A political marriage of convenience

The London Free Press
By Rory Leishman

In a rare display of intergovernmental and bipartisan harmony on Tuesday, Canada’s Conservative Prime Minister Stephen Harper and Ontario’s Liberal Premier Dalton McGuinty jointly announced more than $1.5 billion in additional federal spending for projects in Ontario.

A substantial chunk of the federal tax money -- $586.2 million – will be funnelled to Ontario through “Canada ecoTrust,” a new agency that the Harper government has established to support provincial projects for reducing greenhouse gas emissions and other pollutants. Among the several environmental initiatives jointly approved by the Harper and McGuinty governments is the expedited construction of a new East-West transmission line for the importation of clean hydroelectric power from Manitoba.

McGuinty has a special interest in this transmission line. Once it is completed, the Ontario government should finally be able to fulfil the abortive promise he made in the last provincial election to shut down Ontario’s biggest polluter – the gigantic, coal-fired Nanticoke generating station.

Most of the new federal money for Ontario -- $962 million –- is designated for expansion of the Toronto subway system as well as the construction of other transit facilities and commuter highways in the Greater Toronto Area. The projects are intended to speed up traffic flow on commuter highways and persuade more people to use mass transit, thereby reducing air pollution and making life more comfortable for commuters in the Toronto suburbs where the Conservatives hope to gain seats in the next federal election.

Ontario, of course, is not the only province designated to benefit from new federal spending. Just last month, Harper announced plans to allocate $349.9 million out of the Canada ecoTrust to Quebec. Like McGuinty, Quebec Premier Jean Charest is also enthused about these promises of more federal spending in areas of provincial jurisdiction.

In contrast, Toronto Mayor David Miller is not altogether happy with federal grants to the provinces for municipal projects. He is trying to browbeat the Harper government into transferring all the revenue from one percentage point of the GST directly to the nation’s cities.

Miller’s proposal would cost the federal treasury more than $5 billion a year. He estimates that Toronto alone would get $470 million a year. In this way, he and other municipal politicians would get credit for spending hundreds of millions of dollars out of revenues that the federal government would retain responsibility for raising.

No federal prime minister is likely to go along with such a one-sided proposal. Miller and other city mayors should count themselves lucky that the Harper government has promised to transfer two cents of the federal gas tax to the municipalities for spending on urban transit.

McGuinty, Charest and the other provincial premiers are no less loath than Harper to make unconditional grants out of their tax revenue to municipal politicians. As a general rule, politicians on one level of government can see little advantage to raising tax revenues for transfer to politicians on another level, if the latter will have complete control over how the money is spent.

In the past, the federal government incurred the wrath of the provinces by imposing conditional grants for spending in areas of provincial jurisdiction that did not accord with provincial spending priorities. Harper has been careful to avoid such antagonism, by working in close coordination with the provinces on joint spending plans.

Consequently, both Ontario and federal officials were all smiles on Tuesday as Harper announced plans for increased federal spending on environmental, transit and highway projects approved by the government of Ontario. McGuinty’s only reference to the separation of federal and provincial powers under the Constitution was to jest that Parliament bears entire responsibility for excessively cold weather.

There is a catch in Harper’s new spending proposals: He cannot actually hand over the money that he has promised to Ontario and Quebec, until Parliament approves the spending in the upcoming federal budget. Will the opposition parties dare to combine to vote down that budget?

Probably not. It would be a rash Liberal or New Democrat in Ontario who would want to go into an election campaign with the Conservatives blaming them for depriving the province of hundreds of millions of federal dollars for curbing air pollution and improving mass transit in Toronto.