The Rise and Fall of Canada Welfare State

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The shocks of the Great Depression further stressed the need for the state to intervene and initiate changes in social thinking. The rate of unemployment in Canada was skyrocketing, forcing the newly formed government of Bennett to pass a law, Dominion Unemployment Relief, that offered funding to the Canadian provinces, which in turn would help their respective subjects. The state further formed unemployment relief camps controlled by the Department of Defense, which was tasked with offering jobs to the unemployed though at low wages. The worsening state of the economy, as well as pressure emanating from the trade unions, forced the ruling Conservative Party to soften its opposition to social reforms in the country. However, following the exit of Bennett’s government, the new regime was a bit more favorable to the introduction of social reforms. As a result, the Unemployment Insurance Act came into effect, paving the way for the federal government to make more interventions on matters concerning social needs (Vivekanandan, 2002).

Third Phase

The third and perhaps the final phase of the formation of the Canadian welfare state began in 1941, coinciding with World War II. The Canadian government, having learned the painful lessons of the Great Depression and World War I, saw the need of building their economy by centering on improving social life, especially during and after World War II. The Canadians studied the Beveridge Report from the United Kingdom and immediately drafted a similar report known as the Marsh Report, which was later taken to the parliament for debating (Vivekanandan, 2002). The Marsh Report advocated for an active involvement of the state in providing assistance and protection to its citizens. The report recommended that the government should establish two kinds of social security funds: one focusing on protecting people with the help of the salary scheme while the other protected the physically challenged members of the society. The recommendations anchored in the Marsh Report eventually formed the basis for establishing a welfare state of Canada, especially after the adoption of most of its principles as part of Canadian laws. However, subsequent regimes had different approaches regarding the issue of initiating social reforms in the country. For instance, Prime Minister Mackenzie King was reluctant to address the issue in such a way. He broke up previous attempts of his predecessors to intervene during a crisis such as war. Instead, he preferred to base his economic policies on Keynesian principles, which required the state to restrict itself to only managing the economy and offer help to private entities strictly when necessary (Vivekanandan, 2002).

The successive governments amended laws, which resulted in an increase in social expenditures with a particular focus on education, health, and assistance to the physically challenged. Likewise, the government became favorable to the Aboriginal people (Vivekanandan, 2002). For instance, in 1991, the Indian Act was amended, enabling the provinces to extend their social assistance to the Aboriginal people (Phillips, 2012). Besides, the Unemployment Assistance Act came into force, funding several social programs for the unemployed. By 1970s, the Canadian Welfare State had fully attained the levels of a welfare state with an expansive safety net. A review of social security that was introduced in 1973, which was intended to widen the provision of social services by both federal and provincial governments, did not secure the prerequisite support. However, the child tax credit was introduced in 1978, which further allowed the use of funding from taxation to offer social assistance.

Fourth Phase

The fourth phase in the Canadian welfare state began in the early 1970s, where the government significantly increased social spending, putting pressure on the economy, which eventually lead to the decline of the welfare program (Phillips, 2012). Under this phase, the government set aside substantial amount of funds to cater for the aged, following the enactment of the Old Age Security law, as well as the physically challenged, which was the courtesy of Guaranteed Income Supplement. The provinces, on the other hand, were mostly concerned with the assistance for Canadian children as a response to the Canadian Assistance Plan. The government funding for both secondary and primary education significantly expanded similar to that of free health service provision. The government further cautioned the unemployed by widening the programs that aimed at providing free funds to those unable to secure a job including unemployment insurance (Vivekanandan, 2002).

However, by the mid-1970s, the Canadian economy declined due to the rising rates of inflation as well as mass unemployment. The Keynesian principles anchored by the past governments proved unfruitful (Phillips, 2012). In response, the government initiated plans to curb social expenditures in the country, seeing it as the only way to return the economy to its normal state. The first step towards controlling the government spending on social programs was taken in 1977 when the provincial and federal governments initiated plans to set new ways of sharing funds for social programs. The initiative was backed by passing the Established Programs Financing and Fiscal Arrangements Act that guided both levels of governments in revenue sharing (Vivekanandan, 2002).

Further control measures were initiated through methods such as tightening eligibility, contracting private entities to offer social services, and increasing government revenues collected from healthcare centers (Troilo, 2013). According to other initiates, the government lowered the budget meant for social programs and ceased some social programs as it was witnessed in 1989 when the government ended the Family Allowance. Successive governments applied all strategies mentioned above together with others, backing them with pieces of legislations or government policies. For instance, the government of Brian Mulroney initiated an array of measures aimed at reducing the state funding on the social program. To be more precise, his government significantly reduced the amount of workers protected by the unemployment insurance and limited sharing of costs, using the Canada Assistance Plan (Troilo, 2013). In the 1990s, some provinces like Ottawa put a ceiling on their level of social assistance, predicting the likelihood of the end of the Canada Assistance Plan. As it had been predicted, in 1996, the government had no allocation in its budget for the Canada Assistance Plan. In addition, the government reduced funds allocated for social programs and substituted the Canada Assistance Plan with Canada Health and Social Transfer (Troilo,