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David Clinton

How would provinces and cities survive if the federal government collapsed?

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The Audit

 David Clinton

How Resilient Are Canadian Provinces?

Suppose one fine day the federal government was unable to show up for work. Perhaps it wasn’t feeling well. Or maybe it had borrowed so much money that it maxed out its line of credit, defaulted on its interest payments, and just couldn’t pay its bills. What then?

Let’s say – and I’m just spitballing here – let’s say that exploding, uncontrolled public debt is a bad thing. All the smart people tell us that taking on too much credit card debt won’t end well, right? Well I can’t think of any solid reason that such logic shouldn’t also apply to governments.¹

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As you can see from the graph, our federal public debt climbed from $351 billion in 1990 all the way to $884 billion in 2024. The 50 percent leap between Q4 2019 and Q4 2021 was the generous gift of COVID. Things started to recover in mid-2023, but they’ve since nose dived once again.

Ah, but that’s just debt you say. It’s someone else’s problem.

Not exactly. You see, even if we’re not paying down the principle on the debt, you can be sure that we’re covering interest payments. Which, it just so happens, have become a lot more expensive ever since massive government borrowing drove up interest rates.

How much more expensive? As of Q1 2024, our annual interest payments totaled $11.7 billion, compared with $6.2 billion back in Q1 2022. Put differently, the interest we pay each year comes to seven percent of our total federal budget.

I’m certainly not going to confidently predict that the federal government will soon default on interest payments, lose access to capital markets, and begin laying off government workers and shutting down services. But I wouldn’t say that it can’t happen either.

Given that possibility, what can provinces and cities do right now to prepare for a sudden (hopefully brief) disruption? First off, though, what exactly is a province?

As defined by the British North America Acts, areas of the exclusive responsibility of the federal government include:

  • Public debt and property
  • Regulation of trade and commerce
  • Criminal law
  • Militia, military and naval service, and defense
  • Navigation and shipping
  • Banking, incorporation of banks, and the issue of paper money
  • Bankruptcy and insolvency
  • Naturalization and aliens
  • Unemployment insurance

Provinces are responsible for:

  • Property and civil rights
  • Administration of justice (including policing)
  • Municipal institutions
  • Education
  • Health and welfare
  • Natural resources

So a short-term federal disruption might not have much of an impact on most Canadians’ day-to-day activities. Federal employees and UI recipients would have to figure out how to survive without their paychecks and border entry points would shut down. But great news! Your criminal prosecution can go ahead on schedule because, while criminal law is controlled by the feds, lower criminal courts are provincial.

On the other hand, consider how federal transfers contribute between around 15 percent (Alberta) and 40 percent (Atlantic provinces) of provincial budgets. And Toronto’s municipal budget, for instance, includes around 15 percent in transfers from the province, and another five percent from the federal government. So it wouldn’t take long before all levels of government begin to feel the heat.

I’m not suggesting we change Canadian federalism (good luck trying). But a province that’s reduced or eliminated its own budget deficit and successfully weaned itself from incoming federal transfers would probably enjoy a smoother trip through a shutdown. Exploring the legality of temporarily taking over the payroll for critical federal roles (like Border Services), for instance, might also pay dividends when push came to shove.

I would suggest that thinking formally about these issues would be an important part of any government’s emergency planning preparedness. Yesterday was the best time to start. But today is the next best option.

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1

Post-COVID, the claims of Modern Monetary Theory proponents didn’t age well.

 

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David Clinton

Are We Winning the Patient-to-Doctor Ratio War?

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By David Clinton

The fact that millions of Canadians lack primary healthcare providers is a big deal. The grand promise of universal healthcare rings hollow for families forced to spend six hours waiting in a hospital emergency room for a simple ear infection diagnosis.

Just how big a deal is it? Statistics Canada data from 2021 ranks provinces by their ability to provide primary health providers. As you can see from the chart, New Brunswick and Ontario were doing the best, with doctors for nearly 90 percent of their residents. Quebec, able to find providers for just 78.4 percent of their population, landed at the bottom. But even just 10-15 percent without proper coverage is a serious systemic failure.

Since healthcare is administered by the provinces, it makes sense to assume that provincial policies will influence results. So comparing access to primary care practice results over time might help us understand what’s working and what isn’t.

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To that end, I pulled Statistics Canada data tracking total employment in offices of physicians (NAICS code 621111) by province. The data covers all employees (including nurses, office managers, and receptionists) in all non-hospital medical offices providing services that don’t include mental health.

I originally searched unsuccessfully for usable data specific to doctors. But as it turns out, such data would have included surgeons and other hospital-based specialties when I’m really looking for general (family) care providers. So I think what we got will actually act as a better proxy for primary care access.

Do keep in mind that staffing levels in the sector represent just one of many statistical signals we could use to understand the healthcare universe. And it’s just a proxy that’s not necessarily a perfect map to reality.

In any case, I adjusted the numbers by provincial populations so they’d make statistical sense. The chart below contains ratios representing how many residents there are per worker between 2010 and 2023:

You might notice that PEI is missing from that chart. That’s because the reported numbers fell below Statistics Canada’s privacy threshold for most of the covered years.

Alberta, with a ratio of just 282:1 is the current champion, while Newfoundland (438:1) has the worst record. But changes over time are where things get interesting. BC’s performance declined by more than 11 percent. And Quebec improved by more than 40 percent!

As you can see for yourself in that chart, Quebec’s most dramatic growth took place between 2016 and 2019. What was going on around that time? Well, both Bill 10 and Bill 20 were introduced in 2015.

  • Bill 10 restructured the healthcare system by reducing the number of administrative regions and centralizing governance to streamline services and improve efficiency.
  • Bill 20 established patient quotas for doctors, mandating a minimum number of patients they were required to see. Physicians who did not meet these quotas faced penalties, such as reduced compensation.

I don’t need to speak French to assume that those measures must have inspired an awful lot of anger and push back from within the medical profession. But the results speak for themselves.

Or do they? You see there’s something else about Quebec we can’t ignore: Chaoulli v. Quebec (2005). That’s the Supreme Court of Canada case where the Canada Health Act’s ban on private delivery of healthcare was ruled unconstitutional (for Quebec, at any rate).

As a direct result of that decision, there are now more than 50 procedures that can be performed in private surgical clinics in the province. The number of private clinics nearly doubled between 2014 and 2023.

Predictably, wait times for surgeries fell significantly over that time. But the numbers of non-hospital employees would probably have climbed at the same rate. That could possibly go further to explain Quebec’s steady and consistent improvements in our data.

What about the other provinces? There have been structural changes to delivery policies in recent years, but they’re mostly too new to have produced a measurable impact. But here’s a brief overview of what’s being tried:

  • This Toronto Star piece describes efforts in both Ontario and BC involving plans among some smaller municipalities to build and manage family health practices and pay their doctors as employees. The idea is that many doctors will prefer to avoid the headaches of starting and running their own businesses and would prefer instead to work for someone else. The obvious goal is to attract new doctors to underserved communities. It’s still way too soon to know whether they’ll be successful in the desperate race for the shrinking pool of family physicians.
  • Both Ontario and Alberta have championed Family Health Groups (FHGs), where physicians receive additional incentives for providing comprehensive care. Ontario’s Family Health Networks (FHN) and Family Health Organizations (FHO) also compensate physicians based on the number and demographics of enrolled patients.
  • British Columbia and Nova Scotia have implemented variations of a Longitudinal Family Physician (LFP) Payment Model. LFPs compensate family physicians based on factors like time spent with patients, patient panel size, and the complexity of care. They claim to promote team-based, patient-partnered care.

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So What ARE We Supposed To Do With the Homeless?

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The Audit

David Clinton

 

Involuntary confinement is currently enjoying serious reconsideration

Sometimes a quick look is all it takes to convince me that a particular government initiative has gone off the rails. The federal government’s recent decision to shut down their electric vehicle subsidy program does feel like a vindication of my previous claim that subsidies don’t actually increase EV sales.

But no matter how hard I look at some other programs – and no matter how awful I think they are – coming up with better alternatives of my own isn’t at all straightforward. A case in point is contemporary strategies for managing urban homeless shelters. The problem is obvious: people suffering from mental illnesses, addictions, and poverty desperately need assistance with shelter and immediate care.

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Ideally, shelters should provide integration with local healthcare, social, and employment infrastructure to make it easier for clients to get back on their feet. But integration isn’t cost-free. Because many shelters serve people suffering from serious mental illnesses, neighbors have to worry about being subjected to dangerous and criminal behavior.

Apparently, City of Toronto policy now requires their staff to obscure from public view the purchase and preparation of new shelter locations. The obvious logic driving the policy is the desire to avoid push back from neighbors worried about the impact such a facility could have.

As much as we might regret the not-in-my-back-yard (NIMBY) attitude the city is trying to circumvent, the neighbors do have a point. Would I want to raise my children on a block littered with used syringes and regularly visited by high-as-a-kite – and often violent – substance abusers? Would I be excited about an overnight 25 percent drop in the value of my home? To be honest, I could easily see myself fighting fiercely to prevent such a facility opening anywhere near where I live.

On the other hand, we can’t very well abandon the homeless. They need a warm place to go along with access to resources necessary for moving ahead with their lives.

One alternative to dorm-like shelters where client concentration can amplify the negative impacts of disturbed behavior is “housing first” models. The goal is to provide clients with immediate and unconditional access to their own apartments regardless of health or behaviour warnings. The thinking is that other issues can only be properly addressed from the foundation of stable housing.

Such models have been tried in many places around the world over the years. Canada’s federal government, for example, ran their Housing First program between 2009 and 2013. That was replaced in 2014 with the Homelessness Partnering Strategy which, in 2019 was followed by Reaching Home.

There have been some successes, particularly in small communities. But one look at the disaster that is San Francisco will demonstrate that the model doesn’t scale well. The sad fact is that Canada’s emergency shelters are still as common as ever: serving as many as 11,000 people a night just in Toronto. Some individuals might have benefited from the Home First-type programs, but they haven’t had a measurable impact on the problem itself.

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Where does the money to cover those programs come from? According to their 2023 Financial Report, the City of Toronto spent $1.1 billion on social housing, of which $504 million came in funding transfers from other levels of government. Now we probably have to be careful to distinguish between a range of programs that could be included in those “social housing” figures. But it’s probably safe to assume that they included an awful lot of funding directed at the homeless.

So money is available, but is there another way to spend it that doesn’t involve harming residential neighborhoods?

To ask the question is to answer it. Why not create homeless shelters in non-residential areas?

Right off the top I’ll acknowledge that there’s no guarantee these ideas would work and they’re certainly not perfect. But we already know that the current system isn’t ideal and there’s no indication that it’s bringing us any closer to solving the underlying problems. So why not take a step back and at least talk about alternatives?

Good government is about finding a smart balance between bad options.

Put bluntly, by “non-residential neighborhood shelters” I mean “client warehouses”. That is, constructing or converting facilities in commercial, industrial, or rural areas for dorm-like housing. Naturally, there would be medical, social, and guidance resources available on-site, and frequent shuttle services back and forth to urban hubs.

If some of this sounds suspiciously like the forced institutionalization of people suffering from dangerous mental health conditions that existing until the 1970s, that’s not an accident. The terrible abuses that existed in some of those institutions were replaced by different kinds of suffering, not to mention growing street crime. But shutting down the institutions themselves didn’t solve anything. Involuntary confinement is currently enjoying serious reconsideration.

Clients would face some isolation and inconvenience, and the risk of institutional abuses can’t be ignored. But those could be outweighed by the positives. For one thing, a larger client population makes it possible to properly separate families and healthy individuals facing short-term poverty from the mentally ill or abusive. It would also allow for more resource concentration than community-based models. That might mean dedicated law enforcement and medical staff rather than reliance on the 9-1-1 system.

It would also be possible to build positive pathways into the system, so making good progress in the rural facility could earn clients the right to move to in-town transition locations.

This won’t be the last word spoken on this topic. But we’re living with a system that’s clearly failing to properly serve both the homeless and people living around them. It would be hard to justify ignoring alternatives.

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