Monthly Archives: September 2016

Atlantic Canada offers guidance on aboriginal education

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By Joseph Quesnel, AIMS Fellow

Six months after pledging historic investments in indigenous education within the federal budget, Prime Minister Trudeau is now being criticized for the pace of new funding.

The former Conservative government tried to reform Aboriginal education with one major national piece of legislation called the First Nations Control of First Nations Education Act.

There was nothing wrong with the proposed Act per se, as it did propose a major overhaul of education standards for First Nations students, especially on band-operated schools, where those standards were needed.

However, perhaps less of a national, one-sized-fits-all model was needed. First Nations communities and regions are quite different, despite facing many of the same challenges.

One model of Aboriginal education reform in Atlantic Canada could perhaps provide guidance. In 1999, the Mi’kmaw community of Nova Scotia won the legal right to manage their own education system. The Mi’kmaw Kina’matnewey became the education authority for 13 Mi’kmaw communities across Nova Scotia. One chief strength of the authority was its ability to act as a “school board” of sorts to support local band schools. This was something many band schools lacked across Canada. Band schools lacked enforceable standards. The authority was able to improve education standards and promote Mi’kmaw language and culture. Most importantly, the First Nations graduation rate in Nova Scotia increased to 88 percent, compared to the national average of 35 percent. This is very important given that new jobs in the trades and in the natural resources sector require Grade 12, and these are areas where we can tap the younger Aboriginal population.

Perhaps the answer is to roll out accountable and transparent aboriginal education reforms on a provincial or regional basis.

Equalization’s Negative-Option Agreement; or How Provinces Learned to Stop Developing and Love the Transfer

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By John Williamson, Vice-President, Research

Under Canada’s equalization program, Ottawa transfers nearly $18-billion to provinces with less-robust economies. Today, the three Maritime Provinces receive $3.8-billion each year. Quebec’s allotment is $10-billion.

Provincial governments collect tax and royalty revenues from natural resource development, like drilling for oil or fracking shale gas. Equalization, at one time, was reduced by one dollar for each new tax dollar a province collected from its non-renewable resources. But for some provinces, losing a dollar in equalization for a dollar earned from resources wasn’t enough of an incentive to encourage economic growth. So Ottawa changed its formula. The equalization clawback dropped from 100% to 50% on new resource revenues. That way any have-not provinces that developed local economies would be financially ahead.

Yet, Quebec and the Atlantic Provinces still do not permit hydraulic fracturing of shale gas deposits. They say it is unsafe. Never mind that Saskatchewan, Alberta and B.C. all frack for gas and have prospered economically while safeguarding the environment. Or that equalization is funded, in part, by the development of shale gas resources in western Canada.

One problem with Canada’s equalization program is how it accepts the attitude behind negative-option billing. Negative-option billing is the practice of companies charging consumers for a good without consent by assuming consumers want the product. Equalization is the mirror opposite. Instead of being billed for something, the equalization recipient provinces are sent federal dollars. No questions asked. If they do nothing, they keep the money. A province only forgoes 50¢ of its transfer for every $1 earned when its acts by developing non-renewable resources. But that requires some economic effort.

Consumers hate negative-option billing for good reason. It’s an gratuitous business practice that assumes acceptance of a transaction without notice or even a handshake. But for eastern governments the offer of receiving equalization dollars for no effort is a perfect arrangement. So long as Quebec and Atlantic governments don’t develop shale gas resources the equalization transfers will continue to arrive. That this arrangement has resulted in slow-growth, high unemployment economies is a regrettable by-product of equalization that should be discussed.

 

Hurting the poor with wage policies

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By Marco Navarro-Génie, President & CEO

Advocates of higher minimum wages often believe that higher wages alone will help lift people out of poverty. While on an individual basis there is a common but simplistic sense that this is true, the aggregated economic reality is different. Forcing wages up artificially hurts those who are employed in low-wage jobs.

Economies are vast collections of transactions and relationships that echo in various directions, often unforeseen.

A new study into Seattle’s minimum wage hike to $11 per hour shows results that were contemplated by market theory. Such results should give Atlantic Canadian (and Alberta) governments pause when suggesting $15 CDN per hour or more.

The study found that workers end up with less money in their pockets:

  1. While some workers made more per hour than before, fewer workers were employed in the same jobs.
  2. Many of those still employed before the increase were subsequently working fewer hours.
  3. There is an increase in automation of low end jobs.  McDonald’s restaurants, as an example, are now experimenting with the automation of food orders.

There is no magic involved in having predicted that this would be so.  When the cost of labour goes up, businesses with limited resources can purchase less of it.  One can afford less labour hours, so one cuts employee positions or the number of work hours if one keeps all employees.

In a robust economy like Seattle’s the net result is that forcing wages upward hurts those the policy claims to help, the poor.  In a region like Atlantic Canada where we already struggle with unemployment, the consequences of pushing minimum wages upward so dramatically could have dire consequences.