Canada is a superb creation and initial credit for that must, obviously, go to Canada's founding fathers. How we came about is a fascinating tale of seemingly intractable regional disputes resolved, at least for a time, by new institutions and a new country.
Pre-Confederation, after the 1840 Act of Union led to the abolishment of two regional legislatures in 1841, the Province of Canada was created and comprised of parts of modern-day Ontario and Quebec. There was one legislative assembly with an equal number of parliamentarians from Lower Canada (later Quebec) and Upper Canada (later Ontario).
This was a cause of some discontent. At the time, politicians in Lower Canada complained of how their region had a greater share of the population but only half the seats. That meant Upper Canada had an inordinate influence over matters.
Over the ensuing decades, Upper and Lower Canada eventually switched places on the population question. Then, it was the turn of parliamentarians in Upper Canada to complain of financing Lower Canada.
For example, in a wry 1865 speech, Upper Canada parliamentarian George Brown put the matter this way: "Immense sums of public money have been systematically taken from the public chest for local purposes of Lower Canada, in which the people of Upper Canada have no interest whatsoever, though compelled to contribute three-fourths of the cash."
The founding fathers' eventual remedy to regional bickering was simple: the new federal parliament should handle national issues and the future provinces should govern matters in the provincial sphere. (Credit here to Janet Ajzenstat and other editors of the 1999 book, Canada's Founding Debates, from which the following quotes are derived.)
This remedy, Brown pointed out, would remove rancour as henceforth, "if our friends in Lower Canada choose to be extravagant, they will have to bear the burden of it themselves."
Canada, the solution, would also resolve other complaints then common.
Was the then Legislative Assembly of the Province of Canada not spending enough revenues on Lower Canada's "roads, bridges and landing piers, court houses, gaols [jails], and other structures"?--a complaint then in vogue. "Well sir, this scheme remedies that," said Brown. The new provinces could build all they liked with costs "defrayed from local funds."
Also, each province would "have control over its own crown lands, crown timber, and crown minerals--and will be free to take such steps for developing them as each deems best," said Brown.
For the record, this did not mean provinces could block, in their own province, cross-country projects of importance to the entire nation. The founding fathers also, wisely, allowed the Dominion government the power to veto provincial attempts to hamper interprovincial trade and commerce. The federal government did so 65 times in the first 30 years after confederation, a power it yet possesses but rarely exercises.
The eventual deal at Confederation was just what Brown predicted: Each level of government was given the necessary powers, including tax powers, to enable it to function properly in its own jurisdiction without substantial help or interference from Ottawa.
The Dominion government did, as part of the 1867 deal, also agree to pay some federal money to the provinces. The founding fathers were not thrilled about transfer payments but agreed to them in exchange to an end to trade-hampering, pre-Confederation provincial tariffs.
Also, while the provinces were granted the right to tax personal income, few thought they would go down that road. That was an additional reason the founders agreed to initial transfer payments from the federal treasury.
On such transfers, the Confederation-era agreement was stated to be the "full and final" settlement of all claims by the provinces upon the new Dominion government, this according to historians Milton Moore and J. Harvey Perry.
Alas, the clearness of Confederation did not last, though that was not the fault of the 1867 constitution but to later politics. Political decisions in the twentieth century increasingly moved Canada away from a more sensible model envisioned by the founders: Each level of government mostly responsible for its own spending (and the taxing necessary to finance it), absent unusual events such as depressions, wars and natural disasters.
Thus, today, inter-provincial debates are similar to pre-1867 tussles where one province's citizens complain of how others are on the federal dole courtesy of tax dollars from the more prosperous regions. And all the provinces again regularly press the federal government for more money.
Such muddying of jurisdictional tax-and-spend lines of accountability is unfortunate and sub-optimal. The founding fathers, such as George Brown, had the better idea and remedy to chronic inter-provincial bickering.