Canadian Governance Policy Trends: Canada’s National Policy Bargain

The policy horizon for Prime Minister Mark Carney’s newly elected Liberal government will depend on successful negotiations with the provinces and territories that dominate policy making in Canada.

Gerald Butts, a central player in the Ontario Kathleen Wynne and federal Justin Trudeau Liberal governments knows that provinces and territories do the heavy lifting of policy making in Canada (The Bridge, March 13, 2025). They oversee the core social and economic policies and physical infrastructure that shape the nation, such as for education and health care. They usually do not raise sufficient revenue to pay for these functions. The federal government has few such direct obligations and raises much more revenue than it can spend on its own responsibilities.

This creates a central dynamic of Canadian public policy. The provinces and territories need money to fulfill their many obligations while the federal government has excess funds it can provide provinces and territories to help fulfill these demands. Provinces and territories seek federal financial support for their initiatives while the federal government may seek to influence the content of provincial and territorial public policies in areas outside its direct control. This national policy bargain is the fulcrum of public policy in Canada.