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public service employment. Part 1 enacted the Public Service Labour Relations Act, which provides for a labour relations regime in the public service. Part 2 amended the FAA to put direct responsibility for certain aspects of human resources management in the hands of deputy heads, subject to policies and directives of the Treasury Board. New deputy head responsibilities include providing awards and setting standards of discipline. The FAA was also amended to provide for annual reporting to Parliament by the President of the Treasury Board on the application of the human resources management provisions of the PSM Act. A new Public Service Employment Act was enacted,5 modernising staffing in the public service and retaining core values such as merit, excellence, and non-partisanship. The Act gives a new meaning to merit and provides the Public Service Commission (PSC) with the legal responsibility for protecting and promoting merit-based staffing. Whereas the PSC is responsible for overseeing many public service values, individual departments are responsible for the values of flexibility and efficiency. The head of each organisation is accountable for achieving the results in relation to delegated responsibilities. The Act requires, in addition to the annual reporting by the PSC, that the President of the Treasury Board report annually to Parliament on the Treasury Board’s responsibilities under the Act.

3.1.5. Establishment and roles of parliamentary committees

The Parliament of Canada Act does not contain any specific provisions on the composition of parliamentary committees. These are laid down in Standing Orders of the House of Commons and in Rules of the Senate. Each house has four types of committee: standing committees, special committees, legislative committees, and committees of the whole. The number and type of committee depend on the government in power. The standing committees mainly focus on a substantive sphere of government policy, each being responsible for one or more government departments. In 2004, the House of Commons had 19 standing committees including the Finance Committee which deals with the budget and economic and financial issues. The Senate had 16 standing committees including the National Finance Committee which deals with government finance issues. Most committees are controlled by the government, as the chair and majority of members are from the governing parties.

3.2. Roles and responsibilities of sub-national governments

Canada is divided into ten provinces and three territories, with considerable variation in size. The Constitution Act 1867 lays out the areas of provincial and federal jurisdiction (ss. 91 and 92). Most powers are assigned exclusively to one of these two levels of government, although a few are designated as concurrent powers. Federal responsibilities include monetary policy, defence, foreign relations, trade and criminal law. Provinces are generally responsible

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for health, education, property and civil rights, social security and municipal institutions. Residual powers, that is, any power not set out in the Constitution Act, lie with the federal government (for details, see OECD, 2000).

Canada stands out as a decentralised fiscal system since provinces have extensive taxing and spending powers, and federal regulatory interventions at territorial level are few (OECD, 2002). Financial relations are governed by the Federal-Provincial Fiscal Arrangements Act. Transfers to provinces take a number of different forms, including those for tackling the disparities between provinces. Three major programmes account for most of the transfers: the equalisation programme under the Constitution Act (Art. 36.2) and the FederalProvincial Fiscal Arrangements Act (Part 1); the territorial formula financing under the Federal-Provincial Fiscal Arrangements Act; and the Canada Health and Social Transfer (CHST) under the Federal-Provincial Fiscal Arrangements Act (Part V). The Constitution Act 1867 states the objectives of the equalisation programme, one of the main transfer payments: “Parliament and the Government of Canada are committed to the principle of making equalisation payments to ensure that provincial governments have sufficient revenues to provide reasonably comparable levels of public services at reasonably comparable levels of taxation.”

Box 3. Canada: Major transfers from the federal to the provincial governments

●Equalisation transfers: These are vertical transfers from the federal government to provinces with low fiscal capacity, which are calculated by comparing the per capita revenues that could be generated by each province if the average of five provinces were applied (British Columbia, Manitoba, Ontario, Quebec and Saskatchewan).

●The Canada Health and Social Transfer system (CHST) provides provinces with both cash payments and tax transfers in support of health care, postsecondary education and social services, including childhood development. CHST payments are partially conditional: provinces and territories have flexibility to allocate payments among social programmes according to their priorities provided they respect the principles of the Canada Health Act and do not impose a condition of a minimum residency period with respect to social assistance. The CHST was replaced by the Canada Health Transfer and the Canada Social Transfer with effect from 1st April 2004.

●Territorial formula financing (TFF): This is an annual unconditional transfer from the federal government to the three northern territorial governments. It enables these territories to provide a range of public services comparable to those offered by provincial governments.