Author: Aqsa Malik
Release Date: May 22, 2013
Pages: 26
This paper was prepared as background material for the Canada 2020 event ‘Confronting the crisis in public health’ on May 28, 2013 in Ottawa, Canada. It was written by Aqsa Malik, who is finishing her Ph.D. in Neuroscience at the University of British Columbia’s Brain Research Centre. The Foreword was written by Diana Carney, Canada 2020’s Vice President, Research, who was also the editor.
It is our conviction at Canada 2020 that there is and should be a role for the federal government in assuring the health of Canadians. While the provinces work on the mechanics of healthcare delivery, is there scope for the federal government to provide true leadership around public health issues, both to ease the financial burden on health systems and increase Canadians’ quality of life?
This paper joins other research and commentary written for our Securing the Health System for the Future policy stream, one of five areas of work that comprise the Canada We Want in 2020 project.
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Year: 2013
The modern university: relevant? Yes, but is this enough?
On May 9, 2013 Canada 2020 staff attended a Canadian Club of Ottawa lunch at which Allan Rock, President of the University of Ottawa and former Chretien-era cabinet minister, delivered a speech entitled “The Skills Mismatch and the Myth of the Irrelevant University”.
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.
So you want to build a progressive movement in Canada
Last November, Larry Summers opened his talk at our packed Canada 2020 event, by saying that think tanks, such as Canada 2020, were vital to the political process. In his view, much of the North American political discourse is the result of a carefully placed op-ed, or a strategically researched issue brief from a think tank.
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.
An austerity agenda hidden in an ‘NDP budget’
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.
How to talk about a carbon price – without panicking
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.
Margaret Thatcher, Kathleen Wynne, Alison Redford and the politics of conviction
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.
The tax-cutting ideology espoused by Thatcher and Ronald Reagan reverberated far and wide, transforming the political right in some countries, but also having an impact on more moderate, centrist governments. The Chrétien Liberals, we should recall, boasted 13 years ago about bringing in the largest tax cut in Canadian history. This set a trajectory for federal tax reductions of various kinds that continued under both prime ministers Martin and Harper, the latter of whom took this ethos to absurd extremes when he suggested all taxes are bad.
At the federal level in Canada, for 15 years and spanning three different governments, the only acceptable direction for taxes has been down. Any politician who hints at the notion of a federal tax increase faced pillory if not political destruction. The ideological groundwork laid by Thatcher in the 1980s had a big influence on this world view taking root in Canada.
The worm, however, seems to be turning in this country on tax policy, at least at the provincial government level. And it is turning due to the ascent of two new women politicians on the Canadian scene — Premier Alison Redford of Alberta and Kathleen Wynne of Ontario. Together, these premiers may be on the cusp of sparking a minirevolution of their own on the issue of taxes. Both are courageously suggesting that perhaps some taxes will have to be increased. In so doing they are challenging a received wisdom that has gripped this country for two decades.
Wynne is basing her government’s entire agenda on the idea that Ontarians are going to have to pay more in taxes or other charges in order to generate the revenue needed to fix the chronic public transit issues that have afflicted the province — especially the Greater Toronto-Hamilton Area — for a generation and that undermine both quality of life and economic productivity. It is a breathtakingly sensible idea that runs headlong into the anti-tax red meat Ontarians have been fed for many years, stuffed down their throats today by both Conservative Leader Tim Hudak and Toronto Mayor Rob Ford.
For her part, Redford’s government has committed heresy in Alberta by suggesting that her province’s minimalist carbon tax might have to be more than doubled to have the desired effect on oilsands emission reductions. That Redford has even raised this issue in a province with the most anti-tax political culture in Canada, that prospers or slumps on the fortunes of the oil industry, borders on the heroic.
The nascent tax reform agendas emerging under the Wynne and Redford governments are potentially revolutionary in their longer-term implications if they succeed in sparking a conversation among Canadians about the appropriate role, levels and uses of taxes, and in the process recast two decades of anti-tax political discourse. Wynne and Redford might in fact be putting the first nail in the coffin of the conventional view that any talk of tax increases is political suicide in this country.
Margaret Thatcher famously described herself as a conviction politician, one who would not be dictated to by public or elite opinion. While Kathleen Wynne and Alison Redford — Liberal and Progressive Conservative respectively — reject Thatcherite policy ideology, they too appear to be conviction politicians in their own right. Both women seem to genuinely believe that the specific tax increases they are suggesting are good public policy choices that are needed to improve the quality of life, economic prosperity and environmental sustainability of their provinces, even if they might prove to be less than popular among citizens.
It is worth remembering that the last major act of Thatcher’s government was the introduction of the “community charge,” known euphemistically as the “poll tax,” one of the most controversial policies of her time in office. As premiers Wynne and Redford embark upon their own tax reform agendas they can take some comfort from the fact that even Maggie Thatcher — the inventor of conviction politics and one of the leading proponents of tax cuts during her era — believed in some tax increases.
Announcing the winner of Canada 2020 & uOttawa’s Student Prize Essay contest
In November 2012, Canada 2020’s leadership met with the faculty and staff of the University of Ottawa’s Graduate School of Public and International Affairs (GSPIA) with the goal of engaging their students in our marquee project The Canada We Want in 2020. We created a prize essay contest, with gracious financial support from the administration of GSPIA, where students were asked to write a short paper on a policy challenge facing the federal government, and what a progressive policy solution would look like.
This is the winning submission, entitled ‘Re-evaluating the Canada Pension Plan Disability Benefit and its Return-to-Work Incentives’
In her paper, second-year student Nicole Agbayani picks up on a number of different strands Canada 2020’s work – from reducing income disparities and polarization, to increasing productivity, as well as our more recent foray into skills training and development.
At present, those who are injured or disabled are at the tail end of an extreme income polarization in this country. What caught our attention, though, was her assertion that in order to remedy this, governments should construct policy not around disability – but rather, ability. It’s a simple idea, but one that – if enacted properly – would be transformative.
Download her paper here.
Canada 2020 would like to thank Nicole Agbayani for her hard work and thoughtful submission to the contest. We would also like to thank the Graduate School of Public and International Affairs (GSPIA) for their support of this initiative. In particular, we would like to thank David Zussman, the School’s Director, and Miles Corak, Professor of Economics, for their support and promotion of the contest and our work. Lastly, we would like to thank all of the students who submitted work to the contest.
Questions and comments can be directed to [email protected].
Why would Canadians buy carbon pricing?
Author: Diana Carney
Release Date: April 10, 2013
Pages: 19
This paper provides background for our panel, How to sell carbon pricing to Canadians, that will take place in Ottawa on April 17, 2013. We decided to host this panel, and work in this area, because of our concern over the disintegration of constructive debate about carbon management at a national level in Canada. The current deadlock is not good for our country, our democracy or for our planet.
The purpose of the panel is to open a dialogue that is respectful of all positions, so that we can begin to take steps towards improving the long-term future for all. The paper here serves as a summary of background information on where we are, how we got here, and some options and factors that will influence decisions going forward.
A first step is to reignite enthusiasm for this topic through identifying a refreshed mode of discussion. We can then begin to define a constructive and positive course of action that is based on a common Canadian sense of purpose that enables us truly to lead in this area.
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#Budget2013 – Market intervention, conservative style
The reviews of Budget 2013 are in. It is a big yawn. A nothing Budget, a one- day wonder in terms of press interest, most of the new measures in it having been leaked beforehand.
This misses a core point. Budget 2013 is remarkable for one thing—the Conservative government has embraced a degree of market intervention we have not seen before.
Conservative commentators like Andrew Coyne, the Canadian Taxpayers Federation, the Fraser Institute and the National Citizens Coalition have lamented for years that the Harper government has strayed from conservative principles because it has been big spending and state expanding. The Harper government’s fiscal record, say these critics, is anathema to conservative principles and history. The critics are of course wrong. Big spending has been the hallmark of every national level conservative government in North America for going on thirty five years. Ronald Regan, George Bush 1 and 2 and Brian Mulroney delivered to their electorate massive deficits, ballooning national debts, and major expansions in the size of the state. If you believe the critics that the Harper government has been big spending and has expanded the size of the state you can be secure in the knowledge that this sits squarely within mainstream North American conservative governance history.
What is new for conservative governments in this country, however, and what runs afoul of three centuries of conservative orthodoxy—all the way back to Adam Smith–is micro economic market intervention, what is sometimes pejoratively referred to as “picking winners” or “industrial policy”. Too its credit, the Harper government’s 2013 Budget shows a willingness to depart from the conservative orthodoxy that the free, unfettered market always delivers the superior economic outcome. Fortunately, this orientation sits squarely in the wheel house of most governments, regardless of political stripe, in most advanced industrial countries.
The 2013 Budget, then, gives us a glimpse of a government that is acting much less like a tribe that subscribes to the theology of Milton Friedman and Frederick Hayek, and much more like a government that wants to experiment with ideas that actually work. In this connection, Budget 2013 contains three welcome market interventionist initiatives of note.
The first relates to the well-known problems of the Canadian labour market, specifically the skills mismatch that exists across the country, in which many employers cannot find workers with the requisite skills to fill jobs. Five years ago, the Conservatives introduced Labour Market Agreements (LMAs), whereby Ottawa transferred, with no strings attached, $500 million per year to the provinces to improve labour market outcomes in their jurisdictions. Half a decade of this hands- -off approach has evidently left the feds underwhelmed, as the skills mismatch has intensified. As a result, going forward, Ottawa will play a more active role in labour markets through the creation of a new Canada Jobs Grant—funded out of the LMA envelope—a $5,000 grant to individuals to be matched by employers and provinces to help ensure workers get the training they need to fill the jobs the labour market is offering. The free market and the provinces will no longer be left to their own devices in resolving Canada’s skills mismatch. Ottawa is coming to the rescue.
The second welcome market intervention contained in the 2013 Budget is the response to the panel headed by David Emerson, former Minister of Industry and Trade, mandated to review Canada’s aerospace policies and programs.
It is a truism that the global aerospace industry is dominated by government interventions of various types. Governments the world over have concluded that aerospace is an industry worth having and worth spending taxpayers money on because of the relatively unique positive spillovers that accrue to the economy as a whole from this sector. Subsidizing aerospace is even supported by a body of serious economic theory—so-called strategic trade theory—that Nobel prize winning economist Paul Krugman pioneered thirty odd years ago.
To its credit, the Harper government seems to have been persuaded that a new, yet modest, market intervention in the Canadian aerospace sector is warranted. Hence, Budget 2013 has committed to establish an Aerospace Technology Demonstration Program, with funding of $110 million over four years. This program will help Canadian aerospace firms bridge the financing gap for large scale technology demonstration projects, which if left un-bridged can cost business opportunities. This is a relatively low-cost and welcome market intervention that could make a big difference for the competitiveness of Canadian aerospace firms in the global marketplace.
Finally, after decades of neglect from both Conservative and Liberal governments alike, Budget 2013 is embracing the notion that Canada needs some kind of defence sector industrial policy. This follows on the heels of the recent report led by Tom Jenkins, CEO of Opentext, which basically called for Ottawa to put in place, on an urgent basis, a number of measures that cumulatively amount to a Canadian defence industrial strategy.
Market intervention in the defence sector is of course also contrary to free market orthodoxy. Yet governments the world over have recognized at least since the Second World War that this industry operates in a managed market, where governments are the main, and sometimes only, customers. And for a variety of complex national security, economic and sovereignty related reasons, most governments around the world have chosen to put in place various types of market interventions to support domestic defence suppliers. Canada has been a weird and almost inexplicable outlier in this respect. Budget 2013 fixes our outlier status with its commitment to implement the Jenkins panel report and establish a Canadian defence industrial policy.
This, then, is why Budget 2013 matters. Like all budgets, you can criticize it on many levels. But the idea that it is a pretty meaningless document misses a core feature of it. Budget 2013 signals an important shift—a maturing if you will– in the Harper’s government’s approach to economic policy, from one largely bound by free market orthodoxy to one that is more interested in policies that work in practice, but maybe less so in theory.