Fraser Institute
Ottawa’s health-care deal cements failed status quo in Canada
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From the Fraser Institute
By Mackenzie Moir and Jake Fuss
Canada will reach a projected $244.1 billion in 2023, which translates to $6,205 per person—nearly double the level of per-person spending (inflation-adjusted) three decades ago. And yet, last year Canadians endured the longest median wait time (27.7 weeks) ever recorded for non-emergency surgery.
Last week, as part of Ottawa’s promised $46 billion in additional health-care spending, the Trudeau government agreed to increase Quebec’s share of federal health-care dollars by $900 million annually. Quebec was the last province to reach an agreement with Ottawa before the March 31 deadline. With the closure of this agreement, Canadian taxpayers are on the hook for more health-care spending than ever before. For the same old broken health-care system.
Of course, it ultimately doesn’t matter whether the $46 billion originates from Ottawa or the provinces. In the end, Canadian taxpayers foot the bill. And what do we get in return for our health-care dollars?
In 2021, the latest year of comparable data, Canada’s total health-care spending (as a percentage of the economy) was the highest among 29 other comparable countries with universal health care (after adjusting for differences in population age). This isn’t a new development. Canada has a long history of having one of most expensive systems among high-income universal health-care countries.
Despite this, according to the latest comparable data, Canada ranks among the poorest performing universal health-care countries in key areas such as the number of physicians, hospital beds and diagnostic technology (e.g. MRI machines). Further, according to the Commonwealth Fund, in 2020 Canada ranked dead last on timely access to specialist consultations and non-emergency surgery.
Meanwhile, public health-care spending in Canada will reach a projected $244.1 billion in 2023, which translates to $6,205 per person—nearly double the level of per-person spending (inflation-adjusted) three decades ago. And yet, last year Canadians endured the longest median wait time (27.7 weeks) ever recorded for non-emergency surgery.
In short, Canada’s health-care system is in shambles, but the answer does not lie in simply throwing more money in its general direction. Federal politicians should instead look to the example of welfare reform during the Chrétien era in the 1990s. Those reforms, which reduced federal transfers to provinces and eliminated most of the “strings” attached to federal funding, resulted in increased provincial autonomy, greater policy experimentation, fewer Canadians needing welfare and savings for the federal government (i.e. taxpayers).
This is the opposite of today’s approach to health care, where the existing vehicle for federal funding (the Canada Health Transfer) is connected to the Canada Health Act (CHA), which prevents provincial governments from innovating and experimenting in health care by threatening financial penalties for non-compliance with often vaguely defined federal preferences. The result is a stalemate that satisfies no one and ensures that Canada’s policies remain at odds with the policies of our better-performing universal health-care peers.
While new federal dollars for health care are undoubtedly appealing to premiers, they will not improve the state of health care for Canadians. Until our federal politicians have the courage to reform the CHA and follow the example of 1990s welfare reform to improve outcomes, our health-care system’s unacceptable status quo will continue.
Authors:
Business
Worst kept secret—red tape strangling Canada’s economy
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From the Fraser Institute
By Matthew Lau
In the past nine years, business investment in Canada has fallen while increasing more than 30 per cent in the U.S. on a real per-person basis. Workers in Canada now receive barely half as much new capital per worker than in the U.S.
According to a new Statistics Canada report, government regulation has grown over the years and it’s hurting Canada’s economy. The report, which uses a regulatory burden measure devised by KPMG and Transport Canada, shows government regulatory requirements increased 2.1 per cent annually from 2006 to 2021, with the effect of reducing the business sector’s GDP, employment, labour productivity and investment.
Specifically, the growth in regulation over these years cut business-sector investment by an estimated nine per cent and “reduced business start-ups and business dynamism,” cut GDP in the business sector by 1.7 percentage points, cut employment growth by 1.3 percentage points, and labour productivity by 0.4 percentage points.
While the report only covered regulatory growth through 2021, in the past four years an avalanche of new regulations has made the already existing problem of overregulation worse.
The Trudeau government in particular has intensified its regulatory assault on the extraction sector with a greenhouse gas emissions cap, new fuel regulations and new methane emissions regulations. In the last few years, federal diktats and expansions of bureaucratic control have swept the auto industry, child care, supermarkets and many other sectors.
Again, the negative results are evident. Over the past nine years, Canada’s cumulative real growth in per-person GDP (an indicator of incomes and living standards) has been a paltry 1.7 per cent and trending downward, compared to 18.6 per cent and trending upward in the United States. Put differently, if the Canadian economy had tracked with the U.S. economy over the past nine years, average incomes in Canada would be much higher today.
Also in the past nine years, business investment in Canada has fallen while increasing more than 30 per cent in the U.S. on a real per-person basis. Workers in Canada now receive barely half as much new capital per worker than in the U.S., and only about two-thirds as much new capital (on average) as workers in other developed countries.
Consequently, Canada is mired in an economic growth crisis—a fact that even the Trudeau government does not deny. “We have more work to do,” said Anita Anand, then-president of the Treasury Board, last August, “to examine the causes of low productivity levels.” The Statistics Canada report, if nothing else, confirms what economists and the business community already knew—the regulatory burden is much of the problem.
Of course, regulation is not the only factor hurting Canada’s economy. Higher federal carbon taxes, higher payroll taxes and higher top marginal income tax rates are also weakening Canada’s productivity, GDP, business investment and entrepreneurship.
Finally, while the Statistics Canada report shows significant economic costs of regulation, the authors note that their estimate of the effect of regulatory accumulation on GDP is “much smaller” than the effect estimated in an American study published several years ago in the Review of Economic Dynamics. In other words, the negative effects of regulation in Canada may be even higher than StatsCan suggests.
Whether Statistics Canada has underestimated the economic costs of regulation or not, one thing is clear: reducing regulation and reversing the policy course of recent years would help get Canada out of its current economic rut. The country is effectively in a recession even if, as a result of rapid population growth fuelled by record levels of immigration, the GDP statistics do not meet the technical definition of a recession.
With dismal GDP and business investment numbers, a turnaround—both in policy and outcomes—can’t come quickly enough for Canadians.
Business
New climate plan simply hides the costs to Canadians
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From the Fraser Institute
Mark Carney, who wants to be your next prime minister, recently released his plan for Canada’s climate policies through 2035. It’s a sprawling plan (climate plans always are), encompassing industrial and manufacturing emissions, vehicle emissions, building emissions, appliance emissions, cross-border emissions, more “green” energy, more “heat pumps” replacing HVAC, more electric vehicle (EV) subsidies, more subsidies to consumers, more subsidies to companies, and more charging stations for the EV revolution that does not seem to be happening. And while the plan seeks to eliminate the “consumer carbon tax” on “fuels, such as gasoline, natural gas, diesel, home heating oil, etc.” it’s basically Trudeau’s climate plans on steroids.
Consider this. Instead of paying the “consumer carbon tax” directly, under the Carney plan Canadians will pay more—but less visibly. The plan would “tighten” (i.e. raise) the carbon tax on “large industrial emitters” (you know, the people who make the stuff you buy) who will undoubtedly pass some or all of that cost to consumers. Second, the plan wants to force those same large emitters to somehow fund subsidy programs for consumer purchases to offset the losses to Canadians currently profiting from consumer carbon tax rebates. No doubt the costs of those subsidy programs will also be folded into the costs of the products that flow from Canada’s “large industrial emitters,” but the cause of rising prices will be less visible to the general public. And the plan wants more consumer home energy audits and retrofit programs, some of the most notoriously wasteful climate policies ever developed.
But the ironic icing on this plan’s climate cake is the desire to implement tariffs (excuse me, a “carbon border adjustment mechanism”) on U.S. products in association with “key stakeholders and international partners to ensure fairness for Canadian industries.” Yes, you read that right, the plan seeks to kick off a carbon-emission tariff war with the United States, not only for Canada’s trade, but to bring in European allies to pile on. And this, all while posturing in high dudgeon over Donald Trump’s plans to impose tariffs on Canadian products based on perceived injustices in the U.S./Canada trade relationship.
To recap, while grudgingly admitting that the “consumer carbon tax” is wildly unpopular, poorly designed and easily dispensable in Canada’s greenhouse gas reduction efforts, the Carney plan intends to double down on all of the economically damaging climate policies of the last 10 years.
But that doubling down will be more out of sight and out of mind to Canadians. Instead of directly seeing how they pay for Canada’s climate crusade, Canadians will see prices rise for goods and services as government stamps climate mandates on Canada’s largest manufacturers and producers, and those costs trickle down onto consumer pocketbooks.
In this regard, the plan is truly old school—historically, governments and bureaucrats preferred to hide their taxes inside of obscure regulations and programs invisible to the public. Canadians will also see prices rise as tariffs imposed on imported American goods (and potentially services) force American businesses to raise prices on goods that Canadians purchase.
The Carney climate plan is a return to the hidden European-style technocratic/bureaucratic/administrative mindset that has led Canada’s economy into record underperformance. Hopefully, whether Carney becomes our next prime minister or not, this plan becomes another dead letter pack of political promises.
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