The Freedom of Disassociation

The freedom to associate – that is, the liberty of association protected under Section 2 of the Canadian Charter of Rights and Freedoms–is the individual right to participate, and, by extension, abstain, from any group of choice. This right is a central tenet of democracy, as it protects citizens’ rights to form political parties, interest groups, labour unions, etc., which represent their members’ interests.

Contemporarily, the right of organization is primarily a labour issue and union rights, collective bargaining, and other labour-related issues are at the forefront of this discussion. For example, the Supreme Court used Section 2 to uphold collective bargaining as a constitutional right in the 2007 British Columbia Health Services case. However, while the Supreme Court upholds the freedom to associate with unions, there have been serious Section 2 infringements in Canada regarding the ability to disassociate with unions. Most collective agreements require all workers to join the union at their respective workplace. The Supreme Court upheld this feature on several occasions, such as the aforementioned British Columbia Health Services case and the Quebec Advance Cutting and Coring case in 2001, where the Court upheld the requirement in that province’s construction industry.

Another barrier to the freedom of association comes via the Rand Formula, which the Supreme Court posited in the 1940s. Following its suggestion, several provinces enshrined this formula into law. It requires that all workers in a unionized workplace pay dues to the union, regardless of their relationship with it. In other words, workers must pay for the labour union, regardless of whether they agree with its actions or principles.

These rulings are disturbing insofar as they infringe on the ability of workers to leave their union without leaving their occupation. Although protecting the freedom of individuals to associate with certain groups is important, the other side of it must be the ability to disassociate from them–and unions should be no exception. Correcting this problem requires implementing right-to-work legislation, which would allow workers to leave their union if they are unhappy, while also keeping their job.

Critics of right-to-work legislation often suggest that it will weaken unions. Where this argument falls short, however, is that several developed democracies do not have mandatory union membership. Australia, for example, does not require union membership, yet the labour union density remains nearly 18 per cent and retains a strong presence in many industries, such as education, healthcare, utility services, transportation, etc.

Ultimately, protecting the freedom of association is important for a properly functioning democracy. However, it must go both ways, which entails the right to both join and leave any group. Unions ought not to be exempt from this principle. The provinces should introduce right-to-work legislation as a means of protecting the freedom of association, not because it will weaken unions.

Randy Kaye is a 2013-2014 Atlantic Institute for Market Studies’ Student Fellow. The views expressed are the opinion of the author and not necessarily the Institute

Supply management: a gift to farmers at the consumer’s expense

Supply management, the system by which Canada controls dairy, poultry, and egg production, helps farmers weather market fluctuations and shields them from international competition. However, by creating quota assets for farmers that increase production costs (while boosting income levels), it increases consumer prices for a number of agricultural products, disproportionately harming low-income Canadians.

In Canada’s supply management system, the national Dairy Commission stipulates a price range for various dairy products, which provincial boards use to set exact prices. These boards consider production costs and the “fair level of return” for farmers in setting these prices. The poultry and egg industries operate in a similar manner.

Without trade barriers, foreign competitors could undercut these prices. American dairy products, for instance, cost roughly 30 to 50 per cent of Canadian products. Consequently, the federal government has erected trade barriers for managed products in the form of prohibitive import tariffs.

If farmers could sell their products for higher-than-cost prices without further controls, they would overproduce and create a surplus of these products. This unpalatable possibility explains a third element of the Canadian supply management regime: production quotas. Farmers can purchase and sell these quotas on centralized exchanges made available by the government. By creating scarcity in the dairy, poultry, and egg markets, the government creates economic rents payable to farmers (in the form of higher consumer prices).

Economic rents include all payments to factors of production, whether land, labour, or capital, which rise beyond the minimum payment at which someone would supply the factor.

If, for example, Ottawa abandoned supply management, anyone with the proper resources could enter the dairy industry. Competition among different dairy farmers would drive prices down to a level near cost. The economic rent created by supply management per dairy product would be the price differential between this at-cost price and the actual price charged.

Why is this price higher?

In a roundabout way, it is because the costs are also higher. Supply management creates an implicit cost for producers–the rent attributed to their quotas, which they can sell on an exchange. The price consumers pay ultimately represents the cost of producing managed products–the labour, the feed, the physical capital, and the rent of the land–in addition to the market value of the quota for that given product.

Proponents of supply management claim that farmers deserve prices above cost to compensate them for their work. They also claim that subjecting Canada’s agricultural industries to international competition might threaten food security.

Oddly, Alberta Milk claims that supply management makes subsidies unnecessary. This contention concedes that dairy farmers receive enough revenue to produce under supply management. However, this is because consumers pay above-normal prices, instead of the government providing direct subsidies.

Farmers tend to be wealthy, largely because of the assets that government creates for them in the form of production quotas. In fact, the OECD reports that dairy farmers in the group gross more than $250,000 annually. Yet, higher prices for milk, eggs, and chicken hurts low-income Canadians more than any other group, as they spend a higher proportion of their incomes on these goods. Thus, supply management is a regressive arrangement.

Low-income Canadians are also more likely to spend their money on less healthy products. It is likely that many opt for a $1 two-litre bottle of pop, instead of paying $6 for two litres of milk.

New Zealand and Australia both axes their supply management systems and saw increases in domestic production paired with lower prices. Canada should follow these examples and buyout the quota assets the federal government created for farmers. This would lower prices and reduce the price of essentials for low-income Canadians, instead of subsidizing the farming industry.

Michael Sullivan is a 2013-2014 Atlantic Institute for Market Studies’ Student Fellow. The views expressed are the opinion of the author and not necessarily the Institute

Emphasizing the Importance of Senate Reform

The Senate expense scandal has placed the upper chamber in the political spotlight, which it rarely occupies. Unfortunately, however, controversy regarding improper expense claims, although deserving of full attention, overshadows an important discussion Canada needs to have: Senate reform.

Conceived with the noblest of intentions, the Canadian Senate serves as a forum for ‘sober second thought’ removed from the popular interests that dominate the House of Commons. At present, however, partisanship riddles the upper-chamber, which has become ineffective and unaccountable. This, in conjunction with the current controversies, has led many observers to rally for its abolition.

Abolishing the upper-chamber is a poor alternative that would damage intrastate federalism and remove balanced representation from the Canadian federation. Should the Senate operate as an elected chamber, however, it could continue serving a vital role.

Intrastate federalism is the idea that provinces, cantons, or regions should receive formal representation at the federal level. Similarly, balanced representation is the notion that representation should be equal among all provinces. Most federations, such as the United States and Australia, employ some form of intrastate federalism and balanced representation. Canada, for instance, achieves intrastate federalism and balanced representation through the Senate such that each ‘region’ has twenty-four seats.

In the Canadian Senate, lesser-populated provinces receive a greater distribution of seats to balance their representative against provinces with larger populations and, thus, greater representation in the House of Common, such as Ontario and Quebec. An elected Senate, therefore, is particularly important for Atlantic Canada, which possesses 30/105 seats (28.5 per cent of the Senate representing 6.95 per cent of the country’s population).

The Senate’s current structure, however, does not facilitate balanced representation, as it lacks legitimacy.

If each province’s electorate, for instance, chose Senators or if the provincial legislature appointed them, the upper-chamber would achieve greater legitimacy. These reforms would re-establish Senators as representatives of the provinces and their constituents, rather than partisan Prime Ministerial appointments. With this newfound legitimacy, the Senate could perform legislative functions with real merit, as opposed to acting as a ‘rubber stamp,’ which it currently does.

There are, however, two common criticisms of an elected Senate.

The first is that an elected Senate, such as the United States’ Senate, is more likely to create gridlock in Parliament. Nevertheless, the Senate’s constitutional function is to provide a check on majority governments in the House of Commons. This could also change the nature of debate within the House of Commons, since a truly representative Senate would compel Members of Parliament evaluate legislation with additional rigor before submitting to the upper-chamber.

The second criticism is that constitutional reform is difficult to achieve. While this is true, the Senate’s current state is unacceptable and inaction will only perpetuate the status-quo.

Ultimately, the Senate continues to serve an important role in the Canadian legislative process. The Canadian political system depends on its ability to achieve intrastate federalism and balanced representation, both of which would suffer were it abolished. Reforming the Senate, as a result, is a conversation Canadians need desperately to have, regardless of its difficulties.

Randy Kaye is a 2013-2014 Atlantic Institute for Market Studies’ Student Fellow. The views expressed are the opinion of the author and not necessarily the Institute