a more directive use of the spending power,” Graefe explains. “For instance, the degree of federal-provincial collaboration in defining policy challenges has declined. Partnerships now seem to be conditional on a province accepting the federal government’s policy vision, rather than collaborating on a shared goal,” he says.

Looking at key bilateral agreements in four different policy areas, the authors find that they require the provinces and territories to provide far more detail and transparency in planning and reporting than what was required in the 1995-2005 era, suggesting a more hierarchical intergovernmental arrangement.

What are the consequences of these changes?

On the one hand, having a federal government with greater legitimacy to impose priorities and reporting conditions on other levels of government is likely to produce a stronger social citizenship. But this model may lead the provinces and territories to resist the use of the spending power more than they have done in the past.

Ultimately, Graefe and Fiorello caution that critiques of the spending power are likely to become stronger and could contribute to enduring disagreements about how to define Canada’s political community.

The Federal Spending Power in the Trudeau Era: Back to the Future? can be downloaded from the Centre’s website (centre.irpp.org).