Whither the health debate?

Posted on April 25, 2012

The current federal health accord expires in 2014. Most expected that, by now, we would be entering a period of protracted wrangling over what would replace it. Instead we face something of a void.
In December 2011 the federal finance minister unexpectedly – and unilaterally – announced a surprisingly generous new offer to the provinces: continued 6% annual increases in federal transfers for three years after the current health accord ends, after which transfers will be pegged at the rate of nominal GDP growth with a guaranteed base of 3% a year.
This money comes with no strings attached. The federal government seems to have abandoned the semblance of a policy role in healthcare, beyond its fiduciary responsibilities to aboriginal health (enshrined in the Constitution), its responsibility for military healthcare, its funding of health research, and its role in drug approvals.
What does this mean for us, the consumers – and ultimate financers – of healthcare in Canada?
The healthcare authors in our book, The Canada We Want in 2020, writing before the December 2011 announcement, all agreed that the there was an important leadership role for the federal government in healthcare. In particular, they suggested that an active federal government, acting in a sensitive and collaborative mode, could help address many of the core challenges that our system faces. These include:

addressing the disparity in care across provinces/communities (developing, en route a meaningful set of common indicators);
stimulating a process of modernization so that our healthcare system better addresses current needs (such as chronic rather than acute care and addressing the high cost of outpatient drugs/the need for a national pharmacare programme);
ensuring better and more consistent evaluation of which procedures should be funded (evidence-based not media-driven decision-making);
institutionalizing a culture of innovation in healthcare;
placing a clear focus on healthcare outcomes, within a systems approach, rather than concentrating on inputs and procedures;
helping to forge a societal consensus on paying for healthcare and providing leadership on diversified revenue sources.

This pro-federal leadership viewpoint is also espoused in a March 2012 Senate report entitled, Time for Transformative Change: A Review of the 2004 Health Accord. This largely unpublicized report notes: “…..there is a need for federal leadership in promoting healthcare reform across jurisdictions.” (p. 83).
Apparently, the federal government disagrees. All these deep and difficult challenges will now be left to the provinces. It has therefore provided a swift answer to the question posed in our volume by Philippe Couillard, physician and former Quebec Minister of Health: Does [the federal government] want 2014 to be a low-profile rubber stamping event or does it wasn’t renewal of our health system to be part of its legacy?
For if renewal does take place – and that is a big if – it must be the provinces that take the lead (and thus the glory). Whether they will be capable, or willing, to do this remains to be seen. The challenge is all the greater since many of the problems of healthcare, such as inter-provincial disparities, may actually be exacerbated by the new federal stance. Under the new arrangements, federal funding will be allocated on a strict per capita basis across the country. (At present it is a mixture of per capita payments and tax points which means that certain provinces, notably Alberta, receive much less per capita than others). The new arrangements could have a negative impact on those provinces with a higher proportion of older – more expensive in healthcare terms – Canadians.
Though Canada’s health system scores well on important indicators (for example, we are above average on life expectancy at birth and at age 65, though dismally below average for the aboriginal population), ours remains one of the most expensive systems in the world. Health spending accounts for 11.4% of GDP, almost 2% above the OECD average.
Sadly, the problem of financing healthcare has not miraculously disappeared with this announcement. Increasing amounts of money still need to be found and if new sources of revenue are not identified (for example, the type of social insurance premium that our author, Mark Stabile talked about in his piece), healthcare financing will continue to squeeze other priorities in both federal and provincial budgets.
Neither have the severe problems around First Nations’ healthcare been resolved. The federal government has recently announced that its National Aboriginal Health Organization will cease to operate by June 30, 2012. It is not year clear what path has been chosen for moving forward in this area.
Maybe, though, the provinces will surprise us. Now that their energies need no longer be wasted on battling the federal government on healthcare, perhaps they will be put to better use innovating, modernizing and refocusing. Time will tell. Polls suggest that most Canadians still want a federal role in health. But, regardless of who is taking the decisions, our contention at Canada 2020 is that the policy issues around healthcare for all Canadians must remain firmly in the spotlight.

Canada must leap ahead in Asia

Posted on April 11, 2012

Canada is back in the game in Asia. With two recent visits by Prime Minister Harper (to China, Thailand, Korea, and Japan) and a path-breaking trip to Myanmar by Foreign Minister John Baird, the government has begun a serious policy tilt towards Asia.
The recent federal budget underscores this leaning towards Asia, with its focus on trade and investment negotiations across the region. Canada is now in various stages of bilateral free trade talks with five Asian countries, and is making the case for entry into the Trans Pacific Partnership (TPP), a grouping of nine Asia Pacific economies.
If the government seems to be in a bit of hurry on Asia, there is good reason. Canada’s market share in Asia is below potential, we have no full trade agreements with Asian countries, and Ottawa has not been invited to regional clubs such as the East Asian Summit.
Entry into the TPP is by no means assured. Ironically, one of the main obstacles is our closest ally and trading partner, as was evident in the remarks by President Obama at the recent Canada-US-Mexico Summit. Obama suggested that Canada’s supply management system for dairy and poultry products could be a deal breaker. This issue was known to be problematic, but it is telling that the US President would draw attention to it rather than to the importance of bilateral economic ties and the proven success of NAFTA. Even though the US has clearly made a policy “pivot” towards Asia, there little indication to date that Washington DC considers Canada as playing a useful supporting role for American objectives in the region.
Canada is playing catch-up in Asia, which explains the frenetic pace that this government has set for itself on trade agreements. In my paper for Canada 2020, I outlined the elements of a “catch-up” strategy on Asia and am pleased to see that many of these ideas are now being implemented. If the current policy tilt to Asia is sustained, there is every reason to believe that we can indeed catch-up.
But there are no prizes for simply entering the race. To recognize that China and India are global powers and that Asia is vital for Canada’s future prosperity is simply to be on the same page as every other major industrialized country.
In addition to a catch-up strategy, Canada needs a leap-frog strategy. The goal should be no less than for Canada to be the most Asia-engaged country in the western world.
Leap-frogging our competitors will require a commitment at the federal and provincial levels, as well as by business and civil society, to make sure that Canadians have the knowledge and skills to be effective in an increasingly Asia-centric world. If future generations of Canadian leaders are to become more Asia-engaged, there will have to be substantially more teaching about Asia and Asian languages in the education system, including at the elementary and high school levels.
In one key area, Canada can already lay claim to be the most Asia-connected country in the industrialized world. In relative terms, human ties between China and Canada are longer and deeper than for any western country, and in Vancouver we have arguably the most Asian city outside of Asia. These are assets in the Canada-Asia relationship that are grossly underutilized; they offer the potential to leverage diplomatic, commercial and civil-society ties with Asian countries that other western countries can only regard with envy.
The federal government’s Asia Pacific Gateway and Corridors Initiative (APGCI), for example, has set the stage for Vancouver to become not simply the preferred entry point for Asian shipments to North America, but the premier hub for government, business, cultural, and research linkages connecting the two sides of the Pacific. A gateway is valuable in part because of what passes through it, but more so because of the value-added activity that happens within and around it. The next phase of the APGCI should therefore focus on the “gateway economy”, which would include activities such as the development of business and professional services for global Asian firms and the attraction of Asian head offices for their North American operations.
In the near-term, the most important game-changer in the Canada-Asia relationship is energy exports. Current debate around oil sands and shale gas development in western Canada, and the construction of the Northern Gateway pipeline to the coast, focuses largely on the impact on Canadians, especially First Nations. The bigger story, however, is that the coming energy glut in North America could lead to the creation of a trans-Pacific energy market. In addition to significant economic benefits for Canada, energy trade across the Pacific could lead to increased energy security in Asia, superior environmental outcomes in the region, a more balanced trade relationship, and stronger diplomatic ties with Asian countries.
As global economic and political weight continues to shift towards Asia, Canada has to work harder just to be noticed. Our ability to put in place the infrastructure and regulatory framework for energy exports – and to foster cooperation on energy issues more broadly, including on renewables – will be watched closely in Asia.
It is in some ways a major test for Canada-Asia relations: success will mean a significant new platform for trans-Pacific ties in an area that matters hugely to Asia. Failure, on the other hand, will signal that Canada cannot muster the political will to diversify its economy, even where the opportunity and potential is so clearly evident.
This, in turn, raises a scenario that I would rather not contemplate: that we neither catch-up, nor leap-frog, but instead fall further behind in our ties with the most economically dynamic region in the world.
Yuen Pau Woo is President and CEO of the Asia Pacific Foundation of Canada.

Can a Small Change Budget Transform Canada’s Economy?

Posted on April 6, 2012

The federal Budget thus far seems to be known most for eliminating the penny, a small change initiative if there ever was one. Yet the government claims Budget 2012, entitled Jobs, Growth and Long Term Prosperity, will secure Canada’s long-term prosperity, which, according to Mr. Flaherty and the Prime Minister, is anchored in this country’s innovation performance.

This budget, like many others over the past fifteen years, spills a lot of ink on Canada’s well- documented innovation deficit. There is a whole chapter on “supporting entrepreneurs, innovators and world class research”. The government claims that its approach to innovation policy, as outlined in the Budget, will, over time, transform Canada’s economy, making it much more innovative and globally competitive. This, in turn, will secure our prosperity.
Does the substance in Budget 2012 line up with that claim?
For at least fifteen years, successive governments – Liberal and Conservative – have tried to improve the Canadian business sector’s woeful innovation performance, primarily through spending and tax measures of various kinds. These are aimed at stimulating private and public sector research and development, and the commercialization of that research. Spending on R&D is effectively considered, in government circles, to be a rough proxy for innovation. As a result, we have seen a litany of tax and spending measures over the years, and the creation of all kinds of new entities to deliver that agenda. And yet Canada has barely moved the needle at all on innovation and productivity performance.
Budget 2012 devotes a total of $1.1 billion over five years to improving Canada’s innovation performance. To some, that might sound like a lot of money, especially in the context of an austerity-focused government. It isn’t: it is trivial. It amounts to one tenth of one percent of total federal spending. It is a drop in the ocean in a $1.75 trillion economy. It is considerably less innovation-related expenditure than most governments – including previous Conservative governments – have apportioned in recent budgets.
So how can the government seriously claim that Budget 2012 is all about the economy’s long-term prosperity, which it acknowledges is bound up with improving Canada’s innovation performance?
Here’s how.
Budget 2012 basically throws in the towel on the traditional federal approach to improving innovation performance through government spending and tax incentives. The government seems to have concluded that this standard remedy isn’t working after many years of considerable federal effort. The evidence suggests they are right.
The government also seems to have concluded that the most significant thing they can do to improve Canada’s innovation performance is to expose the Canadian business sector to the full forces of global business competition. This is the Harper government’s new innovation agenda for Canada.
Budget 2012 is unique, and quite bold, among recent federal budgets in one respect. It devotes 10 pages to outlining how the government is “expanding trade and opening new markets for Canadian business”. This globalization agenda has been emerging piecemeal over the past 18 months, and is now laid bare for all to see in the Budget. The Harper government is embarking upon the most significant international trade agenda in memory – opening up free trade talks with the EU, India, Japan and the Trans Pacific Partnership (a multi-lateral free trade agreement centered in Asia), and beginning exploratory free trade discussions with Thailand and Mercosur (a customs union involving four large south American countries). In addition, the government recently signed a foreign investment protection agreement with China – which was 18 years in the making – and is now finally taking a serious interest in Chinese trade and investment.
Exposing Canadian business to the full forces of global market competition, and prying open foreign markets for Canadian exports, is also a textbook way to drive innovation performance in the business sector. And it doesn’t cost a penny pinching (and penny eliminating) government any money at all to do so.
That is why Budget 2012—“the small change budget”—could actually do as the government says, and significantly improve Canada’s innovation performance in a way no previous government has been able to. The only remaining question is this: Are Canadian businesses and workers prepared to meet the gale winds of global competition?

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