Revitalizing Atlantic Canada

Writing for Free Exchange allowed me to examine a multiplicity of issues facing Atlantic Canada and the following are some that I have found to be of paramount importance.

The most prominent issue in Atlantic Canada is slow economic growth, which has resulted in an enormous outflow of skill labourers, young professionals, and families who have left for British Columbia, Alberta, and Saskatchewan to find work. Economic growth rates in New Brunswick, Nova Scotia, and Prince Edward Island, for instance, have fallen below the national average of 2 per cent in 2013. Newfoundland and Labrador, which is currently booming due to oil production, is somewhat of an exception, however, declining revenues threaten to derail the province’s path to prosperity. In addition, the three Maritime Provinces experienced declining populations in 2013.

NL’s growth is largely attributable to strong oil and gas production, which has been growing in the province since the mid-2000s. The rest of Atlantic Canada could benefit from NL’s model and the region may need to look toward the oil and gas sector. New Brunswick currently boasts an opportunity to host the Energy East Pipeline and has a prospective shale gas industry. Other opportunities include increased cooperation or shared services between the three Maritime Provinces and exploring trade prospects with emerging markets.

Another problem facing the region, and the entire country, is unfunded liabilities. In other words, public sector pensions are a significant issue that plagues both federal and provincial government. This is where Atlantic Canada can lead: New Brunswick and Nova Scotia both made changes to their pension programs and the rest of Canada could learn from their progress.

In addition, Canada’s healthcare system requires additional consideration and policymakers must look into issues plaguing it. Through the Canada Health Transfer, the federal government allocates funds to the provinces to assist them with growing wait lists, quality assurance, and a number of other issues. However, progress has been futile. The federal government has given $41 billion in additional healthcare funding since 2004, yet, in 2010, Canada ranked last out of 11 countries in terms of wait times. This is why policymakers should consider alternatives to the status quo.

There are also serious democratic issues facing the country. The Senate remains unelected and unaccountable, and the Supreme Court’s recent ruling inscribed the current structure in stone. Its ruling does not need necessarily indicate defeat, though, and the Prime Minister, in addition to supporting premiers, must take the lead and ensure reform to the Upper Chamber.

While many Canadians may agree that these issues are of great importance, there must be action. We often criticize the political sphere for not dealing with these issues adequately, however, the truth is that we, as electors, must show that they are a priority or politicians will not give them due consideration. It is our duty to ensure that ideas, such as natural resource development, prudent fiscal management, and adequate healthcare, receive fair scrutiny, rather than arbitrarily dismissing them from the outset; it is our duty as citizens to place them on the political agenda.

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

Against Smoking Bans in “Public Spaces”

In Canada, the government prohibits smoking in “indoor public spaces,” which, according to the law, consist of bars, restaurants, bowling alleys, etc. The term “indoor public spaces,” however, is misleading: they are public only in the sense that there are other people sharing the space, yet, many of these “indoor public spaces” are owned by private individuals. There are several reasons for protecting their right to choose whether they want a smoke-free or smoke-filled establishment.

Many complain that smoking in bars is encouraging to nonsmokers and exposes them to secondhand smoke. There are many reasons why this argument may not hold. For now, though, it is more important to focus on the demonization of smoking. By categorically prohibiting restaurant owners from allowing their customers to smoke inside, the government prevents people from doing something they may want to do, i.e. to smoke in a bar or own a bar that allows smoking). Smoking is not good or bad “in itself,” but, rather, it is only good or bad according to individual preference, including, but not limited to, the tradeoff of overall health for immediate pleasure, the terms of which some individuals would happily agree with. Moreover, there is an enormous amount of information detailing the economic, health, and social harms associated with smoking available to consumers that allows them to choose intelligently.

A popular argument for banning smoking in indoor public spaces pertains to workers’ rights: smoking indoors threatens employee health and welfare and because many workers do not have the convenience of choosing their place of employment–so the argument goes–allowing it forces them to choose between inhaling toxic cigarette fumes and unemployment.

To some extent, indoor smoking harms workers. Does that really justify banning it?

Closer examination of firm behavior demonstrates that it varies based on the economic implications of “safety.” Between 2008 and 2010, 700 construction workers died from workplace injuries in Canada. In addition, 637 individuals died in manufacturing workplaces and 329 in the transportation industry. Although these numbers may seem surprising, the theory of compensating differentials explains why outcomes in some industries differ from those in others.

According to the compensating wage differentials theory, workers are compensated by firms in a number of ways: these include wages, nonwage benefits, and working conditions. Any given individual has a set of preferences between these forms of compensation. A risk adverse employee, for instance, may be willing to give up much of his paycheck for a little more safety. Someone comfortable with risk, however, could be willing to put herself squarely in danger’s way for better pay. That some individuals are comfortable with more risk explains why construction workers, for instance, agree to work in dangerous settings: higher compensation allays most concerns, whereas lower compensation highlights them. Firms need to offer compensation for labour to attract workers—when they decrease safety, labour supply shrinks and forces the firm to boost wages. Thus, there is a positive correlation between risk and compensation. And there is no authoritatively “ideal” level of risk; instead, there is a multitude of individually preferred ones.

Thus, to attract workers, owners of establishments that allow smoking indoors would need to offer wages high enough to distract employees from the health hazard associated with working there (assuming these concerns are present). For some workers, the increase in pay would offset their health concerns. Similarly, restaurant owners must consider whether indoor smoking discourages consumers from eating at their establishment. If there is growing opposition to smoking, for example, restaurant owners must choose between allowing customers to smoke indoors and losing whatever percentage of their customer base that refuses to eat in an establishment that permits indoor smoking.

Examining both consumer and employee perspectives on smoking indoors lead to a common conclusion: laws dictating firm behavior typically enforce an arbitrary standard and ignore individual preferences. Instead, the government should allow property owners to decide what is best for their respective establishments and let people pursue their individual desires freely.

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

Reforming Canadian Healthcare

The provinces are responsible for administering and delivering healthcare in Canada and while provincial jurisdiction may appear odd, it was not of major concern when the Fathers of Confederation ratified the British North America Act in 1867. Following several years of debate, however, the Judicial Committee of the Privy Council declared the provinces responsible for administering and provisioning healthcare. The federal government is responsible for public health, in addition to providing healthcare to certain groups, including First Nations, Inuit, military personnel, and federal inmates. It does provide funding to the provinces via the Canada Health Transfer, which is supposed to assist them with costs and ensure some degree of equivalency between provincial healthcare systems.

Former Saskatchewan Premier Tommy Douglas, widely recognized to be the “Father of Medicare,” fought ardently for the implementation of a publicly funded healthcare system. In 1962, one year after his departure from provincial politics, Saskatchewan began providing public healthcare and, shortly thereafter, so too did Alberta. Former Prime Minister John Diefenbaker, in 1958, announced the federal government would fund 50 per cent of provincial healthcare, and eight years later, then Prime Minister Lester B. Pearson ratified this motion.

As a result, Ottawa’s role in healthcare funding is controversial and has been a major policy issue in Canada. Indeed, without federal funding, there would be significant disparities among the provinces in terms of quality, yet, despite these concerns, healthcare innovation is provincial jurisdiction.

The debate over federal funding remerged following the expiration of the Canada Health Accord, established in 2004 under Paul Martin’s tenure as Prime Minister of Canada. It guaranteed six per cent annual increases in funding for healthcare and was supposed to help with deficiencies, such as high wait times. Stephen Harper’s government recently committed to a six per cent increase until 2017, after which the government will fund based on inflation-adjusted economic growth (although the level of funding will not fall below 3 per cent). This development has prompted critics to demand the government return to guaranteeing the six per cent increase, arguing that underfunding issues could worsen the system, and more worrying, allow new issues to emerge.

However, despite funding increases, very little has changed in terms of quality. Kelly McParland of the National Post, for instance, notes the lack of progress in reducing wait times. Moreover, citing the Health Council, he noted that homecare services for seniors are inadequate, primary care is insufficient, and prescription drugs are unaffordable. For example, as reported by the National Post, the federal government has given $41 billion in extra healthcare funding since 2004, yet in 2010 Canada ranked last of 11 countries in wait times.

McParland is not the sole critic. Indeed, there are several reports revealing the shortcomings of Canada’s healthcare system given the amount of money spent on it. Funding, therefore, is not necessarily the issue. There needs to be real reform of the Canadian healthcare system: Ottawa should retain its role, however, the provinces must consider new healthcare models as a means of strengthening their programs. Perhaps the first step ought to be reforming the Canada Health Act to be less restrictive in terms of delivery requirements. The Act requires that healthcare be publicly administered, greatly restricting any partnership with private entities. France, on the other hand, embraces a two-tier system, which typically performs highly in comparison to healthcare systems administered by other rich, democratic countries, in terms of both cost and outcome.

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