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Report Card on Ontario's Secondary Schools 2017

The Report Card on Ontario’s Secondary Schools 2017 collects a variety of relevant, objective indicators of school performance into one, easily accessible public document so that anyone can analyze and compare the performance of individual schools. By doing so, the Report Card assists parents when they choose a school for their children and encourages and assists all those seeking to improve their schools.

Where parents can choose among several schools for their children, the Report Card provides a valuable tool for making a decision. Because it makes comparisons easy, it alerts parents to those nearby schools that appear to have more effective academic programs. Parents can also determine whether schools of interest are improving over time. By first studying the Report Card, parents will be better prepared to ask relevant questions when they visit schools under consideration and speak with the staff.

Of course, the choice of a school should not be made solely on the basis of a single source of information. Web sites maintained by Ontario’s Education Quality and Accountability Office (EQAO), the provincial ministry of education, and local school boards may also provide useful information. Parents who already have a child enrolled at the school provide another point of view.

Naturally, a sound academic program should be complemented by effective programs in areas of school activity not measured by the Report Card. Nevertheless, the Report Card provides a detailed picture of each school that is not easily available elsewhere.

The act of publicly rating and ranking schools attracts attention and this can provide motivation. Schools that perform well or show consistent improvement are applauded. Poorly performing schools generate concern, as do those whose performance is deteriorating. This inevitable attention provides an incentive for all those connected with a school to focus on student results.

However, the Report Card offers more than just incentive. It includes a variety of indicators, each of which reports results for an aspect of school performance that may be improved. School administrators who are dedicated to their students’ academic success accept the Report Card as another source of opportunities for improvement.

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Examining the Revenue Neutrality of British Columbia's Carbon Tax

British Columbia’s carbon tax is often praised as a model for other jurisdictions to follow, in part due to its alleged revenue neutrality. However, in the eight years since it was introduced, the offsetting tax measures used in the government’s revenue neutral calculation have changed, prompting questions about whether the carbon tax is still revenue neutral.

Revenue neutrality simply means that the amount of revenue the government generates through the carbon tax is used to implement new reductions in other taxes that are equal to the revenue generated by the carbon tax. Revenue neutrality is also important for economic efficiency since cuts to economically damaging taxes, such as personal and corporate income taxes, can help offset the economic costs of a carbon tax.

When the carbon tax was first implemented in 2008/09, the BC government enacted four offsetting tax measures which included a reduction in the bottom two personal income tax (PIT) rates, a reduction in the general corporate income tax (CIT) rate, a reduction in the small business CIT rate, and the introduction of the low income climate action refundable tax credit. These four tax measures offset enough revenue to make the carbon tax revenue neutral in its first fiscal year.

However, by 2013/14, the first full fiscal year with the carbon tax at its highest value ($30 per tonne), a major issue arose with the way the BC government was calculating revenue neutrality. At this point, the government was no longer solely relying on new tax measures to offset the carbon tax revenue and instead began using pre-existing tax reductions in its revenue neutral calculation.

Specifically, the pre-existing tax measures are the Training Tax Credit—Individuals, the Interactive Digital Media Credit, the Training Tax Credit—Businesses, Film Incentive BC Credit, the Production Services Credit, and the Scientific Research and Experimental Development Credit (SRED), which first appears in the revenue neutral calculation in 2014/15. The two film industry tax credits and the SRED tax credit were first introduced almost 15 years before they were included as carbon tax revenue offsets.

If the pre-existing tax measures are properly removed from the government’s revenue neutral calculation, then BC’s carbon tax ceases to be revenue neutral as of 2013/14, with a net tax increase of $226 million that year. In 2013/14 and 2014/15, the two years for which final data are available, British Columbians bore a combined $377 million net tax increase.

If the available historical data are combined with the government’s projections to 2018/19, then from 2013/14 to 2018/19, the carbon tax is projected to result in a cumulative $865 million net tax increase for British Columbians. If we were to distribute this tax increase equally among the province’s populace, each British Columbian would pay $182 more per person, or $728 for a family of four.

In addition, the composition of the offsetting tax measures has changed over time. Rather than most of these measures coming from cuts to broader, more distortionary taxes that help mitigate the economic costs of the carbon tax, the government has increasingly used targeted tax measures (i.e., boutique tax credits) to offset the carbon tax revenue. Specifically, before 2013/14, cuts to the general corporate income tax (CIT) rate and two personal income tax (PIT) rates totaled, on average, over 60% of the revenue generated by the carbon tax. However, from 2013/14 onwards, cuts to the general CIT rate and two PIT rates account for less than 45% of the revenue generated by the carbon tax.

The BC government should take the appropriate steps to ensure that the carbon tax is revenue neutral in a way that mitigates the economic damage of the carbon tax by reducing existing distortionary taxes to the greatest possible extent. Barring this, proponents who praise BC’s alleged “revenue neutral” carbon tax reform as a model for others to follow should temper their enthusiasm and more accurately describe the actual model that currently exists, not the model that existed back in 2008.

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Report Card on British Columbia's Elementary Schools 2017

The Report Card on British Columbia’s Elementary Schools 2017 collects a variety of relevant, objective indicators of school performance into one, easily accessible public document so that anyone can analyze and compare the performance of individual schools. By doing so, the Report Card assists parents when they choose a school for their children and encourages and assists all those seeking to improve their schools.

Where parents can choose among several schools for their children, the Report Card provides a valuable tool for making a decision. Because it makes comparisons easy, it alerts parents to those nearby schools that appear to have more effective academic programs. Parents can also determine whether schools of interest are improving over time. By first studying the Report Card, parents will be better prepared to ask relevant questions when they visit schools under consideration and speak with the staff.

Of course, the choice of a school should not be made solely on the basis of a single source of information. Web sites maintained by Ontario’s Education Quality and Accountability Office (EQAO), the provincial ministry of education, and local school boards may also provide useful information. Parents who already have a child enrolled at the school provide another point of view.

Naturally, a sound academic program should be complemented by effective programs in areas of school activity not measured by the Report Card. Nevertheless, the Report Card provides a detailed picture of each school that is not easily available elsewhere.

The act of publicly rating and ranking schools attracts attention and this can provide motivation. Schools that perform well or show consistent improvement are applauded. Poorly performing schools generate concern, as do those whose performance is deteriorating. This inevitable attention provides an incentive for all those connected with a school to focus on student results.

However, the Report Card offers more than just incentive. It includes a variety of indicators, each of which reports results for an aspect of school performance that may be improved. School administrators who are dedicated to their students’ academic success accept the Report Card as another source of opportunities for improvement.

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Fiscal Consequences of Higher Spending on K-12 Public Schools in Canada

Summary

  • Spending decisions by governments have consequences beyond just the direct effects of the new or expanded spending. Additional spending today requires either higher taxes today or, when financed by deficits (i.e., borrowing), higher taxes in the future. At the provincial level, a lack of spending restraint on elementary and secondary (K-12) education has a disproportionate effect on the government’s finances due to the size of education spending compared to most other spending.
  • For Canada as a whole, the increase in per-student spending in K-12 public schools after accounting for the effects of inflation (price changes) was 25.8% between 2004/05 and 2013/14. Over the same period, the province with the highest per-student spending increase in K-12 public schools was Saskatchewan (39.0%) while British Columbia recorded the lowest increase (18.3%).
  • Had spending been restrained so that per-student public school spending had been held constant from 2004/05 to 2013/14, education spending on K-12 public schools in Canada would have been 20.3% lower—$49.8 billion instead of the $62.6 billion that was actually spent.
  • Constant per-student public school spending would also have meant that, in 2013/14, Alberta and Prince Edward Island would have recorded budget surpluses instead of deficits, Quebec would have essentially balanced its budget two years earlier, and the deficits or surpluses of other provinces would have been substantially reduced or increased respectively.
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A Federal Fiscal History: Canada, 1867-2017

The Canadian federation’s 150th anniversary is an important milestone for a country that has become one of the most successful countries in the world. Canada’s economic evolution from a rural agricultural nation to a modern, highly urbanized, service-intensive economy is accompanied by the federal government’s transition from spending mainly on goods to spending on transfers. Indeed, over two thirds of federal spending today is now largely a transfer payment of some type whether to individuals, other governments, or bondholders. The evolution of the federal government from a producer and provider of public goods and services to a cheque-writing agency is a result that would likely astound the nineteenth-century founders of Canada.

Canada’s federal government has grown both in terms of its absolute revenue and expenditure as well as relative to the economy. At the dawn of Confederation, Canada’s federal government had a budget of $14 million, an ex-penditure-to-GDP ratio of approximately 5%, and a net debt of $75.7 million. This resulted in a net ratio of debt to GDP of 20% and annual interest charges of $4.9 million absorbing 29% of spending. By 2017, it is anticipated that total federal government spending will be $331 billion with an expenditure-to-GDP ratio of about 15.6%. The net federal public debt will total $759.5 billion, resulting in a debt-to-GDP ratio of 35.7% and debt service costs of $26.4 billion accounting for 8% of federal expenditure.

Paying for this expenditure changed over time. From 1867 to World War I, the federal government’s revenue was dominated by customs duties, which peaked at 66% of revenue in 1912. The needs of the war effort sparked the search for new revenue, which led to the creation of the first personal and corporate income taxes and the first federal sales tax. Over time, the importance of these three new revenue sources grew and it is anticipated that by 2017 the personal income tax alone will make up 51% of federal government revenue, corporate taxes, 13%, and commodity taxes (GST, excise taxes and customs duties), 17%.

The 150 years since Confederation have witnessed a transition of the federal government from its primary concern with the active economic development of a state grounded in liberal economic principles to an activist role partly aimed at bringing about a more egalitarian state via redistribution. This led to an expansion of the federal gov-ernment’s spending after World War II that, in the absence of more concerted fiscal discipline and given the slow-down in economic growth, ultimately was a factor in the debt crisis of the 1990s.

Prudent government spending is useful: for example, the construction of the transcontinental CPR railway aided by subsidies paid to encourage the building of a risky capital project. However, the same strategy also resulted in over-subsidization of the CPR as well as substantial subsidies to two other, less successful, rail lines. More gov-ernment spending is not always better and that also applies to the use of deficit financing.

Nevertheless, over the period from 1867 to 2017, Canada’s federal government ran a deficit nearly three quarters of the time with the largest deficit-to-GDP ratios during the two world wars and the run up to the debt crisis of the 1990s. The important policy decisions when it comes to spending are when to spend, what to spend it on, how much to spend, and how to pay for the spending. Getting the wrong answer to any of these questions has fiscal implications.

Given the surge in deficit financing at the federal level currently under way in the wake of the 2016 budget, one wonders if the lessons of the 1990s have already been forgotten. While interest rates remain at historic lows, eco-nomic growth is also low, making a case for fiscal prudence given the dynamics of deficits and debt. The progress made in reducing the ratio of federal net debt to GDP below 40% will be largely squandered if we allow debt to once again grow uncontrollably.

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Comparing Government and Private Sector Compensation in Ontario, 2017

Using data on individual workers from January to December 2015, this report estimates the wage differential between the government and private sectors in Ontario. It also evaluates four available non-wage benefits in an attempt to quantify compensation differences between the two sectors. After controlling for such factors as gender, age, marital status, education, tenure, size of firm, type of job, industry, and occupation, Ontario’s government sector workers (from the federal, provincial, and local governments) were found to enjoy a 13.4 percent wage premium, on average, over their private sector counterparts in 2015. When unionization status is factored into the analysis, the wage premium for the government sector declines to 10.3 percent.

The available data on non-wage benefits suggest that the government sector enjoys an advantage over the private sector. For example, 82.1 percent of government workers in Ontario are covered by a registered pension plan, compared to 25.2 percent of private sector workers. Of those covered by a registered pension plan, 97.0 percent of government workers enjoyed a defined benefit pension compared to just under half (45.1 percent) of private sector workers.

In addition, government workers retire earlier than their private sector counterparts—about 1.4 years on average—and are much less likely to lose their jobs (3.2 percent in the private sector versus 0.5 percent in the public sector). Moreover, full-time workers in the government sector lost more work time in 2015 for personal reasons (10.9 days on average) than their private sector counterparts (6.8 days).

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Alberta's Budget Deficit: Why Spending is to Blame, 2017

Summary

  • Alberta is projected to run a deficit of $10.8 billion in 2016/17. This will be the province’s 8th deficit in nine years. The province is expected to return to a net debt position this year for the first time since 2000/2001.
  • While the sharp decline in oil prices since 2014 is often blamed for the province’s fiscal challenges, the evidence does not support this view. Instead, the primary reason for the deterioration of Alberta’s finances in recent years is rapid program spending growth.
  • Between 2004/05 and 2015/16, program spending increased by an average rate of 7.1% per year while revenues increased at an average annual rate of 4.6%. During the same period, spending increased at nearly double the combined rate of inflation plus population growth.
  • Had the government increased spending more modestly at the rate necessary to keep up with inflation plus population growth, the province would have run surpluses in every year examined, rather than 8 deficits in 9 years. The early evidence suggests the new government in Edmonton is repeating the mistakes of its predecessors.
  • In its first full year in control of the budget, the new government is projected to increase program spending by 7.5% this year (or 5.4% excluding unplanned emergency spending associated with the wildfires in Fort McMurray).

If the government oversees more spending growth in the years ahead, it will exacerbate Alberta’s fiscal problems, contributing to further increases in debt and delaying a return to balanced budgets. A better course is to acknowledge the source of the problem—spending—and take corrective action.

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Intellectual Property Rights Protection and the Biopharmaceutical Industry: How Canada Measures Up

An extensive body of evidence demonstrates that patents and other intellectual property protections are critical to the future of innovation and the development of new treatments and cures. A strong legal regime is essential for a robust innovation-based biopharmaceutical industry. This study examines the legal architecture required for more effective intellectual property protection for the innovative biopharmaceutical industry. It also reviews the existing Canadian legal framework as well as global best practices, which leads to several recommendations for Canadian IP legislation.

For Canada, the legal architecture surrounding intellectual property rights protection and the national regulatory regime are powerful forces shaping the biopharmaceutical industry, its profitability, productivity, and innovative future. These dimensions also have consequences for Canadian patients, the Canadian economy, and access to future medical innovations. In the course of ongoing trade negotiations, several aspects of the Canadian IPR system have come under scrutiny and changes to these elements have become a central discussion point. This paper describes existing IP policy in Canada, compares it to global norms and regimes, evaluates the strengths and weaknesses of the Canadian system, and recommends improvements and reform.

There are five areas of concern regarding Canadian IP protection for the biopharmaceutical industry: (1) the period of patent term restoration (also called “sui generis protection”), (2) weak enforcement of patents (e.g., no patent linkage right of appeal for innovators), (3) a patent utility standard that is higher than and inconsistent with international norms, (4) the duration and scope of regulatory data protection, and (5) the lack of an orphan drugs regime. The paper examines each of these in turn, analyzing the specific weaknesses of Canadian legislation and how these elements measure up against other nations.

The intellectual property environment in Canada clearly has consequences for this country’s global competitiveness. Overall, there are numerous deficiencies that weaken intellectual property protections within Canada relative to what is provided in other industrialized nations. The result is an IP regime characterized by significant uncertainty and instability for biopharmaceutical firms. Weaknesses such as onerous patentability requirements, insufficient enforcement mechanisms, and inadequate anti-counterfeiting measures place Canada in the company of Mexico, Malaysia, China, and Russia in the IP Index rankings. These rankings make a difference to prospective investors and signal Canada’s lack of support for knowledge-based industries, especially the biopharmaceutical industry. Fundamentally, Canada is a global outlier, providing inadequate intellectual property protection for the biopharmaceutical industry.

This paper also considers the consequences of changing the Canadian IP architecture and what Canada stands to gain. Benefits will include reduced legal ambiguity and litigation through increased predictability, greater research and development expenditures, increased foreign direct investment, additional job creation in the biopharmaceutical and related industries, productivity gains, greater biopharmaceutical self-sufficiency, faster launch times for new medicines, and additional innovation on cutting-edge treatments and therapies.

A comparison of Canada’s legal framework with global best practices leads to several recommendations for Canadian IP legislation. Specifically, Canada should provide innovative biopharmaceutical firms with patent term extensions in order to recover time lost due to mandatory governmental regulatory and marketing approvals. In addition, Canada should remedy issues of weak enforcement by providing patent owners with an effective patent linkage right of appeal. Changes must be made to Canada’s IP laws in order to restore certainty to Canada’s distorted patent system and clarify the expectations of the patent utility doctrine. Canada should also extend data protection regulations and increase the scope of products that may be classified as “innovative drugs.” Finally, Canadian policymakers should enact legislation to define a rare disease and encourage Canadian firms to intensify their research and development of new therapies. The adoption of these changes would help to bring the Canadian regime in line with international standards.

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Cost of Government Debt in Canada, 2017

Budget deficits and increasing debt are key fiscal issues as the federal and provincial governments prepare to release their budgets this year. Combined federal and provincial net debt has increased from $833 billion in 2007/08 to a projected $1.4 trillion in 2016/17. This combined debt equals 67.5% of the Canadian economy or $37,476 for every man, woman, and child living in Canada.

Debt accumulation has costs. One major consequence is that governments must make interest payments on their debt similar to households which must pay interest on borrowing related to mortgages, vehicles, or credit card spending. Spending on interest payments consumes government revenues and leaves less money available for other important priorities such as spending on health care and education or tax relief.

Canadian governments (including local governments) collectively spent $62.8 billion on interest payments in 2015/16. That works out to 8.1% of their total revenue that year and $1,752 for each Canadian or $7,009 for a family of four. The total amount spent on interest payments is approximately equal to Canada’s total spending on public primary and secondary education ($63.9 billion, as of 2013/14, the last year for which we have finalized data).

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Did the Coal Phase-out Reduce Ontario Air Pollution?

In 2005, the province of Ontario began a process that would eventually lead to the phasing out of its coal-fired power plants, the largest of which were the Lambton and Nanticoke facilities in southern Ontario. The rationale for shuttering these plants was a 2005 cost-benefit analysis that assumed that about $3 billion in annual savings to the health care system would come from the reduction of smog-related air contaminants. However, that analysis, and another one done for the province the same year on the effects of cross-border air pollution, reported that the phase-out of coal would have only very modest effects on Ontario air quality, which is consistent with emissions inventory data showing that electric power generation was a minor contributor to particulate and ozone pollution at the time. The cost savings estimate came from assuming very large health effects associated with very small changes in air pollution.

In the aftermath of the coal phase-out, and the extremely costly changes to the electricity system this transition required, we examine whether the removal of coal from the grid explains changes in air pollution levels since 2002. We develop statistical models of air pollution concentrations in Hamilton, Toronto, and Ottawa, looking at monthly average levels of fine particulates (PM2.5, or particulate matter smaller than 2.5 microns), nitrogen oxides (NOx) and ground-level ozone (O3). Our explanatory variables include electricity generation from coal-fired and natural gas-fired power plants, NOx and PM2.5 emissions from other sources in Canada and the US, weather conditions, and seasonal indicator variables.

We find the elimination of coal was associated with a reduction in average urban PM2.5 levels by about 1 to 2 mg/m3 (about 6–12 percent from the peak levels), but the effect was not statistically significant in Toronto or Hamilton. We find no evidence that the coal phase-out reduced NOx levels, which were instead strongly affected by reduction in US NOx emissions. We find a statistically significant reduction in peak O3 levels from the coal phase-out, offset by a significant increase associated with natural gas plant emissions.

Overall, we conclude that the coal phase-out yielded small improvements in air quality in some locations, consistent with projections done prior to the plant closures, which were comparable in size to projected air quality improvements that could have been achieved through installation of new pollution control systems rather than closing the plants. This has implications for understanding the costs and benefits of a coal phase-out, such as the one being contemplated in Alberta.

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