Thursday’s federal budget marked the end of an era in Canada’s approach to foreign aid with the merging of the Canadian International Development Agency (CIDA) into the Department of Foreign Affairs (DFA). To some this might seem like just another bureaucratic shuffle, meaningless in the broad scheme of things. To others, in the NGO community in particular, who rely on CIDA funding to do their jobs, this move represents the end of the world as they know it.
For the public servants who have to execute this merger it will be a bureaucratic nightmare that makes major corporate takeovers pale by comparison. The new ministry will likely take years to jell into an effective organization.
The last big bureaucratic merger Ottawa went through was the post-911 attempt to create a Canadian version of the U.S. Department of Homeland Security, when the Martin government established Public Safety Canada by merging the Department of the Solicitor General and its associated agencies, with the Border Services Agency and the Office of Critical Infrastructure and Emergency Preparedness. That new super ministry took years to come together effectively. Some claim it still has teething problems a decade later.
The last time a shotgun marriage of this scale was attempted in the foreign relations machinery was in the early 1980s when Trade, Immigration and External Affairs were merged by the Trudeau government to create what was popularly known as the Three Headed Monster.
It is a truism that smashing together big bureaucracies does not make for snap efficiencies — the new organizations can take years to deliver on the promise of their architects. This is particularly the case when you are dealing with departments or agencies with strong cultures, rigid ways of doing business, and vocal clientele groups, all attributes that apply to CIDA.
From the time it was founded as an independent agency in 1968, CIDA was always a horse of a different colour. It was mandated to work multilaterally outside the traditional strictures of foreign policy. The president who saw CIDA through its formative years in the 1970s, Paul Gérin-Lajoie, nurtured a very different — practically monastic — culture from that of the traditional Ottawa foreign affairs apparatus. Whether as a Crown agency or reporting through a minister as it did in later years, CIDA always staked the claim that it defined Canadian development interests. The fact that CIDA was parked across the river from Fort Pearson reinforced its independence from the mother ship.
The CIDA culture and mandate may have been high-minded in the best “soft-power” tradition, but this was always a roadblock to getting the agency focused on the same objectives that the prime minister and the foreign affairs and defence ministers might have been pursuing. In the post-Cold War period in particular, when Canada has been involved in numerous international peace and security operations, foreign affairs and defence ministers often saw CIDA as a critical instrument of broader foreign policy that needed to conform better to their priorities. CIDA frequently resisted this.
During the early years of Canada’s involvement in Kandahar, for example, the tension between CIDA and DFA/DND priorities became increasingly clear. Afghanistan was not initially a top priority for CIDA, even though it was the government’s central foreign and defence policy preoccupation. The CIDA minister often clashed with the foreign and defence ministers, as a result. The Afghanistan fault line might have marked the beginning of the end of an independent CIDA.
There is an inescapable reality now that runs contrary to CIDA’s culture and history. Namely, when your soldiers and diplomats are heavily and routinely involved on the ground in failed and failing states, they more often than not need money delivered quickly and efficiently to aid and reconstruction projects in those countries — so-called high-impact projects — to maximize Canada’s effectiveness. That is what that tired old “3-Ds” (the integration of defence, diplomacy and development) notion is all about. Unfortunately, neither DFA nor DND have discretionary budgets or authorities for this purpose. CIDA is the only existing pot of money for such things, even if it really isn’t set up for that purpose.
In an ideal world, CIDA would be left to its own devices to fight global poverty, and Foreign Affairs and National Defence would have a separate fund they could tap to advance Canada’s broader foreign interests, particularly in places where the Canadian Forces are deployed. That ideal world has never existed, and it certainly doesn’t exist in the age of austerity. And that is probably one of the central reasons for the government’s decision to merge CIDA with Foreign Affairs and thereby bring a 45 year experiment in Canadian foreign aid policy and administration to an end.
Category: Opinion
It’s not unemployment, it’s underemployment
There are a lot of different ways to describe the period after a young person graduates from their schooling, but increasingly in Canada, one word sticks out: underemployed.
That’s underemployed.
It’s a somewhat slippery concept, and an even harder one to prescribe policy around, but efforts have been made by various banks and other international bodies to track and measure underemployment. The OECD has assigned it a relatively formal taxonomy: visible underemployment, where an individual is working less than they would like; and invisible underemployment, where an individual is not working in a field or position that matches their capabilities or skills.
But the more compelling story goes like this: As short as 20 years ago, our combined attainment of education, work experience, and connections would place us, and many other young Canadians, on a secure career track that would allow us to pay back our loans, save for a house, and contribute to the overall productivity of this great country.
Today, that’s more or less not the case, and an increasing number of young Canadians are caught in a veritable limbo state: educated enough to work a skilled job given the opportunity, but either not working as much as they want, or nowhere close to the field that would exploit their full potential. The glibber among us call it the rise of the B.A.rista
Now typically when we talk about policies for youth, the conversation focuses on unemployment – on ensuring everyone at least has a job. And that’s understandable, if mostly unrealistic: new job numbers released last week by Statistics Canada tell us the youth unemployment rate sits at 13.9%, double the overall unemployment rate. Furthermore, job creation for Canadian youth is slowing to a halt, less than 1% of jobs created since 2009 were for this demographic. And while that’s nothing to be proud of, it is actually an improvement from other post-recession periods – where the unemployment rate stood at 19.2% in 1983, 17.2% in 1993.
We feel the more telling story lies elsewhere. In the pre-recession hey-day of 2005, the CGA Association of Canada found that 24.6% of young Canadians were underemployed. We must ask why.
This is not to say that youth unemployment is not a problem. It most certainly is. And it is also not to sound entitled, selfish, or declare a war on hard work – all criticisms routinely lobbed at millennials. But we need to start asking better questions about the work today’s youth doing, and the skills they acquire: if you have a job, is it a good job that matches your skills? If you do not have a job, how can you get past survival and into the right job?
Concern about opportunity for Canadian youth is bubbling up in some form or another across the country: individuals not yielding a sufficient enough return on their education, students caught in low-quality job traps, skilled graduates taking unpaid internships well into their twenties, firms coping with skilled labour shortages and mismatches, parents generally fretting their children will be unable to build a better life on their own, Gen-Yers feeling resentful towards older generations, and baby boomers looking on young generations as entitled and lazy.
As this mixture of tension and unease brews, real labour market problems are taking root. A young, underemployed Canadian will never make up for lost earnings and stunted career growth, will struggle to repay student debt, save for a house and prepare for retirement. That’s not to mention the impact on the Canadian economy of weaker consumer demand, loss of tax revenue and a slower housing market.
Although the policy options may not be very different to unemployment, we must make sure that they are inclusive of young Canadians facing underemployment.
A good place to start is focusing on tactics to better inform young people about the opportunities available to them. The U.S. has made some headway with President Obama’s new college scorecard initiative through which colleges must disclose information about value, affordability and career placements of different majors.
Second, employers must invest in young graduates that are stuck in the vicious cycle where they have no job because they have no experience because, again, they have no job. The Conference Board of Canada found that Canadian employers have reduced their investments in training by 40% since 1993. Higher education does not necessarily equate job readiness and employers are needed partners on the bridge from education to employment.
In the long run we must face the daunting task of restructuring our education system. Higher education institutions must be more in tune with the needs of students, employers and the labour market. When it was deemed Canada should embrace a “knowledge economy” in the 90’s, thousands of Canadians pursued higher education. Now the pendulum has swung the other way, with calls for Canadians to rush skills trades, most certainly flooding colleges and apprentice programs. Our policy approaches have been overly reactive, sewing consequences generations down the line.
Yes, many young Canadians can get a job – but do they have the right job? As young Canadians trying to succeed, to contribute, and be productive members of society, we do not think it sounds entitled to simply ask.
Industrial policy is back — except in Ontario
Industrial policy — government interventions to grow and improve the competitiveness of select industries — is back in fashion, according to a new paper by John M. Curtis and Dan Ciuriak published by the Institute for Research on Public Policy (IRPP).
In fact, industrial policies never really went out of style, except in the Anglo-American democracies. For the past three decades governments in the Anglosphere — regardless of the party in power — have shied away from industrial policies and embraced the notion that state interventions to promote specific economic sectors usually do more harm than good. This is allegedly because governments don’t have the necessary information to “pick winners.” The market, according to this view, is always far superior at allocating resources than any government ever could be.
Under this paradigm, the best thing governments can do to promote investment, industrial development and economic growth is to get the so-called economic fundamentals right and let the market — that supreme and venerable vehicle for the efficient allocation of resources — take care of the rest. In practice, the prescription calls for low taxes on capital and income, balanced budgets, low debt, low and stable inflation and a light regulatory touch. These are the necessary ingredients that will permit the market to work its magic on the economy.
Governments in this country have by and large bought into this mainstream view for over two decades, and have implemented this policy agenda, to varying degrees. Successive governments in Ottawa, for example, have rarely missed an opportunity to brag that Canada has the best economic fundamentals in the G8.
In the context of this conventional wisdom, the industrial policy light has barely flickered in this country.
But now, according to Curtis and Ciuriak, industrial policy is resurging, even in the more skeptical Anglo-American countries. They argue this is due to the global financial crisis/recession, and the slow and uneven economic growth that has followed. Governments are increasingly looking for some way — any way — to get growth back onto a decent trajectory, and in particular to regenerate manufacturing industries that were hit very hard during the recession.
This marks a big shift in attitude. For decades, governments in this country wouldn’t utter the phrase industrial policy for fear of being labelled economically illiterate by the high priests of mainstream economics and their apostles in the business media. Today, however, the competency of the economics profession is in serious question given its role in creating the intellectual foundations for the policies that brought on the global banking crisis of 2008-09 and the worst recession many countries have experienced in 80 years. Not to mention the fact that mainstream economics’ remedies to the crisis have produced scant growth in most countries thus far.
We might now, therefore, be on the cusp of a new economic policy paradigm. As Curtis and Ciuriak claim, it is those countries with robust industrial policies — especially in Asia and other emerging markets — that have seen superior growth performance post-recession. Those are the kind of facts — as opposed to theory — that tend to catch the attention of governments struggling for an economic narrative to put to citizens in a slow-growth and relatively high-unemployment context.
Canada is no exception. The Harper government, on paper the most free market administration in living memory, is adopting a more industrial policy-friendly mindset. There is evidence of this in policies to promote extractive industries, but also with significant new initiatives in the aerospace and defence sectors, both of which are well-known candidates for industrial strategies in almost all advanced countries. The relatively new Federal Economic Development Agency for Ontario is also to a degree an industrial policy instrument.
Curiously, though, the one government in Canada that you would expect to be embracing industrial policy seems lukewarm to it. Ontario has experienced the most alarming economic transformation of any Canadian province in recent years. Its manufacturing sector lost 255,000 jobs over the last decade. The province’s share of Canadian GDP fell from 41 per cent to 37 per cent over that same time period. For three years now, Ontario, traditionally the milch cow of Confederation due to its powerhouse industrial economy, has been officially a “have not” province, receiving billions of dollars in equalization payments from Ottawa annually.
Yet we seem to see more enthusiasm for industrial policy in blue Ottawa than in red Queen’s Park, which still emphasizes deficit reduction as the key to Ontario’s economic prosperity. While the Wynne government is pursing an aggressive transit agenda, it seems less enthusiastic than its predecessor in developing “green” manufacturing to offset some of the decline in the auto industry, and shows little interest in policies aimed at other sectors that offer promising growth opportunities.
Now is probably the time for the Ontario government to embrace the industrial policy paradigm and advance an economic agenda for the province that works in practice but maybe not so well in theory.
Searching for Canada’s Michelle Obama
“Mom, I should eat broccoli because Michelle Obama says I should eat broccoli.”
What music to the ears of parents and policymakers!
A week ago, Canada 2020 hosted the fifth and final panel of the year in our signature speaker series, The Canada We Want in 2020. The topic was ‘confronting the crisis in public health’, specifically how we can come together to combat obesity and related chronic diseases.
One of our panelists was the dynamic and accomplished Melody Barnes, former White House Director of Domestic Policy to President Barack Obama, and chair of the administration’s task force on childhood obesity. Melody was also heavily involved in the First Lady’s Let’s Move! campaign aimed at persuading Americans to embrace healthy living.
Canadians are up against the same public health challenges as our American neighbours. According to recent data published in the Canadian Journal of Public Health, 25% of the Canadian population is estimated to be obese. Obesity rates here in Ontario are above the national average at almost 29% and, on the current trajectory, an estimated 70% of Ontario’s current kids will enter middle age obese or overweight.
Rates are already higher in other provinces and amongst particular social groups (aboriginal Canadians and those from lower socio-economic groups, especially disadvantaged women). In some Atlantic provinces obesity rates already exceed 35%.
Childhood obesity is a particular problem: research shows that early onset obesity increases the risk factors for a range of chronic diseases – including diabetes, coronary heart disease and atherosclerosis. Obesity in females during late adolescence is also associated with psychosocial behavioural abnormalities in adulthood.
If we are to change this trajectory, we need to consider evidence-based policy approaches that have successfully improved obesity-related health outcomes. The following are some of the key messages and insights that emerged at our event:
A week ago, Canada 2020 hosted the fifth and final panel of the year in our signature speaker series, The Canada We Want in 2020. The topic was ‘confronting the crisis in public health’, specifically how we can come together to combat obesity and related chronic diseases.
One of our panelists was the dynamic and accomplished Melody Barnes, former White House Director of Domestic Policy to President Barack Obama, and chair of the administration’s task force on childhood obesity. Melody was also heavily involved in the First Lady’s Let’s Move! campaign aimed at persuading Americans to embrace healthy living.
Canadians are up against the same public health challenges as our American neighbours. According to recent data published in the Canadian Journal of Public Health, 25% of the Canadian population is estimated to be obese. Obesity rates here in Ontario are above the national average at almost 29% and, on the current trajectory, an estimated 70% of Ontario’s current kids will enter middle age obese or overweight.
Rates are already higher in other provinces and amongst particular social groups (aboriginal Canadians and those from lower socio-economic groups, especially disadvantaged women). In some Atlantic provinces obesity rates already exceed 35%.
Childhood obesity is a particular problem: research shows that early onset obesity increases the risk factors for a range of chronic diseases – including diabetes, coronary heart disease and atherosclerosis. Obesity in females during late adolescence is also associated with psychosocial behavioural abnormalities in adulthood.
If we are to change this trajectory, we need to consider evidence-based policy approaches that have successfully improved obesity-related health outcomes. The following are some of the key messages and insights that emerged at our event:
- Promote healthy living without demonizing different body types.
The body-mass index is used to estimate overweight and obesity rates amongst different populations. However, in our efforts to address the growing obesity epidemic we should not be concerned with the final output (weight) but rather the inputs (sedentary lifestyles, eating food of poor nutritional quality, etc.) that affect our health outcomes. Obesity is simply a proxy measure for increased disposition to myriad chronic diseases that will lead to soaring costs of healthcare delivery and a diminishing quality of life in years to come. - We cannot educate our way out of this crisis.
Two of our panelists, Melody Barnes and Alex Munter (President and CEO of the Children’s Hospital of Eastern Ontario) repeatedly emphasized this point. It is imperative to educate individuals about the importance of healthy eating and active lifestyles so that they can make informed choices. However, information alone is not sufficient: Canadians also need better access to nutritious lunches at school cafeterias, grocery stores that stock fresh produce at affordable prices, safer parks and recreation facilities and other health-promoting infrastructure. This is where governments have a particular role to play. With their support, the healthy choice can become the default choice. - Improving health outcomes is not just the responsibility of individuals but also of the collective ‘us’.
Confronting the crisis in public health requires different (and sometimes opposing) forces including government, industry, NGO partners, health practitioners and individuals to act together. There is no magic bullet, no one miracle program and no single player that can succeed on its own. The programs and initiatives that deliver results have two things in common: they are uniquely tailored to address the specific issues faced by a given community and they are supported by multiple stakeholders.
In Canada, certain corporations stand out for their efforts to address the issue of obesity. For example, Coca Cola Canada has recently announced that it will make nutritional information more transparent by featuring calorie counts on the front of all packages. The company’s new marketing guidelines include a self-imposed ban on buying advertising space in media directed at audiences comprising more than 35% children under the age of 12. In addition, Coca Cola is supporting physical activity and nutritional education programs, such as Breakfast Club of Canada. Loblaw is also making concerted efforts to bring in more nutritional information through its Guiding Stars program and its in-store dieticians.
Hopefully other companies will follow this lead. But it is also likely to take regulation (such as that proposed in Ontario’s recent Healthy Kids Strategy) to make sure that young children are not subject to junk food advertising and, thus, that parents are better able to control the nutritional messages reaching their children. Such regulation has already proven to be very effective in Quebec where the ban that has been in place since 1980 is estimated to have reduced junk food consumption amongst children by 13%.
Certainly, governments have an important role to play, and not just in the direct area of health promotion. As Alex Munter noted, the government of Ontario is addressing two key social determinants of health with its focus on poverty reduction and mental health and addiction. And the federal government is increasingly moving towards being a facilitator of partnerships and an enabler of best practice.
The First Lady of the U.S. has provided a very visible rallying point in that country – people respond to her sheer force of personality. Children look up to her; they want to eat their vegetables for her. That’s not a policy lever, but no one can say it’s not effective.
Here in Canada we do not have such a figure, but, encouragingly, we do have a federal government that is becoming more active in this space and that has demonstrated, in its recently released 2013–2016 Preventing Chronic Disease Strategic Plan, that it has a good understanding of the challenges it must address. It sees itself as an information hub, willing to fund partnerships and to act as a catalyst in the prevention of chronic disease, much of which is attributable to obesity and overweight.
As Alex Munter reminded us, “public policy always lags culture, and the culture on healthy eating is changing fast.” That bodes well for the future, but we should not underestimate the sustained effort that it will take to change the trajectory of ill-health into which we have fallen.
Aqsa Malik is a research associate at Canada 2020, an Ottawa-based think tank on the role of the federal government, and PhD. candidate in Neuroscience at the University of British Columbia. Diana Carney has just stepped down as Canada 2020’s Vice President of Research.
For more information and to watch a video of this panel or read the full background paper, click here.
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.