Health care costs: putting our worries in context

By John Geddes - Tuesday, November 16, 2010 at 2:45 PM - 34 Comments

Worry about the cost of Canadian health care is growing among those who pay attention to how governments pay for programs, which is a good thing. But I think we should get straight on the strengths of the system before we start arguing in earnest about how to reform it.

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The other list

By Aaron Wherry - Wednesday, August 25, 2010 at 2:27 PM - 0 Comments

Last week there appeared here an unofficial tally of those organizations and officials who oppose the government’s decision to do away with the mandatory long-form census. Several more expressions of concern have since been noted.

Here then, in the interests of fairness, is the list of organizations and officials who have expressed support for the government’s decision. Continue…

Tony Clement needs you (IV)

By Aaron Wherry - Friday, July 16, 2010 at 1:36 PM - 0 Comments

Postmedia’s Shannon Proudfoot finds a taker: a senior economist with the Fraser Institute willing to support the government’s changes to the census.

“I certainly understand that social scientists, and I’m one of them, like to play with data, they like to analyze social trends and analyze trends, but the reality here is there really is no good basis for collecting this information,” he said. “It’s a cheap way for academics and social scientists to get information that I believe should be acquired using voluntary means.”

It perhaps unfortunate for Mr. Clement’s cause that this same economist co-authored a report on federal stimulus in March that the Finance Minister dismissed as “shabby.”

Manitoba: Golden boy or laggard?

By Nancy Macdonald - Thursday, March 4, 2010 at 9:00 AM - 10 Comments

Forget everything you thought you knew about the Western Tigers: booming B.C., Alberta and Saskatchewan. Quiet, humble Manitoba, which boasts one of the country’s lowest unemployment rates, is the new envy of the West, according to a report by the Canada West Foundation. Its highly diversified economy and slow-and-steady fiscal gait have, by and large, helped the province avoid the Great Recession, says report author Jacques Marcil. Others would “love to be” in its position, adds Marcil, noting that the province’s economy hasn’t contracted as much as other provincial economies.

Not so fast, says Niels Veldhuis, senior economist at the Vancouver-based Fraser Institute. Manitoba is “anything but the envy of the West—or most other provinces,” he says. Manitoba isn’t seeing the same degree of fiscal contraction as the rest of the West because it never expanded in the first place: that is, no boom, no bust. In a downturn, says Veldhuis, more successful economies like B.C. or Alberta simply feel the pain more deeply than unsuccessful ones.

Like Manitoba, Atlantic Canada has fared well over the course of the recession, adds Charles Cirtwill, president of the Atlantic Institute for Market Studies. They were cushioned by an outsized public sector—“the only truly recession-proof industry.” (So far, the public sector has been spared deep cutbacks.) If you consider purely private sector forecasts, Manitoba, says Veldhuis, is expected to be near the bottom of the rankings for real GDP growth for 2010. And of the four western provinces, Manitoba is the only province seeing net out-migration, adds Veldhuis. Manitobans—whose disposable incomes are still $10,000 lower than Albertans’ and $2,400 lower than in neighbouring Saskatchewan—“continue to vote with their feet.”

Charitable Questions

By Andrew Potter - Friday, December 18, 2009 at 12:13 AM - 99 Comments

I received a phone call a few days ago as I was getting ready to go to work. Like a lot of calls I get this time of year, it was a woman calling from a charity. I can’t remember what it was – childhood leukemia maybe – but as she was in the midst of telling me about their poster child for this year’s campaign, I cut her off. I said look, you’re wasting your breath, I won’t be giving. “Not even a small donation?” she asked. Nope, I said, rushing to get off the phone. As I was hanging up, the cliche making me cringe even before I’d formed the sentence, I said “I have another charity I give to.”

Which is true enough. Actually I have two charities I donate to, in monthly installments charged automatically to my credit card. It isn’t a huge amount though, and I could easily afford to give more, either to the chosen two, or even to one of the charities that comes a-ringing at Christmas time.

The amount I give is, roughly, about 0.75% of my before-tax income. Which is to say, Not Much. But in many ways, I’m a typical Canadian. According to the Fraser Institute’s latest study comparing generosity in Canada and the US, 24.0 percent of Canadians give to charity each year, and we give, on aggregate, 0.73 percent of our personal income.

The figures vary considerably by province. Manitobans are the biggest givers on both scores (27.3/1.02) followed by Saskatchewan (25.7/0.86) and Ontario (25.7/0.84). Quebecers (21.9/0.33) give the least.

Like most of what it publishes, the Fraser Institute is interested here in making Canada look bad compared to the US, so what analysis there is in the study consists mainly of pointing out how poor our showing is compared to Americans. And it’s true, we are bad givers compared to Americans, though there are a lot of complications, caveats and other factors at work in making cross-border comparisons (here’s a not-bad quick pass at some of the issues.)

But back to me. Continue…

The rebels gather

By Nicholas Köhler - Friday, November 6, 2009 at 9:10 AM - 3 Comments

Not long ago, after a Fraser Institute dinner at a Calgary hotel, Alberta Premier Ed Stelmach strolled into the bar to find Rod Love, Ralph Klein’s one-time chief of staff, huddled with some friends drinking. “Is this the conspiracy table?” Stelmach, grinning broadly, asked the group. The gallows humour got a laugh. Still, there’s truth in jest. Love and one of his drinking buddies that night, Alan Hallman, a one-time campaign manager to Klein, had been rumoured to back a political challenger who could soon sweep Stelmach aside.

For weeks, the Tories’ annual general meeting in Red Deer, with its mandatory Nov. 7 leadership review, has promised to be good theatre, equal parts fun and intrigue (Duck Soup meets CPAC). Ordinarily a routine feature of party governance, this vote, wherein 1,000 delegates cast secret ballots for or against a leadership race, is now important business. Stelmach could go, and everywhere observers have delighted in identifying pretenders in the shadows—former leadership hopefuls Jim Dinning and Ted Morton, Calgary entrepreneur and Dragons’ Den panellist Brett Wilson, even federal Environment Minister Jim Prentice. Continue…

Why the poor aren’t poorer after all

By Tom Henheffer - Thursday, June 25, 2009 at 1:00 PM - 2 Comments

Many studies have come to the depressing conclusion that the rich are getting richer while the poor are getting poorer—but according to a new report from the Fraser Institute, it’s not happening here.

In The Economic Well-Being of Canadians: Is There a Growing Gap?, Chris Sarlo, an economist at Nipissing University, argues that most studies of the issue so far have been too narrow. The accepted figures show that the income gap between rich and poor has grown by nine per cent since 1969. But Sarlo says those reports don’t take into account the “underground economy” of unreported incomes common in the repair, renovation and hospitality industries. Sarlo values this economy at up to $50 billion a year, enough to seriously skew the statistics on incomes.

Continue…

The tax freedom shuffle

By Andrew Potter - Wednesday, June 10, 2009 at 12:21 AM - 11 Comments

In a letter to the editor printed of the current issue of Maclean’s, Niels Veldhuis, “Director of Fiscal Studies” for the Fraser Institute, accuses me of missing the point with my criticisms of tax freedom day. Of course we get benefits from taxes, he graciously concedes. The question Canadians want to know, he writes, is: “Are we getting value for our tax dollars?” As he goes on to claim, the point of tax freedom day is to provide Canadians with “an accurate and easy to understand estimate of their total tax bill.”

Of course, no sooner does he concede this then he falls back into the rhetoric of taxes as something “imposed by the government”, but let that pass.  I’ll grant that it is entirely possible that Mr. Veldhuis believes what he writes, but my argument against tax freedom day is that it simply cannot serve this educative function he envisions. Why? Because the percentage of our income devoted to public spending has absolutely nothing to do with the question fo whether we are getting value for that spending. They are two completely separate issues. It’s like wondering whether the restaurant you ate at last night was any good by simply looking at the bill.

Of course, I don’t expect any libertarians out there to take my word for the essential uselessness of tax freedom day. So why not ask… Niels Veldhuis. In a recent column typical for its combination of credulity and contradiction, Jonathan Chevreau begins by celebrating the unexpectedly early arrival of tax freedom day, and even quotes some boilerplate from Veldhuis about how taxes are blah blah family necessities blah blah. But then Chevreau turns on the federal government for deigning to take credit for the early arrival, thanks to their tax policies and so on.

Indeed, the real reason for tax freedom day come early, he says, is not good tax policy, but the tanking economy:

“When the economy slows and incomes stagnate or decline, an average family’s tax burden tends to be reduced to a greater extent than its income. The reason for this accelerated decrease in the tax burden compared to income is the progressive nature of Canada’s tax system… Under our progressive tax system, families pay more proportionately in taxes as they earn more income. The reverse is also true. It is this reverse phenomenon that is driving much of the decrease in Tax Freedom Day.”

Who said that? None other than Niels Veldhuis.

So to summarize: Sometimes tax freedom day is a tool for helping us judge whether we are receiving value for the services our tax dollars provide. Except when it’s a tool for measuring economic stagnation under a progressive taxation system.

Like I said, it’s entirely possible Niels Veldhuis believes what he writes.

Freedom comes early

By Andrew Potter - Friday, June 5, 2009 at 3:13 PM - 17 Comments

Tomorrow is Tax Freedom Day! Celebrate by pledging not to call the police or the fire department or drive on a public highway for the rest of the year. Or just watch this video, which lists the various things you have to pay tax on. It also reminds Canadians that their tax dollars go for such horrors as CPP and EI.

Tax freedom? What a lot of rubbish.

By Andrew Potter - Thursday, May 28, 2009 at 1:00 PM - 22 Comments

What is it about springtime that makes anti-government types go light-headed? As millions of Canadians from coast to coast were getting ready to celebrate the Victoria Day weekend by opening the cottage, firing up the barbecue, or—er—watching hockey, the Canadian Taxpayers Federation took the opportunity to declare May 14 “Gas Tax Honesty Day.”

Designed to “kick off the summer travel season for Canadian motorists” by reminding us of “the high tax component hidden in the price of gasoline,” this 11th annual holiday consisted—according to CTF propaganda—of “events” across the country. The highlight event was a jamboree down at the Ashbridges Bay Pumping Station in Toronto that featured CTF director Kevin Gaudet engaging in such summer-fun activities as . . . releasing a report on gas taxes . . . and . . . demanding that gas taxes be lowered.

Continue…

One-eyed men leading the blind

By Andrew Potter - Friday, May 8, 2009 at 10:11 AM - 24 Comments

At least William Watson will be there to keep an eye on things, but otherwise, the jokes write themselves:

***

Media Advisory: Fraser Institute Holding Free Economics Education Seminar for Parliament Hill Staff and MPs

OTTAWA, ONTARIO – The Fraser Institute is bringing its popular economics education programming to Parliament Hill on Tuesday, May 12, with an open session on market economics for all elected members and government staff.

How do economists tackle the big issues like taxes, stimulus, and recession? Do their recommendations change when times get tough? The Fraser Institute’s panel of experts will use economics to explain current policy issues against the backdrop of the number one news item of 2009: the global economic downturn. What are the causes, solutions, and long-term outcomes of this recession?

Each presentation will be followed by a question-and-answer session featuring three panellists: Mark Mullins, Fraser Institute executive director, Niels Veldhuis, Fraser Institute senior economist, and William Watson, economics professor at McGill University.

Fraser Institute Fantasyland

By Andrew Potter - Tuesday, April 28, 2009 at 8:55 AM - 100 Comments

The Fraser Institute’s long march from right-wing hysteria sheet to respectable and highly influential think-tank has been interesting to watch (and might be the subject of another post someday). But institutional memory is a powerful thing, and it still routinely tosses out stunt releases like “tax freedom day” (the Buy Nothing Day of the right) and this weird one today, lamenting the fact that “The average Canadian family spends nearly half its total income on taxes, more than it spends on food, clothing, and shelter.”. 

The heart of the study is an invidious contrast between the amount of their total income Canadians spend on food, clothing, and housing versus taxes today, compared with similar measures from 1961. And if you hate taxes, it doesn’t look good:

- In 2008, the average Canadian family earned an income of $71,764 and paid total taxes equaling $31,535-43.9 per cent of its income.

- In 1961, the average Canadian family earned an income of $5,000 and paid $1,675 in total taxes-33.5 per cent of its income.

And here’s what they have to offer in the way of analysis of these Shocking Figures:

“Canadian families have seen their total tax bill increase by an astounding 1,783 per cent over the past 47 years,” said Niels Veldhuis, the study’s co-author and the Institute’s director of fiscal studies.

“The tax burden faced by Canadians extends well beyond income tax. When you add up all the taxes Canadians pay to all levels of government, the typical family is sending more of its income to government than it spends on basic necessities such as food, clothing, and housing.” 

Get it? Food and clothing and housing are “necessities”. But taxes? That’s a “burden.”

Let’s look at it another way: Since 1961, the amount that Canadians spend collectively providing themselves with defence and other forms of security, health insurance, unemployment insurance, pensions, clean air and water, consumer protection, infrastructure,  research and education, and other public goods has increased by 1,783 percent per family. Astounding? I’ll say! Burden? Hardly. 

Despite what the Fraser Institute wants you to think, this is an entirely good thing. Only in the bizarro-world fantasies of anti-tax conservatives could a world where families spend over half their income on private necessities be considered preferable to the one we have today. If it’s invidious contrasts the Fraser folks are after, why look to 1961? Today, the average North American spends about 10 percent of disposable income on food alone. In 1933 it was more like 25 percent.

Ahh, but the tax “burden” was so much lower then.

Managing expectations the Jim Flaherty way!

By kadyomalley - Monday, January 12, 2009 at 3:29 PM - 18 Comments

Fresh off the Canadian Press newswire (emphasis added): 

Finance Minister Jim Flaherty says the government is not looking to cut spending as it prepares to table its budget later this month, but notes that Canada is caught in a worldwide recession and drastic actions are required to help Canadians.

“This is not a cutting exercise. We are in extraordinary times. It calls for some extraordinary thinking,” Mr. Flaherty said in Victoria on Monday. “The deficit will be substantial.” [...]

First thought: Wow, the folks at the Fraser Institute must be wondering why they bothered to show up for today’s pre-budget confab in Victoria, what with recommending that the government take exactly the opposite approach (well, except for the tax cuts, which are still on the table as far as we know). Also, good for CP pointing out that these are, in fact, closed door meetings and not the usual pre-budget free-for-all held by the Finance committee. 

Second thought: Is this the first time that the word “failed” has been so casually employed to describe last fall’s economic statement? Not that ITQ is arguing that it wasn’t, but technically, it hasn’t failed yet, at least as far as being voted down by the House of Commons.

Final thought: “Extraordinary thinking” and a “substantial deficit,” huh? Oh, minister. Are you trying to get out in front of the unnamed senior PMO official who predicted that you were poised to bring down one of the most important budgets in modern Canadian history? I mean, I get the part about priming public opinion for a sudden slide from the black to the red, fiscally speaking, but it’s getting tough to tell the difference between your fiscal prognostications and the worst case scenarios that the opposition parties have been coming up with for months. Then again, maybe you figure that this way, if you manage to keep the deficit under say, $60 billion, even fiscally conservative voters will be pleasantly surprised.

Shocker: our drugs aren’t cheap at all

By Peter Shawn Taylor - Friday, October 24, 2008 at 12:00 AM - 0 Comments

Compared to the U.S., drug prices here in Canada seem pretty low. Certainly the Americans who were ordering our pharmaceuticals over the Internet a few years ago seemed to think so. But a new study has found that both Canadians and Americans pay much more for their drugs than any other Western country.

The Paris-based Organisation for Economic Co-operation and Development (OECD) found that the average Canadian spends US$589 per year on drugs, while the average American spends US$792. Both figures are far above the US$404 OECD average. The study found that retail prices for patented drugs in Canada are 25 per cent higher than relative prices across the other countries. For generic drugs—medicines no longer covered by patents—our costs are a shocking 70 per cent above the average.

So why do we pay so much more than the rest of the world?

One possibility is that we are one of only four countries (along with the U.S., Poland and Mexico) without a national pharmacare program. This fact was briefly an election issue, with both the NDP and Liberals promoting federal drug plans in their respective platforms.

However, the OECD report fingers “regulatory failures and lack of competition” at provincial drug boards as the main reason for Canada’s high generic-drug prices. Brett Skinner, director of pharmaceutical research at the Fraser Institute in Toronto, agrees. He says the best way to lower drug prices in Canada is not by launching a pharmacare program, but by opening the generic market to more competition and relaxing government price controls.

“We overpay for generics as a result of government policy,” he says. “We don’t need another government program to fix it.”