A New, New Deal for Social Policy and Federalism?

by Terrance Hunsley

Could we be looking at a big change in social policy and federalism?

The press have suggested that Bill Morneau was not supportive of Justin Trudeau’s plans for a bold economic initiative.

There is also speculation that the new plan could encourage a transformation to a green economy. It would be financed by printing new money, a lot of new money. Central banks have apparently figured out, despite the idea having been rejected by economists for decades, that the money supply,  and public debt, can be increased substantially without economic disaster, so long as inflation is also kept in check. With the pandemic entering a second wave, it might seem a propitious moment for a Hail Mary pass.

The New Deal economic plan coming out of the Great Depression changed the structure of spending of different levels of government in the USA, with the federal level gaining prominence.  Canada followed suit more gradually, following a royal commission on federal provincial fiscal arrangements in the 40’s(1).  Maybe something similar is in the offing?

Perhaps a brave new initiative will focus entirely on a green economic agenda. But there are at least two other hot issues that have raised pressure for federal action. One is for some kind of income guarantee to combat the economic fallout of the pandemic. The CERB was useful, but was not designed for the long term. And the EI program is just not going to cut it in the new world of work, where fewer people fit the standard definition of an employee. The other is for the inclusion of assisted living and long term care in medicare, with accompanying national standards.  


So what if Mr Trudeau decided to make a major shift, and not be beholden to the provinces to permit him to do it? 

He could make big investments in alternate energy infrastructure,  energy saving refits,  environmental cleanup and stewardship, with some big opportunities for indigenous peoples.

He could introduce an income guarantee program. To do it through unilateral federal action, he might restrict it to a working income guarantee through the Canada Workers Benefit, thus making it in effect,  a portable wage subsidy.  Or he could go whole hog and introduce a universal basic income. That action would immediately relieve the social assistance budgets of provincial governments without requiring their collaboration. He would probably accompany it with increased taxes on high incomes and wealth.  

Mr Trudeau would then be in a strong position to tell provinces that the Medicare Act will be expanded to require that assisted living and long term care of the elderly be provided under the same five principles required by that act. They are universality of coverage, portability of coverage (from province to province), reasonable access to services (without financial impediment), comprehensiveness of needed services, and public administration of the overall system. 

He would then be able to either offer some financial contribution, or to suggest that the provinces can handle the costs because of their big social assistance savings. 

Could be a pretty good plan. 



(1) A bit of historical trivia: During the 1980’s I was the Executive Director of the Canadian Council on Social Development. During the 1940’s that organization was called the Canadian Welfare Council and was led by Charlotte Whitton. In that role, she made sixteen separate submissions to the royal commission. She was a familiar figure.

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