An Ounce of Prevention:
Long-term Policies for Canada
Robin Rix
National As Prime Minister Award Winner 2002
Two of Canada’s key challenges are to improve the living standards of its people and to ensure a secure and prosperous global community.
Meeting these challenges requires a political vision focusing on long-term sustainability rather than on short-term practicality and, as prime minister, I would apply this principle to all domestic and international policies.
I begin by considering how to improve “living standards” which, I suggest, refers not only to a country’s economic condition but also to the social condition of its people. I proceed by suggesting how Canada can extend these principles to its relations with other countries, on the basis that global security and prosperity are founded ultimately on all countries’ ability to provide for their peoples’ economic and social needs. I conclude by stressing the importance of the task at hand. As a liberal democracy with a relatively innocuous history, Canada if and only if economically and socially strong can play an integral role in the world.
IMPROVING LIVING STANDARDS
On one level, “living standards” refers to the quantitative condition of the Canadian economy. My aims are threefold: to increase our gross domestic product (gdp) per capita; to stabilize the value of our currency; and to reform our tax system. On another level, “living standards” refers to the qualitative condition of Canadian society. Here, my aims are twofold: to enhance the operations of our social services; and to promote active civic participation.
My first economic aim is to increase Canada’s gdp per capita which, as an assessment of productivity and efficiency, has grown less impressively than that of most other countries in our peer group. To increase it, I would seek to reduce and eventually to remove protectionist barriers discouraging innovation and fair competition. These include interprovincial impediments to the free movement of goods, people, services and capital; provinces may have the constitutional right to legislate in this field, but the federal government could be more proactive in mediating conflicts that may arise. The obstacles
also include international trade barriers, whether formal or informal, which prevent Canada from benefiting from the opportunities offered by globalization. Our reluctance to recognize foreign credentials renders many of our immigrants underemployed, while our preference for recruiting domestic candidates discourages other skilled people from immigrating. Related to this proposal is increasing the annual immigration level to 300,000, equivalent to one per cent of the country’s population, and facilitating the ability of temporary workers and foreign students to come to Canada. On average, immigrants benefit rather than weaken a country’s economy, not least by offsetting the demographic
difficulties that will accompany the retirement of most of the baby-boom generation within the next decade.
Another set of measures to increase our gdp per capita involves increasing the federal government’s commitment to the growth of our cities which, as the United States and Western Europe recognized almost a decade ago, power a country’s economic development. Current funding arrangements prevent cities from financing the capital projects necessary to attract and retain people to live and work there. In co-operation with the provincial governments, I would increase federal spending on such projects, and also develop methods to ensure that cities have access to adequate financial resources to operate effectively, such as receiving a percentage of federal tax revenue. In the event that these proposals appear too expensive, I posit the alternative: the gradual hollowing
out of our cities, complete with the undesirable and highly expensive social problems accompanying them. Indeed, spending on our cities represents an investment in, not a drain on, our country’s long-term finances.
My second economic aim is to remedy the declining value of our currency which, as a measurement of stability and confidence, has lost 30 per cent of its value in relation to the American dollar over the past decade. To a certain extent, the significance of this decline is exaggerated, as the Canadian dollar has remained approximately on par with the British pound and has increased in value relative to most other currencies during the same period. Nonetheless, our currency’s value has fallen drastically in relation to that of our largest trading partner. While beneficial for our export and tourism sectors, the decline is damaging in almost all other respects.
On this issue, I would resist the proposal to establish a fixed exchange rate between the two currencies, or even to adopt a common currency. The two countries operate on different economic cycles and the United States would be unlikely to alter its monetary policy to accommodate our needs. Instead, I would investigate adopting the “snake in the tunnel” monetary policy, which Europe pioneered in the 1970s. This policy would tie the Canadian dollar to a bundle of other currencies, but would also permit fluctuations within a predetermined band. This exchange-rate mechanism would not only provide Canada with a clear target for the value of its currency, but its adoption would, in and of itself, increase investor confidence in the Canadian currency, thereby strengthening it.
My third economic aim is to reform the tax system, although I do not support a reduction in the overall taxation level. While some Canadians are dissatisfied that they pay, on average, more taxes than their American counterparts, there may be compelling reasons to support this discrepancy. Taxes allow governments to raise revenues for projects, such as health care and education, which would not otherwise be funded on account of difficulties associated with collective action. Taxes also redistribute wealth, not necessarily from the more deserving to the less deserving, but from the more fortunate to the less fortunate, such as people who are unable to work or to find work. Generally, most Canadians, including myself, believe that a higher taxation level is preferable to the alternatives of reduced social spending or deficits.
Nevertheless, the tax system requires reform. The Goods and Services Tax should be eliminated, as it impedes commercial transactions, increases the transaction costs of operating businesses, particularly small ones, and disproportionately affects those segments of society whose circumstances require them to spend a greater percentage of their income. In its place, I would introduce other taxes that more accurately reflect the efficient and equitable reasons for taxation. An inheritance tax, structured progressively in the same manner as income tax, would advance the principle of equal opportunity. An environmental tax, phased in over time, would provide incentives for industries to alter their activities in accordance with the needs of the community. Finally, taxes on luxury items, comparable in principle to the taxes levied on such activities as air travel, would help to recoup some of the revenue lost by eliminating the tax on general goods and services.
My support for the current overall level of taxation leads into my aims regarding the condition of Canadian society, as its retention is justifiable if and only if Canadians in turn receive sufficient societal advantages. My first societal aim is to ensure that our social services operate as efficiently as possible. Regarding health care, I suggest that the debate regarding private health care is tangential to the major debate regarding the effective deployment of resources. Additional funding should be made available now for the prevention of illnesses, so that less funding will be required for treatment in the future. National campaigns to teach awareness about aids and smoking have saved thousands of lives as well as millions, if not billions, of dollars. The same principle should be applied to a variety of other fields, such as mental health, nutrition and safe driving practices.
Other social services should improve in a similar fashion. Regarding education, I would uphold the principle of accessibility by increasing bursary support for low-income students and by forgiving the student loans of graduates who remain in Canada and who accept jobs in certain public-service fields. I would also uphold the principle of excellence by increasing funding for research and teaching chairs at universities, by working with the provinces to set universal standards at the elementary and high school levels, and by enhancing the adult training programs offered through human resources development offices. Regarding infrastructure, I would commit to extending high-speed Internet access to all communities in Canada. This proposal, undeservingly shelved in
the 2001 budget, could unite all regions of the country in a manner comparable to that of the railway in the 19th century, and it offers innumerable benefits with regard to accessibility of information. While these initiatives require significant short-term expenditure, the long-term benefit to Canada and to Canadians will be significant.
My second societal aim is to promote active civic participation. In the event that this concept appears unrelated to the improvement of living standards, I point out the danger of allowing civic apathy to fester. Alienated from the policy-making system, individuals withdraw from public life or flirt with ideologies on both the right and the left that are antithetical to liberal-democratic principles and that threaten an entire country’s well-being. Although the trend may currently be more pronounced in other countries,
Canadians would be irresponsible to believe that it could not arise here as well. Declining voter turnout and the growth of single-issue political parties are ominous and unwelcome signs of electoral dissatisfaction and fatigue.
To challenge apathy, I would initiate a series of measures to make the policy-making system more responsive. The accountability of our legislative institutions would improve through a reconstitution of the Senate: its members would be elected for fixed terms on a staggered basis, and it would oversee the procedural functioning of the members of the House of Commons, especially with regard to financial and ethical issues. The public service would be opened up so that skilled members of the private or non-governmental organizational sectors could take leadership roles within it. Finally, I would loosen the restrictive rules of parliamentary procedure to enable MPs, as representatives of the people, to speak more freely on policy issues, and I would also empower the Speaker of the House of Commons to curtail arguments advanced in obstructionist manners or made in bad faith.
BUILDING THE GLOBAL COMMUNITY
While the improvement of living standards for Canadians is an important goal, it cannot be pursued to the exclusion of all other goals. As the events of the past year have devastatingly demonstrated, no country in the world can pursue its internal objectives without regard to external circumstances. With reference to the national interest, Canada and Canadians are directly threatened by such international dangers as terrorism and weapons of mass destruction. With reference to the global interest, Canada has a responsibility to help less fortunate countries, not only on account of moral considerations, but also because people deprived of hope and opportunity are more likely to engage in actions that threaten global security and prosperity.
In the short term, fighting terrorism must be our immediate goal. Geographical reality should force us into a common defence policy although not offence policy with the United States, necessitating a strengthened perimeter and shared information resources relating to bilateral security. Moreover, Canada should fully commit to assisting the United States financially and morally in its pursuit of individual terrorists. We also have an important military role, not, given the condition of our armed forces, as front-line soldiers, but as supporters of justifiable American activities to prevent future terrorist attacks.
In the long term, however, it will be necessary to do more than simply “fight terrorism.” Instead, Canada should take an active role in fighting the causes of terrorism and, more generally, instability. Poverty and ignorance are endemic throughout much of the world, breeding resentment and encouraging the support of utopian and often confrontational ideologies. Canada should increase its co-operation with organizations, whether supranational or grassroots, to promote sustainable development in countries that are willing to accept our help. This includes providing support at the leadership and managerial levels, and also providing support at the operational level. Concrete goals should be to enable every young Canadian to afford to work for a summer on a community-based project, and to enable Canadian professionals to spend prolonged periods of time on international projects. Conversely, Canada should encourage programs that bring young people and professionals from developing nations to study or to work here, on the basis that personal linkages and familiarity with other countries represents a promising manner in which to cultivate trust and to understand other cultures and values.
On a more macroscopic level, Canada must also play an increasingly active role in the global political system. As a middle power, without the imperial baggage of the United States or the major European countries, we are uniquely poised to lead mediation and reconciliation efforts in the flashpoints of the world Kashmir and Israel/Palestinian territory are two examples. Creative solutions, such as the establishment of United Nations’ protectorates, should be explored, and they will require the leadership and financing of the wealthy countries of the world. Other situations require diplomacy of a different form, particularly in relationships with countries not led by rational actors; Iraq and North Korea are two examples. It is undisputed that such countries should not come into possession of weapons of mass destruction, thereby threatening the stability of an entire region or possibly the world. Canada should take a stronger leadership role within legitimate supranational bodies, most notably the United Nations, to support close monitoring of such countries. However, we should also remember that cornered nations or those with nothing to lose are potentially the most dangerous. Canada should ensure, as far as it can, that such countries understand their options fully, and we should also ensure, as far as is reasonably possible, that such countries have a face-saving and viable way to avoid escalating a dispute into a full-fledged conflict. Therefore, I would recommend that our participation in monitoring and enforcement agencies should include the offer of economic assistance in the case of real adherence to the principle of international security.
A final method of increasing global security and prosperity relates to the liberalization of trade. Earlier, I wrote that freer trade would benefit Canada; similarly, I suggest that freer trade would benefit other countries by giving them access to Canadian goods and Canadian markets. Trade, moreover, is a potent tool with which to effect change in developing nations. By tying trade liberalization to environmental, human rights, and labour standards, Canada can help to improve the economic and social conditions of other countries, thereby contributing to international security and prosperity through an indirect, yet still powerful, manner.
CONCLUSION
At this moment in history, the challenges facing all countries are immense. Global security and prosperity are threatened, and it is questionable as to whether any country can offer much to uphold them unless that country is economically and socially secure. Canada, despite its economic and social problems, is one of the few countries that can attempt to meet these challenges from a relatively strong position. The ideas contained in this paper are necessarily broad and ambitious. Nevertheless, the principle uniting them is founded on the need to implement policies that focus on long-term sustainability rather than on short-term practicality. By enhancing its own economic and social conditions, and by adopting a global outlook, Canada could meet its challenges from an even stronger position for the benefit of itself, and also for the world.