The Canadian Welfare State: Policy Theory and Evolution

Introduction: Canada's Liberal Welfare Model

The Canadian welfare state arose in the 1930s as a response to the poverty of the era and was bolstered in subsequent decades to include numerous elements of the social safety net. Prior to the development of the modern Canadian welfare state, the country relied on a classic liberal economic model, with few restrictions on enterprise and the commoditization of labour. Workers had few protections, the central government exerted limited taxation power, and provided little in the way of social services. Anderson (1990) argues that Canada constitutes a modern liberal welfare state, one characterized by "means-tested assistance, modest universal transfers and modest social-insurance plans" (p. 26). The role of government in such a state emphasizes the promotion of commerce, with social welfare elements often ranking as a lower priority. In the middle decades of the 20th century, Canada shifted more towards a welfare state, instituting elements such as universal health care, subsidized university tuition, and a national pension plan. Other assistance remained means-tested, and most governments continued to focus their energies on building the economy.

Anderson further argues that "the welfare state caters essentially to the working class and the poor," as opposed to the middle class. The way the Canadian welfare state has been structured has not delivered sufficient benefits to the middle class to encourage them to vote for something more akin to a European model. In Canada, the welfare state model functions simply as a safety net. The elements that benefit the large voting middle class — the CPP and universal health care — have been retained, but many other elements are resisted by voters (p. 31).

The forces that have impacted the development of the welfare state in Canada have been primarily the forces of self-interest among the country's large body of middle-class voters. These voters have a model to the south for a lower-tax regime with fewer public services, and they can be envious in particular of the opportunities provided by that higher level of dedication to free-market capitalism (Cameron, 1978). Yet Canadians are intent on retaining the basic elements of a social welfare system — not so much that there will be no poor, but only to the point where a middle-class Canadian need not fear, too much, falling out of the middle class. In essence, Canadians are as a culture more risk-averse than Americans, so social welfare has some appeal to the voting masses. However, the country's collective work ethic — derived from an Anglo-Saxon Protestant tradition — makes it imperative that individuals not be given too much help. There is a rejection of a Scandinavian-style welfare state, in that hard work is considered a virtue, implying that the chronically indigent lack this ethic. This can be a powerful force, and it manifests itself in objections to taxation. The Canadian welfare state is primarily forged from the balance between an expressed admiration for the virtues of free-market capitalism and the risk aversion that demands a social safety net remain in place, at least to ensure that one does not slip from the ranks of the middle class.

Conceptual Overview: Theoretical Frameworks

There are a number of developmental models that can be used to assess the changing nature of the Canadian welfare state. The stages heuristic is one framework that can shed light on the processes and influencers that have guided shifts in Canadian welfare state policy. The stages heuristic breaks down a policy into the problem, the policy options, the implementation, evaluation, and any subsequent changes that are made. This framework can be valuable in understanding the evolution of public policy because this process is undertaken in multiple iterations. A regime might implement one policy and then evaluate and refine it. More commonly, subsequent regimes may opt to revisit policies that have already been put into place, filtering the evaluation process through their own political lens, or seeking to ensure that the policies are still meeting the needs of constituents in a new time.

This framework aligns fairly well with the concept of punctuated equilibrium. The equilibrium stages are those times when a given policy is not being evaluated, but there are moments when circumstances change — or at the very least when the perception of changed circumstances holds — and the result is that the policy comes under scrutiny again. Baumgartner and Jones (n.d.) outline the case for punctuated equilibria. This model argues that governments have agendas and that policy monopolies emerge. In Canada, with respect to the welfare state, there is evidence that shifts in such policy monopolies have served to engage the cycle described in the stages heuristic.

Stages Heuristic and Punctuated Equilibrium

In the 1930s, the Canadian welfare state began to take shape. The predominant interest at the time was with the large mass of unemployed and underemployed. They became the policy drivers, and this generation continued to drive policy through the decades after World War Two. Baumgartner and Jones note that every group seeks to have a monopoly on public policy so that their interests can be advanced. The interests of the Canadian public, therefore, should reflect, more or less, the majority interest of each successive voting bloc. A policy monopoly, to the extent that such a thing exists, should have some formality in its nature. It should have "a definable institutional structure" and "a powerful supporting idea associated with the institution" (Baumgartner & Jones, p. 7).

The balance of power, where it can be established, breaks up the equilibrium. When a policy is enacted, it goes through the heuristic stages. There is typically an underlying interest that drives implementation and guides the form that the policy takes. Thus, when the desire for socialized medicine is born, there is a policy monopoly that allows this idea to become manifest in law and influences how the concept will be implemented. Once a policy is in place, an equilibrium state sets in — it could also be termed inertia — the situation is stable and difficult to change unless there is some strong, overwhelming rationale.

As the Canadian social welfare system was being built, the wealth of the country was relatively high. Furthermore, Canada was more culturally homogenous at that time, and there were prevailing values that acted as constraints on how far the social welfare state could be implemented. There were fewer overt interest groups in Canadian politics then, but unions were fairly strong, and their influence as a voting bloc brought social benefits into the realm of public policy. Over time, however, the influence of unions has waned, bringing changes to the policy monopoly with respect to the welfare state. New interests have emerged — business interests driven by free-market think tanks. These institutions, whether industry lobbies or organizations like the Fraser Institute, have gained in political power. They are not yet a clear policy monopoly, but they have sought to advance their ideas in different, smaller ways while perhaps influencing the dismantling of elements of the social welfare state.

The policy monopoly with respect to the social welfare state still nominally belongs with the Canadian voter. However, this influence is waning, and the voter can no longer be said to hold a monopoly. Given the structure of government — wherein a Prime Minister can hold the power of a monarch after winning only a minority of voting-age Canadians' support — political actors are free to allow other influences into policy and to grant monopolies in some areas. There will be no overnight dismantling of the social welfare state, but there is a battle over influence. Unions no longer have the power they once did, arguably squandered on persistent public-sector strikes that punish the public more than anybody else, and a more concerted informational campaign from free-market advocates has also contributed to a shift in public sentiment. The current state of equilibrium in the Canadian social welfare state reflects that Canadians are committed to what they have established, but are starting to be more willing to put certain aspects on the table, should there be a convincing argument to do so. Thus far, the elements that have been challenged are at the fringe, where a policy monopoly can be achieved — getting government out of the liquor business in Alberta, reduced funding for the arts, and reduced funding for post-secondary education. But the shift is occurring, as changes in policy influence have resulted in a repeat of the stages heuristic, leading to old policies being revisited and incrementally modernized.

Conclusion

The rise of the Canadian social welfare state can be explained through a couple of different theoretical lenses. First, it follows the patterns set out in the stages heuristic and punctuated equilibrium. When a problem is perceived by the public, it demands action. The Canadian political system is structured in such a way that action must be taken. A solution is found and implemented. Eventually, after an equilibrium period, circumstances change and this necessitates revisiting old policies — or at least it does when there are institutions with an interest in reshaping those policies in their own image. Institutional theory tells us that the relative power of institutions affects public policy. If in no other way, it does so by framing public discourse. Thus, when citizens vote, they vote on issues and options that institutions have brought to the fore.

The institutions that underlie globalization are powerful enough that their rise to prominence since the 1980s has given them the voice to shape public discourse. This has occurred simultaneously with the decline of labour unions, which arguably marginalized themselves by aligning with the distant third party, the NDP, taking their voice away from the genuine power brokers of the nation. Globalization's institutions are now so powerful that issues are reframed in ways that allow them profound influence over policy. The social welfare system is now measured on "cost efficiency" and other criteria antithetical to the entire idea of social welfare — it was never the same thing as an economic transaction — and this reframing has allowed concepts like austerity to return to public debate, displacing the time-tested ideas that support government investment in the social welfare state. Institutional theory has the best explanatory power for understanding why this works, but the how is best explained by the dual concepts of punctuated equilibrium — with the rise of globalization serving as precisely such a punctuation — and the stages heuristic.

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