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There are no special accountabilitymechanisms to ensure the accountability of governments for the commitments theymake in intergovernmental agreements. As already noted, the main methods ofaccountability are the standard parliamentary procedures whereby the executivemust have the support of a majority in its legislature to remain ingovernment.

Recent Developments: The Social UnionFramework Agreement

The Social Union Framework Agreement is anintergovernmental agreement signed by the federal government and nine of theprovincial governments early in 1999.37 Some of the provisions inthe Agreement attempt to address issues that relate to the lack ofaccountability and transparency in the intergovernmental relationsprocess.38

Although these provisions in the Social UnionFramework Agreement are indicators that governments are attempting to addressthe issues of accountability and transparency it is important to remember thatthese commitments are themselves only part of an intergovernmental agreement.The Agreement is now 18 months old but as yet there are few visible signs thatgovernments have made any progress in meeting these accountability andtransparency commitments.

B. A Summary of Federal and ProvincialBudgetary
Elations inCanada

This section contains a description of thestylized facts of the relative magnitudes of federal and provincial fiscalresponsibilities and how they have evolved over time. This includes theshares of federal and provincial governments in public spending and revenueraising, the importance of transfers between the two orders of government, andthe extent of vertical and fiscal imbalance in the Canadianfederation.

In Canada, there is a hierarchical fiscalrelationship among the three main orders of government. The federalgovernment deals mainly with the provinces, while the provinces deal with themunicipalities within their borders. The division of fiscalresponsibilities between a province and its municipalities differs considerablyacross provinces. As well, although the provinces are legislativelyindependent from the federal government, municipalities are not legislativelyindependent of the provinces. As already noted, the municipalities arethe creation of the provinces and provincial governments exercise extensiveoversight over their municipalities. This makes the provision of someimportant public services, such as education, welfare and health, very muchsubject to joint provincial-municipal decisions. For these reasons, wehave aggregated provincial and municipal expenditures together, and refer tothe result simply as ‘the provinces’.

For the most part, we treat the provinces asan aggregate, though presenting disaggregated data by province as well.In the following subsections, we present the shares of federal and provincialgovernments in total public spending; their shares in total revenues; theimportance of transfers from one level to another, and the manner in whichthese transfers affect the vertical and horizontal imbalances that exist acrossjurisdictions.

1. Federal And Provincial Shares Of TotalPublic Spending

Table B.1 provides almost 40 years of dataindicating the shares of federal and provincial governments in total publicsector spending.39 Since public sectorspending includes transfers made to other orders of government, and thosetransfers go to finance programs of the latter, it would be misleading simplyto record expenditure shares with those programs included. We havetherefore presented two alternative calculations of shares — one with the transfers included,and one without. Recall that we have aggregated the provinces and theirmunicipalities together, so this is really only an issue with respect to thefederal government. Thus, shares of federal and provincial spendingincluding intergovernmental transfers treat federal transfers to the provincesas a component of federal spending, while shares excluding intergovernmentaltransfers do not.

Table B.1: Federal and Provincial Government Shares of TotalPublic Spending (Percentages)

Including IntergovernmentalTransfers

Excluding IntergovernmentalTransfer

Year

Federal

Provincial

Federal

Provincial

1961

57.4

42.6

52.7

47.3

1962

56.8

43.2

51.8

48.2

1963

55.1

44.9

50.0

50.0

1964

53.6

46.4

48.7

51.3

1965

51.7

48.3

46.1

53.9

1966

51.5

48.5

45.6

54.4

1967

49.9

50.1

44.1

55.9

1968

48.8

51.2

42.6

57.4

1969

47.3

52.7

41.2

58.8

1970

46.4

53.6

39.7

60.3

1971

46.3

53.7

38.7

61.3

1972

47.1

52.9

40.5

59.5

1973

46.2

53.8

40.0

60.0

1974

48.2

51.8

42.0

58.0

Table B.1 (Continued): Federal andProvincial Government Shares of Total Public Spending (Percentages)

Including IntergovernmentalTransfers

Excluding IntergovernmentalTransfer

Year

Federal

Provincial

Federal

Provincial

1975

48.6

51.4

42.3

57.7

1976

46.5

53.5

40.2

59.8

1977

46.2

53.8

39.8

60.2

1978

46.3

53.7

39.9

60.1

1979

45.4

54.6

39.2

60.8

1980

45.4

54.6

39.5

60.5

1981

46.0

54.0

40.6

59.4

1982

46.3

53.7

41.0

59.0

1983

46.1

53.9

40.7

59.3

1984

47.5

52.5

42.0

58.0

1985

48.1

51.9

42.6

57.4

1986

46.9

53.1

41.7

58.3

1987

46.7

53.3

41.5

58.5

1988

46.4

53.6

41.0

59.0

1989

46.3

53.7

41.1

58.9

1990

46.3

53.7

41.3

58.7

1991

45.8

54.2

41.1

58.9

1992

44.7

55.3

39.7

60.3

1993

44.6

55.4

39.6

60.4

1994

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