I followed the Canada @ 150 discussions online over the past three days. It was an excellent demonstration of how a political party can convene a group of interesting speakers and engage, at relatively low cost, thousands of interested citizens in a serious discussion. Less time and energy wasted travelling, too. Kudos to the technical team for making it happen and to the party leadership for believing it could work.
It was good for the party to hear some uncomfortable truths, in particular that the party is in danger of losing its soul.
At the satellite event in London on Saturday, organized by Doug Ferguson and Glen Pearson, I argued that policy should be our priority. I know that some voters aren't interested in the details of policy, but I reject the idea that people don't care or are too stupid to understand policy. Political parties, and especially party decision-makers, hide behind these two excuses when they fail to persuade voters or their execution is poor. These same folks think it is a good idea to withhold the details of a policy platform until the writ is dropped, expecting Canadians to hear about, consider and support a wide range of policy proposals in just a few weeks. We need to break this cycle.
We have to look no further than the dramatic rise of the Green Party of Canada to see the attraction a focus on policy first has for ordinary Canadians.
Recently, I was nominated for an Action Canada fellowship. Unfortunately, I just heard that I wasn't selected for an interview. But the application process prompted me to focus on the fellowship theme -- Economic Transformations -- and put forward a few policy proposals.
Canada @ 150 was a very good event in many ways, but it is just one important part of our policy development process. We need to build on this success and flesh out a serious, practical policy platform.
I believe in the importance of productivity (of both labour and capital) to our prosperity. The folks at the Institute for Competitiveness & Prosperity have produced a series of good reports on the topic. I believe education and competition are essential to productivity.
Existing policy instruments designed to increase productivity -- an accelerated capital cost allowance (CCA) for investments in machinery and equipment, for example -- operate through the income tax system and are targeted at for-profit companies. This is reasonable, as for-profit companies account for the majority of Canada's GDP. But public sector organizations, non-profits and charities aren't influenced by these policy instruments, as they don't pay income taxes.
My first idea is to provide an enhanced donation tax credit to donors who designate gifts to productivity-enhancing expenditures, such as skills upgrading and training of employees, purchases of computers, software and other technology/equipment. Specifically, I proposed a 200 per cent donation tax credit multiplier for gifts to registered charities that are designated to productivity-enhancing investments. I now believe it needs to be even higher -- say 250 per cent. For example, the tax credit for a $10,000 donation to a charity that was designated to an eligible expenditure would be 2.5 x 29% (highest existing federal tax credit) = 72.5% or $7,250. The net cost to the donor would therefore be $2,750. Such a policy instrument could allow the approximately 80,000 charities in Canada to benefit from increased productivity gains. By aligning with existing tax measures regarding eligible expenditures, the marginal cost of monitoring and enforcement would be minimized.
On the education front, I put forward two ideas for PSE:
- We need more competition in PSE. By increasing by proportion of institutional funding that comes from students (ie tuition) while increasing grants available to low-income students, more of the funds directed to PSE would follow the student without impairing access. PSE institutions would necessarily have to further differentiate themselves from each other and compete on the basis of quality.
- Remove disincentives in provincial funding formulas for universities that discourage year-round education, especially co-op education. The summer break is a throwback to an economy based on agriculture, and I doubt we would design a PSE system on that basis if we were starting with a blank slate. The status quo funding model for universities encourages inefficient use of capital (more and larger buildings to handle Fall/Winter enrolment peaks) and less labour (fewer professors and instructors) because operating funding is allocated on the basis of full-time equivalent enrolment without regard for how enrolment is distributed throughout the year or how capital stock is utilized. University of Waterloo is a good example of a university that has succeeded despite these disincentives.
We also need to increase competition, especially by reducing barriers to competition such as unduly long or restrictive protection of intellectual property. The Competition Policy Review Panel rightly identified this as an important issue, but seems to give priority to protecting rightsholders rather than users of intellectual property. Rightsholders have a strong financial incentive to erect barriers to competition for as long as possible. Canada should balance the private interests of rightsholders and the need for reasonable protection of intellectual property with the longer-term public benefits of strong competition, individual freedom and rapid adoption of new technology and ideas. We need to get this right in order to attract and retain highly skilled, creative workers.