To adapt John F. Kennedy on Canada-U.S. relations to our federal-provincial dynamic: Geography has made us roommates, history has made us skeptical and a pandemic has made us cooperate. Despite all the systemic weaknesses revealed by the COVID-19 crisis, its public health and economic exigencies have proven that Canada’s governments are capable of working together. Longtime Liberal strategist and Hill + Knowlton VP John Delacourt examines the economic and political implications of that breaking news. 

John Delacourt 

It is a time that now seems as remote as the Cold War years, given the current fog-of-war reality of this pandemic. But in 2004, Paul Martin’s Liberal government, coming off an election that had seen a confident majority reduced to a nervous minority, convened a meeting of the first ministers on health care at the old railway station in downtown Ottawa—the building that now houses the Senate. 

Much was expected for a national vision. The conference was supposedly going to set the co-ordinates on how health care would be managed in Canada for generations to come. Implicit in the rhetoric leading up to the discussions was an evocation of a larger theme: a defining tone for co-operative federalism for the new century. 

Yet for those among the press gallery who knew Prime Minister Paul Martin well, they did not have high expectations that he would use this meeting as a bully pulpit for federalism, even though a report written by former Saskatchewan Premier Roy Romanow just two years before called for an assertive position that would have the feds providing 25 percent of all health care funding to the provinces and territories. Apart from Romanow’s recommendations there was also the prospect of a national pharmacare plan being discussed in the halls—and perhaps even an opportunity to look ahead and mitigate the risk of a crisis for seniors’ care. Yet after four days of meetings, with a result that might have been indicative of risk aversion or canny transactional politics by Martin and his team, the final deal was far less than a “fix for a generation.” There was an agreement on wait times for five priority areas and another on an escalator clause for funding, and those were the high points of a conference so underwhelming that Alberta Premier Ralph Klein skipped the last day and was rumoured to be spending most of his free time at the new casino across the river in Gatineau. 

This 2004 conference has taken on a new historical resonance when viewed through the lens of how our current Liberal minority government has, because of the challenges of COVID-19, been compelled to adopt a bolder federal role. The fact that 80 percent of the deaths due to the virus have occurred in care homes, even though only one percent of the population is living in them, is a stark enough statistic and a sign that the provinces are struggling to manage this crisis with limited help or leadership from Ottawa. Seniors Minister Deborah Schulte has stated there will be a “Team Canada approach” to establishing federal guidelines for these homes now. Another Liberal minority government, similarly chastened by a loss of majority fortunes, now has to deal with what was overlooked 15 years ago.

Yet there are two other factors that are pulling strongly, like a magnetic force, on the compass points directed toward federal leadership: the economic impact of the pandemic on our cities and the strong undercurrents of a new economic nationalism, owing to the grim realization that depending on global supply chains for essential goods in a time of international crisis seems increasingly ill-advised. The tragedy that has befallen the long- term care homes may have been the first sign that a new way of working collaboratively with the provinces on solutions is needed, but our cities and our ability to manufacture and manage our own essential products and tighten our hold on our greatest resources are now the crucial long-term challenges. 

No one knows this better than ministers Catherine McKenna and Mélanie Joly, tasked with managing infrastructure and the regional economic development agencies, respectively. As McKenna and her team have been focused on the creation of a kind of second Economic Action Plan, working with the provinces on a prioritized list of “shovel-worthy” projects, they have quickly come to the realization that revenue shortfalls at the municipal level are going to make partnering on needed projects very difficult. McKenna’s office has stated they were initially looking at making changes to the gas tax fund, increasing the annual escalator of two percent, but because the tax is allocated on a per capita basis for provinces and territories, smaller communities may not benefit to the same degree. Joly has had to look squarely at the dark horizon for cities as well. Under normal circumstances, regional economic development agencies target their support at communities large and small. If anything, they will devote greater attention to the latter to help grow the tourism and service economies, especially in places that never really recovered from the last recession in 2008. But as storefronts and restaurants are boarded up on formerly busy downtown streets, with no signs of return, there are just too many Canadians out of work in Montreal and Toronto. With cultural events and conferences now taken off the table for the next few quarters, federal resources and leadership are needed more than ever during the long months of recovery ahead.

And as these urban economies stutter-start back to life, the merits of looking outward and re-embracing the central tenets of globalization are being re-examined. Provinces largely managing their own supplies of, say, surgical masks for personal protection made eminent sense just months ago. Now, relying on the U.S. or China for what we’ll need in future crises no longer seems wise or forward-thinking. No one has come to this realization as swiftly as Deputy Prime Minister Chrystia Freeland and her office, whose conversations with the premiers have focused on averting shortages as supply chains have hardened like clotted arteries, struggling to pump some lifeblood into communities whose need is greatest. A rethinking of the positives and negatives of wide-open markets has gone from a ripple to a wave around the world now, and Canada has learned the same lessons as other nations in the G7. It would be an exaggeration to presume the next election will see campaign platforms touting a new economic nationalism, but a new focus on how Canada can ably depend upon itself in times of future crises will be plausible, and will likely sound very compelling to an electorate made war-weary by this virus.

Still, as it is with most COVID-era phenomena, it is too early to say if a greater role for the federal government in Canadians’ lives will maintain its appeal past that next campaign or through the worst of this recovery period. Yet there are strong voices from other fronts that are beginning to suggest so. A trio of prominent names from academia and the cultural sector recently authored an op-ed for the Globe and Mail calling on the government to create a variation of President Franklin D. Roosevelt’s Works Progress Administration, a Depression-era initiative that got Americans working on bricks-and-mortar construction projects but also on films, murals and photography projects. It is less fanciful a notion than it sounds at first; as the authors note, nearly three percent of Canada’s GDP is from the cultural industries; greater than agriculture, forestry, fishing and hunting, accommodation and food services and utilities. The hearkening back to the Great Depression for inspiration may be more apt a notion than we currently want to consider. 

And yet. Outgoing Bank of Canada Governor Stephen Poloz, with one of the few heartening comments of his final days, stated the dire economic forecasts for the next few quarters may be “overblown” and that a wave of innovation and new startups may emerge over the horizon. With that, the new tide of federalism may recede over the stronger terra firma of this recovery phase. The stimulus measures, in this scenario, will have achieved the objective of cushioning the impact on all sectors and providing a smoother transition back to small but incremental growth. 

There is a saying about marathon running and childbirth—that people do it over and over because we have short term memories of pain. The Canadian economy is undoubtedly on a long trek for recovery and when it’s over, the hardships may fade quickly from memory as well. But perhaps some of the lessons from a more co-operative federalism will resonate beyond this crisis. For the Trudeau government’s fortunes, that might be the best news they can hope for before another election campaign.  

Contributing Writer John Delacourt, Vice President and Group Leader of Hill + Knowlton’s public affairs practice in Ottawa, is a former director of communications for the Liberal Research Bureau. He is also the author of three novels.