This episode of Hub Dialogues features host Sean Speer in conversation with University of Alberta law professor Malcolm Lavoie about his important new book, Trade and Commerce: Canada’s Economic Constitution.
They discuss how trade and commerce were integral to the creation of Canada, the economic vision of the framers that is embedded within the Constitution, and how modern judicial thought wrestles with this issue, including with respect to interprovincial trade disputes.
You can listen to this episode of Hub Dialogues on Acast, Amazon, Apple, Google, Spotify, or YouTube. The episodes are generously supported by The Ira Gluskin And Maxine Granovsky Gluskin Charitable Foundation.
SEAN SPEER: Welcome to Hub Dialogues. I’m your host, Sean Speer, editor-at-large at The Hub. I’m honoured to be joined today by Malcolm Lavoie, a law professor at the University of Alberta and a leading expert on property rights, aboriginal law, and constitutional law who’s argued in front of the Supreme Court of Canada in significant constitutional cases.
He’s also the author of the fascinating new book, Trade in Commerce: Canada’s Economic Constitution, which challenges prevailing views about the inherent economic thinking embedded in Canada’s constitutional architecture. I’m grateful to speak with him about the book, its key ideas, and their possible implications for Canadian jurisprudence. Malcolm, thanks for joining us at Hub Dialogues, and congratulations on the book.
MALCOLM LAVOIE: Thanks, Sean. I’m a regular listener of the podcast, so it’s a special pleasure to be here with you.
SEAN SPEER: The book’s central argument is that the framers of the 1867 British North America Act had an economic vision for the country and that economic vision was embedded in Canada’s Constitution. Let’s just start there. What was their economic vision?
MALCOLM LAVOIE: Yeah, so the central argument in the book is that there is an economic vision that underlies the provisions of the Constitution Act 1867, formerly known as the British North America Act 1867. That economic vision, I argue, has four components. Two have a decentralizing focus, and two have a centralizing tendency, let’s say. So the decentralizing elements of the economic vision are, firstly, a commitment to secure property rights, which might be surprising to some, but I argue that that’s embedded in our constitutional structure.
The other decentralizing element is a commitment to local autonomy and the principle of subsidiarity on economic questions. Subsidiarity just means that more centralized governments like the federal government should play a subsidiary role, stepping in that only when necessary in order to be effective. There are these decentralizing aspects, which are quite important in a large and diverse country like Canada.
And then there are also two elements that have a centralizing tendency. So I argue that there’s a commitment to economic integration and free internal trade, and that’s manifested in the positive jurisdiction of the federal Parliament on specific types of economic questions that can’t be effectively dealt with at the local level. And it’s also reflected in certain restrictions on the ability of provinces and local governments to impede interprovincial trade. So there’s this commitment to interprovincial trade that has both the positive dimension, the jurisdiction of the federal Parliament, and a negative dimension, the restrictions on barriers to trade.
SEAN SPEER: You observe in the book that a common view in the world of Canadian legal thought is that judicial interpretations of the Constitution should forgo trying to read in such visions on the grounds that it ought not to put normative constraints around policymakers. You cite Justice Malcolm Rowe, for instance, on this point in the book. Do you want to elaborate on this judicial point of view? What does it mean, and what are its consequences?
MALCOLM LAVOIE: I think that tendency that you described is somewhat selective, right? So with respect to interpreting the Charter of Rights, judges take a purposive view, they look at the underlying purposes of the provisions and they try to give effect to those purposes in say, protecting freedom of expression or freedom of religion, let’s say. But when it comes to the structural provisions of the Constitution, those provisions that you see in the Constitution Act 1867, the jurisdiction of the federal parliament and provincial legislatures, courts back off from that. And they have, especially in the past few decades, adopted not quite a hands-off approach but a light touch with those provisions, aiming to interpret them in a way that’s flexible. It gives both orders of government the flexibility to enact policies as long as there’s some kind of connection to their jurisdiction, and I think that’s problematic.
I think that that really flexible approach that doesn’t look at the underlying purposes fails to recognize that the exclusive nature of federal and provincial jurisdiction is actually one of the key ways—Sections 91 and 92, the division of power—it’s one of the key ways that those purposes are achieved. It matters that federal heads of jurisdiction are exclusive; that protects local autonomy. At the same time, it matters that federal heads of jurisdiction are exclusive. The federal jurisdiction over interprovincial trade for instance, by making that exclusive, yes, you give some jurisdiction to parliament, but you also restrict the ability of provinces to impede the flow of interprovincial trade. And so when you look at the purposes, it actually matters that those provisions are exclusive, that those powers are exclusive; that’s part of how those purposes are achieved. And that’s something I think we’ve especially lost sight of in the past, let’s say, three decades or so.
SEAN SPEER: Okay. That prompts the question: If your notion of a national economic vision took root in the world of jurisprudence, how would it affect the way that courts adjudicate cases? What might be some examples of how it may produce different outcomes, including with regard to how we think about the scope of provincial policymaking and its ability to impair the functioning of the national economy?
MALCOLM LAVOIE: Well, I should say, I make the point in the book that courts were fairly faithful to this economic vision for most of Canada’s constitutional history. You see that, for instance, with the understanding that existed for a long time, that it was important that heads of jurisdiction, including economic jurisdiction, were exclusive. But in the past few decades, there’s been a move away from that understanding, and I think there are areas where this would make, potentially, a big difference. And there are examples I can list within each of those four aspects of the economic vision. But one case that I single out that I talk about at some length is the case of R v. Comeau.
This is a case from 2018. It involved a very relatable set of facts. A gentleman from New Brunswick, a retired steel worker who drove to Quebec to get a better deal on beer, was pulled over in what amounted to essentially a police sting operation. They confiscated his beer, wrote him a ticket, essentially, for possessing beer that was purchased from another province. He challenged that. This ended up going to the Supreme Court of Canada on the basis of Section 121, which says that “essentially, all goods from one province shall be admitted freely into other provinces.” It’s the Constitution’s free-trade provision. And the court gave a remarkably permissive reading of that provision, essentially upholding a reading that essentially allows it to uphold any provincial measure that is within provincial jurisdiction. As long as there’s a purpose there that is somehow connected to provincial jurisdiction, it’s not going to fall foul of Section 121 on the Supreme Court’s approach.
And in coming to that reading, the court fails, I think, to give due regard to this commitment to free trade within Canada, which was, when you look at the Confederation debates, one of the central purposes that you see across effectively all of the framers, this commitment to, okay, what are we trying to achieve here? We’re trying to achieve a free trade zone if nothing else. And so there was a failure to give due regard to that purpose. And I think a failure to give a proper reading to Section 121. There are other areas where this is going to matter, right? So where the economic vision, I think could come into play. I talk about the greenhouse gas reference. I think the economic vision of the Constitution it’s not narrow and restrictive. There is room for, say, recognition of new heads of federal power if an issue transcends the boundaries of a particular province. But you need to keep that bounded, right?
And so if you’re going to say greenhouse gas emissions transcend provincial boundaries, which they do, maybe they transcend the ability of provincial governments to deal with it. You can have a restricted federal head of power that deals with those cumulative effects. But what was upheld in that case was something, I think, more far-reaching than that. That allows the federal government to take into account not just greenhouse gas price stringency but also all manner of industrial policy factors that can come into the analysis. The Impact Assessment Act, the new federal environmental legislation, that’s about to be litigated at the Supreme Court of Canada. And there as well, you’re going to have some of these issues at play. The way that Act is framed, you have areas of federal jurisdiction that are more or less unambiguous navigable waterways, Indigenous lands.
But on the basis of that federal jurisdiction, there’s a kind of aggressive assertion of authority that extends well into natural resource projects. And if you have a flexible approach to federalism that fails to give regard to the importance of provincial autonomy, then maybe that federal law can be upheld. But if you think the exclusive nature of federal and provincial heads of power is important, if you think protecting provincial autonomy is important, keeping federal jurisdiction just to the areas that can’t be effectively addressed at the local level, then I think there are issues with the Impact Assessment Act. Those are some examples, I think, of issues that are out there that the economic vision might have something to say about.
SEAN SPEER: That’s a great answer, Malcolm. If I can just follow up, and here is where I’m going to expose some of my ignorance about the intricacies and nuances of some of this body of jurisprudence. As I heard you apply your conception of a national economic vision to some of these decisions and the possible implications if the courts used your framework and lens for making these types of judgements, is there something of an incompatibility between how the Supreme Court thought about the powers and roles of the respective orders of government in Comeau versus how the court did in the carbon tax case?
MALCOLM LAVOIE: Well, one way that these issues often get framed is in terms of, “Okay, are you pro-provincial jurisdiction or are you pro-federal jurisdiction?” My book is neither or both, you might say. Comeau is seen as a decision that’s friendly to provincial jurisdiction because provinces are the governments that are more likely to erect trade barriers. That’s a structural issue, by the way, in a federation. That you have these diverse governments that aren’t necessarily thinking about the cost that they might impose on outsiders because they’re not represented in their jurisdiction. So the potential for local protectionism is a built-in structural problem in a federation, and you need a constitutional response to it. Our Constitution contains mechanisms to respond to that. They just haven’t been adequately interpreted. But in any event, Comeau is seen as a decision that’s friendly to provincial jurisdiction, the greenhouse gas case is a case that’s seen as friendly to federal jurisdiction.
My book is not really one or the other. It just says that there’s actually a purpose to the particular heads of power that have been assigned to the provinces and to the federal Parliament. There was some thought that went into that, obviously, and there’s an economic purpose achieved by that. And there’s an economic purpose achieved by having those heads of power be exclusive. And so, rather than say we should expand provincial jurisdiction, or we should expand federal jurisdiction, we should think about exactly what subjects are best dealt with at the provincial level and what subjects are best dealt with at the federal level. And the division of powers provides a pretty good roadmap for understanding that. There are a few different considerations that come into play, but there’s essentially a default preference in the constitution for provincial jurisdiction over economic questions, primarily on the basis of the property and civil rights power, this expansive power over private relations, but also the natural resource jurisdiction of the provinces.
So there’s a default preference for provincial jurisdiction. But at the same time, you have this series of exceptions of federal heads of power, where you can point—and for essentially every economic head of federal power, you can point to a justification grounded in principles of political economy for why that matter can’t be effectively dealt with at the provincial level. For many of these heads of power, it’s because they involve economic relations across jurisdictions. So transportation, communication, and trade across jurisdictions, those can’t be effectively dealt with at the local level because they involve interests and the ability to impose costs on people in other jurisdictions, which local governments are always going to be tempted to do. The federal government is better placed to do that.
On other issues, there are justifications grounded in the idea that there’s a kind of infrastructure of exchange. Federal heads of power over currency, weights and measures. This sort of basic infrastructure that allows for parties from one part of the country to effectively engage in commerce with parties in another part of the country. But I think there’s a justification for having standardization on some of those issues. But there’s a justification that underpins essentially every economic head of federal power. Grounded in essentially enduring principles of political economy, these arguments are just as valid now as they were in 1867. This potential for, say, local governments to favour local interests over those in other jurisdictions, that’s a timeless principle, and it underpins our constitutional order. And so rather than say we should expand federal jurisdiction or we should expand provincial jurisdiction, we should look at what those heads of powers are. We should look at the text, which says, in the clearest possible terms, those heads of power are exclusive, and we should understand what the justification for those heads of power is.
SEAN SPEER: Just as you’ve outlined here, Malcolm, you say early in the book that part of what you’re aiming to do is to reconcile a robust conception of the national economy with a healthy place for federalism that even in the proceedings of the BNA Act and subsequent judicial decisions, has always been granted significant scope for provincial action.
This is something that I’ve struggled with, even when it comes to the issue of interprovincial trade barriers. Let me put my cards on the table. On one hand, as a conservative, I’m drawn to the interpretation of the Constitution that reflects what you and others have persuasively argued was the goal of a national economy. On the other hand, as someone predisposed to a conception of decentralized federalism that emphasizes provincial sovereignty, I’m also inclined to protecting provinces from federal overreach. How should I think about the preservation of the spirit of a national economic vision with the freedom of the provinces to make policy decisions that may or may not be dumb or harmful, but are ultimately within their right to enact?
MALCOLM LAVOIE: I think that’s a great question, Sean. And that’s something that I struggled with as well. I’m a big proponent of decentralized decision making in this and in my other scholarship dealing with property rights. And just on that point, the local political communities that were the focus in 1867 were primarily—Quebec was the main one that was pushing for decentralization, the Maritimes to a lesser degree. But this framework that was established has since been expanded to apply to political communities that didn’t exist in 1867, including Alberta and Saskatchewan in their current form. And it also provides a compelling model for thinking about how to conceptualize the jurisdiction of Indigenous governments within Canada. And I think that that’s an important point to put on the table, that our understanding of what communities are a part of this has expanded over time. And the model, I think still is a compelling one despite that broadening of the scope.
So I’m a big proponent of decentralized decision making. I think the key to how you reconcile that decentralized decision-making with the need for an integrated national economy and free inter-provincial trade is this principle of subsidiarity, right? This principle which starts from the premise that we shouldn’t be absorbing the functions of local decision-makers when they can perform those functions themselves. And so the role of a more centralized body like parliament and the federal government is precisely to pursue those functions that cannot be effectively dealt with in a more local way. And the principle of subsidiarity it’s a very general principle, and it can have lots of different applications. I think it’s been essentially implemented through the specific heads of power set out in Sections 91 and 92.
And so, I think there is, and there ought to be a preference for local economic decision-making on the basis of the jurisdiction of the provinces, but also on the basis of the local decision-making of property owners. I think secure property rights are an important part of the economic vision as well. But there are exceptions, and those exceptions need to be bounded. There’s always a risk that they’re going to be given an overly expansive interpretation. The Constitution instructs courts to police the scope of those federal powers with some vigilance to ensure that they don’t infringe on the exclusive areas of jurisdiction of the provinces.
And I think the purpose of understanding the underlying purposes can help with that. When we look at what should be the scope of the federal trade in commerce power, for instance, that’s a broadly worded power, and it has the potential to be given an incredibly expansive interpretation. Just look at the United States Constitution and the Interstate Commerce Clause, which has been interpreted to allow Congress to do almost anything. And so there’s always a risk in a federation that the central government is going to grow at the expense of the local jurisdictions. The text of our Constitution provides safeguards: the exclusive nature of the jurisdiction, the underlying purposes which need to be reconciled with local decision-making. I think this idea that the federal heads of power, especially on economic questions, exist to deal with issues that can’t be addressed locally in an effective manner helps to provide some sort of boundaries on those federal heads of power and helps us understand the importance of those boundaries.
And the move towards flexible federalism, that ultimately it’s provinces that will bear the brunt of that. Because if you take an expansive view of federal heads of power and an expansive view of provincial heads of power, you’re going to get lots of overlap. And in our system of government, when there’s overlap, federal law prevails under the doctrine of paramountcy. And so, if you move in the direction of this flexible conception of federalism, you’re going to ultimately end up with what Justice Brown in the Greenhouse Gas Reference calls a supervisory model of federalism, where provincial jurisdiction exists at the sufferance of a federal Parliament that has the power to oust it whenever there’s an inconsistency. And so, I think, how do we protect local decision-making? The exclusive nature of federal and provincial heads of power is a big part of that. But also understanding that purpose, including the principle of subsidiary.
SEAN SPEER: We’ll come back, Malcolm, to the subject of the national economic vision becoming a means to effectively expand the scope of federal policymaking in the country. But before we get there, I want to talk a bit about the process or methodology that you use to establish this notion of a national economic vision and its implication for judicial prudential considerations.
Crucial to your argument about the intent behind a national economic vision and the name of “knitting together a national economy” is the ideas and arguments put forward by participants in the constitutional-making process. That approach may be characterized as “originalist” by some. Do you agree with that characterization? Why do you think that going back to the original source materials is important? And to challenge possible critics, how else would they go about rendering judgments about these types of constitutional considerations?
MALCOLM LAVOIE: Great questions, Sean. I should say the book starts with the original public meaning, the original meaning of the text understood in its original context and according to its original purposes, but it doesn’t stay there, right? So I lay out what I think is the best understanding of what the Constitution meant at the time the provisions were made. The text is the primary source there, but there’s also an understanding of the historical context, including, for example, the fact that the reciprocity treaty with the United States was expiring and there was a need to provide alternate markets within these colonies. But I also look at what the framers had to say.
And I’m clear though, I don’t think that we’re bound by the task statements of the framers. This isn’t an original intent approach. And the reason for that is relatively straightforward. In a society governed by the rule of law, we’re governed by what the legal source material says, interpreted properly. We’re not bound by the private statements or private intentions of even our most powerful politicians, even say, John A. Macdonald. But I do look at the Confederation debates. That’s not because I think we’re bound by the intentions of these folks, but rather because they provide a window into what the text meant to informed contemporaries of the Constitution, those who were studying and thinking about it, what they thought this text was going to achieve.
In any event, I start with that sort of question: What did this text mean at that time? The text but also its purposes and the historical and other contextual factors. What did it mean at the time? And I accept that that will be quite persuasive and interesting to many people. But I also accept that in Canadian law, there’s this understanding of “the living tree” approach to interpretation, that meaning isn’t necessarily fixed, that it can evolve. And so I make the case in the latter half of the book that this economic vision from 1867 remains relevant today. And you see that in some of the political dynamics.
The values that we’re talking about here, the commitments we’re talking about here remain broadly popular across partisan lines, including the commitment to free internal trade. These aren’t values that have been somehow superseded by time. These ideas are still relevant today, and they still serve a purpose today. I made the point that there’s a kind of enduring or timeless nature to some of these principles of political economy. The risk that local governments will fail to give due regard to the interests of people in other jurisdictions that I think is just as relevant today as it was in 1867. So even if you’re not an originalist, even if you think constitutional meaning can evolve, you can look at these purposes and say, “Well, they’re still achieving something.”
On other commitments in the Constitution, I think there’s a little bit more evolution over time. Our understanding of, say, why property rights are important is a little different. Many of the framers were essentially committed to “Lockian vision,” the approach of John Locke. I think that’s probably less. So today, there’s more of a pluralistic understanding of what property rights can achieve. And indeed the fact that they need to be reconciled with regulatory authority of governments, I think that the particular way in which property rights are secured in the Constitution is consistent with that, it’s consistent with the vision of parliamentary supremacy.
Our understanding of the importance of local decision-making by governments too has evolved to some degree. We’re no longer just talking about the original political communities of 1867. We’re talking about western provinces that didn’t exist in their current form. And we’re quite importantly talking about Indigenous governments. Unfortunately, the mid-19th century was a low point for Crown-Indigenous relations. There were feuds of cultural assimilation that were prevalent at the time. And in the interest of Indigenous people and Indigenous governments weren’t adequately reflected in the text of the Constitution Act 1867. In the latter half of the 20th century and into the 21st century, there’s been a renewed understanding of the importance of Indigenous self-determination. I argue, though, that the commitments of the Constitution can be adapted to accommodate that. One of the big pressing issues of our time is how to reconcile the jurisdiction of Indigenous governments with the Canadian state.
And I think the Constitution provides a compelling model. One that’s already been adapted to some of these circumstances that the Nisga’a Treaty is one example. The areas of jurisdiction of the Nisga’a Nation for example, there are some significant resemblance to areas of provincial jurisdiction. And so this idea that we’re trying to reconcile local decision-making with the kinds of decisions that have to be made by a more centralized body there are lessons in the Constitution Act 1867. Not that they should be adopted reflexively, but there’s a compelling model there.
And so I do make the case in the book that these principles remain relevant. Our understanding, say, of certain kinds of decentralized decision-making and the importance of them may have shifted over time. But I think each of the components of the economic vision that I outlined remain relevant today. You can start with the original meaning and understanding of the Constitution. I think that’s important. I don’t think we should ignore that. I think no matter what your approach to constitutional interpretation, you should be interested in that as a starting point. But even if we accept that that’s only a starting point, these elements of the constitutional vision are still relevant today, and they still should inform interpretation because of that.
SEAN SPEER: Malcolm, I know you’re a legal scholar and may want to stay clear of politics, but let me ask about causality. How much is the diminishment of a national economic vision for the country a reflection of legal decisions narrowing the ambitions of the national government versus jurisprudential direction actually following broader political trends in our society?
To be concrete about it, we increasingly have a national military with inadequate capacities and resources at the same time that we have the federal government poised to spend billions of incremental dollars in provincial health care. To try to sum up my point, it seems like it’s not merely the courts who’ve come to abandon the ambitions of a national economic vision. What do you think might be behind some of these broader trends?
MALCOLM LAVOIE: Yeah, that’s a really insightful point, Sean, and I think there’s feedback that may have gone on here in terms of the political dynamics informing legal interpretation and vice versa, and I talk a little bit about that in the book. It’s understanding that causality isn’t necessarily the main purpose of the book, but I do talk about how, at the same time as you have this move towards approaches to interpretation that are maybe undermining the economic vision, you also have some reluctance on the part of the federal government in particular to exercise the jurisdiction that it has.
And one example that is often given on this topic is something like interprovincial trucking. So I understand it’s still the case, potentially. I don’t think anything’s changed in the past couple of years, that trucks sometimes have to change configurations at provincial boundaries because you have different regulations in terms of what’s permitted in one province versus another. That’s a political problem more than a legal problem. On existing doctrine, there is no question that Parliament has jurisdiction over interprovincial trucking that it could exercise tomorrow to create uniformity in those rules around interprovincial trucking. But there’s a reluctance to use it, and I think you could say the same for elements of interprovincial trade. I think there’s space for parliament to step in and address some of the more egregious barriers to interprovincial trade. But there’s a reluctance to use it.
And you made a point that, at the same time though, there’s federal involvement in areas of provincial jurisdiction, which is interesting and it may follow political incentives. Maybe many Canadians see themselves more reflected in their provincial governments than in their national governments and so they’re susceptible, I suppose, to rhetoric that says, say, an attempt to address a trade barrier is an infringement on provincial jurisdiction. At the same time, it seems like federal governments want some of the political credit for delivering some of those social services that are important to voters, including in the area of health care. I think that’s potentially a problem. I talk a little bit about the federal spending power in the book. This idea that, at the same time as you have a federal Parliament that’s reluctant to use its powers to enforce an economic union or to uphold the economic union, you have the use of federal powers in a way that could be coercive for its provinces.
The spending power is an unexamined topic in Canadian constitutional law, but there’s no question that there are some instances where the federal government offers money in a manner that doesn’t really give provinces a meaningful choice. And so if you have provinces that are, say, dependent on federal health transfers, and you try to attach certain conditions to that and say, “Well, if you don’t accept the conditions, you’re going to lose this health transfer,” that’s not a real choice for many provincial governments. Perhaps all of them have this potential for the federal power to tax and spend to be transformed into a plenary power to make policy in areas of provincial jurisdiction, contrary to the principle of subsidiarity, contrary to that commitment to local autonomy.
And I can see that there are political dynamics behind that. I do think the Constitution has something to say about it, though, as a constraint. If you adopt this flexible approach to federalism, you don’t have any constraints on those potentially pernicious political dynamics that could work to undermine the federal structure. And so I think there’s a role here for constitutional doctrine. I think there’s a role here for judges to give an interpretation of the division of powers that relies on exclusivity and says, “No, whatever your political incentives are, you can’t do that.”
SEAN SPEER: I asked earlier about the prospects of your conception of a national economic vision taking hold. Are there any signs, Malcolm, of progress in that direction? Obviously, the Comeau case, which you’ve outlined here as well as in the book, was almost like a proxy fight about these fundamental questions, and it produced an outcome that conflicts with your approach. Do you see a world in which that’s changing among scholars or students or by some other means?
MALCOLM LAVOIE: Yeah, that’s interesting. The Comeau case was very interesting because of the broad support we ended up seeing for at least the principle of free interprovincial trade. You saw that among a broad spectrum of commentators and the population. You also saw that from governments with a caveat, right? So essentially every government in Canada, including the federal government, was willing to step up and say, “We support free interprovincial trade, and we’re going to do something about it.” You had the negotiation of the Canadian Free Trade Agreement, which is an agreement between the federal government and provincial governments with certain principles. They’re very compelling, high-minded principles of free trade, unless some kind of restriction is necessary to achieve a certain policy objective. So really good principles, but then hundreds of pages of exceptions, right? And it’s this exact dynamic I was alluding to—that local governments face incentives to favour local interests. And so they might all like the idea of free trade in the abstract, but when it comes down to the specific local industries and specific local interests, they built in all these exceptions. And that’s the kind of institutional incentives that a constitutional commitment to free trade could help address. It’s a commitment mechanism that says, “No, we’re all going to be held to the same high standard of free interprovincial trade, and we’re not going to allow people to defect from that commit whenever there’s a particular local industry that wants help.”
So it was nice to see that people professed a commitment to these ideas. I don’t think the political process has provided a solution to the issues. I think the solution is ultimately going to be appropriate. I think the solution almost has to be constitutional in nature because of that political dynamic. You have some governments that are better than others. The Kenney government in Alberta took a lot of unilateral action to lower trade barriers. But you still have nine other provinces, you have three territorial governments, and you increasingly have a large number of Indigenous governments. And so the number of governments that have to be at the table if you want to address internal trade is only growing over time.
And this collective action problem of locally imposed barriers trade is only going to get worse because of that. Regardless of whether everyone thinks pre-trade principles are important, the dynamic there, the institutional dynamic is such that we have a potential problem on our hands. And the Constitution has solutions to that problem because it has to. Because in a federation, this is a structural issue that may not necessarily be something you can solve through the political process. And so there’s an awareness of these issues.
There are attempts at political solutions, which is nice to see. I don’t think those political solutions, though, are going to be a replacement for an appropriate interpretation of constitutional doctrine. There has been some attention in the scholarly world as well, but not as much as I’d like. And I hope the book sparks some of that, but I think these are important issues, and that’s why I wrote the book.
SEAN SPEER: I want to wrap up, Malcolm, by returning to something we’ve talked about, and that is the potential risks associated with your conception of a national economic vision taking hold in the world of jurisprudence. A lot of our listeners will be nodding along with this conversation, but as you yourself acknowledge, there could be risks of the federal government’s role in regulating the national economy itself becoming abused. You mentioned the case of the Interstate Commerce Clause in the United States. I was struck in the particular case of Obamacare or the Affordable Care Act that the U.S. Supreme Court sustained the legislation on the grounds that it was somehow core to the functioning of the national economy.
What would you say to those who might argue that in a world of tradeoffs, a judicial tilt in favour of a weaker trade and commerce power may actually be better for, say, personal freedom and choice than the alternative?
MALCOLM LAVOIE: I don’t think we have to make that choice. I think that it’s not that we’re going to go all in on the provinces or all in on the federal government. I think if we have an expansion of federal economic powers in keeping with this vision, there also has to be an understanding of the limits. And those limits are grounded in the exclusive nature of provincial powers. They’re grounded in the principle of subsidiarity and the commitment to local autonomy. Federal heads of power should not be unbounded. In fact, they should be strictly bounded to those areas that cannot be addressed effectively at the local level. And so as long as that commitment to exclusivity is borne in mind, I don’t think we’re at risk of, say, having comprehensive legislation of health care like you see in the Obamacare case.
And indeed since you mentioned that, there are actually some positive lessons to derive from that case for Canada. I mentioned the spending power, the Obamacare decision, 2012, the federation of Independent Business and Sebelius case is a great case for limits on the congressional spending power you had. Much of Obamacare was upheld ultimately on the basis that the individual mandate was essentially taxed. But there was a Medicaid expansion that was premised on essentially a threat to the states to take away all of their Medicaid funding. And that part of Obamacare was held to be unconstitutional on the basis that this conditional offer of spending was coercive.
And so that’s one area where I think we could be doing more in our jurisprudence to rein in the federal government. But I don’t think the best way to think about it is pro-federal government or pro-provinces. I think the way to think about it is the right delineation, and the right delineation gives you regard to the need for these powers to be exclusive and for them to be bounded.
SEAN SPEER: Just a ton of insight in that answer, Malcolm, as there’s been throughout this conversation. The book is Trade and Commerce: Canada’s Economic Constitution. Professor Malcolm Lavoie, thank you so much for joining us at Hub Dialogues.
MALCOLM LAVOIE: It was my pleasure. Thanks, Sean.