The unitary state and federal state are different political system. Many countries in the world are implementing unitary system of government, Such as: Israel, Egypt, Ghana and the China. In the unitary state, the central government plays the role of ultimate authority. That the national government decides how much power passes to the lower levels of government. It is clear division of responsibility and accountability as a unitary state the relationship between central and local government’s one of the characteristics  . In federalism countries, the authority of the government divided two levels of government; the relationship between federal and province governments is on the edge of decentralization.
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Federal and provincial government activities are interdependence to each other, these two levels government will share responsibilities, jurisdiction and authority. Either federal state or unitary state must deal with intergovernmental relations particularly intergovernmental fiscal relations. In accordance with the international division, Canada is commonly named as a federal union. It is import to understand the relationship between the federal and provincial governments because complex relationships influence one of the central elements of Canadian government policymaking. Somehow, it is clear to figure out the major problem is federalism need balance the government’s responsibilities on the finance role  . Every year federal government delivers the large money that the provinces use to their infrastructure construction programs and the public service. Based on the public service of investment system between two government transformations, the relations between federal government and province government is that the Federal government responsibilities transfer funds to Province government which likes financial co-ordination relationship. However, the Federal government some time for indirect investment in the public sphere on social services, and that it is necessary through reforms, to establish the federal government and province government responsibilities of the financial resources in public domain. Investment in public sector reform has a direct influence on the social organization of the development, improving social institutions and civil society formation. However, the Federal Government spending power is a strong hand on the provincial policies.
Health care is an example of the federal funding provincial policies. Provinces receive funding from the Federal government combined with portions of the Canada Health Transfer (CHT), Canada Social Transfer (CST), and Health Reform Transfer (HRT). However, the funding is subject to compliance of Canada Health Act, which applies national criteria and conditions. These conditions include public administration, universality, accessibility, and restrictions on extra billing and user fees  . If a province fails to follow the Act, the Federal Government can reduce the transfer amount to the province. This means the Federal side wants to impose the national policy in the power of the subsidy. However, many provinces argue that the health care system is the provincial jurisdiction, and sometimes refuse the condition. Quebec, regardless it receives almost half of the Federal Health Transfer amount, still stands up to against the Federal intervention in provincial policies  .
In my opinion, policies are separate into different conditions. Health care policies are civil policies that take cares of every individual. Canada as a large nation should have a consistent policy in all provinces. Because every citizen is equal, treatment should be the same. Provinces may release some power in this sector in order to meet the standard of the nation as a whole. The Federal Government on the other hand, should not reduce funding to provinces, which will only worsen the health care system in the province. If rich provinces try to liberate from the Federal Budget, the national standard will lose its meaning as a whole. Think of Canada, health care maybe one of the most proud systems the country have.
Overall, Canada’s current building in the social system is discouraging provinces. The central government targeting of the social construction implementing fiscal policies also causes decentralization. The division of responsibilities between the two sides is not clear and difficult to divide smoothly. In many cases, the federal government’s social policy directly touches into the local social policies, such as taxation and equalization payment of basic public services.
In 1982, the central government formally proposed “equalization payment” concept, and the financial system as a target. The government will redistribute money from rich provinces to poor provinces. For example, Ontario has strong corporation income tax, because many head office are located in Ontario. Strong fiscal income made Ontario higher in Federal income budget. In order for all provinces to share the welfare, the Federal government will relocated the benefit of Ontario to other provinces, making the all region more equally across country.
This program is not pleasing rich provinces like Ontario and Alberta, who are the main contributors of the program. The recipient provinces have the disadvantages of smaller territories or smaller population. Small economic scale is bringing down the total fiscal capacities of those provinces. Therefore, with equalization payment from the Federal Government, economic per capita of the small provinces is actually higher than those of large economies  . Scholar Jay says:
[A]ll citizens are entitled to the same social services at the same tax rate, regardless of where they live. How one personally views fairness in this context will bear heavily on whether or not they support the very notion of the Equalization Programâ€¦ 
Dissatisfaction causes big provinces demand for bigger political power. The equalization payments actually put them in the advantage of negotiation. These provinces have large population and big economies, the Federal will hesitate to directly refuse or not negotiating with them.
On the other hand, the smaller provinces become more dependent on the program. The province of Newfoundland and Labrador still demands the equalization payment even after the province has discovered oil drain in the Atlantic Sea  . The equalization payments program touches deep in terms of the province policy-making, for the province is too much relied on the fund to carry any policies. The Federal government will lose their trust to the provinces if disadvantage is brought to provinces.
The Federal Government should focus on areas that are essential to the public. For other areas, it should not be involved in firm relations with the public. We should truly reflect the people-oriented to public service and community management as a task. Thus, targeting at rebuilding public financial institutions, the government carried out a series of financial system reforms, including taxation, budget management system, expenditure restructuring, and new round of tax reforms. Although the reform was opening up, reform of taxation system several times, the federal government’s entitlement to raise the taxation anytime is far away from the goal of support public finances.
Take the Harmonized Sales Tax, HST, as an example, Federal and Provincial level government both entitled to the sales tax. Federal government tries to make taxation easier and negotiated with several provinces. British Columbia is the newest to impose it. In order to cut the deal with the British Columbia government, Federal government is promised to subsidy the provincial government more than one billion in imposing HST  . The provincial government is applying the HST program so that the subsidy from the Federal Government is assured. We can certainly critic that the provincial authority hasn’t well explained the benefit of the HST program is in the business sector. To normal citizens, the HST will dig deeper in the public consumer sector. Provincial Government had trade the public off to the subsidy provided by Federal government. Such a movement is contradictory to the image of Federal Government as the servant the general public. The relationship of federal-provincial policies will be criticized for its unawareness of the public and backdoor deal on subsidy.
The importance of the federal-provincial relationship varies widely based on many conditions. Policymaking of both levels of government should be co-ordinate rather than directed by funding. Achievement on important subjects such as health care, and equalization payment should not be used as leverage. Conference between provincial and federal government should focus on the methods of equalizing the power between them. Negotiating budget for jurisdiction of policies is much a delay to effectively delivery programs. In terms of authority, both levels of governments represent citizens within Canada, as long as the program will do good for the people, there will not be too much criticism on both sides.
There are times Federal has little to do with the provincial policies. It is because either the Federal government does not have the ability to intervene or it has no incentive to do so. If the negotiation costs are too high, Federal government will slow down its demand for power. Therefore, provinces again could have freedom on policy-making, if they are not so rely on federal money. This decentralized power seems a hit on federalism, but actually it is a situation when province has the better insight on a particular matter.
Environment policy is the example of Federal government and Provincial government co-ordinate, but the provinces are leading in reforming. The province of British Columbia had imposed the leading Carbon Tax, along with Quebec releasing projected reduced emission target as plausible as British Columbia. These are the two best provinces in making policies  . The Federal is weak on the environmental policies. One reason is that Canadian provinces have varies conditions. Federal negotiation with Alberta and Ontario, who are heavily rely on oil and auto industries, will be much harder than with other provinces. Weak Federal policies and limited funds did not stop other provinces from developing environmental policies. Here the federal government has little impact and even has no guidance to the lower level governance.
No matter how the Federal government will impose policies with subsidies to provinces or not, provinces are always negotiating with maximizing their own power in their jurisdictions. Sometimes maybe too rely on the government, but most of the times, no one will give up the power in hand.
The trend is to argue for putting less emphasis on extensive federal-provincial co-operation, and more on encouraging each government to act independently within its area of jurisdiction. This clearly separation of power suggests that government responsiveness and policy effectiveness is to be found more in competing rather than searching arrangements from one side of the agreement for one’ own sake. This will encourage a more collaborative, partnership model. By contrast of wasting time on negotiation, the sense that in some areas governments can effectively achieve their goals is much attractive to two levels of government. With two powerful governments in an equal position, co-operation is essential for success.
This will not deny the federal-provincial relationship defined in the constitution. The main idea is whether they should constitute something like an equal floor for negotiation, with real decision-making power, not subordinated to big money. Instead, they should be able to consult each other and bring up debates. Each side also tends to argue for something that differs in real suggestions. Those more competitive programs call for clarification of the powers of each government level. If reforms taken in the central government which will make it more regionally responsive, therefore policies are easier to pass all provinces. Collaboration of federalism need for a new positioning not only programs that delivers sum of money. Decentralization may cause the Federal some concern, but if policies are more effective, Canada and its citizens should be happy to see this.
Dale Marshal, “Provincial Power Play: Breaking Away from Federal Inaction on climate change,” pp.1-21. 2008 Vancouver: David Suzuki Foundation
“Federal Transfer programs to the Provinces,” Quebec government. www.desequilibrefiscal.gouv.qc.ca/en
Malcolmson, P. and Myers, R. “The Canadian Regime,” University of Toronto Press (2009)
Markarenko, J. “Equalization Program in Canada: Overview and Contemporary Issues,” Mapleleafweb.com. (2008) http://www.mapleleafweb.com/features/equalization-program-canada-overview-and-contemporary-issues
Palmer, V. “HST federal legislation locks B.C.’s near future,” Vancouver Sun (Dec. 2, 2009).