Federal-Provincial Collaboration 9780773560796

Table of contents :
CONTENTS
ACKNOWLEDGEMENTS
Part One: The Background
1. Introduction
2. The Institutional Environment
Part Two: The Canada–New Brunswick GDA
3. Introducing a New Approach to Decision Making
4. A First Generation of Subsidiary Agreements
5. A Second Generation of Subsidiary Agreements
6. Implementing the Subsidiary Agreements
7. Actors and Procedures
Part Three: An Assessment of the GDA Approach
8. The GDA Approach and Political-Administrative Institutions
9. The GDA Approach and Federal-Provincial Relations
APPENDIX: FINANCIAL SUMMARY OF NEW BRUNSWICK SUBSIDIARY AGREEMENTS
NOTES
INDEX
A
B
C
D
E
F
G
H
I
J
K
L
M
N
O
P
Q
R
S
T
U
W
Y

Citation preview

Federal-Provincial Collaboration

CANADIAN PUBLIC ADMINISTRATION SERIES COLLECTION ADMINISTRATION PUBLIQUE CANADIENNE J. E. Hodgetts, General Editor/Directeur général Roch Bolduc, Directeur associé/Associate Editor The Institute of Public Administration of Canada L'Institut d'administration publique du Canada This series is sponsored by the Institute of Public Administration of Canada as part of its constitutional commitment to encourage research on contemporary issues in Canadian public administration and public policy, and to foster wider knowledge and understanding amongst practitioners and the concerned citizen. There is no fixed number of volumes planned for the series, but under the supervision of the Research Committee of the Institute, the General Editor, and the Associate Editor, efforts will be made to ensure that significant areas will receive appropriate attention. L'Institut d'administration publique du Canada commandite cette collection dans le cadre de ses engagements statutaires. II se doit de promouvoir la recherche sur des problèmes d'actualitè portant sur 1'administration publique et la dètermination des politiques publiques ainsi que d'encourager les praticiens et les citoyens intèressès à les mieux connaître et à les mieux comprendre. II n'a pas été prévu de nombre de volumes donné pour la collection mais, sous la direction du Comité de recherche de 1'Institut, du Directeur général, et du Directeur associé, Ton s'efforce d'accorder 1'attention voulue aux questions importantes.

Canada and Immigration: Public Policy and Public Concern Freda Hawkins The Biography of an Institution: The Civil Service Commission of Canada, 1908-1967 J. E. Hodgetts, William McCloskey, Reginald Whitaker, V. Seymour Wilson An edition in French has been published under the title Histoire d'une institution: La Commission de la Fonction publique du Canada, 1908-1967, by Les Presses de 1'Université Laval Old Age Pensions and Policy-Making in Canada Kenneth Bryden Provincial Governments as Employers: A Survey of Public Personnel Administration in Canada's Provinces J. E. Hodgetts and O. P. Dwivedi Transport in Transition: The Reorganization of the Federal Transport Portfolio John W. Langford Initiative and Response: The Adaptation of Canadian Federalism to Regional Economic Development Anthony G. S. Careless Canada's Salesman to the World: The Department of Trade and Commerce, 1892-1939 O. Mary Hill Health Insurance and Canadian Public Policy: The Seven Decisions that Created the Canadian Health Insurance System Malcolm G. Taylor

Conflict over the Columbia: The Canadian Background to an Historic Treaty Neil A. Swainson L'Economist et la chose publique Jean-Luc Migué (Published by Les Presses de 1'Université du Québec) Federalism, Bureaucracy, and Public Policy: The Politics of Highway Transport Regulation Richard J. Schultz Federal-Provincial Collaboration: The Canada-New Brunswick General Development Agreement Donald J. Savoie

Federal-Provincial Collaboration The Canada-New Brunswick General Development Agreement

DONALD J. SAVOIE

The Institute of Public Administration of Canada L'Institut d'administration publique du Canada McGill-Queen's University Press Montreal

© The Institute of Public Administration of Canada/ L'Institut d'administration publique du Canada 1981 ISBN 0-7735-0373-0 (cloth) ISBN 0-7735-0374-9 (paper) Legal deposit 2nd quarter 1981 Bibliothéque Nationale du Quebec Printed and bound in Canada by T. H. Best Printing Company Limited

To Linda, Julien, and Margaux

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Contents ACKNOWLEDGEMENTS

xi

Part One: The Background 1. Introduction

1

2. The Institutional Environment

7

Part Two: The Canada-New Brunswick GDA 3. Introducing a New Approach to Decision Making

25

4. A First Generation of Subsidiary Agreements

45

5. A Second Generation of Subsidiary Agreements

65

6. Implementing the Subsidiary Agreements

91

7. Actors and Procedures

107

Part Three: An Assessment of the GDA Approach 8. The GDA Approach and Political-Administrative Institutions

127

9. The GDA Approach and Federal-Provincial Relations

151

APPENDIX: FINANCIAL SUMMARY OF NEW BRUNSWICK SUBSIDIARY AGREEMENTS

169

NOTES

171

INDEX

185

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Acknowledgements

Many have assisted in the preparation of this study. I am especially grateful to Nevil Johnson of Nuffield College, Oxford, who provided inestimable help and advice in an earlier version of the work. I am also grateful to other members of the University of Oxford who encouraged me in my work at various lectures and seminars and at less formal gatherings. I also benefited from the advice of Professeur Guy Lord of L'Université de Montréal who read the entire original draft. He is responsible for many improvements in the final draft. Richard Simeon, director of the Institute of Intergovernmental Relations at Queen's University, provided valuable encouragement in revising the work for publication. J. E. Hodgetts, editor of the Canadian Public Administration Series, also provided patient support and important editorial assistance in revising the study. Successful completion of the book would clearly not have been possible without access to relevant officials and documents and generous financial assistance which my former employer the Department of Regional Economic Expansion (DREE) provided or made possible throughout the period of research. I am also very grateful to several former colleagues at DREE and the Government of New Brunswick. They were good enough to read and comment upon versions or parts of the work, or to reply patiently to specific questions. And, though I must respect their anonymity, I am indebted to many cabinet ministers, public servants, and others who gave so generously of their time during the numerous interviews that I conducted in gathering information for the research. I must, however, with greater than usual emphasis absolve them all of any responsibility for my errors. I also wish to state emphatically that the opinions and conclusions represented in this study are solely those of the author.

ACKNOWLEDGE MENTS

I also wish to take this opportunity to express special gratitude to Chris Warmington and Pat Kimball for having undertaken the difficult task of typing the manuscript. Among all my many debts, however, my strongest are to my wife, Linda, and to our children Julien and Margaux. A moment's reflection will reveal the implications which this work has had for family life.

Part One

The Background

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Chapter One Introduction "The guiding principle of mid-twentieth century federalism," writes A. H. Birch, "is the need for co-operation."1 Given the demands and complexities of modern government, it is no longer possible for either level of government in a federation to operate in hermetically sealed jurisdictions. For this reason, and also because Canada's constitution as judicially interpreted has made it difficult to reallocate legislative and financial jurisdictions in order to reflect changing circumstances, "cooperative federalism" has increasingly shaped Canada's federal-provincial relations for the past thirty years.2 Cooperative federalism essentially means the use of federal-provincial agreements to permit cooperation and coordination between the two levels of government. Nowhere is the need for federal-provincial cooperation more evident than in the area of economic development. For one thing, Canada's constitution does not deal explicitly with this field and most observers agree that concurrent powers exist. For another, major regional economic imbalances exist and the federal government has been actively involved in redistributing resources towards the provinces most in need of economic development. In addition, with the national and provincial economies more and more interwoven in a web of interdependence, some form of intergovernmental consultation is essential, if only to ensure that the efforts of one level of government do not frustrate those of the other. Counter-balancing this interdependence, however, is the fact that the word "federalism" itself implies that no government has hierarchical controls over others. Thus, if a fundamental principle of federalism is to be respected, governments, in their relations with each other, must respect each other's political autonomy. In Canada, under the heading of cooperative federalism, intergovernmental relations in the field of economic development have taken many forms. More recently, mainly to meet the growing demand for more I

CHAPTER ONE

consultation with the provinces, the federal government introduced the General Development Agreement (GDA) approach to federal-provincial relations, under which the bureaucracies of both levels of government are brought together to plan and implement new initiatives designed to stimulate economic development. At the same time, it decentralized to the provincial capitals the decision-making authority of its Department of Regional Economic Expansion (DREE). This new and significant development in Canada's federal-provincial relations is the subject of this study. Its underlying theme is that while the GDA approach may well promote a highly sophisticated and coordinated attack on economic disparities, it also entails—when placed in a broader perspective—important consequences for Canada's political-administrative institutions. Certainly, if the GDA operates as was initially intended, then it should be increasingly difficult to maintain the "layer cake" view of intergovernmental relations so often associated with cooperative federalism.3 This view, which reflects the Canadian experience, stipulates that policies or initiatives, at least at the outset, are formulated by each government and subsequently submitted to a bargaining or a mutual adjustment process between two equals. Federal-provincial agreements traditionally have been negotiated at the political level after both levels of government had either independently formulated or considered within their organizational structures the proposals leading to the agreements. Since it brings together both bureaucracies to develop and implement initiatives jointly, the GDA approach manifestly departs from this tradition in that it does not constitute just another procedural relationship, but rather a formalized decision-making process which intentionally blurs jurisdictional lines. In turn, this should manifest itself not only in federal-provincial relations but also in Canada's main political and administrative institutions. Existing studies of Canadian federalism deal chiefly with the legal and financial aspects of the federal system, with the cultural and regional diversities of the federal society, or with the policy- or decision-making roles of federal-provincial conferences and committees. Too few studies have assessed the role of officials (that is, public servants) in shaping federal-provincial relations and fewer still have examined intergovernmental relations in Canada when these are conducted bilaterally. The GDA approach provides an excellent opportunity to study these two issues. Both it and the decentralization of DREE were expressly designed to promote bilateral relations between the federal and provincial governments so that together they could take into consideration local economic circumstances and conditions in formulating and implementing new initiatives. In addition, officials are able to wield considerable—in some provinces unprecedented—decision-making authority when dealing with GDA-sponsored initiatives. This study, then, assesses the conse2

Introduction quences for Canadian federalism and institutions when the two levels of bureaucracy are tied together and analyses how officials approach federalprovincial relations. The last point is particularly significant, given that officials are more and more exercising a decisive influence on federalprovincial relations, if only because of their possession of expert knowledge or specialized information. This remains a largely unexplored issue, perhaps because the necessary information to undertake an in-depth study of the role of officials in federal-provincial relations has not always been readily available. To permit a detailed analysis of the actual operation of the GDA decision-making process, we have focused on a single case study—the Canada-New Brunswick General Development Agreement. The reason for this particular choice stems partly from the fact that the information required was accessible (a matter not to be taken for granted), and also because New Brunswick offers an excellent model for our investigation. In economic terms, although it is not the poorest province, using per capita income as the criteria, it is classified as a "have-not" province. Thus, New Brunswick's reliance on federal support for economic development is important to the provincial government and makes for frequent federal-provincial interaction. In addition, most observers would agree that the structure (or the machinery) of this province's government is quite representative of at least the other three Atlantic provinces. It is nevertheless important to bear in mind that the conclusions of this study are drawn from a specialized case study; that what is true for New Brunswick may not necessarily hold in other provinces. For example, because of their wealth and self-reliance in the area of economic development, the GDA approach should play a far less significant role in, say, Alberta or Ontario. Moreover, though the legal and administrative requirements of the GDA approach may well be applied uniformly in all provinces, every student of government knows that other factors, such as the political persuasions of provincial governments and the personalities of decision makers, can have far reaching implications for decision making. The conclusions reached here regarding New Brunswick might well be applied to the other Atlantic provinces, given that some similarities exist in terms of size of the public service, political culture, and the high level of dependency on the federal government in the field of economic development. In the first part of this study, the organizations of the governments of Canada and New Brunswick are briefly surveyed. It is important to gain an appreciation of how the two levels of politicians and officials traditionally interact and of their relationship, to both the general public and interest groups. The development, implementation, and federal-provincial interactions 3

CHAPTER ONE

entailed in earlier schemes in the field of regional economic development are also discussed so as to place the GDA approach in an overall context, after which it will be possible to assess to what extent it differs from its forerunners in terms of possible impact on political institutions, and also to determine why it was introduced by the federal government. As will be shown in the second part of the study, GDA-sponsored initiatives can be developed in a variety of policy fields. In fact, GDAs are essentially loosely defined legal frameworks and in themselves do not provide for specific action. Project and cost-sharing arrangements are, instead, presented in subsidiary agreements. In New Brunswick, subsidiary agreements have at times introduced new policies, at times altered existing policies, and at times merely provided for programs, some of which were first introduced under pre-GDA cost-shared arrangements. Given that the GDA approach does not lay down clear policy and program limits within which political and administrative actors must operate, its operation needs to be discussed at some length, as does the matter of how GDA decisions are made. It is well known that, traditionally, governments in Canada compete at federal-provincial conferences or elsewhere to expand their spheres of influence, to affect each other's priorities, to gain status, and at times to discredit each other.4 The continuing Ottawa-Quebec conflict provides a classic example of the mutual strategy to "gain points" by undermining the credibility of the other level of government, although it is by no means unique. For instance, provincial governments in the Atlantic region frequently blame federal policies for their economic woes, while in turn Ottawa maintains that misguided provincial policies are often responsible for the economic under-development of the region. Broadly speaking, then, the federal-provincial arena is viewed as a place where governments compete for public acceptance and where bargaining and sometimes outright confrontation guide the development of new federal-provincial policies and programs. Cabinet ministers bring to the arena the political goals of their respective governments and it is these often diverging goals that provide the starting point for bargaining. Under Canada's present constitutional arrangement, provincial Cabinet ministers, especially those from the have-not provinces, are continually seeking the best possible federal cost-sharing arrangement to support initiatives they consider to be politically attractive. Conversely, federal Cabinet ministers, through the extensive federal spending power, seek to influence provincial government priorities to reflect what the federal government perceives to be the most appropriate course of action. Intergovernmental competition is not strictly confined to the political level. Administrative actors or officials also have goals to promote and the interest of their departments to protect. Speaking of Canada's eleven 4

Introduction government bureaucracies, a leading Canadian political scientist recently remarked: "Typically . . . they seek to enlarge the scope of their functions. If the environment offers new opportunities for expansion in emergent problem areas they will compete with other bureaucracies for the prizes of status and growth offered by enhancement of their activity."5 It nevertheless remains true that intergovernmental relations at the officials' level are conducted in a much less controversial atmosphere than those held at the political level: for one thing, being result oriented, officials are more likely than politicians to accept a common information base from which discussion can proceed;6 for another, they do not have an electorate to which they must appeal. The second part of our case study examines the goals, values, and attitudes of political and administrative actors and how they shape the development of GDA-sponsored initiatives. The fact that the approach calls for joint planning and decision making is significant in that it raises a number of questions. Some of these are: To what extent are GDAsponsored initiatives in fact the result of joint planning? Does the GDA approach lend itself to political level bargaining? Bearing in mind the decentralization of DREE, how do federal and provincial officials interact? How do federal officials other than those of DREE view the GDA approach, given that it can sponsor initiatives falling within their fields of responsibility? More generally, where does it fit into the continuing struggles of bureaucracies to expand their spheres of influence? In the concluding chapters, questions concerning the impact of the GDA approach on Canada's political-administrative institutions and on federal-provincial relations are asked. Specifically, the study considers how far the GDA approach and its process of joint decision making are compatible with established political and administrative institutions. For example, it considers whether or not the ability of the House of Commons and the provincial Legislative Assembly to expose government action to public scrutiny has been affected. The extent to which interest groups and informed members of the general public are able to participate in formulating New Brunswick subsidiary agreements is also examined. Finally, the study places and in turn assesses the GDA approach in the overall context of modern Canadian federalism. Such issues as its impact on the constitutional division of responsibility and on the competitive nature of Canadian federalism are also discussed. The study concludes by arguing that the political cost of the GDA approach is excessively high and presents an alternative for the federal government to consider in its efforts to alleviate regional economic disparities. Information for this study comes from a number of sources. The most important are newspapers, government documents, and personal interviews with politicians and officials concerned with the Canada-New

5

CHAPTER ONE

Brunswick GDA. Records of parliamentary and legislative debates and government publications were examined, as were a number of unpublished documents which included correspondence between both levels of government, project proposals, briefing material, records of decisions of federalprovincial development, and management committees of various subsidiary agreements. With no attempt made to arrive at a representative survey, over seventy interviews were conducted. In the case of the Canada-New Brunswick GDA, a number of both elected and non-elected officials representing an assortment of departments and agencies from both levels of government were involved. The objective was to identify and interview as far as was possible as many of these who either played a significant role in it or were directly affected by the outcome.

6

Chapter Two The Institutional Environment POLITICAL-ADMINISTRATIVE INSTITUTIONS: A COMPARATIVE SURVEY On the face of it, one may well be tempted to argue that when it comes to political-administrative institutions what is true at the federal level is also true at the provincial level, and that a joint planning approach to federal-provincial relations would be well suited or at least compatible with these institutions. Apart from the fact that provincial legislative assemblies do not have an upper chamber as does the national Parliament, parliamentary practices and procedures at the federal and provincial levels are similar in that they are both deeply rooted in British traditions. Moreover, in line with British governmental forms, political parties are highly disciplined at both levels, federal and provincial cabinets stand at the apex of the policy-making process in their respective governments, and government departments are organized along similar administrative principles (though there are some exceptions, they are organized at both levels along functional, rather than, for instance, geographical lines). Yet, there is one significant difference between the two levels of government which is especially relevant in analysing the GDA approach of bringing together two bureaucracies to carry out joint planning and joint decision making. Excluding the provinces of Ontario and Quebec, there exists a substantial imbalance in size between the federal and provincial governments. The federal government is large by any standards, considering that major government functions like health, social services, and education fall under provincial jurisdiction. In our interviews, most federal officials accepted that the federal government is something like 20 to 25 percent overstaffed, whereas the provincial bureaucracies in the have-not Atlantic provinces are understaffed and lack the necessary research capability to undertake sound long-term planning.1 The federal executive is divided into twenty-seven departments and over 100 so-called independent agencies. During fiscal year 1976-77, the 7

CHAPTER TWO

total number of allocated federal man years amounted to 321,191, a figure which excludes all military personnel and federal employees not under Treasury Board control, such as those of most independent agencies. The New Brunswick executive, on the other hand, is divided into eighteen government departments and several independent agencies employing some 11,300 employees. When the two bureaucracies are compared according to expenditure budgets and man years, the New Brunswick government is only slightly bigger than an average federal department and, in fact, smaller than eight of them. What implications does this imbalance hold for decision making? Obviously, at the federal level it is a far more complex and involved process than at the provincial. One federal official estimates that from its conceptual stage through to final approval, a new program proposal is ordinarily reviewed by at least twenty bureaucratic decision-making or "vetting" centres and that it can take up to several months before the proposal can receive final approval. In New Brunswick, however, it is not uncommon for a Cabinet minister, especially if he has the support of the premier, to request the development of a new proposal and have it approved by full Cabinet, all within a few weeks. The imbalance in size also means that relations between political and administrative actors differ radically from one level of government to the other. At the federal level, Cabinet ministers are compelled to delegate considerable decision-making authority to their departmental officials, if only because they simply do not have the time to involve themselves with administrative matters and with all departmental issues. One federal deputy minister (that is, the administrative or permanent head of the department) revealed that he sees his minister, on average, one hour a week and that the minister himself only spends about seven hours a week on departmental matters. The rest of the minister's seventy hour week is spent with Cabinet, Cabinet committees, the House, constituency matters, and attending to various other commitments.2 This, among other factors, has led many observers to suggest that the federal bureaucracy has been able to establish "considerable patterns of authority" over decision making. Commenting on his relations with his departmental officials, one Cabinet minister recently stated that "I felt that the ritual of the paper work—the chain of command—make it virtually impossible to get the kind of information I needed when I needed it and I felt very helpless."3 Professor Thomas Hockin adds that "Canada, especially at the federal level, exhibits many characteristics of an administrative state."4 In our interviews, most federal officials acknowledged that a problem of political control over decision making exists and has existed for some time at the federal level. However, they hastened to point out that they lacked sufficient access to their departmental ministers and several emphasized 8

The Institutional Environment that they would welome periodic meetings with their ministers so as to obtain a better feel of his and the Cabinet's "political mood." New Brunswick government officials have no such complaints. On the contrary, the great majority of them charged that ministers are far too preoccupied with what they themselves regard as administrative matters. Because they have a lighter legislative workload and because New Brunswick government departments are, comparatively speaking, quite small, the provincial Cabinet ministers are much more a part of their departmental management team than are their federal counterparts. They participate, at times in a very direct fashion, in preparing their departmental budgets and in developing new initiatives. Furthermore, they are likely to know on a first name basis—at least to the section supervisor level—most of their departmental officials. Accordingly, ministers and officials interact frequently, not just on politically sensitive issues and when formulating new policies and programs, but also on program implementation and administrative matters. In many ways the New Brunswick bureaucracy is still in its nascent stages. The rapid expansion of government activities and expenditures at the provincial level in recent years has occasioned the hiring of new and better qualified officials. Since the early 1970s, the provincial public service has pursued an annual policy of recruiting university graduates and young professionals from other governments and private industry. It has also instituted several continuing manpower development programs, through which modern management techniques (such as cost-benefit analysis) have been introduced. This new generation of "technocrats" has strengthened the professionalism of the New Brunswick public service. Nevertheless, there is no doubt that the provincial Cabinet and individual Cabinet ministers dominate decision making in the New Brunswick government, in that they decide not only when and which proposals should be implemented, but also, in fairly specific terms, how they should be implemented. Provincial Cabinet ministers emphasized in our interviews that New Brunswick lacks sufficient financial resources to set up an elaborate planning capacity and that it would not necessarily be welcome even if it could be afforded. Broadly speaking, they contend that planning entails little benefit and that it often provides a means for officials to circumvent their decision-making authority. Others, however, say that New Brunswick Cabinet ministers are reluctant to increase the province's planning capacity in any significant fashion because it would inhibit their ability to dispense political patronage and to base their decisions on purely political partisan considerations.5 As in most large bureaucracies, hierarchical lines are highly respected at the federal level. Leaving aside the departmental picnic and the odd

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staff conference, both the minister and the deputy minister seldom meet with officials below the director general level. In addition, federal officials operate under a host of administrative directives, guidelines, and regulations. Compared with their provincial counterparts, federal officials are in fact notorious for documenting on paper and in an elaborate manner their proposals and activities and for establishing and respecting timeconsuming procedures both in their relations with each other and with those outside the public service. Some have suggested that this "red tape" is to their advantage. By deliberately putting up from time to time "a stunning array of bureaucratic logjams and interdepartmental stalling," they are able to resist political pressure.6 Again as in other large bureaucracies, interdepartmental competition and cooperation are important elements of the process by which priorities are determined. Much has been written elsewhere in respect of federal departments continually competing to expand their spheres of influence.7 It will suffice here to discuss briefly how interdepartmental relations are conducted at the federal level. At the more senior level of the public service informal contacts are vitally important as officials do not always have time to attend regularly formal interdepartmental committee meetings, however important these may be. Nevertheless, because they are able to view policy issues in a broader context than is available to the program specialists, they can very often resolve actual or potential interdepartmental conflicts quickly and quietly among themselves at luncheon meetings or the like. In any event, they recognize that they represent the only buffer zone between the Cabinet and the rest of the bureaucracy: unless they are able to resolve interdepartmental conflicts, these will be submitted to Cabinet committees and to an already overburdened Cabinet for resolution. The bulk of interdepartmental relations is maintained at the middle and lower levels of the bureaucracy. Here, the sheer number of officials makes widespread informal contacts impossible. The most important mechanism to promote interdepartmental relations remains the interdepartmental committee and, at present, well over 1,000 of them operate at the federal level.8 In recent years, however, with government policies and the interests of departments overlapping more and more, a number of departments have been looking at other means of promoting relations. Some twelve of these, for example, have established within their respective structures a section which includes the promotion of interdepartmental relations as one of their principal tasks. These staff sections have something like the following terms of reference: To establish links with other departments, to provide special management information to senior officials on activities of other departments, 10

The Institutional Environment to determine potential conflicts and/or to take advantage of other departmental policies and to provide for [their] departmental input into other departmental policies.8 In New Brunswick, interdepartmental relations are much less complex than they are at the federal level. The headquarters staff of all government departments are located in two neighbouring buildings which, if nothing else, promotes frequent and informal contacts. In our interviews, provincial government respondents pointed out that officials working in each major policy area know each other and nearly all of them underlined the important role informal contacts play at all levels of the bureaucracy in promoting interdepartmental relations. In addition, there is ample evidence to suggest that government departments in New Brunswick are far less preoccupied with expanding their sphere of influence than are federal departments. One provincial official explained why: "We do not have enough staff to carry out the duties for which we are specifically responsible—little wonder we do not compete with other departments to move into their fields of activity." Perhaps more important is that the Cabinet and the premier are very close to all aspects of policy making and they are able to detect early on potential interdepartmental conflicts and resolve them at the Cabinet level. The only recent innovation designed to promote interdepartmental relations has been the establishment of two committees at the deputy minister level on economic and social development. No New Brunswick department has so far established an organizational unit with specific responsibilities for interdepartmental relations. INSTITUTIONS AND THE PUBLIC Partly because of the imbalance in size, but also because of the distinct political culture that is found in the Atlantic provinces, the federal and the New Brunswick governments differ in how they relate to interest groups and political institutions. Federal government departments accept, however reluctantly in some instances, the importance of interest groups. Many departments, notably those organized along functional lines, have established strong and continuing contacts with interest groups (for instance, the Department of Agriculture and the Canadian Federation of Agriculture) and some have invited interest group representatives to sit on advisory-type departmental committees. In a well-documented study, Robert Presthus reports that officials ranked "interest groups" third above "party policy" as the main locus of government responsibility.10 Yet it is also suggested that friction does exist between the bureaucracy and interest groups and, as well, that an element of competition exists between them in their attempts to influence ministers.

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In the case of New Brunswick, at least, relations between provincial or local interest groups and the federal bureaucracy are not very strong, partly because of the considerable physical distance separating Ottawa and the province. Also, New Brunswickers have traditionally turned to their elected representatives in their relations with governments, even for strictly administrative matters. For highly controversial issues, interest groups or spontaneously organized groups will often have access to the federal minister responsible for the province during his weekend trips home.11 Much more often, however, groups and concerned citizens will communicate their views to their members of Parliament who, in turn, are expected to make representations to the relevant Cabinet minister or government department on their constituents' behalf. Relations between government and Parliament concerning proposed government expenditures differ substantially from those that exist between government and the Legislative Assembly in New Brunswick. In line with the recommendations of the Royal Commission on Government Organization, government departments at the federal level have been granted considerable autonomy in what is regarded as the more detailed aspect of financial management. In implementing the concept of "letting the managers manage," the relationships between departments and the Treasury Board were altered as were those between departments and Parliament. Central control has been markedly reduced and significant discretionary powers have been delegated to departments to transfer funds between activities even after the funds have been voted by Parliament. Departmental estimates are reviewed in Parliament by a corresponding standing committee (in the case of DREE, the estimates are reviewed by the House Standing Committee on Regional Development). Proposed expenditures are submitted in loosely defined terms to correspond to broad government activities without being broken down into sub-activities. Nor are proposed expenditures itemized further as to standard objects of expenditure. In New Brunswick, considerable legislative time is allocated to reviewing departmental estimates which are submitted in detailed form to the Legislative Assembly's Committee of Supply, By and large, each vote corresponds to an organizational unit within a department and it is broken down into standard objects of expenditure. Frequently, questions in the most minute detail are raised when the estimates are presented to the assembly. It is not uncommon, for instance, for opposition members to ask for the identification of individual employees, to enquire about funds allocated for travel expenses, and the like. In addition, funds cannot be transferred from vote to vote once they have been approved and when a 12

The Institutional Environment department overspends a vote, the government must seek a special warrant from the assembly to approve further funds. Not unexpectedly, the Government of New Brunswick relates differently to interest groups and to the general public than does the federal government. Invariably, groups and individuals will direct their suggestions or concerns at the political level and more specifically at Cabinet ministers in their attempt to influence government decisions. It is important to bear in mind that New Brunswick's small population lends itself to close contacts between Cabinet ministers and the public (the ratio between residents and Cabinet ministers being approximately 30,000 to one, compared with approximately 750,000 to one at the federal level). Equally important is the fact that until several years ago the provincial bureaucracy played a relatively unimportant role in policy formulation and implementation and was thus unable to answer, let alone accommodate, the demands of interest groups and individuals. To a large extent, particularly in rural areas, New Brunswickers still regard the provincial bureaucracy as little more than a powerless implementing agency, responsible simply for carrying out the decisions of Cabinet ministers. As in the other Maritime provinces, there is also here a strong sense of obligation on the part of Cabinet ministers to remain accessible to the general public. One New Brunswick minister stated that a voter wishing to meet any minister other than perhaps the premier can usually do so within a week of his request. This possibly explains why, by national standards, voter participation in the Maritime provinces is very high, as is the ability of Maritimers to identify their elected officials.12 Another important characteristic of New Brunswick's political culture is the existence of a diagonal line running from the northwest to the southeast which divides the province into two ethnic regions. North of the line is predominantly French-Acadian while to the south it is predominantly English-speaking. Similarly, electoral districts north of the line are traditionally Liberal, while to the south they are traditionally Progressive Conservative. This voting behaviour pattern applies not only at the provincial, but also at the federal level (for instance, all federal electoral ridings north of the line are at present held by Liberal members). An important consideration here is that while the Liberals have held power in Ottawa for most of the past eighteen years, the Progressive Conservative party has been in power in New Brunswick for the past ten. In most other provinces, voting behaviour patterns could be regarded as somewhat irrelevant to a federal-provincial decision-making process. In New Brunswick, however, it cannot so easily be discounted. Partisan political concerns, political patronage, and ethnic relations have always constituted important considerations in formulating government decisions. 13

CHAPTER TWO

REGIONAL ECONOMIC DISPARITIES AND DREE The problem of regional economic disparities can be briefly summarized as follows: long-term persistence of low per capita income coupled with high unemployment in the four Atlantic provinces, in northern Quebec, and in a number of smaller geographical areas located in the other provinces.13 Since the Diefenbaker government of 1957, every federal government has ranked the attempt to reduce regional economic disparities as one of its foremost priorities. Yet regional disparities remain great; in 1975, for example, per capita income in all four Atlantic provinces was less than 80 percent of the national average, while the unemployment rate was close to 2 percentage points above any other region, including Quebec.14 By whatever criterion one may wish to employ, New Brunswick is, from an economic development point of view, a have-not province. Per capita income and unemployment have already been mentioned. To these can be added a lower participation rate in the labour force, lower productivity in many economic sectors, and important shortcomings in the province's fiscal capacity (fiscal capacity equals the tax from a province's various tax bases at a rate corresponding to the national average).15 During 1973-74, New Brunswick's fiscal capacity was some 34 percentage points below the national average. Both levels of government claim a jurisdictional role in the field of economic development. The federal government maintains that its involvement in economic development is made necessary by its competence over national fiscal and monetary policies, through which, it argues, favourable economic conditions for stimulating investment and growth can be established. It also contends that, because it alone has a "total" economic view, it is the only government which can objectively promote the necessary policies required for balanced economic growth and that, in any event, the provinces cannot be expected to take into account important interprovincial considerations in promoting economic development. The provinces meanwhile maintain that government efforts at promoting economic development frequently fall in the area of resource development, which constitutionally is either shared with the federal government or assigned solely to provincial jurisdiction. Ever since confederation the federal government has instituted a number of special measures to promote development in slower-growth regions. For a number of years after 1867, special grants to the poorer provinces were employed for this purpose. However, the 1957 economic recession brought a new understanding of the problem of regional economic disparities on the part of the federal government and, consequently, a revised strategy. The recession re-emphasized the marked economic

14

The Institutional Environment difference between regions and revealed important deficiencies in the economic structure of the Atlantic region and in certain economic sectors. It was also during this period that the federal government began to accept that simple financial transfers to the poorer provinces would no longer be sufficient. Henceforth, federal programs especially designed to stimulate regional growth would be introduced. The numerous federal programs introduced during the late 1950s and the 1960s were, however, more in response to the special economic needs of particular economic sectors and areas of the country than part of an overall development strategy. Thus, from 1957 onward, Atlantic Provinces Adjustment Grants above equalization payments were enacted, as were special federal payments to these provinces for special developmental projects. In 1961 the Agricultural Rehabilitation and Development Act (ARDA), concerned with low income and land utilization of rural areas, was introduced; and in 1965 an area development incentives scheme intended to stimulate investment from the private sector was established. Another federal initiative—the Atlantic Development Board, 1962—was designed to improve the industrial infrastructure of the Atlantic region. And still another—Fund for Rural Economic Development (FRED), 1966—attempted to deal with problems associated with chronic rural poverty which could not be covered under the more general ARDA scheme. Much of the planning involved in developing these programs was carried out on a fairly independent basis by separate federal departments. Although occasionally a central agency like the Department of Finance would attempt to promote coordination between the various departments, such coordination usually resulted more from individual deals struck between line departments than through imposition or even encouragement from the top down. Similarly, intergovernmental contacts on matters relating to regional economic development were carried out between federal and provincial line departments on an ad hoc program basis. By and large, at least at the federal level, each program had a different objective and was attached to a different agency which meant that overall coordination was difficult to achieve. Partly to promote a more coordinated approach to economic development and partly because the recently elected Trudeau government wanted to give an even higher priority to federal attempts to reduce regional economic disparities, which would in turn increase the federal visibility in this area, DREE was established in 1969. Senior DREE officials, however, stressed in our interviews that a principal motivation behind its establishment was the desire to elevate planning for economic development from the provincial to the regional level. They argued that a transfer of federal funds to provincial governments, with a stipulation that these 15

CHAPTER TWO

be employed for purposes associated with economic development, would not do because most constraints inhibiting regional growth are by nature regional and not provincial. The four Atlantic provinces, for example, have all been unsuccessful in—among other things—diversifying their economic base, in providing essential infrastructure to all their communities (such as water and sewer systems or modern transportation facilities), and in fully developing their natural resources. What DREE can do, they maintain, is at least provide incentives to provincial governments to coordinate their efforts in order to minimize costly interprovincial competition. In establishing DREE, most federal programs and initiatives concerned with economic development, including ARDA and FRED, were consolidated under one department. From the outset, however, DREE's intention was to move away from the ARDA and FRED approach, which tended to emphasize rural development. Accordingly, shortly after it was established, DREE announced that it would implement a new comprehensive plan which would concentrate federal development efforts on urban and on industrial development. Two programs formed the nucleus of the new DREE strategy. The first was a scheme involving incentive grants to industry to locate, expand, or modernize its operations in designated slow growth areas. Under this scheme, grants which are calculated on the initial capital investment and on the number of jobs created are given to industries locating in areas where the rate of unemployment is high and where per capita income is substantially lower than the national average. Although consultations were held with each provincial government to designate areas for the purpose of the program, the federal government alone—through the Regional Development Incentive Act (RDIA)—is responsible for the administration and financing of the program. Hence, once the areas have been designated, there is little need for further federal-provincial negotiations. The introduction of the special areas approach to economic development constituted the second, and also the most important, DREE policy. Borrowed from F. Perroux's "growth pole" concept, in which he argues that economic activity tends to concentrate around certain focal points, DREE's special areas agreements with the provinces were intended to provide the necessary framework for attracting industrial development in selected key urban centres located within slow growth areas.18 DREE felt that to attract new industrial activity such key centres must be in a position to offer, not only incentive grants to enterpreneurs, but the necessary infrastructure facilities as well. Thus, special areas agreements provided for such things as land acquisition and servicing for industrial and housing developments, construction of schools and other training 16

The Institutional Environment centres, and for the improvement of transportation facilities. In consultation with the ten provincial governments, twenty special areas were designated as eligible for federal-provincial cost-sharing agreements and three others were designated for industrial incentives only.17 In the case of New Brunswick, only the cities of Saint John and Moncton were designated as "key" centres—eligible for both incentives grants and development projects. On April 21, 1970, DREE and the New Brunswick government signed the first of two special areas agreements. Projects sponsored by the agreement were primarily aimed at improving the physical infrastructure of both cities and—in more specific terms—included funds for road construction, water supply and sewer services, industrial land servicing, and for the construction of educational facilities. A second agreement was signed in 1971 in order to provide for additional federal funds and to extend the period under which projects could be cost-shared to March 1975. In addition, DREE and the province signed a number of agreements for highway construction outside the special areas.18 Over the past several years, and in particular since the introduction of the GDA, DREE's financial resources have come to play a significant role in the priority determining process of the "have-not" provinces. In the case of New Brunswick, for example, the great majority of new projects in the general economic development spending category are cost-shared under the GDA approach. One provincial Treasury Board official commented that GDA-sponsored projects account for "over" 70 percent of discretionary spending in New Brunswick. In any given year more than 90 percent of the New Brunswick expenditure budget is allocated to such non-discretionary items as servicing the public debt and to continuing programs to provide such essential government services as medical care. Thus, the importance of the GDA to the provincial budget lies in the fact that its funds annually sponsor a major part of the government's new budget; in some departments, such as Natural Resources, all new initiatives are sponsored under the Canada-New Brunswick GDA. In absolute terms, GDA-related expenditures amount to approximately 5 percent of the total provincial expenditure budget.19 At the federal level, DREE spending has consistently represented a substantial part of total federal expenditures in joint federal-provincial programming in the economic development field. At the moment, GDArelated expenditures account for something like 10 percent of the federal government's own economic development budget, which in turn accounts for approximately 17 percent of the total federal budget.20 It should be recognized that the importance of DREE and the GDA approach to the "have-not" provinces should not be measured in terms of their impact in strict dollar terms on the federal budget. Federal-provincial agreements 17

CHAPTER TWO

in the areas of health and welfare and the fiscal equalization program are far more costly. However, these are well defined and on-going and, in comparison to the GDA, entail far less federal-provincial interaction. Before the introduction of the latter, relations between DREE and the provinces were conducted in an atmosphere of "adversary politics." Much of DREE's decision-making authority was centralized in Ottawa. It lay in the hands of the minister and deputy minister to the extent that one cannot examine the kind of federal-provincial relations which DREE then stimulated without first mentioning the powerful personalities of the department's first minister, the Honourable Jean Marchand, and the first deputy minister, Tom Kent. A long-time colleague of Prime Minister Trudeau even before they entered politics together and—at the time—the federal minister responsible for Quebec, Marchand was regarded as one of the most influential ministers in the Trudeau Cabinet. Equally, Kent, who had been a political activist for the Liberal party when it was in opposition and subsequently principal secretary to Prime Minister Pearson, had become one of the most powerful permanent officials in Ottawa. Though a public servant, he had direct access to most Cabinet ministers and could, whenever he wished to do so, play a quasi-political role. In fact, his decision-making authority on political issues outside Quebec virtually equalled that of a Cabinet minister and this everyone recognized, even the provinces.21 Under Marchand and Kent, DREE approached regional economic disparities and federal-provincial relations with preconceived solutions. In many ways, provincial governments were partners in the policy and program formulation process only to the extent that they could accept or reject DREE initiatives. By and large, these were packaged in Ottawa by a handful of senior-level officials who were closely supervised by Marchand when earmarked for Quebec and by Kent when designed for the other nine provinces. For their part, DREE field offices were restricted to overseeing the implementation of administrative and technical requirements of agreements once signed and to providing the department with a day-to-day working relationship with the provincial administrators. DREE officials who worked in the field offices under Marchand and Kent now reveal that they were effectively blocked from the decision-making process. Occasionally some of their newspapers would provide a more reliable source of information than the department itself in revealing proposed DREE agreements or DREE's position towards the province for which they were responsible. From time to time, in order to gain public recognition for the proposed initiatives and to incite public pressure on the provinces to accept them, DREE would release its position to the press.22 Negotiations with the provinces were conducted at the highest level, with both Marchand and Kent directly involved on the federal side and— 18

The Institutional Environment especially in the case of the have-not provinces—the premiers and their more senior Cabinet ministers on the provincial side. Much like federalprovincial relations conducted in other policy fields, confrontation rather than genuine two-way consultation guided these negotiations, with DREE presenting its pre-packaged initiatives in a "take it or leave it" fashion. Accordingly, at that time, DREE's relations with the provinces were for the most part conducted at the political level, merely providing a focus on economic development and not providing for a new intimate form of federal-provincial relations. The department never assumed coordinating authority over other federal departments nor was it looked upon by other federal ministers and officials as a significant innovation in federal-provincial relations. Nevertheless, DREE's scope of operations remained potentially wide and its programs were to have a profound effect upon economic development in the provinces. The have-not provinces in particular hastened to respond to DREE programming if only to ensure that they would receive their share of federal funds. 23 New Brunswick lacked the necessary expertise to challenge in an analytical fashion DREE programs. Kent persistently refused to provide financial assistance to the provinces to support provincial planning agencies concerned with economic development. On the contrary, he encouraged his officials to bypass these agencies and to deal directly with provincial line departments.24 The one central agency that could concern itself with economic development (the New Brunswick Office of the Economic Advisor) was severely restricted with a staff complement of only four to six officials. The Development Policy Secretariat, which the Robichaud government established in 1969, was never able to devise a central planning framework for economic development because the provincial Cabinet never granted it the required mandate to do so and because it also lacked sufficient manpower. As could be expected, political considerations constituted by far the most important determinant factor shaping the New Brunswick position in its negotiations with DREE. The New Brunswick special areas agreements restricted all development projects to the cities of Moncton and Saint John, both of which are located in the southern part of the province. In the negotiations leading to the designation of these two cities, the then Liberal Robichaud government, not least because it received most of its political support from the northern part of the province, repeatedly argued that other geographical areas be designated as eligible for DREE-supported development projects. Unable to convince DREE, provincial Cabinet ministers publicly revealed that the intransigence of the "feds" was responsible for the non-designation of eligible special areas other than those of Moncton and Saint John.25 Though DREE held firm on this issue, largely as a result of incessant demands from the New Brunswick 19

CHAPTER TWO

Government, it agreed to provide extensive financial resources towards highway construction in northern New Brunswick and outside designated special areas.26 Negotiations between DREE and the provinces were thus carried out at the highest level and once agreement was reached there was, broadly speaking, little need for continuing negotiations. The terms of DREE's special areas agreements were outlined in contract form with individual provinces describing the specific activities for which federal aid was available, the conditions that the provinces had to meet to qualify for federal assistance, and the administrative procedures for reimbursement. It can hardly be overemphasized that, prior to the introduction of the GDA approach, politicians played a leading role in shaping relations between DREE and the provinces. This was and remains true in a number of other policy areas. Richard Simeon, for example, maintains that "American bureaucrats operating federal-state programmes try to keep their respective political heads out of things. Their Canadian counterparts have not been able to do so."27 Our interviews with both federal and New Brunswick politicians support Simeon's conclusion. In fact, one federal government backbencher suggested that frequently political control is greater on programs negotiated between the two levels of government than on those developed strictly within the federal bureaucracy. There is no doubt that many policy options, issues, and disagreements debated at ministerial-level meetings would otherwise be resolved—at least at the federal level—within the bureaucracy. In addition, Cabinet ministers and even government backbenchers are able to influence or at least comment on proposals, not only when they are being developed within their respective governments, but also when they are being negotiated with the other level of government. For their part, officials readily accept that ministers are far more involved in the decision-making process when proposals have to be negotiated intergovernmentally. They revealed, for instance, that they have to brief their minister much more thoroughly on a proposed federalprovincial initiative, if only to ensure that he will be in a position to respond to questions when confronted by other ministers. Though they do not deny that this can serve to strengthen political control, federal officials contend that, at the ministerial-level, federal-provincial meetings are not as efficient as ministers like to believe. Several officials complained that ministers tend to engage in long and acrimonious debates over administrative-type issues that would be best left to them to resolve. Another central feature of contemporary Canadian federalism is that federal-provincial relations are usually highly contentious. Politicians in particular view the federal-provincial arena as a place where one competes "to gain credit, status and importance, and to avoid discredit and 20

The Institutional Environment blame."28 Following a procedure of "proposal-rejection and re-proposal," joint policies and programs are formulated through a process of negotiation—some have labelled it a process of "confrontation." Commenting on existing federal-provincial fiscal arrangements, Anthony Careless, for example, writes that they were the result "not of intimate consultations and co-ordination of objectives but of confrontations produced by a 'propose and respond' technique."29 It is also important to note here that interprovincial relations have, latterly, gained considerable importance. The three Maritime provinces, for example, have from time to time in the past been able to arrive at a regional position in their negotiations with Ottawa. In addition, some several years ago the three premiers signed an interprovincial agreement establishing the Council of Maritime Premiers whose raison d'etre is "... to promote unity of purpose among the three provincial governments . . . [and] to establish the framework for joint action and undertakings."30 Many hoped at the time that the council would be particularly successful in the area of economic development by eliminating or reducing costly competition and duplication of effort. With its own permanent secretariat and with an annual expenditure budget in excess of fifty million dollars supporting five major interprovincial programs, the council has had some success. The federal government's position vis-a-vis the council has always been a positive one. Although it does not wish to be seen as imposing regionalism on the provinces, Ottawa's policy is to encourage and, whenever possible, to lead the Maritime provinces to coordinate their policies and programs, particularly when these have an impact on economic development. In line with this policy, the federal government has agreed to cost share three of the five interprovincial programs introduced by the council. More generally, the federal government has traditionally claimed responsibility for promoting a regional consciousness in the Atlantic region in the field of economic development. This is not to suggest that it has been particularly successful at doing so. What can be said is that the federal government has consistently established, in the allocative process of its economic development schemes, a mechanism to look at the Maritimes or Atlantic provinces, not simply on a province to province basis, but also from a regional perspective. Even when one goes back to such pre-DREE schemes as the Maritime Marshland Rehabilitation Act (MMRA) and the Atlantic Development Board (ADB), one can see where the federal government attempted to place a regional focus on its programming. In establishing MMRA, the federal government instituted a regional advisory committee to administer the act. The committee brought together representatives of provincial governments, federal government departments, as well as representatives 21

CHAPTER TWO

of concerned interest groups. Though it spent most of its time reviewing specific proposals, from time to time the committees did discuss broader issues such as soil conservation in the maritimes and the role in this matter of certain federal departments.31 The Atlantic Development Board Act, as amended in 1963, established an eleven-member advisory board which was to be "constituted in such a manner as to reflect the economic structure of the Atlantic region." The board's secretariat was staffed by federal officials operating out of Ottawa. Over a period of time, the board obtained its own budget and initiated a series of costly infrastructure projects throughout the region. In addition, it sponsored a variety of research and planning studies, a number of which dealt with economic sectors on a regional, rather than on a provincial, basis.32 In DREE's early years, responsibility for promoting a regional outlook to federal economic development schemes clearly rested with Ottawabased officials, not simply because they could deal with provincial governments in an arm's length manner, but also because they were without doubt the principal actors in the planning and budget allocation processes. ARDA projects remained under the tight control of Ottawa and all projects amounting to $5,000 or more still required federal Treasury Board approval. In addition, Ottawa-DREE officials placed considerable emphasis on developing an element of commonality between the different ARDA agreements. Regional (DREE) officials also lost their signing authority and "were placed on strict budgets, closely directed from Ottawa" when implementing ARDA and FRED agreements.33 As well, in implementing the FRED agreements, DREE's deputy minister and another senior Ottawa-based official represented the federal government on all joint advisory boards. One such board was established for every FRED agreement and held overall responsibility for implementation. It was also Ottawa-based DREE officials who decided which urban centres would qualify for assistance under the special areas agreements. DREE officials now report that they favoured the designation of Saint John, Moncton, and also Halifax, in order to assist in the development of a major urban core situated in the geographical heart of the Maritime provinces. It was felt that this would strengthen the economic base of the whole region as well as bolster future efforts in the economic development of the three Maritime provinces.

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Part Two

The CanadaNew Brunswick GDA

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Chapter Three

Introducing a New Approach to Decision Making DEVELOPING THE GDA APPROACH By 1971-72, it became apparent that DREE would have to introduce some far reaching changes in its approach to federal-provincial relations in its attempt to alleviate regional economic disparities. All provincial governments were by then demanding more consultations with DREE, not only in matters relating to implementation, but also in formulating new programs. Moreover, in the 1972 general election, the federal Liberal party saw its parliamentary majority reduced to an almost untenable minority position with the party losing over thirty seats in English Canada and suffering some humiliating defeats in traditionally safe Liberal seats. During the election campaign—with the Honourable Jean Marchand as a principal target—much was said about the so-called excessive French power in Ottawa. For one thing, Marchand was accused of concentrating too much of DREE's resources on the economic problems of Quebec, much to the detriment of those of the other have-not regions. In addition, by most criteria (for example, per capita income, unemployment rate) little, if any, progress had been made in correcting regional economic imbalances during DREE's first three years of operation. A number of federal-level officials, particularly those in central agencies, but also some from DREE itself, argued that DREE was putting far too much emphasis on developing a limited number of designated urban centres and on such infrastructure projects as water and sewage and road construction. They maintained that the time was ripe for a look at new means to achieving economic development. Essentially, they argued for a more positive attack on the problems of regional economic disparities and for a new imaginative approach to federal-provincial relations in promoting economic growth. 25

CHAPTER THREE

In response to these developments, the prime minister transferred Kent to another department in 1971 and then followed suit with Marchand in 1972. He appointed another powerful political figure in the Honourable Don Jamieson from the Atlantic region to head DREE, and named J. D. Love, a career public servant, who had risen through the ranks of the federal bureaucracy, as the department's second deputy minister. In addition, a major review of DREE's policies and operations was also announced. Under an assistant deputy minister, a new division—coordination and liaison—assumed the responsibility for carrying out the policy review. In doing so, it prepared a detailed analysis of existing DREE policies and programs and concluded that they were too restrictive in scope and tended to concentrate too much on specific economic problems within particular areas. It proposed that the department should instead attempt to identify and pursue specific development opportunities in the four economic regions of the country. During the policy review, fifteen staff papers—three dealing with existing departmental policies and programs and twelve with regional and provincial economic circumstances and opportunities—were prepared. Clearly, the most important were those dealing with economic circumstances and opportunities, or the so-called yellow books, one, in the case of the Atlantic region, being prepared on each of the four provinces and one on the region as a whole.1 Although information was requested and obtained from provincial governments and from other federal departments, the policy review remained until the end a strictly DREE undertaking. The great majority of the twenty officials who worked on the preparation of the staff studies were senior economists seconded from various branches of DREE. Only three officials from other federal departments and a few consultants from outside government were brought in to assist on specific issues. All nonDREE personnel, however, reported directly to senior DREE officials and severed relations with their home departments. Drafts of the yellow books were only submitted to senior DREE management for consideration and feedback and not—at least formally—to other federal departments and to provincial governments. Officially, provincial governments were informed that a departmental policy review was being held, that existing DREE programs would continue at least until a new approach could be defined, and that the outcome of the review would be the subject of extensive federal-provincial consultations.2 The final draft of the New Brunswick yellow book argues that the province faced two important constraints in developing its economic potential. First, long-term economic projections revealed that the unemployment rate could reach an unacceptable level by the 1980s, mainly 26

Introducing a New Approach to Decision Making because of heavy employment losses in the primary sector, particularly in agriculture and fisheries. Second, it concluded that the New Brunswick socio-economic composition in itself constituted a developmental constraint. It stated, for example, that a number of Acadians from the northern part of the province prefer living in a French-speaking area and are unwilling to move elsewhere in the province where employment opportunities are more readily available.3 It was emphasized throughout the book that the identification of development opportunities should be regarded as an on-going process between the two levels of government and that government initiatives in the area of economic development should be sufficiently flexible to take advantage of changing circumstances. The yellow book nevertheless went on to present several possible opportunities for growth in New Brunswick. In the primary sector, it identified several opportunities in forestry, agriculture, and mining. It described forestry as a key resource sector of the provincial economy which could, if properly developed, "make a significant contribution to development in the province." In agriculture, it expressed concern over the rapidly decreasing number of operating farms and suggested government intervention to stimulate capital investment and to upgrade agricultural marketing services. In mining, it identified four possible major undertakings involving both mineral development and processing. Although not specific in the kind of projects it envisaged, the book also suggested fisheries, housing, and tourism as important areas for identifying development opportunities.4 The Atlantic region yellow book noted that all four Atlantic provinces rely to a very high degree on resource-oriented industries and that by most criteria the economy of the region was the most "desperate" in the country. It nevertheless argued that wide-ranging development opportunities also existed at the regional level, such as, for example, in agriculture, fisheries, forestry, and mining.5 During the first several months of the policy review, DREE concentrated all its efforts at identifying economic development opportunities for each province and each region and left unresolved the question of how these opportunities could be implemented. None of the twelve yellow books, for example, suggested in any specific fashion how development opportunities would be realized. One DREE official who worked on the policy review maintains that the development of an appropriate federalprovincial decision-making arrangement to implement the identified opportunities was more an after-thought than an integrated part of the review. Two major themes evolved from the policy review: first, that a number of specific development opportunities existed in every province and, second, that future DREE-sponsored initiatives should be comprehensive 27

CHAPTER THREE

and multi-dimensional in scope. Provisions should be made for DREE to involve not only the two levels of government but also to solicit from them a variety of policy areas and government departments in identifying and pursuing development opportunities. The policy review recommended this move after it had concluded that regional disparities constitute too complex a problem to be dealt with effectively by one agency acting alone. In reporting on the policy review to the House Committee on Regional Development, the Honourable Don Jamieson emphasized this point by stating: "I have become increasingly impressed by the range of opportunities for economic development that exist in most parts of this country and by the large number of public policies and programmes that bear, or could be brought to bear, upon a concentrated effort to realize some of these opportunities."6 Stressing that the opportunities outlined in the yellow books were intended to serve as illustrations rather than commitments, DREE circulated the yellow books to all provincial governments and to interested federal departments. In the meantime, it proceeded to call upon the department's coordination and liaison division to assume responsibility for developing the new decision-making approach. It was recognized at the outset that the mechanism needed above all to be sufficiently flexible to adjust to changing circumstances, to involve more than one department, and more important, to permit joint decision making between the federal and provincial governments. Although no officials from other federal departments were directly involved, frequent interdepartmental consultations were held at first between DREE and central agencies and subsequently between DREE and other line departments. The meetings in the end turned out to be more of a DREE publicity campaign in support of the new approach than a forum where views could be exchanged, although this was not the original intention. DREE selected some ten federal departments because of their relevance to economic development and organized a series of on-going meetings designed to keep them informed of developments and also to stimulate feedback. While comments were requested throughout, most departments remained non-committal; the great majority of officials attending the meetings were at the time far more concerned with their departments' day to day activities and problems than with another department's proposed decision-making approach. Consultations at the political level involved a number of Cabinet memoranda to full Cabinet and two lengthy speeches by the DREE minister to the House Standing Committee on Regional Development. The first Cabinet memorandum, which was essentially a summary of the yellow books, requested and received Cabinet approval to adopt the "identification and pursuit of development opportunities" approach to 28

Introducing a New Approach to Decision Making economic development. Based on recommendations contained in a subsequent memorandum, Cabinet accepted the concept, as well as the goals and strategies of the nine GDAs, and authorized DREE to initiate preliminary discussions with the provinces. Perhaps because traditionally Canadian members of Parliament have had little interest in the workings of a departmental decision-making process, hardly any efforts were made to brief them on this aspect of the GDA approach. Also, the two ministerial speeches to the House Committee were, in fact, progress reports— first, on the policy review and second, on the implementation of the new approach. The decision-making tool which was finally accepted to implement DREE's new strategy was labelled the General Development Agreement (GDA) approach. Negotiated on a one to one basis with each province, a GDA provides a broad statement of goals for both levels of government to pursue, outlines the priority areas, and describes how joint decisions will be taken. As has already been noted, GDAs are enabling documents only and do not in themselves provide for specific action. Projects and precise cost-sharing arrangements are instead presented in subsidiary agreements which are attached to the umbrella-type GDAs. From a strictly administrative point of view, all nine GDAs are basically similar. Each has a ten-year life span, each stipulates that DREE and the provincial government in question will, on a continuing basis, review the socio-economic circumstances of the province, and each outlines a similar process for joint federal-provincial decision making. They differ only to the extent that the cost-sharing for subsidiary agreements varies from province to province. Under the GDA approach, DREE was granted the following authority to share the cost of a subsidiary agreement: up to 90 percent for Newfoundland, 80 percent for Nova Scotia and New Brunswick, 60 percent for Quebec, Manitoba, and Saskatchewan and 50 percent for Ontario, Alberta, and British Columbia.7 The required flexibility of the new approach called for by the yellow books is provided by a schedule A attached to each GDA and by developing subsidiary agreements. The schedule presents a brief socio-economic description of the province as well as a statement of objectives which are geared to local economic circumstances. It also outlines a broad development strategy which the two governments agree to pursue jointly. Once signed, the GDA can provide for three kinds of subsidiary agreements: "those which co-ordinate existing federal and provincial programmes in support of a particular development opportunity; those which provide specific support not available through other government programmes; and those which establish continuing programmes to fill gaps in the existing range of government development programmes."8 Thus, since they are not restricted to specific geographical or to particular policy 29

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areas, subsidiary agreements can be developed to fit the needs of any given province or to pursue any type of development opportunity. They have been described by DREE as a means of providing maximum flexibility to the policy makers and as "action pacts [encompassing] . . . development which the federal government and the signatory province agree will lead to greater economic and social growth in a particular area of the country."9 The GDA approach to federal-provincial relations is intended to be applied uniformly in all provinces. The legal and administrative framework under which subsidiary agreements are formulated and implemented is the same for all nine GDAs. Briefly summarized, the more important legal-administrative characteristics of subsidiary agreements are: they can be initiated either by the province, DREE, or another federal department; at the federal level, all new agreements must be approved by Treasury Board, and, in some cases, particularly when they involve new policy initiatives or politically sensitive issues,'by full Cabinet; and, while agreements can be signed for a period of one to ten years, all subsidiary agreements contain a clause which explicitly states a termination date. Finally, the federal government stipulates in each agreement the maximum contribution that it is prepared to make. The Canada-New Brunswick GDA (as do other GDAs) requires the federal minister of DREE and the relevant provincial minister to designate official (s) who will assume responsibility for jointly coordinating "the action to be taken under this agreement" (that is, the GDA) .10 In the case of New Brunswick, an on-going Canada-New Brunswick Development Committee, consisting of the provincial director general of DREE representing the federal government and the secretary to the Cabinet Committee on Economic Development representing the provincial government has been established to oversee the formulation of new agreements. The committee meets on a regular basis—about once every five weeks—to accept or reject recommendations submitted by a series of joint subcommittees, or work teams, which in turn are established to undertake detailed studies and to identify projects in developing the various subsidiary agreements. After a subsidiary agreement has been signed, a joint management committee is established to oversee its implementation. In nearly all cases in New Brunswick, the provincial DREE director general and the general manager of the provincial Community Improvement Corporation act as co-chairmen of the committees which are made up of an equal number of representatives from both governments. As with the development committee, a management committee acts as a formal decision-making body and, in this capacity, reviews and approves the annual expenditure budget, as well as all programs and projects implementing the subsidiary agree30

Introducing a New Approach to Decision Making ment. It is also important to note that these management committees have the authority to identify new projects even after the agreement has been signed. In introducing the GDA approach, DREE also put forward a number of measures designed to secure the involvement of other federal departments in developing and implementing subsidiary agreements. Apart from the consultative-type steps and procedures through which DREE officials should submit a proposal before it can evolve into a federal-provincial agreement, provisions are made for other departments to participate as federal co-signers of the agreements, as financial partners, and also as members of the management committees. In addition, federal departments are encouraged to tailor, whenever possible, their programs and activities to complement those supported by the various subsidiary agreements. Finally, in the Atlantic region, an interdepartmental conference on regional development is to be held annually to provide a forum for federal departments, including central agencies, to discuss federal efforts at promoting regional economic growth in the area. In short, the GDA was intended to be more a "federal" decision-making approach to federalprovincial relations rather than solely a DREE one. There are a number of legal and administrative requirements incorporated in the Canada-New Brunswick GDA and in all subsidiary agreements, which need to be noted. Sections 9.1 to 11.2 of the GDA, which deal exclusively with coordination, stipulate that the federal and provincial ministers responsible for the agreement "shall meet annually, and shall consult together at such other times as may be mutually agreed, to review the general operation of this Agreement; to consider development opportunities that might be pursued; [and] to review existing or proposed subsidiary agreement."11 The section goes on to add that a meeting involving representatives of interested federal and provincial departments should be convened at least once a year to review the development strategy being pursued under the GDA. Section 12 further requires that all subsidiary agreements include an evaluation clause to permit periodic assessments of the programs to determine whether or not they are meeting the stated objectives. Subsidiary agreements are presented in the same format as is the GDA; that is, the first section outlines the administrative-legal requirements of the agreement, another requires that both levels of government undertake, in a coordinated fashion, the development and implementation of a public information program in regard to projects and activities under the agreements; and yet another stipulates that the two levels of government must fully exchange information on "any and all aspects of the work undertaken under the agreement." Moreover, subsidiary agreements have an 31

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attached schedule A which presents the estimated cost as well as the federal-provincial cost-sharing arrangement, and some have a schedule B which details the strategy and the projects of the agreement.12 THE DECENTRALIZATION OF DREE In announcing the new decision-making approach, the Honourable Don Jamieson stated that a high degree of decentralization of DREE's operations and decision-making authority was not only desirable but, indeed, was made necessary by the demands which the GDA approach would invariably generate.13 Apart from calling for joint decision making, the approach requires an improved capacity on the part of DREE to undertake joint federal-provincial analyses of regional and provincial economic circumstances and opportunities. And, because the pursuit of development opportunities by means of coordinated application of federal and provincial policies and programs are called for, DREE requires an improved capacity to relate more effectively, not only with other federal departments, but also with provincial governments and their departments and agencies. Thus designed to complement the GDA approach, DREE's 1973 reorganization substantially reduced the size of the Ottawa head office, established four regional offices, and considerably strengthened the ten existing provincial offices.14 Leaving only two assistant deputy ministers in the federal capital (one responsible for planning and coordination and the other for administrative and financial services), the reorganization relegated the role of the Ottawa office to "one of co-ordination and support of field activities." With some modifications made for Quebec and Ontario, since these two regions consist of single provinces, a basic organizational structure was developed for the four regional offices. The Atlantic regional office was located in Moncton, and consists of five separate units reporting to an assistant deputy minister who is DREE's chief executive officer in the region and who reports directly to the deputy minister in Ottawa. A regional development unit, headed by three senior development executives who hold the same classification or rank as the provincial directors general, assumed responsibility for identifying and pursuing regionally oriented development initiatives. A second unit, the analysis unit, conducts general research in the region, builds and operates a regional bank of analytical information, and provides analytical assistance to the provincial offices. The program coordination side of the coordination and public information unit is responsible for gathering and providing special management information to senior DREE managers in the region on those matters which do not fall wholly within the jurisdictional responsi32

Introducing a New Approach to Decision Making bilities of the other units (for example, operating management information systems). The regional administrative unit provides the necessary administrative, financial, and personnel support services to the regional office and, to a certain extent, to the provincial offices as well. Finally, the regional incentives unit, in conjunction with the incentives branch in Ottawa and those in provincial offices, administers the Regional Development Incentives Act (RDIA). 15 Formerly restricted to a program implementation role, the ten provincial offices were now delegated unqualified authority in this area and were also granted "responsibility for programme formulation." The position of the provincial DREE director was reclassified to the director-general level and the total provincial staff complement was more than doubled. In the past, the DREE planning division in Ottawa would negotiate agreements directly with provincial governments and afterwards delegate some implementing authority to the provincial offices. Henceforth, the provincial director general and his office would represent the focal point of contact on "all issues" involving DREE and the provincial government. In other words, DREE provincial offices would in future lead all DREE activities affecting their respective provinces, which means that regional and Ottawa-based DREE officials must channel their development ideas or policy inputs through the provincial offices or, at the very least, consult with them before contacting provincial governments. Thus, under the GDA approach, DREE's part in jointly identifying and pursuing development opportunities with provincial governments must, at least in an operational sense, take place within the provincial DREE office. Thus, the decentralization of DREE was designed to accomplish two things: to transform the role of the Ottawa head office into an essentially "staff" one, and to transfer much of the decision-making authority to the field offices for them to assume "line" responsibilities for developing and implementing the department's policies and programs. In doing so, the intent was to reverse the head office to field office staff ratio from 70:30 to 30:70.16 Under the new organization, the Moncton regional office was allocated slightly more than one hundred staff man years while the total staff complement of the New Brunswick provincial office was increased from sixteen man years to just under fifty. Such a massive exercise in decentralization in terms of decision-making authority was unparalleled in the history of Canadian public administration and for this reason DREE could not draw on the experience of past cases in establishing its new organizations. The potential benefits of decentralization are numerous and some have already been noted. It can be added that decentralization enables a department to undertake on-site studies and examinations of provincial and local problems and makes program delivery much more sensitive to 33

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public needs. Moreover, in DREE's case, decentralization was regarded as an effective way of promoting better relations with provincial governments at the policy level and as indispensable in highlighting the process of joint decision making under the GDA approach. Conversely, decentralization also entails some potential drawbacks. At the management level, it means establishing new positions and new patterns of relationships between offices within the organization. Another problem involves obtaining staff commitment to organizational change. At the policy level, decentralization leads to reduced national consistency in program delivery and raises new problems of control and accountability in program formulation and decision making. Such traditional management control systems as face to face contacts, for example, are disrupted because of the distance separating the various offices. Hence, the establishment of formal information and reporting systems becomes imperative, especially when decentralization involves a large scale transfer of decisionmaking authority to field offices, as in DREE's case, where the provincial offices have responsibility for all aspects of the program formulation cycle; that is, from research analysis to program formulation and implementation to program evaluation and revision. Otherwise, because they operate away from the centre of knowledge, staff in regional offices and in head office could quickly lose touch with current issues and problems facing the department. Some of these potential difficulties were recognized and a number of systems and procedures introduced in an attempt to increase interdepartmental consultations, to involve officials from other DREE offices in program formulation, and to ensure that the information requirements of senior DREE officials were met. Among other things, provincial level officials were encouraged to involve regional and head office officials in identifying development opportunities, a computerized information system was established, and precise procedures were outlined for the development of subsidiary agreements and Treasury Board submissions. At the same time that DREE decentralized its operations, interdepartmental consultations gained greater importance since DREE would now wish to involve the policies and programs of other departments in pursuing development opportunities. These became more difficult to promote and monitor because (if for no other reason) the distance separating the administrative actors makes the process of interdepartmental consultations awkward. (There were, for example, fewer informal contacts, and it was more difficult for officials in field offices to attend regular meetings of interdepartmental committees in Ottawa, and so on.) Yet, in its relations with other federal departments, DREE was never granted any extraordinary authority to substitute itself for them or to become a super coordinating agency. DREE Minister Honourable Don Jamieson made 34

Introducing a New Approach to Decision Making this clear in the House Committee by stating: "Both the Prime Minister and I ... feel that the main co-ordinating instrument is the cabinet committee system. Rather than try to set up some kind of super ministry or give DREE a dominant role vis-a-vis other departments in the operational sense." (sic)11 Thus, in developing its multi-dimensional programs, DREE has to rely on traditional methods of promoting interdepartmental relations rather than on authoritative supremacy over other departments. During the early months of decentralization, provincial-level officials were often reminded, through staff conferences and departmental position papers, of the importance of having other DREE offices, particularly the regional and Ottawa offices, involved in a systematic fashion in formulating new initiatives. In simplified terms, the DREE inter-office working arrangement is intended to work something like this: a provincial level official notifies an Ottawa-based official as soon as a development opportunity is identified so that he in turn can establish communications with all interested federal departments; DREE Ottawa can then assess the reactions to the proposal and subsequently identify and attempt to resolve potential interdepartmental conflicts should DREE decide to go ahead. It was felt that this type of provincial office-Ottawa working arrangement would compensate for the fact that DREE could not conduct full interdepartmental consultations in the field since no other federal department had even remotely decentralized its decision-making authority to the same extent as had DREE. In short, then, provincial offices would generate policy and program proposals, while DREE-Ottawa would seek the active support of other federal departments to bring them to fruition. Meanwhile, the regional office would also assist in promoting interdepartmental relations by reviewing, on a continuing basis, the policies and programs of other federal departments affecting the four Atlantic provinces, and by highlighting potential conflicts or overlaps between them and those sponsored by DREE. The regional office was also designed to stimulate contacts between the four Atlantic provinces, and between them and itself. In fact, a principal reason for establishing an Atlantic regional office stemmed from conclusions reached during the policy review which argued that sufficient basic socio-economic similarities exist with the Atlantic region to effect a common approach to economic growth. The process of relaying management information upward is important in any government department; in a decentralized department, where informal contacts between superiors and subordinates at the management level are much less frequent, it becomes vital. In decentralizing its operations, DREE introduced an elaborate, computerized information system and established specific procedures for provincial offices to follow in the development of their program proposals. Both of these measures are in35

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tended to keep the minister, senior departmental officials, and other federal departments informed of new DREE initiatives as they develop. The management principle behind these measures is that ministerial approval must be obtained and interdepartmental consultations must be held at the federal level before a provincial office can commit DREE to a proposal or even "raise the expectations of provincial governments." The computerized "Project Formulation Management Information System" operating in the Atlantic region breaks down the process of program formulation into nineteen definite steps. These cover the flow of events required in moving a proposal from its conceptual form to a Treasury Board submission, and finally to the signing of a subsidiary agreement. Officials in the field offices are asked for input at each step so that the progress of proposals can be monitored. This, it was felt, would provide current information to senior departmental officials, including the minister, and enable them to contribute to program formulation. Moreover, the information system was to be employed as an interdepartmental coordinating device by having a status summary report of all DREE proposals produced and circulated to a number of federal departments on a regular basis. Procedures for the development of subsidiary agreements were first established in 1973, at the same time that DREE decentralized its operations, and were subsequently amended in 1975 to provide for an earlier involvement of senior officials in formulating the agreements. As amended, the procedures stipulate that, from whatever source it may originate, a proposal should at the outset be briefly described in a memorandum and submitted to the provincial director general and to the regional assistant deputy minister for approval, before any kind of interdepartmental or intergovernmental analysis can be initiated. If approved, a detailed work program is developed which should, among other things, list the federal departments that ought to be consulted and how the consultation will take place. This in turn must be approved by the deputy minister who may at this stage bring the proposal to the minister's attention. Afterwards, it is circulated to other interested federal departments, preferably by the regional assistant deputy minister, who should also call and chair the first interdepartmental meeting on the proposal and invite active support and participation from other departments. It is important to underline that, according to the procedures, a proposal must first be discussed interdepartmentally at the federal level before initiating discussions with a provincial government. Once a formal federal project team has been formed, a process of joint analysis with the provincial government can begin which should be followed by a series of progress reports submitted at regular intervals to the regional assistant deputy minister and the deputy minister. If the analysis indicates that a 36

Introducing a New Approach to Decision Making subsidiary agreement is desirable, then one is drafted and circulated to all interested parties before submitting it to Treasury Board or Cabinet for final approval.18 THE NEW BRUNSWICK GOVERNMENT AND THE GDA APPROACH DREE's new GDA approach was formulated with very little input from provincial governments, yet it held two obvious and important implications for the Government of New Brunswick. First, it required that the province shift the emphasis of its economic development strategy from spatially oriented development projects to one which could allocate development projects throughout the province, to most policy areas, and hence to most government departments. Second, because of this multidimensional aspect, and also because of the process of joint decision making inherent in all GDAs, the federal government, through DREE, would henceforth be in a position to exercise greater influence on provincial priorities in a variety of economic sectors. DREE officially informed the New Brunswick government that it had decided to undertake a general review of its policies and programs through a letter, dated July 25, 1972, from the Honourable Jean Marchand (then still the minister of DREE) to Premier Richard Hatfield. It will be recalled that the policy review, in terms of federal-provincial consultations, remained exclusively a DREE undertaking until it was completed. Although provincial governments did provide some information, DREE alone remained responsible for reviewing its federal-provincial programs and for preparing the yellow books. In addition, very little federalprovincial consultations took place in developing the decision-making aspect of the new approach. Premier Hatfield maintains that it was this aspect of the GDA approach that was "new and cast in concrete" when the then minister of DREE, the Honourable Don Jamieson, held a series of orientation meetings with provincial premiers from May 10 to June 15, 1973. The minister's objective in holding these premier-level meetings was to introduce the GDA approach to provincial governments and to obtain their agreement to proceed with its implementation. In his meeting with the premier of New Brunswick, Jamieson pointed out that the new approach would enable the federal government to concentrate its efforts in areas where it was necessary (as, for example, in the Atlantic region) and to ignore those which were sufficiently developed (such as the Toronto metropolitan area). He explained that it also represented a clear departure from the current method of applying centrally devised and preconceived solutions to the problems of regional economic disparities. According to Premier Hatfield, he went on to explain that through the new GDA 37

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approach, DREE would be able to get more funds from the federal Treasury Board than would otherwise be the case. Jamieson stressed that henceforth DREE would be in a position to provide federal funds whenever a promising development opportunity could be identified. The New Brunswick government essentially welcomed the GDA approach because it felt that it would generate more federal funds for economic development than did the special areas agreements. Several officials nevertheless expressed some concern over DREE's announced plans to decentralize its operations. They were apprehensive about how traditional working relationships with DREE would be affected. In the past, they had developed a good working rapport with senior DREE officials in Ottawa on policy matters (that is, in the sense that whenever they required a quick decision from DREE on a policy issue they could get it by contacting Ottawa) and with those in the provincial DREE office in implementing DREE-New Brunswick programs. They feared that the establishment of a DREE regional office would only add another layer of bureaucracy and that their proposals would henceforth have to be vetted by yet another office. With a regional office of over 100 man years and a provincial office of nearly fifty man years, some provincial officials initially feared that the federal DREE expertise would overwhelm the provincial public service. Although the total number of DREE officials did not increase substantially with decentralization, for the most part, before decentralization, DREE officials operated out of Ottawa and could not claim to understand the needs of the people and of the province to the same extent provincial public servants could. Following Jamieson's visit to New Brunswick, the provincial government held a number of Cabinet-level discussions on DREE's new GDA approach. The discussions centred more on the kind of projects that could be sponsored through the GDA than on the implications it held for federal-provincial relations or for the province's priority determining process. Apart from accepting that the decision-making aspect of the GDA approach was a fait accompli, one New Brunswick Cabinet minister commented that " . . . [at the time] we felt that all this talk of jointly identifying and pursuing development opportunities was little more than federal bureaucratic talk geared to sell us a new way of doing things." Nevertheless, in accepting the new approach, the Cabinet committed the provincial government to work with DREE on the nature of the proposed Canada-New Brunswick GDA and on the identification of development opportunities. In doing so, however, very few changes were made to the government's administrative structure for dealing with the new approach and with DREE's decentralized operations. The already established Office of the 38

Introducing a New Approach to Decision Making Cabinet Secretariat assumed the responsibility for coordinating program and project proposals under the new approach and for representing the provincial government in its day-to-day working relations with the provincial DREE office, particularly in developing subsidiary agreements. In addition to these new responsibilities and with only a few more man years added to its staff complement—bringing the total to about twenty—the office also retained all of its existing responsibilities. That is, it would continue to oversee the implementation of the government's official languages policy, to provide secretariat and advisory-type services to the Cabinet committees on policy and priorities, on economic and on social development, and to act as the central coordinating agent for the province's relations with other governments.19 Thus, in retaining the duties of that position, the secretary of the Cabinet Committee on Economic Development became the provincial government's counterpart to DREE's provincial director general. It is he, along with DREE's director general, who constitutes the DREE-New Brunswick Development Committee operating under the Canada-New Brunswick GDA. Moreover, within the provincial government, he leads a handful of officials in the Office of the Cabinet Secretariat in encouraging provincial line departments to come up with development ideas, in coordinating and developing these ideas into possible subsidiary agreements, and in negotiating cost-sharing arrangements with the provincial DREE office. After an initial debate as to whether or not line departments should assume full responsibilities for implementing subsidiary agreements, the Cabinet decided to grant the Community Improvement Corporation (CIC) a central coordinating role in implementing the various subsidiary agreements.20 In this capacity, the corporation acts as the provincial funding agency for most subsidiary agreements, monitoring the programs and projects under them. It is also represented on nearly all DREE-New Brunswick management committees which, it will be recalled, are charged with the responsibility of implementing subsidiary agreements. Apart from the separation of the post of chairman and general manager, these added responsibilities did not entail a significant increase in staff for the corporation. On the whole, government operations were intended to function much as they had in the past and accordingly no new interdepartmental coordinating procedures were established. Officials felt that the provincial public service would remain sufficiently small so that, however complex or involved a decision-making approach might be, any special procedures designed to promote interdepartmental relations (for example, computerized information systems) would, in the end, be superficial and of little practical value. What provincial government officials in central 39

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agencies and in line departments requested, however, was additional staff to counter-balance DREE's decentralized expertise, but, at least in the beginning, this was refused by the provincial Treasury Board. Considering the potential significance of the GDA to New Brunswick and that through it DREE would be in a position to influence provincial priorities, one may ask why the provincial government did not introduce a more elaborate planning capability to deal with the new approach and also with a decentralized DREE? In response to this question, Premier Hatfield stated that "we simply did not have the required financial resources to establish any kind of elaborate planning capability." A provincial Cabinet minister added: "As a rule we [the provincial Cabinet] do not have much confidence in planners and their five-year plans." NEGOTIATING THE CANADA-NEW BRUNSWICK GDA Immediately after the ministerial-level meeting, DREE and the province initiated discussions on the proposed GDA. With the administrative-legal aspects already established and standardized for all provinces, DREE's position on schedule A of the GDA was based on the contents of the New Brunswick yellow book. Thus, it re-emphasized the need for jointly pursuing development opportunities and listed those in the yellow book as possibilities. The province's response to DREE's position was essentially two-fold: on the one hand, the senior-level official from the Office of the Cabinet Secretariat, charged with negotiating the GDA on behalf of the province, maintained that the GDA should explicitly state the negative economic position of the province in relation to central Canada; on the other, the premier and his Cabinet adopted the position that the province would not sign the GDA without in return obtaining from DREE a commitment to cost share some specific projects.21 On the first point, DREE officials did not object strenuously, though they argued that the GDA should stress the positive aspects of the provincial economy. The approach itself, they pointed out, was especially designed to be a positive one by enabling both levels of government to identify and pursue development opportunities. Accordingly, the GDA should clearly express the fact that it represents a clear departure from past federal-provincial efforts in the area of economic development in that it does not attempt to solve problems but rather to develop the economic potential of the province. On the second point, DREE officials adopted the position that the GDA should be developed separately or in isolation from specific projects or precise cost-sharing arrangements. They restated the point that GDAs are only enabling documents or formal frameworks and that in themselves 40

Introducing a New Approach to Decision Making they cannot provide for specific programs or projects. The province, however, took a different view. Coincidentally, during the fiscal year in which the GDA was being developed, the province had a substantial amount of DREE funds to spend under existing programs. Thus, since DREE was not in a position to withhold federal program money to force the province into signing the GDA, the provincial Cabinet decided to take advantage of the situation and to strike a "hard bargain with the feds." It correctly assumed that the federal government would be anxious to sign all nine GDAs and to implement the new approach. In the case of New Brunswick, DREE—in particular the provincial DREE office—had hoped to have the GDA signed by the fall of 1973. The province's position was clear: it would agree to sign the CanadaNew Brunswick GDA provided that DREE would agree to cost share a series of programs and projects. At the top of the list stood several highway construction projects. In particular, the province wanted some assurance that DREE would continue to cost share the construction of highway eleven, which runs from the northeast of the province to the southeast, and two arterial roads for the cities of Saint John and Moncton. (DREE had until then cost-shared highway eleven through a special highways agreement and the two arterial roads under the special areas agreements.) The province also requested some form of DREE financial assistance for the development of industrial parks, for the construction of a proposed nuclear power plant, and for the so-called Bricklin project (a proposed automobile manufacturing plant for Saint John). In addition, the province proposed that subsidiary agreements should include a cost escalation clause as a safeguard against inflation.22 After several months of discussions and with the GDA still unsigned, the province continued to press for some kind of DREE commitment for its list of projects. Moreover, by the end of the 1973 calendar year, the province raised the issue of the level of financial resources DREE had earmarked for New Brunswick for the upcoming fiscal year. In response to these developments, DREE initiated discussion on two highway subsidiary agreements and indicated its willingness to consider the industrial parks as a development opportunity. However, in regard to the GDA itself, the provincial director general warned that the New Brunswick GDA, as drafted, had been approved by the federal Cabinet and, should the province introduce substantial changes to it, then DREE would have to prepare another submission for Cabinet consideration. With no assurance that the federal Cabinet would agree to the changes, he argued that the signing would, at the very least, be delayed. To break the impasse and to obtain from DREE a ministerial-level commitment on the provincial proposals, Premier Hatfield met with DREE Minister Jamieson in January 1974. Premier Hatfield presented 41

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all of the proposals noted above and, in addition, requested some federal assistance for the development of a new port terminal for Saint John. Jamieson stated that he would bring the latter point to the attention of the federal Ministry of Transport. On the other provincial proposals, he observed that the department was considering them and that, in fact, some were already in an advanced development stage. The meeting concluded with both agreeing on the desirability of having an early signing of the GDA. Satisfied that his demands had been met, Premier Hatfield reported back to his Cabinet and subsequently wrote to DREE to confirm the outcome of his discussions with Jamieson. He also announced that the province would be ready to sign the GDA by the first week of March 1974. It soon became apparent, however, that the signing would have to be postponed. For one thing, DREE was not responding to the premier's letter; for another, the GDA negotiations had by now dragged on into 1974 which, for New Brunswick, was an election year. Hence, especially in the eyes of provincial Cabinet ministers, the whole GDA issue assumed a different perspective. Not least because highway construction programs are always politically attractive at election time, particularly in New Brunswick, the provincial Cabinet now insisted on receiving from DREE firm commitments on highway subsidiary agreements. In fact, the province had already committed itself by approving some construction projects for all the highways in question and now requested from DREE a clause which would allow for retroactive cost-sharing. In addition, the province wanted a definite answer, or commitment, regarding the level of DREE funds to be made available to New Brunswick in the ensuing year. But, as one DREE official remarked, the "ground rules had changed" since the minister of DREE was now also in a position to "bargain." Specifically, he could refuse to attach a retroactive financing clause to subsidiary agreements and, because of the new fiscal year approaching, he could also use DREE's financial resources as a bargaining lever. Perhaps more important, the provincial Cabinet was now anxious to sign the GDA. Apart from the fact that no new DREE-New Brunswick programs could be initiated without a signed GDA, the provincial Cabinet wished to resolve all outstanding issues in preparing itself for the election campaign. And the province's public stance—that DREE was largely responsible for the delay in signing the GDA—weakened as DREE signed GDAs with other provinces.23 In response to these developments, Premier Hatfield met Jamieson once again in an attempt to obtain definite DREE commitments on the provincial proposals. After some last-minute negotiations over the level of DREE's financial resources for the upcoming fiscal year, DREE and the province finally signed the GDA on April 23, 1974, or nearly one year after Jamieson's visit to the province to introduce the new approach. 42

Introducing a New Approach to Decision Making The Canada-New Brunswick GDA contains all the standard, administrative-legal clauses found in every GDA and includes a schedule A which presents the objectives and the strategy to be followed in meeting them. Both the objectives and the strategy of the agreement have a close resemblance to those presented in the New Brunswick yellow book: to increase the productivity of the primary industries; to increase valueadded in the province by processing local natural resources; to further diversify the provincial economy; and to encourage the development of viable diversified communities.24 The strategy as outlined in schedule A re-states the importance of the forest industry to the province and calls for joint development efforts in agriculture, fisheries, mining, and tourism. Schedule A also states that "both levels of government will co-ordinate their policies to serve the objectives established in the schedule."25 It concludes by affirming that new development opportunities will be jointly investigated throughout the life of the agreement. DREE met most of the provincial demands. In signing the GDA, Jamieson and Hatfield issued a joint press statement confirming that two highway subsidiary agreements "would be signed in the very near future."26 The two agreements also contained a clause which provides for retroactive cost-sharing. Other provincial demands that were met will be discussed later in this study. AN OVERVIEW In reviewing the events leading up to the signing of the Canada-New Brunswick GDA, one can hardly describe them as resulting from joint planning between the two levels of government. In fact, they followed the established pattern of federal-provincial relations in Canada in that outright political-level bargaining guided the introduction of the GDA in New Brunswick. The minister of DREE entered the negotiations with an Ottawa-developed approach to federal-provincial relations and with some definite ideas as to what ought to be done to develop the province's economic potential. Premier Hatfield and his Cabinet meanwhile made use of the situation to strike the bsst possible deal with the federal government by obtaining DREE financial support for specific initiatives. Some of these—notably, highway construction projects—were at variance with the new "development opportunities" approach. Among other things, the projects had been previously sponsored by programs which DREE now described as "oriented too much toward the problems of an area rather than toward its potential." Interestingly enough, a number of provincial DREE and provincial government officials present similar observations regarding the above. They report that with the focus on political actors and with the negotia43

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tions being given extensive press coverage, it was to be expected that politicians would hurl charges and counter-charges in accusing each other of being responsible for delaying the signing of the GDA, and that the provincial Cabinet would, in return for approving the signing of the GDA, demand federal cost-sharing for programs in such high "political" profile areas as highway construction. One federal respondent concluded that "it was the price we had to pay to introduce the GDA approach in New Brunswick." Another conclusion to be drawn from this chapter is that from a strictly administrative point of view, both levels of government viewed the GDA approach in a markedly different manner. In decentralizing DREE, the federal government established elaborate bureaucratic structures at the provincial and regional levels, and in Ottawa. It intended to base its contribution to the joint decision-making approach on extensive analytical resources or on a highly bureaucratic footing. The New Brunswick Cabinet meanwhile saw little need to introduce substantial changes to the provincial government's administrative structure.

44

Chapter Four A First Generation of Subsidiary Agreements Between June 24, 1974, and June 23, 1977, fifteen subsidiary agreements to the Canada-New Brunswick GDA involving some 373 million dollars were signed. The terms "first generation" and "second generation" of subsidiary agreements are frequently employed to separate agreements whose programs and projects were developed before (or during) the introduction of the GDA approach in New Brunswick from those developed subsequent to its signing. No universally accepted date separating the two generations exists, but for the purpose of this study it is proposed that all agreements signed on or before February 17, 1975, constitute the first, and that those signed after this date, the second. (The appendix, page 169, provides a financial breakdown of the fifteen subsidiary agreements.) The underlying objective in reviewing the events leading to the signing of the fifteen subsidiary agreements is to understand how the GDA approach actually operates in New Brunswick and to gain an insight into "its system of influence." Questions are asked to determine which administrative and political actors participated in formulating the agreements, how and by whom program elements of subsidiary agreements were initially identified, and to what extent the agreements were a product of joint federal-provincial planning. Answers to these questions will provide the basis for bringing forth certain conclusions regarding the impact of the GDA approach on Canada's political and administrative institutions. HIGHWAYS AGREEMENTS AND KING'S LANDING HISTORICAL SETTLEMENT In signing the Canada-New Brunswick GDA, DREE agreed to costshare a number of initiatives which it had previously supported under

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various pre-GDA federal economic development schemes. Two examples are highways construction and the development of the King's Landing Historical Settlement. Once DREE agreed to cost-share under the GDA the construction of the two arterial highways and route eleven, there were very few issues left to resolve. Since the Saint John and Moncton arterial highways subsidiary agreement would continue the construction begun under the special areas agreements, DREE and the province were in agreement over such administrative-type issues as project locations, the estimated cost of the two highways, and the like. In the case of the 1974-75 highways subsidiary agreement, there was only one issue to resolve. The provincial Cabinet had made it clear in accepting the GDA approach that it expected DREE would agree to cost-share a long-term highways agreement to complete highway eleven. DREE officials responded by saying that a long-term agreement could not be finalized in time to include the projects that the province had planned for the 1974-75 fiscal year. This argument proved convincing and the province accepted a one-year highways subsidiary agreement. However, at the insistence of Premier Hatfield, a joint press release was issued which stated that "the early completion of this highway [eleven] is important to the economic development of these areas of the province [that is, the northeast]."1 DREE officials had "indicated their willingness" to discuss further the possibility of developing a multi-year highways agreement to complete highway eleven. In early discussions, the province proposed to DREE that they enter into a subsidiary agreement to complete the reconstruction of an historical settlement begun under the FRED-Mactaquac agreement. DREE agreed, and a DREE-New Brunswick task force was, accordingly, convened. It suggested that, in addition to completing the settlement as had been originally planned under the FRED-Mactaquac agreement, various visitor facilities, including a highway interchange system leading from the Trans Canada highway to the settlement, be constructed.2 Once the provincial DREE office and the province agreed on the contents of the proposed subsidiary agreements, they were circulated to other federal departments in Ottawa for comments. Mainly because they constituted clearly defined and self-contained projects holding very little consequences for the policies of other federal departments, few objections were raised. MIRAMICHI CHANNEL STUDY Historically, the ports of Chatham and Newcastle have been important to the economy of eastern New Brunswick. However, in recent years the 46

A First Generation of Subsidiary Agreements economic importance of the two ports has lessened dramatically because most modern and commonly used cargo vessels, which require a depth of some twenty-six feet to operate, can no longer service the two ports. The natural depth of the Miramichi Channel is less than fifteen feet. In the mid-1960s, the federal Department of Public Works carried out an investigation to assess the feasibility of increasing the navigable depth of the channel to twenty-eight feet, but recommended against doing so on the grounds of high initial costs and the observed siltation rate. In 1972, as part of the comprehensive Canada-New Brunswick Northeast Transportation Study, a consulting firm re-examined the situation and concluded that dredging the channel to twenty-six feet could be economically beneficial, provided it was feasible from an environmental point of view and that the cost of maintaining the channel until 1991 was less than 1.9 million dollars a year.3 The federal department most directly concerned with the northeast transportation study, the Ministry of Transport, called a meeting of relevant federal and provincial government departments to review the findings of the study. They concluded that a further two-year investigation, involving hydraulic studies, on-site studies (for example, a survey of bottom sediments of the river), as well as a separate ecological study to assess possible environmental impact would be needed to determine whether the conditions outlined in the report could be met. The federal departments of Transport, Environment, and Public Works agreed on the desirability of carrying out such an investigation and all promised their support. However, the operating budget of the Department of the Environment was such that it could not finance the 1974 field survey program which represented the most costly part of the proposed investigation. Rather than see the investigation delayed for a year or possibly dropped altogether, the New Brunswick DREE office proposed to the province that they enter into a subsidiary agreement to assume the financial responsibility for the 1974 field survey program. The province quickly agreed. One provincial Cabinet minister reported that the province recognized that it would not incur future-year costs in signing the agreement, since the responsibility for financing any development efforts for the channel would fall to the federal Department of Public Works. There was another and equally enticing reason for agreeing to cost-share the study through a subsidiary agreement. For an extremely modest amount of funds ($76,400) the provincial Cabinet saw that the province would be able to claim credit for having assisted in bringing to fruition a study that could lead to important economic benefits for the Chatham-Newcastle area of the province. 47

CHAPTER FOUR FORESTRY In March 1971, with financial assistance from DREE and with a federalprovincial steering committee established to direct the study, the Government of New Brunswick initiated a comprehensive forest resources study. The steering committee consisted of representatives from the federal departments of Environment (the Canadian Forestry Service), Industry Trade and Commerce, and DREE, and from the provincial departments of Natural Resources, Economic Growth, and the Cabinet Secretariat. On several separate occasions, DREE had acknowledged the importance of the forest industry to the province. Apart from agreeing to share the cost of the forest resources study, DREE stated in its New Brunswick yellow book: "Forestry in New Brunswick is the single largest contribution from the resource sector to the provincial economy." And, in schedule A of the New Brunswick GDA, both DREE and the province had agreed that: "The forestry and forest products sector is extremely important to the long-term economic growth of the province. In many parts of the province, this industry is the mainstay of the economy."4 Hence, when the GDA approach was introduced to New Brunswick, two things were clear: first, a forestry subsidiary agreement would be developed and second, the New Brunswick forest resources study would help shape that agreement as far as possible. Thus, in developing the Canada-New Brunswick GDA, a number of DREE-New Brunswick task forces were set up to produce a forestry development strategy for the province and to identify specific programs and projects for consideration under the GDA. To assist provincial DREE officials and provincial government officials, a number of outside consultants were employed. Although it only submitted its final report in early 1974, it soon became clear through interim reports what the forest resources study would recommend. It would propose that the provincial government assume a more positive role in managing the province's forest resources and that a number of specific measures and techniques designed to enhance the productivity of forest industries be applied or tested. In line with this position, DREE and the province considered two broad areas when formulating the forestry development strategy; one would examine such fields as forest inventory, forest protection, land consolidation, and the like; the other would explore the possibilities of testing, under operational circumstances, new techniques in forest management and harvesting. As noted earlier, several federal and provincial departments were members of the steering committee of the forest resources study. In this capacity—since the projects were to be based primarily on the outcome of the study—they all had an opportunity to influence the general direction 48

A First Generation of Subsidiary Agreements of the proposed development strategy. However, initially at least, the provincial DREE office and the provincial departments of Natural Resources and the Cabinet Secretariat retained full responsibility for developing and packaging a list of specific projects into a proposed forestry subsidiary agreement. Broadly speaking, the working arrangements of the provincial DREE office and the provincial government operated in the following fashion: proposals stemming from the forest resources study, task forces, its own internal organization, or outside consultants were considered by the officials of the provincial Department of Natural Resources who would recommend a variety of projects; next, Cabinet Secretariat officials would prepare a "provincial position" by providing a centralized and coordinated overview to the proposals for their discussions with the provincial DREE office; from there provincial DREE officials would review the proposals, often in conjunction with Cabinet Secretariat officials. This is not to suggest that provincial DREE officials did not contribute ideas towards the development of specific projects; on the contrary, this they did through task forces and at numerous DREEprovince meetings. Nor is it to suggest that they did not communicate directly with provincial government officials in line departments. However, it remains that for the forestry subsidiary agreement, as for most other sectoral subsidiary agreements, the relevant provincial line department was regarded as the "initiator" of projects, while the provincial Cabinet Secretariat and the provincial DREE office were regarded as the "reviewers" of the projects. By early October 1973, the provincial DREE office and the province had agreed to a development strategy for the forestry sector. Reflecting the high priority which both attached to the industry, they agreed that, in terms of financial resources, it should represent the most important so far developed under the GDA. By this time, they had also decided to prepare two separate subsidiary agreements, one to support activities under the heading of forestry general and the other to sponsor the development of a pilot project and its related activities. The latter encompassed five major programs, all of which were designed to increase the effectiveness and the total use of the province's forest resources and to increase employment opportunities and per capita income for those working in related industries. The programs were developed in line with the suggestion that the provincial government should assume a more positive role in managing the province's forest resources. To give an appreciation of the flexibility of the GDA approach (in the sense that through it a variety of diverse projects can be supported) the contents of the five programs sponsored by the DREE-New Brunswick forestry subsidiary agreement will be briefly described.5 The first—forest 49

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management—provides for projects for the development of a woodlands inventory system through aerial photography, of silviculture practices, and of new concepts for the protection of forest resources against insects, diseases, and so forth. It also provides for an elaborate system of forest arterial roads. A second program—resource utilization—undertakes to develop a systems approach to economical harvesting and transporting of timber, and to provide a loan assistance fund to encourage the use of such new equipment as might be required under the new approach. The third program involves manpower development and the establishment of educational and research facilities. The fourth provides professional and technical-type support services to programs sponsored by the proposed agreements. The fifth program introduces a pilot project to test some of the new concepts discussed in the forest resources study. An important element of this program is the provision of funds to develop a forest industrial park in order to group together a variety of wood utilization firms. It would be designed to provide the most advanced techniques the forest industry could offer. In addition, firms located in the park would be able to assist each other through such means as bulk by-product utilization and disposal. A significant decision, which it is important to note here, was that DREE and the province agreed to locate the pilot project in the economically depressed northeast area of the province. The proposed strategy encompassing these five programs was submitted to a formally constituted federal-provincial committee on November 13, 1973. Charged with the responsibility of considering the various proposals sponsored by the strategy, the committee consisted of representatives of the same departments that made up the steering committee of the New Brunswick forest resources study and also of representatives of the federal Department of Manpower and Immigration and the provincial Department of Labour. It is significant that officials of the New Brunswick office of the Canadian Forestry Service represented the Department of the Environment—the federal department most directly affected by the proposed agreements. With very little changes made to what DREE and the province proposed, the strategy was again submitted for federal interdepartmental consideration, but this time in Ottawa, to a senior-level interdepartmental meeting especially convened to review the New Brunswick forestry agreement. All participating federal departments gave their approval in principle to the strategy in early 1974. However, the Department of the Environment requested more time so that its more senior departmental officials could also review the proposals. Subsequently, in March 1974, Environment officials suggested to DREE that the agreements should be 50

A First Generation of Subsidiary Agreements redrafted to give more importance to environmental quality control. In particular, they argued that a systems approach to forest harvesting should be developed, not only in relation to economical operations, but also consistent with environmental concerns. They also stated that some program elements were too general to permit "intelligent criticism."6 Mainly because the comments came at a late date, but also because provincial DREE officials felt that most of the objections could, if necessary, be accommodated while implementing the agreements, the provincial DREE office chose to recommend ignoring the objections raised by the Department of the Environment. To have revised the strategy would have meant a new round of discussions with the province and other federal departments which the New Brunswick DREE office was unwilling to do. It had been a year since DREE and the provincial government had first initiated discussion on the development of forestry subsidiary agreements and close to three years since they had agreed to sponsor a comprehensive forest resources study. Both were now anxious to implement what they regarded as imaginative and vigorous proposals for economic development. The province was particularly anxious to sign the agreements and repeatedly applied pressure on provincial DREE officials to speed up the federal approval process. In fact, the province had by then already established the New Brunswick Forest Authority to oversee the implementation of the pilot project. After some last minute administrative adjustments, including the combination of the two agreements into a single subsidiary one in order to provide still more flexibility in implementation, the provincial DREE office, in accordance with federal government approval procedures, forwarded the proposed agreement in May 1973. In September, some four months later, the federal Treasury Board gave its approval to the forestry subsidiary agreement. Although they did not object to the Treasury Board when it considered the agreement, Department of the Environment officials did express concern to DREE over what they felt had been a lack of interdepartmental consultations at the federal level. Specifically, they expressed displeasure that they had not been asked to participate on the management committee implementing the forestry subsidiary agreement.7 Much more will be said in ensuing chapters about interdepartmental relations at the federal level under the GDA approach; for now, however, some specific developments in regard to the forestry agreement need to be considered. A major difficulty with interdepartmental consultations in developing the forestry agreement—and also a recurring one in developing other subsidiary agreements—is that, other than DREE, few federal departments have policy and program developers located in provincial capitals, precisely where new GDA-sponsored policy and program

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initiatives originate. Officials of the Canadian Forestry Service of the Department of the Environment were early on involved as members of the steering committee of the forest resources study and of the formal federal-provincial committees considering the proposed agreements in formulating an overall economic development strategy for New Brunswick's forest sector. But they were located outside of Ottawa in the provincial capital of New Brunswick. It was left to them to advise their senior departmental officials and, through them, their minister, on the kind of policy initiatives which were under consideration. There is every reason to believe that this was not adequately done. On the other hand, it must also be pointed out that DREE officials did not punctiliously abide by the detailed interdepartmental consultative procedures which DREE had established to cover the flow of events required before program proposals can evolve into a signed federalprovincial subsidiary agreement. In the case of the forestry subsidiary agreement—as for most subsidiary agreements for that matter—DREE ignored some of the consultative procedures. For example, the first interdepartmental meeting held on the forestry agreement came after DREE had completed the "process of joint analysis" with the province and not before, as was required. Finally, from earlier discussions we know that provincial Cabinet ministers do not attach a high priority to research and planning activities. Yet an important element of the forestry agreement deals with research and planning, which leads one to ask why did the provincial Cabinet approve the forestry agreement? Responding to this question, one provincial Cabinet minister remarked that, unquestionably, the Cabinet favoured what he termed the more "concrete elements" of the agreement. He suggested that, along with a number of his colleagues, he regarded the inclusion of several research and planning projects in the agreement as required "trade offs" to obtain federal cost-sharing for the other projects. "One thing is certain" he concluded "without substantial federal funds to support them we [the provincial Cabinet] would never have approved a number of projects sponsored by the forestry subsidiary agreement and this not simply because of a lack of financial resources." However, DREE and a number of provincial government officials often point to the New Brunswick forestry agreement whenever they wish to illustrate the viability of the GDA approach in developing federal-provincial agreements. Only through its adaptability, they argue, could such an imaginative and flexible agreement be developed. Moreover, in interviews provincial government officials disagreed that some projects represent provincial "trade offs" or that somehow the province unwittingly accepted projects under the forestry agreement. 52

A First Generation of Subsidiary Agreements AGRICULTURE In its yellow book on New Brunswick, DREE noted with concern the decline of agriculture's role in the provincial economy and suggested that development efforts be launched to reverse or at least moderate this process. The province was quick to agree and in late 1973 a joint review of the agricultural sector was carried out. Apart from DREE and the provincial Cabinet Secretariat, the federal departments of Agriculture and Industry, Trade and Commerce and the provincial Department of Agriculture were involved in the review. The findings of the review indicated that development efforts to strengthen the agricultural sector should concentrate on improving technical and infrastructure services to the industry and on providing opportunities to farmers to diversify their operations. The review also called for the development of a provincial planning capability to enable the province to formulate long term agricultural development strategies and recommended that, in the interim, measures be introduced to increase production and to create employment opportunities. Thus guided, provincial DREE officials and provincial government officials from the Cabinet Secretariat and the Department of Agriculture met to formulate specific projects for an agricultural subsidiary agreement. For the agricultural sector, the provincial DREE office and the province agreed to a subsidiary agreement which would provide for twelve programs. An important program, with close to 15 percent of the agreement's total financial resources committed to it, involved a number of research and planning projects. Several of the remaining eleven programs sponsored a variety of projects in support of six agricultural-related industries (such as the beef and apple industries).8 As for other subsidiary agreements, the provincial DREE office forwarded the proposed agricultural agreement to relevant federal departments for consideration. As a general criticism, a number of concerns were expressed that the agreement was piece-meal and scattered in its approach and that it lacked focus. More specifically, partly because of its concern for national policies but also because it would impinge on one of its programs, the federal Department of Agriculture objected to one item in the proposed agreement which called for direct subsidies to assist farmers in purchasing feed grain. Both the provincial DREE office and the province agreed to delete that item and to redraft the whole agreement in order to present its content more accurately. As signed, it is basically similar to the original draft with the exception that the twelve programs are regrouped under four main headings which, in turn, contain twelve program elements (that is, the original twelve programs).9 53

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Before continuing our discussions on program formulation under the GDA approach, it is important to comment on the role of interest groups in the development of subsidiary agreements, which on the whole is applicable not only to this instance, but also to all other sectoral-type subsidiary agreements. The role of interest groups in the GDA process is highlighted here because evidence is available to support what was frequently said in interviews with government officials and representatives of interest groups. Correspondence between them substantiates the contention that, given the nature of the GDA approach, interest groups can be effectively blocked out of the GDA decision-making process. We know that, for the most part, projects are developed and packaged by officials in the relevant provincial line department and reviewed by Cabinet Secretariat officials and—at times jointly—by provincial DREE officials. Again, DREE and provincial central agency officials can influence program formulation through their continuing two-way communications with line department officials and through their participation on policy review committees. These committees enunciate broad guidelines from which specific projects can be identified. What this working arrangement entails, among other things, is a high degree of interdependence between the departments involved. Both the New Brunswick Federation of Agriculture and the Maritime chapter of the National Farmers Union applauded the announcement that a Canada-New Brunswick GDA would be signed and that in all likelihood it would generate programs to develop the province's agricultural sector. But, when their representatives communicated with the provincial Department of Agriculture, they found officials there reluctant to discuss the proposals under consideration. Fearing that an agricultural subsidiary agreement would be signed without at least being able to comment on its contents beforehand, both organizations co-signed a telegram to the minister of DREE, in which they stated: "With reference to the agricultural portion of this agreement [the Canada-New Brunswick GDA] we have not been consulted and have been refused information by the New Brunswick Department of Agriculture."10 The telegram goes on to request the minister not to sign any agricultural agreement with the province "until such time as the farmers of New Brunswick are given a chance to present their views to your department and the Government of New Brunswick." However, everyone, including government officials directly involved with the agreement, acknowledges that in the end the two interest groups had no influence whatsoever on the contents and direction of the agricultural subsidiary agreement. DREE maintains that liaison with local interest groups in formulating programs under the GDA approach is strictly the responsibility of the province. DREE officials insist that they cannot—nor indeed would they 54

A First Generation of Subsidiary Agreements want to—dictate how a provincial government should deal with them. In any event, DREE officials recognize that a provincial government would have every right to object, not only if DREE were to interfere in its relations with local interest groups, but also if it were to establish bilateral discussions with them in developing or in assessing its position vis-a-vis a proposed sectoral-type subsidiary agreement. Yet, though everyone acknowledges the dominant position of the provinces in this area, in the interviews, the great majority of New Brunswick government officials argued that the GDA approach inhibits their relations with interest groups and also with the general public. A tacit understanding exists amongst officials which prohibits anyone from discussing or "leaking" proposals under consideration outside of federal-provincial review committees or DREE-province task forces. Programs and projects are to be announced jointly and only after relevant subsidiary agreements have been signed. Both provincial government and provincial DREE officials point out that otherwise the GDA approach would become unmanageable, not least because departments (including and especially their ministers), might, on an individual basis, be tempted to make premature announcements or commitments in an attempt to claim credit for having developed a particular project. Moreover, provincial government officials correctly point out that under the GDA approach they have no assurance that all projects under a proposed subsidiary agreement will be approved until the agreement as a whole has been approved by the federal government. For this reason, they are unwilling to discuss in any detail a proposed project with interest groups, even on a confidential basis, for fear that they may raise their expectations and afterwards be unable to deliver the project should the federal government refuse to cost-share it. KENT REGION PILOT PROJECT The Kent region, as defined by the subsidiary agreement, lies on the province's eastern shore and includes all of Kent County and two rural centres from the adjoining Northumberland County. The region is predominantly French-Acadian and, relative to the province as a whole, it has a high unemployment rate and low per capita income. During the 1973-74 fiscal year, a special Kent pilot program under the ARDA 111 agreement designed to provide advisory services to would-be entrepreneurs and financial assistance for specific development projects was instituted. DREE and New Brunswick officials agreed that special measures for the Kent region should continue and that preferably all new initiatives should be sponsored through the GDA rather than through an extension

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of the ARDA agreement. However, they faced two obstacles. First, although they had agreed to do something, they experienced considerable difficulty in defining precisely what it was they wanted to do. It was not a problem of agreeing which project should be included in a Kent region subsidiary agreement, but rather more one of coming up with ideas in the first place which could be developed into projects. Unable, and to a certain extent unwilling, to develop a detailed strategy, they recommended that the agreement should adopt a pilot project approach encompassing three broadly defined programs. Even when one bears in mind that they are intended to constitute a pilot project, the three programs lack any kind of definition or terms of reference. The first stated objective of the most costly program—the project initiation and technical support program—best illustrates this point. It states, "to facilitate implementation of development projects by providing a fund from which money can be drawn to assist projects as they become ready."11 The objectives of the other two as stated in schedule B of the agreement, are as broadly defined. For instance, the only stated objective of the second program reads, "to provide infrastructure necessary to support activity that will result in permanent job opportunities."12 The intent was to give to the management committee, or the committee responsible for implementing the agreement, very wide discretionary powers in initiation projects and in spending the funds of the agreement. DREE and provincial government officials involved in developing the agreement knew that most of them would also be involved in implementing it. They felt that they would be able to identify specific projects more precisely if they could do so on a longer-term basis and also by taking into account changing economic circumstances. The second obstacle was political. Apart from their reluctance to approve such loosely defined programs, a number of provincial Cabinet ministers objected to the idea of having a subsidiary agreement limiting itself to a specific geographical area of the province. They argued against special recognition for the Kent area by pointing out that several other regions in the province were also economically underdeveloped in relation to the province as a whole. But equally important in explaining the reluctance of some Cabinet ministers to support a Kent region subsidiary agreement is the fact that the area covered by the agreement has been and remains a Liberal party stronghold. When the agreement was being developed, for example, the Liberal party (or the provincial opposition) held three of the region's four seats. In the end, according to one Cabinet member, the Cabinet approved the agreement only because it saw merit in the argument that for a relatively small amount of money ($548,000) the province could get the federal government to spend $2,740,000 within provincial boundaries. 56

A First Generation of Subsidiary Agreements At the federal level, the Treasury Board registered two observations in considering the Kent region agreement. First, it expressed concern not only over the lack of specific projects in the agreement, but, in addition, over the lack of criteria to govern the eligibility of projects which could be supported. Second, the board noted with concern that the agreement included federal support of provincial overhead costs, including salaries for provincial public servants—in fact the board went on to stipulate that it would not in future consider agreements which make provision for the cost of salaries of provincial public servants. This was particularly discomfiting to provincial DREE officials in New Brunswick who had already initiated discussions with provincial government officials on a number of proposed subsidiary agreements which contained funds to cover just such costs. Only after an intervention by the minister of DREE, who acted on the advice of his officials, did the board qualify its position by stating that it would entertain special cases, including subsidiary agreements which were in the advanced stage of development.13 Before submitting it to Treasury Board, DREE had requested several federal departments to comment on the proposed Kent region subsidiary agreement. With few exceptions, they stated that the agreement was too broadly defined to warrant meaningful discussion. In particular, one official of the Department of Agriculture remarked: "We cannot approve or disapprove the agreement until we see details of the proposed projects."14 In essence, the Kent region pilot project agreement amounted to a block of funds to be allocated by the DREE-province management committee on projects as they surfaced. It was simply a 3.3 million dollar allocation with very few projects actually defined at the time of signing. In addition, there was no detailed specification as to the basis on which projects could be identified. INDUSTRIAL DEVELOPMENT In his discussions with the minister of DREE regarding the introduction of the GDA approach, Premier Hatfield insisted on receiving assurance that programs for the promotion of industrial development, in particular those for the development of industrial parks, would be available under the new approach. The premier's principal concern at the time was to ensure that federal-provincial programs would be available indefinitely to fill the void left behind by the termination of DREE's special areas agreements. In New Brunswick, these agreements provided, among other things, measures to stimulate industrial development in Saint John and Moncton. As for other subsidiary agreements, provincial DREE and provincial 57

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government officials met on numerous occasions both formally (as at task force meetings) and informally to discuss the contents of the proposed agreement. This time the local DREE office and the province did not initiate a major policy review or a comprehensive study of the industrial promotion field to guide them in developing the subsidiary agreement. They did, however, engage an independent research agency— the New Brunswick Research and Productivity Council—to come up with proposals for possible inclusion in the agreement. Early in the discussions the province suggested that the proposed agreement make provision for the establishment and operation of regional industrial development commissions in every major region of the province to promote and coordinate initiatives designed to attract industrial development to their respective regions.15 DREE readily supported this proposal. Under its FRED-northeast agreement with the province, DREE sponsored a similar industrial commission and there it had met some success. The Research and Productivity Council suggested two programs. The first, which both provincial and DREE officials enthusiastically accepted, was designed to facilitate the introduction of new products by establishing a production pilot plant. The second called for the establishment of a special industrial park, or mall, which would provide factory space and central administrative and technical services simultaneously to several manufacturers agreeing to locate there.16 Two other industrial infrastructure type programs were also included in the agreement. One provides funds for the acquisition and industrial servicing (for example, water, sewer, and highway access) of sites where a significant demand for industrial land exists. This program was initially proposed by provincial government officials and their intent was not only to continue the special areas agreements approach but to extend it to all areas of the province. The second program was jointly identified and formulated by a handful of officials from the provincial DREE office and the provincial Department of Economic Growth. Essentially, it provides for a pool of unallocated funds to permit the management committee implementing the agreement to respond to unforeseen demands including, if necessary, assistance to research establishments and to provide certain facilities which otherwise would not be available under existing federal programs, such as physical facilities at secondary airports.17 Both parties also agreed to a small business incentives program based on a similar one operating in northeast New Brunswick under the FREDnortheast agreement. The program was designed to assist small businesses wishing to establish in areas of particularly high unemployment. But, when DREE circulated the proposed subsidiary agreement to interested federal departments in Ottawa for comments, the departments of Finance 58

A First Generation of Subsidiary Agreements and of Industry, Trade and Commerce objected to the inclusion of the small business program. They argued that it would only duplicate a number of federal programs and services already available to small businesses. To protect the already earmarked 1.5 million dollars and to avoid blockage at the federal Treasury Board level, provincial DREE and provincial government officials agreed to devise and include in the agreement a spuriously defined program.18 As described in schedule A of the agreement, it reads as follows: "Provision of flexible use factory space to meet the demands of viable manufacturing enterprises for industrial locations or expansion."19 Three additional programs, all of which were vigorously supported by DREE officials, provide funds for initiating planning and research studies relating to industrial development. One in particular provides for the establishment and operation of a planning unit in the provincial Department of Economic Growth. These three programs combined account for some 15 percent of the agreement's total cost. In approving the industrial development subsidiary agreement, the federal Treasury Board repeated the concerns it had expressed over the Kent region pilot project. That is, it noted that industrial development programs were too loosely defined and that in future GDA programs should not provide funds to support salaries of provincial public servants. OTHER ISSUES The most outstanding issue which DREE and the province had to contend with in developing the first generation of subsidiary agreements, and one which is still at the forefront of federal-provincial relations in New Brunswick, is the intraprovincial economic disparities that exist between the northern half of the province, in particular the northeast, and the southern half. The strong growth in the overall national and provincial economies between 1971 and 1974 did not narrow the gap between the north and the south; in fact, during this period the disparity in income and employment widened. Compared with 16 percent for the provincial average during the 1974 winter season, the unemployment figure in northeast New Brunswick (for example, Gloucester) rose to over 30 percent.20 Especially during the mid-1970s, the press and some elected officials, particularly those representing the concerned area, demanded special recognition and measures to stimulate economic development in the northeast. L'Evangeline, the only French-language daily newspaper in the province, ran a number of leading articles asking both levels of government to place special emphasis on the northern half of the province in formulating their policies and programs. Herb Breau, the federal Liberal member of Parliament for Gloucester County, accused the provincial government of failing to establish policies and programs which would 59

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"benefit the north as well as the south."21 The Honourable Romeo LeBlanc, the New Brunswick representative in the federal Cabinet commented: "The gap between the north and the south cannot last indefinitely."22 At the provincial level, the Liberal opposition, in a special two-day debate on northeast New Brunswick, called on the provincial government to "implement policies for equal opportunities for the whole province to prevent the economic gap from widening year after year."23 For many, it was not just a question of introducing special measures for the northeast. They felt that the provincial government was, as a matter of course, discriminating against the northern half of the province by, among other things, spending a disproportionately large amount of its financial resources in the south. In addition, they insisted that GDAsponsored programs were no exception. They pointed to some subsidiary agreements which were intended to benefit the south only, such as the King's Landing Historical Settlement and the Saint John and Moncton arterial highways, and to others which were designed to meet southern conditions and circumstances, such as agriculture. L'Evangeline repeatedly suggested that for every dollar spent by DREE and the provincial government in the north, where funds for economic development were especially needed, two were being spent in the south.24 The provincial government's decision to construct the province's first nuclear power generating plant in the south heightened still more the controversial north-south debate. Many accused the government of opting for the southern site for purely partisan political reasons. They argued that the government's principal concern in its choice was to make secure its main political base which happened to be located in the south. The New Brunswick Electric Power Commission, a quasi-independent provincial government agency, identified three possible sites for the proposed nuclear power plant—one in the south near Saint John and the other two on the province's north shore. All held certain advantages: building the plant in the south was slightly less expensive, but geological surveys favoured the north.25 Government members of Parliament, from New Brunswick through to the minister of DREE, urged the provincial government to build the plant in the north. They argued that several major projects, including a DREE-assisted automobile manufacturing plant which the provincial government supported, had recently been earmarked for the Saint John area where the economic base was already strong. Building the nuclear plant in the north would, at least on a short-term basis, create employment opportunities in an economically depressed area. They urged the provincial government to consider regional economic disparities in its decision much like—they insisted—the federal government was doing 60

A First Generation of Subsidiary Agreements through DREE. The minister of DREE indicated his willingness to consider a provincial government proposal for a subsidiary agreement to offset the added cost in building the plant on a northern site. But the premier's position left little room for negotiation when he met the minister of DREE in Ottawa to discuss federal financial assistance in building the nuclear plant. He made it unequivocally clear that he would not entertain discussion on location and that, as far as he was concerned, the only question left to resolve was whether or not the federal government would assist in building the plant on the southern site. As it had done with other provinces wishing to establish a nuclear power generating program, the federal government agreed to guarantee a Government of New Brunswick loan to finance part of the cost of building the plant. For some time after the ministerial-level meeting, the province's relations with the federal government were strained, in particular with DREE's minister and senior officials and with government members of Parliament from New Brunswick, though with the latter they had never been easy. These federal officials resolved to stress in future the need to promote economic development in northern New Brunswick. The minister of DREE indicated this in the House Standing Committee on Regional Development, when he announced that his department "would be looking to get more involved . . . in the northern part of the province to redistribute the growth within the province."26 In line with this statement, DREE initiated discussion with the province on a replacement agreement for the FRED-northeast agreement which was scheduled to expire in 1976. Three other issues need brief mention. First, DREE and the province reached agreement on a fisheries subsidiary agreement but this became stalemated at the federal level. Ostensibly, this was because the federal minister responsible for fisheries (who, incidentally, was also New Brunswick's representative in the federal Cabinet) wanted to review simultaneously all proposed fisheries subsidiary agreements coming from the Atlantic provinces. The province objected strenuously, arguing that it should not be penalized while other provinces were sorting out their difficulties with DREE. Second, the province repeatedly protested at the slowness of the federal government in approving subsidiary agreements. These protests were frequently warranted. After reaching agreement with the province over their contents—excluding the 1974-75 highways agreement—it took, on average, four months for provincial DREE officials to secure federal approval for first generation subsidiary agreements. Lastly, Mr. Jamieson was transferred to another department in a Cabinet shuffle and Marcel Lessard from Quebec was named the new minister of DREE. However, both provincial DREE and provincial government officials reported in interviews that this change in minister held little significance 61

CHAPTER FOUR

for them. Only if one of the two ministers involved had been from New Brunswick would federal-provincial relations under the GDA approach been significantly affected. CANADA-NEW BRUNSWICK GDA MEETINGS The Canada-New Brunswick GDA requires that a meeting of officials as well as a meeting between the two ministers responsible for the GDA (the minister of DREE and the premier) be held annually. The stated purpose of these meetings is to assess progress made under the GDA and also to review the strategy being pursued. Both operate independently of one another in that they are held at different times, and they are guided by distinct agenda. Provincial DREE officials who attended the first annual meeting of officials, held in Fredericton on April 8, 1975, report that very little feedback from other departments on existing and proposed subsidiary agreements was stimulated. About half of the officials of the eighteen federal departments represented at the half-day meeting came from regional and district offices and, in many cases, were being exposed to the GDA approach for the first time. As a result, most of the meeting was spent on transmitting information about DREE and about the GDA approach. In consequence, DREE officials concluded the meeting by circulating an information package containing copies of the New Brunswick GDA and its eight subsidiary agreements and inviting participants to familiarize themselves with their contents.27 The first Canada-New Brunswick GDA ministerial-level review meeting was held in Fredericton on December 16, 1975. Apart from the minister of DREE and the premier, no other ministerial-level representatives from either the federal government or from the province participated in the half-day meeting. Nine DREE officials, including six representatives of the provincial office attended, as did seven provincial government officials, of whom six were representing central agencies. DREE and provincial government officials made use of the meeting to resolve a number of what they termed "housekeeping-type" issues. As an example, both ministers signed an amendment to the Saint John and Moncton arterial highways subsidiary agreement to allow for an improvement in the scheduling of construction work. With regard to the more substantial policy issues, the premier again pressed the minister of DREE for longer-term federal commitments for the construction of highway eleven. He stressed the importance of eliminating the uncertainties surrounding DREE's intentions with regard to this project. The province, he added, would agree to sign another one year highway agreement only because it had no choice. 62

A First Generation of Subsidiary Agreements For his part, the minister of DREE expressed uneasiness over the apparent slowness in formulating a replacement for the existing FREDnortheast agreement. Although he did not specify an exact amount, he indicated that it ranked high among DREE's priorities and that measures would be taken to ensure that adequate supportive funds would be available. The premier responded by voicing his support in principle for a replacement agreement, but he also outlined some of the difficulties associated with agreements which focus on specific areas of the province. Apart from noting the need to explain to other areas of the province why they are not entitled to special recognition, he stressed the importance of reaching an early accord on the boundaries covering the eligibility of programs under a spatial-type agreement that would avoid misunderstanding with the general public. For these reasons he suggested that the proposed replacement agreement limit itself to the area defined by the FRED-northeast agreement. Because of insufficient time, a number of issues were not raised. For example, it was agreed to dispense with a joint review of the province's economic circumstances. Some advisers, notably ministerial assistants, subsequently complained that the meeting did not address itself to the more important issues. Apart from highway construction and northeast New Brunswick, they argued, the meeting ignored the matters surrounding the development of future subsidiary agreements and it also failed to review the DREE-New Brunswick strategy which was being pursued. Officials, they complained, spent too much time on purely administrative affairs and "on congratulating each other" for the excellent work being done under the GDA.28 To a certain extent, this reflects the difference of opinion that exists between political and administrative actors over the appropriateness of the GDA approach. Without going into detail here, it is sufficient to note at this point that provincial DREE and provincial government officials are very comfortable with the GDA approach. They readily accept the need for joint analyses of provincial economic circumstances and conditions, the economic logic of jointly developing programs, and the importance of employing "sound," "efficient," and whenever possible "quantifiable" criteria to develop programs. Politicians do not share this view. Whatever innovations officials may bring to federal-provincial relations, politicians retain their goals and perspectives, however subjective these may be. They accept that goals and perspectives can differ from one level of government to the other, but they hold that these differences should be accommodated through negotiations—preferably between themselves.

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Chapter Five A Second Generation of Subsidiary Agreements Second generation subsidiary agreements were to differ from first generation ones in that they would adhere more judiciously to the GDA's original intent and design. For one thing, more emphasis would be put on the process of jointly identifying "development opportunities" and less on continuing or extending programs first initiated before the introduction of the GDA approach. For another, with DREE's decentralized organization more firmly in place, provincial DREE offices would now be expected to follow more dutifully the established procedures for developing subsidiary agreements and for consulting other federal departments. PLANNING In developing the GDA approach, DREE officials contended that the federal government should accept cost-sharing, especially with the "havenot" provinces, the cost of planning the "development process." Without federal financial encouragement, they reasoned, the provinces—particularly the Atlantic ones—would not accord a sufficiently high priority to research and planning activities. This would inhibit the process of "rational joint decision making" which the GDA approach calls for. Initially, they proposed a regional planning agreement involving three Atlantic provinces—Prince Edward Island being excluded because of its FRED plan—and DREE, which would commit the federal government to cost-share provincial research and planning activities in the field of economic development and the salaries of provincial public servants engaged in such activities.1 With the decentralization of DREE, provincial DREE officials pursued the idea of developing planning subsidiary agreements with provincial governments. However, in the Atlantic provinces, DREE officials strongly 65

CHAPTER FIVE

advised that these planning agreements be formulated bilaterally rather than through a regional proposal. They contended that the nature of the GDA approach itself would seriously inhibit any attempt to arrive at a regional agreement. It is true that the GDA approach does not contain any kind of mechanism to plan or implement a regional or interprovincial agreement. The only committees operating under the GDA approach are bilateral federal/ provincial committees of officials. For instance, the Canada-New Brunswick, Canada-Nova Scotia, and Canada-Newfoundland development and management committees are charged with the responsibility of formulating and implementing all GDA-related agreements in the Atlantic region. There are no similar committees operating at the regional level such as a Canada-Atlantic provinces development committee. Quite apart from the lack of a regional formulating and implementing mechanism, provincial DREE officials pointed out to the regional and Ottawa-based DREE officials that the GDA approach requires that priorities be established jointly by the provincial DREE office and the relevant provincial government. They insisted that this meant that the proposed planning agreement be provincial rather than regional in scope. In New Brunswick, provincial government officials gave their complete support to a provincial rather than to a regional planning agreement. They feared that a regional agreement would be cumbersome to implement and, more important, they saw little need to have other provinces involved in establishing their planning priorities. All in all, they applauded the position of their provincial DREE counterparts which suggested that a provincial planning agreement was more in line with the principles of the GDA approach, of DREE's decentralization, and of joint decision making with the provinces. Though they welcomed the concept of a planning subsidiary agreement, both provincial government and provincial DREE officials recognized that provincial Cabinet ministers would object. For this reason, in developing the planning subsidiary agreement, New Brunswick officials stressed that it would constitute little more than a means for the province to obtain financial recoveries for studies and staff allocations necessary to develop other subsidiary agreements. At the federal level, it will be recalled, when approving the Kent region pilot project subsidiary agreement, Treasury Board members stipulated that in future subsidiary agreements should not include funds to cover the cost of provincial public servants. Although they never denied the importance of planning in creating policies and programs for economic development, they maintained that these costs should compete unaided for provincial government funds. They contended that the pro66

A Second Generation of Subsidiary Agreements vision of financial incentives to provincial governments to build up their public services gave no assurance that federal-provincial policy making and decision making would be "better." On the contrary, they suggested that in all likelihood a provincial government would utilize a more competent or bigger public service to devise ways to obtain more federal funds in most policy fields and to embarrass the federal government at federal-provincial meetings.2 Disappointed with the Treasury Board decision on salaries for provincial public servants, provincial DREE officials set out to retrieve what they could for future joint planning activities and, specifically, for the proposed planning subsidiary agreement. In the case of New Brunswick, the Treasury Board decision was less significant than was at first anticipated. The decision was appealed and the Treasury Board subsequently agreed to consider special cases, including subsidiary agreements, which had already been developed and agreed to with provincial governments. Under this provision, some New Brunswick subsidiary agreements, such as the agricultural agreement, which contain funds to cover the cost of provincial public servants engaged in planning activities, were approved. All the same, having identified at least three such proposals which needed some research and planning work, provincial DREE and provincial government officials recognized that planning requirements falling outside the scope of signed subsidiary agreements existed, and continued with plans to develop a planning subsidiary agreement. To respect the Treasury Board decision on provincial government salaries, they formulated the agreement to provide only for the employment of outside professional staff or independent consultants. Nevertheless, although the province cannot hire additional permanent staff, through a tacit understanding between the provincial DREE office and the provincial government, the planning agreement can cover the cost of provincial public servants engaged in planning activities related to the Canada-New Brunswick GDA. The Community Improvement Corporation (CIC), a crown corporation legally outside the provincial public service, was designated the provincial employment agency for outside professional staff during the development stages of subsidiary agreements. Apart from its own staff, CIC can hire provincial public servants on a contract basis for any length of time provided they work on planning studies relating to the development of subsidiary agreements or to other aspects of the GDA. Once their work is completed, they can return to their line departments to implement what will likely be the agreement which they helped to develop as outside professional staff. As a result, under the planning subsidiary agreement, CIC staff salaries are cost-shared as are those of selected employees in other departments. 67

CHAPTER FIVE MINERALS AND FUELS The New Brunswick-GDA pointed to the mineral sector as having potential for economic development. It was recognized at the outset that an existing federal-provincial agreement on mineral reconnaissance would form the foundation of the proposed minerals subsidiary agreement. As for other sectoral subsidiary agreements, the relevant provincial line department—in this case the Department of Natural Resources—assumed responsibility for formulating proposals for consideration. Drawing from the independent Research and Productivity Council, from existing DREEsponsored programs, and from officials of other government departments including, of course, provincial DREE officials, the provincial department prepared a "comprehensively planned" 30 million dollar package containing seven programs, two of which were extensions of the previously mentioned agreement on "mineral reconnaissance."3 As with other subsidiary agreements, the package was formally presented to the provincial DREE office through the Office of the Cabinet Secretariat. It was then reviewed to assess its compatibility with the overall GDA strategy and to determine the viability of its projects. After the joint review, DREE and the province agreed to an eleven million dollar minerals and fuels subsidiary agreement which in content closely resembles the province's original proposals. As one provincial DREE official puts it, "by comparing the wording of the early provincial proposals with the finished product [one can see that] nothing has really been left out."4 Even the sharp reduction in the province's original expenditure estimate from 30 to 11 million is not as significant as it may at first appear. All of it comes from the one program on resource utilization and infrastructure to which initially the province knowingly attached a high expenditure estimate. Again, as for other subsidiary agreements, the provincial DREE office made arrangements to circulate the proposed agreement, once it was drafted, to relevant federal departments for their comments. TOURISM DREE and provincial government officials could not rely on existing and continuing federal-provincial tourism programs to develop the tourism subsidiary agreement, as they did for a number of sectoral-type agreements. On the whole, it was left to the provincial Department of Tourism to devise an appropriate strategy. This it did without initiating a major policy review involving other government departments. Mainly for this reason, provincial DREE officials and Cabinet Secretariat officials reveal 68

A Second Generation of Subsidiary Agreements that they experienced considerable difficulty in developing the tourism subsidiary agreement. They report that tourism officials were initially over-ambitious, even unrealistic, in that they proposed an assortment of largely unrelated programs and infrastructure projects which, when compared with those of other subsidiary agreements, required a level of funding far exceeding the industry's importance to the provincial economy. Furthermore, they declare that the proposals as presented were such that it was impossible to devise cost-benefit criteria or other quantifiable measurements to assess their potential impact. Over a period of several months, the tourism package was "talked down" to a more appropriate level of expenditure and redrafted to give the proposed agreement a sense of coherence or central purpose. Once drafted, provincial DREE officials made arrangements to circulate copies of the agreement to relevant federal departments. They subsequently called an interdepartmental meeting on the subject. With few exceptions, departments remarked that several of the proposed initiatives were too broadly defined and lacked appropriate selection criteria. They also expressed concern that the agreement manifestly ignored tourism development at the regional level or in the other three Atlantic provinces and, to a lesser extent, in the neighbouring province of Quebec.5 This was not the first time DREE was charged with ignoring regionalism in its development programs, and much more will be said about this in later chapters. For the moment, however, it is important to examine to what extent the New Brunswick tourism subsidiary agreement was developed in isolation from those proposed for the other Atlantic provinces. The ministers and the deputy ministers of tourism of the four Atlantic provinces are organized in separate but complementary associations designed to promote cooperation between the four provincial departments of tourism. The two associations meet on a regular basis and they have had some success, especially in coordinating their promotional campaigns. Both associations made separate approaches to DREE to initiate continuing discussions on tourism development in the region, but in both instances their efforts were thwarted. DREE's position was and remains clear: it cannot entertain a continuing discussion with provincial departments which could lead to a regional development strategy and programs without the departments having first persuaded their respective governments of the appropriateness not only of the discussions themselves but also of any proposal they may wish to evolve. Otherwise, DREE officials argue, provincial line departments might be tempted to circumvent the approval procedures of their own governments to seek directly from DREE federal funds for their proposals. 69

CHAPTER FIVE

HIGHWAYS: 1975-76 AND 1976-77 To the dismay of many provincial DREE and provincial government officials, DREE-New Brunswick highway construction programs and intentions soon became enmeshed in a heated political debate and in the north-south economic disparity issue. Federal government politicians were reluctant to enter into a multi-year highway subsidiary agreement with New Brunswick for a variety of reasons, not least because it feared that federal funds would merely supplement the province's financial allocations on highways rather than displace them. New Brunswick's representative in the federal Cabinet, the Honourable Romeo LeBlanc, made this clear when he indicated publicly that he would not agree to a long-term DREE-New Brunswick highways agreement unless the province was prepared to commit more of its own funds to highway eleven and, more generally, to highway construction in northern New Brunswick. He emphasized that highway construction was strictly a provincial responsibility and that the federal government was not interested in building highway eleven on behalf of the provincial government.6 Similar observations were echoed at the provincial level. The opposition charged in the Legislative Assembly that the provincial government was incapable of relating its highway construction program to economic development. The opposition spokesman on economic development accused the provincial minister of transportation of using the government's highway construction program for purely partisan political purposes. He said: "The present minister of Transportation ... views highway expenditures as the pork barrel of Tory politics, the source of jobs for labourers and truckers dictated by local Conservative committees."7 L'Evangeline also questioned whether the Hatfield government was sincere when it repeatedly stated that highway eleven held a priority status in its highway construction program. It noted that out of 60 million dollars spent on highway eleven between 1970 and 1975, the federal government, through DREE, had provided 54 million. In a leading article, the editor of L'Evangeline stated: "It seems that the provincial government is trying to obtain federal participation on highway eleven in order to spend its own money on other provincial highways. In other words, highway eleven is a priority providing the federal government foots the bill."8 Despite its reluctance to enter into a long-term arrangement, DREE agreed to sign two additional one-year highways subsidiary agreements (1975-76 and 1976-77) with New Brunswick. Although both provide for new projects, they were essentially designed to carry forward projects initiated but not completed under previous agreements, including those sponsored by the 1974 subsidiary agreements. As in the past, the new 70

A Second Generation of Subsidiary Agreements projects were directed to highway eleven, either as integrated sections of that highway or complementing it. Without giving further assurance, DREE accepted that these new projects should be consistent with possible future long-term construction plans. When DREE finally accepted the need for a multi-year highways subsidiary agreement, it requested the province to prepare and present an overall five-year highways construction plan. Ostensibly, DREE requested this in order to assist in identifying those projects which could entail significant socio-economic benefits to the provincial economy. However, federal-level politicians from New Brunswick whose electoral ridings were served by highway eleven had another reason for wanting to see a provincially formulated five-year plan. They were anxious to review the province's stated priorities and, more specifically, to assess the importance which the province gave to highway eleven and to highway construction in northern New Brunswick in relation to similar projects in other areas of the province. By and large, the provincial Cabinet based its five-year plan on a collection of political commitments, most of which dated back to the 1974 provincial election campaign. Although the 400 million dollar plan covered projects in all areas of the province, it allocated approximately 65 percent of its funds to those located in the southern half of the province. For example, compared with 76 million for highway eleven, the plan allocated close to 200 million dollars on projects leading to and from the three urban centres of Fredericton, Saint John, and Moncton, all of which are located in southern New Brunswick.9 After reviewing the plan, the provincial DREE office prepared its own multi-year proposal for highway construction. As could be expected, its proposal placed far more emphasis on highway construction in the northern part of the province—something like 90 percent of its projects and financial resources were earmarked for northern New Brunswick.10 Meanwhile, responding to a ministerial-level request, provincial DREE officials made available to members of Parliament from New Brunswick copies of the province's five-year plan. Without revealing its contents, the Honourable Romeo LeBlanc and Herb Breau initiated a public campaign to discredit the plan. Speaking at a Bathurst Chamber of Commerce meeting, which Premier Hatfield also attended, LeBlanc described the provincial plan as "unacceptable." He also made it explicitly clear that it gave priority to highway construction projects located in southern New Brunswick. The premier responded by again calling on the federal government to contribute substantially towards the construction of highway eleven. He added that it would not be "acceptable or desirable" for the province to concentrate highway construction projects in only one area of the province which, he suggested, 71

CHAPTER FIVE

was what some federal-level politicians wished to do. In concluding their remarks both LeBlanc and the premier expressed a willingness to further "negotiate" the province's five-year highway construction plan.11 LeBlanc's public intervention had at least one effect: without anyone outside the two governments having seen the provincial five-year plan, demands for the provincial government to allocate more highway construction projects to the north resumed. Based on LeBlanc's comments, the provincial opposition condemned the five-year plan. L'Evangeline urged the federal government not to sign a highways agreement based on the provincial plan; to do so would be tantamount to accepting a plan which would aggravate still further intraprovincial economic disparities. Concerned by rumours, news reports, and public statements which suggested that the northern half of the province would not receive its fair share of highway construction projects, the town council of the northern community of Dalhousie called on the provincial government to make public its five-year construction plan.12 To the surprise of many federal officials, not least those in DREE, Premier Hatfield did just that and more. In addition to the province's own five-year plan, he tabled in the Legislative Assembly what he termed DREE's 94 million dollar counter-proposal. In doing so, he commented that the federal government attached less importance to highway eleven than it would like the general public to believe. He pointed out that DREE's counter-proposal earmarked fewer funds towards the construction of highway eleven than did the province's five-year plan.13 The minister of DREE immediately denounced the premier's action. He said "by making our working documents public the Premier effectively hindered the development of a long-term highways subsidiary agreement for New Brunswick."14 He insisted on referring to the DREE document as a "working" document and denied that it ever represented a federal counter-proposal to the provincial five-year plan. Nevertheless, government backbencher Herb Breau expressed astonishment at the existence of such a DREE document. He asked the minister of DREE to account for it in the House. For their part, provincial DREE officials regarded their document as strictly a working document for their use in discussions with provincial government officials. At no time, they insist, did they even imply to the province that it represented a firm federal position. Exchanging working documents with provincial government officials, they maintain, is a customary and indeed a necessary practice under the GDA approach. In an interview with a local newspaper, the acting provincial director general of DREE termed Premier Hatfield's tabling of the two documents as "most disturbing."15 Provincial government officials agree with the above interpretation and 72

A Second Generation of Subsidiary Agreements acknowledge that, under the GDA approach, working documents are frequently exchanged with provincial DREE officials either formally or otherwise. Furthermore, some add privately that the premier's action was "unnecessary and unhelpful." In the midst of the controversy, one provincial government official publicly stated that the DREE document was "not a proposal, only a document . . . and the final agreement will be worked out at some undetermined date."16 The premier's unveiling of the contents of the two documents sparked yet another public debate on highways. This time in a leading article called "Le Chat est sorti du sac," L'Evangeline congratulated Premier Hatfield for having made public the two documents and expressed disappointment over DREE's apparent unwillingness to contribute substantially toward the completion of highway eleven. For very different reasons, opposition members of Parliament from southern New Brunswick also expressed disappointment over DREE's document. Fred McCain and Robert Howie tabled a series of questions in the House asking the minister of DREE to explain "the federal government's opposition to 300 million dollars worth of project in New Brunswick's proposed fiveyear highway plan."17 HIGHWAYS: 1977-80 With the latest public debate on highway construction subsiding, provincial DREE and provincial government officials renewed their discussions on a long-term highways agreement. Although the debate had in the end discredited both documents, with most observers agreeing that the provincial five-year plan was too excessive and the DREE document inoperative, if only because government members of Parliament publicly dissociated themselves from it, two things remained essentially unchanged: first, DREE would honour its twice-made ministerial-level commitments to enter into a long-term highways agreement with New Brunswick; second, DREE's position would favour the northern part of the province, in particular highway eleven. Bearing this in mind, DREE officials set forth to rescue the proposed multi-year highways agreement from what they regarded as an insalubrious climate of federal-provincial and partisan political disputes. For one thing, they would place more emphasis on evolving a federal, rather than simply a DREE position. For another, they would, to the extent possible, identify or select projects in line with "rational socio-economic criteria." At the time DREE and New Brunswick were developing their multiyear highways agreement, the federal minister of Transport announced his intentions to negotiate a comprehensive highways program with the 73

CHAPTER FIVE

four Atlantic provinces. In making this announcement, he was responding to demands on the federal goverment to make available to the Atlantic provinces a program similar to the highway strengthening program initiated in 1973 for the three prairie provinces. Thus, like the "Prairie provinces highway strengthening programme" the "Atlantic provinces primary highway strengthening programme" would constitute a regionally oriented program rather than a provincial one, and would initially be developed intergovernmentally by the four provinces concerned and then negotiated with the Ministry of Transport. The Ministry of Transport rejected out of hand the possibility of employing the GDA approach to negotiate the highway strengthening program. For one thing, the minister of Transport considered federal cost-sharing under GDAs in the Atlantic region to be far too generous. For their part, Transport officials closely associated the GDA approach with DREE and did not regard it as a federal tool which could be employed by other departments. They also report that their intention was to negotiate an agreement which would deal with highways on a regional level or on one which would cut across provincial boundaries. They felt that the GDA approach would not lend itself to this. While negotiating with the Atlantic provinces, the minister of Transport requested DREE not to proceed with its proposed long-term highways subsidiary agreement with New Brunswick. Since that agreement would likely include assistance for the construction of highway eleven, a highway which New Brunswick also included in the one billion dollar Atlantic proposal, Ministry of Transport officials expressed concern over the potentially embarrassing position of having two federal departments simultaneously—but under different programs—evaluating the same highway for federal cost-sharing purposes. New Brunswick DREE officials, however, recommended against suspending its discussions with the province. They noted the long-standing ministerial-level commitments to enter into a multi-year highways agreement with New Brunswick and also the urgency and importance of building highway eleven to stimulate economic development in the economically depressed northeast area of the province. In carrying on with its proposed highways agreement, DREE acknowledged that the Ministry of Transport would not co-finance the federal share of the agreement under the GDA approach and that, in all likelihood, Transport officials would oppose the agreement interdepartmentally. The last point in particular re-emphasized the need to develop the agreement in line with sound "rational criteria," a need which in any event DREE officials welcomed. Together with provincial government officials and representatives of an independent consulting firm, they developed the three-year highways agreement in accordance with criteria 74

A Second Generation of Subsidiary Agreements outlined by the federal highways policy and by an elaborate cost-benefit analysis. Among the many "quantifiable socio-economic benefits" identified in support of the proposed agreement was greater labour mobility. This would, it was argued, increase out-of-region employment opportunities and stimulate more development in the tourist-related industry. Moreover, by estimating, for example, the number of highway accidents which new construction projects would prevent and by attaching a dollar figure to highway-related fatalities and injuries, they arrived at a costbenefit ratio which also favoured the construction of highway eleven.18 From these analyses and from established federal criteria, provincial DREE and provincial government officials arrived at a 56 million dollar multi-year package. Although almost all of the funds were allocated to highway eleven projects, the package would still not bring about the completion of highway eleven. To do that would require an additional 42 million dollars worth of projects which, because of budgetary limitations, DREE was incapable of funding. Both DREE and provincial government officials hoped that the Ministry of Transport's announced highway program would eventually fill that gap. In any event, they included in the proposed agreement a 600,000 dollar planning program to continue "in-depth planning of the highway system and specifically to investigate the future requirements"19 of those sections of highway eleven which would remain uncompleted. With the general thrust of the proposed agreement and the level of funding remaining intact, government MPs from New Brunswick, whom the minister of DREE consulted before submitting the agreement to the federal interdepartmental highways committee and to Treasury Board, discarded some projects and added others. However, this did not prevent Gloucester MP Herb Breau from publicly voicing his disappointment with the long-term highways agreement.20 At the provincial level, reactions were mixed. The great majority of Cabinet ministers were disappointed that the agreement was not formulated to cover projects located in central and southern parts of the province. A much smaller minority, but one which included the premier, had hoped that a DREE cost-shared agreement would "once and for all" complete highway eleven. Whether or not the agreement displaced provincial priorities to the benefit of northeast New Brunswick is difficult to assess. On the one hand, most of the provincial government officials interviewed, including Cabinet ministers, readily admit that the multi-year agreement, like the other highways subsidiary agreements, freed provincial government funds to projects located elsewhere in the province. Had DREE rejected all highways subsidiary agreements, they add, the province would have on its own provided funds for highway eleven projects. And, with its share of the 75

CHAPTER FIVE

multi-year agreement averaging 4.7 million per annum, which amounts to just over 10 percent of its own annual highway construction budget, the province would have had little difficulty in directing at least that 4.7 million to highway eleven without DREE assistance. On the other hand, provincial officials persuasively argue that completing highway eleven without financial assistance would have constituted if not an impossible then certainly an interminable endeavour, not only because—and this they freely admit—it unquestionably held a lower priority at the provincial than at the federal level, but also because the province lacked the necessary financial resources to complete, even over a longer-term period, such a major construction program as highway eleven represents. Thus, the possibility of completing one of its primary highways in the not too distant future definitely influenced the province to contribute its share of funds, however small, making the multi-year highways agreement possible. NORTHEAST NEW BRUNSWICK Pressure on both levels of government to sponsor programs expressly for the northeast—an area originally defined by the FRED-northeast agreement to include all of Gloucester and Restigouche counties, as well as a small section of Northumberland County—grew out of the north-south intraprovincial economic disparity debate. This debate was fuelled by the province's decision to locate its nuclear power plant in the south rather than in the north, where some felt the need for such a major development project was greater; and by charges that the provincial government was as a matter of course discriminating against the north by allocating a disproportionately greater amount of its financial resources to the south. Moreover, since the second FRED-northeast agreement was due to expire in 1976, a decision as to whether special measures for the northeast should terminate, continue, or assume a different strategy was required. Aware of this, groups from the northeast area and elsewhere pressed for a renewed attack on the economic difficulties of the northeast. L'Evangeline incessantly called for special measures to alleviate the economic disparities of the north. A committee representing the Roman Catholic clergy of northeast New Brunswick, which was organized especially to review the socio-economic circumstances of the area, expressed "alarm" and "distress" over the prevailing economic conditions of the northeast in a letter to the prime minister.21 Standard economic indicators showed clearly the inferior economic position of the northeast in relation to the rest of the province. For instance, the area's unemployment rate is double and its earned per capita income is only two thirds the provincial average. As well, although its economy is highly dependent on such primary industries as fishing and 76

A Second Generation of Subsidiary Agreements mining, there is an insufficient number of local resource processing facilities, and much of the area's primary products must be exported. Hence, primary sector employment opportunities in the northeast are often seasonal and vulnerable to the fluctuations of the national and international markets. Northeast New Brunswick, as defined by the FRED-northeast agreement, represents nearly 20 percent of the province's population. It is both predominantly French-speaking Acadian—75 percent of the population claims French as their mother tongue—and rural— with only 27 percent of the population residing in urban centres of over 5,000.22 Aware of the province's usual reluctance to enter into spatial-type agreements, the minister of DREE urged the premier at the first annual GDA ministerial-level meeting to commit his government to develop with his department a post-FRED subsidiary agreement for the northeast. It will be recalled that the premier accepted the minister's proposal, while insisting that the boundaries limit laid down by the FRED-northeast agreement be adhered to. The initial step in developing the subsidiary agreement began with a review of the existing agreement, to which both governments had in any event already committed themselves. The jointly prepared review confirmed that the area's economic outlook was not promising and that, without government intervention, the economic disparity between the northeast and the rest of the province would worsen. With regard to future joint initiatives, DREE and the province concluded by agreeing that these should stress measures for the creation of direct employment rather than, for example, the provision of such physical infrastructure facilities as schools, roads, and municipal water and sewage plants. The FRED-northeast agreement, as amended in 1972, incorporated another requirement. It called on officials to involve the "people" of the northeast area in identifying, implementing, and—according to some interpretations—in assessing projects sponsored by the agreement. While DREE and the province were considering this, Gloucester MP Herb Breau pre-empted them by announcing, at a press conference, that a series of public hearings would be held to assess the FRED-northeast agreement and to consider projects for a post-FRED agreement.23 This announcement infuriated both provincial government and provincial DREE officials not simply because they had yet to agree on precisely how and when such public consultation sessions should take place, if at all, but also because it violated the GDA principle of issuing public announcements jointly. Nevertheless, some four months following Breau's intervention, DREE and the province jointly declared their intention to co-chair a series of public hearings in the northeast and "to provide an opportunity to area residents to present their views on the problems and opportunities facing 77

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the region." They subsequently announced that two rounds of public hearings would be held over a three-week period, with the second round designed to provide an opportunity to review written briefs. As a DREE official commented at one public session, the holding of public hearings in developing the northeast subsidiary agreement was a "first" under the GDA approach. Yet the joint DREE-province public consultation campaign did not get under way without adverse criticism. Since public hearings were being held at a late date in the planning process, some suggested that it would amount to little more than "window dressing." When confronted with this argument, the minister of DREE admitted that it was quite late but added that "it was never too late for public consultation."24 Others complained that, by holding nearly all public hearings in the larger communities of the northeast, DREE and the province were de facto ignoring the smaller rural communities where the area's main socio-economic problems were located and where traditionally the general public has had less access to governments. Still others argued that if both governments were seriously concerned with public consultation, then both would initiate on-going public hearings, not only for the northeast agreement, but for all other subsidiary agreements as well.25 Notwithstanding these and other criticisms, the public hearings were well attended—some 1,500 people submitting over seventy written briefs attended the seventeen public hearings. Several themes emerged from these meetings. Certainly the one which the general public and members of public and private organizations voiced most often was the feeling of isolation from and, in some cases, hostility to the political-administrative organizations of the provincial government. One area member of the Legislative Assembly remarked that Fredericton public servants "dispatched" to the north for meetings "won't stay more than two or three hours before heading back to the capital . . . the only way to keep them is to organize a banquet—then we can keep them for the evening." A northeast resident asked whether a spatial-agreement "was a good thing" since, as had happened in the past, it would not supplement existing provincial government programs, but merely give a pretext for the province to ignore the area. Provincial DREE officials located in Fredericton were also accused of indifference in their dealings with the economic difficulties of the northeast. Several residents repeated L'Evangeline's accusation that, even though federal politicians from the area continually spoke of shifting priorities to the north, for every one dollar spent there, two were spent on projects in the south. One organization spoke of the high degree of interdependence between provincial DREE and provincial government officials. It stated that waiting for a decision from them on northeast issues or projects "was like waiting for the Greek month of calends." A large 78

A Second Generation of Subsidiary Agreements number of written briefs complained of decision makers being "physically" and "mentally" far removed from the northeast. One such brief recommended that "Ottawa" enter into a northeast development agreement, not with the provincial government, but with a regionally elected council. Others called on both levels of government to decentralize further their decision-making authority to the northeast area in implementing any post-FRED agreement. Area residents also suggested numerous measures to deal with the economic difficulties of the region. A number of presentations called on both governments to provide infrastructure facilities, including the completion of highway eleven, municipal infrastructure, and the like, which, they argued, would promote industrial development.26 But a larger number of presentations emphasized the need to retain the unique cultural and rural lifestyles of the northeast. They were highly critical of federal "experts" and "planners" imposing their ready-made solutions on the area. In the past, these had included unsuccessful attempts to urbanize what they maintain was, is, and should remain, an essentially rural society—initially the FRED-northeast agreement included provisions designed to encourage rural residents to resettle in urban areas. Several written briefs highlighted the fact that the northeast was particularly rich in such natural resources as fishing, forestry, agriculture, and mining. However, they argued that economic activities in these areas had been allowed to decline over the years, giving precedence to industrial development. They went on to suggest that future development efforts should be directed to rural areas where residents are experienced and motivated to work in the resource sector. They recognized that resource sector employment is very often seasonal, but added that residents were willing to accept the inconveniences of such employment opportunities if, in turn, they could retain their indigenous way of life.27 Although not at public hearings but very often publicly, local members of Parliament also put forward their recommendations for the post-FRED agreement. Northumberland MP Maurice Dionne asked on numerous occasions that all areas of his constituency be included under the proposed agreement rather than just the small area covered by the FRED agreement; Restigouche MP Maurice Harquail meanwhile stressed the importance of completing highway eleven.28 Herb Breau, by far the most persistent and articulate MP from the area, called for massive development in both the strictly economic and the socio-economic-cultural fields. With particular emphasis on the provision of infrastructure facilities, he recommended a project approach to economic development rather than a program one. He suggested that DREE's past involvement in such infrastructure-type projects as highway and school construction, and the provision of municipal water and sewage 79

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facilities had been highly visible and that this had created expectations. To vacate these fields and to abandon socio-cultural activities initiated under the FRED agreement could be catastrophic because the provincial government, instead of assuming its constitutional responsibilities to continue providing such services for the northeast, would simply ignore them. To negotiate a post-FRED agreement, which would incorporate such a strategy, he advocated the staging of a public debate with the provincial Cabinet. This would, he felt, have the added benefit of revealing to what extent the provincial government was committed to alleviating the economic disparities of the northeast. At the top of Breau's priority list stood a comprehensive highway construction program which included provisions for completing highway eleven and for upgrading several other highways and roads linking the northeast to other areas of the province.29 Some several months before holding the public hearings, DREE and the province had initiated discussions on a northeast subsidiary agreement, first, as noted above, by jointly reviewing the FRED-northeast agreement, and then by undertaking a series of planning studies. At the outset, they recognized several potential problems in developing the agreement. As with the Kent region, DREE and provincial central agency officials expected to encounter considerable difficulties in identifying specific projects for the spatial-type agreement. Unlike in the development of sectoral agreements, where relevant line departments have a direct interest in assisting or assuming responsibility for evolving projects, no line department at either the federal or provincial level had specific responsibility for the northeast region or, for that matter, for any specific geographical area of the province. It was also evident early on that the great majority of provincial Cabinet ministers were opposed to a post-FRED subsidiary agreement for the northeast. As with the Kent region subsidiary agreement, they maintained that other areas were economically underdeveloped in relation to the province as a whole and they argued that none should receive special recognition under the GDA approach. If the northeast needed special measures, they suggested, then existing subsidiary agreements should be adjusted to accommodate them. In any event, some felt that if another spatial agreement were to be developed, then it should be directed to the southwest region, or specifically to Charlotte County where, in relation to the province as a whole, it too was economically underdeveloped. Politically, that would have been much more palatable. The government held all of Charlotte County's four seats, while in the northeast it held only three of the area's eleven seats. A subsidiary agreement for Charlotte County would at least politically counter-balance that for the Kent region where, it will be recalled, the provincial opposition held three of the area's four seats. Lastly, some Cabinet ministers noted that the Canada80

A Second Generation of Subsidiary Agreements New Brunswick GDA strategy as outlined in schedule A of the agreement contained no mention of sub-provincial disparities or sub-provincial economic development. Although they found it relatively easy to define the economic difficulties of the northeast, provincial DREE and provincial government officials, for reasons already noted, found it quite another matter to develop detailed solutions, programs, and projects for the region. The Canada-New Brunswick Development Committee, which is co-chaired by the provincial director general of DREE and the secretary to the province's Cabinet Committee on Economic Development, requested a series of joint planning studies to evolve an overall development strategy from which more detailed programs could be drawn. What the on-going joint economic analyses revealed was that, while the resource sector should not be ignored, most of the potential for future income growth and employment creation was to be found in the industrial urban economy. With a broad development strategy in mind, DREE and provincial central agency officials embarked on a concerted effort to involve other departments and agencies from both levels of government in an attempt to come up with innovative and viable programs and projects. Within DREE itself, senior officials resolved to involve, as much as possible, regional and Ottawa-based officials in program formulation in an attempt to make greater use of their expertise, not only to generate more ideas for possible projects, but also to assist provincial DREE officials in consulting other federal departments. There was another reason for wishing to involve at least one regionally based official: DREE's provincial director general had left New Brunswick for another position and, to ensure that a senior-level official would oversee the formulation of the northeast agreement, the department appointed a senior development executive from the regional office, who happened to be a French-speaking Acadian, to assume specific responsibilities for developing the northeast subsidiary agreement. Some twelve months after provincial DREE and provincial government officials first reviewed the FRED-northeast agreement, and several months after the Canada-New Brunswick Development Committee requested joint planning studies on the proposed northeast subsidiary agreement, DREE's regional assistant deputy minister chaired the first of a series of federal interdepartmental meetings on northeast New Brunswick. Two federal departments—Central Mortgage and Housing Corporation and Manpower and Immigration—with local offices in the province had contributed to some analytical work beforehand, but this senior-level meeting represented DREE's first attempt to put together an overall federal position on the proposed northeast agreement. For this agreement, DREE officials would again attach considerable importance to inter-

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departmental consultations because, being a spatial-type agreement, they could not rely on any one line department to generate ideas for programs. Those interdepartmental meetings, it was felt, would provide a forum where ideas could be presented and reviewed by federal experts representing some eleven departments and agencies. There were two other reasons why DREE officials deemed it particularly important to consult interested departments. First, they anticipated that proposals could impinge or overlap with the existing programs of several federal departments rather than just one, as is often the case with sectoral agreements. Second, interdepartmental consultation on a spatialtype agreement gave DREE the opportunity to stress to other departments the need to consider less developed areas of Canada—in this case, northeast New Brunswick—in allocating their funds and activities. However, apart from a few isolated instances where federal line departments had a direct interest in a specific project under consideration, DREE officials were disappointed with federal interdepartmental consultations on northeast New Brunswick. Not only was DREE unsuccessful in inciting other departments to contribute development ideas in formulating the agreement, but, in addition, it was largely unable to influence them to redirect some of their resources and activities to the northeast. On the whole, federal departments complained of a lack of financial resources and pointed to their own priorities. At the provincial level, central agency officials also met with little success in their attempts to involve line departments in formulating the agreement. For one thing, the most important provincial line departments, such as Commerce and Development, Natural Resources, and Agriculture, were preoccupied with implementing their own sectoral subsidiary agreements. They too had little interest in contributing to a program which not only lacked a home department but an overall functional design or focus as well. For another, the great majority of ministers were not encouraging their officials to contribute to the proposed agreement— in fact, a number of them were openly and unreservedly hostile to it. It was thus left to a handful of provincial DREE and provincial government officials to develop the northeast subsidiary agreement. Even within DREE, very few officials outside the New Brunswick office contributed to the formulation of the northeast subsidiary agreement—often the best regional and Ottawa-based DREE officials could hope for was to be kept informed of new developments. Initial attempts to involve officials from the Ottawa office petered out when it became clear that there was little hope for arriving at a concerted federal effort in the region. This lessened the need for frequent and continuing consultations with other departments in Ottawa and at the same time for the involvement of Ottawa-based DREE officials. The same was also true in the case of the regional office 82

A Second Generation of Subsidiary Agreements where the senior regional development executive transferred with him his special responsibilities for the northeast agreement when he was appointed the new New Brunswick director general of DREE. At the provincial government level, input came almost exclusively from central agency officials working out of the Office of the Cabinet Secretariat and the CIC. As for the Kent region agreement, the central difficulty in attempts to involve departments in formulating the spatial-type northeast agreement appears to lie in the fact that no line department at either level had specific responsibilities for the geographical area. For sectoral agreements, corresponding line departments invariably exist at the provincial level. Officials in relevant line departments view proposed subsidiary agreements for their sectors as a means—in the case of New Brunswick, often the only means—of developing new projects or of expanding existing programs and thus gaining status for their departments. There is, therefore, a strong self-serving reason for actively promoting the development of sectoral agreements. Spatial agreements, on the other hand, do not offer such opportunities, for they cut across departmental lines. Overall responsibility for developing and implementing them rests with a central agency and not with a line department. Similarly, federal departments do not take the same interest in spatial as they do in sectoral agreements, which constitute a potential challenge to their field of responsibility or their expertise. For instance, officials of the federal Department of Agriculture will quite naturally want to take a strong interest in any proposed federal-provincial agreement in agriculture for a variety of reasons, not least to ensure that the agreement does not frustrate the objective of their on-going programs. Understandably, the same will not be true for an agreement which deals with a rather small sub-provincial area when viewed from a national perspective and which represents a collection of diverse projects. With regard to actual program formulation for the northeast agreement, DREE and the province reversed their GDA working arrangements. In the case of the northeast subsidiary agreement, it was provincial DREE officials who formulated proposals for joint consideration. Furthermore, it was they who in the end packaged the different program elements into a proposed subsidiary agreement. For their part, provincial government officials simply exchanged roles with provincial DREE officials in that this time they contributed ideas to the program formulation process and reacted or commented on the program elements as they developed. Consisting of six programs at a cost of 95.5 million dollars, the northeast subsidiary agreement represents the largest New Brunswick subsidiary agreement.30 The main thrust of the agreement revolves around two industrial development programs which, when combined, account for half of the agreement's total financial resources. A third program is 83

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designed to increase the skills of the area's labour force to ensure "an adequate supply of workers with the skills needed for advanced industrial operations." A relatively smaller program is designed to make available low-cost housing in the area and to provide housing improvements for owner-occupied houses. Another—the resource development program— outlines initiatives to promote employment opportunities in resourcebased industries. Finally, encompassing three coordination and implementation-type program elements or sub-programs, the purpose of a sixth is to ensure that joint analyses, reviews, and evaluation of the area's socio-economic conditions and of the agreement itself will be on-going. In response to observations voiced by participants at public hearings on the need to stimulate resource-based rural employment opportunities and on the importance of preserving the culture and lifestyle of the area, an important research activity provides for a continuing survey of work choice and income in northeast New Brunswick. Basically, officials regarded preferences expressed at public hearings as "soft information" and wanted a statistically more valid picture. A number of northeast organizations and area residents made representations urging DREE and the province to reveal the contents of the proposed agreement and to hold another round of public hearings before submitting the agreement for approval. DREE and provincial government officials rejected both requests. They argued that holding another round of public hearings would delay still further the signing of the agreement. Privately, they again pointed to the inadvisability of disclosing contents of any agreement before its signing for fear of raising expectations without later being able to deliver all the projects. Providing one accepts their reasoning, their reluctance to discuss proposals outside of government circles in the end held some justification. In approving the northeast agreement, the federal Treasury Board broke with its practice of approving subsidiary agreements unconditionally in that it gave its approval, but subject to a series of conditions. It dropped one housing sub-program, pending the outcome of the government's review of a similar but nationally sponsored one, reduced the federal share for two specific projects, and stipulated that no federal funds be allocated for airport improvements under the agreement as was initially projected. The board also attached several administrative and financial conditions designed to restrict DREE's decision-making authority in the field. These included a provision that projects costing more than two million dollars be subject to Treasury Board approval and a requirement that it be consulted in the development of guidelines for four subprograms. In addition, the board specifically instructed DREE to consult other federal departments in implementing a particular sub-program.31 84

A Second Generation of Subsidiary Agreements At the provincial government level, the agreement went through the approval procedures unscathed. However, there is little doubt that the great majority of provincial Cabinet ministers loathed it. Some observers insist that only three or four ministers supported it and that well over half of the Cabinet was openly hostile. In fact, some ten months before approving the agreement the provincial Cabinet considered advising DREE of its wishes to obliterate altogether the proposed northeast agreement. Some provincial government officials informed DREE officials of this in confidence. Shortly after, DREE made it clear to the province that should the Cabinet decide to terminate discussions on a northeast agreement then the 70-plus million DREE dollars earmarked for it would in all likelihood be transferred to another province.32 This certainly had a dampening effect on the provincial Cabinet. So did the fear that DREE would somehow retaliate in kind in other subsidiary agreements. AN UNSIGNED FISHERIES SUBSIDIARY AGREEMENT After nearly a year of discussions, which centred more on developing an overall strategy from identified proposals than on the acceptability of these proposals, DREE and the province agreed to a fisheries subsidiary agreement encompassing three programs. The first called for the establishment of a separate planning unit in the provincial Department of Fisheries and Environment. A second was designed to promote the exploitation of new fishing grounds and further processing of certain species by means of studies and pilot operations. A third allocated funds to expand training facilities for fishermen and plant workers in the province and to sponsor productivity improvement schemes. As for other sectoral-type agreements, DREE forwarded a copy of the proposed fisheries agreement to the relevant federal departments for their comments. Initially, the federal minister responsible for fisheries, the Honourable Romeo LeBlanc, insisted on withholding federal approval until such time as all those fisheries agreements proposed for the Atlantic region could be reviewed simultaneously. He repeatedly argued that problems and opportunities associated with Atlantic fisheries were regional and not provincial, because—and this he frequently stated— "fish do not recognize political boundaries." Subsequently, after having reviewed the three proposed Atlantic agreements, he noted with concern that all provided for the development of new products; this, he argued, would invariably lead to duplication and competition between the three agreements and between the three provinces. In addition, he insisted that it would seriously impinge on his department's own on-going research and development program. He pointed to other activities which were supported by all three proposed agreements, such as those relating to 85

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marketing, and persuasively argued that federal funds through fisheries subsidiary agreements would in the end be squandered in supporting projects which compete with each other.33 But his principal concern with the proposed fisheries subsidiary agreements was a jurisdictional one which involved not only the two levels of government but also DREE and the federal Department of Fisheries. The BNA Act states that "exclusive legislative authority of the Parliament of Canada extends to all matters coming within . . . sea-coast and inland fisheries." Moreover, Canada's Fisheries Act assigns to the federal minister of Fisheries responsibility for the "proper management and control of the sea-coast and inland fisheries." Based on these constitutional and parliamentary mandates, LeBlanc argued that his department should lead all government initiatives in the fisheries sector. Although the constitutional responsibility for resource management of the fisheries sector is unambiguous, that for such industrial-type activities as fish processing and marketing, and for what is termed the "general welfare" of the fishermen, is less clear. Furthermore, the federal Department of Fisheries has not, over the years, energetically occupied its constitutional responsibilities. For example, fisheries at the federal level over the past twenty years has by turn held non and full departmental status, whereas at the provincial level, at least in the Atlantic region, it has uninterruptedly held full status for some time. It is for this reason, and particularly because they regard fisheries as inescapably linked to any attempt to alleviate economic disparities in the Atlantic region, that DREE officials initiated discussions with three Atlantic provinces on fisheries subsidiary agreements. Notwithstanding this and the fact that the GDA approach seemingly involves joint decision-making, LeBlanc resisted all DREE efforts to sign a fisheries agreement with New Brunswick. Essentially, he believed the GDA approach favours the provinces, and, that through it and with federal funds, they could move into areas of federal jurisdiction. Since the public views provincial governments as the agents who implement GDA-sponsored programs the provinces would receive all the credit for having developed the initiatives and federal funding would go unacknowledged.34 LeBlanc also opposed what he regarded as DREE's intrusion in his field of responsibility, especially at a time when the fishing industry faced a crisis which, according to some, threatened the very existence of the industry. During the mid-seventies, fishermen were suddenly confronted by an unlikely combination of falling market prices and a sharp decline in the availability of fish. Responding to the crisis, LeBlanc submitted a comprehensive strategy to the federal Cabinet in 1975 designed to rebuild or at least to rescue Canada's fishing industry. Primarily because of the 86

A Second Generation of Subsidiary Agreements federal government's anti-inflation program of the time, the Cabinet, in approving the fisheries strategy, withheld funding on several proposed initiatives. Subsequently, LeBlanc often questioned why DREE funds earmarked for fisheries subsidiary agreements could not be transferred to his department where all available federal funds for fisheries should be marshalled "to save the industry from collapsing." More candidly he added: "I resisted the DREE agreement in fisheries because I found it difficult... [to accept that] . . . what I could not do in my defined area of responsibility I find another department. . . [doing]."35 Quite apart from the interdepartmental jurisdictional dispute, LeBlanc opposed the New Brunswick fisheries subsidiary agreement on the grounds that it would do little to remedy the crisis situation crippling the fishing industry. He insisted that the three Atlantic region subsidiary agreements would work at cross-purposes since each contained separate and necessarily competing marketing schemes. In addition, without revealing the contents of the proposed subsidiary agreements in any detail, he charged publicly that the provinces would simply use some of the funds to expand their own fisheries departments or their own bureaucracies. Finally, LeBlanc also suspected that, if the fisheries subsidiary agreements were approved, the provincial departments of Fisheries would opt out of his department's cost-shared programs in order to take advantage of more generous GDA-sponsored cost-sharing arrangements. Many of these difficulties, he argued, could have been prevented had DREE not entered into substantive discussions with the provinces "in the absence of the Department of Fisheries."36 On numerous occasions, DREE and the provinces attempted both jointly and independently to accommodate LeBlanc's objections. For example, New Brunswick suggested making use of the Council of Maritime Premiers as a forum to discuss ways to avoid duplication of efforts in the marketing field, and also expressed its willingness to review the proposed fisheries agreement in light of LeBlanc's apprehensions. DREE officials also organized countless meetings with Department of Fisheries officials to break the impasse. In doing so, they stressed the use of economic "logic" and "efficiency" as the appropriate criteria to determine who should be doing what in fisheries. Economic logic and efficiency, they suggested, dictate that the federal government play a leading role in the resource management field if only to ensure that collective action is taken to check resource depletion. With regard to industrial development and fisheries, they argued that each aspect should be dealt with according to its own economic merit. Joint federal-provincial responsibility was advocated for matters relating to community development and the general welfare of the fishermen. Within the federal government, they saw a further overlapping of responsibility with the Department of Fisheries 87

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holding overall responsibility for managing the fishery resource and DREE having a legitimate interest in the industry because of its importance to the economy of the "have-not" provinces of the Atlantic region. DREE officials report that on several occasions they were able to arrive at GDA-sponsored programs in the fishery sector with the support of federal fisheries officials, but that each time LeBlanc steadfastly refused to concur. For LeBlanc there was but one acceptable outcome and that was for his department to assume absolute responsibility for all fisheriesrelated activities, including the funding of federal-provincial cost-sharing arrangements, should these be necessary. But DREE officials found this option unacceptable. For one thing, they pointed out that it would severely restrict their involvement in the fishery sector without, in return, providing any assurance that federal policies and programs would be compatible with its stated objectives in the field of regional economic development. They also feared that the Department of Fisheries would, as a matter of course, exclude the provinces when formulating its policies and programs, thereby ignoring, if nothing else, economic "logic" and "efficiency." OTHER ISSUES Both provincial DREE and provincial government officials report that the level of federal funding under the GDA has never been as contentious an issue as one would have expected. It will be recalled that, in signing the GDA, the federal government committed itself to finance up to 80 percent of the cost of New Brunswick subsidiary agreements. In the case of all sectoral subsidiary agreements, the federal government has, in fact, agreed to contribute 80 percent of the cost. The subsidiary agreements to which the federal government contributes less include the highways agreements, the Miramichi Channel study, and the planning and northeast agreements. Provincial government officials reveal that it was widely known even before discussion began that the federal government would contribute 80 percent of the cost of sectoral agreements, 70 to 75 percent of the highways agreements, and 50 percent of planning agreements. This is not to suggest that the province accepted these percentage terms without raising any objections: Premier Hatfield and the provincial Cabinet, for example, objected to DREE's refusal to share 80 percent of the cost of highways subsidiary agreements. However, because DREE has had a consistent and clear policy on cost-sharing, cost-sharing ratios never figured extensively in the actual discussions leading to the development of subsidiary agreements. Once again, the north-south or intraprovincial economic disparity issue dominated federal-provincial relations in New Brunswick throughout the period covering the development of second generation subsidiary agree88

A Second Generation of Subsidiary Agreements ments. It is true that DREE and the province agreed to develop a northeast subsidiary agreement, but observers accused the provincial government of deliberately protracting the development process. Even when signed, some observers remarked that the northeast agreement was "too little, too late" while others feared that the provincial government, having signed, would now use it as a pretext to divert its own funds and programs to the southern half of the province. In any event, the agreement only extended to the northeast area of the province. The northwest, although not as economically underdeveloped as the northeast but nonetheless a slow growth area when compared with the province as a whole, now requested its own spatial agreement. Madawaska-Victoria member of Parliament Eymard Corbin made numerous presentations to the minister of DREE for his department to initiate discussions with the province with a view to developing a northwest agreement. However, before DREE and provincial government officials or the Canada-New Brunswick Development Committee had a chance to consider the suggestion in any serious fashion, the provincial Cabinet made it indubitably clear that it would not entertain another spatial-type subsidiary agreement, in particular one for the northwest area of the province. Essentially, provincial Cabinet ministers felt that, in accepting the northeast agreement as proposed, they had yielded their share in the negotiations and that should new DREE money be available, then it should be allocated to existing or new sectoral-type subsidiary agreements. Responding to Corbin's request, the minister of DREE stated that though he was not opposed to a northwest subsidiary agreement he held little hope of seeing one develop because the province would not support it. Disappointed with the response, Corbin issued a news release stating: "If the province has a plan to deal with development, it's about time it was clearly spelled out, so the people could know who's in and who's out." More significantly, he revealed that the minister of DREE had informed him that "the provincial authorities do not favour a special joint subsidiary development agreement for northwest New Brunswick."37 Agreeing with provincial govenment officials that the province's position should not have been revealed publicly, at least not by a federal government backbencher, DREE officials made representations to the province to clarify the department's position. Another issue which surfaced in developing second generation subsidiary agreements, and which disquieted both DREE and the province, was the apparent reluctance of other federal departments to work with the GDA approach. The federal minister of Fisheries revealed publicly his displeasure with DREE and with the GDA approach. Before the Senate Standing Committee on Agriculture, the federal minister of Agri89

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culture also directed criticism at the GDA approach and at DREE. He said: "DREE, it is just a give-away budget. . . they [DREE officials] run off half informed on agricultural programmes."38 Commenting in a rather more cynical fashion on what he regarded as an excessive DREE expenditure budget compared with his, and on DREE's ineffectiveness, he remarked to a member of the committee: "When the minister of DREE is here tomorrow, then ask him to give the money to the minister of Agriculture and he will do it right away."39 GDA MEETING On the whole, the second annual ministerial-level GDA meeting followed the format established at the first; it only lasted a few hours and, apart from the premier and the minister of DREE, it was largely restricted to a small group of provincial DREE and provincial government officials, and it was guided by a jointly prepared formal agenda. All in all, the discussions were carried on in a most amicable fashion. So much so, argue some politicians and political-level advisers, that GDA ministerial-level meetings serve little purpose other than to sign agreements. By the time issues surface at the meeting, they maintain, they have been "massaged" by officials to the point that little or no disagreement can possibly exist. They add, and not without some justification, that should the two ministers adopt different views on an issue, then officials would feel that somehow they had failed in their duties. In other words, officials consider it very much a part of their responsibilities to resolve any disagreement and outstanding issues rather than submit them to the political level. There is also a self-serving reason for wishing to resolve conflicts amongst themselves or within the "guild," where, at least, disputes can be resolved according to objective or technical criteria. To submit them to the political arena is far more uncertain; there, participants are often inspired by different goals.

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Chapter Six Implementing the Subsidiary Agreements In analysing a new approach to federal-provincial decision making, one would not ordinarily place much emphasis on its implementation, mainly because policies and programs are often formulated in such a fashion that "implementors" are directed by established and clearly defined limits— this is particularly true with regard to intergovernmental programs in Canada. Officials overseeing the implementation of a typical non-GDA federal-provincial program may at times disagree on what constitutes legitimate cost, but more often they concern themselves with monitoring such things as the flow of cash to ensure that the estimated expenditure is not exceeded. Canada's medical insurance provides such an example, in that, until recently, the provinces had to meet precise and unyielding criteria to obtain federal cost-sharing. Enough has been said to demonstrate that the GDA approach manifestly breaks from this tradition. To recapitulate briefly, the approach was purposely designed to give the administrators wide discretionary powers to enable them to take into account "changing economic circumstances" while implementing programs and projects. In addition, in order to take advantage of "development opportunities as they emerged," most New Brunswick GDA-sponsored programs were deliberately defined in a very broad manner. In fact, some were so broadly defined that several federal departments commented that their descriptions were rendered meaningless. Few provincial DREE and provincial government officials would disagree with the above comment. They readily admit that for certain subsidiary agreements (for example, the two spatial agreements and the planning agreement), the implementation process was in actual fact a planning, development, and implementation exercise. This is true because the agreements were little more than an uncommitted block of funds to be allocated after projects were identified and formulated. In certain 91

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instances, initiatives were not defined or even foreseen when the agreements were signed. Given the wide discretionary authority delegated to officials sitting on joint implementation committees, it is imperative that implementation under the GDA approach be closely examined. In this chapter and the next, the study relies heavily on information established through extensive personal interviews, if only because the "politics" inside the bureaucracy seldom appears on public record. It is acknowledged that when discussing current issues, officials tend to tell their own version of the story. However, the information was verified through further interviews to ensure that both sides of the story could be assessed and, whenever possible, through unpublished government documents which were made available by both DREE and the Government of New Brunswick. GDA IMPLEMENTATION PROCEDURES GDAs confer responsibility on the provinces for implementing programs and projects but they stipulate that this is to be done under the overall supervision of joint DREE-province management committees.1 All subsidiary agreements require both ministers responsible for GDAs to appoint officials to constitute management committees which, in turn, are delegated authority for approving all programs and projects as well as the agreement's annual expenditure budget.2 In the case of the New Brunswick GDA, with the exception of the management committee implementing the planning subsidiary agreement (which is made up of the provincial director general of DREE and the secretary to the provincial Cabinet Committee on Economic Policy), all management committees are composed of the provincial director general of DREE and the general manager of CIC. Other officials may participate at management committee meetings, but only in an advisory capacity. Management committees meet on average once every six weeks to review recommendations from a variety of federal-provincial steering committees. It is often said, however, that management committees like the Canada-New Brunswick Development Committee merely grant formal approval to initiatives which have been discussed and approved beforehand, either through steering committees, task forces, and study groups or through informal discussions between provincial DREE and provincial government officials. At the risk of stating the obvious, not all management committees and their steering committees have the same authority to develop or shape new projects. Clearly defined subsidiary agreements, like those on highway construction, leave little scope to develop new projects, whereas others, like that for the Kent region, are so broadly defined that in actual fact the management committee has "x" 92

Implementing the Subsidiary Agreements amount of funds to spend as it wishes, according to very loosely outlined criteria. Representatives of other government departments are invited to participate in the implementation of GDA schemes as non-voting members of management and steering committees. However, that other departments participate as non-voting members is not as significant as it may at first appear since DREE and CIC prefer to implement programs by evolving consensus from discussions "between equals" rather than by formal votes. On the other hand, even though DREE and CIC rarely make use of their veto power, it is understood by all parties involved that they are primus inter pares.3 Predictably, officials from the relevant provincial line departments are always invited to participate on committees implementing sectoral type subsidiary agreements—for example, officials of the provincial Department of Agriculture participate on committees overseeing the implementation of the agricultural subsidiary agreement. At the federal level, five departments other than DREE have been invited to sit as members of management committees implementing the forestry, agriculture, tourism, minerals and fuels, and the 1977-80 highways subsidiary agreements. In addition, although no department other than DREE and provincial central agencies sit on a continuing basis on committees implementing the two spatial and the planning subsidiary agreements, officials from a number of provincial and some federal departments are often requested to participate in implementing specific programs and projects under the three agreements. Yet the involvement of other federal departments in the GDA implementation process remains a contentious issue. DREE has only invited five federal departments to sit on a corresponding number of management committees from a total of fifteen subsidiary agreements—hence fifteen management committees. Furthermore, in almost every instance, DREE extended the invitation only after the departments in question made clear their desire to sit on a particular management committee. Several reasons explain the reluctance of provincial DREE officials to involve other federal departments directly in implementing subsidiary agreements. Among others, they maintain that it tends to slow down decision making and restricts DREE's ability to react positively with the province to identified development opportunities. They add that some departments often attempt to make use of their positions on management committees and more generally of the GDA approach to expand their ce rather than to assist DREE in promoting own spheres of influence economic development.4 Not surprisingly, provincial government officials are even more reluctant to involve federal departments in implementing GDA-sponsored 93

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programs. In particular, they fear the imposition of still more federal procedures or, as one official remarked, "federal red tape." They explain that the provincial bureaucracy is a relatively small one and that, while it can easily work with the provincial DREE office, it finds it very difficult to work with other federal departments which invariably insist on formalizing both GDA implementation procedures and federal-provincial relations. Because provincial DREE officials are located in the same cities and because they are comparatively few in number, provincial government officials point out that they have been able to develop a good rapport with most of them and to promote what they term an "informal working interface" with the provincial DREE office. Said one provincial official: "We know who is doing what, what is to be done, and how it should be done. . . . We do not need a great number of rules and procedures to tell us that." But when other federal departments become involved in implementing subsidiary agreements, he goes on to explain, "the process is overly formalized and made cumbersome." Before examining the implementation of selected GDA programs, it is important to make some general points on how schemes are implemented. Once a subsidiary agreement has been signed, the province must submit the agreement's annual expenditure budget for approval to the management committee. Initially, the budget is reviewed by steering committees, which are made up of provincial DREE and provincial government officials and, at times, officials from other federal departments, to ascertain that it is consistent with the subsidiary agreement before the management committee formally approves it. Program descriptions in schedule A of subsidiary agreements provide the starting point from which specific projects can be identified and included in the annual expenditure budget; but even if a new project is not identified and provided for in the annual budget, it can still be approved at any time during the year by the provincial director general of DREE and the general manager of CIC. However, whether or not a project has been approved in the annual expenditure budget, it must, in theory at least, again be re-examined by a steering committee before public tenders can be called to confirm once again—among other things—that proposed expenditure commitments will not exceed guidelines established in the annual expenditure estimate. In addition, should projects entail the construction of infrastructure or physical facilities, which they often do, they very frequently need to be reviewed by the federal Department of Public Works to certify that provincially prepared project specifications meet with established federal engineering regulations and requirements. In cases where public tenders do not fall within the estimated dollar figure, projects are again referred to steering and management committees. With regard to actual working arrangements, the province submits all proposed 94

Implementing the Subsidiary Agreements new projects to steering and management committees for consideration. Hence, whenever DREE officials wish to put forth ideas or suggestions for new projects, they must—officially at least—do so through provincial government officials. Lastly, all decisions respecting new projects and annual expenditure budgets are formally recorded in management committee minutes, which are approved jointly by DREE and the province.5 Provincial government officials view the above working arrangement, especially when it is observed punctiliously, as anything but satisfactory. They argue that such formalized working procedures and rules may be necessary in large bureaucratic organizations, such as most federal departments, where uniformity and common rules must apply, but that in a smaller bureaucracy they are counter-productive. A number of provincial government officials add, however, that most provincial DREE officials fortunately recognize this situation. Whenever the federal involvement is restricted to provincial DREE officials, provincial government officials report that they are able to get projects approved and to get on with their implementation within a sensible time span. They maintain that mutual trust exists between the two groups and that many of their discussions are conducted informally either by telephone or at informal meetings. This means that short cuts can and often are taken to speed up project approval procedures.6 This type of informal working arrangement is next to impossible whenever other federal departments are involved. Essentially, argued one provincial government official, provincial DREE officials start from the premise that economic disparities exist in New Brunswick and something should be done about them. However, he adds, officials from other federal departments start from the premise that provincial government officials "are out to get the feds" or out to get as much money as possible from the federal government. It became clear during the interviews that officials from other federal departments will very often insist that established procedures be scrupulously followed, that all provincial proposals be submitted in a strictly formal fashion to steering and management committees, and that relations between federal and provincial officials also be strictly formal. This irritates provincial government and provincial DREE officials and also makes implementation slow and unwieldy. One example will best illustrate this point. The forestry subsidiary agreement provides for the construction of resource access roads and, following the procedures outlined above and in consultation with DREE officials, the province submitted a proposal for a road construction project in the forestry pilot project area. Once approved, the province called for public tenders and subsequently initiated actual construction work. However, some time afterwards the federal Department of Public Works noted that the engin95

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eering specifications omitted road signs warning truck drivers of a particularly dangerous curve in the road. It formally requested DREE to inform the province that no federal dollars would be spent on the project until provincial government officials made arrangements to have proper signs erected. DREE communicated this to the relevant provincial government official who, in turn, referred the matter to the project engineer. The latter reported that, even though they were not in the specifications, the signs had been ordered and would have been erected in any event. Nevertheless, the province had to submit official confirmation to the steering committee, with copies to several departments and agencies, that it intended to erect the signs. From the time the province was informed of the omission in the specifications until it could submit official confirmation to a formally constituted committee that it intended to rectify the omission, a period of four to five weeks elapsed, during which time construction work on the project was officially suspended—not insignificant, given New Brunswick's short construction season. This type of incident, according to both provincial DREE and provincial government officials, is not at all uncommon whenever federal departments other than DREE are involved in the GDA implementation process. Officials of other departments confirm that such incidents occur. But they are quick to point out that the strict observance of established procedures and administrative requirements is indispensable in making sure that public funds are spent in a correct manner.7 Provincial government officials not only disagree that the process needs to be thoroughly formalized to ensure that public funds are spent prudently but they also argue that with the incessant demands for "onpaper information," the provincial public service is being overly bureaucratized. This, they argue, entails still other difficulties. Those provincial officials who work in the field and who oversee or actually implement GDA projects complain, for example, that implementation procedures, especially when federal departments other than DREE are involved, blur responsibility and accountability. One official explains: "I feel like I no longer work for somebody or for a department—instead I work for an array of federal-provincial committees, none of which I get to talk to directly." He goes on to add that "nobody ever seems to be in a position to make a decision." From a provincial point of view, yet another difficulty with implementing GDA schemes, whenever procedures are followed in a strictly formal manner, is the inability of management committees to approve projects in a sufficiently expeditious manner to meet projected expenditure targets. It is precisely for this reason, provincial officials maintain, that actual expenditure under the Canada-New Brunswick GDA consistently falls below estimated expenditure.8 When obligated to abide by formal pro96

Implementing the Subsidiary Agreements cedures and to justify their actions "on paper" they affirm that, given the short construction season, they can never generate enough projects to expend all of the subsidiary agreements annual expenditure budgets. INTERGOVERNMENTAL AND INTERDEPARTMENTAL RELATIONS Apart from administrative and procedural difficulties, the involvement of other federal departments in implementing subsidiary agreements entails other drawbacks which are especially disconcerting to provincial DREE officials. They assert that other federal departments manifest little interest in assisting DREE and the province in promoting economic development. On the contrary, they argue, federal departments view their role on management and steering committees as one of ensuring that national policies are respected and that GDA-sponsored projects conform with federal policy regulations. This frequently gives rise to conflicts simply because, in the opinion of DREE officials, the observance of national policies is very often incompatible with efforts to promote regional economic development. Provincial government officials agree with this assessment. Commented one: "Other federal departments have never come up with an interesting idea or a possible project—that is not their style. All they do is sit in judgement of our proposals and our work to see if they run counter to national policies and the vested interest of their departments." Two specific examples will illustrate the conflict. The agricultural subsidiary agreement makes provision for assisting the New Brunswick dairy industry. However, when it came to approving projects to upgrade the industry, the federal Department of Agriculture, through its representative on the agricultural management committee, opposed all proposals. Department of Agriculture officials had established a national and provincial production quota for dairy products and argued that no measures to increase milk production should be supported at a time of national surplus. Provincial DREE and provincial government officials countered that, although a national surplus of dairy products existed, the New Brunswick dairy industry had consistently failed to meet its allocated production quota.9 In any event, they argued, both the New Brunswick production quota and actual production were so inconsequential compared with national figures that any increase in production would have little or no impact on the total national supply of dairy products. In addition, the province repeatedly pointed to the precarious state of the industry by noting the dramatic decrease in the number of dairy farms in the province and the sharp decline in milk production during the mid1980s. If New Brunswick were to have a viable long-term dairy industry, provincial officials argued, then special measures were urgently needed. 97

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Despite these arguments, the federal Department of Agriculture held firm to its position by maintaining that it would be absurd to initiate measures to promote the dairy industry in one part of the country while an imposing national surplus of dairy products existed. In the end, projects to support the dairy industry were approved because, in the words of one provincial government official, "DREE officials shouted down the Department of Agriculture." The position of the federal Department of the Environment vis-a-vis the New Brunswick minerals and fuels subsidiary agreement illustrates further the nature of interdepartmental conflicts at the federal level under the GDA approach. Basically, federal environment officials contended that several projects under the subsidiary agreement could prove harmful to the environment and that whenever and wherever federal funds were spent, appropriate measures should be taken to avoid environmental damage. DREE officials disagreed. They did not deny that environmental considerations are important but they maintained that the province had its own Department of Environment which is quite capable of advising the implementing agency, the provincial Department of Natural Resources, on environmental matters. Provincial DREE officials report that they had hoped federal environment officials would limit their interest to assisting DREE and the province in evaluating the appropriateness of economic development projects and not assume a "police" role by monitoring projects to see if they met federal environmental regulations. They also suggested that the federal Department of the Environment had been unsuccessful in its attempt to influence the provinces to adopt more stringent environmental regulations and that now it would like to use the GDA approach to impose such controls. Thus far, however, provincial DREE officials have persistently and successfully refused to be drawn into a debate with the province over what they regard as purely environmental questions relating to the development of provincially owned resources.10 As a more general criticism of the GDA implementation process, a number of federal departments complain that they are seldom consulted sufficiently early to bring any kind of meaningful contribution to the formulation of projects. Frequently, they argue, projects have been fully developed and funds committed to them before they are consulted.11 Although less numerous and certainly less intense, interdepartmental conflicts also occur at the provincial level. Almost exclusively these involve disputes between, on the one hand, line departments and, on the other, central agencies like CIC and the Office of the Cabinet Secretariat rather than between line departments. Furthermore, conflicts centre mostly around administrative and financial issues and very rarely involve disagreements over policy. Quite apart from the fact that the provincial bureaucracy is sufficiently small that officials, who know each other on a 98

Implementing the Subsidiary Agreements first name basis, can resolve most conflicts informally before they become unmanageable, there is an important and effective deterrent to interdepartmental conflicts at the provincial level. Unlike at the federal level, where considerable distance separates the Cabinet and officials, provincial officials know that if they cannot resolve conflicts amongst themselves then these conflicts will be unhesitatingly reviewed by Cabinet, which may well resolve them to the satisfatcion of no one except Cabinet ministers. Thus, in the eyes of provincial DREE and provincial central agency officials, it is not so much provincial line departments but other federal departments that impede the orderly formulation and implementation of GDA projects. Nevertheless, there are a number of factors favouring provincial DREE and provincial government officials in their continuing conflicts with other federal departments. For one thing, programs and projects are formulated and implemented at the provincial level where provincial DREE officials work and where, in most cases, they have been able to foster an excellent working rapport with their provincial government counterparts. Much more often than not, officials from other federal departments sitting on management and steering committees work out of Ottawa and can only spend a day every six weeks or so in Fredericton to review GDA projects. As a result, they often can only play a responding role to projects which have been fully developed and which are ready for implementation. Moreover, officer-level provincial DREE officials and provincial government officials have come up with surreptitious working arrangements in their relations with federal departments. Periodically some provincial DREE officials, having notified their provincial counterparts beforehand, will denounce the province at those steering committee meetings which are attended by representatives of other federal departments for not taking seriously the GDA development strategy. This is done to keep other federal departments "at bay" by reassuring them that DREE is diligently supervising how federal dollars are spent. More often, DREE officials will counsel provincial government officials on how to word or present their proposals so that they will meet with unquestioned approval of other federal departments at committee meetings.12 The above should not be interpreted to mean that relations between provincial DREE and provincial government officials are always harmonious in implementing GDA programs. A number of provincial DREE officials contend that the province too often views DREE as simply a source of funding for things it wants done. This view is not unjustified; numerous provincial government officials admitted that they make every effort to work as many of their projects as possible under GDA costsharing, not least because otherwise some of these projects, as one remarked, "would never see the light of day." 99

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More specifically, some provincial DREE officials are clearly suspicious of provincial government intentions with regard to the implementation of the northeast subsidiary agreement. They suggest that most provincial government line departments simply view the agreement as an addition to the total provincial budget and hence fear that whenever these departments identify projects for the northeast area, they will attempt to claim funding under the northeast agreement rather than from existing and relevant sectoral agreements. This implies that far more than usual DREE officials will be playing a "police role" in the implementation of the northeast agreement. However, provincial government CIC officials also expressed similar apprehensions regarding the northeast agreement. They also reported that they would be carefully monitoring line department activities in the northeast to ensure that funds under other subsidiary agreements, which would otherwise be allocated to the area, are not directed elsewhere in the province. Hence, tensions in implementing the northeast agreement may surface not only between DREE and the province but equally between DREE and CIC on the one hand and provincial line departments on the other. Provincial government officials also expressed criticism towards the provincial DREE office. An imposing number of respondents accused it of generating and, in turn, requiring far too much paperwork. Furthermore, they revealed ruefully that of late, with other federal departments and their ministers more openly voicing criticism of DREE, DREE officials were adopting a more formal posture in their relations with the province. Some provincial DREE officials, said one provincial government official, "are increasingly becoming more concerned with protecting themselves by correctly following established procedures than with getting things done." There is little doubt, however, that when compared with other federal departments, the province's relations with the provincial DREE office have been and remain unmatched. Provincial government officials readily admit that, if only because most of their decision makers are located in Ottawa, they have never been able to develop nearly as good a working rapport with other federal departments as they have with the provincial DREE office. Whereas contacts with other federal departments are sporadic, and then not always with the same officials, contacts between provincial government and provincial DREE officials not only occur on a daily basis but also, with nearly all provincial DREE officials specialized along sectoral lines, these contacts invariably occur between the same officials. A number of provincial government officials suggested that most provincial DREE officials have been able to adapt themselves to the informal approach and working environment of the provincial public service. A few added that, except for the fact that they have to produce 100

Implementing the Subsidiary Agreements far more written information for DREE, their relations with provincial DREE officials are not unlike those they have with provincial Cabinet committee officials in submitting their annual expenditure estimates. One official summarized the provincial DREE-provincial government working relationship in implementing GDA projects as follows: "Compared with the kind of nonsense other federal departments throw at DREE and indirectly at us, our disputes are trivial squabbles." FLEXIBILITY IN IMPLEMENTING SUBSIDIARY AGREEMENTS Whatever the state of the politics of officialdom may be at any one time, it remains that GDA implementation is incomparably flexible. Since its introduction, the Canada-New Brunswick GDA has sponsored a multitude of projects, a number of which were formulated after their sponsoring subsidiary agreement had been signed. It is worth noting again that changes in funding and emphasis within certain subsidiary agreements have also been affected, although in some cases through formal amendments approved by the two ministers responsible for the GDA. The remarkable flexibility and scope of the GDA implementation process is made obvious by the diversity of projects it has thus far supported. Perhaps the one common theme which emerges is a reliance on research and planning activities. To date, well over 100 GDA-sponsored planning initiatives have been approved and are at various stages of development. Moreover, even these are dissimilar in some respects in that they provide for, among other things, town planning studies, coordination of activities under each subsidiary agreement, and general planning studies to determine the optimum allocation of resources under the GDA. In addition, the agricultural subsidiary agreement has enabled the establishment of a planning unit within the provincial Department of Agriculture.13 It is important to underline once again that, of the many GDA projects now in the implementation stages, a great number of them were only barely defined, while others were not even identified when their sponsoring subsidiary agreements were submitted for approval at both the federal and provincial levels. An excellent example is the Kent region agreement, where most projects were only identified while officials were implementing the agreement. These included financial and technical assistance for such initiatives as irrigation for vegetable growers, Christmas tree woodland development, and the construction of a community recreation centre.14 Other new projects and activities identified or developed subsequent to the signing of subsidiary agreements included several under the forestry agreement which were designed to promote such things as cross-country 101

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skiing, canoeing, and camping. Moreover, funds under the agreement's resource protection program were allocated to support an unforeseen but major study evaluating alternatives to spruce budworm spraying. From the industrial development agreement, some thirty industrial infrastructure projects have been developed and allocated to several communities throughout the province. And, from funds allocated to the "essential resource services" program of the tourism subsidiary agreement, the tourism management committee agreed to purchase strategically located parcels of land for future relevant development projects. Under the "infrastructure" program, the committee agreed to purchase a mobile unit to be used throughout the province for hospitality training of the personnel employed in the tourism sector. The minerals and fuels management committee has allocated funds towards the construction of resource roads to stimulate active mine development. Under several subsidiary agreements, funds have been expended to provide the necessary departmental staff and technical support to implement GDA projects. Lastly, in anticipation that the proposed fisheries subsidiary agreement would be signed, several GDA-sponsored projects for the fisheries sector have been approved and implemented through the planning subsidiary agreement.15 THE PARTICIPANTS AND POLITICAL CONTROL Few DREE officials outside the provincial office are either directly or indirectly involved with the implementation of subsidiary agreements. The minister's authority under the Canada-New Brunswick GDA, and the authority to co-chair all joint management committees for the federal government, have been delegated to the provincial office through the provincial director general. He holds federal signing authority to approve all projects, including authority to agree to adjustments in costs or modifications to GDA programs, provided the total cost of the relevant agreement is not increased. Apart from the regional assistant deputy minister to whom provincial directors general report, regional and Ottawa-based DREE officials are cut off from the GDA implementation process. They report that, at best, they are informed of a new project only after it has been approved for implementation and, at worst, they are totally ignorant of the status of subsidiary agreements once these are in their implementation stages. Officials of other federal departments who are members of management and steering committees are, as a matter of course, far better informed on the implementation status of specific subsidiary agreements and projects than are regionally or Ottawa-based DREE officials. When asked about this situation, provincial DREE officials retorted that it was never the intention of the department to involve the regional or Ottawa offices

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Implementing the Subsidiary Agreements in implementing GDA-programs. In any event, one added, "What could regional or Ottawa officials do that we cannot do here?" There is also ample evidence to suggest that information on program implementation is seldom exchanged between provincial DREE offices even within designated regions. Below the provincial director general level, provincial DREE officials operate in isolation from their colleagues in other provincial offices; for example, it was revealed in interviews that provincial implementation officers in the Atlantic region have never met to review sectoral activities of common interest.16 Quite apart from the awkward physical distance separating their offices, which inhibits both formal and informal contacts, there are occasions when provincial officials do not wish to discuss projects outside their offices because of interprovincial competition. Whatever the reasons may be, this lack of interprovincial communication in implementing GDA programs entails obvious difficulties and a former federal minister of Agriculture pointed to one when he said: "When I was . . . in New Brunswick, one thing they [farm organizations] were raising Cain about was the fact that DREE was setting up another operation in another part of the Maritimes [i.e., necessarily a neighbouring province] to produce cabbages or something, when they already had a surplus of cabbages which they could not get rid of."17 As one would expect, the degree of political consultation in implementing GDA programs differs at both levels of government. At the federal level, the minister of DREE is not involved in the process nor—at least in case of the Canada-New Brunswick GDA—does he want to be. Incessant demands on his time prohibit him from taking more than a cursory interest in it. Apart from a general review of programs under implementation submitted to him before each annual GDA ministerial-level meeting, the minister is from time to time given short briefing notes on selected projects, which are viewed by provincial DREE officials as being "politically sensitive." Ordinarily, these briefing notes are submitted for information only and are designed to enable the minister to reply to anticipated questions in the House or from the press. They rarely necessitate ministerial direction or response. In fact, on almost every occasion, briefing notes are forwarded after a management committee has considered and already decided on the project in question.18 While this arrangement satisfies an overburdened minister, who besides overseeing his department's activities in ten provinces must attend House sittings, Cabinet, and Cabinet committee meetings, it is anything but satisfactory for government members of Parliament. Those from New Brunswick complain that they are never informed of new projects being developed under the GDA approach, let alone consulted or involved in formulating them. Disparagingly, they report that New Brunswick newspapers are the best source of information on DREE activities in New 103

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Brunswick. It has been the policy of the provincial DREE office to give no more information to politicians, whatever their party affiliation or the level of government they represent, than that available to the general public, which is limited to projects which have been accepted by management committees and which is released only after it has been jointly agreed to do so. At the provincial level, in the case of New Brunswick at least, GDA projects are submitted to the Cabinet Committee on Economic Development as part of the annual spending estimates review exercise. However, it is important to underline the fact that projects are always discussed with provincial DREE officials before they are submitted to the Cabinet committee. Thus, at a minimum, the broad outline of projects has already been agreed upon intergovernmentally before they are considered at the political level. The same is also frequently true within departments. Though consultative practices can vary between departments, provincial DREE and provincial government officials have usually reviewed the proposed projects jointly before these are submitted to the relevant Cabinet minister for his consideration. Provincial Cabinet ministers expressed considerable dissatisfaction with the implementation aspect of the GDA approach.19 The one possible exception is the premier, who reported that he is involved in the GDA implementation to the extent that he is able, given his preoccupations with other matters. Some ministers, manifesting an obvious distrust of officials, argued that the process is deliberately made sacrosanct by officials in order to frustrate ministerial participation. Specifically, they contend that the process tends to dilute their departmental authority, while at the same time enhancing that of their officials. For example, they maintain that at times their ideas or inputs in the process are summarily dismissed by officials who insist that steering and management committees would not consider such proposals by pointing to an assortment of reasons including "incompatibility with the relevant subsidiary agreement." What ministers object to most strenuously is that they often have to accept these decisions if only because they cannot appeal to anybody, least of all provincial DREE officials. One minister remarked that "whenever I suggest a project for the GDA, officials come up with twenty reasons why it can't be done and there is little I can do about it." Perhaps more perceptively, other ministers maintain that, while the GDA implementation process may be appropriate at the federal level, it is unsuitable for a smaller provincial government. Essentially, what they suggest is that the responsibility for implementing New Brunswick subsidiary agreements along with eighty others in eight other provinces can rightly be regarded at the federal level as "administrative detail" that ought to be delegated to departmental officials. However, in the case of 104

Implementing the Subsidiary Agreements New Brunswick at least, each sectoral subsidiary agreement can represent all of a department's new programs and activities for several years. A minister wishing to play a dominant role in shaping his departmental initiatives necessarily must be able to influence significantly the GDA approach. One minister reported that he had complete confidence that his officials reflect his priorities in their discussions with DREE officials, but this, he said, "is not enough." It is during discussions and interactions at the officials level that initiatives originate and actual decisions are taken. For this reason, he argues, he should be permitted to participate in these discussions and to sit on those management and steering committees which relate directly to the activities of his department. He concludes that "effective power is no longer in my office—it lies with the committees." The great majority of provincial government officials admit that GDA implementation procedures significantly reduce ministerial authority. The interdependence with provincial DREE officials, which the approach promotes, enables provincial officials to confront ministers more forcefully than would otherwise be the case. An example will clarify the point. The tourism subsidiary agreement provides for the establishment of "visitor orientation centres" in three communities which represent the province's major entry points for the purpose of tourist promotion. The government member for Edmundston, who is also the provincial minister responsible for the Treasury Board, insisted—admittedly perhaps for partisan political reasons—on a certain location for the Edmundston centre. Provincial government officials—reasoning from a cost-benefit point of view—insisted on another. With the support of provincial DREE officials and after several months dispute with the minister, they were able to locate the centre on the site they had initially proposed. Provincial government officials unreservedly accept that had the centre not been a GDAsponsored project, then without doubt the minister's position would have prevailed.20 One thing on which both provincial DREE and provincial government officials unanimously agree is that the GDA implementation process is structured in such a fashion that it enables them to exclude the participation of interest groups. They reveal that from time to time they arrive at mutually agreed working arrangements whereby they refer (to employ their term, "put off") interest groups to each other, or they (that is, provincial DREE and provincial government officials) accuse each other of being responsible for turning down a particular suggestion. And under no circumstances, they emphatically state, would they invite representatives of interest groups to participate at any given management or steering committee meeting; to do so, they contend, would seriously inhibit their discussions.21 Although all agree that the GDA approach is structured so that interest 105

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groups can easily be ignored, not everyone agrees that this is inherently "bad." Some DREE and provincial government officials argued that one of the strong points of the GDA approach is its ability to circumvent interest groups, among others, and to clear the way for "serious" planning in the field of economic development. Basically, they contend that interest groups rarely contribute anything worthwhile and that, more often than not, their only objective is to further their "pet" project without regard to its implications for other economic sectors.22

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Chapter Seven Actors and Procedures Although this study has examined in considerable detail the formulation and implementation of subsidiary agreements, several important questions either remain unanswered or need further elaboration. These will be investigated in the present chapter and include: Who are the principal actors in the GDA formulation process? How do officials from both levels of government relate to each other under the GDA approach? What are the procedures for approving subsidiary agreements at each level of government and how closely are they followed? How do politicians and officials relate under the GDA approach? It is worth outlining again briefly how the GDA formulation process, as formally constituted, is intended to operate. The Canada-New Brunswick Development Committee, composed of the provincial director general of DREE and the secretary to the provincial Cabinet Committee on Economic Development, and assisted by the broadly stated GDA strategy and by officials from both the provincial DREE office and the provincial government, decide on the priorities to be followed. From there, provincial government officials prepare proposals for new subsidiary agreements by drawing from a variety of sources, not least provincial DREE officials and joint federal-provincial sectoral policy reviews. A more detailed proposal is then prepared jointly by provincial DREE and provincial government officials who report periodically to the Development Committee on the matter. Once drafted the proposed subsidiary agreement is forwarded for consideration to the provincial Cabinet by way of the Cabinet Committee on Economic Development, to the federal Treasury Board, and to other "appropriate federal departments in Ottawa."1 And, as we have seen, once a subsidiary agreement is signed, the responsibility for managing the agreement devolves to a management committee consisting of provincial DREE and provincial government officials and at times officials from other federal departments. These 107

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management committees are delegated unqualified authority to approve all projects and to adjust funding allocations between them. The focus under such a working arrangement is clearly on provincial DREE and provincial government officials. It is incumbent on them to consult and seek the participation of other interested parties since they alone are involved, not only at the very beginning but also throughout the program formulation cycle. Hence they are always in a position to decide which, how, and when other interested parties should be consulted. THE DECENTRALIZATION OF DREE AND THE FORMULATION OF SUBSIDIARY AGREEMENTS It was noted earlier that a provincial office is headed by a director general who reports to a regional assistant deputy minister who, in turn, reports to the deputy minister in Ottawa.2 Unquestionably, the deputy minister and the regional assistant deputy ministers can involve themselves in the process to the extent they are able, given that DREE's deputy minister must oversee the work of the Ottawa office, four regional offices and, indirectly, ten provincial offices. Meanwhile, the Atlantic regional assistant deputy minister is responsible for five organizational units in the regional office and four provincial offices. It goes without saying that, whenever they wish, they can request from a provincial office specific information on any given issue. And, although somewhat more difficult, because GDA-related decisions must be taken jointly with provincial governments, they can also direct a provincial office to adopt a particular line of action or, failing that, a particular posture in their relations with provincial governments. Moreover, in allocating the departmental budget, the deputy minister and the Atlantic regional assistant deputy minister annually review, however briefly, all existing and proposed subsidiary agreements in the region. Leaving aside senior management, few officials outside the New Brunswick DREE office are, as a matter of course, involved or even consulted in formulating subsidiary agreements. What is important to bear in mind in understanding the GDA approach is that, under it, DREE's framework for budget allocation and its project delivery mechanism are strictly provincial in scope. The total DREE budget is divided by provinces, based on the accepted practice that the Atlantic provinces and Quebec receive, on a per capita basis, the lion's share of available resources and on commitments or agreements signed or to be signed with the provinces.3 Once New Brunswick's expenditure estimate has been determined—it has consistently been in the 52 to 63 million dollar range during the past several years—the responsibility for allocating it devolves to the provincial office. The Ottawa and the Atlantic regional offices are not allocated any funds 108

Actors and Procedures to promote nationally or regionally oriented initiatives. Added to this is the fact that the GDA approach, as a federal-provincial decision-making process, only operates in a provincial context.4 To influence the direction of their departmental activities, Ottawa and regional officials must, through suggestions and encouragement, attempt to influence the prioritydetermining process of provincial DREE offices. Certainly in the case of New Brunswick, they have hardly been successful throughout the period covered by this study. Officials in Ottawa and in the Atlantic regional office have been left playing a coordinating and broad policy advisory role to the regional assistant deputy minister, deputy minister, and minister.5 For example, the department is frequently requested to provide information or briefing material to the minister and to other federal agencies. While notes are often first prepared in provincial offices, a degree of coordination is required at the regional level and in Ottawa to ensure not only that the information is presented in a standard format but that it is consistent throughout the department. Ottawa and regional officials are also asked to monitor and comment on the initiatives of other federal departments with an eye to the impact these may have on the regions. Economic analyses, in the form of regional and national overviews to those done in provincial offices, are also prepared from time to time, as are analyses of specific issues, such as possible government assistance to the ailing steel industry in Cape Breton. In large measure, that is what the Ottawa and Atlantic regional offices are responsible for. More than one regional office, however, commented that the Atlantic regional office has yet to define a viable role for itself. Certainly, nobody below the rank of regional assistant deputy minister suggested that they had any kind of continuing influence on how their departmental resources are allocated under the GDAs. Similarly, nobody in the Ottawa office claimed that they had any kind of appreciable influence on the contents of subsidiary agreements in the Atlantic region. All officer-level DREE officials interviewed in the Atlantic regional office recognized that their intended role under the GDA approach is to assist provincial DREE offices. However, most objected that they are never invited to perform these duties. One regional official described the DREE inter-office working arrangements as follows: "It's like we have to plead with provincial officials to get involved and even then we are unsuccessful." Another remarked that DREE no longer operates as one department, but rather as a series of unconnected offices with provincial offices holding effective power. There are other reasons apart from the GDA's provincially oriented allocative process to account for Ottawa and regional DREE officials virtually having had no impact on the formulation of subsidiary agree109

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ments. The concept of decentralization of decision-making authority is jealously guarded by provincial DREE officials and some suspect that, once involved, Ottawa officials may choose to report on their activities directly through the Ottawa hierarchy rather than through the provincial DREE office. This would, they fear, constitute the first step in restoring to the Ottawa office the centralized, decision-making authority it once held. Other provincial DREE officials consider that when it comes to GDA activities, the Ottawa "coordination" function, as defined, is unnecessary. They argue that, under the GDA approach, promoting policy and program coordination with other federal departments cannot be performed at arm's length from the officials responsible for formulating new programs. The coordination function, they insist, is an integrated part of the program formulation process and necessarily should be the responsibility of the provincial DREE office.6 The reasons behind the reluctance of provincial DREE officials to involve Ottawa-based officials are equally applicable with regard to regional officials. That is, the decentralization of authority must be protected, not only from those who would want to centralize it, but also from those who would wish to regionalize it. In addition, provincial DREE officials are often reluctant to reveal information on proposed initiatives to regional officials for fear that the information would be disclosed to neighbouring provincial DREE offices and through them to other provincial governments. This, and the fact that provincial government officials would object in any event, explain why regional DREE officials are rarely invited to participate at joint DREE-province sectoral meetings where proposals for new subsidiary agreements are reviewed. It should also be noted that in terms of hierarchical rank in the federal bureaucracy, the provincial directors general are equal or superior to anyone below the assistant deputy minister level. Atlantic regional officials maintain that this explains why provincial directors general do not tolerate anyone below the assistant deputy minister level reviewing subsidiary agreements when these are submitted in the departmental approval process.7 All in all, then, both the Ottawa and regional officials play a very limited role under the GDA approach. Yet it remains that if they wish to influence the allocation of their departmental resources, they can only attempt to do so through the GDA approach and at the provincial level where they must convince provincial DREE, as well as provincial government officials (whom they seldom, if ever, see) that their suggestions are appropriate. The lack of a viable role for the Atlantic regional office has not gone unnoticed in the New Brunswick government. Officials report that they are completely bewildered as to what the regional office is supposed to do. 110

Actors and Procedures One provincial central agency official remarked cynically, but nevertheless to the point: "We have absolutely no idea what regional DREE officials are supposed to do ... if they prepare reports or proposals then these must be highly confidential because we have never seen or heard of one." Another commented that: "So long as the regional office and its 100 highly paid jobs are located in New Brunswick, I won't ask any questions. But don't ask me what these 100 people do." THE GDA APPROACH AND OTHER FEDERAL DEPARTMENTS Though the extent to which officials of other federal departments are involved in formulating subsidiary agreements can vary for each agreement, some general conclusions can be drawn. Initially, the intent was to promote the GDA approach, not solely as a DREE decision-making tool, but rather as a "total" federal one. It was hoped that it would give rise to a united federal attack on regional economic disparities. Development opportunities would be identified and relevant federal departments would be encouraged to assist in bringing them to fruition, either by incorporating the required action into their own program framework, by initiating the development of a subsidiary agreement, or by joining DREE as a financial partner (or signatories) to DREE formulating subsidiary agreements. Very few would dispute that the participation of other federal departments in formulating subsidiary agreements has been nowhere near the level initially anticipated. For example, under the Canada-New Brunswick GDA, no federal department has joined DREE as a financial partner, while on a national scale the contribution of other federal departments amounts to less than 5 percent of the total federal share of all subsidiary agreements under the nine GDAs.8 Not only have other federal departments shown little interest in contributing financial resources to specific subsidiary agreements; they are also anything but satisfied with the GDA approach, even when DREE contributes the total federal share of the cost of subsidiary agreements. Several reasons explain the disenchantment of other federal departments with the GDA approach generally and their unwillingness to participate under it as DREE's financial partner. One is, quite simply, that other departments have their own priorities and budgetary limitations. GDA-related activities must, necessarily, be oriented towards the promotion of regional economic development and, though in this regard proposals may hold a high priority, they may well be considered unimportant by officials of other departments who, quite naturally, tend to classify government priorities according to the stated objectives of their own departments. Ill

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Whether it was DREE's original intention or not, the GDA approach has become identified as a strictly DREE decision-making tool. Not unexpectedly, then, departments do not wish to enter into a financial partnership with DREE as a junior partner without, in return, at least being able to participate on an equal footing in formulating and implementing subsidiary agreements. Here one must bear in mind that, in a bureaucracy the size of the Government of Canada, officials and departments continually compete to expand their own sphere of influence. Understandably, other departments are not anxious to contribute financial resources to what they regard as DREE programs and thereby expand DREE's sphere of influence, its growth, and its prestige—possibly to the detriment of their own self-interest. Other departments are also critical of the GDA approach, even when DREE assumes all of the federal share of the cost of subsidiary agreements. It has to be remembered that the flexibility of the GDA permits the development of subsidiary agreements in practically all areas of government activity or in most policy fields. With the exception of the planning and the two spatial subsidiary agreements, all New Brunswick subsidiary agreements relate directly to the program framework of other federal departments—for example, the agricultural subsidiary agreement and the federal Department of Agriculture. No doubt, concern with DREE's expanding sphere of influence again partly explains the uneasiness of other federal departments over the GDA approach. Some find it difficult to accept that DREE is allocated funds to initiate projects in their defined area of responsibilities while they are unsuccessful in obtaining from the federal Treasury Board resources to develop their own proposals which, they insist, are far more appropriate. However, there is also little doubt that provincial DREE officials have not consulted other departments in formulating subsidiary agreements to the extent that they had initially promised. Officials of other federal departments insist that they are consulted too late to bring any worthwhile contribution or to present adequately their departmental point of view. The best they can hope for, they report, is to be given an opportunity to react to specific proposals. Even then, proposals are often so far advanced that it is too late to influence them.9 Here again, the physical distance separating provincial DREE officials from the policy and program developers of other federal departments in part explains the lack of interdepartmental consultation at the federal level under the GDA approach. The importance of continuing informal contacts between federal departments cannot be over-emphasized. It is true that in any bureaucracy formal communication networks are always reinforced by informal ones. However, in Ottawa informal contacts between senior officials constitute more than reinforcements—they are in 112

Actors and Procedures fact an integrated part of the interdepartmental consultation process. Professor James Eayrs, for example, maintains that the chief catalyst of interdepartmental coordination at the federal level is the way senior officials spend time together outside their offices at luncheon meetings and at social gatherings.10 The physical distance separating the policy and program developers and the resulting lack of informal contacts between them have also meant that DREE officials are not as well informed about the activities of other federal departments as they would otherwise be. One New Brunswick DREE official listed a number of interdepartmental meetings held in Ottawa to review proposed activities which would, if approved, have had an obvious impact on economic development for the province, but to which neither he nor his colleagues were invited. Officials of other departments confirm that provincial DREE officials are at times overlooked when inviting participants to attend interdepartmental meetings and they attribute this to two factors. First, they too point to the physical distance and the concomitant lack of informal contacts; one Ottawa-based official remarked that it is very difficult to know in every case who in the ten provincial DREE offices is specifically responsible for what. Another commented that "if DREE officials are not invited to meetings, which are of interest to them, it may be because they are scattered all over the country." Second, several officials mentioned the difficulties associated with having to deal with a number of separate DREE offices when discussing policy issues rather than with just one, as is the case with other departments. Each provincial DREE office, in harmony with its respective provincial government, has its own policy preference and very rarely is there a consensus on what would constitute the most appropriate course of action in any given economic sector. Though it has proved a mixed blessing, the decentralization of DREE has greatly improved DREE's relations with federal offices located outside of Ottawa. In a number of cases, improved communications have enabled DREE officials to obtain quickly expert technical advice on specific questions from other departments, thereby facilitating the task of implementing subsidiary agreements. However, the involvement of local offices of other federal departments in formulating subsidiary agreements has, on the whole, entailed little benefit, thus slowing down the process considerably. Essentially, the lack of decision-making authority delegated to these offices creates confusion and delay in getting at the appropriate officials. The designers of the GDA approach recognized some of the potential difficulties associated with a decentralized organization and also that DREE's mandate would encroach on the field of responsibilities of a number of other departments. Accordingly, they instituted a series of 113

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formal procedures for provincial DREE officials to follow in formulating subsidiary agreements. These were designed to inform senior DREE officials, the minister, and officials of other departments of those initiatives under consideration and, more important, to involve them early on in formulating new ones. To relay the necessary information from the provincial offices to the regional office, to DREE-Ottawa, and to other federal departments in a timely manner, computerized information systems were established. These are based on the procedures for formulating subsidiary agreements and cover the flow of events required in moving a proposal from its conceptual stage through to a signed subsidiary agreement. In addition, a federal interdepartmental conference was to be held annually to discuss issues relating to economic development in the Atlantic region. All New Brunswick DREE officials interviewed insist that whenever possible they follow the established procedures and make all the required contacts with other departments in formulating subsidiary agreements. While this may be true, there undoubtedly exists flexibility as to how early contacts with other departments should be made, because, for all practical purposes, it is left to the judgement of provincial DREE officials to decide when this should take place. Conversely, the main criticism voiced by other federal departments is that they are consulted too late by provincial DREE officials in formulating subsidiary agreements. As amended, the procedures stipulate that proposals are not to be made available to the provinces nor are provincial DREE officials to entertain "serious" discussions with provincial government officials until the regional and Ottawa DREE offices have been informed and preliminary discussions with interested federal departments have been held. Given the nature of the GDA working arrangement between provincial DREE and provincial government officials, such conditions are at best impractical— at worst, completely irrelevant. For one thing, proposals, by and large, do not originate within provincial DREE offices but rather at the provincial government level. Admittedly, provincial DREE officials are consulted throughout the various stages in formulating subsidiary agreements and they contribute substantially to all of them. However, it remains that under the GDA approach, provincial government officials are viewed as the "originators" of proposals and it is they who, formally at least, submit them for consideration to the Canada-New Brunswick Development Committee. Hence, considering that the province is viewed as the party responsible for formulating proposals, it is absurd to stipulate that proposals should not be made available to the province until they are reviewed by other federal departments. 114

Actors and Procedures Furthermore, the term "serious" discussion is one which has not been given and, in my opinion, defies, any operational definition. Provincial DREE and provincial government officials interact both formally and informally on a daily basis and it is these interactions which give rise to proposals—no line exists, or could possibly exist, to indicate when serious discussions are about to begin. It would in any event be exceedingly difficult, if not impossible, for provincial DREE officials to suspend discussions on proposals as they evolve in order to consult relevant federal departments in Ottawa. Should DREE officials systematically do this with every proposal, it would render the GDA approach, or the "process of jointly identifying developmental opportunities" through joint planning, meaningless. One provincial government official agrees with this assessmet and argues "subsidiary agreements are not formulated overnight. . . they grow from discussions and you cannot turn these discussions on and off to accommodate Ottawa people without seriously crippling the process." All federal officials concerned with the GDA approach agree on one thing; that is, computerized information systems have proven of little value to DREE's interoffice communications and to the promotion of interdepartmental consultations. Some provincial DREE officials have completely ignored the information systems, claiming that they were developed by computer experts without regard to the people who would actually be asked to operate them. For instance, they report that there is no provision for senior management or other departments to respond to information recorded on them. Moreover, some are concerned that information on these systems would flow too freely to other provincial governments, through either the regional office or other provincial DREE offices. Whatever the reasons may be, provincial DREE officials have failed to keep the systems up to date with timely information—an obvious prerequisite if they are to be of any benefit to anyone. During the interviews it was revealed that even the names of certain New Brunswick subsidiary agreements never appeared on the information systems, let alone the several steps required in moving the proposal from its conceptual stage to a signed agreement. Not surprisingly then, officials of other federal departments reported that they never employed these systems to find out what DREE was proposing—in fact, a number reported that they were not even aware that computerized information systems complementing the GDA approach existed.11 Although not all formal procedures for formulating subsidiary agreements are respected, all proposed subsidiary agreements must be formally reviewed by a host of federal officials and departments; they include the regional assistant deputy minister, the deputy minister, other interested

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federal departments, and the Treasury Board. These departments have never incorporated any substantial changes in reviewing New Brunswick subsidiary agreements, though in a few cases, most notably the northeast New Brunswick agreement, the Treasury Board attached several provisos to its approval. Nevertheless, for provincial DREE officials and especially for provincial government officials, the time required to move their proposed subsidiary agreements—on average three to four months—through federal approval procedures is unduly long. At the provincial level, at least in the case of New Brunswick, provincial government officials are ordinarily able to obtain final Cabinet approval in something less than two weeks. Obviously, this imbalance creates difficulties. For instance, until officials came to accept that as a matter of course it could take up to four months to approve subsidiary agreements, federal approval procedures played havoc with projecting annual expenditure estimates for both DREE and the province. More important, however, it means that provincial DREE officials are constantly applying pressure on other federal departments to expedite their proposed subsidiary agreements. Understandably, after having agreed with provincial government officials that their proposed initiatives are timely and appropriate, DREE officials are anxious to start their implementation. Many DREE officials working outside the provincial offices argue that concern with the slowness of the federal approval process explains why they have overlooked some of the required consultative steps. As an interdepartmental coordinating tool, annual interdepartmental conferences on economic development in the Atlantic region have also fallen far short of expectations. From a DREE perspective, other departments continually want to steer discussions towards specific complaints regarding DREE's inadequate level of consultation, and to dismiss any discussions on the kind of contribution their departmental activities could bring to economic development in the region. Officials of other departments confirm that they prefer discussing specific issues relating to existing or proposed subsidiary agreements, while general discussions on regional economic development serve little purpose because the GDA approach operates within a provincial, rather than a regional context and also because general discussions seldom entail agreement on follow-up action or future planning. It may be that the effectiveness of these annual conferences is severely restricted by the fact that the provinces (or DREE's partner under the GDA approach) are not invited to participate. In any case, no one, including DREE officials, would claim that annual interdepartmental conferences on economic development have had any kind of significant impact on the direction of GDA activities in the Atlantic region or on the activities of other departments. In fact, it is no longer 116

Actors and Procedures possible to refer to the "annual" interdepartmental conference, since only three have been held in the Atlantic region since the GDA approach was introduced in 1973. Having established that the principal actors under the GDA are provincial DREE and provincial government officials, it is important to examine more closely how they interact. Provincial DREE officials tend to identify themselves with specific economic sectors and to become the in-house experts on them; for example, one official will concern himself almost exclusively with agriculture, another with forestry, and so on. Since most government departments are established to correspond to specific economic sectors, provincial DREE officials also become identified with line government departments. Thus, for example, the provincial DREE official concerned with agriculture becomes the focal point for DREE's working-level relations with the provincial and federal departments of Agriculture. Contacts between provincial DREE officials and the relevant officials of the provincial government department are on-going and frequent—in some cases on a daily basis. They can take various forms: a telephone conversation to confirm a certain viewpoint; a meeting between a few selected officials to draft or review a proposal; or a more formal seniorlevel meeting, in which very often provincial central agency officials from either the Office of the Cabinet Secretariat or CIC take an active part. Given that provincial government officials are ordinarily responsible for initiating proposals for joint review, one may well ask how early provincial DREE officials are consulted? Without doubt—and on this, officials from both levels of government unanimously agree—in nearly all cases, channels of communications are established very early on. One provincial government official commented that "the process works far better when we discuss ideas or proposals with DREE before we even start to put anything down on paper." For their part, provincial DREE officials agree that, apart from a few isolated instances at the time the GDA approach was first introduced, they are involved sufficiently early in formulating subsidiary agreements. According to all respondents, there is no single point when contacts between provincial DREE officials concerned with a particular economic sector and officials from the relevant provincial government departments actually begin and end. Interaction is continuous and occurs for a variety of reasons, even after a subsidiary agreement has been signed. These include meetings to implement the agreement, to review the economic circumstances of the relevant economic sector, or to prepare the groundwork for a subsequent subsidiary agreement. Most respondents also reported that their meetings are held in a "productive atmosphere" and lead to "serious economic planning." One 117

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provincial government official stated that "when dealing with provincial DREE officials we put all our cards on the table at the outset, we never try to trick them—after all, we all work for the same objective." His reasoning is that to do otherwise would entail confrontation rather than mutually beneficial discussions and also that the province would simply be asking for problems in the ensuing years in implementing the agreement or in formulating new ones. Although not unanimously, provincial DREE officials generally agree with this assessment, viewing the GDA formulation process as one in which proposals evolve from joint discussion and agreement rather than from one in which one party tries to impose its views on the other. Perhaps the one thing that does not flow from joint discussions is the level of financial resources attached to subsidiary agreements. According to provincial DREE officials, provincial government officials always propose a very high level of expenditure in initiating discussion on a proposed subsidiary agreement. However, in the words of one provincial DREE official: "We are always able to talk them down to a more sensible level." Once provincial DREE and provincial government officials have reached agreement, they quite naturally become identified with their work. As could be expected, a number of them view other officials—or anyone else for that matter—questioning the contents of their proposals as a challenge to their competence. Not least because proposals emanate from what they regard as serious joint deliberations, joint analytical analyses of economic circumstances, and in some cases from elaborate policy reviews, they invariably become deeply committed to the appropriateness of their proposals. Throughout our interviews, they suggested that, by and large, objections to their proposals stem from officials who are constantly preoccupied with ensuring that national policies and regulations as outlined by their departments are observed, or from politicians who are guided by partisan political considerations, and not from any serious attempt to review the proposals from a regional economic development point of view. Accordingly, DREE and provincial government officials have from time to time agreed to mutually supportive measures to ensure that their proposals are accepted. THE GDA APPROACH AND POLITICAL ACTORS At the federal level, the Cabinet does not ordinarily review proposed subsidiary agreements, nor is there any serious suggestion that it should or would want to. Periodically, the Cabinet reviews the general economic circumstances of the different regions of the country and, although in a cursory manner, it also looks at DREE activities in these regions. That is the extent to which the federal Cabinet is involved in the GDA formula118

Actors and Procedures tion process. With nearly all federal politicians and officials interviewed arguing that the Cabinet has far more pressing issues to consider than the formulations of subsidiary agreements, few would wish to see it more deeply involved. (It will be recalled that, initially, full Cabinet approved all nine GDA's and that it subsequently delegated its authority to approve subsidiary agreements to the Treasury Board.) Below the Cabinet level, however, it was found that most, be they politicians or departmental officials, are concerned that the federal involvement in the GDA formulation process is too often limited to provincial DREE offices. Individual Cabinet ministers, government members of Parliament, officials of other government departments, and even some senior DREE officials complain that they are rarely consulted at various stages in formulating subsidiary agreements. Some claimed that frequently the first time they learn of the contents of proposed subsidiary agreements is when these are submitted for Treasury Board approval or, in some cases, just before they are signed.12 At least in the case of New Brunswick, it is indeed a rare occurrence for the minister of DREE to be consulted in formulating subsidiary agreements. With the exception of possibly four instances, it was revealed that the first time the minister was informed of specific program elements of proposed subsidiary agreements was when they arrived on his desk for his required signature before being forwarded to Treasury Board.13 Although designed more for his information than to obtain his reactions, the minister is also briefed on New Brunswick issues before each annual GDA ministerial-level meeting and from time to time on what are regarded as politically sensitive issues. The minister's office finds this working arrangement difficult, not so much because the minister would wish to involve himself directly in formulating subsidiary agreements, but because others who have the time and the interest in contributing political considerations to the formulation of subsidiary agreements are not able to do so. Government members of Parliament from New Brunswick and members of the minister's own staff complain that the GDA approach is structured in such a fashion that it effectively prohibits their participation. They persuasively argue that, to contribute ideas, they must do so before proposals are evolved and agreed upon by provincial DREE and provincial government officials—otherwise, at the best of times, they are merely informed what these proposals are before they are made public. However, other than through the news media, which does not allow for two-way communication, there is no recognized channel through which government members of Parliament can communicate their suggestions to provincial DREE officials, or in turn for DREE to inform them of proposals under consideration. Moreover, they point out that since provincial DREE officials alert them (or anyone else at the federal level) 119

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only to what has already been agreed to and never to what was considered but discarded by DREE and the provincial government, unless they agree with what is being put forward, their contribution must necessarily be negative. They cannot consider the alternatives put forward and support a particular course of action. In the case of the Canada-New Brunswick GDA, there are exceptions to the above which should be noted. Although they maintain that their suggestions were largely ignored, the participation of certain government MPs from New Brunswick—as was that of the general public—was sought in the formulation of the northeast agreement. In addition, Herb Breau, the government MP for Gloucester, was able to review the multiyear highways agreement and add some projects to it before it was submitted for Treasury Board approval. He nevertheless subsequently demonstrated his displeasure with the agreement by publicly denouncing it.14 Apart from the manner by which subsidiary agreements are formulated, government MPs and some federal Cabinet ministers have expressed other reasons for their displeasure with the GDA approach as a federalprovincial decision-making tool. In earlier chapters it was noted that two ministers ignored the notion of Cabinet solidarity and publicly criticized the GDA approach. Essentially, their argument was that the federal government receives very little political credit for buttressing provincial government expenditures, which is precisely what they believe DREE is doing through subsidiary agreements. It is true that the federal presence in GDA-sponsored activities is far less visible to the general public than is the provincial one, primarily because it is the responsibility of the provinces to deliver the programs and services to the public. What is particularly irritating to federal politicians is that, in some instances, DREE contributes up to 90 percent of the cost of these programs and services. One former federal minister disparagingly described the situation as follows: . . . in western Canada they [DREE officials] are out there putting sewer and water projects in towns, and we get no credit for that whatsoever, when you go to visit one of these towns you would think you were a stranger because you are a federal government representative. They don't appear to have any appreciation for all the money we have spent.15 Some government MPs and political-level advisers also complain that the GDA approach is structured in such a fashion that only the end product or the subsidiary agreements themselves are revealed to the public and never the position adopted by the provinces in formulating the 120

Actors and Procedures agreements. This, they argue, tends to blur accountability and permits the provinces to claim credit for GDA activities or, conversely, to shift responsibility for them to the federal government, depending on the circumstances. In their opinion, the provinces can also take refuge under their GDA whenever they wish and avoid being publicly pinned down to a particular position. For example, New Brunswick MP, Eymard Corbin, when promoting the idea of developing a spatial subsidiary agreement for the northwest, publicly stated: "If the province has a plan to deal with development, it's about time it was clearly spelled out so that people could know who's in and who's out."16 Another New Brunswick MP, Herb Breau, recommended that, in negotiating a post-FRED agreement for the northeast, the federal government should engage the provincial Cabinet in a public debate in order to reveal to what extent the province was committed to alleviating economic disparities in the northeast.17 Obviously, if the provinces can blur accountability by pointing to the process of joint federal-provincial decision making, then the federal government can do likewise and frustrate opposition MPs in their attempts to force the government to state clearly its position on a given issue. When an opposition member asked in the House whether or not DREE had refused to grant financial assistance to a particular interest group, he was told that: "A negative decision was reached [on the matter] by the joint federal-provincial management committee."18 The reply did not go on to elaborate how the joint decision was arrived at. That is, it did not reveal whether it was DREE, the province, or DREE and the province jointly, which initially recommended to the management committee that it should reject the request for financial assistance. Federal opposition members have also complained that they are frequently unable to obtain the required information to review properly DREE's activities. One New Brunswick opposition member, for instance, reports that when he requested copies of three DREE-sponsored consultant reports he was informed that two of them could not be made available since they were classified as confidential.19 Opposition members find that information is particularly difficult to obtain when reviewing DREE's proposed expenditure budget. Not all agreements for which funds are allocated have been signed and it is the policy of DREE and the provinces to restrict the availability of information on unsigned agreements. Responding to a member's question which attempted to determine whether DREE intended to sign a subsidiary agreement for a particular economic sector, the minister of DREE explained that: . . . there is a limit on the amount of detail we can give here in Committee or publicly on the discussions between the two levels of government on those proposed subsidiary agreements, their contents 121

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and level of funding before we have reached . . . a conclusion, this is the understanding we have agreed upon between the two levels of government.20 At the provincial level, at least in the case of New Brunswick, no elaborate procedures for approving subsidiary agreements were ever established. Once formulated, they are simply submitted to the Cabinet Committee on Economic Development and subsequently to full Cabinet. At the officials' level, a committee of six deputy ministers reviews all subsidiary agreements before they are considered by Cabinet committee. Unlike at the federal level, where a considerable amount of background information is attached to subsidiary agreements, when they are submitted to Treasury Board for approval, provincial government officials report that they only submit to Cabinet the agreement itself or the material which is made public after it has been signed. Several officials agreed with the observation of one respondent, who stated that if they were to include background information it would only "confuse the ministers and get them in all sorts of difficulties." Essentially, officials fear that, with more information, ministers might be tempted to add or delete some program elements. This is not advisable, they argue, because it would mean that they would have to begin anew discussions with DREE officials, thereby delaying further the signing of subsidiary agreements and this with no assurance that the proposed changes would in the end be acceptable. There is little doubt that it is far easier to obtain Cabinet approval for subsidiary agreements than it is for proposals which are to be wholly financed by the province. For instance, officials are able to remind ministers that GDA initiatives are available to the province for what they commonly refer to as "2(V dollars." This, Cabinet ministers agree, is a most compelling reason for a have-not province to accept GDA programs as submitted. There is little doubt that for GDA-related activities, officials enjoy more influence and Cabinet ministers less than is the case for non-GDA activities. In response to the question: "What are the principle advantages of the GDA approach?", an imposing number of provincial government officials ranked their ability "to keep politicians under control" as its most important and useful characteristic.21 One boasted that "many ministers would trade position with me every time I attend our DREE meetings because they know that there is where the power lies." It is worth noting again that ministers are not allowed to attend DREE-province meetings; hence—theoretically at least—officials can dismiss their suggestions by simply arguing that DREE officials do not or would not agree to them. Cabinet ministers readily admit that their ability to direct their officials,

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Actors and Procedures or their "obedient servants," in shaping GDA proposals is severely restricted. What they object to—and they repeatedly did so—is that under the GDA approach they are displaced by officials. They claim that they are unable to participate directly in formulating subsidiary agreements. Basically, they view federal-provincial relations as a bargaining process which should always involve themselves and their federal counterparts as the principal actors whenever new federal-provincial programs need to be negotiated. They complain that it is pointless to discuss a subsidiary agreement with their federal counterparts because, at the federal level, all the agreements are viewed as the responsibility of the minister of DREE. Partly because of the nature of the GDA approach itself, but also because he is responsible for over fifty agreements at any one time, the minister of DREE could not possibly entertain the same kind of relations which, traditionally, provincial ministers have had with their federal counterparts, let alone negotiate subsidiary agreements with them. The opinion that, whenever required, federal-provincial relations should be guided by political-level bargaining is strongly held by New Brunswick Cabinet ministers. This goes beyond their strong desire to see proposals before these are submitted for consideration and approved at the officials' level. They regard the federal-provincial arena as a place where a government should compete to strike the best possible deal. This view extends to the GDA approach, even though its overriding objective is to promote joint planning between the two levels of government. When the minister of DREE toured the provinces to introduce the GDA approach, it will be recalled that the New Brunswick Cabinet responded by presenting a list of activities it wanted cost-shared in return for accepting the new approach. Largely as a result of the province's position, one industrial development and five highways subsidiary agreements were signed. It enabled the premier to boast: "I would like to bring to the attention of the Legislature that, according to my latest information, 11 of the 46 subsidiary agreements that DREE has signed across the country were with New Brunswick. This represents almost one-quarter of the subsidiary agreements."22 As could be expected, government and opposition members of the provincial Legislative Assembly (MLAs) are even more critical of the GDA approach than are their federal counterparts. Government members complain that they are very rarely informed of new GDA activities before these are made public, let alone consulted during their formulation stages. Provincial government officials confirm this but add that it is never advisable to inform government members of new initiatives for fear that they would prematurely reveal them publicly in an attempt to gain political credit. Unless the principle that all new initiatives are announced 123

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jointly is strictly observed, officials argue, then a situation would develop where politicians from both levels of government would compete with each other to be the first to announce new GDA initiatives.23 For their part, opposition members complain that they are not only refused access to information on proposed agreements, which in their opinion is bad enough, but also that they are frequently unable to get information on signed subsidiary agreements. One opposition member expressed his annoyance at such a situation when he said "Under Natural Resources 6 million has been allotted, and when I ask how this money is going to be spent, you don't have any answer. You say the decision will be taken sometime during the coming year."24 Meanwhile, the provincial minister of Commerce and Development admitted in a debate that a "perennial" problem of the assembly is to determine "what has been signed and what hasn't" under the GDA.25 The problem here is that ministers are not always in a position to reveal information on proposed GDA activities, even after the relevant subsidiary agreements have been signed, because the government itself does not always know what activities will be introduced in, for example, six months time. This is so because joint management committees have been delegated authority, not only to formulate specific projects from very broadly defined programs, but to approve them as well.

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Part Three

An Assessment of the GDA Approach

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Chapter Eight

The GDA Approach and Political Administrative Institutions The foregoing case study has sought to demonstrate how the GDA approach operates and to underline its importance. It now remains to assess how it conforms or adapts to Canada's principal political-administrative institutions. What implications does the GDA approach have for such political institutions as Parliament and the provincial Legislative Assembly? What are the consequences of the GDA approach for the traditional working patterns of the federal bureaucracy and for the federal government's relations with the provinces? What does the case study tell us about the impact of the GDA approach on decision making at the provincial level? Though it is beyond the scope of this study to evaluate from an economic development point of view the appropriateness of programs formulated under the GDA approach, it is nevertheless essential to comment on them briefly. Some observers argue that DREE has been no more successful in alleviating regional economic disparities under the GDA approach than under previous federal schemes, such as ARDA, FRED, and the like. Essentially, they maintain that the approach has produced neither new imaginative attacks on regional economic disparities nor the kind of "developmental opportunities" initially envisaged in DREE's yellow books.1 Supporters of the approach at the federal level—admittedly for the most part DREE officials—hold that it nevertheless constitutes the most expedient federal-provincial decision-making approach yet introduced. They insist that the kinds of developmental opportunities initially identified in the yellow books have not all been pursued, not because the GDA approach itself is lacking, but because of the 1972 oil crisis and the subsequent downturn in the economy of the western world. Whether or not GDA activities in New Brunswick have been effective 127

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is a matter that would require a detailed and extensive analysis, which, however, might not produce a definitive answer. Essentially there are two problems with such an evaluation: first, the objectives of the GDA itself and the subsidiary agreements are not clearly defined nor are they accompanied by suitable performance indicators, so that one can only hope for some kind of impact assessment of GDA expenditures on economic sectors and on relevant sub-provincial regions; the second difficulty, one which provincial DREE and provincial government officials often point to, is that GDA activities were designed for their long-term impact on the economic circumstances of the province and it is therefore too early, the argument goes, to prepare a meaningful evaluation of GDA activities in New Brunswick. Such an evaluation should only be undertaken several years after the New Brunswick GDA has expired, for only then will one be in a position to assess fully the implications of its expenditures on the provincial economy. That said, the provincial DREE office, together with the provincial government, have prepared evaluation reports for certain subsidiary agreements. As could be expected, the results are varied, with some initiatives receiving high marks, others considerably less so.2 Supporters of the approach also argue that pre-GDA federal schemes designed to stimulate economic development were, by and large, tied to national regulations, thereby prohibiting officials from reacting to the unique socio-economic and developmental opportunities existing in each province. Under the GDA approach, they point out, officials are free to react positively to any type of developmental opportunity, however dissimilar they may be from each other or from province to province. Our case study of the Canada-New Brunswick GDA supports this observation and clearly demonstrates that subsidiary agreements can be formulated to sponsor an unlimited assortment of initiatives in almost any policy field. The study has shown that these agreements were formulated to extend some programs initially introduced under ARDA, FRED, and the special areas agreements, and to establish new ones in such diverse policy fields as forestry, agriculture, tourism, and industrial development. Even after agreements were signed, new and unforeseen projects were introduced through the highly flexible GDA implementation process. Given its remarkable flexibility, from an administrative point of view the GDA approach is perhaps the most appropriate and expedient federal-provincial decision-making approach yet introduced. Be that as it may, the political cost of the GDA approach is extremely high in that it operates in such a fashion that traditions of accountability —at least in New Brunswick—are affected, patterns of relations between ministers and their officials are altered, and public and interest group participation is discouraged. 128

The GDA Approach and Political-Administrative Institutions THE GDA APPROACH AND THE CANADIAN PARLIAMENT It is important to note at the outset that Parliament's role in Canada has been in decline for quite some time, as it has in other countries with a parliamentary system of government. For example, it has recently been written in Britain that "Parliamentary government has become weaker and more disaggregated than the theory of collectively responsible cabinets suggests, the role of Parliament in relation to government has been attenuated."3 Yet, since Britain has a unitary form of government, the British need not worry about federal-provincial relations challenging the sovereignty or the role of their Parliament. In his study of federal-provincial conferences in Canada, Richard Simeon speaks of the "incompatibilities between parliamentary government and federalism." He contends that, when dealing with matters negotiated at federal-provincial conferences, Parliament's role is frequently limited to ratifying arrangements worked out in another arena, although it has not become irrelevant in that it debates—at times heatedly —policies and programs negotiated at conferences. He cites as an example the "difficult time" the government had in piloting the Canadian pension plan through Parliament even though it had been negotiated beforehand at a federal-provincial conference.4 Thus, though it must at times share the stage with federal-provincial conferences, Parliament can still act as the "nation's congress of opinion"—a role which John Stuart Mill once attributed to it. Comparatively speaking, Parliament's role under the GDA approach has been much more limited. It was not given the opportunity to debate the approach, when it was introduced, nor the contents of the nine GDA's after they had been negotiated with the provinces. Rather than introduce special legislation in Parliament to establish the GDA approach, the government chose to obtain the required legislative authority through its annual expenditure budget. Given the importance of the GDA approach to federal-provincial relations, and the political sensitivity of regional economic disparities in Canada, many now accept that, at a minimum, the proper course of action in introducing the GDA approach would have been for the government to seek special legislative authority. By March 31, 1979, the Canadian government had signed ninety-three subsidiary agreements with provincial governments valued at well over three billion dollars and covering a variety of policy fields.5 The legislative mandate permitting the federal government to enter into agreements remains Vote 13a of the 1973 Appropriation Act number 5. A short paragraph attached to the vote reads: "To authorize the Minister of Regional Economic Expansion to enter into general development agree129

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ments with the provinces ... to provide measures to improve opportunities for productive employment."6 As this study has demonstrated, the GDA approach introduced a new pattern of federal-provincial relations, by which the federal government took the unprecedented step of decentralizing one of its departments and delegated to its officials in the field the authority to develop new initiatives with their provincial government counterparts without defining program limits within which they must operate. In addition, the GDA approach operates in such a fashion that new initiatives are never submitted to a federal-provincial political-level meeting—rather they are submitted independently for approval through the federal and provincial politicaladministrative organizations. Thus, political-level consultation under the GDA approach is sporadic and rarely involves politicians other than the minister of DREE and the provincial minister designated responsible for the GDA. Quite apart from the fact that this approach departs from traditional federal-provincial working arrangements, the problem of regional economic disparity in Canada, as in any federation for that matter, is a political one. The central government, in promoting regional economic development, must attempt to strike a proper balance between, on the one hand, the pursuit of national objectives through national policies and, on the other, the promotion of regional economic development through special regional policies and programs. These two goals are conflicting, not only because to make special provisions for one region is often to oppose the implementation of national policies, but also because to promote economic development in one region is to assist that region in competing with other regions of the federation. Hence, irrespective of how competent or reasoned an approach may be, such a conflict remains essentially a political one and any attempt to resolve it should be debated in Parliament. Certainly, in Canada, attempts to alleviate regional economic disparities have traditionally held a high political profile. Prime Minister Trudeau has repeatedly said that "he should be rejected by the voters if his solutions of official bilingualism and regional economic development are perceived as inappropriate."7 Not surprisingly then, these two issues have been dominant in recent federal election campaigns. In particular, during the 1972 campaign—the election preceding the introduction of the GDA approach—much was said about regional economic disparities by all political parties and especially by the New Democratic Party, which made government assistance to private industry for the stimulation of economic development its central campaign theme. Before the introduction of the GDA, the federal government sought, in every instance, special legislation when it wished to introduce new schemes to stimulate regional development. MMRA, ARDA, the Atlantic

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The GDA Approach and Political-Administrative Institutions Development Board, and the regional incentives to industry program— RDIA—were all established through acts of Parliament. Meanwhile, the FRED program was established through legislation passed by Parliament in May 1966. Parliament amended the act in 1967 to provide $300 million in additional resources to the FRED program. DREE was created by an Act of Parliament which, at the same time, provided authority to the federal government to enter into special areas agreements with the provinces. Members of Parliament, including those on the government side, and some DREE officials report that the government should have sought special legislation to establish the GDA approach. One may well ask why special legislation was not introduced to Parliament? A DREE official has responded: "I really don't know why we didn't seek special legislation. It may well be that the department hesitated asking Parliament to give us such an open-ended instrument to deal with the provinces." Several DREE officials suggested that DREE recommended the expenditure estimates route to meet legal requirements because to have sought special legislation would have delayed considerably the introduction of the GDA approach. Convinced of the appropriateness of the concept, DREE officials were anxious to get on with the task of developing GDA-sponsored initiatives with the provinces. Still other DREE officials report that they suspected that Parliament would have, in all likelihood, only debated the GDA concept without contributing any worthwhile improvements. Thus, Parliament has never debated the GDA approach. The one place where the government has explained it is in the House Standing Committee on Regional Development, where, however, membership is restricted to some twenty members. Not unexpectedly, this has been particularly frustrating for MPs from the Atlantic region who view regional economic disparities as one of their principal and overriding concerns—a view shared by the news media in the region as well as by their constituents. It certainly goes a long way in explaining why Atlantic region members are anxious to be heard in Parliament on matters of regional economic disparities—obviously this is especially true when the government introduces a new scheme to attempt to alleviate these disparities. It has already been noted that a tacit working agreement with the provinces limits the information DREE is prepared to release on unsigned or proposed subsidiary agreements. This poses questions regarding Parliament's ability to ascertain the purpose for which funds are requested. It is true that Parliament retains control to the extent that the funds it allocates to the designated vote in the spending estimates will necessarily go to GDA-sponsored initiatives, and many would argue that this is sufficient. However, it will be recalled that GDAs are very broadly defined, 131

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enabling documents only. Partly for this reason and partly because the GDA approach empowers officials to develop new initiatives and agreements on an on-going basis rather than strictly in anticipation of the annual expenditure estimate exercise, in reviewing DREE's proposed expenditure budget, members of Parliament can easily be frustrated in their attempts to determine specifically for what initiatives and, even at times, for which subsidiary agreements funds are being requested. Government MPs complain that individually or collectively, as members of the government caucus, they are unable to contribute opinions or suggestions under the GDA approach. Such a complaint is, of course, not new and certainly not limited to the GDA approach. However, they insist that it is not only incomparably more difficult to influence the contents of new programs under the GDA approach than is normally the situation, but also that they frequently consider themselves ill-informed on GDA matters. The odd briefing session with DREE officials are of little benefit because, apart from a few exceptions, DREE can only discuss proposed new agreements in very broad terms. Again, the difficulty stems from the fact that subsidiary agreements are evolved jointly with the provinces and also from the high degree of interdependence which the GDA approach promotes between officials of both levels of government. For non-GDA matters, government backbenchers very often know of proposals being formulated and are able to communicate their concerns before they are submitted for final political consideration to the minister responsible. THE GDA APPROACH AND THE FEDERAL GOVERNMENT Like DREE before its decentralization, federal departments are very often program-oriented, highly centralized administrative structures. The GDA approach radically departs from this tradition—it delegates authority to provincial DREE offices to develop initiatives in most policy fields and only marginally restricts them to specific program limits. DREE officials in provincial offices and their provincial government counterparts are free to come up with practically anything they consider appropriate to stimulate development. This fact was acknowledged in a recent DREE annual report: "The GDA does not state specifically what has to be done, nor the means of doing i t . . . [it] is, in effect, an enabling document designed to permit the signing governments to identify and encourage particular economic development projects."8 Even the very broadly stated GDA objectives and strategy do not appear to limit program developers. For instance, nowhere in the Canada-New Brunswick GDA will one find any mention of sub-provincial disparities or the need to develop initiatives for specific geographical areas. Yet this did not prevent 132

The GDA Approach and Political-Administrative Institutions the development of subsidiary agreements for northeast New Brunswick and the Kent region. Not surprisingly, this radical departure from established administrative practices has led to numerous conflicts between DREE and other federal departments whose fields of responsibilities have been affected by GDA initiatives. Certainly, in the case of New Brunswick, interdepartmental conflicts at the federal level under the GDA approach have been far more prevalent than intergovernmental ones. Typically, conflicts between DREE and other federal departments have not stemmed from disagreements over the appropriateness of GDA initiatives to the field of economic development but rather over whether or not such initiatives would produce negative side-effects for national policies and programs. Added to this is the fact that other departments have been concerned with DREE's expanding sphere of influence under the GDA approach. Interdepartmental conflicts at the federal level have been such that it is no longer possible to hold the view, traditionally associated with federalprovincial relations, that the federal government presents its position or reacts to a provincial government position. Our case study reveals that in formulating and implementing a number of subsidiary agreements, two federal positions surfaced. On the one hand, DREE presented a position which resulted from discussions with provincial government officials and which consisted of specific proposals to stimulate economic development in the province. On the other hand, officials of other federal departments presented their positions which almost exclusively reflected their preoccupations with their department's national policies and programs. In some cases (for example, the agricultural subsidiary agreement) DREE officials amended the proposed subsidiary agreements to accommodate the objections of other federal departments. In others, however, DREE officials ignored the objections of other departments (as in the forestry subsidiary agreement) and in still other cases, interdepartmental conflicts under the GDA approach at the federal level were never resolved (as in the fisheries subsidiary agreements). The fact that interdepartmental conflicts are more prevalent than intergovernmental ones has given rise to a widespread concern in Ottawa that an illicit working relationship has developed between provincial DREE and provincial government officials. The expression that "provincial DREE officials are in bed with the provinces" was heard time and again in interviews with Ottawa-based officials. Some explained that provincial DREE officials tend to identify themselves more with their respective provinces than with the federal government. Others argued that, if only because they are always anxious to obtain federal approval on a given agreement as quickly as possible after it has been approved at 133

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the provincial government level, provincial DREE officials have come to view the federal approval process as a hindrance rather than as a necessary and integrated part of the GDA approach. These views are not always inaccurate. It will be recalled, for example, that provincial DREE and provincial government officials agreed to a spuriously defined program in the industrial development subsidiary agreement to protect 1.5 million dollars from the federal Treasury Board. Moreover, in implementing subsidiary agreements, they devised surreptitious working arrangements in their relations with other federal departments in order to reassure them that DREE was carefully supervising how federal dollars were being spent, thereby keeping them "at bay." Finally, enough was said in our case study to demonstrate that provincial DREE officials showed little concern for regional considerations—let alone national ones—in formulating subsidiary agreements. The above leads us to question to what extent Ottawa is able to control or influence the development of GDA initiatives. At the administrative level, it was noted that officials in Ottawa—including those in DREE— have incessantly complained that they are consulted too late in the formulation process to make any worthwhile contribution. By and large, their involvement is limited to reviewing subsidiary agreements and this often only after the agreements have been fully developed and agreed upon by provincial DREE and provincial government officials. Concerned, therefore, that too much decision-making authority rested with the New Brunswick DREE office, in approving the northeast agreement the federal Treasury Board attached several conditions. These were not only designed to limit decision-making authority in the field, but also to compel provincial DREE officials to consult Ottawa-based officials. Treasury Board officials in Ottawa report that they have experienced considerable difficulties in working with the GDA approach. Apart from the restrictions imposed for the northeast agreement, they reveal that they have had virtually no impact on proposed subsidiary agreements. It is exceedingly difficult, they report, to influence the direction of GDA activities because agreements are packaged and approved intergovernmentally before they are submitted for approval to the Treasury Board. If not outright commitments, then certainly expectations are raised with the provinces when the provincial DREE office jointly approves a proposed subsidiary agreement. To reject, or substantially revise, a proposed agreement, the federal Treasury Board would in fact not only be rejecting or revising a proposal from a federal department but also one that has been approved by a province, in the case of New Brunswick, by the Cabinet. What is true at the administrative level in Ottawa is of course equally if not more so at the political level. Since subsidiary agreements are 134

The GDA Approach and Political-Administrative Institutions ordinarily reviewed by the Treasury Board only and not by full Cabinet, some Cabinet ministers who are not members of the Board have complained that they are not informed of subsidiary agreements before they are signed and made public. Obviously, not all ministers would wish to review subsidiary agreements as they are formulated. Apart from ministers whose departments have a clear interest in a given subsidiary agreement, the minister responsible for the province for which agreements are being developed has a special interest in reviewing agreements before they are signed. However, ministerial-level, or for that matter political-level, consultations at the federal level under the Canada-New Brunswick GDA have, as this study has shown, been almost exclusively restricted to highways subsidiary agreements. Under the GDA approach, highway construction is the one area where it is relatively easy for Cabinet ministers and government backbenchers to influence the contents of subsidiary agreements. A highway construction program can be subdivided into a number of separate and fairly independent projects, thereby enabling politicians to add, delete, or rearrange projects according to their priorities. The same is not true of other subsidiary agreements. While politicians can easily identify other highway projects to replace those they have discarded, they are not able to do the same with, for example, a proposed agricultural agreement containing expertly designed proposals to promote economic development in selected agricultural industries. At the federal level, ministers and their political advisers are only given the opportunity to review the contents of proposed subsidiary agreements after they have been approved by the provincial government concerned. They are, thus, unable to determine which level of government first suggested a particular proposal nor are they able to review options or proposals considered but subsequently rejected. In fairness to provincial DREE officials, however, this is not in disharmony with the underlying intent of the GDA approach, which calls for the formulation of initiatives through joint planning. Our case study has demonstrated that subsidiary agreements in New Brunswick have on the whole evolved from joint discussions between provincial DREE and provincial government officials. Nevertheless, what the above means in practical terms is that ministers are limited to a reacting role in reviewing proposed subsidiary agreements. Rarely do they have an opportunity to direct officials to adopt a certain position in the early formulation stages, simply because they do not know what type of proposals their officials are looking at, let alone when these early formulation stages actually begin. Thus, ministers have to receive, rather than initiate, suggestions. But even this reacting role is limited either to accepting subsidiary agreements as proposed, which is the usual response, or to rejecting certain aspects. This latter course, 135

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however, is highly impractical—and consequently very rarely followed— since it would entail re-opening discussions with the province and so delaying considerably the signing of the agreement. A third option is for a minister to reject out of hand a proposed agreement, as the minister of Fisheries did in the case of the proposed New Brunswick subsidiary agreements on fisheries. However, the cost of taking this last option is potentially very high. In rejecting a proposed subsidiary agreement, a minister is, in fact, rejecting a proposal promoted by his colleague, the minister of DREE, which could result in a ministerial-level conflict. It is true that such a potential conflict exists every time a minister rejects or opposes any proposal recommended by another department. However, these conflicts can usually be resolved during the formulation stage, or at least contained within the confines of the federal government. Under the GDA approach, with another government involved in formulating subsidiary agreements, the conflict can become public and undermine the notion of Cabinet solidarity—which is what happened in the case of the proposed fisheries agreement. The minister of DREE charged publicly that his Cabinet colleague, the minister of Fisheries, was responsible for delaying the signing of the agreement and stated that "he should explain his position fully."9 The minister of Fisheries retorted publicly that the proposed agreement was not worth signing and stated "I know of no opportunities missed by the absence of these agreements [that is, the fisheries agreements for New Brunswick and Nova Scotia]."10 In addition to risking making public a ministerial-level conflict, a minister must accept that in rejecting a proposed agreement, no DREE funds can be spent in the economic sector for which the agreement is designed. He must also be prepared to account for his action publicly. When the province in question is a have-not province like New Brunswick, the press is particularly insistent on knowing why an agreement to stimulate economic development is left outstanding—after all, for many in a have-not province, something from the federal government, however inappropriate, is always better than nothing. On the question of which level of government most gains status or prestige under the GDA approach, it was noted earlier that federal politicians in particular complain that the federal government is not receiving its fair share of the credit for GDA-sponsored initiatives. Few would dispute this assessment. Yet, it is the federal government which introduced the GDA approach and which laid down the rules to which both levels of government have to conform. Some of the rules include provisions calling for joint tendering procedures to award capital projects, joint news release to announce new initiatives, and the like.11 However, from a federal government point of view, these measures have proven

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The GDA Approach and Political-Administrative Institutions inadequate. All GDA initiatives are implemented through provincial government departments and agencies which, if nothing else, enables provincial Cabinet ministers to be far more familiar with specific projects than the minister of DREE. More important, however, GDA initiatives are viewed for precisely what they are—provincially oriented programs and projects, and not regional or national ones. Thus, whenever a question arises about them, the local press invariably communicates with the relevant provincial minister rather than with the minister of DREE who, in all likelihood, would not be familiar with the question, let alone the answer. In addition to being on-site, or where projects are implemented, provincial Cabinet ministers also operate in a much smaller government and cater to a much smaller clientele than do their federal counterparts. They are continually in a better position to take advantage of GDA initiatives to gain public exposure. A few examples will illustrate this point. In the case of New Brunswick, a minister is ordinarily able to have a news release on a GDA initiative—those which can be released unilaterally—prepared and issued within a day or two. Moreover, the several provincial ministers who oversee the implementation of subsidiary agreements make a point of attending all ribbon-cutting ceremonies opening new GDA-sponsored projects. The federal government cannot possibly compete for public attention with the provinces in this way. For one thing, it takes DREE, on average, two to three months to approve a news release prepared by a provincial office, which often means that by the time it can be issued, the news item is outdated.12 For another, simply because he does not have the time at his disposal, only under the most extraordinary circumstances would the minister of DREE attend a ribboncutting ceremony in a province other than his own. Lastly, but significantly, it is federal officials and not federal politicians who operate in the field under the GDA approach. Because officials are not as sensitive to public opinion, nor as eager to take advantage of opportunities to gain public exposure, as are politicians (in fact officials tend to shun public exposure) provincial ministers can occupy the public stage with very little competition from the federal government. Apart from the issue of public visibility, it can also be argued that the GDA approach demotes the status of the federal government in its relations with the provinces. Since the GDA approach is purposely designed to promote bilateral relations with the provinces, the federal government becomes in many ways just another government rather than the senior level. Under the GDA approach, the federal government cannot play a central leading role, nor can it assume a national posture, since it must continually operate in a provincial context.

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THE GDA APPROACH AND THE PROVINCIAL LEGISLATIVE ASSEMBLY What is true of the federal Parliament is also true of a provincial Legislative Assembly. Both are rooted in British practice and tradition and, among other things, both require the executive "to submit itself and all its works to the judgement of the Legislature."13 Nevertheless, in terms of operating style, significant differences exist between the two. Briefly summarized they are: first, the provincial Legislative Assembly—in the case of New Brunswick—examines the work of the executive in a more detailed fashion than Parliament does at the federal level; second, comparatively speaking, far more legislative time is spent on reviewing the government's proposed expenditure budget at the provincial level;14 third, not simply because they operate in a much smaller context, but also because of the distinct political culture of the Maritime provinces, a New Brunswick MLA views his role differently than does a typical MP in Ottawa. Particularly in reviewing the government's proposed annual expenditure budget, the extent to which the Legislative Assembly demands detailed information from Cabinet ministers is simply unheard of at the federal level. It has already been noted, for example, that it is not at all uncommon for the opposition to request the provincial government to list the names and salary level of certain government employees in reviewing departmental budgets. The New Brunswick budget is relatively straightforward and lends itself to this kind of detailed review. It is considerably smaller—in 1976-77 the New Brunswick expenditure budget amounted to $1.2 billion compared with $42.2 billion for the federal budget—and is regarded as a strictly expenditure-oriented budget in that it does not concern itself with such fiscal matters as currency stability, national level of growth, and price stability. Another explanation why MLAs insist on detailed information centres on the ombudsman-like role they play for their constituents. Everything said about Parliament's difficulty in ascertaining the precise purpose for which GDA funds are requested is also applicable to the provincial Legislative Assembly. Here, however, the consequences are even more significant and complaints from opposition members much more numerous. The principal objection of opposition MLAs, one which they have persistently voiced, is that they have to vote GDA funds blindly. That is, though the Assembly appropriates funds to subsidiary agreements, the actual decisions as to where the funds should be allocated and to which projects, are taken by management committees often only after the budget has received legislative approval. It will also be recalled that during the course of a fiscal year, funds can be transferred between subsidiary agreements. Members who traditionally have been able to review the budget down to the most minute detail find this new way of doing 138

The GDA Approach and Political-Administrative Institutions things difficult to accept. It certainly raises the possibility that under the GDA approach, the Legislative Assembly is in some ways transformed into a kind of public accounts committee in that, on occasions, the assembly is only able to review government expenditures after the funds have been spent. Responding to complaints in the assembly regarding the lack of information available on proposed GDA initiatives, Premier Hatfield acknowledged this possibility when he said: "I would like to see the budget nice and neat and specific so that we could come in here with the knowledge of everything that will be done for the whole year, but I am telling you that for this government and other governments that is becoming more and more difficult to do every year."15 Moreover, opposition members maintain—and government members, including Cabinet ministers, concur—that the lack of information available to the assembly explains why, comparatively speaking, the assembly has spent less time reviewing proposed expenditures for GDA activities than for those under other headings. During the 1977 budget debate, for example, the assembly spent only a few hours reviewing the CIC budget, under which, for budgetary purposes, subsidiary agreements fall. This is considered unusual, not only because the CIC budget is considerably bigger than those of other departments, but also because GDA-sponsored initiatives represent a major part of the government's new budget. What is significant is not so much that the power of the Legislative Assembly to allocate funds has been eroded—in fact the Legislative Assembly, like Parliament, has had virtually no influence over the government's budget allocation process for some years—but that, because it cannot secure the required information, the opposition is incapable of holding the government accountable for what it proposes to do under the GDA approach. Viewed from this standpoint, the role of the Legislative Assembly in relation to government has been weakened to the extent that, for GDA-sponsored initiatives, the legislature has unwillingly lost its ability to expose to criticism and to public examination proposed government expenditures. It is true that the Public Accounts Committee still represents an important forum for exposing government activities to criticism. However, only about twenty MLAs are members of the committee and, as always, the committee only has a mandate to review government activities for which resources have already been spent. Equally significant are the consequences which the GDA approach holds for the long-held notion in New Brunswick that MLAs are, above all, ombudsmen to their constituents. This view is especially strongly held in the rural areas of the province but not exclusively so—for example, some urban MLAs, including Cabinet ministers, hold weekly sessions to which constituents are invited to bring their complaints. Several reasons explain the tendency of the New Brunswick population to rely heavily on 139

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their MLAs in communicating with the provincial government. The ability to identify elected officials is inordinately high in the Maritime provinces. Underscoring this phenomenon, David Bellamy writes: In a system where patronage is common, the politician probably becomes better known than in a society where universalistic, bureaucratically administered programmes are of primary significance in the operations of the state. Also, the profile of politicians is undoubtedly high in the small largely rural communities of the Maritimes.16 Yet another feature peculiar to New Brunswick is simply that unilingual French-speaking Acadians residing in the northern and northeastern part of the province have litle choice but to communicate with the provincial government through their local MLA. In discussing the northeast subsidiary agreement, for example, it was noted that Acadians view the provincial bureaucracy in the provincial capital for what it is—essentially an English-speaking bureaucracy, with only a limited capacity to deal with French-speaking residents. Again, the difficulty that MLAs have with the GDA approach when dealing with their constituents stems from their inability to obtain relevant information on projects until these are in the various stages of implementation. The consequences for MLA-constituent relations are twofold. On the one hand, MLAs are rarely in a position to explain to their constituents such things as the contents, eligibility criteria, and the like, of new GDA-sponsored projects. On the other hand, MLAs are unable to seek the opinion of their constituents on proposed GDA projects— hence, they are unable to report their concerns to the Legislative Assembly. These consequences have not gone unnoticed and MLAs have voiced objections in the assembly ever since the GDA was introduced. For example, one remarked that "if they [constituents] were to ask me if there is anything available to them from the monies that we voted in this Legislature I would not be able to tell them. That is why I would like to have a little more detail."17 Another argued that projects under the forestry agreement designed to promote mechanization in the forest industry were introduced without consultations and were, in fact, responsible for large-scale unemployment of woodworkers in his riding. He added, "I meet them [woodworkers] quite regularly on weekends, and they are unemployed and are concerned about feeding their families."18 The problem of consultations under the GDA approach appear to be compounded by the fact that MLAs cling to what they regard as their proper role. For obvious reasons, they are not reporting to their constituents that the GDA approach tends to diminish 140

The GDA Approach and Political-Administrative Institutions their ombudsman-like role, nor are they suggesting to them that they should communicate their complaints or suggestions to provincial government and provincial DREE officials. It has to be remembered that in many ways the New Brunswick political culture is a distinct one. On this point, P. J. FitzPatrick writes: Politics in New Brunswick have more colour than content. . . . To an outsider, the patronage system may appear abusive; to the people [that is, New Brunswickers] it may seem to fulfill their needs more effectively than can institutionalized bureaucracies. . . . To the rest of the country, politics [in New Brunswick] may appear insupportably rustic; to the people of New Brunswick their style is preferable . . . the people [of New Brunswick] prefer their political system the way it is.19 An important consideration here is that the GDA approach was designed by DREE officials who quite naturally were guided by the established administrative practices of the federal government. Ever since the Glassco Commission concluded in the mid-sixties that "the magnitude and complexity of existing government operations had . . . outgrown the highly centralized and inflexible system of control,"20 the federal government has moved away from a budgeting system based on standard objects of expenditures to one which presents proposed expenditures along broadly defined program lines. The preliminary report of the Royal Commission on Financial Management and Accountability suggested that "Parliament was . . . affected by the adoption of the new budgeting system. . . . The new format submerges details such as salaries and contracts that were previously contained . . . but does not provide M.P.'s with . . . data . . . the Treasury Board uses in its review of expenditure plans."21 Moreover, the auditor general concluded in his 1976 annual report that "I am deeply concerned that Parliament—and indeed the Government—has lost or is close to losing effective control of the public purse."22 It is in this context that the GDA approach was designed and it can be argued that the practice of broadly defining GDA programs may only have a limited impact on federal political and administrative institutions. However, the same is not true at the provincial level, notably in New Brunswick. There, new programs are still defined by establishing specific limits guiding the implementators and, when the government submits these new programs to the Legislative Assembly, it is still expected to provide highly detailed information. Yet GDA programs are defined jointly by two bureaucracies, which are linked together and, for the purpose of political and public consideration, the definitions are as ap-

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plicable at the provincial as at the federal level. Thus, it can be concluded that the administrative-political structures of the New Brunswick government and its relations with the provincial Legislative Assembly are not being left to develop spontaneously from within but rather by the influences of a highly technocratic federal bureaucracy. In fact, a number of DREE officials suggested in the interviews that the strengthening of the provincial public services and the promotion of more long-term planing at the provincial level are two of the leading positive characteristics of the GDA approach. THE GDA APPROACH AND THE PROVINCIAL GOVERNMENT When DREE announced the introduction of the GDA approach and its intentions to decentralize its operations, many feared that the expertise of the federal government would overwhelm the much smaller provincial bureaucracies in the Atlantic region. Shortly before DREE's announcement, the Atlantic Provinces Economic Council had noted with concern that "a special section of the federal Treasury Board to study DREE's programmes . . . employs more economists than the entire New Brunswick Government."23 Concern was heightened when it was revealed that seniorlevel DREE officials would operate in the field for the stated purpose of carrying out joint planning with the provinces. In New Brunswick, however, the provincial bureaucracy has been anything but overwhelmed. Our case study has made it abundantly clear that the provincial DREE office has not proven to be an effective point of entry for other federal officials to influence GDA policy and program proposals, as some initially feared it would. For one thing, provincial DREE officials have not consciously set out to organize federal analytical resources to challenge or overwhelm the provincial bureaucracy. For another, there is little likelihood that they could have done so, even if they had wanted to, considering the intensity of interdepartmental conflicts at the federal level under the GDA approach. It was also revealed that even the analytical resources available within DREE itself at the regional and national levels have been largely left unused in the formulation of new GDA initiatives. Generally speaking, GDA proposals are formulated at the provincial level by provincial DREE and provincial government officials, with other federal officials involved only to the extent that they are invited to review and comment on proposals once formulated. Provincial DREE officials report that they alone are not able to overwhelm completely the provincial bureaucracy, nor would they want to. They tend to view the GDA approach as a decision-making process to which they bring their expertise in the field of economic devel-

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The GDA Approach and Political-Administrative Institutions opment, and provincial government officials bring their competence in specific economic sectors, as well as an intimate knowledge of local socio-economic circumstances. This is not to suggest that GDA initiatives lack an analytical base. On the contrary, by New Brunswick standards they have a particularly sound analytical background. Supporting on-going discussions between DREE and the province are numerous GDA-sponsored planning initiatives, including a planning subsidiary agreement as well as specific planning activities in most other subsidiary agreements. It is estimated that in the first four years of its existence, the Canada-New Brunswick GDA sponsored well over one hundred planning projects.24 For the most part, outside consultants were employed—not federal expertise from other federal departments—to execute these planning activities, though in some cases additional policy and program developers were hired at the provincial government level. Irrespective of who actually executes the planning initiatives, all are implemented through provincial government departments and agencies. New Brunswick's planning capability was infinitely smaller before the introduction of the GDA approach and there are strong reasons to believe that the provincial Cabinet preferred it that way. A number of provincial ministers loathe all planning activities. They view planning simply as an effective means of preventing them from getting at detailed information. Certainly, for wholly provincial matters, officials report that they have considerable difficulty in introducing a long-term planning element into Cabinet-level decision making. For instance, as did so many other governments in the United States and Canada during the 1960s and early 1970s, the New Brunswick government atempted to introduce a Planning Program Budgeting System (PPBS) to its budget process. However, in New Brunswick the attempt was short-lived. One provincial Treasury Board official maintains that the decision to shelve PPBS was made as soon as ministers realized that, under it, they could not even retain the power to decide which departments should receive the new electric typewriters! Though no doubt an exaggeration, it nevertheless demonstrates the extent to which ministers wish to involve themselves in determining priorities— given the size of the New Brunswick government they can afford such a luxury. Those ministers who do not have an ingrained aversion towards planning, nevertheless insist that in the cost-benefit sense it should not constitute the sole determinant factor in shaping new proposals. They point to other important considerations, including purely political ones. This is what Premier Hatfield was implying when he stated: "The reason we wanted more roads was that people should have roads. There was no need for any more reasoning for it."25 143

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New Brunswick Cabinet ministers not only argue that there is an undue reliance on planning under the GDA approach. They also hold that, for GDA-related matters at least, the provincial bureaucracy is being transformed in that the established boundaries between them and public servants are being redrawn. The great majority of provincial officials who were interviewed accept the last point—in fact, it will be recalled, an imposing number of them suggested that their ability "to keep politicians under control" under the GDA is the approach's more important and useful characteristic. An important consideration here is that GDArelated decisions must be taken jointly at the officials' level, thereby enabling provincial officials to challenge their ministers more forcefully than would otherwise be the case. Moreover, compared with the traditional view held at the provincial government level, provincial DREE officials quite naturally hold a different interpretation of what is a political and what is a purely administrative matter. With the majority of them having been trained and conditioned by the Ottawa environment, provincial DREE officials instinctively regard most GDA issues as administrative, whereas in New Brunswick they would ordinarily be regarded as political. At the federal level, officials maintain that the decision to introduce the GDA approach was, and rightly so, a political-level decision, but that implementing individual GDAs and developing their subsidiary agreements is an administrative matter better left to officials. New Brunswick Cabinet ministers find this interpretation difficult to live with—in fact, it has also been challenged by federal politicians. Provincial government officials, on the other hand, applaud it. They welcome the opportunity it entails of promoting more appropriate and soundly developed measures to stimulate economic development in the province. Though not strictly attributable to it, the GDA approach has been highly instrumental in further centralizing decision making at the provincial government level. In part, because of Premier Hatfield's desire to elevate decision making to the Cabinet level, but also to provide a focal point to respond to federal initiatives, in particular those from DREE during the early 1970s, the New Brunswick government announced a complete restructuring of its Cabinet committee system and at the same time strengthened considerably the role of the Office of the Cabinet Secretariat.26 In the case of the GDA approach, provincial governments have little choice but to establish some form of a centralized planning or coordinating capability. Otherwise, they would leave it to DREE to provide an overall view of GDA activities in their provinces and also risk the danger of having their line departments vying with each other to strike the best possible deal with DREE. In any event, GDAs stipulate that the provinces must nominate one minister to act as the provincial counterpart 144

The GDA Approach and Political-Administrative Institutions to the minister of DREE and to represent the province at the annual GDA ministerial-level meeting.27 THE GDA APPROACH: INTEREST GROUPS AND THE PUBLIC The GDA approach operates in such a fashion that it tends to freeze out the participation of interest groups and the general public. Though the approach recognizes that the provinces have overall responsibility to maintain communications with local interest groups, provincial officials are reluctant to enter into two-way communications with them on GDArelated issues. A tacit understanding with provincial DREE officials prohibits discussing any GDA-sponsored programs under a proposed subsidiary agreement until the agreement has been approved by both levels of government. Equally important is the fact that the provinces have no assurance whatsoever that all programs and projects under a subsidiary agreement will be approved until the agreement is actually signed—in considering the northeast agreement, for example, the federal Treasury Board dropped several projects and this after New Brunswick had approved the agreement. Understandably, provincial government officials are unwilling to review proposed GDA initiatives outside of government circles for fear of raising expectations and then being unable to deliver the projects discussed. For a have-not province this concern is particularly relevant because, unless a project receives substantial federal cost-sharing, it loses much of its appeal and in all likelihood will be dropped for another which is cost-shareable. Given the high degree of interdependence between provincial DREE and provincial government officials under the GDA approach, provincial government officials can easily out-manoeuvre local interest groups whenever they wish. This they readily admit. Whenever confronted by an interest group with what they regard as an unsuitable proposal, they can and have argued that, while the proposal may have some merit, it is highly unlikely that it could successfully meet all the GDA approval steps. For instance, officials from a provincial line department can reveal to interest groups that GDA proposals must be reviewed by officials of the Office of the Cabinet Secretariat, at times by CIC officials, by provincial DREE officials, by a host of other federal officials in Ottawa, by the provincial Cabinet, and by the federal Treasury Board. Faced with such a bureaucratic maze, and being local in character and having little financial resources at their disposal to organize a concerted effort to promote their proposals, interest groups are compelled to accept what provincial government officials tell them. At any rate, since all GDA decisions are necessarily taken jointly at DREE-New Brunswick committee meetings, 145

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interest groups cannot appeal a decision either to provincial DREE or provincial government officials. It was also revealed that under no circumstances would interest groups be invited to attend a committee meeting either as participants or observers. Obviously, what is true regarding the lack of interest group participation under the GDA approach is on the whole equally true of the general public. Nevertheless, for the purpose in hand, we need to present some additional comments. It will be recalled that suggestions from the public were sought in formulating the northeast agreement. It will also be recalled, however, that the news media complained (and the minister of DREE acknowledged) that public consultations were being held at a rather late date in the formulation process. It was also argued that the decision to hold public consultations was made to honour a political-level commitment from a member of Parliament which, in turn, was made without the knowledge or consent of DREE officials—let alone provincial government officials. Furthermore, once the agreement was formulated, DREE and the province turned down a request to hold another round of public consultations to review the agreement, publicly arguing that it would unnecessarily delay further the signing of the agreement. Lastly, because preferences expressed at public consultations were regarded as soft information, the northeast subsidiary agreement provides for a continuing survey of work choices in northeast New Brunswick in order to obtain a more statistically valid picture of attitudes of area residents. More generally, the GDA approach has not only redrawn the boundaries between provincial ministers and their officials but at the same time redrawn those between the public and the provincial bureaucracy as well. Reflecting the fact that the New Brunswick government caters to a total population which is considerably smaller than the population of Canada's larger urban areas (such as Montreal, Toronto, or Vancouver), the public has traditionally been able to communicate directly with provincial ministers whenever they deal with the provincial government. In fact, the size of the New Brunswick government is such that until the late 1960s and early 1970s, a number of ministers were able to perform their duties on a part-time basis and, in so doing, involve themselves not only in policy matters, but also in purely administrative ones—for instance, New Brunswick ministers still retain authority to approve, and on occasion appoint, new staff from an eligibility list prepared by the provincial Public Service Commission. Thus, from both a policy and an administrative point of view, ministers are usually sufficiently knowledgeable about their departmental activities, however trivial these may be, to resolve complaints from the public or to entertain a discussion on departmental programs with informed members of the general public. Though provincial ministers are as accessible as ever, there is little 146

The GDA Approach and Political-Administrative Institutions doubt that when it comes to GDA-related matters they are frequently not able to respond to queries from the general public in the traditional manner. The provincial bureaucracy can no longer be regarded as a collection of powerless implementing agencies and departments. For example, representatives of municipal councils are more and more having to deal with officials to ascertain whether or not their towns and villages are eligible for specific GDA projects. They can no longer present a request to the relevant minister and hold him accountable to it. Given that several federal and provincial agencies and departments are as a rule involved in formulating and implementing a subsidiary agreement, it can be argued that it is manifestly unfair to hold a minister accountable for all activities sponsored by a subsidiary agreement for which he has departmental responsibility. The GDA approach has bureaucratized decision making in New Brunswick to such an extent that it has led to objections not only from the general public, but also from the provincial bureaucracy itself. Briefs, submitted when public hearings were held on the proposed northeast agreement, complained that DREE and the province were taking far too much time in arriving at decisions. Subsequently, a representative of a regional industrial commission charged that "too much bureaucracy and not a lack of money" was responsible for holding back economic development in the province. He added that when an organization applies for funds under a specific program "there is too much frustration and red tape."28 Provincial government officials agree that the GDA approach is overly bureaucratic. As mentioned earlier, a number of provincial government officials stressed in our interviews that elaborate procedures such as are necessary to large bureaucracies like the federal government, tend to be counter-productive in a much smaller provincial bureaucracy.

AN OVERVIEW Significantly, while DREE and provincial government officials acclaim the GDA approach, most federal and provincial politicians are critical of it—some publicly. It was designed by officials whose overriding concern was to develop the most appropriate possible federal-provincial decisionmaking tool to formulate sound measures to alleviate regional economic disparities. Though in this regard they may well have succeeded, the approach, at least in the case of New Brunswick, operates in such a fashion that effective political control is considerably diluted and political institutions bypassed. For their part, officials are able to argue that the approach frees them from defined program limits, thereby enabling them to take advantage of every identified developmental opportunity; that it is sufficiently flexible to adjust programs, even after they have been 147

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formulated and approved to meet changing economic circumstances; and that it brings together or combines the expertise of federal and provincial officials to develop sound initiatives to promote economic development. On the other hand, politicians from both levels of government are able to argue that the GDA approach tends to reduce to administrative decisions what they regard as essentially political conflicts; that it promotes an illicit working relationship between DREE and provincial government officials; and that joint planning under the approach in effect means that, because officials are in a position to choose which proposal should be submitted for political-level consideration, they are only presented with what officials conclude is the best possible course of action and not possible alternatives. Furthermore, federal politicians are able to argue that DREE officials can circumvent political control by maintaining that discussions with the provinces are so far advanced that the federal government is in fact "locked in"—a term commonly employed by officials—hence, the Treasury Board has little choice but to approve a proposed subsidiary agreement. Provincial politicians meanwhile can argue that their officials can isolate themselves from political control by pointing out that the GDA proposals, which they have developed with DREE, are available to the province for only 204 dollars. Lastly, federal politicians can argue that the federal government receives very little political credit for buttressing provincial government expenditures under the GDA approach. With very few exceptions, the politicians interviewed for this study expressed concern—some provincial politicians alarm—that the GDA approach erodes their power to influence the priority determining process. Again, officials readily admitted that under the GDA approach effective political control is weakened and public participation severely restricted. However, not every official thinks that this is inherently undesirable. The majority argue—at the provincial level the opinion is almost unanimously held—that their ability to block out what they regard as political interference is the most significant positive characteristic of the GDA approach. Some, in particular senior level DREE officials, made passing suggestions that measures or procedures should be incorporated in the GDA approach to ensure a higher degree of political control at the federal level. However, these were not well developed in detail. There is little doubt that, in the case of the Canada-New Brunswick GDA, officials feel that politics and politicians impede rather than clear the way for formulating sound initiatives. As a matter of course, they will do their utmost to resolve disputes at their level rather than submit them to the political level where, in the words of one provincial government official, "anything can happen."29 At least at the officials' level, disputes are still resolved according to objective administrative criteria and not 148

The GDA Approach and Political-Administrative Institutions according to partisan political considerations. With regard to such political institutions as Parliament and the provincial Legislative Assembly, few even pretend that they have any kind of influence, however indirectly, on GDA programs. The deliberations of both Parliament and the Legislative Assembly are virtually ignored by officials—those who report that they occasionally read Hansard and the New Brunswick Synoptic Report are senior-level DREE and provincial government officials, or precisely those who are in a position to have a better feel for the political mood of the day because of their more frequent contacts with politicians. It may well be argued, as some respondents did during our interviews, that Parliament and provincial Legislative Assemblies are archaic institutions, unable to respond to the challenges of modern societies. It would be absurd to deny the validity of Simeon's argument that certain incompatabilities exist between parliamentary government and federalism. It would be equally absurd to deny that the prevailing conditions of 1867, which permitted the Fathers of Confederation to grant all legislative powers of any significance to the national Parliament and which led some of them to hope that the new federation would eventually evolve into a unitary form of government, no longer exist. Yet, apart from some relatively minor reforms, Parliament and provincial Legislative Assemblies function as they did in the nineteenth century. Though this suggests that the principal political institutions no longer correspond to the conditions and needs of modern Canadian society, the solution surely does not lie in bypassing them, but rather in re-defining their role and authority.30 The alternative of devising a decision-making tool like the GDA approach, which bypasses political institutions, entails important consequences. In the case of the GDA, it raises serious questions about the lack of political control on the formulation of new proposals; about the apparent inability of interest groups and informed members of the public to participate, however remotely, in determining priorities and in shaping new programs; and about the extent to which governments, let alone individual Cabinet ministers, can be held accountable. The impact is particularly severely felt at the provincial level where traditional working relationships between ministers and officials, and between politicians and the public, have been disrupted. Partly because the New Brunswick government operates in, comparatively speaking, a much smaller context, but also because of the distinct political culture found in the Maritime provinces, ministers have had considerable power over the provincial bureaucracy. In turn, they have maintained a close and direct contact with the general public.

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Chapter Nine The GDA Approach and Federal-Provincial Relations What implications does the GDA approach have for federal-provincial relations? How does it relate to the constitutional division of responsibility? What advantages and drawbacks does it hold for Canada's political system? More generally, what can we conclude about the GDA approach? In answering these questions, this concluding chapter will assess the GDA approach in the context of contemporary Canadian federalism. THE GDA APPROACH AND FEDERAL-PROVINCIAL RELATIONS Even by contemporary standards, the GDA approach and the decentralization of DREE have significantly altered the pattern of federal-provincial relations in the field of economic development—a field recently described as representing "an important leading edge of federal activity."1 For one thing, the GDA approach has introduced, to an unprecedented degree, bilateralism in federal-provincial relations—unprecedented because, for the first time relations are conducted at the provincial level or in provincial capitals between officials of a decentralized federal department (who hold considerable authority to develop new initiatives) and provincial government officials. Bilateralism in federal-provincial relations is not a new departure, in that it existed under such pre-GDA federal economic development schemes as ARDA, FRED, and special areas agreements. However, federal decision-making authority was then highly centralized in Ottawa, as was observed by Anthony Careless in his study of federal economic development policies preceding the introduction of the GDA approach, in which he noted that the federal government was then able to adopt a "divide and conquer" posture with the provinces. With Ottawa alone having an overall view of regional economic development and the prov-

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inces having to compete to strike the best possible deal under national programs, provincial governments could never collectively challenge the federal government.2 In addition, because decision making was highly centralized in Ottawa, a handful of federal personalities like Marchand and Kent had been able to exercise considerable influence on the provinces priority determining process. In some cases, writes Careless, "these powerful personalities have . . . constituted an almost impenetrable opposition."3 The establishment of DREE and other reforms instituted by the then newly elected Trudeau Government during the late 1960s also gave the federal Cabinet greater political control over federal-provincial relations, and this in turn meant that agreements were often arrived at through political-level bargaining. On the first point, Careless states: Countersteps have limited officials to definite mandates from the Cabinet for intergovernmental negotiations. The official's job has been returned to the more proper role of giving and receiving information for his minister.... The realm of political negotiation and compromise has very firmly been returned to federal ministers and to the powerful "supergroup" of select advisors around Trudeau.4 Regarding federal-provincial relations, he maintains that: Particularly with DREE . . . , provinces have found themselves confronted with formal federal proposals presented in a manner of "take it or leave it," without discussions in intergovernmental meetings of any compromise. Joint policy was only hammered out in this adversary procedure of "proposal-rejection-proposal." . . . Because the federal position has been formulated in advance of a joint meeting with the provinces, scope for flexibility has been limited. The federal willingness to negotiate has also been confined by Ottawa's habit in recent years of releasing its position to the press prior to federalprovincial conferences.5 The GDA approach manifestly departs from the above in that, although federal-provincial relations are conducted bilaterally, the federal government is rarely in a position to adopt a "divide and conquer" posture with the provinces. Rather than presenting national programs under which the provinces are expected to compete for federal funds, the GDA establishes special arrangements with each province, thereby diffusing the process considerably. Not only are provincial governments unwilling to discuss these special arrangements with each other, but provincial DREE officials are themselves reluctant to discuss new proposals with most regional and Ottawa-based officials for fear that the proposals would in turn be re152

The GDA Approach and Federal-Provincial Relations vealed to other provincial DREE offices and other provincial governments. Thus—and our interviews emphatically confirm this—competition for GDA funds and for development ideas is as intense between provincial DREE offices as it is between provincial governments. Like other permanent officials, provincial DREE officials tend to be purpose oriented. Not surprisingly, under the GDA approach, since they cannot identify with national policies and programs or with a geographical area larger than the provincial boundaries within which they operate, they associate their purpose or their raison d'etre directly with their respective provinces. Moreover, given the nature of the GDA approach, provincial DREE offices can operate in near isolation from each other and are free to develop, from their continuing discussions with their corresponding provincial governments, agreements and programs to accommodate local economic circumstances. Hence, Ottawa is left to oversee the work of ten self-contained and relatively autonomous provincial offices, each of which has its own distinct priorities and its own special relationship with the corresponding provincial government. While this will now often prevent Ottawa from adopting a "divide and conquer" posture with the provinces, it also does little to promote interprovincial coordination. As this study has made clear, the GDA approach does not provide a forum where proposed initiatives can be reviewed from a regional point of view, nor does it provide incentives to the provinces to consider anything but strictly provincially oriented initiatives. And, with provincial governments and provincial DREE offices unwilling to discuss or reveal their proposed GDA initiatives, situations have occurred where neighbouring provinces have found themselves working at cross-purposes. Yet it is widely accepted that the consequences of interprovincial competition in the field of economic development are particularly damaging and that a principal role of the federal government is to promote coordination among the units in the federation. An important consideration here is that under the GDA approach the provinces are able to take the initiative in developing new agreements. The opposite was true in the days of pre-GDA schemes. The federal government exercised central direction by presenting to the provinces for negotiations—although at times in a take it or leave it manner—readymade solutions and agreements. Though national programs were sufficiently flexible to leave room for negotiations, they were nevertheless tied to national standards and defined limits. In decentralizing decision making and in eliminating defined program limits, the federal government appears to have fragmented the process to such an extent that, under the GDA approach, it is incapable of providing regional leadership in the field of economic development. The great majority of DREE officials readily admit that, under the 153

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GDA approach, DREE has not been able to promote a "regional consciousness" in the Atlantic region or even among the Maritime provinces. One DREE economist succinctly described the direction of his department under the GDA approach when he said: "DREE does not have a regional economic policy. DREE's policy now is to have ten policies, one for each province." Prior to the introduction of the GDA approach, the federal government had established mechanisms in its economic development schemes to permit a consideration of interprovincial issues. Regional advisory committees were attached to the Maritime Marshland Rehabilitation program and to the Atlantic Development Board. In DREE's early years, its officials pointed to the importance of regional or interprovincial factors in promoting economic development as one reason why it was necessary for DREE to be highly centralized. This, it was argued, enabled departmental officials holding effective decision-making authority, to view the provinces from a broader detached perspective than if they were located in the field. Perhaps the most significant and distinct characteristic of the GDA approach is the often repeated claim that it is especially tailored to carry out jointly identification of development opportunities, planning, and decision making between the two levels of government. The question of whether GDA proposals evolve from joint planning depends to a large extent on how one defines the term. If it is considered a process through which proposals emerge from continuing discussions which have a common analytical base, then one can concede that the majority of GDA proposals in New Brunswick did, indeed, evolve from joint planning. Only when politicians pre-empted the process did outright political bargaining become the determinant factor in shaping new agreements— bargaining, that is, in the sense that the province presented a distinct position and the federal government countered with another. There is no doubt that the GDA approach makes for a less combative form of federalism. Though in the case of New Brunswick the provincial government is regarded as the originator of proposals, the GDA approach is non-partisan in that both levels of government can initiate proposals. For example, DREE first proposed the majority contained in the northeast subsidiary agreement. Furthermore, regardless of the level of government from which they originate, proposals are reviewed very early on in their formulation stages, either informally by provincial DREE and provincial government officials or by joint DREE-New Brunswick committees. In fact, in the great majority of cases, proposals are developed and packaged by joint committees and task forces so that when they are submitted for political level consideration it is exceedingly difficult to delineate which level of government first proposed what. Because most 154

The GDA Approach and Federal-Provincial Relations proposals are formulated jointly, the GDA approach goes further than any other federal-provincial decision-making tool in eliminating the adversary procedure of "proposal-rejection-proposal." It can hardly be over-emphasized that officials, being purpose- or result-oriented, tend to reduce the level of intergovernmental conflict. This is particularly relevant for the GDA approach since it is officials who play the leading role in developing new proposals and in establishing priorities at joint development and management committee meetings. Though less severely felt at the federal level, in New Brunswick, politicians, including Cabinet ministers, complain that they have been preempted by officials under the GDA approach. Officials, because they "are not constrained directly by a critical and partisan public back home,"6 can view problems and proposed solutions with greater impartiality than can politicians. Furthermore (and this is especially true of the GDA approach), officials share a common technical or information base from which judgements can be formed. Quite apart from readily available government statistics on the socio-economic conditions of the province and of specific areas within the province, the Canada-New Brunswick GDA has sponsored numerous independent research surveys and reports. Given this common information base, it is relatively easy for provincial DREE officials and provincial Cabinet Secretariat officials, for example, to identify and accept jointly the need for special development efforts for certain economic sectors, for specific industries within those sectors, and for certain designated areas. For politicians, however, there are other considerations to take into account—not least, purely partisan political issues and the need to explain to voters employed in non-designated industries and geographical areas why they failed to receive special attention. Politicians—notably those in New Brunswick—are not inclined to identify their political goals from a recognized information base unless, of course, it can lend support to their goals. Rather, their goals and judgements are formed by the political, social, and economic interests of the area they represent.7 Hence, the political goals of one level of government can come into direct conflict with those of the other, particularly if government members from one government represent an area which is underrepresented in government at the other. This was precisely the situation in New Brunswick throughout the period covered by this study. The federal government held every riding in the northern part of the province, but was under-represented in the south, while the provincial government was highly represented in the south but under-represented in the north. This only adds to the tendency of politicians to engage in what is commonly referred to as "adversary politics" in federal-provincial relations. Politicians wish to compete, and often publicly, in the federal-provincial 155

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arena, not only to advance their political goals or those of their governments but equally, to be seen doing so by their constituents. One thing is certain, federal politicians would not have negotiated, or even knowingly agreed to, a spuriously defined program in order to protect financial resources from the federal Treasury Board as did officials in developing the New Brunswick industrial development subsidiary agreement. It is not surprising that politicians and officials should view the federalprovincial arena differently, in that politicians are preoccupied with public expectations and officials with efficiency. Moreover, bargaining and adversary politics are inherent to the profession of politics. Charles Lindblom, for instance, has pointed out that "some [political scientists] have come close to asserting that . . . skill in bargaining is the definitive skill of the politician."8 A politician's involvement in government is continually conditioned by the notion of adversary politics; a politician must initially contest his party's nomination, compete for political office, and, perhaps more significantly, once elected, his effectiveness in parliamentary or public debate is frequently evaluated (especially in New Brunswick), not by the kind of insight he is able to bring to a situation but rather by how well he is able to condemn the government or the opposition— depending on where he sits in the House or Assembly. Once elevated to the Cabinet, members may well carry this zeal to gain status in their relations with other governments if only to be able to tell their constituents that they ought to be re-elected. Officials, on the other hand, attach more importance to objective research. This is not to suggest that officials do not compete—at the federal level, they are anxious to protect or expand their sphere of influence. Nevertheless, again because their discussions are frequently guided by an objective information base, but perhaps also because they do not share the politician's preoccupation with immediate political gains, officials are more disposed to collaborate and to resolve quietly jurisdictional conflicts —for example, in this study it was noted that federal fisheries officials showed a willingness to resolve the impasse blocking the proposed fisheries subsidiary agreement, but that their minister persistently refused. In any event, when federal officials share the same objective as do provincial DREE and provincial government officials and when they need not concern themselves with their sphere of influence—a point which will be raised again later—conflicts are less likely to occur and there is also every chance that there will be collaboration to promote what is regarded as the most appropriate course of action. Under the GDA approach, provincial DREE and provincial government officials are able to operate in quiet collaboration. This is true not simply because they share a common interest, but also because the approach is structured in such a fashion that it opens the way for them to 156

The GDA Approach and Federal-Provincial Relations play the leading role in formulating and implementing agreements. The fact that agreements are developed jointly by officials and considered independently at the political level, rather than submitted to a bargaining session, is significant. Even more significant is the fact that officials intentionally defined subsidiary agreements in a very broad manner to give themselves greater flexibility in implementing them. It will also be recalled that the agreements are implemented by joint management committees whose memberships are restricted to officials. These committees are not simply coordinating ones where members meet to exchange information, nor are they advisory committees. They hold effective decision-making authority to approve or reject all projects under the GDA approach and, once taken, decisions become binding for both the federal and the provincial governments. Provincial DREE and provincial government officials admit that, whenever necessary or when other federal departments are represented on the committees, they agree to mutually supportive measures to ensure that their views prevail—in one instance, they successfully opposed a provincial Cabinet minister in his attempt to locate a GDA project on a particular site. Because management committees are separate decisionmaking entities, it can be argued that the GDA approach introduces a third tier of government. It certainly introduces a new dimension to government in New Brunswick—a dimension which is largely hidden from public view and which renders meaningless the classical notion of the administrator as an implementor of ministerial rules and decisions. This represents a significant modification to traditions of cooperative federalism in Canada, a distinguishing characteristic of which is that federal-provincial negotiations leading to new programs are conducted between Cabinet ministers in a highly competitive atmosphere. As mentioned earlier, Richard Simeon has commented on this phenomenon: "American bureaucrats operating federal-state programmes try to keep their respective political heads out of things. Their Canadian counterparts have not been able to do so."9 Simeon also argues that "the governments [in Canada] are interdependent but truly autonomous."10 The GDA approach extends the ambit of cooperative federalism in Canada by delegating authority to formulate and implement agreements to joint committees with membership restricted to officials. It is increasingly difficult in New Brunswick for even Cabinet ministers, let alone the Legislative Assembly and the general public, to determine which level of government is responsible for having proposed or objected to a given GDA initiative. Agreements are formulated and reviewed by committees of officials and subsequently submitted to political level consideration essentially as a fait accompli. Thus, contrary to established Canadian practice, proposals leading to federal-provincial agreements under the 157

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GDA approach are developed jointly by governments rather than by governments operating independently. Accordingly, it becomes increasingly difficult to assert, particularly in respect of the have-not provinces, that "governments [in Canada] are interdependent, but truly autonomous." It can also be argued that implementation under the GDA approach ignores basic political-administrative diversities that exist between governments in a federal system. Since not all governments in a federation are of equal size and not all operate in the same manner, what may be viewed as a simple administrative matter in one government may in another be viewed as essentially a political issue (as, for instance, the exact location of a given project). For an assortment of reasons, including size, and also because the federal Liberal party which has held power in Canada for thirty-six of the past forty-three years, has not often brought forth policy values markedly different from those of the bureaucracy, the federal public service has traditionally held considerable influence over policy issues and almost unrestricted authority over administrative matters.11 However, while the federal government and perhaps the bigger provincial governments of Ontario and Quebec can regard the implementation of GDA agreements as administrative detail, smaller provincial governments may well find this interpretation difficult to accept. Yet, it is provincial officials and not provincial politicians who, according to the GDA approach, must co-chair the Canada-New Brunswick Development Committee and the various management committees. In the case of New Brunswick at least, the GDA approach and its process of joint decision making has without any doubt compelled Cabinet ministers to delegate authority to their officials which they would otherwise not have done. THE GDA APPROACH AND THE CONSTITUTIONAL DIVISION OF RESPONSIBILITY At this stage, it is necessary to digress briefly for purposes of historical recapitulation. Though the Canadian constitution lacks an amending formula, the Canadian federation has displayed cyclical swings from centralization to decentralization and back again. Initially, the greater part of constitutional developments occurred through judicial interpretation which, between 1883 and 1937, dramatically reduced the powers of the federal government. Since the outbreak of the Second World War, however, the courts have been circumvented—some would argue, replaced—by federal-provincial negotiation or by what Donald Smiley calls "a process of continuous and piecemeal adjustment between the two levels of government... [which]... have come about through interactions 158

The GDA Approach and Federal-Provincial Relations between federal and provincial executives."12 During the past forty years, centrifugal and centripetal tendencies have continued to swing the pendulum of power back and forth. The one thing which has remained constant is that the federal government has always bargained from its position of financial strength and the provinces from their positions of jurisdictional strength. The GDA approach continues this tradition. Even when the wealthier provinces of Alberta and Ontario are included, the federal government contributes far more financial resources to GDA-sponsored agreements than do the provinces. And most GDA activities fall in policy areas which constitutionally belong to the provinces. Furthermore, while decisionmaking authority was highly centralized in Ottawa under such pre-GDA schemes as FRED and special areas agreements, the GDA approach decentralizes decision-making authority and gives the provinces considerable leeway in formulating new proposals. What is new and significant about the GDA approach is that it is a multi-dimensional or open-ended approach to federal-provincial relations. That is, GDAs provide a legal framework for DREE and the provinces to develop agreements in almost every policy area, irrespective of which level of government is constitutionally responsible for them. Never before have governments agreed to a decision-making instrument which blurs constitutional responsibilities to such an extent. One provincial government official put the GDA approach in its constitutional perspective when he said "constitutional niceties have no place in the development of subsidiary agreements." With the majority of provincial DREE and provincial government officials agreeing with this assessment, it is not an isolated opinion by any means. In fact, provincial government officials, in particular, demonstrated in our interviews a striking unfamiliarity with the BNA Act as judicially interpreted. Meanwhile, DREE officials stressed time and again the flexibility of the GDA approach to demonstrate its viability. One senior DREE official remarked that the most positive contribution of the approach may not be the new programs it has generated, but the intergovernmental decisionmaking process that has been put in place. He argues that politicians in smaller provinces are compelled to look at longer-term solutions to economic development and that jurisdictional disputes with the provinces over which level of government is responsible for what can now be avoided. This study has clearly demonstrated that the GDA approach is especially well tailored to avoid jurisdictional disputes with the provinces and that it can just as easily work in areas over which the federal government holds constitutional responsibility as in those belonging to the provinces. (More than one DREE official commented that the ultimate 159

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objective of the GDA approach is to blur the constitutional division of responsibility and thus clear the way for officials to come up with soundly developed, viable economic development schemes.) Including the unsigned fisheries agreement, DREE and the province developed sixteen subsidiary agreements to the Canada-New Brunswick GDA between June 24, 1974, and June 23, 1977, the period covered by this study. By and large, these agreements have been developed to sponsor projects in policy areas for which the province is constitutionally responsible. However, this is not exclusively so. The proposed fisheries agreement includes projects for which the federal Department of Fisheries holds jurisdictional responsibility. Other agreements (for instance, the northeast agreement) contain specific projects for which other federal departments would ordinarily be responsible. In any event, as was just noted, in developing subsidiary agreements, officials were far more concerned with coming up with sound economic development projects than with respecting the constitutional division of responsibility. For example, in attempting to resolve the jurisdictional dispute over the proposed fisheries agreement, DREE essentially argued that "logic" and "efficiency" should determine who should be doing what in that sector. The multi-dimensional aspect of the GDA approach is such that eleven of the seventeen provincial line departments in New Brunswick now have GDA projects to implement, while six have or have had specific subsidiary agreements to implement—for example, the Department of Tourism and the tourism subsidiary agreement—and in one case, the Department of Natural Resources is currently overseeing the implementation of two subsidiary agreements—namely, forestry, and minerals and fuels. And, because the spatial subsidiary agreements on the northeast and on Kent region do not have home line departments, their projects are implemented through a number of line departments, most of which also have a specific subsidiary agreement to implement. The Government of New Brunswick has now reached the point where every one of its departments—other than those strictly concerned with providing internal administrative support services—has entered into some kind of cost-sharing arrangements with the federal government.13 Apart from subsidiary agreements to the Canada-New Brunswick GDA, far more costly federal-provincial agreements have been signed in the important areas of health, welfare, and education. Moreover, in response to federal initiatives, some departments have instituted programs which, when they comply with certain federally established criteria, enable the province to claim federal cost-sharing. Thus, the Government of New Brunswick can no longer point to a single policy area for which it is unambiguously and solely responsible. Admittedly, the province could turn down federal cost-sharing schemes 160

The GDA Approach and Federal-Provincial Relations but this—as was repeatedly demonstrated in this study—is both politically and economically impractical, since non-participation means forgoing federal funds. Present-day Canadian federalism certainly renders meaningless K. C. Wheare's working definition of federal government which states: "By the federal principle I mean the method of dividing powers so that the general and regional governments are each, within a sphere, co-ordinate and independent."14 Even less formal and less rigid definitions of federalism have also become outdated. W. H. Riker, for example, maintains that a constitution is federal if "each level has at least one area of activity in which it is autonomous and there is some guarantee—even though merely a statement in the constitution—of the autonomy of each government in its own sphere."15 It is not suggested that Canada should return to nor indeed that it is possible to define watertight jurisdictional responsibilities, as was done during the nineteenth century. The demands of modern government and the simple fact that both levels of government in the end serve the same people suggest that government decisions in a federal system ought to be coordinated at least to some degree. However, there is little doubt that in Canada there is considerable scope for a sensible disentanglement of functions and responsibilities between the two levels of government. Blurring constitutional responsibilities to the extent that governments in Canada have done is not without important consequences. It is not only more and more difficult for those outside government to ascertain which level of government is jurisdictionally responsible for what, but also to determine which level is ascending in the ever more frequent cyclical swings of centralization and decentralization. Equally important is the threat posed to the political diversities of the federation. Yet it is precisely these political diversities, along with cultural ones, which forced the Fathers of Confederation in 1867 to adopt a federal system and to reject their preference for a unitary form of government. In addition, particularly in the have-not provinces and when issues relate to economic development, residents are being told that decisions are made not by any one level of government but rather by committees of officials linking the two levels. Increasingly, citizens are becoming accustomed to receiving government service from a third tier of government or from interwoven and largely unaccessible committees of officials. Adjusting responsibilities in a federation through administrative provisions is also not without important consequences. With governments no longer guided by overriding and firmly established principles, the process of adjustment becomes unruly and disjointed. At the stroke of a pen, responsibilities can be shifted from one level of government to the other, relations between governments altered, and traditional relations between governments and the public transformed. Because the GDA approach is 161

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so flexible, it is mostly officials who determine the kind of relationship a province will have with the federal government. In fact, it can be stated that any attempt to discern a pattern of intergovernmental relations under the GDA approach has to be formulated in terms of human relations or relations between officials attached to the different governments. A decision-making process such as the GDA approach, which is geared to promote bilateral relations, also makes it exceedingly difficult to assess from a national standpoint the federal-provincial division of responsibility. Given the flexibility of the GDA approach, what is true in one province is not necessarily so in another. For instance, the federal government, through DREE, is deeply involved in the processing and marketing of forest products in New Brunswick. However, in Alberta, the provincial government alone occupies this field. A number of similar examples can be found in comparing all signed subsidiary agreements to the nine GDAs. More than ever, it is necessary to review each province's relations with Ottawa to assess which level of government has power in any policy area. Much has been written of late about the competitive nature of intergovernmental relations in Canada.16 With governments having all but discarded the jurisdictional approach to assigning responsibilities, the argument goes that politicians and officials continually compete to expand or protect their spheres of influence. There is little doubt that as a general observation this is true. However, with regard to the GDA approach, it is necessary to present some qualifications. In our case study, there was little evidence of interjurisdictional competition between provincial DREE and provincial government officials. On the contrary, there were numerous examples of collaboration between the two groups. This is explained by the fact that it is in the self-interest of both groups to eliminate competition in their relations. Provincial DREE officials have no jurisdiction to protect and the only means of expanding their sphere of influence is quite simply to sign more subsidiary agreements with the province. Only then will they obtain a bigger slice of the departmental budget, which basically is allocated by provincial office, and only then will they be able to influence provincial government activities. Provincial government officials have jurisdiction to protect natural resources, but in the case of New Brunswick (a have-not province) they do so at definite risk. Without DREE funds, they would not be able to initiate nearly as many new projects in policy areas for which they hold constitutional responsibility. It has also been noted that provincial government officials applaud the GDA approach because it enables them to limit political-level interference in the formulation of new projects. Thus, paradoxically, they view the provincial DREE office as a means of expanding their sphere of influence. This is not to say that the GDA approach is without jurisdictional 162

The GDA Approach and Federal-Provincial Relations conflicts. Primarily because of their concern that DREE and the provinces are encroaching on what they perceive as their fields of responsibility, a number of federal departments have vehemently denounced the GDA approach. Eugene Whalen, the minister of Agriculture, publicly suggested that GDA funds earmarked for agricultural subsidiary agreements would be far better spent if they were allocated to his department. Minister of Fisheries LeBlanc asked the Treasury Board to redirect some GDA funds to his department so that the federal government could discharge its constitutional responsibilities in the fisheries sector. For their part, provincial Cabinet ministers on the whole do not take kindly to what they regard as DREE's intrusion into their fields of responsibility and, in particular, to the process of joint decision making which the GDA approach entails. However, they too can only turn down GDA funds at their own peril. As George Rawlyk explains, the economic weakness of the Atlantic provinces conditions their responses.17 At the officials' level, it will be recalled that some federal officials attempted to use the GDA approach to extend their departmental regulations to the provincial government level and that most of them were preoccupied with ensuring that GDA-sponsored projects did not conflict with the policies and programs of their departments. In addition, our interviews revealed a feeling on the part of a number of federal officials that the decentralization of DREE has uprooted provincial DREE officials from the federal bureaucracy and hence that they are not as committed as before to promoting the overall interest of the federal government. THE GDA APPROACH AND REGIONAL ECONOMIC DEVELOPMENT However inappropriate or outdated Canada's present constitutional arrangements may be, it is in this context that the GDA approach operates and in the final analysis it is in this context that it must be assessed. The question which needs to be addressed here is that, given Canada's constitutional arrangements, is the GDA approach necessary? No one would dispute that both levels of government have an important role to play in alleviating regional economic disparities. In fact, it is now universally accepted that one of the basic purposes of the Canadian federation is to arrive at some amelioration of regional economic disparities. Where opinions differ is when one attempts to answer the question "Who should do what?" The federal government introduced the GDA approach, not just to grant DREE greater flexibility in its relations with the provinces, but equally to mount a concerted federal attack on regional economic disparities. The intent was to bring about a coordinated application of public policies and programs, including those of other federal departments, to 163

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stimulate economic development in slow growth areas. Have-not provinces have applauded DREE's attempt "to educate" other federal departments to recognize that they too have a responsibility to contribute to the federal government's overall goal of regional economic development. A staunch defender of DREE, but not necessarily of the GDA approach, New Brunswick Premier Richard Hatfield has repeatedly argued that should DREE disappear it would be particularly detrimental for the Atlantic provinces and not simply because it could mean a loss of federal funds.18 Essentially, he maintains that without a distinct DREE voice in Ottawa to speak on their behalf, the special needs of the smaller have-not provinces would simply be ignored by other federal departments, given their preoccupations with national policies and with the far more populous provinces. His concern is not at all unjustified. For instance, a recent report of the Economic Council of Canada is especially revealing in this regard. It reads: The figures show, for example, that [transfers of] the Department of Industry, Trade and Commerce, under its various industrial assistance programmes . . . are highest on a per capita basis in British Columbia and Ontario, precisely those areas which DREE would consider lowpriority areas for assistance in economic development. [Moreover] of the $357.1 million paid out in agricultural subsidies in 1974-75 . . . the Atlantic region received $7.3 million or just slightly over two per cent.19 Our study has made it abundantly clear that the GDA approach has not given rise to a concerted federal effort in promoting regional economic development. Other federal departments have not employed the GDA approach to develop their initiatives with the provinces, they have only contributed a negligible amount of financial resources to subsidiary agreements which have been signed, and only in a few isolated instances have they participated actively in the formulation of subsidiary agreements. Broadly speaking, they have, for whatever reasons, merely sat in judgement on proposals after these had been developed by provincial DREE and provincial government officials. Furthermore, very rarely did other federal departments attempt to tailor some of their activities to complement GDA-sponsored initiatives. Thus, the apparent inability of the federal government to impress on its operating line departments the need to direct more of their efforts and activities in slow-growth areas remains an important lacuna in the federal government's strategy to promote regional economic development.20 All in all, a strong case can be made for suggesting to the federal 164

The GDA Approach and Federal-Provincial Relations government that it should look more inwardly in its attempt to alleviate regional economic disparities. There are several key federal departments whose fields of responsibility are particularly relevant to economic development, and this is especially true in regard to the Atlantic provinces; some of these include the Ministry of Transport, the departments of Industry, Trade and Commerce; Fisheries and Oceans; and Supply and Services. The advantages for the federal government of concentrating its efforts internally are clear. For one thing, it would meet head-on the frequently heard criticism both in the House Standing Committee on Regional Development and from independent observers that the policies of the federal government on regional development are essentially uncoordinated.21 For another, it would enable several federal departments, which have legitimate jurisdictional responsibilities, to occupy their policy fields more energetically and to take a harder line in defending their jurisdictions against provincial encroachment—fisheries is an excellent example here. It is also suggested that the provinces occupy their fields of jurisdiction in a less diluted fashion than they do at present under the GDA approach. Accordingly, it is concluded that the GDAs should not be renewed when they are scheduled to expire in a few years. Admittedly, this leaves unresolved the issue that some provinces simply do not have at their disposal sufficient financial resources to support the kind of economic development initiatives to permit them to narrow the gap with the wealthier provinces. This issue is particularly relevant since the provinces hold considerable jurisdictional authority over natural resources. Conceivably, a federal unconditional grant to the have-not provinces would be satisfactory. The provinces would have the freedom to spend within the limits of the federal grant and, as a result, they would be accountable for their expenditures. However, in practical terms this may not be an acceptable solution. There is every reason to believe that in the field of economic development especially—a field which has a high political profile—the federal government would insist on using its spending power actively rather than transferring it unconditionally to the have-not provinces. Perhaps a more acceptable solution, from the federal government's point of view, would be the creation of a "Special Economic Development Fund" to replace the GDA approach.22 The fund, under the supervision of one or of a group of federal Cabinet ministers, would provide assistance to the have-not provinces and to federal departments for initiatives beyond their program expenditure estimates and to those industries willing to initiate major development projects in designated geographical areas. There are important basic questions which would obviously have to be resolved in establishing the fund. Its size would have to be determined, 165

CHAPTER NINE

as would indicators or criteria to allocate the fund between provinces and regions. It is envisaged, however, that the advantages would far outweigh the difficulties. For one thing, political control would certainly be heightened. Havenot provinces would be asked to prepare their proposals through their own political-administrative institutions. Once formulated, the proposals would be submitted to the federal minister or ministers responsible for the fund for possible assistance. The negotiations would be conducted at the political level, preferably at an especially convened federal-provincial conference open to the press. The federal ministers would be asked to review the proposals to ensure that they were not at variance with what they perceive to be—from a federal standpoint—public expectations and preferences. Federal officials attached to the fund would provide advice to the ministers after reviewing the proposals to see, for example, that the proposed expenditures were not incompatible with regional interests. The role of officials in the administration of the fund would be to provide information and advice to their respective ministers. Proposals would not be prepared or even reviewed jointly by officials before being submitted for political consideration at both levels of government. This would serve to eliminate the kind of illicit working relationship that has developed under the GDA approach between DREE and provincial government officials. The fund would also constitute a positive first step in disentangling federal-provincial responsibilities. Compared with the GDA approach, it would be far easier for politicians, not to mention the general public and interest groups, to discern clearly who is responsible for what and who is doing what. In addition, the Legislative Assembly, in the case of New Brunswick, would once again be in a position to ask for and secure detailed information on proposed government expenditures. Another distinct advantage is that federal departments would be able to draw from the fund to deliver some projects to the public which have in the past been delivered by the provinces under the GDA approach. With members of the public, such as fishermen, looking to specific federal departments for services rather than to provincial governments or to intergovernmental committees, the federal government would gain much greater visibility in its spending. Even when provincial governments would make use of the fund, federal Cabinet ministers, having debated the merits of the initiatives under the scrutiny of the press, would be able to promote a much greater public visibility for federal government expenditures than they now can under the GDA approach. This might well assist the federal government in checking growing centrifugal tendencies in the federation. If the GDA approach is to be retained, then it should be substantially 166

The GDA Approach and Federal-Provincial Relations revised. Among other things, decision making ought to be exposed to public scrutiny to a much greater extent than it is at present. This could be accomplished by increasing considerably the involvement of elected officials in the process. For example, joint Canada-Province Development and Management committees could be co-chaired by the provincial Cabinet minister responsible for the GDA and by a government member of Parliament from the province rather than by senior federal and provincial public servants. With politicians directly responsible for setting priorities under the GDA approach and for reviewing the appropriateness of new initiatives, the likelihood that the merits of GDA issues would be debated in public would be greatly enhanced. Federal-provincial management committees responsible for implementing subsidiary agreements should also be disbanded. One department, either federal or provincial, depending on the circumstance, should be designated the implementation agency and be unambiguously responsible and accountable for the implementation process. DREE's implementation role meanwhile would be relegated to one of "after-the-fact" review. This would serve to "debureaucratize" the GDA approach substantially and enable smaller provincial governments in the Atlantic region to operate more in line with established workings practices and requirements of their own political-administrative institutions. Emphasis would be placed on the pre-signature stage and agreements would be worded in a much more precise manner than they are at present. Strategic decisions would be taken in planning the agreements and not after they have been signed, as has so often been the case in federal-provincial programming in the field of economic development since the introduction of the GDA approach. The GDA approach should also be revised to permit multi-province approaches to economic development issues. One possibility would be for the federal government to sign regional agreements with groups of provinces. The purpose would be to promote a regional or multi-province perspective on issues such as those relating to energy and transportation, which often are better viewed from a regional standpoint.

167

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Appendix

Financial Summary of New Brunswick Subsidiary Agreements* (as amended to July 1, 1977)

1. 2. 3. 4. 5. 6.

7. 8. 9. 10. 11. 12. 13. 14. 15.

Agreement Amount Highways 1974 $13,335 Saint John and Moncton Arterial 44,700 Highways Miramichi 351 Channel Study King's Landing Historical 4,393 Settlement 58,029 Forestry Agricultural Development (as amended 11,841 11-02-77) Kent Region 7,751 Pilot Project Industrial Development 30,228 Highways 1975-76 11,690 11,402 Tourism Planning 4,876 Minerals and 11,314 Fuels Highways 1976-77 12,000 Highways 1977-80 56,000 Northeast New Brunswick 95,500 373,408

Province 3,335

Years in Terminatior DREE Agreement Date 31-03-75 1 10,000

13,410

31,290

5

31_03_79

88

263

1

31-03-75

879 11,606

3,514 46,423

3 5

31-03-77 31-03-79

2,368

9,473

4

31-03-78

1,550

6,201

6

31-03-80

24,182 8,767.5 9,122 2,438

5 1 4 5

31-03-79 31-03-76 31-03-78 31-03-80

2,263 3,000 14,000

9,051 9,000 42,000

5 1 3

31-03-80 31_03_77

28,325 94,509

67,175 278,899

5

31-03-82

6,046 2,922.5 2,280 2,438

31-03-80

*(000's) Source: Canada, Department of Regional Economic Expansion.

169

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Notes Notes to Chapter One 1. A. H. Birch, Federalism, Finance and Social Legislation in Canada, Australia, and the United States (Oxford: Oxford University Press, 1955), p. 305. 2. There is no universally accepted definition of the term "cooperative federalism" and it remains a notably imprecise concept. It usually embodies such ideas as "cooperation" and "coordination" but these are vague concepts in their own right. At a minimum, cooperative federalism means that governments agree to take into account the policies and actions of other governments in formulating their own policies. At the other end of the scale, some hold that the term implies "some willingness to surrender or dilute their sovereignty." See A. R. Kear, "Co-operative Federalism: A Study of the Federal-Provincial Continuing Committee on Fiscal and Economic Matters," in J. Peter Meekison, ed., Canadian Federalism: Myth or Reality (Toronto: Methuen, 1968), p. 307. The one thing on which agreement exists is that under cooperative federalism, governments still legally retain their constitutional responsibilities and authority and that cooperation occurs between equals and not between "principals and agents." In addition to A. R. Kear, see, among others, M. J. C. Vile, The Structure of American Federalism (London: Oxford University Press, 1961). For a discussion on cooperative federalism in the Canadian context see, among others, J. R. Mallory, The Structure of Canadian Government (Toronto: Macmillan Company of Canada, 1971), pp. 386-93. 3. Such expressions as "layer" or "marble cake" view of intergovernmental relations" are frequently employed by students of American federalism. See, for example, Morton Gradzins, "The Federal System," in Aaron Wildawsky, ed., American Federalism in Perspective (Boston: Little Brown and Company, 1967), p. 257. For a collection of essays on this point, see Daniel J. Elazar et al., eds., Cooperation and Conflict: Reading in American Federalism (Itasca, Illinois: F. T. Peacock Publishers, 1969). 4. Richard Simeon, Federal-Provincial Diplomacy: The Making of Recent Policy in Canada (Toronto: University of Toronto Press, 1972), p. 20. See also chapter 8.

171

NOTES TO PAGES 5-14

5. Alan C. Cairns, "The Governing of a Federal Society: The Canadian Case," Foundation Lecture for the Foundation for Canadian Studies in the United Kingdom, October 18, 1977, p. 7, mimeo. 6. See D. V. Smiley, Conditional Grants and Canadian Federalism (Toronto: Canadian Tax Foundation, 1963), p. 38.

Notes to Chapter Two 1. See, among others, Atlantic Provinces Economic Council, Fifth Annual Review (Halifax: APEC, 1971). 2. See, for example, Michael Hicks, "The Treasury Board of Canada and Its Clients: Five Years of Change and Administrative Reform 1966-71,"

Canadian Public Administration 16 (June 1973): 192. See also Canada, Royal Commission on Financial Management and Accountability, Final Report

(Ottawa: Minister of Supply and Services, 1979), p. 488. 3. Quoted in Thomas A. Hockin, Government in Canada (London: Weidenfeld and Nicolson, 1975), p. 136. 4. Ibid., p. 169. 5. See, for example, P. J. Fitzpatrick, "New Brunswick: The Politics of Pragmatism," in Martin Robin, ed., Canadian Provincial Politics (Scarborough: Prentice-Hall of Canada, 1972), pp. 116-33. See also Hugh Thorburn, Politics of New Brunswick (Toronto: University of Toronto Press, 1961). 6. Hockin, Government in Canada, p. 168. 7. See, among others, J. E. Hodgetts, The Canadian Public Service: A Physiology of Government 1867-1970 (Toronto: University of Toronto Press, 1973). 8. Based on information provided by an official of the Privy Council Office. 9. Canada, Department of Regional Economic Expansion, "Information, Co-ordination and Advisory Services," undated, mimeo. 10. Robert Presthus, Elite Accommodation in Canadian Politics (Toronto: University of Toronto Press, 1973), pp. 220-21. 11. It is said that the Canadian Cabinet is federalized in that political tradition dictates that whenever possible all provinces should be represented in Cabinet. In turn, some ministers are designated "the minister responsible" for their home provinces. What this means is that they are consulted by their Cabinet colleagues and from time to time by senior officials on policies or issues affecting their provinces. 12. See, for example, David J. Bellamy, "The Atlantic Provinces," in David J. Bellamy et al., eds., The Provincial Political Systems (Toronto: Methuen, 1976). 13. Throughout this study we employ the term "region" or "regional" to correspond to one or more of the four geographic and economic regions of Canada. It is important to bear in mind that we never equate the term "region" with individual provinces nor do we employ "region" or "regional" to refer to a given area within a province unless specifically indicated. DREE defines the four regions as follows: the provinces of Ontario and Quebec constitute separate regions; the "Western region" includes the provinces of British Columbia, Alberta, Saskatchewan, and Manitoba; and the "Atlantic region" 172

NOTES TO PAGES 14-22

includes New Brunswick, Nova Scotia, Prince Edward Island, and Newfoundland. From time to time the term "Maritime provinces," which excludes Newfoundland but includes the remaining three Atlantic provinces, is employed. 14. Canada, Minister of Supply and Services, Living Together: A Study of Regional Disparities (Ottawa: Minister of Supply and Services, 1977), pp. 35-60. 15. See, for example, F. Walton, "Canada's Atlantic Region: Recent Policy for Economic Development," paper presented to the Northeast Regional Science Association Meetings, Halifax, May 28-30, 1977, mimeo. 16. See, among others, J. R. Boudeville, ed., L'Espace et les poles de croissance (Paris: Presses Universitaires de France, 1968). 17. Canada, Department of Regional Economic Expansion, "Regional Development Programmes," 1973, pp. 26-31, mimeo. 18. Canada, Department of Regional Economic Expansion, "Current Programmes by Province: New Brunswick," 1972, pp. 41-59, mimeo. 19. See Government of New Brunswick, Main Estimates 1977-78, pp. 3, 4,13. 20. See Canada, Department of the Treasury Board, How your tax dollar is spent, 1976-77. 21. Information for our assessment of Tom Kent's management style comes from interviews with federal officials who worked with DREE while Kent was deputy minister. In addition, see A. G. S. Careless, Initiative and Response: The Adaptation of Canadian Federalism to Regional Economic Development (Montreal: McGill-Queen's University Press and the Institute of Public Administration of Canada, 1977), pp. 167-69. 22. Cureless, Initiative and Response, p. 199. 23. Ibid., chapters 8,9, 11, and 12. 24. Ibid., p. 97. 25. For his part, Marchand argued that "the more you extend it [i.e. special areas] the more you weaken it. ... We have no other reason other than if we extend it too much, it will become meaningless. It is difficult and politically it is very difficult too, but anyhow this is the purpose of the programmes. We have to stick to our guns." See Canada, House of Commons, Standing Com-

mittee on Regional Development, Minutes of Proceedings (Ottawa: Queen's Printer, 1970), p. 62. 26. Consultation with officials. 27. Richard Simeon, Federal-Provincial Diplomacy: The Making of Recent Policy in Canada (Toronto: University of Toronto Press, 1972), p. 144. 28. Ibid., p. 185. 29. Careless, Initiative and Response, p. 215. 30. Council of Maritime Premiers, Annual Report 1976 (Halifax: Council of Maritime Premiers, 1977), p. 1. 31. Consultation with officials. See also minutes of the thirty-sixth meeting of the Maritime Marshland Rehabilitation Advisory Committee held at Amherst, Nova Scotia, April 14, 1967, mimeo. 32. See, for example, Background Studies 1 and 3 on "Forestry in the Atlantic Provinces" and "Fisheries in the Atlantic Provinces" (Ottawa: Information Canada, 1972). 33. Careless, Initiative and Response, p. 86.

173

NOTES TO PAGES 26-33

Notes to Chapter Three 1. All twelve yellow books have been made public and can be obtained by communicating with the Department of Regional Economic Expansion, Ottawa, Canada. 2. See letter to New Brunswick Premier Richard Hatfield from the Honourable Jean Marchand on DREE's policy review, dated July 25, 1972, mimeo. The letter was made available by representatives of the New Brunswick government. 3. Canada, Department of Regional Economic Expansion, "New Brunswick: Economic Circumstances and Opportunities," Yellow Book, April 1973, pp. 22-23. 4. Ibid., pp. 25-34. 5. Ibid., pp. 26-62. 6. Canada, Department of Regional Economic Expansion, "Notes for a General Statement by the Honourable Donald Jamieson to the Standing Committee on Regional Development concerning the policy review," April 1973, p. 11, mimeo. 7. Canada, Department of Regional Economic Expansion, The New Approach (Ottawa: Department of Regional Economic Expansion, 1976), p. 22. GDAs were signed with all provinces except Prince Edward Island, which already had a fifteen-year Comprehensive Development Plan with the federal government when the GDA approach was introduced. 8. Ibid., pp. 20-21. 9. Canada, Department of Regional Economic Expansion, A Better Way to Grow (Ottawa: Department of Regional Economic Expansion, undated), p. 6. 10. The New Brunswick General Development Agreement and the subsidiary agreements are signed by the minister of DREE on behalf of the federal government and by the premier on behalf of the province (other ministers are at times invited to co-sign subsidiary agreements). Thus, the two ministers having overall responsibility for the Canada-New Brunswick GDA are the minister of DREE and the provincial premier. 11. Canada, Department of Regional Economic Expansion, Canada-New Brunswick General Development Agreement (Ottawa: Information Canada, 1974), p. 8. 12. For an example of a Canada—New Brunswick subsidiary agreement, see the Canada/New Brunswick Forestry subsidiary agreement, Department of Regional Economic Expansion, February 19, 1975. 13. Canada, Department of Regional Economic Expansion, "Notes for a General Statement by Honourable Donald Jamieson to the Standing Committee on Regional Development concerning the policy review," March 1974, p. 24, mimeo. 14. For a brief outline of DREE's 1973 reorganization see Canada, Department of Regional Economic Expansion, "The New Approach" pp. 31-34. 15. This study largely ignores DREE's incentives program. Although some attempts were made shortly after the policy review to bring the RDIA more in line with the identification of development opportunities approach to economic development, it remains a program very much apart from those under the GDA system. It is worth noting, however, that the program, which

174

NOTES TO PAGES 33-49

accounts for some 20 percent of DREE's total financial resources, was also decentralized after the policy review. 16. See Canada, Department of Regional Economic Expansion, "Climate for Regional Development: A working paper on regional circumstances and trends in Canada submitted by the minister of Regional Economic Expansion to the Standing Committee on Regional Development," 1976, pp. 16—17. 17. Canada, House of Commons, Standing Committee on Regional Development, Minutes of Proceedings (Ottawa: Queen's Printer, 1973), pp. 12:4-12:5. 18. Consultation with officials. 19. New Brunswick, Changes in Central Organization, June 15, 1972, pp. 17-21, mimeo. 20. The Community Improvement Corporation is an independent crown corporation and was established in the mid-sixties to coordinate activities under the federal FRED programs. See New Brunswick, Community Improvement Corporation, Annual Reports 1974-1977. See also A. G. S. Careless, Initiative and Response: The Adaptation of Canadian Federalism to Regional Economic Development (Montreal: McGill-Queen's University Press and the Institute of Public Administration of Canada, 1977), pp. 77-79. 21. Consultation with officials. 22. Ibid. 23. The Canada-New Brunswick GDA was the seventh of a series of nine GDAs that the minister of DREE signed with the provinces. See Canada, Department of Regional Economic Expansion, "Joint Press Release: General Development Agreement between Canada and New Brunswick," April 23, 1974, p. 5, mimeo. 24. Canada, Department of Regional Economic Expansion, Canada-New Brunswick General Development Agreement, p. 15. 25. Ibid. 26. See Canada, Department of Regional Economic Expansion "Joint Press Release: General Development Agreement between Canada and New Brunswick," April 23, 1974, mimeo.

Notes to Chapter Four 1. Canada, Department of Regional Economic Expansion, Joint news release on the 1972-75 Highways subsidiary agreement, June 28, 1974, mimeo. 2. Canada, Department of Regional Economic Expansion, Canada/New Brunswick King's Landing Historical Settlement subsidiary agreement, February 17, 1975, pp. 19-20. 3. Canada, Department of Regional Economic Expansion, Canada/New Brunswick Miramichi Channel Study subsidiary agreement, February 17, 1975, pp. 17-19. 4. Canada, Department of Regional Economic Expansion, Canada-New Brunswick General Development Agreement (Ottawa: Information Canada, 1974), p. 17. 5. Canada, Department of Regional Economic Expansion, Canada/New Brunswick Forestry subsidiary agreement, February 17, 1975, pp. 15-30. 175

NOTES TO PAGES 51-65

6. Consultation with officials. 7. Ibid. 8. Canada, Department of Regional Economic Expansion, Canada/New Brunswick Agricultural subsidiary agreement, February 17, 1975. 9. Ibid., pp. 15-19. 10. See telegram to Hon. D. C. Jamieson on the proposed New Brunswick Agricultural subsidiary agreement from R. Culbertson, president of the New Brunswick Federation of Agriculture and H. Ebbett, Regional Coordinator, Maritimes National Farmers Union, March 3, 1974, mimeo. A copy of the telegram was made available to us by a New Brunswick government official. 11. Canada, Department of Regional Economic Expansion, Canada/New Brunswick Kent Region Pilot Project subsidiary agreement, February 17, 1971, p. 18. 12. Ibid., p. 10. 13. Consultation with officials. 14. Consultation with a federal official who quoted correspondence between the federal Department of Agriculture and DREE. 15. Canada, Department of Regional Economic Expansion, Canada/New Brunswick Industrial Development subsidiary agreement, February 17, 1975, p. 13. 16. Ibid., pp. 14-15. 17. Ibid. 18. Consultation with officials. 19. Canada, Department of Regional Economic Expansion, Canada/New Brunswick Industrial Development subsidiary agreement, February 17, 1975, p. 14. 20. "Gloucester County Leads N.B. in Unemployment," Daily Gleaner (Fredericton), May 7, 1975. 21. "FRED Assessment Slated for Fall," Telegraph-Journal (Saint John), August 10, 1975. 22. "DREE With or Without Acadians," Telegraph-Journal, September 9, 1975. 23. "Major Debate Being Waged on North's Woes," Telegraph-Journal, November 28, 1975. 24. "Le MEER . . . ," L'Evangeline (Moncton), September 4, 1975. 25. See, among others, New Brunswick, Legislative Assembly, Synoptic Report (1975 Session, various dates). 26. Quoted in "DREE Shifting Focus in N.B.," Daily Gleaner, April 22, 1976. 27. Consultation with officials. 28. Consultation with officials. For an official summary of the first CanadaNew Brunswick GDA ministerial-level meeting, see Canada, Department of Regional Economic Expansion, Notes for a Press Statement for Honourable Marcel Lessard, December 16, 1975, mimeo.

Notes to Chapter Five 1. Such federal-provincial agreements as ARDA and FRED, including the FRED-northeast agreement, provided for federal financial assistance for the 176

NOTES TO PAGES 67-79

cost of salaries and expenses of provincial public servants. However, by and large, this assistance was limited to public servants engaged in implementing projects sponsored by these agreements. 2. Consultation with officials. See also "Provinces must pay civil servant salaries under cost-shared development agreements," Moncton Times, March 15, 1975. 3. Canada, Department of Regional Economic Expansion, Canada/New Brunswick Minerals and Fuels subsidiary agreement, June 24, 1976, pp. 14-23. 4. Consultation with officials. 5. So did L'Evangeline in a leading article. See "Pot-pourri touristique, L'Evangeline (Moncton), April 19, 1976. 6. "LeBlanc Pushes for Bigger N.B. Slice," Telegraph-Journal (Saint John), October 27, 1975. 7. "Highway Development Attacked," Telegraph-Journal, April 23, 1975. 8. "Les detours de Hatfield sur la route 11," L'Evangeline, October 28, 1975. 9. "Fredericton: un plan de $400 millions," L'Evangeline, December 9, 1975. 10. "Ottawa: un plan de $94 millions," L'Evangeline, December 9, 1975. 11. See, for example, "LeBlanc Pushes for Bigger N.B. Slice," TelegraphJournal, October 27, 1975. 12. "Dalhousie veut connaitre le plan de construction routiere du N.-B.," L'Evangeline, October 28, 1975. 13. See, for example, "Le chat est sorti du sac," L'Evangeline, December 9, 1975. 14. "Lessard deplore 1'action de Hatfield," L'Evangeline, December 12, 1975. 15. "DREE Refuses Funding for Fredericton Bridge," Daily Gleaner (Fredericton), December 6, 1976. 16. Ibid. 17. "Howie Questions DREE Cuts in Provincial Highway Programme," Daily Gleaner, January 12, 1976. 18. Consultation with officials. 19. Canada, Department of Regional Economic Expansion, Canada/New Brunswick 1977-80 Highways subsidiary agreement, February 11, 1977, p. 16. 20. "Breau: 1'entente sur les routes est loin d'etre satisfaisante," L'Evangeline, October 20, 1975. 21. "Le clerge catholique et la question sociale—La situation du Nord-Est est alarmante," L'Evangeline, October 20, 1975. 22. "Northeast New Brunswick—information to assist in the preparation of a Development Sub-Agreement," Telegraph-Journal, March 25, 1976. 23. "On evaluera 1'entente FODER au moyen d'audiences publiques," L'Evangeline, August 19, 1975. 24. "Pour le Nord-Est—Des audiences publiques sur 1'entente FODER," L'Evangeline, December 17, 1975. 25. See, among others, "Le Cran craint une repetition des erreurs de 1'entente FODER," L'Evangeline, September 17, 1975. 26. See, among many others, "Le developpement du Nord-Est—La nouvelle entente devrait reduire 1'ecart regional," L'Evangeline, March 10, 1976. See also "memoire presente par le clerge de Restigouche-Ouest aux repre177

NOTES TO PAGES 79-102

sentants du MEER pour le renouvellement de 1'entente federate," undated, pp. 1-4, mimeo. 27. See, among many others, "La nouvelle entente FODER aurait besoin d'un budget de $12.6 millions," L'Evangeline, January 13, 1976. 28. See, for example, "Harquail parle de ses priorites: 1'entente FODER et la route 11," L'Evangeline, October 15, 1975. 29. See "Herb Breau parle des problemes de son comte," L'Evangeline, August 20, 1975. 30. Canada, Department of Regional Economic Expansion, Canada/New Brunswick Northeast subsidiary agreement, June 23, 1977. 31. Consultation with officials. 32. Ibid. 33. "No fisheries accord—LeBlanc," Moncton Times, February 11, 1977. 34. See, for example, "LeBlanc sees no early signing of fishery sub-pact," Moncton Times, August 24, 1976. 35. "No fisheries-accord—LeBlanc," Moncton Times, February 11, 1977. 36. "$ Millions in Fisheries Aid in Limbo?" Telegraph-Journal, February 11, 1977. 37. News Release, Office of Eymard Corbin, member of Parliament for Madawaska-Victoria, March 17, 1977, mimeo. 38. Canada, Proceedings of the Senate Standing Committee on Agriculture, Minutes of Proceedings (Ottawa: Queen's Printer, 1977), p. 11:21. 39. Ibid., p. 11:20.

Notes to Chapter Six 1. Canada, Department of Regional Economic Expansion, Canada-New Brunswick General Development Agreement (Ottawa: Information Canada, 1974), p. 8. 2. See, for example, Canada, Department of Regional Economic Expansion, Canada/New Brunswick Agricultural Development subsidiary agreement, February 17, 1975, pp. 5-6. 3. Consultation with officials. 4. Ibid. 5. Ibid. 6. Ibid. 7. Ibid. 8. See, for example, New Brunswick, 1977 Provincial Budget Speech (Fredericton: New Brunswick Information Services, March 15, 1977), Appendix B. 9. Consultation with officials. See also New Brunswick, Department of Agriculture, Background Paper on the New Brunswick Dairy Industry, August 30, 1976, mimeo. 10. Consultation with officials. 11. Ibid. 12. Ibid. 13. New Brunswick, Community Improvement Corporation, Annual Report 1974-75, pp. 12-22. 14. Ibid., pp. 17-18. 15. New Brunswick, Community Improvement Corporation, Annual Re178

NOTES TO PAGES 103-122

port 1975-76, pp. 12-23. See also Canada, Department of Regional Economic Expansion, Annual Report 1975—76, pp. 12—22. 16. Consultation with officials. 17. Canada, Proceedings of the Senate Standing Committee on Agriculture, Minutes of Proceedings (Ottawa: Queen's Printer, 1977), pp. 11-19. 18. Consultation with officials. 19. Consultation with New Brunswick Cabinet ministers. 20. Consultation with officials. 21. Ibid. 22. Ibid.

Notes to Chapter Seven 1. See, for example, New Brunswick, Legislative Assembly, Synoptic Report (1975 Session), volume 5, p. 2034. 2. DREE's organizational structure is presented in Canada, Department of Regional Economic Expansion, The New Approach (Ottawa: Department of Regional Economic Expansion, 1976), p. 37. 3. For a breakdown of DREE expenditures by province, see Canada, Department of Regional Economic Expansion, Annual Reports, 1972-73 to 1978-79. For a breakdown of DREE expenditures by province on a per capita basis, see Annual Report 1978—79, p. 51. 4. Nearly all regional DREE officials interviewed underlined this point. The few interprovincial programs which DREE supports in the Maritime provinces were all introduced before the establishment of the GDA approach. 5. Consultation with officials. 6. Ibid. 7. Ibid. 8. Canada, Department of Regional Economic Expansion, Annual Report 1976-77, p. 124. 9. Consultation with officials. 10. James Eayrs, The Art of the Possible: Government and Foreign Policy in Canada (Toronto: University of Toronto Press, 1961), p. 35. 11. Consultation with officials. 12. Ibid. 13. Ibid. 14. "Breau: 1'entente sur les routes est loin d'etre satisfaisante," L'Evangeline (Moncton), October 20, 1975. 15. Canada, House of Commons, Proceedings of the Senate Committee on Agriculture, Minutes of Proceedings (Ottawa: Queen's Printer 1977), p. 11:21. 16. News Release, Office of Eymard Corbin, member of Parliament for Madawaska-Victoria, March 17, 1977, mimeo. 17. See, for example, "Herb Breau parle des problemes de son comte" L'Evangeline, August 20, 1975. 18. Canada, House of Commons, Inquiry of Ministry, Question number 188, October 13, 1976, p. xlix. 19. "Why are Area Studies Confidential?" Telegraph-Journal (Saint John), December 2, 1975. 20. Canada, House of Commons, Standing Committee on Regional De179

NOTES TO PAGES 122-138 velopment, Minutes of Proceedings (Ottawa: Queen's Printer, 1976-77), p. 12:15. 21. Consultation with officials. 22. New Brunswick, Unrevised Synoptic Report of the Proceedings of the Legislative Assembly, June 17,1976, p. 2538. 23. Consultation with officials. 24. New Brunswick, Legislative Assembly, Synoptic Report (1975 Session) , volume 5, p. 1859. 25. Ibid., p. 2062.

Notes to Chapter Eight 1. See, for example, "APEC Head: DREE Ineffective," Telegraph-Journal (Saint John), February 27, 1976; and "DREE Can't Create Jobs and Re-

gional Wealth," Daily Gleaner (Fredericton), October 4, 1973. 2. As of September 1, 1979, joint evaluation reports had been prepared for the following subsidiary agreements: Agricultural, forestry, industrial development, Kent region, minerals and fuels, and tourism. 3. Nevil Johnson, In Search of the Constitution: Reflections on State and Society in Britain (Oxford, Pergamon Press, 1977), p. 227. 4. Richard Simeon, Federal-Provincial Diplomacy: The Making of Recent Policy in Canada (Toronto: University of Toronto Press, 1972), p. 280. 5. Consultation with officials. See also, Canada, Department of Regional Economic Expansion, Annual Report 1978-79, pp. 50-53. 6. Canada, Statutes of Canada, Eliz. II, ch. 47, p. 676. 7. More specifically, Prime Minister Trudeau has stated that: "If the underdevelopment of the Atlantic Provinces is not corrected—not by charity or subsidies but by helping them become areas of economic growth—then the unity of the country is almost as surely destroyed as it would be by the French-English confrontation." Quoted in Atlantic Provinces Economic Council, Fifth Annual Review (Halifax: APEC, 1971), p. 15. 8. Canada, Department of Regional Economic Expansion, Annual Report 1978-79, p. 2. 9. "Lessard passe le ballon a Romeo LeBlanc," L'Evangeline (Moncton), December 17, 1975. 10. "Peches: entente federale-provinciale toujours en suspens," L'Evange/me, February 11, 1976. 11. See, for example, Canada, Department of Regional Economic Expansion, Canada/New Brunswick Minerals and Fuels subsidiary agreement, June 24, 1976, p. 9. 12. After a provincial office has prepared a news release, it must go through numerous check points before it is finally approved by the minister in Ottawa. For a rather cynical but nevertheless to the point article on DREE's difficulties with issuing timely news releases see "A Story from Our Country's Bureaucracy," Daily Gleaner, September 25, 1975. 13. Philip Laundry, "Legislatures," in David J. Bellamy et al., eds., The Provincial Political Systems (Toronto: Methuen, 1976), p. 280. 14. Consultation with officials who have worked both in Ottawa and Fredericton. 180

NOTES TO PAGES 139-152

15. New Brunswick, Legislative Assembly, Synoptic Report (1975 Session) , volume 5, p. 2063. 16. David J. Bellamy, "The Atlantic Provinces," in David J. Bellamy et al., eds., The Provincial Systems, p. 14. 17. New Brunswick, Legislative Assembly, Synoptic Report (1975 Session), volume 5, p. 2052. 18. Ibid., p. 2024. 19. P. J. FitzPatrick, "New Brunswick: The Politics of Pragmatism," in Martin Robin, ed., Canadian Provincial Politics (Scarborough: Prentice-Hall of Canada, 1972), p. 133. 20. Quoted in Allan T. Lambert, chairman of the Royal Commission on Financial Management and Accountability, "Notes for an Address to the Canadian Club, April 17, 1978," p. 2, mimeo. 21. Canada, Royal Commission on Financial Management and Accountability, Progress Report (Ottawa: Minister of Supply and Services, 1977), p. 23. 22. Canada, Auditor General of Canada, Report for the Fiscal Year Ended March 31, 1976 (Ottawa: Minister of Supply and Services, 1976), p. 9. 23. Atlantic Provinces Economic Council, Fifth Annual Review, p. 89. 24. Consultations with officials. See also New Brunswick, Community Improvement Corporation, Annual Reports 1974-75, 1975-76, 1976-77. 25. New Brunswick, Unrevised Synoptic Report of the Proceedings of the Legislative Assembly, June 6, 1977, p. 1997. 26. New Brunswick, Changes in Central Organization, June 15, 1972, pp. 12-21, mimeo. 27. Canada, Department of Regional Economic Expansion, Canada-New Brunswick General Development Agreement (Ottawa: Information Canada, 1974), pp. 3-8. 28. "Bureaucracy retards development," Moncton Times, June 27, 1977. 29. Donald V. Smiley presents a similar observation regarding the administration of shared-cost programs. See Donald V. Smiley, "Public Administration and Canadian Federalism," in J. Peter Meekison, ed., Canadian Federalism: Myth or Reality (Toronto: Methuen, 1968), p. 278. 30. Richard Simeon argues very eloquently that "The formal institutions and processes cannot simply be bypassed; whatever their weaknesses, it is through them that adjustments must ultimately be made." He adds "We are now paying the price of the historic underdevelopment of representative political institutions in Canada." See Richard Simeon, "Reaching the Lifeboat: Roles of Leaders and Citizens," in R. Simeon, ed., Must Canada Fail? (Montreal: McGill Queen's University Press, 1977), pp. 180-8.1.

Notes to Chapter Nine 1. A. G. S. Careless, Initiative and Response: The Adaptation of Canadian Federalism to Regional Economic Development (Montreal: McGill-Queen's University Press and the Institute of Public Administration of Canada, 1977), 2. Ibid., p. 195. 3. Ibid., p. 200.

181

NOTES TO PAGES 152-165

4. Ibid., p. 199. 5. Ibid., p. 198. 6. Richard J. Van Loon and Michael Whittington, The Canadian Political System: Environment, Structure and Process (Toronto: McGraw-Hill Ryerson Limited, 1976), p. 377. 7. For a perceptive discussion of "status goals and political competition" in federal-provincial relations, see Richard Simeon, Federal-Provincial Diplomacy: The Making of Recent Policy in Canada (Toronto: University of Toronto Press, 1972), ch. 8. 8. Charles E. Lindblom, The Policy-Making Process (New Jersey: Prentice-Hall Inc., 1968), p. 95. 9. Simeon, Federal-Provincial Diplomacy, p. 144. 10. Ibid., p. 33. 11. See, among others, Thomas A. Hockin, Government in Canada (London: Weidenfeld and Nicolson, 1975), ch. 5. He also suggests that "Since Canada does not entrench the liberties of citizens in a written constitution, and since there is no Council on Administrative Tribunals in Canada and no

Ombudsman, there is inadequate legislative prescription of administrative procedures," pp. 141-42. 12. Donald V. Smiley, "The Rowell-Sirois Report, Provincial Autonomy and Post-War Canadian Federalism," in J. Peter Meekison, ed., Canadian Federalism: Myth or Reality (Toronto: Methuen, 1968), p. 65. 13. New Brunswick, 7977 Provincial Budget Speech (Fredericton: New Brunswick Information Services, March 15, 1977); see, in particular, Appendix B—Gross Ordinary Revenue by Department, pp. 1-15. 14. K. C. Wheare, Federal Government, 4th ed. (Oxford: Oxford University Press, 1963), p. 11. 15. W. K. Riker, Federalism: Origin, Operation, Significance (Boston: Little Brown and Company, 1964), p. 11. See also R. L. Watts, New Federation: Experiments in the Commonwealth (Oxford: Oxford University Press, 1966), p. 9. He argues that "there must be an explicit constitutional demarcation of powers and functions between the general and regional governments. Governments at both levels must each be limited to their own sphere of action and must each be independent within their own sphere." 16. See, among others, Alan C. Cairns, "The Governing of a Federal Society: The Canadian Case," Foundation Lecture for the Foundation for Canadian Studies in the United Kingdom, October 18, 1977, mimeo. 17. George Rawlyk, "Quebec's Separation and the Atlantic Provinces," in R. Simeon, ed., Must Canada Fail? (Montreal: McGill-Queen's University Press, 1977), pp. 85-92. 18. "DREE is the best answer in the fight against regional economic disparity—Premier Hatfield," Moncton Times, June 7, 1977. 19. Canada, Minister of Supply and Services, "Living Together: A Study of Regional Disparities" (Ottawa: Minister of Supply and Services, 1977), p. 170. 20. For example, the Atlantic Provinces Economic Council recently argued that "At the national level, it would appear necessary to implement a better co-ordination between overall national policies and regional development policies." See "Development policy, retrospect and prospect," Newsletter, volume 21 (Halifax: APEC, February, 1977), p. 3. 21. Ibid. See also Canada, House of Commons, Standing Committee on

182

NOTES TO PAGE 165

Regional Development, Minutes of Proceedings (Ottawa: Queen's Printer, 1976-77), p. 23:25. 22. Richard Higgins suggested the establishment of a "major regional development fund" in his presentation to the Standing Senate Committee on National Finance. See Canada, Standing Senate Committee on Finance, Minutes of Proceedings (Ottawa: Queen's Printer, 1978), p. 3:11.

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Index

Acadians, 13, 27, 55, 77, 81, 140 Adversary/confrontation politics, 18-21, 118, 155-56 Agricultural Rehabilitation and Development Act (ARDA), 15-16, 22, 55-56, 127-28, 130-31, 151 Agriculture, 27, 43, 53-55, 67, 93, 97-98, 103,112,133,135,164, 169 Agriculture, Senate Standing Committee, 89-90 Agriculture Dept., fed., 11, 53, 83, 97-98, 112; minister, 89-90, 163 Agriculture Dept., N.B., 53-54, 82, 93, 101 Alberta, 29, 162 Anti-inflation program, 87 Atlantic Development Board (ADB), 15, 21-22, 130-31, 154 Atlantic Provinces Adjustment Grants, 15 Atlantic Provinces Economic Council, 142 Auditor General, 1976 report, 141 Bathurst Chamber of Commerce, 71 Bellamy, David, 140 Birch, A. H., 1 Breau, Herb, 59-60, 71-72, 75, 77, 79-80, 120-21 Bricklin project, 41 British Columbia, 29, 164 British North America Act, 86, 159

Cabinet/Cabinet ministers, fed., 4, 8-9, 20, 28-29, 118-20, 134-37, 166 Cabinet/Cabinet ministers, N.B., 4, 9, 11, 13, 19,38,40,42, 52, 56, 75, 80-81,85,89,99,101,104-5, 122-23, 137, 143-49, 155, 163 Cabinet Committee on Economic Development, N.B., 30, 39, 81, 104, 107, 122 Cabinet Secretariat Office, N.B., 38-40, 48-49, 53-54, 68-69, 83, 98, 144-^5, 155 Canada-New Brunswick Development Committee, 30, 39, 81, 89, 92, 107, 114, 158 Canada Pension Plan, 129 Canadian Federation of Agriculture, 11 Cape Breton, 109 Careless, Anthony, 21, 151-52 Central Mortgage and Housing Corporation, 81 Charlotte County, N.B., 80 Chatham, N.B., 46-47 Commerce and Development Dept., N.B., 82, 124 Community Improvement Corporation (CIC), 30, 39, 67, 83,92-94, 98, 100, 117, 145 Constitutional responsibility, 5, 80, 86-88, 151, 158-63 Corbin, Eymard, 89, 121 Cost-sharing, 4, 17, 29,40,44-47, 185

INDEX

65,67,74, 123, 145, 160-61 Council of Maritime Premiers, 21, 87 Dairy industry, 97-98 Dalhousie, N.B., 72 Department of Regional Economic Expansion (DREE): Atlantic Regional Office, 32-33, 35, 38, 108-11; budget, 108-9; decentralization, 2-3, 5, 32-38, 44, 65, 108-13,163; establishment, 15-17, 131; minister (fed.), 61, 72, 103, 119, 123, 136 Development Policy Secretariat, N.B., 19 Dionne, Maurice, 79 Eayrs, James, 113 Economic Advisor Office, N.B., 18 Economic Council of Canada, 164 Economic Growth Dept., N.B., 48, 58-59 Edmundston, N.B., 105 Environment Dept., fed., 47-48, 50-52, 98; Forestry Service, 48, 50, 52 Environment Dept., N.B., 98 L'Evangeline, 59-60, 70, 72-73, 76, 78 Federal Government: hierarchical lines, 9-10, 110; interdepartmental committees, 10-11; staffing, 7-8 Federalism, 1-5,20-21, 149, 151-67 Federal-provincial conferences, 4 Federation of Agriculture, N.B., 54 Finance Dept., fed., 15, 58-59 Fisheries, 27, 43, 61, 85-88, 102, 133, 136, 156, 160, 169 Fisheries Act, 86 Fisheries and Environment Dept., N.B., 85 Fisheries Dept., fed., 86-88, 160, 165 Fitzpatrick, P. J., 141 Forestry, 27, 43, 48-52, 93, 95-96, 101-2, 133, 140, 169 Fredericton, 62, 71,78,99 Fund for Rural Economic Development (FRED), 15-16, 22, 65, 127-28, 131, 151;FREDMactaquac agreement, 46. See also Northeast N.B.

186

General Development Agreements (GDA): annual meetings, 31, 62, 90, 114, 116-17; definition/ purpose, 4, 29-31, 40-41, 91, 107, 111,123, 128,131-32, 163-64; legal/ administrative requirements, 3,31,43,92,94-95, 131-32; management committees, 30-31, 39, 58, 66, 92-97, 99, 102-4, 121, 124, 155, 157, 167 Glassco Commission, 141 Gloucester County, N.B., 59, 76 Halifax, 22 Harquail, Maurice, 79 Hatfield, Richard, 37,40-43, 46, 57, 62-63, 71-73, 75, 88, 104, 123, 139, 143-44, 164 Highways, 17, 20, 25, 41-46, 63, 123, 135, 169; arterial roads, Saint John, Moncton, 46, 62, 169; highway eleven, 41, 45-46, 62, 70-76, 79-80, 88, 92-93; multiyear agreement, 70-76 Hockin, Thomas, 8 Housing, 16,27,84 Howie, Robert, 73 Industrial development, 16-17, 41, 57-59, 83, 87, 123, 134, 156, 169 Industry, Trade and Commerce Dept., fed., 48, 53, 58-59, 164-65 Information: computerized systems, 34-36, 39, 114-15; hoarding, 18, 55, 84, 89, 102-4, 110, 121-24, 131-32, 139-40, 145, 152-53, 166-67 Interdepartmental relations/consultations, 10-11, 28-29, 34-39, 51-52, 97-105, 111-24, 133, 142-45,162 Interest groups, 5, 11-13, 54-55, 105-6, 121, 145-47, 149, 166 Intergovernmental competition, 4-5, 9-10, 18-19,93-96, 111-12, 154-56, 162-63, 165 Jamieson, Don, 26, 28, 32, 34-35, 37-38, 41-^3, 61 Kent, Tom, 18-19,26,153 Kent Region Pilot Project, 55-57, 59,

INDEX

66,81,83,92-93, 101, 133, 160, 169 King's Landing Historical Settlement, 45, 60, 169

Northumberland County, N.B., 76 Northwest N.B., 89, 121 Nova Scotia, 29, 66 Nuclear power plant, 41, 60-61, 76

Labour Dept., N.B., 50 LeBlanc, Romeo, 60, 70-72, 85-89, 136 Legislative Assembly, N.B., 5, 12, 138^2, 149, 166 Lessard, Marcel, 61 Liberal Party, 13, 18, 25, 56, 158 Lindblom, Charles, 156 Love, J. D., 26

Official languages policy, 39 Oil crisis, 127 Ontario, 7, 29, 32, 158, 164

McCain, Fred, 73 Manitoba, 29 Manpower and Immigration Dept., fed., 50, 81 Marchand, Jean, 18-19, 25-26, 37, 152 Maritime Marshland Rehabilitation Act (MMRA), 21-22, 130-31, 154 Mill, John Stuart, 129 Minerals and fuels, mining, 27, 43, 68, 98, 102, 169 Miramichi Channel, 46-47, 88, 169 Moncton, 17, 19, 22, 32-33, 41, 46, 57, 71 National Farmers' Union, 54 Natural Resources Dept., N.B., 48-49, 68, 82, 98 New Brunswick Electric Power Commission, 60 New Brunswick Government: development, 9, 146; expenditures, 12-13, 138-39; financial resources, 9, 17-18; staffing, 7-8 New Democratic Party, 130 Newcastle, N.B., 46-47 Newfoundland, 29, 66 Northeast N.B., 59-60, 76-85, 88-89, 100, 116, 120, 133-34,145; FRED-northeast agreement, 58, 61, 63, 76-77, 121; programs, costs, 83-84; public hearings, 77-79, 146-^7 North-south disparities, N.B., 13, 59-60, 76, 78, 88

Parliament, 129-32, 141, 149 Patronage, 9, 13, 140-41 Pearson, Lester B., 18 Perroux, F., 16 Planning agreement/initiatives, 40, 52-53, 66-67, 101-2, 143-44, 169 Planning, joint, 5, 7, 28-29, 32, 43-45,67,81-83,86, 115, 118, 121, 123, 135, 148, 154, 159 Planning Program Budgeting System (PPBS), 143 Presthus, Robert, 11 Prince Edward Island, 65 Progressive Conservative Party, 13 Public Accounts Committee, N.B., 139 Public Works Dept., fed., 47,94-95 Quebec, 4, 7, 14, 18, 25, 29, 32, 108, 158 Rawlyk, George, 163 Regional Development, House of Commons Standing Committee, 12,28-29,34-35,131,165 Regional Development Incentives Act (RDIA), 16, 33, 130-31 Regional economic disparities, 5, 14-22,28,60, 111,130-31, 163-67 Regionalism, 21-22, 66, 69, 74, 153-54 Research and Productivity Council, N.B., 58, 68 Resource development, 14, 84 Restigouche County, N.B., 76 Riker, W. H., 161 Robichaud government, 19 Roman Catholic clergy, 76 Royal Commission on Financial Management and Accountability, 141

187

INDEX

Royal Commission on Government Organization, 12 Saint John, 17, 19, 22, 41-42,46,57, 60, 71 Salaries, provincial officials, 57, 59, 66-67 Saskatchewan, 29 School construction, 79 Sewer services. See Water supply Simeon, Richard, 20, 129, 149, 157 Small business incentives, 58-59 Smiley, Donald, 158-59 Soil conservation, 22 Spatial agreements, 63, 78, 80, 83, 89,91,93,112, 121,160 Special areas agreements, 16-17, 19-20, 38, 128 Spruce budworm, 102 Subsidiary agreements: annual expenditure budgets, 94-97, 101, 104, 108, 129, 132; format, 31-32; number, cost, 45, 129, 160, 169; procedures, 36-37; purpose, role, 4, 29-31

188

Supply and Services Dept., fed., 165 Toronto, 37 Tourism, 27, 43, 68-69, 75, 93, 102, 105, 160, 169 Tourism Dept., N.B., 68-69 Transport Dept., fed., 42,47, 73-75, 165; minister, 73-74 Treasury Board, fed., 12, 36-37, 51, 57, 59, 66-67, 84, 107, 112,116, 119, 134-35,142, 145,148, 156 Treasury Board, N.B., 40, 105 Trudeau, Pierre E., 15, 130, 152 "Twenty-cent" dollars, 122, 148 Unemployment, N.B., 14, 16, 26-27, 58-59, 76-77 Water supply, sewer services, 16—17, 25, 58, 77, 79-80 Wheare, K. C., 161 Yellow books, 26-29, 37, 40, 43, 48, 53, 127