Carney's Federalism Dilemma

The prime minister must choose avoidance or engagement

For the fourth time in four federal elections, the Liberal Party of Canada has earned the most seats and will form government. Many eyes are fixed squarely on the opposition parties for their failures before and during the campaign. In an earlier post, I discussed the paths ahead for Conservatives: rage road or brokerage boulevard.

Here, I discuss how the Liberals, too, face a choice: retreat into the comfort of minority government maintenance, or take a bold step toward restructuring how we do federalism and intergovernmental relations in this country. One option invites deepening resentment, particularly in Alberta. The other offers a chance at intergovernmental collaboration at a time when Canadians need it most.

I base the following analysis on over seven years working in intergovernmental relations in Manitoba and Alberta, along with my academic research on the topic.

Path 1: Avoidance as Usual

The easiest path would be to do what Liberals have done before: claim legitimacy, govern from the centre, and treat Alberta alienation as a passing grievance. After all, they’ve weathered this before. The NEP. The Reform wave. A Firewall Letter. An equalization referendum. Threats to destroy the Canada Pension Plan. Even the Alberta Sovereignty Act didn’t draw the Liberals into a discussion about the future of Canadian federalism.

To borrow a boxing metaphor, the Trudeau Liberals played a rope-a-dope strategy with Alberta, hoping the UCP would punch itself out. They didn’t.

Nonetheless, the Liberals could double down on their avoidance strategy. This would draw the UCP into increasingly extreme positioning, likely dragging down the image and credibility of the Conservative Party of Canada in the process.

The Liberals could invest in their core agenda—climate transition, pharmacare, urban housing—and deal with provinces as they must, on a case-by-case basis. They could rely on existing institutions: First Ministers’ Meetings when needed, bilateral deals when possible, federal spending power as leverage.

But this path carries a lot of risk and steep cost. It reinforces the perception, especially in Alberta, that the federal government is oblivious to concerns from peripheral regions and that federalism, itself, is broken.

It puts partisanship ahead of patriotism, inflaming a form of regionalism that no longer sees intergovernmental disagreement as healthy tension, but as confirmation that the system is beyond repair.

It invites more court challenges which, even when Ottawa wins, allow Alberta leaders to chip away at the legitimacy of the judiciary (framing judges as part of the Laurentian elite).

Worse, it assumes that the current institutional architecture can withstand the next wave of anger. It might not, given that the norms and rules underpinning intergovernmental relations have eroded so much over the last decade. More on that below.

Path 2: Renewed Engagement

The harder but more hopeful road begins with humility: an acknowledgment that our existing intergovernmental system — shaped by ad hoc meetings, asymmetrical power, and top-down decision-making — has outlived its usefulness.

The real crisis isn’t national unity; it’s institutional fragility and forgotten norms. We need to bolster both.

Part of this second approach would be to adopt select elements of the Chretien and Harper strategies for intergovernmental relations. From the former, a renewal of the Social Union Framework Agreement (SUFA) might assuage concerns about federal overreach and bring dissident provinces back into the field of cooperative federalism through a rules-based approach.

This aligns with elements of Harper’s “open federalism” model, which saw the federal government vacate some areas of provincial jurisdiction while bolstering fiscal transfers and making them more predictable. As during the Harper years, this could open up space for inter-provincial leadership on key priorities, including climate change.

Elsewhere, I've argued for a reinvigoration of intergovernmental relations in Canada, particularly in the face of the Trade War with the United States that transcends partisan divides and strengthens the federation’s ability to face domestic and international challenges.

This means re-committing to several key norms that have fallen by the wayside in these populist times. Canadian intergovernmental relations were once governed by unwritten rules that prioritized trust, cooperation, and restraint. These included avoiding partisan attacks during elections, respecting consensus through unified messaging in intergovernmental forums, providing advance notice of major policy moves or visits, steering clear of unnecessary constitutional debates, and presenting a coordinated “Team Canada” front on the international stage.

Today, these norms are rapidly deteriorating. Partisan posturing, unilateral policy announcements, performative constitutional provocations, and uncoordinated foreign engagements by premiers have replaced the spirit of respectful federalism, undermining trust, cohesion, and Canada's global credibility.

Ultimately, I argue that the health of Canadian federalism and the success of “Team Canada” will depend on our willingness to restore and revalue these intergovernmental norms. Without them, our ability to act cohesively and effectively on the world stage is at serious risk. And our adversaries will exploit that division.

In an earlier piece amid the COVID-19 pandemic, I argued that we need systemic reform designed to foster trust, not just transaction. This means re-introducing routine, rules-based intergovernmental relations, where leaders know they’ll meet regularly, under shared agendas, with accountability built into the process​.

That starts with institutionalizing First Ministers’ Meetings, moving them from sporadic events to annual fixtures with jointly determined priorities. These summits should no longer be convened only in moments of federal need; they should serve as the engine of collaborative governance. As seen early in the pandemic, regular interaction breeds familiarity and buy-in. The next step is permanence​.

Second, the federal government should co-host joint cabinet meetings in provinces, not just retreats for its own team. The symbolism matters. It demonstrates that Ottawa is willing to govern with rather than over its provincial counterparts.

Alberta, in particular, needs to be brought into these conversations — not as a problem to be solved, but as a partner in addressing national challenges. If the UCP government balks, that posturing should be made transparent and public. The vast majority of Albertans want their governments to work together, building bridges with other parts of Canada not a firewall around the province.

Third, and more ambitiously, the Liberals should champion interlegislative and intralegislative federalism. That means connecting MPs with MLAs through exchanges and dialogue forums. It means creating regional caucuses that transcend party lines, allowing legislators to find common ground across jurisdictional boundaries​. If we cannot rebuild the old brokerage parties, we can at least recommit to the cross-party regional relationships they once fostered.

These are some of the themes I addressed with the Hill Times, and I’ll discuss them more at next week’s webinar with IRPP.

Fixing the Federation

The coming months will test the resolve of the Liberal government. It will be tempting to focus inward, to shore up its minority, to frame Alberta anger as sour grapes. But that would be a fundamental misreading of the moment.

Alberta isn’t looking for handouts. It’s looking for respect, demonstrated through fair processes, shared institutions, and a commitment to renewal. (Though the UCP government is going about earning this respect in all the wrong ways.) The deeper discontent is not economic, but structural. And it won’t be placated by pipeline announcements or policy tweaks, let alone benign neglect.

What’s required now is not a new federalism, but a renewed one. Fortunately, there are proven models upon which we can draw to foster a federation that makes space for dissent without defaulting to disunity. A system where all provinces are offered the opportunity to be full participants, even when they’re politically at odds with the federal government.

The Liberals have a choice: govern as caretakers of a strained federation or become its renovators. If they choose the latter, they may find not only a new path forward for Canada, but a new identity for themselves: not just the party of national programs, but the architects of a stronger union.