Barking Up the Wrong Tree

By Jacob Friesen 

There’s a new opportunity for one of New Brunswick’s oldest industries. New Brunswick’s forestry industry may soon be able to benefit from global enthusiasm for the use of wood as a construction material. At a time when the oil and gas industry dominate headlines about Canadian natural resources, it is worth remembering our valuable forestry industry.

Wood is both environmentally friendly and safe. Currently, cement-making produces 6% of the world’s carbon emissions, while the making of steel, half of which is used in construction, produces 8% of global emissions. This is part of the reason for which it is estimated that 30-60% of the carbon emissions caused by a building over its lifespan are released during its construction. It takes six times as much energy to create a steel beam as it does to create a laminated wooden beam of similar strength. Well-made wooden building materials from old wooden buildings are also easy to reuse in new building projects.

Wooden buildings also require less energy to heat. A softwood window frame provides 1000 times as much insulation as an aluminum windowframe, and 400 times as much as a steel windowframe. Thus, wood is also useful in making old buildings more energy efficient.

Beyond requiring less energy to build and heat, wooden buildings can actually have a negative impact on carbon emissions. Carbon stored in trees used for construction remains stored in the builing materials, and new trees can be planted in the place of those that are harvested, as is already standard practice in many logging industries.

Additonally, wood is a safe construction material. Contrary to popular belief about an elevated risk of fire in wooden buildings, cross-laminated timber panels peform better in fire tests than steel panels.

As governments work to meet emissions reduction targets, there will likely be increased interest in cutting carbon at the construction site. One way to do this is to encourage the use of wood as a construction material. The forestry industry in New Brunswick, and accross Canada, stands to benefit. Canadian foresters offer high-quality products produced in accordance with world-class environmental and safety standards. Canadian foresters should continue to position themselves as leaders in green innovation, and all levels of Canadian government should promote building codes which recognize the value of wood in safe and environmentally friendly construction. In doing so, they’ll be barking up the right tree.

Uber: Who’s Afraid of a Little Creative Destruction?

By Samuel Kirsh 

 

A frequent topic of conversation among my friends in Halifax is the unreliable taxi service experienced on Friday or Saturday evenings. When it’s time to head home from the bar, game, or dinner, the phone lines of Halifax’s bigger taxi services are clogged with calls, often unrelenting until well past 2am. While this is certainly lucrative for the taxi companies at play, the clear outstripping of demand over supply is starkly illustrated on a weekly basis. Coupled with a transit system that stops at midnight, there needs to be some prescription to reduce this gap. Thus, I firmly believe there could be a market and social benefit from the introduction of ride sharing services such as Uber or Lyft.

To begin with, there is an intuitive economic driver behind introducing ridesharing apps: the demand currently appears to exceed supply. Given that this demand is not met by public transit, this may lead to higher instances of drunk driving. Drunk driving in Nova Scotia is already higher than the national average and is a globally recognized as a detriment to public health. Analytically, great strides have been made to reduce the incidence of drunk driving, but the anecdotal examples of its tragic consequences mean that more must be done to combat this phenomenon. Another incentive for these apps is to provide more flexible employment for newcomers, or to provide a means of employment for the 7.5% unemployed. The other incentive is what is called “creative destruction.” This concept explains how the advent of new technology disrupts existing industries. While in the short run existing industries suffer, this represents a short run cost towards a long-run net gain. With ridesharing apps, this could be seen through increased labor-force participation, innovative carpooling (Uber Pool), and increasing competition in the space. Further, it opens Halifax as a center for technology and growth.

There are conditions of introducing this technology that would make it more palatable and sustainable for its potential employees, as well as the general public. If a ridesharing service was introduced in Halifax, it would thus be the responsibility of the municipality to ensure that contractors received benefits through the parent company they work for. Haligonians would not be the first to demand these types of rights as recent strikes in the UK have shown. Ensuring that individuals are compensated fairly and earn proper benefits commensurate with their employment. Too often, workers in the gig economy are short-changed economically at the cost of their health and well-being, but the next phase of this technological progress should be regulation adapting to this technology. The next aim of local regulators would be to ensure that there is adequate competition, as currently Uber has a virtual stranglehold on the ridesharing app market. Uber, Lyft, and other smaller firms should be allowed entry to promote competition, eventually lowering costs and maintaining stable levels of employment. In other countries limiting the market power of Uber has allowed smaller operators to carve out niches and promoted competition. While this may marginally reduce wages, it provides a wider benefit by limiting the power of an individual firm.

Considering the options available to travelers in other cities makes one inclined to accept the inevitability of ridesharing apps in Halifax. I would not say it is the destiny of Halifax to have Uber nor its familiars, as I could not suggest that allowing Uber to operate here would be without problems. But if one looks at the transportation dilemmas that face Halifax as a growing city, ridesharing is attractive in its low public cost, its ability to reduce drunk driving, and deliver a service found across North America. It could be a signal to firms and individuals that Halifax is moving forward as a city and mark it is as a place to settle.

 

 

The Case for Ending Interprovincial Trade Barriers in Canada

By Jacob Friesen (AIMS On Campus Student Fellow) 

The arguments for ending interprovincial trade barriers are clear and decisive. It is estimated that reducing interprovincial trade barriers would add 3-7%, or $50-$130 billion, to Canadian GDP. Increased GDP brings new jobs, higher living standards, and more revenue for public services and tax relief. Additionally, economically struggling regions have the most to gain from interprovincial trade liberalization, and bear the worst of the costs of current interprovincial trade barriers. This essay will make the case for ending interprovincial trade barriers with reference to one particular industry: consumer health products. While the benefits of interprovincial trade liberalization have been assessed for a variety of industries and products, this essay will focus on consumer health products because the interprovincial barriers these products face are good examples of how interprovincial trade barriers are imposed, these products are immediate in the lives of many consumers, and the consequences of current interprovincial policies and the potential benefits of liberalization are clear in the case of these products.

Discussing and tackling interprovincial trade barriers can be difficult from the outset because explicit barriers such as tariffs are not in use. Rather, interprovincial trade barriers consist of a variety of provincial regulations which restrict the movement of goods and services between provinces. Such restrictive regulations include provincial licensing requirements for various professions, different regulations for freight transportation, and different product safety standards.

 

One important aspect of the regulatory treatment of consumer health products—the process through which products can be reclassified from prescription drugs to non-prescription drugs—is a prime example of an interprovincial trade barrier. The current process for drug reclassification is as follows. First, a company seeking to make one of its products more accessible to Canadians proposes the reclassification of its product to Health Canada.5 Next, Health Canada determines whether to allow the product to be reclassified. This process usually takes at least 17-21 months.6 Health Canada’s decision has no immediate impact on the availability of the product. Its availability only changes after provincial processes following Health Canada’s decision. For every province other than Quebec, the decision to allow reclassified drugs to be sold behind the counter or in front of the counter in pharmacies, or to disregard Health Canada’s reclassification of the product, depends on an assessment by the National Association of Pharmacy Regulatory Authorities (NAPRA). Whether a drug is sold behind the counter or in front of the counter is important, as consumers are often less aware of behind the counter products.

NAPRA usually takes up to four months to complete its assessment. The provinces of Alberta, Saskatchewan, Manitoba, Ontario, New Brunswick, Nova Scotia, and Prince Edward Island automatically implement NAPRA’s decision, and allow for the product to be reclassified and sold differently in their provinces. In British Columbia, a separate process, which can take up to 2 years to complete, determines whether NAPRA’s assessment will be implemented in the province. Quebec automatically moves drugs reclassified by Health Canada behind the counter. For a company to have its product sold in front of the counter, a separate process, which on average takes 4 years to complete, must be initiated. Thus, drug companies wanting to improve access to their products in Canada face a complicated, uneven regulatory environment and great uncertainty. Canada is unique among most major economies in having different orders of government independently involved in the regulation of consumer health products, among other products and industries. The consequences of these interprovincial barriers are severe. On average, products are made more accessible to Canadians 7-9 years after the same products are made more accessible to consumers in the US and EU. Within Canada, consumers in BC might receive greater access to a product 2 years after consumers in other provinces, and consumers in Quebec might never learn of the changed accessibility of a product. Additionally, because of provincial regulations Canadians are forced to use public health resources to gain access to drugs which a globally respected regulator, Health Canada, has deemed safe to consume without a prescription. This means that public health resources are diverted to appointments to fill prescriptions for safe products and away from more urgent needs.

This is an illustrative example of how interprovincial barriers can disadvantage Canadians. It also illustrates the challenges and opportunities presented by liberalization efforts.

 

Beyond the normal challenges of liberalization, such as confronting vested interests and persuading the public, efforts to tackle interprovincial trade barriers will need to address complex networks of regulations in multiple jurisdictions. However, the benefits of tackling interprovincial trade barriers—the greater accessibility and affordability of many products and services, higher growth rates, and the more efficient use of resources, to name a few—are too great to pass over. Canada’s interprovincial barriers to trade must end.