Author: Sophia Thomas

Rescuing Policy: The Case for Public Engagement

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This book argues that public engagement is the right response to the rise of the consumer model of politics and the crisis that it has created in public policy. The book is an authoritative and accessible guide to collaborative policy-making and the engagement processes that support it. With original case studies, this book will be of interest to students of government and governance from across the policy community.

This book draws on the findings of the Public Engagement Project, a two-year initiative involving seven provincial/territorial governments – British Columbia, Alberta, Saskatchewan, Ontario, New Brunswick, Newfoundland and Labrador and Nunavut – the Canada School of Public Service, the City of Hamilton and the Government of Australia.

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Praise for “Rescuing Policy”

“Governments work best when they include people in the decisions that touch their lives. Lenihan’s work provides a thoughtful analysis of the factors that influence those decisions, and draws a roadmap toward new models of citizen engagement.”
Hon. David Alward, Premier of New Brunswick
“A great read and a reminder why I come to work each day…”
Chris Murray, City Manager, City of Hamilton
“…a must-read, particularly for the skeptics, who still think of engagement as utopia. It can be done, and Lenihan shows us how.”
Graham Fox, President and CEO, Institute for Research on Public Policy
“This book gives me hope that our elected governments really can work with the public to find sustainable solutions to the complex public policy issues of our generation”
Penny Ballem, City Manager, Vancouver
“Governments need to find new ways to restore confidence and generate new processes. Public engagement may just be the answer.”
Lynelle Briggs, Former CEO, Medicare Australia
“Lenihan delivers a sharp and telling critique of the shortcomings of contemporary policy-making… He also proposes a provocative way out…”
Giles Gherson, Deputy Minister, Consumer Services, Government of Ontario
“Don Lenihan sets out a blueprint for a new open-source democracy which is an ambitious call to action for citizens, elected officials, and policy leaders…”
Nik Nanos, President & CEO, Nanos Research
“…a persuasive and very readable book that makes a compelling case for public engagement…”
David Zussman, Jarislowsky Chair in Public Management, University of Ottawa
“This work…provides a valuable contribution to our discussions on effectively engaging citizens in the public policy process.”
Brian Manning, Former Deputy Minister of Executive Council, Government of Alberta
“…an important analysis of the challenges facing policy makers in an increasingly complex and interconnected world…”
Hon. John Milloy, Minister of Community and Social Services, Government of Ontario
“Rescuing Policy shines a much needed light on the damage “consumer politics” is having on Canadian society and offers an exciting alternative to realize the potential and promise of our communities.”
Karen Farbridge, Mayor, City of Guelph
“Don Lenihan accurately frames the emerging challenges confronting policy-makers created by changing demographics and expectations among citizens. There is growing need to rethink how government engages the public, and Lenihan’s ideas are part of the solution.”
David Eaves, Blogger and Public Policy Entrepreneur
 

Whither the health debate?

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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

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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?

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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?

A new Asia strategy for Canada

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For the past 250 years, Canada’s deep and mutually beneficial economic links with its superpower neighbour to the south have stood as a cornerstone of our growth and prosperity. While the US will continue to be a major economic partner and critical ally for Canada, its hegemonic days are likely over. The size of the Chinese economy alone is expected to rival that of the US by 2020 – 2030.  That gives Canada only a decade or two to accomplish a major re-orientation of its economy.
The economic links between Canada and the US are broad as well as deep.  There is a deep web of ‘connective tissue’ that binds the two countries, not just economically, but also socially, culturally, and politically. Asia, on the other hand, feels geographically and culturally distant. Links are sparse and Canadian businesses lag their rivals in terms of Asian penetration: only half of the 20 largest Canadian companies have operations in Asia – 100% of the top 20 American companies do.
Canada has a significant mountain to climb. Recent McKinsey research found that not only did many Chinese consumers not know where Canada was, but that the only reference they had for the country was that it was the “place to go for clean air”.
The re-orientation of Canada’s economy towards Asia is unlikely to happen organically – and certainly not at the speed required. The kind of strategic thinking, action and coordination required to achieve this will be a challenge in Canada’s decentralized system of governance.  But previous challenges have brought Canada’s government, business and civil society communities together to act jointly to address major issues. We must do it again. For without such strategic action, Canada’s future prosperity and political power and relevance are at risk.
A first step is for the Prime Minister to appoint a Minister for Asia and establish an Asia Advisory Council made up of 15-20 influential Asia-based politicians and business people. The Minister for Asia would be a key contact point for Canadian businesses, civil society and Asian governments.
Second, we should seek to build on our strong base of human ties with Asia. Increasing the number of Asian students studying in Canada has benefits beyond the pure economics; it also extends personal links that will bear fruit into the future. At the same time we should increase Asian content in our own education system.
Governments in Asia are very strategic about supporting their own companies. We should take a leaf out of their book, identifying and actively supporting strategic sectors. There are many good candidates, including infrastructure, agri-food, aerospace and financial services.
Canada has some of the most admired infrastructure in the world and China has a huge infrastructure need: by 2025 more than 220 Chinese cities will have over 1 million inhabitants. Our financial system came through the 2008 crisis in stronger shape than those of other developed economies and our regulatory system and banks are globally recognized for effective governance and risk management. Aerospace presents another opportunity. China and other Asian countries are keen to develop aerospace industries.  Bombardier is the third largest civil aircraft manufacturer in the world and we also have many successful suppliers to the industry.
Growing Asian interest in both consuming and owning Canadian resources is inevitable. This presents opportunities and risks for Canada. Overseas investment could help bring down the cost of development, expand and modernize our resource infrastructure and create more jobs for Canadians. To take full advantage of this opportunity Canada must proactively invest in its resource infrastructure. We cannot build an energy link to Asia, nor become an energy superpower, unless pipelines to the West Coast are built and the necessary export facilities and shipping lanes authorized.
At the same time, it is imperative that Canada has in place an effective long-term plan for managing its own resources. Our current policy on foreign ownership is unclear to many. We must also ensure that we are not simply spending the wealth of future generations. The Government of Canada should consider working with resource rich provinces to establish an investment fund, like Norway’s, to ensure that future generations of Canadians benefit as much as Canadians of today.
The world is re-balancing towards Asia; Canada must re-balance with it. This will not happen without strong federal government leadership. Canada’s own Asia century must start now.
Dominic Barton is global managing director at McKinsey and Company.

Proposals for helping the environment without hurting the economy

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As the world struggles to restrict carbon emissions into the atmosphere, Canada stands out. Although many countries emit larger absolute amounts of carbon, we are, among developed countries, the second-largest per capita emitter of greenhouse gases, (after Australia).
We need to recognize this status, and show leadership on carbon. If we fail to do so, our economy will attract negative attention and possibly even sanctions on our exports. Anyone who does not take this risk seriously should consider the current difficulties of the Keystone XL Pipeline in the U.S. and proposals in the EU to label oilsands products as “dirty” fuel.
Should our oilsands exports be limited, an industry that supports our national prosperity will be suppressed: whether Canada wants to do the “right thing” for the global climate, we must do the “smart thing” and manage carbon in our own self interest.
Canada agreed to extremely challenging goals for carbon reduction in the Kyoto Protocol in 1997 (to six per cent below our 1990 levels by 2012) and the Copenhagen Accord in 2009 (to 17 per cent below our 2005 levels by 2020). But we have never had a clear plan of how to get there. It should be no surprise, then, that we are not currently on track to arrive.
To change this, we will have to implement an ambitious and smart national program of carbon efficiency that will affect the life of every Canadian. Such a program must recognize one technological reality and two political constraints. The technological reality is that fossil fuels will drive our economy for the next 25 years. Renewable energy is highly desirable, but we are a few technological breakthroughs from it becoming a base fuel. Politically we are constrained by the continuing lack of consensus across the country on the causes and perils of climate change, which limits public buy-in. This problem is compounded by the fact that if big emitters such as China, India and Russia are not with the global program, Canada’s reductions will be ineffectual; we run the risk of incurring sacrifices to no significant benefit for anyone.
The solution? We must focus on energy measures that deserve to be implemented for reasons other than carbon, but that simultaneously reduce our carbon footprint:

  • Press the pedal on natural gas: Natural gas emits half the CO2 of coal and two-thirds that of oil. It is cheap, abundant, and low in other pollutants. We need to convert as many power plants, industries, cars, trucks, and trains to gas as we can. Yes, development of natural gas brings its own environmental issues; these will need to be managed carefully.
  • Invest in energy efficiency: Consumers and producers can do much more. We need to reduce consumption of electricity per unit of GDP by 15 per cent. With recent innovations such as LED lighting and smart distribution grids, this is readily doable – and required investments will more than pay for themselves with reduced power bills. We must also demand that oil and gas producers – especially the oilsands – tighten up the efficiency of their production.
  • Expand rapid transit: Canada still needs to get more people out of cars and onto rapid transit. The spinoff is obvious: less congestion and local pollution in our cities.
  • Expand small-hydro and biomass: There is very significant potential throughout the country for economic development of small hydro and biomass (biodiesel and waste). The local benefits are clear.

Supplemental measures that are desirable, but justifiable for reasons of carbon reduction only, are:

  • Promote carbon capture and se-questration (CCS): There is significant promise in sequestering carbon in underground reservoirs. Federal and some provincial governments are making large catalytic grants to pilot projects. We should double up on them.
  • Invest in innovation in renew-ables: We need to advance the day when renewables become a base fuel. More R&D is good, but the acute need is for support in commercialization of technologies. Government can facilitate initial commercial contracts through: “feed-in tariff” arrangements (as in Ontario); its own procurement programs (as in the City of Calgary); or specific project subsidies, such as the federal Wind Power Production Incentive program. There is particular untapped potential in tidal power in Canada.

Absent from the above measures is a carbon tax or a “cap-and-trade” system for emissions. In order to pack the desired punch, a carbon tax will have to be so high as to impair our economic growth. It would also slow the necessary large-scale shift to natural gas. Cap-and-trade works best for bigger point-source emitters, but regulation can address these more effectively.
This is clearly a very ambitious program. We may have withdrawn from Kyoto but there are some encouraging developments domestically. For example, in August 2011, the federal government demonstrated a commitment to a new natural-gas standard in devising regulations for coal-fired power plants. Moving beyond this will require well-directed regulation, funding and uncommon co-operation between all levels of government and the private sector. But the potential prize is a Canada that tops both the economy and environment league tables. We can get there if we try: now is the time to start.
Ian Mallory is president of Pickworth Investments LP, Calgary.

Why is the timing never right for action on climate?

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Ten years ago, a very senior federal deputy minister told me that implementing Canada’s Kyoto Protocol target to reduce our greenhouse gas emissions to six per cent below 1990 levels by 2012 would force an adjustment on the Canadian economy greater than that of the Free Trade Agreement (FTA) with the United States. (The FTA, which was ultimately of great economic benefit to Canada, had a significantly disruptive effect on the Canadian economy, especially the manufacturing sector, in the short term.)
This bureaucrat’s comment on Kyoto, made five years after Canada signed the Protocol and the year it was ratified by Parliament, reflected the dominant view within the government at that time. Even with the relatively strong Canadian economy that then prevailed, and with a decade in which to implement Kyoto, conventional wisdom in Ottawa held that Canada’s target was a bridge too far. And this was the opinion within the Chrétien government, which signed Kyoto and remained rhetorically committed to it. As a result, nothing meaningful was done to reduce Canada’s GhG emissions at the federal level during the Chrétien years.
And while the short-lived minority government of Paul Martin claimed adherence to Kyoto’s goals, and proposed “Project Green” under then environment minister Stéphane Dion to help Canada reduce its emissions, it too failed to seriously come to grips with the problem. Neither the Chrétien nor the Martin governments had the stomach, even during periods of strong economic growth and when protecting the environment ranked historically high in public opinion, to move forward with the most effective and efficient tools for reducing carbon emissions – a carbon tax and/ or a “cap and trade” regulatory regime. During the Liberal era, the prevailing orthodoxy of fear over the alleged dire political and economic costs of reducing GhGs had an iron grip on the Ottawa mind, even when the political economy conditions for a strong federal push to curb emissions seemed at their most accommodating.
Enter Stéphane Dion, Liberal Opposition leader from 2006-’08, a climate change theologian who became a Kyoto High Priest when he chaired the 2005 UN Climate Change Summit in Montreal, which extended the Kyoto Protocol and sought to deepen GhG reductions among its signatories. As Liberal leader, Dion, sensing the political winds on the environment generally and climate change specifically were blowing in his favour, ran an entire general election campaign in 2008 on the moral imperative for Canada to cut its GhG emissions, and on the thesis that this could be done in an economically beneficial way that was of no fiscal cost to the taxpayer (in other words, the free lunch version of cutting emissions).
At the heart of Dion’s plan was a carbon tax – known as the Green Shift. It was a very complicated yet ultimately mild tax that was designed that way for fear of the alleged severe political repercussions of asking Canadians to make any sacrifice whatsoever on their carbon consumption.
Dion’s Liberals were defeated in that election, proof enough for many that federal climate change policy can’t sell in Canada.
For their part, the Harper Conservatives have done a shift of their own on GhG emissions policy. One-time climate change deniers, the Harper Conservatives were always hostile to Kyoto, and have recently pulled Canada out of this international agreement entirely. Yet in the 2008 election the Conservatives did propose a “cap and trade” system to reduce emissions. They subsequently abandoned that idea in favour of some targeted industrial regulations that have yet to be implemented after six years in office.
This potted history of Ottawa’s record on climate change policy suggests that for well over a decade the dominant view within the federal government is that there is very little it can or should do to reduce Canada’s GhG emissions. It suggests any attempt to do very much on climate policy will cause damage to the economy that is too significant to accept. It implies that the timing for federal action on climate change policy is never right in Canada – neither when the economy is booming nor when it is slumping; neither when the politics of the environment are in the ascendancy or in retreat; not when governments are strong majorities or when they are weak minorities.
The federal government’s 15-year record on tackling Canada’s greenhouse gas emissions is profoundly depressing. By some measures, we have the second-highest per capita emissions in the world. You would think that embarrassing statistic alone would be enough to get the feds moving.

We need more public sector innovation

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The Drummond report on Ontario’s fiscal woes came mixed with a visionary challenge to make Ontario “a province that provides the best public services, delivered in the most efficient manner, in the world . . . We goad our business sector to win new customers globally in the face of stiff competition. Why not apply the same standards to our government?”
Good question. But to meet Drummond’s challenge, the broad public sector in Ontario will have to muster the same sort of commitment to innovation that politicians constantly urge on the business sector. Unfortunately, governments have been strangely silent when it comes to public sector innovation where they alone have both the tools and the responsibility to act. So the blunt message to policy-makers who want to foster a more innovative Ontario and Canada is, first, to get your own house in order.
The public sector is Canada’s biggest industry, accounting for a quarter of GDP. And public policies regarding education, health care and regulation touch every aspect of society and set the context in which the business sector operates. So while innovative businesses are surely important, an innovative public sector is at least equally important.
We need to distinguish two different public sector roles — one as deliverer of public services and the other as policy-maker.
In the delivery role, the challenge is that public services are rarely subject to the discipline of competitive markets, so the incentives to innovate to achieve greater efficiency are less keenly felt. It is also hard to measure the productivity of most government services — they aren’t like “widgets” that can easily be counted. Thus it is difficult to apply many of the management techniques that foster productivity-boosting innovation in sectors like manufacturing.
So we need innovation to develop practical metrics for public sector productivity and to design the right behavioural incentives. Considerable effort is underway in the U.K., Scandinavia and Australia to do just that. Governments in Canada need to be members of this innovation-minded club, learning and sharing best practices.
Unfortunately, none of this is politically sexy. But as the Drummond report put it: “The ultimate challenge in the years ahead will be to find ways to make government work better and preserve as much as possible the programs Ontarians cherish most.” So governments finally need to pay far more than lip-service to innovation in public service delivery since this is the only way to achieve fiscal sustainability without compromising service quality.
This will require an about-face because today the internal incentives in governments are precisely the opposite of what is needed. Rather than reward the calculated risk-taking on which innovation depends, we have instead created a risk-averse public service culture, hobbled by excessive “accountability” regimes that no longer serve the public interest.
The need for greater innovation is just as apparent in government’s policy function. Although the words “innovative government” sound today like an oxymoron, it was not always so. Canada enjoys the legacy of many visionary and innovative public sector initiatives dating from a former era — initiatives like the CBC, the St. Lawrence Seaway, the National Research Council, medicare, the Charter and others like the Auto Pact, often in creative partnership with business.
Could it be that we have we run out of opportunities for innovative public sector leadership on the really big issues? Obviously not. For example:
• We need a fiscally sustainable way to deliver universal public health care to an aging population.
• We need to redesign grade school education to be more relevant to the realities of the information age.
• We need massive, ongoing investment in new generations of public infrastructure as part of any strategy to make Canada more productive, competitive and environmentally responsible.
Consider, for example, medical care where greater adoption of best clinical practices could be induced by creating a cadre of physicians who would meet face-to-face with doctors and administrators — in effect challenging them to explain the existing widespread discrepancies between their practices and “best practices.” Such evidence-based assessment would lead to improved quality and cost-efficiency of health care.
Or consider K-12 education, where we desperately need to discover the best way to teach the new generations of “digital natives”? How can we instill the critical faculties appropriate for an information-besotted culture? What are practical alternatives to the teacher-centric, lock-step classroom tradition? These are huge questions for which no one in the world has reliable answers. So we need an urgent “R&D” program to inform a new education paradigm for the information era. As one concrete initiative, we should create a “Canada Foundation for Innovation and Research in Education” (or C-FIRE), with federal-provincial co-operation, so as to provide the focus and financial support this vital endeavour will require.
These examples set the bar high, but that is because the stakes are so high. And while specific policy ideas can always be debated, the main message is the need to get governments focused on innovation in their own backyards where both the responsibility to act, and the magnitude of the potential payoff, is greatest.
Peter Nicholson was the inaugural president and CEO of the Council of Canadian Academies and was policy director for prime minister Paul Martin.

Let’s reset the regulatory agenda

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In February, Ottawa will almost certainly reveal long-awaited cuts across government departments. It will also likely introduce changes to research and development tax credits, in an effort to promote innovation and increase productivity.
The federal government should be leading by example: The innovation agenda must encompass the public policy function itself. The exercise of this has stagnated over the past 25 years, at least relative to the remarkably innovative decades after the Second World War. New thinking is badly needed.
A good place to start would be with the federal government’s regulatory function, that is the legal obligations imposed by the government on the private sector. Despite significant deregulation in the late 1980s and early ’90s, Canada still has a significant regulatory burden. A 2006 OECD study estimated that if Canada were to have adopted, in each sector, the least restrictive regulations among the countries surveyed, our average annual productivity growth over the period 1985-2003 would have been 0.75% higher.
Supply management in the agricultural area provides a good example of regulation that curtails productivity growth and innovation. Another example comes from the communications industry, where foreign-ownership restrictions deter innovation by preventing Canadian firms from reaching international scale.
Now would be an ideal time to get serious about regulatory innovation. There has not been a fundamental review of the government’s administrative law and regulatory policy for decades. The upcoming budget and the associated departmental budget review bring into sharp relief the need for change. In particular, we should move from ad hoc reviews to a system where the ongoing regulatory oversight function ensures that government operations remain efficient and appropriate over time. This would provide a meaningful legacy for the future operation of the federal regulatory function.
The current system of periodic departmental reviews is both disruptive and expensive. It is a direct result of our more or less unconstrained discretionary model of intervention in business and society: Regulations are imposed under statutes that delegate to the executive branch a broad authority to determine what is in the public interest. This leads to “regulatory creep:” Regulators regulate; they are not inclined to deregulate or minimize regulation. And regulations tend to beget more regulations as the web of regulations becomes more entangled.
An effective alternative would be a “standards-based” approach to all federal regulatory functions (whether economic or social). Under such a system, those who are devising regulations would have an objective benchmark by which to assess their actions (as opposed to a notional reference to the public interest). Innovative, standards-based regulation should therefore result in far clearer limitations, as well as better accountability and responsibility on the part of regulators.
One means of implementing a standards-based approach would be to apply the legal test developed by the Supreme Court of Canada in R. vs. Oakes (the “Oakes test”). This case sets out five conditions that must be met before governments are justified in encroaching on fundamental rights and freedoms under the Charter of Rights. The conditions can easily be adapted to the regulatory context. They would require any regulation to have a clear and pressing objective; be proportionate and clearly connected to the objective; interfere to the minimum extent necessary to achieve the objective and meet a cost-benefit test.
Appropriate provisions for accountability and challenge — an effective legal review mechanism — would have to be put in place. In principle, this might be handled by the courts. However, the courts in Canada have adopted an extreme curial deference when reviewing the activities of specialized regulatory agencies. Affected parties have had no meaningful recourse to independent adjudicators to challenge the regulatory functions of government. This must be addressed.
One option would be to create a separate, universal review process, combining legal fairness with input from non-legal or sectoral experts. The existing Competition Tribunal may fit this description. This body would have the added advantage of understanding the importance of enhancing competition and minimizing regulations that unnecessarily restrict competition.
It is time for the federal government to step forward to reset the regulatory agenda. An aggressive, forward-looking approach would have a meaningful impact on business-sector productivity. It would limit market distortions to the minimum extent necessary to achieve regulatory objectives and, by vigorously promoting competition, would spur business in Canada to be more innovative and thus more productive. The forthcoming federal budget challenges us to take a more long-term perspective.
Lawson Hunter is head of the competition/antitrust group at law firm Stikeman Elliott and a contributor to Canada 2020’s paper, The Canada We Want in 2020: Towards a strategic policy roadmap for the federal government.

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