Canada West Foundation Blog

By: Robert Roach

There are two main ways of addressing the fact that Canada is a collection of diverse regions.

The first is to embrace this fact as a fundamental strength and seek ways to work together and support one another. If we respect our differences and build on our similarities, a strong, united, dynamic and great nation is the result. Taking this path is not easy; it requires empathy, sacrifice, the ability to see beyond narrow perspectives, a willingness to compromise and an abiding commitment to the belief that Canada is strongest when all of its regions are thriving.

The second option is all too common and involves playing one region (or city or industry) of the country off of another for short-term gain, out of jealousy or because of ignorance. This approach sees the different parts of this great nation as competitors locked in a zero-sum game in which one region triumphs as the expense of the others. The result is bickering, missed opportunities, counterproductive animosity and a frayed national fabric. We can do better.

Politicians, business leaders, journalists, policy wonks and citizens from all parts of the country sometimes default to the second option. Most recently, Thomas Mulcair has said a number of things that focus on what divides Canada rather than what unites it. His remarks have been critiqued—and rightly so!—but we have to be careful not to let them become more fuel for the fire of division.

I have heard Albertans blame Quebec for Canada’s problems. I have heard people in Ontario berate life on the Prairies. I have heard people from Toronto tell tourists to avoid Calgary because it is ugly and full of rednecks. I have heard people in BC complain about EI recipients in the Maritimes. On top of these taunts and insults, there are old grudges against eastern banks, the oil sands is blamed for everything from the common cold to global warming and there are far too many Canadians who think breaking up the country is a good idea.

As we react to the recent wave of regional tension, it is worth considering that we are all better off working together as a country of strong regions rather than throwing stones at each other in an attempt to score points in a game with no real winner.

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.

By: Robert Roach, VP, Research

In an article in today’s Globe and Mail, John Ibbitson argues that "One question will define national politics in our time: Are Western Canadians prepared to sacrifice for the sake of the nation, now that Ontario is less able to help?"

In addition to incorrectly implying that western Canadians chipping in to help the rest of the country is a new phenomenon, the question is the wrong one to ask.

The question Canadians should be focused on is how to ensure that the nation successfully adjusts to the evolving global economy. It is a mistake to start with a negative question that assumes the need for "sacrifice"—whatever that means—or puts pressure on the nation’s fault lines by immediately assuming that regional wealth redistribution is the solution to central Canada’s problems. This is the old way of thinking and this is not the time to bring it back.

The West knows what it is like to have its interests and economic prospects ignored and how damaging this is to the country and its potential. It will not, therefore, make the same mistake that central Canada has made in the past and be blithe to the blight of the other regions.

The West gets it—all regions benefit when all regions are heard and respected. The West will do its part, as it always has.

Ensuring Canada’s prosperity will happen naturally as the western economy continues to provide jobs and returns on investment. It will also happen at the political level through the equalization program, a strong tax base in the West that helps fill the national treasury, and by ongoing efforts by Canadians to ensure strong regional representation within the national government.

Ultimately, however, the economic recovery of Canada's industrial heartland will depend on the efforts of individual Canadians and their ability to harness the changes happening at a global level.

By: Dr. Roger Gibbins

Throughout 2011, Canadians took comfort in the fact that as the world around them seemed to go to hell in a hand basket, life was pretty good here at home. Although the Canadian economy sagged a bit, it held up well by comparison with our major trading partners. Stock markets rebounded, employment did not plummet, and across western Canada there was real economic growth and widespread prosperity.

Unlike the political deadlock and acrimony that has become increasingly characteristic of political life south of the border, Canadian governments enjoyed reasonably strong electoral support and, for better or for worse, we have been freed from the paralysis of minority governments in Ottawa. All in all, 2011 goes down as a pretty good year for Canada admidst a general international environment of uncertainty and unease.

Nonetheless, it is difficult to look forward to 2012 with anything close to unbridled optimism. Economic and political conditions in the United States, still our major market for virtually anything we produce, are unlikely to improve as Americans lurch toward the November elections. Economic conditions in Europe remain grave. Closer to home, western Canadians face huge challenges in moving resource assets to new international markets while at the same time, American markets are soft and/or overflowing with conventional Canadian products such as natural gas.

So often western Canadians believe that we have the resources the world needs, and assume the world will beat a path to our doors. Quite understandably, resource wealth breeds complacency. Increasingly, however, we realize that we will have to do much of the beating, that our competitors are many and often better positioned geographically, and that the barriers to international market access are challenging in the extreme. Being resource rich in the absence of markets is not a recipe for sustainable prosperity.

In 2012, Canadians from across the country will also have to come to grips with growing regional imbalances within the national economy, and how these play out through the frameworks of fiscal federalism and in a period of growing financial constraints for all governments—federal, provincial and municipal. On balance, western Canadians are doing very well, but how do we reconcile regional prosperity here with more disadvantaged regions of the country? How do we ensure that regional economic strength is encouraged as a national asset, and not seen as a target?

None of this means that Canadians should be fearful when looking ahead to 2012. At the same time, we will face some truly intimidating policy and political challenges as we try to re-jig the Canadian federal system and national economy to meet unstable and rapidly changing global conditions. The upcoming year will not be a time for the faint of heart, or a time for complacency. But then, to quote the last words of Australian bushwhacker Ned Kelly as he stood on the scaffold, such is life. Or, in the more current vernacular, bring it on!

On behalf of the Foundation, I would like to wish you all the best for the holidays. Thank you for your engagement over the past year. As 2012 approaches, we look forward to continuing our work as the only think tank dedicated to being the objective, nonpartisan voice for issues of vital concern to western Canadians.

by: Robert Roach, Senior Researcher and the Director of The West in Canada Project

Majorities are not evil
Majority governments are the norm in Canada, so it is a bit odd to hear a large number of commentators acting like a Tory majority is some sort of evil aberration out of Tolkien’s Land of Mordor. It is true that the Harper government will be able to pursue its agenda without the restrictions of a minority Parliament, but this is exactly the same as it was for Trudeau, Mulroney, and Chretien. We are back to business as usual and not—as some seem to think—out on a crazy limb that will break and send the country into freefall.

In addition, majority governments like to win more than one majority. Hence, while they can pursue their vision for the country without constant fear of a non-confidence vote, they tend to keep one eye on the next election cycle. In other words, radical policies that will alienate large chunks of voters remain unappealing regardless of majority status.

Regional fault lines remain
From a regional perspective, the outcome of the election is very interesting. You barely need two hands to count the Conservative seats in Quebec whereas the NDP have become the de facto representatives of Quebec in the House. This is a new dynamic. In some ways, Quebec has become like Alberta in that it has chosen to side with the opposition rather than the government. Not that long ago, it was Alberta MPs who had only a small presence on the government side of the House.

On the bright side, a Harper majority likely means that the federal government will do as much as it can to advance Senate reform (full reform still requires the provinces to get on board). This is good for the country, good for Quebec and good for the West. A properly designed Senate has the potential to ensure that regional representation does not depend on which party forms the government in the House. Maybe, just maybe, Canada will finally start to fix this broken part of our political system. Maybe.

The Rise of the NDP
Given the nature of the Canadian system, the Official Opposition in a majority Parliament is largely irrelevant in terms of policy. They have an important job to do trying to keep the government’s feet over the coals, but they can’t block government legislation. In this sense, it matters little which party forms the opposition. However, the rise of the NDP is important for several reasons: 1) it is the first time in Canadian history that the Liberal party finds itself in the third party position and it remains to be seen if it can recover; 2) the fuzzy mandate that Layton has from Quebec voters will be a factor but it is impossible to say how this will play out; and 3) the ideological differences between the Tories and the NDPs are relatively clear and will present Canadians with a black and white set of alternatives to watch over the next four years.

The West is Still In
This election shows that a party with a leader from the West and a strong base of support in the region can, by also appealing to Ontario voters, form a majority government. Regardless of your political stripes, the Harper government is not a bad thing from a regional perspective. A government with a strong western base will have a natural connection to the region’s needs and unique circumstances. Because they are governing a nation rather than a region, these needs will not always take precedence, but they should be at least understood and given a fair hearing. This does not mean that governments without a strong western base can’t do this, but in reality, it is much more likely when they do.

This list was compiled by W. T. Stanbury (wstanbury@prodigy.net.mx) and Armine Yalnizyan, Canadian Centre for Policy Analysis [last update:July 20,2010 ]

1. Atlantic Provinces Economics Council
2. Caledon Institute of Social Policy
3. Canada Census Committee
4. Canada West Foundation
5. Canadian Association for Business Economics
6. Canadian Association of University Teachers
7. Canadian Council for Policy Alternatives
8. Canadian Council of Social Development
9. Canadian Economics Association
10. Canadian Evaluation Society
11. Canadian Federation of Francophone and Acadian Communities
12. Canadian Institute of Planners
13. Canadian Jewish Congress
14. Canadian Labour Congress
15. Canadian Marketing Association
16. Canadian Medical Association Journal
17. Canadian Nurses Association
18. Canadian Public Health Association
19. Canadian Research Data Network Centre
20. C.D. Howe Institute
21. Centre for the Study of Living Standards
22. City of Calgary
23. City of Edmonton
24. City of Red Deer
25. City of Toronto
26. Conference Board of Canada
27. Co-operative Housing Federation of Canada
28. Environics Analytics
29. Evangelical Fellowship of Canada
30. Federation of Canadian Municipalities
31. Glendon School of International and Public Policy
32. Information and Communications Technology Council
33. Inuit Tapiriit Kanatami
34. Institute for Research on Public Policy
35. Medical Health Officers Council of Saskatchewan
36. Nanos Research
37. National Specialty Society for Community Medicine
38. National Statistical Council ( acts in a consultative capacity for StatsCan).
39. Ontario Council of Agencies Serving Immigrants
40. Province of Manitoba
41. Province of PEI
42. Province of Quebec
43. Quebec Conference of University Rectors and Principals
44. Regional Municipality of Halton
45. Regional Municipality of Peel
46. Rotman School of Management
47. Social Planning Council of Sudbury
48. Statistical Institute of Quebec
49. Toronto Association of Business Economists,
50. Toronto Board of Trade
51. Toronto Public Health
52. Toronto-Dominion Bank (per its chief economist)
53. United Way of Canada
54. United Way of Greater Toronto
55. University of Toronto School of Public Policy and Governance

Note: there are other lists and this one may not be exhaustive as it is difficult to keep track. If you know of others, by all means do share them!

A few blogs ago I mentioned that the March budget contained hints that the Conservative minority government was attempting to leave a shrunken government as its permanent legacy. In a recent op-ed I also lamented the absence of long-term thought in current federal economic policy. But now, Industry Minister Tony Clement has apparently accomplished both of these feats by altering the way Statistics Canada collects demographic data across the country. I am talking here of the decision, in anticipation of next year’s Census, to replace the usual Long Form (which was randomly sent to one Canadian household out of five) with a voluntary survey.

Does this matter? Isn’t this just a data collection methodology debate among statistical eggheads and data geeks? Well, the instant uproar was started among that group (of which I am a proud, card-carrying member), but the impact of this decision will be felt everywhere in Canada. Other people have explained very well how the loss of detailed census data will greatly complicate the work of anyone in this country whose job it is to make informed decisions requiring some detailed knowledge of who Canada’s population is. This is especially the case for public policy specialists who work in areas concerned with planning. Just think of people who must figure out the location and the size of hospitals, public transit and roads.

Census information forms the backbone of too many Canadian systems and processes to count. The new approach is the statistical equivalent of changing the diametre of gas pump spouts across the country. It can physically be done and there is a way for everyone to adapt to it, but the adjustment itself is so complicated that you better have a pretty darn good reason for making the change in the first place. I do not think that this is the case here.

Apparently, the Harper cabinet decided to proceed with the change because of growing complaints from the population. Minister Clement told the press that “every MP has had complaints” about what is perceived as intrusions into people’s privacy. Well, I have two things to reply to this. First of all, filling in a census form with personal information is a very small price to pay in order to benefit from informed public policy. Secondly, the complaints the government will receive about this change probably outnumber the initial privacy-related batch already. From left to right, in both the private and the public sector (ranging from federal to municipal), not to mention NGOs and think tanks like Canada West Foundation, many people have expressed concern about the risk of losing access to precious information.

One of the most unexpected aspects of this is the stealth surrounding the change. No consultation whatsoever took place, and the announcement consisted in a mere posting in the Gazette of Canada on June 26 (a Saturday). Contrast this with all the opinion-seeking our Prime Minister went through before selecting the next Governor General.

Statistics Canada has been ranked the world’s no. 1 statistical agency many times and takes great pride in producing good data. As an “arm’s length” federal agency, it is supposed to be outside of the small politics game. When I worked there in the 1990s, the only time we realized we had a Minister at all was during budget cut time. Apart from this, we were allowed to do our number-crunching work alone with no interference. Otherwise, how could our data be credible?

Some will say “This is not a truly important issue. Get your priorities right. Do something about child poverty instead.” Sure. Now, tell me, how do you measure child poverty to start with?

(Note: click PM Harper July 5 to read the letter sent to the Prime Minister by Dr. Roger Gibbins, President and CEO of the Canada West Foundation.)

Posted by: Jacques Marcil

The other day I came across this article in the Wall Street Journal about the US federal administration’s attempt to cut costs by modifying the metallic composition of American coins. (In the US, like in Canada, the penny costs more to produce than it is worth.) It doesn’t take much imagination to discern elements of pure comedy between the lines of a serious and informative news in this story.

At least ten groups, from coin collectors to metal smelters to vending machine operators have something to say about the issue. As one would expect, nearly all the groups are opposed to the change (no pun intended), with each one trying to pull the blanket in its direction by saying that what is good for its constituency is good for the country as a whole. I’m sure that had they been asked, Canadian nickel producers (the ore, not the coin) would have had a thing or two to say about this as well.

This got me thinking about the huge challenges Canada, the US and other countries too numerous to count are facing in the area of public finance. Government deficits need to be reined in all over the world over the next few years, but each measure being considered by each government will generate some form of lobbying.

Think of the multitude of national, sub-national and local governments there are out there, each with dozens, if not hundreds of cost-cutting measures getting lined up in back offices. Then imagine that at least ten lobbies will have something to say about each measure once it is made public, even if it is a plain, common-sense one. Doesn’t it make your head spin? Doesn’t it make the job of governing and managing the public purse look like ridiculously thankless burden?

A few “deep” questions about this:

• Should democracy reach all over our public administration system, or should some areas be “exempted” to make governments easier –and cheaper– to run?
• Is lobbying a necessary evil to keep our elected officials accountable to voters?
• What would the world look like if we only allowed purely altruistic lobbying, meaning that people likely to benefit from a piece of policy could not legally pressure government about it?

And,

• Where can I buy stocks in the companies that make those glossy plastic covers used to package the “information material” handed out by lobbyists?

Posted By: Jacques Marcil

Throne speeches point to a government’s policy priorities. As such, it is good to see the references in today’s federal throne speech to reducing the restrictions on foreign direct investment and to “the aggressive pursuit of free trade.”

Carefully designed rules around foreign investment can help ensure that Canadian companies have the capital they need to thrive while assuaging fears of “foreign takeovers” and threats to national security. There is a lot of footloose capital in the global economy and the more of this that Canadian businesses can scoop up the better.

Canada has benefited greatly from freer international trade. The lack of progress on global free trade makes the case for Canada to pursue the bilateral free trade agreements mentioned in Throne Speech.  This should not, however, undermine our commitment to truly open global trade.

Movement on the two “Fs” of foreign direct investment and free trade is an economically sound policy and one that should serve Canada well in the global economy.

Posted By: Robert Roach

The 2010 federal budget will be tabled on Thursday, March 4.  Some will want to see fewer taxes, some will want more taxes (seriously!). Others will want more or less spending.  Apparently, everyone has a wish list.

Unfortunately, everyone should prepare to be disappointed.  This almost certainly will be a “status quo” type budget as the government can neither spend nor cut very much right now.  Spending more is likely out because we need to wind down the programs that were aimed at fighting the recession before they become unaffordable.  Cutting more is also not an option because it would be risky to start the fight against the deficit right away—that could easily kill the current recovery.

So, given that he cannot spend much nor cut much, what is Minister Flaherty to do? Here’s is one suggestion: it is time to tackle the long suffering experience of all Canadians and introduce real personal income tax reforms—specifically the simplification of our income tax system.

The personal income tax (PIT) system is way too complicated.  Filing a tax return is a time-consuming, head-scratching national visit to the dentist for all adult Canadians.  Our personal taxes are like a forest where there is so much undergrowth that you can’t see the trees anymore.  And it’s only getting worse.

Over the last few budgets, the federal government actually added a bunch of new exemptions to your tax return. While it helped make the government look like it was pushing the country into the right policy direction (e.g., making Canadians physically fit, increasing usage of public transit), this added more and more lines to your already-bloated T1 form.

My colleague Casey Vander Ploeg recently recommended a number of excellent changes in a report on tax reform published by Canada West Foundation (Ready For Takeoff).  My PIT suggestion echoes what he wrote: that we need to “radically simplify the personal income tax and the set of income supports that exist alongside.”

The way to do this is to eliminate the myriad of income-tested tax credits, allowances and deductions we currently have. At the same time, keep the progressive structure of the tax rates so that they still help redistribute some income from rich to poor, but reduce each rate. In the end, zero deductions plus lower tax rates means that everyone pays roughly the same amount in taxes as before. The improvement is that now the system is much simpler, therefore more fair because everyone understands it better.  Call it tax democracy.

The reason I favour this approach is that most of those “mini-programs” which are built into the tax system make it more complex but accomplish little. They are often based on a good idea (i.e., “let’s make good behaviour XYZ tax-free”) but only a minority of Canadians modify their personal choices as a result of those exemptions because they often represent gains of less than $100 a year (that’s about 27 cents per day to you).  Your T1 form is filled with nooks and crannies that achieve little from a policy point of view while wasting everyone’s time.

It will be regrettable if the government does not simplify the tax code this time around. This is the perfect time to prune out the dead wood and position ourselves with a leaner and more efficient tax system just in time for the next phase of economic expansion.

Posted By: Jacques Marcil