Initial Reaction to the CMA Report: A Welcome Step in the Right Direction

The CMA Report released yesterday, "Health Care Transformation in Canada" , is receiving some mixed reviews of the eyeball-rolling "not another report" variety; for example, Norman Spector accuses the CMA of "speaking with a forked tongue" --i.e. advocating more comprehensive coverage and a single payer system while at the same time approving of Quebec's movement toward deductibles and medicare premiums. While recognizing Spector's point, I have a slightly more positive reaction. I have been waiting for an analysis that cuts across the three silos of Romanow, Kirby and Mazankowski, i.e. recognizing the gravity of the cost situation without exaggerating it; confronting the problem of health costs crowding out other policy priorities; distinguishing between public financing and public delivery, without fetishizing that distinction; and taking into account the best comparative work, such as the that of  Ted Marmor and the Devereaux Study.

"Forked" or not, the CMA is speaking more sense than it has in years. Unlike Brian Day and other likeminded political leaders in this professional association, the current report does not leap to the conclusion that we should open the doors not only to private for-profit delivery but private financing as well. (For example, France is a notoriously centralized unitary state in which 60 million people are squeezed into an area slightly larger than Saskatchewan, yet some people want to leap to the conclusion that its success stems from its fees at point of service, or "depassements". What little truth there may be to that judgement is itself grounded in that particular European context.)

Instead, the CMA recognizes that many of the biggest cost-drivers emanate from the 30% of the system that is still privately financed. Extending the scope of our relatively efficient single payer system to include more drug and home care is perfectly sensible--just as is the greater empowerment of physicians and patients to tailor health care to individuals' needs. Combining these two directions is a difficult balancing act, but not a full-blown contradiction. Ideally, we would each pay a medical premium that would carefully distinguish between the behaviours that we have some control over and the conditions that we do not control; incentivizing the former while co-insuring the latter all the while taking into account ability to pay. Such a perfect system does not as yet exist, and would be vulnerable to corruption by economic interests. But overall I would say that the CMA has taken a step in the right direction.
 
I will have more to say when I have reflected on each of the CMA's five recommendations in the light of the above-mentioned literature.

Bob Rae versus Libby Davies on Israel

Bob Rae has called upon Jack Layton to fire Libby Davies.  Indeed, it  seems that the NDP House Leader has crossed the line that separates personal opinion from party policy, since her criticism of Israels' long occupation "since 1948" appears to call into question the legitimacy of Israel's existence; and her call for a renewed intifada--what Rae decries as "calling for more violence, more suicide bombing, more death, more destruction" -- needs some explanation. But if there had been no Palestinian resistance, wouldn't elements in Israel and in the international community regard that as tacit acceptance of Israel's authority? What would the long-term implications of that be for the establishment of a viable, independent Palestine? There are some important issues of international history and law that need to be spelled out.

Bob should know that while it is wrong to compare Israel's occupation of the West Bank to the Nazi's treatment of the Jews, there is some plausible analogy between the desire for a Greater Israel and the way the Nazis treated Poles and other occupants of ancient Germania.(Hence "Lebensraum").

In other words, there was more to Nazism than just antisemitism. And while Israel's right to exist should be accepted, I can't help but think that that small clutch of victorious allies who called themselves the "United Nations" in 1947-48, and who acted out of guilt about not liberating the death camps sooner, and sympathy for fellow educated Europeans, should have done a better job of considering everyone's interests in Palestine--especially those of the Palestinians. In other words, it was not unreasonable for Arabs and Palestinians to consider the creation of Israel as a legacy of colonialism, and not as a straightforward instance of de-colonization. And their slowness to come to terms with Israel's existence should not be taken as an excuse for building settlements all over the West bank, or for annexing East Jerusalem.
 
It is also important to clarify what one means by "intifada". The first or "popular" intifada was an inspired and inspirational grass roots movement that took place in the occupied territories and was aimed at Israeli soldiers and settlers. It was also the only Palestinian resistance that actually worked, by strengthening the hands of moderates inside Israel (led by Yitzakh Rabin) and deservedly garnering support throughout the world. Then Rabin was assassinated (by a Jew who wanted a Greater Israel), Ariel Sharon made his provocative march around a Muslim shrine, and all hell broke loose. Unfortunately, the Palestinians' self-proclaimed leaders (esp. Hamas) took control of the protest, and the polarization between extremists on both sides took place. The Second Intifada is an entirely different beast. Before deciding to fire Libby Davies, my question to her would be: which intifada were you referring to?
 
What should Canada's role be in the Middle East? To support the Rabins, the Abbas's and the Jimmy Carters of this world. Israel has a right to its 1967 boundaries--one could fudge that a little by saying that it has a right to that amount of land it had in 1967. If Israel gives Palestine enough land to build a corridor between Palestine and Gaza, Palestine could in principle agree to give Israel enough land to allow it to keep about half of its existing West Bank settlements. That is the kind of specific two-state solution that makes sense. I think that Libby Davies can be brought around to that, and should say so. The only question is: can Stephen Harper and Bob Rae be brought around to that position, or are they too busy competing for the support of the Jewish community?

Everything I always wanted to know about SEX

According to a recently released study, Canada's teen birth rate has decreased 38 percent, while the teen abortion rate declined 35.7% The reasons? Teenage women are not more or less likely to have sex than they were 10 or 15 years ago. According to Alexander McKay, research coordinator at the Sex Information and Education Council of Canada, the reasons for the decline are (1) better access to contraception, (2) higher quality sex education (including the internet and planned parenthood clinics) and (3) "Canada's relaxed attitude toward toward adolescent sexual health  allows teens to be better educated on the subject."

Pro-Life activists should be happy. But I wonder if they really are.

I Have a strange Confession

It occurs to me that I may have been the first politician in the history of the B.C. Legislature to have advocated a Harmonized Sales Tax. Way back in 1980, I was in the Universities Model Parliament, and decided I would stump the government ministers by recommending the Value Added Tax. This naturally had them scrambling, since none of them had ever heard of the V.A.T., even though it was already commonly used in Europe.

Should I be ashamed?  Efficiency pays. Harmonization streamlines the administration of the tax, and  is more efficient than a straight sales tax, as it allows businesses to get credit for the tax they pay on inputs (as a deduction off the tax they collect). Exporters can reduce their prices by the amount of the tax they pay in imports that previously would have to be covered in the price. I would probably prefer a  broader tax (i.e. with fewer exemptions) at a lower rate and more targetted help for low-income consumers. But, in principle,
I am not opposed to the HST.

Consider this startling passage from the Mintz Report.  It suggests that 82% of the increase in capital stock  and 80% of the job creation resulting from proposed changes to BC's tax regime will result from sales tax harmonization--i.e. only 18% and 20% from corporate tax cuts.  Thus, if one is really concerned about the equity of shifting tax burdens onto ordinary consumers, I suggest ditching the corporate tax cuts, not the sales tax harmonization.

By 2018, when federal and B.C. corporate tax reductions and sales tax harmonization will be

fully implemented, British Columbia will have a tax regime that is more attractive to capital

than that of either Alberta or Ontario. While corporate tax reductions will have been helpful in

achieving this aim, the largest aid to British Columbia’s tax competitiveness will have been sales tax harmonization (emphasis added). With the elimination of the existing retail sales tax on capital inputs, British Columbia’s effective tax rate on new capital investments will decline by 9.1 percentage points, which will represent almost 60% of the drop in the cost of capital for businesses in British Columbia over the next four years.

By 2020, the combined effect of the corporate tax cuts and sales tax harmonization will be to

increase the capital stock by more than $14 billion, which is expected to translate into an

increase of 141,000 jobs. Sales tax harmonization alone will be responsible for an $11.5 billion

increase in the capital stock and an increase of 113,000 jobs by the end of the coming decade.

Campbell's Supply-Side Follies--and a Face-Saving Proposal

If there has been one serious flaw in the record of the Campbell government, it is that it will not give up on supply-side economics. From its very first move–the 2001 20% tax cut that was supposed to pay for itself, but which wound up creating the largest deficit in history–to the carbon tax (which benefits the affluent Vancouverite rather more than other groups)to the HST tax shift, they have refused to heed either public opinion or the economic evidence. They have been loyal to their core constituency, however: the business and professional elite fo Greater Vancouver, who by and large feel that their private gains have outweighed the public’s losses.

Now that the NDP is pulling ahead in the polls, and even former Finance minister Carole Taylor has had the good sense to distance herself from these large tax increases on ordinary consumers, it is time for the Campbell Liberals to consider how they might soften the regressive nature of their policies, while still hanging on to the conceptual virtues of both the HST and the carbon tax. I have two specific suggestions:

1. Lower the HST 1%-2%---with the lost revenue made up by corporate and personal income taxes.

2. Adopt the Canadian Centre for Policy Alternatives proposal to modify the incidence of the Carbon tax, viz. the low-income credit, at minimum, should be increased in line with carbon tax revenues, and ideally its share should be increased to half of revenues. The remaining half of carbon tax revenues should provide funds for other climate actions.

Even if the loss of revenue from reducing the HST (and the corresponding hike in income taxes) is too great to permit the adoption this prescription, one could always narrow some exemptions in order to lower the overall rate or broaden some other exemptions at the current rate, or target subsidies to the poor, etc.  My general point is, I think still valid: that there a number of ways of dealing with the equity issues raised by the HST and the Carbon tax, short of  abolishing these taxes altogether.

A Point of Clarification about the Olympic bursary

When I suggested that there should be a $200 million BC Olympic bursary, I wasn't just suggesting (in the middle of a deep recession) that an additional $200 million in taxes be raised for my favourite spending priority. This was also an argument about spending existing funding more effectively. The number of $200 million corresponds to my rough calculation about what it would take to bring the BC's average student debt load down to the national average. The kind of support--tied demand-side subsidies to students--was based on my analysis of the relative strengths and weaknesses of vouchers, grants to universities and tuition freezes as alternative policy instruments.

What if $50 million could be found in other existing government outlays, including existing universities funding? And if another $50 million could be found from the federal government? That would only leave $100 million of additional spending to found out of rising resource revenues and plugged tax loopholes. If $200 million will close the access gap for the 100,000 neediest full-time studentsover four years, then a mere $25 million will close half the gap for a single year.

Any takers?

Site C is the Big Test for Environmental Assessment Office

Way back on November 30, 2006 , I worried that the three coal-fired power plants being planned by the government would be subjected to one of the weakest environmental assessment procedures in the country. Fortunately, those coal-powered plants were cancelled en route to a newer and greener image for Gordon Campbell. But now that the Site C Dam project is being resurrected, we must again ask: is this EA process up to the job?

BC’s Environmental Assessment Act was rewritten in 2002, replacing one of the country’s most progressive provincial EA laws with one of the weakest laws. Strong provisions that were eliminated included a purpose section emphasizing sustainability, requirements to examine cumulative effects, the need to detail alternatives, and innovative public participation requirements, including a mandatory role for First Nations. All of these functions are now being performed more ‘flexibly’ and ‘efficiently’ by a more ‘streamlined’ Environmental Assessment Office.

Perhaps the high profile of this project will help to ensure that the SiteC assessment will be conducted properly. But it will require vigilance and strong public pressure every step of the way.