Fixing Democracy in Canada

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Appeared in the Winnipeg Free Press

Why worry about such an esoteric subject as democratic reform? After all, Canada is reasonably free and prosperous. Surely we should concern ourselves with more urgent things, such as health care, or the value of the dollar, or threats to national unity. Well, it turns out that we might be far better off in all of these areas if our democratic system worked better.

Canada could be, in fact should be, the most harmonious and prosperous land in the world. We are not, by a considerable way. Our living standard is much lower than in the US, or in many other, smaller, countries. The public is broadly cynical and apathetic with respect to our political process. We have major regional alienation, of which the Quebec sovereigntist movement has the highest profile but is certainly not the only example.

At the federal level, we have what is effectively a one-party government. This party (and the previous Conservative government in its day) is driven by perverse incentives that make political sense, but are in other ways injurious. These include, as examples, the payoff for votes bought in the Atlantic region with economically damaging subsidies, and an immigration policy designed not for the advantage of Canada, but instead chiefly with Vancouver’s - and especially Toronto’s - ethnic voting patterns in mind.

Essentially, all central government postures, from foreign and defence policy, through banking legislation, issues of our relationship with the United States, health policy, and to environmental issues, stem not from open and informed public debate, but rather from the behind-closed-doors accommodation of a governing elite to polling data. There is nothing wrong with a government seeking to react to public attitudes. There is much wrong with failing to inform those attitudes in the first place.

And though it may seem a hopelessly naïve view, surely government should be about something more than being re-elected, important as that is.

The state of our democratic debate is such that tough-minded and realistic discussion in some areas is simply not allowed. Such debate raises difficult and inconvenient issues. The most enduring example is the ridiculous idea that health care ought to be provided only by public employees. A recent example (as expressed by our government) is that it is in some way illegitimate for the United States to want to develop missile protection against rogue states. This latter absurdity has been decisively banished by tragedy, but the former -inefficiently supplied health care - is daily inflicting a less dramatic tragedy of its own kind.

In short, our system is not working as well as it should.

Changing the system

Legislatures have as their main purposes, first, the setting of broad policy (through the imposition of laws, taxes and expenditures) and, second, the oversight of government in its execution of those purposes. Our Canadian legislatures achieve the first, but largely fail in the second function.

In a democracy, legislatures are also to be representative of the governed. They may be wise or not, and consistent or not, depending on the general wishes of the voters, but they must at least be representative. Canadian legislatures often fail this test because one person, the first minister, normally dominates them.

As well, in a parliamentary democracy, legislatures are expected to furnish the senior personnel of government. This function is nominally discharged - ministerial posts are invariably filled and salaries drawn - but many of the personnel are clearly inadequate by any private-sector standard. A strong public service and a few talented elected people can generally make the system work. But, as representative institutions, our legislatures are very imperfect.

In a complex modern society where big government significantly affects the lives of ordinary citizens, this matters. And, naturally, the bigger the government, the more it matters. Surveys in 2002 showed very clearly that most (70 percent) think there is corruption in federal and provincial governments (Léger Marketing, April 2002).

Regional alienation is endemic at the federal level. Waste and inefficiency are widely assumed as the natural order of things governmental. There is a lack of trust and so little apparent representativeness to the system that most citizens assume there is little they can do about any given issue. Consequently, they opt out. Thus, we see a decline in voting participation (now below 60 percent at the federal level, and falling) and a rise in what the public-choice theorists call “rational ignorance - the chilling view that it is not logical to waste one’s time on that which one can do nothing about.

In addition, the perceived nature of our legislatures as they currently exist discourages people of talent from offering their services. The extremely adversarial nature of the system (not only between political parties but with the media as well), the almost total lack of influence unless one is a first minister or senior advisor, and the relatively low compensation outweigh the opportunity for public service and ego gratification that are the principal rewards.

So, the system does not work well. Our society is in tolerable shape in spite of our legislatures, rather than because of them. Thus, the constant call for parliamentary reform.

That there has been no significant reform for over a century (indeed, by many measures matters have deteriorated as governments have grown and first ministers have concentrated power) gives ample testimony to the difficulty of the task, even though, as we shall see, parliamentary reform is in theory one of the easier democratic reforms to enact.

The direction for useful parliamentary reform can be gleaned from a consideration of three of the above words: “representative,” “oversight,” and “adversarial.”


A main reason why Parliament is not representative today is because our MP or MLA, the only person we can directly influence, normally has virtually no power. As noted earlier, we remain at the primitive, democratic stage one, wherein the only important purpose of members is to be counted to determine who shall be the first minister, which worthy (with senior advisors) thereafter makes all important decisions until the next election.

Government members may be afforded influence over marginalia; opposition members may wield some influence through the power to embarrass, but their combined effects are trivial. Count the column inches devoted to the policy views of backbencher Member X. The answer is almost always “zero.” Must it be so? Count the column inches devoted to the views of Congressman X in the US. The answer is “many.” The press has it right. The answer to the problem of “representativeness” is simple: it is the empowerment of the ordinary member.

The technical means of achieving this empowerment include, above all, a reduction in the disciplinary carrots and sticks available to the first minister, which range from appointments (to Cabinet and elsewhere, such as committee assignments) to such minor but personally important things as foreign travel or desirable office space. Finding the best balance is a matter for much thought. For example, as mentioned previously, in some countries the government caucus chooses the Cabinet, leaving the first minister only the assignment of tasks. Members, not the first minister, should undoubtedly choose committee chairmen; this change has finally been forced, at least on paper, in Ottawa. It remains to be seen how it actually works.

Of first importance in achieving repesentativeness is a severe narrowing of the doctrine of “confidence” so that members are genuinely free to vote as they wish on many more measures than they now can. In addition, the iron grip of the government on the management of House business, and especially the work of committees, needs much loosening, with the power shifted to ordinary members.

That said, a sense of balance must be retained. We must guard against the creation of 301 (or however many, in the provinces) political entrepreneurs, trading favours and log-rolling for pet projects, trashing the treasury, and over-regulating the country in the process. The idea behind reform is certainly not to create bigger government. That would fly in the face of the fundamental proposal at the beginning of this paper that the best and easiest democratic reform is indeed smaller government.

>From that point of view, a major virtue of the present system is that of overall responsibility. A government still must bear the responsibility for that overall direction, which implies the tools to do that job. For example, a relaxation of the rule that ordinary members cannot propose expenditures (only the Crown has this prerogative) would lead to disaster, unless at a minimum the same measure raised taxes or reduced other expenditures to compensate. So, the lesson here is that the balance of power must be changed to increase representativeness, but it must be done with caution.


No such restraint is required in reforms connected with the words “oversight” and “adversarial.”

“Oversight” is the monitoring function of elected representatives vis-à-vis the work of government. Tax monies are to be voted for such and such. What exactly is the plan? How will results be measured? Who is responsible? And, after the fact, did it work as planned?

Most citizens believe that between Parliament and the auditor general such oversight is routine and effective. It is not. Committees lack staff resources, continuity of membership, and expertise to do their jobs at the political level. Even when they try to do their jobs, they are often ignored. The reports of the auditor general are embarrassing, nothing more. No one is fired, basic policies are seldom changed, no consequences need flow.

Committees do not cut the budgets of under-performing departments or programs and, in the intensely partisan atmosphere of the legislature, the main object of a committee’s majority is to protect the government, not the public. It is as simple as that, and that is what needs to be changed. Permanent and wide mandates for committees, expert research staff, control by the committee of work plans and choice of chair, and the development of an actual practice of amending legislation and cutting budgets would make an enormous change in the culture of government, much for the better.

And, of course, fundamental to oversight is access to information. The pervasive practice of secrecy by the Canadian government is its best weapon in the control of debate. Policies are always presented as the only logical thing to do; alternatives that may have been debated internally are suppressed. Results, when reported, are almost invariably selected to put the best face on things. Yet a huge amount of information exists within government that would be a great help in assessing the formulation and execution of policy. We shall return to this subject of information later, but for now it suffices to note that committees already have in theory and in law all of the powers required to extract most of the information they need from government if they could ever give up their assumed role as defenders of the government instead of the taxpayer.


Finally, there is the word “adversarial.” Outside of politics and the courtroom - two famously unproductive venues - our whole society is built on the cooperation of voluntary transactions. This cooperative mode includes the idea of competition, but we try to set the rules so that the competition benefits markets rather than rigging them.

In Canadian legislatures, the opposite applies. Governments, of course, are based on coercion rather than voluntary transactions. But worse, legislatures in the Westminster system are based on destructive competition. To be able to achieve anything, one must be in government and preserve that position at all costs; to gain government, one must destroy the one currently in place. In a vicious cycle, this forces our representatives constantly to choose sides, to contest rather than cooperate, and to distort and misrepresent issues to the public in the pursuit of advantage. That is the system and the lion is not about to lie down with the lamb. However, there are some things that can be done to mitigate these facts.

Some of the above recommendations that would allow representatives to act as free men and women and wield real power in many situations would inevitably cause the gradual formation of associations and coalitions across parties in various policy areas. But the main driver of the adversarial system is the rule of “winner takes all.” Where there is no second prize, the competition is single-minded and ugly, and the public is forgotten. A key parliamentary reform is the development of “second prizes.” These already exist in minor ways: the opposition is entitled to set the subject for debate on a few selected days and parties are entitled to designate their own committee members.

There should be much more, however. For example, the official opposition party normally has received the support of at least one-third of Canadians, and together, the opposition parties generally have over half of the vote. Why should not the leader of the opposition have the right of appointment of some small fraction of the members of various boards and commissions, as is the practice for the minority party in the United States? Quite apart from anything else, nothing readies a group for government like genuine experience and responsibility beforehand. Why should not certain non-partisan (or so one would hope) committees of Cabinet, like those responsible for CSIS and the RCMP, or national defence, include an opposition member, subject to standard confidentiality rules?

Clearly, in today’s political climate, such things are unthinkable. Given the current immense concentration of power in the first minister, this will change only as a result of a great leader or, more likely, the gradual reforms insisted upon by empowered ordinary members over time.

In the end, parliamentary reform is the simplest thing in the world. All of the power to achieve it lies within Parliament; it need only decide. Party discipline, and voluntary servitude for too little compensation preclude that. Until parliamentarians are truly free to represent those who elect them - who would rather have cooperation and oversight and representativeness rather than contestation and secrecy and one-man rule - significant reform is unlikely and our best hope lies with constraints on government, to which we now turn. Free trade for consumers stops at the border - Appeared in the Calgary Herald|article|905|||Appeared in the Calgary Herald||||||||||||175|||1305421200|1|1|en|Anyone over the age of 30 will remember how a trip to the United States was once a painful experience for the wallet. Think back to how often the Canadian dollar was low relative to the U.S. currency. For much of the 1980s and 1990s, the Canadian buck often traded at a substantial discount to its American counterpart. The all-time low came in the new millennium. In early 2002, one Canadian dollar could buy just 62-and-a-half American cents.

Our currency has been better off as of late. Reasons include relatively more prudent federal budgets since the mid-1990s. (It is only relative; budgets are still stuffed with unnecessary and wasteful spending). It also helps we had no banking crisis, have better control of our debt, and the fact Canada’s natural resources are highly sought after. Thus why the loonie hit an all-time high in November 2007, at U.S. $1.10, or now as I write, about U.S.$1.04.

Cost-wise, shopping and vacationing south of the border is far more pleasant for Canadians but the caveat is that such bliss only lasts until you return to the border.

Then, the long line-up and eventual interrogation over how many bottles of beer and other purchases begins. Free trade at the macro-level between Canada and the United States began officially in 1989, but 22 years later, consumers at the border still get hassled on the smallest of purchases.

For Canadians, any time we cross the 49th parallel and return within 24 hours, we can be dinged for duties and taxes right away (the federal government has no exemption for short visits). That’s unlike Americans who, in the first two days, can buy and bring back $200 worth of Canadian goods before they must hand over their credit card to U.S. customs. Over two days, the exemption is $800.

It’s a different border experience for us. Not only do Canadians get hit with duties and taxes on same-day trips, we’re also subject to lower exemption limits on longer stints abroad. After one day, our “exemption” at the border is a mere $50; between two and seven days, Canadians can bring back $400 worth of goods before the customs cash register begins to ring.

After one week, Canadians have a $750 exemption on most goods. (The exception, as always, is for beer, wine and spirits where different rules apply; Ottawa and the provinces insist on their pound of tax and duty flesh for anything beyond a few bottles of wine and slightly more beer.)

Even American policymakers have noticed how badly Canadians are treated on these miserly exemptions. When I last wrote on this in January, I suggested both the U.S. and Canadian governments stop hassling shoppers for total purchases of less than $1,000. (It would be nice to have an unlimited exemption but perhaps we should expect the government to start with baby steps.)

Moreover, that tax-and-duty free amount should apply regardless of the time spent abroad.

In a wonderful coincidence, someone down south was already thinking the same thing.

According to reporter Bill Curry, and courtesy of a recent Access to Information request, two American politicians, Senator Kirsten Gillibrand and Congressman Bill Owens wrote federal Finance minister Jim Flaherty last July. They also requested a $1,000 exemption for consumers on both side of the border.

Gillibrand and Owens promise to press the U.S. government to let visiting Americans buy $1,000 worth of Canadian “stuff” duty and tax-free if Ottawa does the same for Canadians. But the hold-up is Flaherty, who resists and cites “competitiveness issues.”

That’s weak. Two decades after Ottawa and Washington signed a free trade agreement, it’s long overdue to bring consumers directly in on the deal. Ottawa can start by not engaging in penny-pinching border protectionism. Canadian retailers can and will survive and compete. Also, it’s not as if they didn’t benefit from American shoppers when the Canadian dollar was low.  

It’s always a bad idea for governments to dampen trade by getting protectionist with consumers via pesky and chintzy border exemptions. It’s a tad ironic the best advocate for Canadian consumers are two American politicians and not Canada’s own federal finance minister. Conservatives in Ottawa preach competition and free trade around the world; they might step up to the policy plate at home and respond positively to the American overture.

There’s one last and not inconsequential angle to all this: border security. The point of border guards in 2011, on both sides of the 49th parallel, should be to focus on threats to both countries, and not on my 80-year-old mother’s minor purchases in Bellingham. Or someone’s six-pack. Government plans to control generic drug prices are doomed to failure|article|909|||Appeared in the New Glasgow News||||||||||||186|||1288227600|1|1|en|For too long, Canadians have been paying almost double what Americans pay for identical generic prescription drugs. And while several provincial governments have announced plans to reduce generic drug prices, these efforts will ultimately be futile because they fail to deal with the underlying problem: the lack of market forces that would normally cause prices to fall.

According to the Fraser Institute study, Canada’s Drug Price Paradox 2010, average generic drug prices in Canada were 90 per cent more than American prices for the same drugs in 2008. Although previous editions of the study found that generic prescription drug prices in Canada were an average of 112 per cent more than U.S. prices in 2007 and 115 per cent more in 2006, indicating that generic drug prices in Canada have been slightly declining relative to American prices, Canadians are still paying way too much for generic drugs.

So why the price discrepancy?

The problem lies in two primary government policies that distort the generic drug market. Both policies are associated with the way in which prescription drugs are reimbursed by provincial public drug programs.

Public drug programs direct the reimbursement of prescriptions to pharmacies instead of consumers. This insulates consumers from cost and removes incentives for comparative shopping that would put downward pressure on prices.

Public drug programs also reimburse generic prescription drugs at a fixed percentage of the brand name original drug. Under this policy there is no price competition because the buyer (the government) offers every seller the same price, and the price is known in advance.

Large established generic companies exploit this reimbursement system to offer rebates to pharmacies that are bundled across many products in exchange for exclusive distribution rights. Because pharmacies are reimbursed directly, discounts are not passed on to consumers.

Recent attempts to reduce generic drug prices in Ontario, British Columbia, and Quebec have all taken a misguided approach. Instead of allowing competition to determine generic drug prices, they are further distorting the market by setting drug prices at a lower ‘fixed-percentage’ of the brand name original. The changes introduced to provincial drug plans fail to address the underlying problem, the total absence of competition among retailers and incentives for customers to comparison shop.

Canadians would be much better off if governments just repealed public policies that distort the market for prescription drugs. That would lead to lower prices and greater voluntary use of generics, which is currently taking place in the United States.

In 2006, Wal-Mart introduced an innovative prescription drug retail program in the United States that allows customers to purchase a 30-day supply of prescriptions drugs for only $4, or a 90-day supply for $10. The program includes more than 300 generic products, and according to Wal-Mart, has saved more than $3 billion since 2006. In response to Wal-Mart’s in-store drug plan, most other U.S. pharmacy chains now offer similar drug programs. This intense competition has enabled Americans to take advantage of low cost generic drugs which, unlike in Canada, are a fraction of their brand-name equivalent.

In 2008, average retail prices for generic drugs in Canada were 73 per cent of the price of their brand-name equivalents, compared with just 17 per cent of the price of their brand-name equivalents in the United States.

As the American experience shows, price incentives in a free competitive market encourage efficient substitution of generics for brand name drugs when appropriate while preserving consumer choice.

While Canadian governments defend their intrusion in pharmaceutical markets by claiming their policies reduce the costs of prescription drugs for consumers, Canadians are paying much more than they should for generic drugs because government policies are distorting the market.

Alternatively, if public drug programs reimbursed consumers directly at a flat percentage of the price of any prescribed drug and prices were not set as a ‘fixed-percentage’ of the brand-name original, consumers would be sensitive to price, and all drug sales would be subject to market forces that would put downward pressure on generic drug prices.

In the absence of government interference, consumer preferences and price sensitivities would encourage the efficient substitution of generics for brand name drugs. The resulting health savings would be significant. Government policies restricting medical training mean Canada's physician shortage will worsen; recruiting foreign doctors a necessary short-term solution|article|142|||||||||||||||186|||1300154400|1|1|en|

VANCOUVER, BC—Canada’s physician shortage will grow worse in coming years because of ill-conceived policies on physician supply, says a new article published by the Fraser Institute, Canada’s leading public policy think-tank.

“Canada’s physician shortage is a consequence of governments endorsing policies that restricted physician training,” says Nadeem Esmail, Fraser Institute senior fellow and author of Canada’s Physician Supply, which appears in the latest issue of Fraser Forum, the Institute’s bi-monthly magazine.

“Removing those restrictions now, while critical in the long term, won’t have an impact for much of the next decade because of the time it takes to train a new doctor. This means it will become increasingly difficult for Canadians to find a family doctor or to see a specialist unless Canada recruits additional foreign-trained physicians.”

In the article, Esmail examines the evolution of Canada’s physician supply over time and projects what could happen in the coming years, taking into account factors such as population growth and Canada’s aging workforce.

Among the key points:

  • With only 2.3 doctors per 1,000 people in 2006 (age-adjusted), Canada’s physician-to-population ratio ranked 26th out of 28 developed nations that maintain a universal access health care system.
  • Although Canadians enjoyed one of the highest physician-to-population ratios in the developed world in the early 1970s, Canada’s growth in doctors per capita has lagged far behind that of other developed nations since then.
  • Physician-to-population ratios are important. Studies have shown that jurisdictions that have higher numbers of doctors tend to have better population health outcomes across a number of health indicators.
  • Canada’s shortage of physicians arose because of government policies implemented in the early 1990s that restricted admissions to Canadian medical schools and training positions.

Citing recent medical school enrolment and graduation rates, Esmail points out that the cohort of new Canadian-trained physicians estimated to be entering the workforce every year through 2018 will fail to meet the number of new doctors required to maintain, let alone improve, the country’s physician-to-population ratio.

He calculates that Canada requires between 2,339 and 2,256 new physicians each year from 2011 through to 2020 to maintain the current physician-to-population ratio, a conservative estimate that doesn’t account for the increasing number of doctors currently practising who will retire between now and 2020.

“Given that approximately 38 per cent of Canada’s physicians were aged 55 or older in 2010, the number of physicians needed to replace those who leave the workforce is likely to rise significantly in the near future,” he says.

Esmail concludes that, without a substantial addition of foreign-trained doctors, the Canadian physician-to-population ratio will shrink in coming years, just as it would have through the 1990s if foreign-trained  doctors had not made up for the shortfall caused by insufficient admissions to Canadian medical schools.

“Government-imposed limitations on the number of physicians being trained in Canada is a policy choice that is not serving the best interests of Canadians, be they patients in need of physicians or capable students who wish to become doctors but are unable to access medical training in this country,” Esmail said.

“Relying on foreign-trained doctors to fill the gap is not a sensible solution to the problem. Canada needs to be training enough physicians to meet the future health care needs of Canadians. The unfortunate reality is that poor policy decisions of the past leave us in a situation where we have little choice but to rely on foreign-trained doctors to ensure the physician shortage doesn't grow more acute in the short term.

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