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In a federal system of government, the constitutional authority to make laws and to tax is divided among a national government and some number of regional governments. Federalism is sustained by a sense of political nationality that develops around the nation state. Two theories of federalism characterize how Canada is viewed by different groups: compact theory and contract theory. Compact theory holds that Canadian federalism represents a compact between French and English Canada. By contrast, contract theory suggests that federalism is a contract among the provinces, which each agreed to give up certain powers to a national government of their creation. The Fathers of Confederation envisaged a strong central government and weak provincial governments but this changed over time with the evolution of Canadian society and the role of the state. Although the federal government divides responsibility for the various policy areas between the federal government and the provinces, there is a great degree of entanglement between them in almost every area. The federal government’s spending power has allowed it to exercise considerable influence in areas assigned to the provinces, such as health care and social welfare policy. Several programs function to provide funding to the provinces so that they may provide comparable services in the areas of health care, education, and social policy.
Central to the understanding of federalism in Canada have been court decisions by both the Judicial Committee of the Privy Council in Britain and the Supreme Court of Canada. Both of these bodies ruled on the constitutionality of government actions and had a major impact on jurisdictional responsibility of the federal and provincial governments. Many view the ruling of the Judicial Committee of the Privy Council as illegitimate, since it was an outside court ruling on issues within Canada, occasionally ruling in favour of expanding provincial powers while narrowing federal jurisdictional clout.
Quebec has pressed for special recognition since the Quiet Revolution in the 1960s. After extensive negotiations, Quebec did not sign the 1982 Constitution Act. Two subsequent attempts to amend the constitution in order to meet Quebec’s demands were made, but also failed. In the aftermath of the 1995 Quebec referendum, the federal Liberal government recognized Quebec as a distinct society and the current federal Conservative government has recognized Quebec as a nation. Regional tension also exists between the peripheral and core provinces, mainly over the perception that federal policy has historically favoured Ontario and Quebec.