Policy Options


"From the editor's desktop" by William Watson

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"The Axworthy view and its dilemmas" by Denis Stairs

Foreign Affairs Minister Lloyd Axworthy seeks nothing less than a transformation of the international political system. His emphasis on "human security," which judges national policies by how they affect the people who live under them, lies four-square in the liberal tradition and aims at the very best in us. That being said, most countries remain jealous of their traditional prerogatives as nation-states; Mr. Axworthy's many allies among the non-governmental organizations lack political legitimacy; and a thorough-going human security agenda will require greater sacrifices than Canadians so far have had to make. The road ahead may therefore be difficult, though it is one worth travelling.

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"Lloyd Axworthy makes Pearsonianism permanent" by Richard Gwyn

The end of the Cold War has left US foreign policy adrift and purposeless. In Canada, by contrast, it has freed us to become international activists, a role that opinion polls suggest Canadians very much want their national government to play. Why the difference between the two countries? First, because in seeking to do good deeds internationally we can both find and express our nationalism. Second, because these days international politics is a pluralist, time-consuming, consultative business, with many players and stakeholders - in other words, just like the Canadian politics in which our officials and foreign ministers get their training. The world, in sum, is an increasingly Canadian place.

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"How do we cut high marginal tax and tax-back rates?" contributions by Frances Woolley, Robin Boadway, Jim Davies, Jon Kesselman, Pierre Lefebvre, and Richard Shillington

A fact that has been overshadowed in the recent fuss over high tax rates and the brain drain is that the highest marginal income tax rates of all are paid by lower- and middle-income Canadians. On balance, they often don't pay tax but are instead net recipients of government transfers. At the margin, however, on the next dollar of income that they earn, they often face income tax rates that far exceed the minimum statutory rate of 17 per cent for Ottawa, plus whatever their province adds on to that. The reason is that, in addition to the official income tax, they face clawbacks of the child tax benefit, the GST tax credit and other social benefits. In a study for the C. D. Howe Institute published in March of last year, University of Western Ontario economist James Davies calculated that tax rates went as high as 80 per cent, and he estimated that the average marginal rate faced by Canadian taxpayers was 51 per cent. Similar studies by Bev Dahlby of the University of Alberta and Alan Macnaughton of Waterloo University have come to similar conclusions.

If high tax rates discourage effort, saving and investment at the top end of the income distribution, the even high rates faced by lower- and middle-income Canadians presumably have the same kinds of effects. But how do we reduce these harmful effects? Ending income testing and going back to universality would get rid of the tax-backs, but presumably it would also require even higher statutory tax rates to finance the larger public expenditures that would be implied.

Is there a way out of this conundrum? We asked several of Canada's foremost experts in this area for their thoughts. Here's what they had to say.

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"The great Canadian paradox meets the reality principle" by Guy Laforest
"Un Canada uni : comprendrait-il les Autochtones ?" by Ovide Mercredi

"Imagine!" wrote John Lennon. Imagine the national unity question were finally solved. What issues should the country turn to then? Two prominent Canadians give us their views.

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"Justice policy and democratic principles" by Kim Campbell
"Who will guard the guardians?" by Bob Rae

At the IRPP co-sponsored conference, "Guiding the rule of law in the 21st century," held last April in Ottawa, two distinguished former politicians gave their thoughts on democracy, justice, politics, choosing judges, monitoring the police, and a number of other compelling issues. Here are the edited comments of Kim Campbell, former prime minister and minister of justice, and Bob Rae, former Premier of Ontario.

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"Job market training: the social union in practice" by Thomas Klassen

Before there was a social union agreement, there was a negotiated transfer to the provinces of federal funds, employees and responsibilities in the area of training for the unemployed. The good news about the transfer is that it appears to have gone relatively smoothly. The bad news about it is that it: emphasizes the goal of short-term employment rather than long-term employability; creates a patchwork of job training policies across the country; and lets both levels of government get away with blaming each other for any deficiencies in how training programs are delivered. These problems may not seem serious when the labour market is performing smoothly, but come the next recession these weaknesses will be apparent.

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"In workers' comp., higher benefits mean lengthier claims" by Michele Campolieti and John N. Lavis

Over the last three decades, as the rate of workplace injury has declined, the overall spending of workers' compensation boards (WCBs) has risen rapidly. Research suggests that increases in compensation benefits have induced changes in the frequency of hard-to-diagnose and hard-to-treat injuries such as back strain. Policies that combine reductions in compensation benefits with increased efforts to prevent injuries and reduce the duration of compensation claims might well stem the growth of expenditures and reduce the accumulated net liabilities of WCBs.

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"Accessibility to job-related training in Canada" by Tiziana Carafa

Continuous training is more and more crucial to economic productivity. Current surveys reveal that employed workers are much more likely to undertake training than unemployed workers are. One reason is that most training is financed by employers. Their interest is in getting the biggest productivity return for their training dollar. This often involves training those who already have higher education, skills and incomes. If greater emphasis on training is not to increase the polarization of incomes, governments and labour unions must take steps to see that training is more widely accessible in Canada.

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"The coming revolution in regulating our forests" by George Hoberg

Forest management practices traditionally have been regulated by governments. But, as evidenced by Macmillan Bloedel's recent decision to abandon clear-cutting in coastal British Columbia, the most effective regulation is currently coming from private standards associations. For the moment, the Forest Stewardship Council (FSC), which is headquartered in Mexico, seems to have the greatest influence on companies. Because the FSC's principles require it to consider the interests of all stakeholders in the forest industry, for-profit corporations have some leverage over its decision-making. By joining the FSC and participating in its deliberations, BC's forest companies are in the process of testing just how much. The industry's future hinges on the outcome.

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Book review: Hugh Benevides reviews Canada v. the Environment: Federal Environmental Assessment 1984-98, by Stephen Hazell

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Book review: William Watson reviews Dutch: A Memoir of Ronald Reagan, by Edmund Morris

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