The speech reiterated that getting a university degree continues to lead to higher lifetime wages. Rock emphasized the pursuit of knowledge as the main goal of education (and, by extension, of the university). He stressed that thoughtful analysis and critical thinking will always be essential skills, and that universities remain the sole institutions where these core competencies are inculcated amongst the next generation.

As we perhaps should have expected, the speech and the short discussion that followed were somewhat self-congratulatory. Rock stressed the continued relevance of universities, especially in today’s knowledge economy. This is beyond dispute but, upon further reflection, I wonder if perhaps we should be asking another question: is simply being ‘relevant’ enough? The answer is no.

This narrow view of knowledge trivializes learning outside of the academic setting, which is both crucial and complementary.

When asked if universities were doing enough to prepare young graduates for the job market, Rock answered that graduates were still being hired and this in itself proved that universities were fulfilling their duties. Is this proof enough? In the United States, the McKinsey Centre for Government found that while 70% of educators thought that graduates were adequately prepared for the job market, less than 50% of employers and young graduates agreed. This is a disconnect, and a concerning one, especially in view of ever increasing tuition fees and higher and higher degree requirements to get a “good job”.

While I will not argue against having a university degree (I, after all, have a master’s degree) I do find that President Rock’s arguments trivialize the challenges facing the next generation. McKinsey & Company rather elegantly points out the paradox: “Higher education has never been more valuable but 48% of university graduates in the U.S. are now in jobs that don’t require degrees”. Although there is a lack of data on this phenomenon in Canada, the situation is likely not much different here.

One of the only comprehensive reports on the issue in Canada, by the Certified General Accountants Association of Canada, finds that in 2005, 24.6% of young university graduates held jobs that required less than a university degree.

Apparently the future is bright for University of Ottawa grads, though. The university self-reports that two years after graduation 82% of graduates working full time are employed in a field related to their studies. It would be interesting to know what they define as a related field, what percentage are actually working full time, and what methodology has been used, since these findings seem contrary to overall employment trends. The full-time/part-time/temporary axis is particularly important: working on temporary contracts is an increasingly normal – if shaky – reality for many young Canadians.

This is not to trivialize the university experience, nor the importance of higher education in general. But we must recognize that the modern university has to adapt and continually strive to do better. Young graduates are facing tremendous challenges and universities must open their eyes to these. In a world where the job market evolves at such a rapid pace, all actors – from industry to the not-for-profit sector – must be involved in creating interactive, dynamic and innovative learning environments. As demand for skills evolves faster than universities are adapting, partnerships beyond co-ops and internships are all the more crucial to training graduates.

Universities could do more by involving companies, multiple levels of governments and not-for-profits in their institutions – and, yes, this can be achieved without compromising academic freedom.

Courses should include more hands-on and practical case studies: in an ideal world, public policy students should take part in real strategic policy development in partnership with government departments and business students should develop and participate in the implementation of new supply chain systems for existing SMEs, not fictitious ones. Some universities have been better than others at providing such an experience for their students (notably the University of Waterloo and its tech industry partners).

Such a model would require more resources from all actors and likely yield smaller cohorts of students, but the young graduates trained would be the best and brightest in their field. The next generation of students expects interactive learning environments, with meaningful outlets for their ideas and entrepreneurial spirits. Millennials have more tools than ever to realize their aspirations: universities must keep up or risk losing this cohort. Indeed the demand for entrepreneurial university programs (diplomas and degrees in innovation, strategy and entrepreneurship) is already at an all-time high in Canada.

Certainly universities are still relevant and they are getting better at creating opportunities for their students. But could they be doing better? Yes. And unless university administrators recognize this, the ‘myth’ of the irrelevant university will persist.

We were delighted to hear this. But we were also mindful that Dr. Summers was speaking from a U.S. perspective: think tanks do indeed play a crucial role in shaping the policy agenda in Washington. Our long-time U.S. associate, The Center for American Progress (CAP), was seen by many as a government-in-waiting during the Bush years. This was not far from the truth as many staff – including Melody Barnes whom we will host at our health event next week – and even more ideas made their way from CAP to the Obama Whitehouse. What John Podesta has built in the past ten years, and the impact that CAP has had on the U.S. policy agenda, is nothing short of extraordinary.

In Canada think tanks have generally been thin on the ground, and typically associated with specific political parties. This remains true today.

We launched Canada 2020 in 2006 because we wanted a space for progressives of all stripes to meet, discuss, and share ideas in an environment that was free of the partisan mentality of old. For seven years we have been hard at work building out that space with our sold-out free events, online engagement, conferences, debates, research briefs and yes, carefully placed op-eds. We’re proud of the work we have done and the voices and ideas that we have featured: we have never had more momentum than we do now.

Other organizations are now beginning to join us.  That’s a good thing – we welcome these additions to the conversation. But as the progressive movement grows, it becomes increasingly important to carve out a unique vision, and a substantive offering.

This is what we have been doing in our marquee project, The Canada We Want in 2020. We identified five areas in which the federal government can and should play a more progressive, strategic role: reducing income inequality, increasing innovation and productivity, rising to meet the Asia challenge, securing our health system for the future, and squaring the carbon circle.

In each of these areas we have fueled new thinking, and engaged different voices in our effort to build a more progressive Canada for 2020 and beyond.

Ultimately, we at Canada 2020 believe that governing is about making choices. Sometimes, and ideally, the choices that governments make are strategic – the product of hard thinking to address major hurdles which coalesce at a particular point in time.

We believe that Canada is at such a point in time today – and that Canada 2020 is playing an important role in driving a discussion about the role of the federal government in Canada.

A serious public policy strategy for the country means doing less of some things, while focusing decisively and aggressively on a few important things. This requires in-depth analysis of the really big challenges and opportunities facing the country. It requires governments to be straight with Canadians about the risks and rewards that lie ahead, so that citizens will buy into a clear direction set by government.

The basic orientation of Canada 2020 is that the federal government has a vitally important role to play in developing and implementing strategic policies, focusing governments and other institutions in society on the big challenges the country faces, and mobilizing consensus for action. In other words, we believe that the federal government can be a force for significant and positive change.

This does not necessarily mean big government. But it does mean intelligent, innovative, analytical and strategic government. It could conceivably result in smaller government, focused on a few big and important areas of public policy that really matter to the Canada’s future.

Canada 2020 is very proud of what we have achieved in our first seven years and we look forward to continuing to build a progressive community around our shared interest.

Earlier this month a response to our paper ‘Why would Canadians buy carbon pricing?’ was published in the Financial Post. The article, ‘Carbon pricing doesn’t work’, was written by Aldyen Donnelly, President of WDA consulting and also President of the Greenhouse Emissions Management Consortium, a not-for profit Canadian corporation formed by companies involved in the oil and gas business that wish to demonstrate industry leadership in developing voluntary and market-based approaches to greenhouse gas emissions management. I note this as Ms. Donnelly’s affiliation is not immaterial to the arguments made in the article and the ‘confirmation bias’ charge leveled our way.

I am guessing that Ms. Donnelly agrees that carbon management is a key strategic issue. But she clearly disagrees with our analysis and also our tone.

The over-riding objective of our paper, and packed event which it supported, was to ‘identify a refreshed mode of discussion… [in order to]… develop a constructive and positive course of action’ to address climate change. Yes, we chose to look at carbon pricing, though were deliberately non-committal between a carbon tax and cap and trade. Our main message was that we must move on and take positive steps to move beyond the climate impasse that is currently plaguing us.

Far from ‘slamm(ing) the door’ on any policy proposals that offer a realistic change of making serious progress on carbon – of which we stand accused – the open debate format and variety of speakers allowed for all options to be brought forward. This includes using performance standards to reduce carbon emissions.

Indeed, our paper credits the federal government for making at least some progress in reducing emissions through regulating vehicles. But we also point to the fact – as many analyses show – that the current government’s sector-by-sector regulatory approach to reducing greenhouse gases will not achieve more than half of our (already inadequate) Copenhagen targets by 2020. It is for this reason that we need a step-change in action in this space. The regulatory approach is, as we note in our paper, ‘complex and slow’. It should form part of the solution but, on its own, it falls way short of being adequate in the short term.

We would certainly welcome a more fulsome explanation from Ms. Donnelly of how product standards are going to enable us to meet our Copenhagen targets, especially in a cost-effective way. It is not that this is a technical impossibility; it is just that there is no credibility to such a claim in the Canada of 2013 (when the 2020 Copenhagen deadline is just around the corner for the purposes of designing and implementing regulation). Tellingly, even Environment Canada has not made this claim.

There are grounds to question some of the finer points of the studies around the fuel-demand effects of carbon pricing in BC and other jurisdictions. But the general correlation between higher costs and reduced demand is intuitive, well-established and underpins the whole of economic theory (as even the first year students, whom Ms. Donnelly recommends should study our paper not for content but for ‘confirmation bias’, would agree).

Yes, demand for fuel is relatively inelastic, but that is in the short term. When prices increase, and further increases are expected, consumers look for more energy-efficient products and companies go to great lengths to supply them. The 1973–1978 oil shock marked the beginning of serious efforts to improve vehicle fleet efficiency in the U.S. and elsewhere.

Technology is key to delivering on Canada’s and the world’s climate change goals. Industry is key to leading the way to a more sustainable future. Carbon pricing will help change the incentives so companies invest in and profit from that future. Many companies get that. Just look at the inspiring presentation by the World Business Council for Sustainable Development on its Vision 2050.

Canada has made progress in fighting climate change, but not nearly enough to make good on our commitments or to make a real difference to our planet’s climate future. We must move on from the current carbon impasse in Canada. If we indeed share the same goals, as Ms. Donnelly suggests, a constructive dialogue is the best way to proceed. That’s exactly what Canada 2020 is promoting and, judging by the attendance at and engagement with our April event, that’s exactly what large numbers of Canadians want.

The Ontario government tries to satisfy everyone.

How does a minority government mired in a big deficit and in the grips of weak economic growth craft a budget that satisfies the NDP opposition and keeps the financial markets content?

Bob Rae, premier of Ontario for five years in the early 1990s, faced economic and fiscal challenges like this throughout his time in office but failed to triangulate such disparate interests. Paul Martin — undisputed master of the fiscal and economic universe for nine years as finance minister under Jean Chrétien — headed a minority government that negotiated a budget in 2005 with the NDP that managed to secure the support of Jack Layton, but was frowned upon by Bay Street.

By contrast, the inaugural budget of Premier Kathleen Wynne and novice Finance Minister Charles Sousa has likely succeeded where these and previous attempts at placating left and right have failed. The NDP will undoubtedly support the budget because it meets most of their demands. And Bay Street should be quite satisfied with a fiscal plan that is consistent with their agenda.

Most of the commentary has characterized this budget as a major victory for the NDP, upon whose support the Wynne government relies to survive, Tim Hudak’s Conservatives having committed to vote against it regardless of its contents. It has even been suggested this is more NDP Leader Andrea Horwath’s budget than anyone else’s.

To be sure, Horwath’s main demands were met, notably closing some corporate tax loopholes, putting in place a youth unemployment strategy, establishing new supports for small business, additional funds for northern Ontario infrastructure and committing to a legislated 15-per-cent cut to auto insurance premiums.

That said, the most important element of the budget runs rather contrary to NDP orthodoxy. This part is buried toward the end of the lengthy tome under the heading “Ontario’s Recovery Plan.” It is in here that we find the stuff the financial markets will like. And it is here that we locate the method to execute a comment Sousa made in a speech on April 22: “The most important and fundamental thing that we can do, together, to secure our future prosperity is eliminate the deficit.”

Put simply, the austerity drive — eliminating Ontario’s $10-billion deficit by 2017-’18 — is the cornerstone of the Wynne government’s agenda, even if the government hasn’t emphasized this.

Importantly, this deficit elimination objective will be achieved by holding program spending increases to less than one per cent per year on average over the next five years. Which might not sound terribly ambitious unless you consider that this is under the rate of inflation, meaning it equals a significant real cut in government spending.

Consider further that health care spending — which has been rising seven per cent per year on average for 30 years — eats up 42 per cent of Ontario’s program costs.

Then add to that the fact that we are on the cusp of the “grey society” — a period of unprecedented aging demographics which will put huge upward pressure on health care budgets — and one starts to realize the magnitude of the fiscal challenge Wynne and Sousa have set out for themselves. The budget document acknowledges this, stating that holding program spending rises to less than one per cent for years to come “will require some difficult choices.” Indeed it will.

Most of these choices have not been grappled with in Budget 2013, and lie in the future for the Wynne government. And despite dire warnings of its imminent demise, this government will almost certainly have a future of at least a few more months, if not another year and another budget.

The Wynne government’s effort at fiscal and economic planning has demonstrated skill on the part of the budget’s architects. They have crafted a document that both left and right can find their values reflected in, which is no small feat. That, in a sense, seems to be the essence of Liberalism today. By injecting into the budget some NDP inspired initiatives — and then emphasizing these publicly — the government is almost certain to survive. And by committing to a fairly tough austerity agenda — even in the context of weak economic growth and relatively high unemployment in Ontario, which might argue for rather less austerity — the government maintains its fiscal prudence credentials. The budget is an impressive piece of political strategy.

In the final analysis, however, what we really have here is a scene setter for a second Wynne-Sousa kick at the fiscal and economic can in a year.

Budget 2014 is where the rubber really hits the road — where the premier and finance minister will have to make some fundamental choices about the basic direction of and role for the Ontario government in the economy and in the lives of citizens.

In this volume of the think-tank round-up, we have plenty of examples of governments in Canada, the U.S. and Europe grappling with very serious policy issues.

Before we dive in though, take the time to register for our final Canada We Want in 2020 speaker series event: Confronting the crisis in public health on May 28. We have an excellent line-up of panelists that includes Alex Munter of CHEO, Alexis Williams of Loblaws, and Melody Barnes, current Vice-Provost of NYU and former White House Director of Domestic Policy under President Barack Obama. Don’t miss it!

Carbon and the environment

In January 2013, the Ontario Ministry of the Environment published Greenhouse Gas Emissions Reductions in Ontario: a Discussion Paper to inform its consultation on the design of a GHG reduction program. Two prominent Canadian environmental research centers, the International Institute for Sustainable Development (IISD) and Sustainable Prosperity (SP), also made public their contribution to the consultation process.

IISD notes that a cap-and-trade system can be effective if well-designed. To achieve this, IISD points to a few key features. First, it must be an overarching scheme that is inclusive of all sectors. Second, permits must be allocated according to cost outcomes. Finally, the Ontario cap-and-trade system should be designed to align with the recently-linked California and Québec cap-and-trade system.

In contrast, Sustainable Prosperity – a co-presenter of the dinner following our recent public panel on selling carbon pricing to Canadians – argues in favor of carbon taxation. SP is clearly disappointed that this option is not on the table. SP’s criteria for a successful scheme are that it must be: comprehensive in its coverage (no exemptions); simple and readily implemented; transparent and accountable; and, finally, complemented by regulations and incentives when a price signal alone is not sufficient. SP also warns against the free allocation of permits in a cap-and-trade system, to avoid encountering problems such as those that have plagued the European Emissions Trading System (ETS, RIP?).

Also at a provincial level, the Pembina Institute’s Simon Dyer published a report entitled Strengthening Alberta’s greenhouse gas regulations. The author welcomes the proposed-40/40 plan while cautioning that even this will not be sufficient to meet Canada’s 2020 Copenhagen commitments. His proposal is to reach the $40/tonne tax level by 2014, but to build on this with a $10 per annum increase so that the taxation rate would reach $100/tonne by 2020. This would generate $1.4 billion per year in revenues for Alberta’s Climate Change and Emissions Management Corporation (Eric Newell, the chair of CCEMC was a panelist in our most recent event, watch it here). These higher targets would help improve the oilsands’ image and potentially help overcome challenges to exporting oilsands products to the U.S. and Europe.

In international news, The World Bank reports that current trends are leading us to a 4 degree Celsius world by 2100 unless drastic action is taken. In response, the Center for American Progress presented New ideas for harnessing global markets to confront climate change, arguing that although global carbon markets have played an important role in the reduction of GHGs, they are still flawed. The authors put forward eight recommendations for the international community, one of the most interesting of which is that consumers should be empowered through social media and online marketing. CAP argues that tools such as Kickstarter can be harnessed to give consumers and individuals greater power in the fight against climate change. Another recommendation calls for learning-by-doing: scaling up the market to cover entire economic sectors and adjusting as we go, rather than trying to design the perfect system at the outset.

Income inequality

There has been much discussion in the United States about the “hollowing out of the middle-class.” If we accept that this is occurring, which policies might help counter this trend? CAP identifies six policies that it claims would not cost the taxpayer a dime, but would help the middle-class. They are to:

1. Increase the minimum wage
2. Make saving for retirement easier, cheaper, and more secure
3. Lower monthly housing costs by providing homeowners with principal forgiveness
4. Let all workers earn paid sick days
5. Ensure that workers who want to form a union are able to do so
6. Require colleges to provide consumer information such as likelihood of graduating, finding employment and paying off student debt via college scorecards.

CAP argues that these measures can be accomplished by changing regulations and labour laws. Although this may be sufficient to achieve the majority of these policies, it seems unlikely that policy #2 can be implemented without incurring important administrative costs on the part of government.

The Center for Economic and Policy Research produced a list of its own in Making Jobs Good. Schmidt and Jones examine how the following factors impact whether a job is “good” or “bad”: universal healthcare, universal retirement system, increase in college attainment, increase in unionization and gender pay equity. The main argument is that reducing the amount of bad jobs is more easily done than creating good jobs. However, a combination of policy actions on gender equity and unionization rates can have a positive effect.

The report shows just how much of an impact gender can have on earnings. If both genders were to receive the same pay for the same level of education, there would be no gender discrepancy in who holds the “good jobs”. Underpayment of women makes their job fall into the “bad job” category while men with similar positions have “good jobs” due to higher pay. Another interesting finding is that increasing unionization causes a greater improvement in the quality of jobs than increasing levels of college attainment.

Although President Obama has stated that income inequality is the defining issue of our time, this sentiment does not seem to be reflected in polling results. The Brookings Institution’s How much do Americans care about income inequality? argues that inequality is not an issue for U.S. voters. Even when individuals are given “tutorials” on the issue, their opinion on the importance of income inequality does not change. This looks to be at odds with attitudes here in Canada where polling found that a majority of Canadians (77%) deem income inequality a serious problem.

Productivity

Policy makers have long been concerned that Canada’s patent registration growth is lower than that in other developed countries. The C.D. Howe Institute produced a report exploring how reforming the Canadian tax system could help improve our productivity (Improving the Tax Treatment of Intellectual Property Income in Canada). It proposes what it calls an “Innovation box” which would give businesses tax breaks linked to the adoption, commercialization and exploitation of the output of research and development (R&D) rather than for the R&D in itself.

Healthcare

Briefly, the Fraser Institute argues that Canada has much to learn from the Japanese healthcare system. Canada spends 87% more on healthcare than Japan in terms of age-adjusted GDP – an interesting indicator in its own right that accounts for the higher usage of health services by older citizens. And yet, the report points to a number of indicators where Canada has worse health outcomes. The report, Health Care Lessons from Japan, authored by Nadeem Esmail, makes some fairly bold recommendations for Canada’s health system based on Japan’s model – not all of which we think should be handled lightly. Key features of the Japanese system that are highlighted as helping to reduce costs is the greater use of progressive cost sharing, as determined by income levels as well as greater reliance on federally regulated private health insurers. In fact, Japan is home to some 3,500 health insurers – a staggering amount.

The report is right to point out that instituting many of these changes would invalidate key aspects of The Canada Health Act. We would take it a step further: it would fundamentally alter our approach to health and healthcare delivery in this country. Are we ready to have that kind of conversation? The federal government seems quite pleased to punt our health accord conversations down the road – so we suspect we already know the answer.

This past Wednesday, over 500 people packed the Chateau Laurier’s ballroom, and hundreds tuned in online to watch ‘How to sell carbon pricing to Canadians’ – our call to re-cast the carbon pricing conversation in Canada.

And as luck would have it, our event couldn’t have been better timed: in the wake of Alberta Minister McQueen’s statement on a possible 40/40 carbon emissions reduction plan for that province, and President Obama’s signals that climate change will be a priority in his second term, new energy has been injected into the climate debate.

That afternoon in the House of Commons showed us exactly why a reboot on our carbon conversation is so desperately needed. Government and opposition MPs viciously attacked one another over what has been billed as a proposed ‘$21 Billion carbon tax’ – another attempt at conflating carbon pricing with putting a ‘tax on everything’. A fresh start is clearly needed, as our background paper ‘Why would Canadians buy carbon pricing?’ affirmed. Our packed house attests to the fact that Canadians are clearly ready.

To begin the move forward, Canada 2020 was honoured to be joined by one of our most diverse and respected panels to date:

• The Honorable Jean Charest, current partner at McCarthy Tétrault LLP, former Premier of Quebec, and former federal cabinet minister including time spent as Minister of the Environment under Prime Minister Brian Mulroney.
• Elizabeth May, M.P. and Leader of the Green Party of Canada, and former Executive Director of the Sierra Club of Canada.
• Bob Inglis, current Executive Director of the Energy & Enterprise Initiative, former Republican Congressman for the state of South Carolina (4^th District).
• Eric Newell, Chair of the Climate Change and Emissions Management Corporation, former President and CEO of Syncrude, and former Chancellor of the University of Alberta.
• Kathryn Harrison, Professor of Political Science from the University of British Columbia.

Our moderator, Don Newman (Chair of Canada 2020’s Advisor Board) set the parameters of the discussion, asking each of our panelists how we can re-establish a constructive debate about carbon in Canada; why Canadians have resisted carbon pricing thus far; would Canadians accept a new way forward now; and, if so, how far might they be willing to go?

The Honorable Jean Charest made clear that Canada would adopt a carbon price in the next 10 to 15 years – a timeline consistent with both the U.S. electoral cycle, as well as the internal pressures that he sees mounting at both the local and provincial level. M. Charest spoke about the opportunity for progress that is presenting itself right now, noting three important reasons why bold political leadership is important: 1) Obama has made the environment central to his second term in office 2) a carbon tax is now viewed as a sound fiscal tool and 3) China is also moving on this issue with an announcement it will implement a carbon tax.

Eric Newell gave an honest and frank assessment of industry’s need to step up to the plate on both demanding political action on carbon pricing, and compliance with current regulations. Mr. Newell pointed out that not a single oil patch CEO had come to him to complain about the SGER, Alberta’s carbon tax regime (the organization which he chairs, the Climate Change and Emissions Management Corporation, takes funds raised under this system and invests in clean technology). A simple, clear price signal, said Mr. Newell, provides stability to markets and would reduce emissions.

Elizabeth May – the lone Green Party M.P. in the House of Commons – explained how and why Canada’s carbon debate has broken down over a series of electoral cycles. During this time we have moved from being a relatively green and progressive nation on the world stage to a carbon-heavy emitter with a growing record of withdrawal from international, legally-binding treaties. Ms. May believes that Canadians are primed and ready for a carbon tax, and that it is solely the lack of political leadership that has kept one from being introduced. The 2008 election, she said, was not a rejection of carbon taxation but rather of the person (Stephanie Dion) who was selling it. A referendum on a carbon tax, she says, has yet to take place in Canada.

Kathryn Harrison, professor of political science at UBC and vocal supporter of the British Columbia carbon tax system, noted that carbon is an easy area for partisan point scoring, and called for this to end. She also brought an international perspective, pointing out that countries that have adopted nation-wide prices on carbon have all done so under some form of proportional representation.

A further critical point that she made was that carbon taxation, once enacted, was likely to be ‘sticky’. Any incoming government that rejects the carbon tax in British Columbia would find itself in the unenviable situation of having to raise income taxes (again) to make up for the forgone carbon tax revenue. This might be even less politically palatable than sticking with the now widely-accepted carbon tax.

Finally, Bob Inglis – the lone U.S. voice who joined our panel to make the conservative case for carbon pricing – found himself welcomed under the progressive banner with open arms. Much of the approach that Mr. Inglis espouses (ending fossil fuel subsidies, shifting taxes from income to pollution, and removing “clumsy government regulations”) aligns with what the Liberal Party of Canada proposed with the Green Shift in 2008. The key difference, our panel concluded, was Bob’s call for the clearest possible price signal and system. That way, as both Eric Newell and Jean Charest concurred, entrepreneurs and innovators can enter the marketplace with solutions and technologies that ease the transition to a lower-carbon economy.

For Bob, explaining a carbon tax (not a cap-and-trade) to his constituents in the U.S. proved challenging, but was more effectively done through the lens of ‘pollution’ and ‘clean air’, all ways that personalize the issue for voters in the here and now (not extrapolate outwards to future generations). This – we at Canada 2020 believe – could be an effective model for moving forward with the debate in Canada. This is an area in which we will be doing further work in the forthcoming months.

Canada 2020 sincerely thanks everyone who watched this panel either in person or online. Without the support of our sponsors and the passionate engagement of everyday Canadians, policy conversations like this would not have the same impact.

Canada 2020 will be continuing its work on carbon pricing with future research, events and programming. To stay involved, join our mailing list, host your own meetings with our materials, follow us online, and connect with our staff members.

Thank you.

This was the fortieth event that Canada 2020 has hosted and it was, by all measures, our largest. The overwhelming response (both in terms of numbers of people who attended and livestreamed and press coverage) has shown there is a real appetite for an ‘adult conversation’ on pricing carbon in Canada.

At the event, the Hon. Jean Charest noted three important reasons why we might be able to recast the carbon debate: (i) President Obama has made the environment central to his second term in office; (ii) a carbon tax is now viewed as a sound fiscal tool; and (iii) China is also moving on this issue, having announced its intention to implement a carbon tax and having signed an agreement with the U.S. on climate change and green technology collaboration.

The video from the panel – featuring Jean Charest, Elizabeth May, Bob Inglis, Eric Newell and Kathryn Harrison – is now online, so please do take time to watch if you were not able to attend in person.  And please also stay involved as we take the debate forward over the next several months.

Carbon and the environment

As M. Charest pointed out, things are shifting in the United States on environmental policy. The IMF came out with a report encouraging countries to remove or decrease their subsidies on fossil fuels, while the Obama budget also takes aim at ‘Big Oil’. The President’s proposal is to eliminate the $39 billion in special tax breaks enjoyed by these companies.

This chimes with the views of our panelist, Bob Inglis, whose core message (“We have to change what we tax: tax the bads not the goods”) echoes the progressive call for linking tax reform with environmental goals.  

The Economist of April 20 reflects on of the European Emissions Trading System (ETS) (ETS, RIP?). It calls the tool a mess: a cap-and-trade scheme, with too many permits, that has been hit hard by the recent recession. The result is that the price of these permits has tumbled to around $3/tonne, three times below California permit prices. The building of 69 new coal energy plants in the EU would also suggest that the impact of the ETS is minimal.

With difficulties in reforming the system at the EU level, we can expect future action to focus at national level. Thinking about that national level, Chatham House this week released a report on the Cost and Consequences of Increasing Biofuel Use in the UK. The report finds that EU policy that has spurred increased biofuels use is ill-founded. Current biofuel standards do not ensure that biofuel use is sustainable and, to make matters worse, biofuel use is not a cost effective way of reducing emissions from road transportation.

The International Energy Agency also produced a critical report (Tracking Clean Energy Progress 2013) this week. The report argues that market failures have stalled progress in the development of clean energy solutions. Although Canada has been an important player in developing carbon capture and storage (CSS) systems, with high levels of funding from the public and private sector, the technology is not yet ready to be marketed (as we know, two major proposed CCS projects in Canada have failed to get off the ground).

If the world is to reduce its emissions without CCS, we must find ways of reducing our reliance on fossil fuels much more quickly. The report states that Canada must make long-term credible commitments to reducing emissions if it is to make real progress on climate change policy. This sentiment is echoed in our recent report, Why would Canadians buy carbon pricing? by Diana Carney.

Income inequality

This week, Matt Bruenig of Demos posted an interesting blog about measuring income inequality. In The Trickiness of Measuring Inequality, Bruenig argues that we need to bring clarity to the debate by finding more accurate metrics. He points out that household income figures can hide important intra-household differences.

Families can look the same on paper but be very different in reality. Two families may both have an income of $50,000. But if one family consists of two adults, each earning $25,000 and the other consists of a couple in which one partner earns $50,000 and the other partner chooses to stay at home, these two families are actually strikingly different. Furthermore, aggregate income statistics do not reveal important differences in hours worked (for the same salary).

Persistent across all indicators though is the fact that incomes in the U.S. have not kept up with economic and productivity growth.

The Center for American Progress has taken a – somewhat – lighthearted approach to the growing wage gap with The Game of Wages, an interactive web launched in honour of April 9, Equal Pay Day in the EU, US and Australia. As we have mentioned multiple times, gender is a determining factor of income inequality. CAP illustrates the lasting implications of  gender wage inequality and the lingering distance between men and women in the workplace.

The Centre for American Progress also produced a study (How Pay Inequality Hurts Women of Color) illustrating the double pay gap faced by women of color. This is a critical issues since 53.3% of black households have a woman as the primary breadwinner.

Competition and Productivity

Briefly: Deloitte has emerged as a leading authority on studying Canada’s innovation and productivity challenges. Their team has put together a smart and quick infographic that positions Canada’s productivity against other major economies. It is a good starting point for a refreshed discussion.

Published in iPolitics Wednesday April 17, 2013. Subscribe here.

Today, Canada 2020 will host a public panel event in Ottawa on carbon pricing. It is called ‘How to sell carbon pricing to Canadians’ and we planned it last fall. As it turns out, our timing could not have been better. In the wake of Alberta Minister McQueen’s statement on a possible 40/40 carbon emissions reduction plan for that province, new energy has been injected into the climate debate in this country.

We hope that the conversation is constructive, open, and reasonable: all things currently missing from our dialogue on carbon and climate in Canada. Our intention is to capture and reinforce that energy and enthusiasm to help build towards actual solutions.

Our goal in convening the panel is to open a dialogue that is respectful of all positions, so that we can begin to take steps towards identifying shared interest in the climate debate. This, in turn, could provide the basis for actions that will make the necessary cuts in our emissions.

A good first step would be to support our governments in finding ways to meet our Copenhagen commitments. But we can and should strive for more. Blame for inaction lies at the feet of all federal parties: quite simply, now is the time to move on.

Countries that have progressed in this area in recent years – such as Ireland and Australia – have benefited from a societal consensus that has transcended short-term political thinking. What is preventing Canada from following their lead?

Above and beyond the Alberta climate proposal, there are some indications that now might be the right time for action. A recent report by Sustainable Prosperity has detailed how companies across Canada, including in the oil and gas sector, are making use of shadow carbon pricing in their day to day operations – planning for a day when carbon pricing is introduced. The Canadian Council of Chief Executives has a standing call for a nationally consistent carbon price, and the Canadian Association of Petroleum Producers has apparently responded to the Alberta 40/40 proposal with a 20/20 proposal of its own, tacitly acknowledging that more needs to be done.

A more active dialogue is developing around Canada’s future as a large-scale energy exporter – with much of the open, constructive debate happening beyond our borders and not at home where it is most needed. President Barack Obama’s forthright statements on climate change – even if they are not yet matched by action – seem to be leading people to question why our government is avoiding engaging the Canadian public on these issues.

It is worth noting that upon advertising our event, it sold out in a few short hours. Over 450 people are signed up to be part of the conversation. They hail from all walks of professional life: the business community, the NGO sector, academics and public servants. The public is clearly ready.

If any country has the incentive to make progress, Canada does. The Arctic is warming at twice the global average rate. And if any country has the information available to inform that debate, Canada does. The province of British Columbia has had a ‘pure’ carbon tax in place since 2009. This is a revenue-neutral tax: all proceeds are returned in the form of business and personal tax cuts. It has not destroyed the economy as many predicted. In fact some businesses have benefitted significantly: the wood pellet and carbon-neutral bio fuel opportunities may have provided a lifeline to the forest industry. And carbon emissions and fossil fuel usage have gone down absolutely and relative to the Canadian average.

Meanwhile Alberta has a hybrid system of intensity reduction targets coupled with penalties (paid to a green technology fund) for failure to achieve these. Companies also have the opportunity to purchase offsets from others that are meeting their targets. And as of January 1 2013 Quebec also has a cap and trade system in place that links the province with California. With such a wealth of experience, Canada should be teaching courses on carbon pricing, not hiding in the back room.

Through our session on April 17 we are aiming to understand a number of the key dynamics at play in our carbon debate: how is carbon pricing best linked in people’s minds to beneficial economic outcomes? Can intergenerational responsibility (i.e. the fact that people care what happens to their children and grandchildren) translate into climate action? And can we build political momentum across party lines to use all policy tools available to meet our international commitments?

But most of all, our goal is to reignite a positive debate on carbon pricing and, in so doing, begin building towards a plan with which the majority of Canadians identify – and of which they can be proud.

Diana Carney is Vice President, Research and Alex Paterson is the Communications & Program Coordinator at Canada 2020, an independent progressive think tank.

The event ‘How to sell carbon pricing to Canadians’ will take place today, April 17, from 4:30 to 6:30 PM at the Chateau Laurier Hotel in Ottawa.

Due to overwhelming demand, we have released a new batch of tickets, and moved to the hotel’s largest ballroom. You can register online until 2:30 PM today at www.canada2020.ca or until tickets last. You can also livestream the event online at www.canada2020.ca/live and follow along on Twitter using #Can2020.

This week saw the passing of former British Prime Minister Margaret Thatcher, one of the most influential politicians of the 20th century and probably the greatest female political leader of modern times. It is a truism that Thatcher led a revolution in the U.K. and beyond, one of the hallmarks of which was the notion that cutting taxes should be a central goal of modern government. Thatcherism, as it came to be called, in conjunction with Reaganism, its brother doctrine in the U.S., held that tax cuts were the cure to most of the economic and social ills that afflicted western democracies in the 1970s and 1980s.

Easter has come and gone, and while you may have been resting, we at Canada 2020, have been working away to produce your latest bi-weekly think tank round up.

Carbon and the Environment

A pipeline rupture in Arkansas on March 29^th led to 10,000 barrels of Canadian crude being spilled in a residential area, raising ever more questions about the merits of building new pipelines.

But it is not just the transport of fuel that is a concern, it is where that fuel comes from in the first place that is worrying many (see Thomas Homer Dixon’s latest op-ed in the New York Times about Canada’s oil sands). In Adding Fuel to the Fire: The Climate Consequences of Arctic Ocean Drilling, Kiley Kroch and Howard Marano of the Center for American Progress look further north, arguing for a ban on Arctic drilling. They note that we have no real idea how to extract oil from fragile areas such as the Arctic without causing damage, citing in support the challenges faced by Royal Dutch Shell (traditionally one of the most experienced and environmentally aware oil companies). The report advocates the development of clean technologies, internalizing the price of pollution and investing significantly in climate resiliency.

It should be possible to generate support for such strategies, if recent polling is to be believed. On April 2, the Center for Climate Change Communication at George Mason University published the results of a climate change survey conducted amongst 726 self-identified Republicans or Republican-leaning Independents (A National Survey of Republicans and Republican-Leaning Independents on Energy and Climate Change). The polling found that the vast majority support an increase in the use of renewable technologies in the US with most recognizing that this must happen immediately.  Moreover, 64% of respondents said that the US should take action to reduce dependence on fossil fuels, and the majority believed that the US would benefit from reducing the use of fossil fuels. Only 26% of respondents did not believe that climate change is taking place.

In other energy sector work, the Pembina Institute produced a report (Getting on Track to 2020) arguing that regulation of the oil and gas sector in Canada must achieve intensity improvements of at least 42% if this sector is to play its part in helping Canada achieve its Copenhagen commitments (17% reduction from 2005 levels by 2020). Tellingly, the current Alberta carbon regime calls for only a 12% improvement in intensity (per barrel emissions) and no overall cap. The Pembina report also argues for reducing companies’ ability to choose offset credits instead of efficiency improvements or payments into the carbon fund (which, it argued, must rise to between $100 and $150/tonne from the current $15). High as these numbers seem, the authors’ analysis shows these sums would add only $3 to the price of a barrel of bitumen in 2020 (by the time other changes in cost and revenue have been taken into consideration).

Elsewhere, the Canadian International Council published an interesting online info-graphic on water scarcity and access to water (Are We Running Out of Water?). Canada is, as we know, very well-endowed, but many countries are not. Interesting to consider this in the week that we discovered that the Government had pulled out of the UN Convention to Combat Desertification.

Income Inequality

On March 21, the Center for American Progress published States at Work: Progressive State Policies to Rebuild the Middle Class which analyses what the various states have been doing to shore up the middle classes (while noting that all levels of government have a role to play). We were reminded how important this is by an article by Edward Luce in the FT on Sunday which noted that median household income in the US has declined by 5.6% since 2009.

The CAP report finds that trickle-down is failing most Americans and that the US has less economic mobility than most other developed countries (as our recent panel, Equality of opportunity: a Canadian dream? discussed). It presents 100 policy reforms to help the middle class, ranging from improving the quality of existing jobs to rebuilding America’s crumbling infrastructure (something which Canada 2020 speaker, Larry Summers, has repeatedly advocated).

We also heard last week from the Brookings Institution about their forthcoming study, The Missing One-Offs: The Hidden Supply of Low-Income, High-Achieving Students. Christopher Avery and Caroline Hoxby have examined the records of every student in the US that scored in the 90^th, or higher, percentile in the SAT (2008), following their progression through high school, college applications and college itself. They found the ratio of high-income to low-income students in this group was 2:1, somewhat lower than college recruiters had actually assumed. When it came to graduation rates, there was no difference between the income levels, which is good news for economic mobility. This is an interesting study as it provides data to support or challenge many commonly-held preconceptions about income and achievement. We look forward to the final report being issued.

On April 2, the Economic Policy Institute of Washington DC and the Century Foundation of New York, published A review of the economic research on the effects of raising ordinary income tax rates. Looking at the period since World War II, the authors found that higher tax rates have had no statistically significant impact on economic growth, which runs counter to the widely-held belief that raising tax rates dampens the economy. Lowering top marginal tax rates does, though, have a tendency to increase both pre- and post-tax income inequality.

Meanwhile, in Australia, the Government Productivity Commission came out with a report entitled Trends in the Distribution of Income in Australia. This shows similar findings to studies from Canada. Real individual and household income has increased between 1988 and 2010 in Australia while the distribution of income has become more uneven with less concentration around the average.

That’s a wrap for this volume of the Think Tank Round Up – See you in two weeks!