Canada West Foundation Blog

By: Robert Roach

A new report released by the Canada West Foundation today summarizes interviews with 23 of the leading minds on how to marry resource development with environmental protection. Keeping Pace: Improving Environmental Decision-Making in Canada is based on input from former senior bureaucrats, former environment ministers, internationally renowned scientists, natural resource industry representatives and ENGO leaders. From former federal Environment Minister Jim Prentice and internationally-recognized scientist David Schindler to original founding member of Greenpeace Patrick Moore and Suncor VP Gordon Lambert, the combined experience with environmental decision-making among interview participants totals well over 400 years.

Considering the diverse background of these Canadian thought leaders there was surprising agreement, especially on three overarching themes:

First, everyone agreed that environmental decision-making in Canada needs improvement—full stop. We are not at the top of our game when it comes to environmental stewardship in the resource sector.

Second, improving environmental decision-making is not about fixing the Canadian Environmental Assessment Act, the National Energy Board, the Alberta Energy Resources Conservation Board, BC Environment or some other government department or regulatory agency. Environmental decision-making has to be viewed in a broader policy context. Some changes are needed to the regulatory framework, but it is a small piece of the pie.

Unfortunately the regulatory framework is taking the brunt of the criticism right now. It shouldn’t. Other components of the decision-making process such as regional plans, monitoring and compliance, strategic plans, clear goals and objectives, political leadership, meaningful consultation/collaboration are much more important. These elements have not kept pace with the public interest.

Third, we have moved from a relatively simple world into a much more complex one. The difference was described as a shift from “environmental challenges 1.0 to 2.0.” The 2.0 label has been famously applied to the World Wide Web to highlight the shift from passive viewing of websites (Web 1.0) to active online interaction and collaboration (Web 2.0). The web has gone from emails, news groups, desktop computers and basic websites to eBay, PayPal, instant messaging, YouTube, Facebook, Twitter, Wikipedia, 500,000+ apps, mobile Internet devices and cloud programming. Environmental challenges have gone from a relatively straightforward set of problems and solutions to situations characterized by a wide range of stakeholders, heated rhetoric, competing scientific claims, incomplete information and responses that require broad social change and/or significant economic costs. Hence, we need to upgrade our environmental decision-making mechanisms.

You can download this timely new report for free from the Canada West Foundation website by clicking here.

By: Robert Roach

The federal government recently announced a “Plan for Responsible Resource Development” that will streamline the federal regulatory review process. While this is a step in the right direction, a report from the Canada West Foundation being published on May 3 argues that the task at hand is much larger. Keeping Pace: Improving Environmental Decision-Making in Canada reveals an environmental decision-making process that, while one of the best in the world, is dogged by a number of significant shortcomings. These weaknesses include insufficient integration of scientific research; a lack of clarity regarding exactly what trade-offs between environmental protection and economic development are acceptable to the government of the day; and the ongoing need to ensure that the various government departments and agencies at the federal and provincial levels are cooperating as much as possible.

You can download this timely new report for free from the Canada West Foundation website on Thursday.

As reflected by the results of the 2011 census, the creation of new House of Commons Seats and the ongoing news about the westward titling of the economy, it is clear that the nature of the Federation is shifting. The latest research from the Canada West Foundation looks at the consequences for the region and the country, now that the West is truly “in”.

Taking Stock of the Federation by Dr. Roger Gibbins, President & CEO and Robert Roach, VP, Research, is the synthesis report from a roundtable held on February 9, 2012 in Calgary. This roundtable gathered sixteen participants who provided their insights on the contemporary political landscape, the likely direction of future change, and the potential for strains within the federation across the four western provinces.

“Each region in Canada is vitally important,” notes Dr. Gibbins. “While differences between the regions have evolved, they are still key variables in both Canada’s political environment and the economy. For the federation to work well, we must ensure that all regions— including the West—are heard, understood, and integrated into the whole.”

While participants expressed a general sense of optimism about the region’s future, they also highlighted some significant challenges western Canadians will face in securing a new position within Canada and the global economy. By addressing issues like market access, sustainable environmental management, labour shortages and a fiscally unbalanced federal state, we can ensure that the future remains bright.

Taking Stock of the Federation is part of Foundation’s The West in Canada initiative, which examines public policy innovation in the West, discusses and recommends ways to improve the Canadian federation, and analyzes regional economic, demographic and public opinion trends. Click here for your copy of the report.

Western Canada profits from its abundance of natural resources, however, in the changing global landscape, we need to take action to ensure our future prosperity. The latest research from the Canada West Foundation outlines the main contours of the contemporary energy world and takes stock of the trends shaping energy in western Canada.

State of the West: Energy – 2012 Western Canadian Energy Trends, by Senior Economist Michael Holden and Policy Analyst Robbie Rolfe, provides an overview of the provincial energy systems in western Canada, including the current state of energy production, consumption, and other associated activities and impacts. That information is framed in the context of the energy-related policy issues and challenges facing the four western provinces.

“Western Canada is characterized by a profound diversity of resources, consumption patterns, and economic and environmental impacts” said Michael Holden. “The energy picture in each province is unique, but their strengths are complementary. Through a more coordinated approach to energy policy, the western provinces can become more than the sum of their parts.”

Given the extent to which it permeates our daily lives, energy has come to dominate the economic, social, and political agenda in the region. State of the West: Energy provides a one-stop information resource on energy in western Canada, informing the debate surrounding energy policy in the West, and providing context to both where we are today and where we may go in the future.

State of the West: Energy – 2012 Western Canadian Energy Trends is part of the Foundation’s Powering Up for the Future initiative, which facilitates constructive debate on sustainable energy policy solutions for Canada and promotes the vital importance of western Canadian energy systems in the national, continental, and global economy. Click here to download a copy of the report.

By: Larissa Sommerfeld 

Alberta is now in the throes of the third week of the provincial election campaign. Given the critical importance of the province’s water resources to its economy and environment, it is worthwhile checking in to see how water policy is being addressed by the contending parties.

I’ve reviewed the platforms of the main parties and have highlighted their water policies below:

Alberta Party
The Alberta Party’s platform focuses on the five core ideas of healthcare, students, democracy, the economy and communities. It doesn’t specifically place environmental concerns front and centre. However, under the “economy” section, the Party commits to promoting a “positive brand image for our resource industries by insisting on best practices and a strong commitment to environmental stewardship.”

Evergreen Party
The Evergreens—a newer addition to Alberta’s political scene who have replaced the Alberta Greens—simply state in their party platform that “we will encourage conservation and reduction of water usage, and prevent the sale or export of water.”

Liberal Party
The Liberals do not mention water in their party platform at all. Rather, their key environmental policies focus on emissions and the monitoring of the oil and gas industry.

New Democratic Party
The NDP has some very specific water policy goals outlined in their platform including stopping the expansion of water markets and putting human and ecosystem needs first when it comes to water allocation. Regarding industry activity, the NDs support:

• Cleaning up tailings ponds, but at a cost to companies rather than taxpayers;
• Doubling the monitoring and enforcement activities of the Ministry of Environment and Water to “make sure the industry lives up to its environmental obligations under the law”; and
• Appointing an independent scientific panel to examine hydraulic fracturing.

Progressive Conservative Party
The PC Party does not have a comprehensive policy platform available on their website. In this case, we have to look at past policy to see where they might stand on water:

• Premier Redford renamed the Ministry of the Environment as the Ministry of Environment and Water last fall. According to Diana McQueen, the current Minister for Environment and Water, this was a “deliberate move to emphasize the priority that our government places on this resource.”
• The government has committed to increase funding to about $11 million for environmental monitoring; and
• An annual amount of $150 million has been committed to fund the Alberta Oil Sands Technology and Research Authority (AOSTRA) to support research that will help Alberta work toward meeting the Water for Life goals.

Wildrose Party
The Wildrose Party has a fairly robust environmental platform. Some of their commitments include creating a position for an Albertan environmental ombudsman and addressing water quantity issues in the south and water quality issues in the north. The Party is committed to finding ways to improve water storage by building more dams and/or reservoirs and states it will review and reform Alberta’s licensing system to “ensure that existing licenses are fully utilized while respecting the principle of first in time, first in right.” It also is supportive of new conservation technology that allows for the use of things such as grey water recycling and supportive of the movement toward a federal ban on bulk water exports to the US. Regarding industry, the Wildrose has stated it in its platform that it will:

• Work toward eliminating tailings ponds;
• Support water technology so that industrial use of water decreases; and
• Strictly enforce existing regulations on effluent-producing industries.

By: Larissa Sommerfeld, Policy Analyst

Canada’s budget was tabled on March 29 and it includes some interesting changes related to water policy. Here are the highlights:

• Department of Fisheries and Oceans (DFO): While we’ll have to wait until the Government’s Budget Omnibus Bill is tabled to find out whether there will be changes to the Fisheries Act, Minister Flaherty announced $10.5 million for the DFO to support “key fisheries science activities”—which is essentially monitoring of key commercial fish stocks. But overall, the DFO faces cuts of about $4 million this year, $13 million for 2013-14 and $79 million after that.
• Elimination of the National Roundtable on the Environment and the Economy (NRTEE): The NRTEE is over twenty years old and is a well-respected, arms-length organization with a Parliamentary mandate to “promote sustainable development advice and solutions”. Over its history, the NRTEE has focused on economic and environment issues related to climate, water, energy, biodiversity and governance. In fact, Canada West Foundation’s Shawna Stirrett authored the Round Table’s most recent publication. It’s unfortunate that this reputable organization will be dissolved—particularly when issues related to the interface between the economy and the environment are arguably more important than they’ve ever been.
• Environment Canada: Environment Canada will face large cuts for the foreseeable future: $20 million (2012-13), $60 million (2013-14) and $90 million after that. 
•  First Nations: The federal government committed $330.8 million over the next two years to build and renovate water infrastructure on reserves. This money is also meant to support the development of a long-term “strategy to improve water quality in First Nations communities.” This is a step in the right direction; a prosperous nation like Canada shouldn’t have the water problems of developing countries, as many argue is the case on reserves across the country.
• Flood mitigation: In response to the devastating floods of 2011, the government has committed $99.2 million over three years to “ assist the provinces and territories with the cost of permanent flood mitigation measures undertaken for the 2011 floods.” Better still, the government wants to move toward a nationally led program: “the Government is also committed to discussing with the provinces and territories the development of a national disaster mitigation program, recognizing that mitigation can lessen the impact of natural disasters on vulnerable communities and reduce the costs associated with these events.” This is a move that should be applauded; proactive measures in flood management are always good news.
• Infrastructure: A series of financial commitments were made to both the provinces and the Federation of Canadian Municipalities to improve water infrastructure. While municipalities will likely see this as positive, others may argue that continuing grants isn’t a good policy choice. While Canada does indeed face a major water infrastructure deficit that requires billions to fix, many argue that the prices of water treatment and conveyance should be increased to fund the upgrades rather than relying on government funding.
• Lake Winnipeg: Since 2008, the federal government has funded the Lake Winnipeg Basin Initiative. The Initiative has goals that include: reducing blue-green algae blooms, ensuring fewer beach closings, and restoring the ecological integrity of the lake. While no dollar amount was specified in the budget, the Government stated that it’s committed to continue funding activities targeted at restoring the lake.
• Mining Regulations: Environment Canada administers the Metal Mining Effluent Regulations, which regulate the deposit of mine tailings and other waste “produced during mining operations into natural fish bearing waters.” According to the DFO, these regulations are “among the most comprehensive and stringent national standards for mining effluents in the world.” These regulations will be expanded to non-metal diamond and coal mines. This is a change that truly makes sense, and probably should’ve been made much earlier.
• National Resources Canada (NRCAN): NRCAN is slated to receive $23 million over two years for new satellite data reception facilities as well as the development of a data management system. These systems can be used for a variety of activities ranging from flood mapping to detecting oil spills. This is a step in the right direction: more knowledge and data will lead to well-informed policy.

Overall, there’s a mix of positive and negative developments outlined in the 2012 budget. We’ll just have to wait and see what impacts these changes will have.

By: Michael Holden

“The fiscal restraint that many expected from this budget is more akin to paper cuts than deep wounds.”

The 2012 federal budget was, for all intents and purposes, the first delivered by the Conservative government under majority rule. It was expected to give us our first glimpse at how the Conservatives intend to govern over the next several years. Many assumed that the result would be a fairly dramatic shift toward fiscal conservatism and smaller government. The reality, by contrast, is decidedly middle-of-the-road. The Conservatives have delivered a prudent budget, one that largely fails to live up to the hopes of strong fiscal conservatives, but also largely fails to live up to the fears of their opponents.

To be sure, specific elements of the budget, such as delaying Old Age Security (OAS) and Guaranteed Income Supplement (GIS) benefits until age 67, are bound to attract controversy and spark debate over the coming weeks and months. There are also deep cuts in some areas, among them foreign aid and the CBC. However, the budget also contains several initiatives that are either welcome or overdue (eliminating the penny leaps to mind). But in the final analysis, while the budget itself is a thick document, filled with a wide range of initiatives, this is, on the whole, a cautious and incremental plan. This is true especially considering initial expectations that the budget would pare back government spending in a big way.

In terms of the priorities outlined in the budget – once again called an “Economic Action Plan” – there is a clear emphasis on measures aimed at promoting economic growth and job creation. In particular there are several programs and initiatives that are recognizable as clear priorities for western Canada. These are discussed further below.

Budget Overview

As expected, the budget established an accelerated timeframe for eliminating the deficit and restoring fiscal balance, primarily focusing on the expenditure side of the equation. In last year’s budget, the deficit for the current year was expected to be $32.2 billion, a figure amended in November to $31 billion. Owing to a combination of resurgent revenue growth at the end of the year, spending restraint and lower-than-expected interest payments on the national debt, the deficit for this year is expected to be $24.9 billion. Moreover, the federal government now plans to balance the books in four years (2015-2016), one year ahead of the schedule laid out in last year’s fiscal plan. In fact, barring an unexpected downturn in economic fortunes, the budget will most likely be balanced within three years.

One of the big items that everyone was waiting for in this budget was news on the extent to which the government would be cutting program spending in the years ahead. This is the part of the budget where, depending on their point of view, people will be either the most disappointed or the most relieved.

Although many of the details still have to be ironed out, the federal government announced that its review of department spending will yield ongoing savings of $5.2 billion per year by 2016-2017. This total represents about 6.9% of the spending that was subject to the review process, but only 2% of overall federal spending. In addition, about 19,200 federal government jobs will be cut, about one third of which will be through attrition.

While these cuts represent real reductions for individual departments and agencies, it’s important to keep in mind that, in the aggregate, they are based on spending levels that have grown dramatically in recent years. Since the first Conservative minority government in 2006, federal spending has increased by 38.7%, while the federal public service expanded by 15.3% (adding more than 60,000 jobs in the process). When viewed in that context, the proposed budget cuts do not exactly suggest a broad-scale withdrawal of the federal government from the public arena.

In addition, other components of federal spending, like transfers to the provinces and to persons, will be rising throughout that period. Old age benefits are the obvious exception, but those changes don’t even begin to kick in until 2023. As a result, the overall effect of the government’s spending restraint will not be a decrease in total program expenditures as much as a slightly lower rate of growth over the forecast period.

Specific Programs and Initiatives

For the most part, the federal government’s fiscal plan delivers on the expectations set out in the Canada West Foundation’s pre-budget commentary. Perhaps most notably, it includes a commitment to modernize the regulatory system for major project reviews with the goal of a “one project, one review” approach. This approach is designed to reduce duplication, the administrative burden on businesses and the timelines for approval. While the specifics are still to be determined, this is a welcome development for western Canada, provided that it does not result in an abdication of government responsibility in the area of environmental stewardship.

The budget also contains measures aimed at job creation and addressing labour shortages in western Canada. These include some modest reforms to the Employment Insurance program, an enhanced youth employment strategy, hiring credits for small businesses and improvements to the Temporary Foreign Worker Program. The budget also mentions improvements to Canada’s immigration system, focusing on economic migrants that meet the labour needs of specific provinces and territories. However, there are few details on what that might mean.

Perhaps most significant for the West is new money for First Nations infrastructure, education and measures to improve training and incentives for the on-reserve Aboriginal population to enter the labour force. In its various consultations and roundtable discussions, the Canada West Foundation has heard repeatedly from western Canadian business and policy leaders that more needs to be done to improve living conditions on reserves as well as to improve Aboriginal participation in the workforce. In contrast with the aging population generally, the Aboriginal population is young and growing quickly. As such, they represent a significant, relatively untapped resource of labour in the West. On this issue, the measures contained in the 2012 budget represent a step in the right direction.

As we looked for in our pre-budget commentary, the 2012 budget also targeted spending cuts to specific areas and avoided cross-the-board measures that might have penalized effective or valuable programs. To be sure, there were few details, as usual, offered in the budget as to which exact programs would be affected by the plan, and as noted earlier, some will be unhappy about the areas that were targeted relatively heavily. But in general, the spending cuts reflected a gradual reshaping of government priorities and not a thoughtless chopping exercise.

The budget also emphasized measures related to innovation and research. This focus was signalled widely in advance of the budget, but the approach taken differed from the norm of recent years. Productivity improvements in Canada have been much sought-after, but elusive as previous government initiatives like lower corporate taxation and tax credits failed to deliver on that promise. With this budget, the government has signalled that it is changing tack. In a “Back to the Future” kind of way, there appears to be a return to more direct government involvement and incentives for high-risk venture capital and business innovation. While this type of direct involvement was (and still is) derided as the government getting into the game of “picking winners and losers,” the initiatives proposed in the budget echo many of the suggestions that we heard from business and policy leaders during our most recent series of Honourable James A. Richardson Roundtables this past autumn.

Another recurrent theme was a continued focus on trade and accessing new markets. In a sense, the budget offered nothing new on the subject; it mostly just restated the government’s recent accomplishments and highlighted the various trade- and investment-related initiatives currently underway. Although there was no new money for trade (in fact, foreign diplomacy and aid received disproportionately heavy cuts in funding), this budget signals that international trade remains a high priority for this government.

There were also some policy issues on which, in our view, the budget was disappointing or disappointingly silent. As noted above, in spite of the fact that trade and market access are stated priorities of this government, financial support for foreign affairs and diplomacy was cut. In addition, the budget includes no significant new measures or financial support relating to environmental protection, conservation, curbing greenhouse gas emissions or renewable energy. There was also disappointing silence on the subject of a Canadian energy strategy. Finally, there were no significant new funds for urban or trade-related infrastructure. While the federal government has made significant investments in this area in recent years, there remains a large infrastructure deficit in many parts of the West.

As a concluding note, it seems appropriate to devote a final thought to bidding adieu to the much-maligned penny which will cease to be minted in April, and stop being distributed later this year. Over the years we’ve all complained about the space pennies take up, we’ve gotten into trouble in school for flicking them at classmates, we’ve thrown them in fountains, used them for ill-advised science experiments and we’ve refused to pick them up when they lie alone and half-forgotten on the street. And now they will be no more.

Goodnight sweet penny. No longer will you fool me into thinking I’m rich based on the thickness of my wallet. May flights of angels sing thee to thy rest.

By: Larissa Sommerfeld

Pipelines, robocalls and economic angst seem to be dominating headlines these days. Yet, there’s an important topic that’s missing from the limelight—water.

Everyone knows that water is essential to our survival and our way of life. What would our national sport be without the ice? But how often do we make the connection between healthy ecosystems and a strong economy?

Not often enough. As economic development in western Canada continues to ramp up, it’s critical that we’re as mindful (if not more) of our water and the broader environment as we are our economic prospects.

Across western Canada, water is integral to a wide range of economic activity including fisheries, shale gas development, irrigated agriculture, oil sands development, and potash and uranium mining.

Yet, there’s a sleeping water policy giant that will be waking up in due course. Climate change, extreme weather, increasing demand for energy, food, commodities, decreasing water quality (often due to effluent discharge and agricultural run-off), depleted sources, mindless water consumption, aging infrastructure, and the drainage of wetlands are all placing immense pressure on our water supplies. If we don’t start mitigating these strains, we’ll have some real trouble on our hands.

If western Canada is going to continue to be a great place to live, we need to constantly be thinking one step ahead. Our economic activity in the natural resource sectors (energy, potash, uranium, agriculture and aquaculture) is projected to grow in the coming decades. This is great news for our economy, but only if we become even better stewards of our water. The time is now for water to take priority on the policy agenda, up alongside energy, health and education policy—before we get to a breaking point.

Water allocation (of which addressing Aboriginal water rights will be key) will be one of the most challenging policy issues in the years ahead and there’s no beating around the bush—it will have to be addressed because water is a necessary component of the western Canadian economy. Canadian author Marq de Villiers once said that “the trouble with water is that they aren’t making any more of it.” We’ve got to protect what we have, not only to keep our ecosystems healthy, but to sustain our economy as well. We have a finite supply of water so it makes sense to find ways to maximize how it’s used so it can meet the increased demand with the same amount of water. This is something we should all care about because our livelihoods depend on it.

Read more about water and economic development in our new report, Stress Points: An Overview of Water and Economic Growth in Canada.

By: Michael Holden, Senior Economist

On March 29^th, the Conservative government will bring forward what effectively amounts to its first budget since it won a majority in the House of Commons last spring. There are several reasons to expect this particular budget to be significant. For one, it will be the first delivered by the Conservatives free from the constraints of a minority Parliament. In addition, the budget is expected to include more specific details on how (and over what time period) the government plans to eliminate the deficit.

Finally, since the current government is early into its mandate, the budget provides an opportunity for it to set its agenda over the next several years and put its stamp on the future direction of the country. Governments in the past have frequently adopted more controversial policies early in their mandates so that voters have as long as possible to forgive and forget before the next election.

In a general sense, the expectations surrounding this budget are pretty clear. The government will take steps toward eliminating the deficit focusing heavily (or exclusively) on the expenditure side of the equation. No new taxes are expected, nor is there expected to be any rollback of previously-announced corporate tax cuts that kicked in this past January. There have also been broad hints about changes to Old Age Security (OAS) eligibility and a renewed focus on international trade and fostering innovation.

What is not known is the nature or the severity of the program spending cuts. We do know that since it was first elected in 2006, the current government has not exactly been “conservative.” Due in large part to its economic stimulus package in 2009, federal program spending has increased by 36.7% since the 2005-2006 fiscal year and the federal civil service has expanded by about 15.3%. Not including federal Crown corporations, there are more federal government employees today than even before the Jean Chretien Liberal government took the reins in the early 1990s.

With that in mind, there are a few things that the Canada West Foundation is anticipating in the budget.

Better-than-Expected Results in 2011-2012

In its last budget, the federal government projected a deficit of $32.3 billion for the 2011-2012 fiscal year. That figure was later amended to $31.0 billion in the government’s annual November fiscal update, as lower-than-expected program spending was more than enough to offset sluggish revenue growth and the addition of a $1.5-billion risk adjustment buffer to guard against the effects of global economic uncertainty on the bottom line.

Barring a major year-end spending spree in March, however, the actual deficit for the current fiscal year will almost certainly be much lower. The deficit was projected to decrease only slightly compared to last year (from $33.4 billion to $31.0 billion) but the government is well ahead of pace. Through the first three quarters of the year (April to December 2011), the federal deficit stands at $17.7 billion, a considerable improvement over the $27.4 billion deficit over the same period last year.

There are two directions the federal government could go with this increased fiscal flexibility. It could accelerate its deficit-elimination schedule and balance its books a year or two earlier than currently planned (in 2016-2017). Alternatively, it could use that flexibility to lessen the severity of anticipated cuts to program spending. Some combination of the two is also possible.

Prudent Economic Forecasts

On a related note, we look for the government to continue making its budget projections based on cautious economic and revenue growth assumptions.

During Jean Chretien’s tenure as Prime Minister, Finance Minister Paul Martin attracted some criticism because his economic- and revenue-growth forecasts were so conservative that the Liberal government regularly posted much better year-end budget balance figures than were initially projected in their budgets. For a few years this was a bit of a novelty as governments historically had tended to over-promise and under-deliver in their deficit-fighting efforts. By the end of the Chretien-Martin era, however, pundits were clamouring for more accurate budget forecasts, because year-end numbers were consistently so much better than budget forecasts.

Returning to this era of under-promising and over-delivering would not be such a bad thing. While worries over sovereign debt crises in Europe and the sluggish US economy have eased somewhat over the past six months, there remains a great deal of global economic uncertainty on the horizon. In this context, small-c conservative growth forecasts would be prudent. 

In addition, understated growth forecasts would allow the current government to capture one of the big advantages enjoyed by the Chretien/Martin approach to budgeting. By regularly underestimating revenue growth, the Liberal government of the time was able to avoid the pressure to increase spending that comes when governments announce that their fiscal situation is actually pretty good. The moment a government announces that it has billions of dollars left over after fulfilling its spending commitments, you can guarantee that there will be a clamour of voices with all sorts of ideas about how that money should be spent. This is not to say that many of those ideas are not worth supporting. Rather, it is extraordinarily difficult for a government to announce that it has excess revenues without at the same time creating enormous political pressure to spend those revenues or to decrease taxes accordingly. This can result in decisions being made on the fly rather than being carefully considered as part of a long-term plan.

Simplification of the Tax System

The Canada West Foundation has long argued in favour of a simpler tax system. The recent trend, at the federal level at least, has been for the addition of boutique tax credits aimed at specific segments of the electorate: tax credits allowing tradespeople to write off their expenses on tools; credits for arts and sports programs for children; employment tax credits and so on. Every year it seems that the forms get longer and more complex. We don’t suggest going to the simplified tax scheme proposed here, but an increase in transparency would be welcome.

A caveat to this statement is that we have no position on whether taxes should be higher or lower. Too often people get swept up in ideological debates which focus entirely on the tax side and ignore the expenditure side completely. It is important to remember that taxes are the means by which governments provide services to their citizens. All else being equal, we get what we pay for: lower taxes means fewer or less comprehensive government services and higher taxes mean the opposite. Now there are all sorts of arguments one could make about how efficiently governments use their revenues and about how much easier it is for government to grow than to contract. But in our view, the appropriate level of taxation is the lowest one possible which provides Canadians with the goods and services they want, while also allowing governments the policy flexibility to pursue appropriate social and economic objectives for the long-term prosperity of the country and also ensuring that Canada is an attractive place in which to do business. In other words, we need the taxes to afford what we want and need, not to blindly raise or lower those taxes without a specific, and compelling, reason for doing so.

Government Program Spending

The federal government has already stated that it will not touch transfers to the provinces as part of its move toward balancing the budget. The size (and growth rate) of federal transfers for health and social services has already been determined for the next decade or more. Similarly, the pool of funds for the equalization program is set to increase each year, tied to the growth of the national economy.  While we have some concerns about the specifics of these programs and some of the interprovincial equity issues that could result from the distribution of those funds, those concerns are not part of the budget discussion itself.

In terms of direct program spending, however, the federal government has already signalled that it intends to find billions of dollars in “savings” under its “deficit reduction action plan savings target.” What this means, exactly, is anyone’s guess at this point, but the specifics of this plan should be included in the forthcoming budget. What is clear, however, is that after years of rapid spending growth and a hiring spree that has seen the creation of more than 60,000 new federal government positions (including in the military) since 2004, there are cuts on the way.

Given the huge increase in federal government spending in recent years, there is certainly some room for modest fiscal retrenchment. There are, however, a few things we would not like to see. First of all, the budget should not take the easy way out and impose across-the-board cuts on departments. Doing so carries the risk of penalizing effective programs by providing them with fewer resources to accomplish their objectives, while allowing less effective or redundant programs to continue on. A more difficult, but ultimately more valuable, exercise would be to use program spending cuts as an opportunity to revisit past government programs and to refocus efforts on initiatives that are demonstrably effective at enhancing economic and social welfare in Canada. Second, the budget needs to walk a fine line between returning to fiscal balance on the one hand, and not undercutting the still-fragile economic recovery on the other. The Canadian economy grew at a relatively modest 2.0% in 2011. A dramatic cut in federal spending could further weaken the economic outlook for the current year.

A better approach would be for the government to back-end-load its spending cut commitments. This means that the government should set out a deficit-reduction plan that sees relatively modest cuts to program spending this year (and possibly next), allowing the economy time to find its footing. When conditions are more robust, the Canadian economy will be in a better position to absorb the impact of more severe cuts to federal spending.  

Environmental Review Process

It has been suggested in the lead up to the budget that the federal government is looking to streamline the environmental assessment process for resource development. While this move is guaranteed to spark outrage in some circles, we are cautiously optimistic. The Canada West Foundation supports the idea of a streamlined review process: one that eases the administrative burden on businesses and reduces the time it takes to get shovels in the ground on approved projects, subject to the condition that the standards to which businesses are held are not compromised as a result.

Many people believe that expediting the review process, or handing the responsibility to the provinces, will result in less due diligence or a patchwork of environmental standards across the country. Some will undoubtedly suggest that a shorter process is, in fact, a backdoor attempt to lower standards, skirt environmental regulations and run roughshod over due diligence.

Without detailed information on the specifics of the federal government proposal, we cannot comment on those anticipated criticisms. We look to the budget to provide some of that information. To be sure, laxer environmental standards are a risk if the spirit of the matter is violated, but we do not accept the view that fixing the review process will necessarily result in lower standards or that it represents an abdication of environmental stewardship on the part of Canadian governments. A longer review process does not make a better review process.

Michael Holden will be in Ottawa on budget day and will prepare a post-budget analysis. Media inquiries can be directed to Rachael Strathern, Communications Team Lead, at communication@cwf.ca or (403) 700-9535.  

By: Larissa Sommerfeld

This coming Saturday will mark the completion of a long and drawn out race for the leadership of Canada’s New Democratic Party.

Does water policy fit into the platforms of its leadership candidates?

It doesn’t seem top of mind for Thomas Mulcair or Brian Topp. Both candidates appear to have mentioned water policy only in the context of larger environmental policy, and don’t have any detailed positions posted on their websites. So called “wild card” Nathan Cullen deems himself a “radical” for standing up for the environment, so it’s probably safe to assume that water would be central to his policy agenda. And Peggy Nash and Paul Dewar have been more passionate about the subject and believe that a national water strategy is needed.

The development of a national water strategy isn’t a partisan issue in the policy community. In fact, groups from all sides of the spectrum (from the Canadian Water Resources Association and Pollution Probe to the Canadian Chamber of Commerce) have been calling for the development of a national strategy to ensure Canada is in the best position possible to stand ground against water challenges due to climate change and rising demand stemming from increased economic activity (e.g., the running of LNG terminals on the West Coast would require massive amounts of energy which would come from hydroelectricity). However, a national strategy wasn’t mentioned in the 2011 NDP election platform, nor does it seem to be getting much attention now.

The water debate is more focused on bulk water exports. In January 2012, Paul Dewar stated he would ban bulk water exports, which is in-line with the official NDP position. Dewar has spoken out about Thomas Mulcair, a former Liberal and Minister of Environment in Quebec, stating “I hope that the position he had before with the Liberal government, which was in the past, is in the past, and that his position will be the party position….” The position Dewar is referring to was Mulcair’s desire to open up a debate on bulk-water exports from Quebec to the US. His position was highlighted in a clip posted by the Liberal Party of Canada.

This will certainly be something to watch. The favoured candidates are Mulcair and Topp, both of whom don’t seem to have water on the brain. If either of them are elected, water as an issue might fall out of the NDP periphery and the push for a national water strategy—which most water policy experts agree is something that’s needed—may rest solely with the Liberals (who are very active on the water file) and the Green Party’s Elizabeth May.