One of the weirder things about the present crisis is that we seem to be re-writing all the rules of federalism without even noticing it.  This will significantly affect the future of higher education.

The most important changes have been with respect to the Canada Emergency Relief Benefit (CERB) and the Canada Emergency Student Benefit (CESB).  Though there have been ebbs and flows over the history of confederation, income support for the under-65s, absent a strong link to the labour force (i.e. through employment insurance), has always been the domain of the provinces.  And then, a month ago: boom!  The CERB shows up and takes over basic income support for pretty much the entire country.  Last week: the CESB came in and handed tons of money to students across the country.  Twenty years ago, the entire political spectrum in the province of Quebec would have risen as one in opposition to the possibility of the federal government giving money directly to students: but the feds managed to do all of this without a peep.

And this is only the half of it.  We have cities banding together for a federal bail-out, which is well outside constitutional norms.  The province of Manitoba is attempting to get federal financial support through wage subsidies to maintain its own public service during the emergency.  And in most policy circles, the need for Ottawa to bail out a Newfoundland government incapable of paying its debts with Brent crude in the $20/barrel range is more or less taken as a given.

Now, part of what is going here is simply that provinces are overwhelmed with the financial and administrative tasks of keeping the virus under control and are grateful for any help they can get.  Part of it is that the feds actually have printing presses of money and the provinces don’t, which means they can borrow in ways the provinces can only dream of.  And, obviously, there’s a case for saying that all this will disappear once the crisis is over.

However, as I’ve been saying for quite some time, we’ve been heading for a major fiscal re-alignment for quite some time: federal finances on the whole look relatively good over the long term, while those of the provinces (especially Newfoundland, Manitoba and New Brunswick) are not very good.  In an ideal world, the federal and provincial governments would be grown-ups and negotiate a new long-term settlement.  And that still might happen – the national small business rent-subsidy announced last week was actually a pretty impressive show of federal-provincial co-operation.             

That’s a temporary emergency measure, though.  It’s a long way from that to some sort of long-term, principled rebalancing of federalism and responsibilities – one which would require either formal uploading of certain responsibilities or much larger federal transfers to provinces (with or without strings).  It’s notable, for instance, that for all the billions of dollars the federal government has spent over the last few weeks, precisely none of it has been on one of the most obvious remedies – more money for health through federal transfers (though then again, why should anyone care about transfers since they are so passé that not a single federal political party can be bothered to speak on their behalf?)

So, I have a feeling that maybe what we are seeing is a crisis imposing a solution where the parties themselves are unable to create one their own.  CERB and CESB might just herald a long-term uploading of responsibility for welfare and student support to the federal government, which would make possible a basic national income framework for individuals.  And why not?  If there is one area where the government of Canada has shown mastery in this crisis, it is in getting money to individuals quickly and efficiently.  One might even call it a core competence (which is freaking amazing considering how badly they screwed up the Phoenix System). Provinces, however, would keep responsibility for institutions – schools, universities, hospitals, etc.  Not an enormous shift from the present, perhaps, but enough that it will help to stabilize provincial finances in the short-term while at the same time making certain types of joined-up policy-making around income support a lot more feasible.  And the thing is no one has to do very much: just allow variations on current policy (something like CERB might be permanent, but it isn’t going to be $2,000 per month) to persist as the crisis subsides and we can avoid meaningful policy discussions while at the same time arriving at a solution that kind of works for everyone.

On such acts of passive aggression was Canada built.  Long live Confederation.