Today’s op-ed by Scott Stinson in the National Post reflects the growing frustration among Canadians and a variety of thought leaders and advocacy groups that little is being done by Ottawa or Queen’s Park to examine potential models of fundamental health care reform.

As Stinson aptly notes, health care gained some traction in the last federal election, but only to the extent that current levels of transfer payments to the provinces would be maintained at 6% for the foreseeable future.  A new report this week from the Canadian Medical Association (CMA) is another wake up call for government leaders (whom are well aware of the health care sustainability challenge) to step forward in a bold fashion and convene a variety of stakeholders to determine how best to sustain a system we are accustomed to and make it more efficient.

For Ontario, this higher level of efficiency and value for public dollars invested becomes increasingly important as our population increases by 28% by 2030.  Our senior population is projected to represent one in five of all Ontarians by this time.  With 42 cents of every program dollar already going towards health care, what level of “distress” is the right time to roll up our sleeves and truly address this dilemma?

No doubt, health care reform is a highly sensitive topic and Canadians across the political spectrum are deeply passionate about it.  Nevertheless, there will come a point at which it is no longer simply easier to ignore the matter or delay the point of crisis with additional funding – at the expense of other public spending priorities.  Think transportation gridlock for instance?  Is it so difficult to put aside our ideologies and pause for a constructive conversation about the health care system?  A dialogue that is open to all ideas and one that is built on a spirit of cooperation?  Whether or not there is enough of a public appetite for health care reform to become a top campaign issue in the upcoming provincial election, November’s Ontario Economic Summit will tackle it head-on.  We look forward to facilitating a genuine debate and strategy session among a cross-section of economic leaders who will seek to uncover dynamic solutions to this very complex challenge.

Photo source: Flickr (nihilenz)

A spirited debate is underway about the relative merits of cutting corporate tax rates to remain internationally competitive for investment dollars and to encourage job creation in Canada.  The current federal election campaign has brought additional attention to the matter, with the Conservative Party vowing to continue with planned reductions in corporate income tax (CIT) rate, which currently sits at 16.5% from a level of 18% in 2010.  A further reduction to 15% is scheduled to take effect in 2012.  The Liberal Party of Canada would like to see a retreat to 18%, arguing that the cuts are not necessary and the revenue is needed to fund for healthcare, childcare, education and other priorities while the NDP have similar concerns and pledge to keep the combined federal/provincial CIT rate below that of the United States. 

A study released last week by the Centre for Policy Alternatives and authored by CAW economist Jim Stanford argues that historical evidence illustrates that business tax cuts are both “economically ineffective and distributionally regressive.” One time OES speaker and renowned economist Jeffrey Sachs is similarly concerned about this global trend, calling on governments to resist the international “race to the bottom”.  Sachs says countries are being “gamed by global companies that are playing off our governments, one against the other.”  Sachs says the United States should champion a multilateral agreement to increase taxes on corporate income.  Laura D’Andrea Tyson, who chaired President Clinton’s Council of Economic Advisors disagrees, insists that higher corporate tax rates undermine growth and competitiveness and that the European Union cannot agree on harmonizing CIT rates for its member states, let alone with the U.S. and other nations.  Jack Mintz, an economist at the University of Calgary says that planned cuts to the federal CIT rate will generate 100,000 jobs and $30 billion in new investment.  As for Ontario, the provincial government started reducing its CIT rate from 14% at the beginning of last year to 12% in July of 2010 and is on course to reduce it further to 10% by July of 2013. 

So with all this difference of opinion on the merits (or lack thereof) of reducing corporate tax rates further, who’s got it right?  It’s important to remember that CIT isn’t the only way that revenue is generated.  For instance, consumption taxes are relied on more heavily as a source of revenue throughout Europe.  Moreover, effective tax rates are sometimes lower than the original CIT because of various loopholes that companies can leverage.  As the Globe and Mail’s Barrie McKenna points out in his insightful piece “Corporate taxes: to cut or not to cut?”, CIT is just one part of the tax package and one factor (albeit an important one) in the investment attraction mix.  Essentially, it’s how important this element is in fostering economic growth that is up for debate.  In short, where is Canada’s “sweet spot” on CIT rates?  Feel free to provide your own comments and opinions below!

The Honourable Kathleen Wynne, Minister of Transportation discussed culture shifts and challenges facing Ontario’s transportation infrastructure while speaking to OES delegates. The transportation industry is working hard to generate innovative policies and plans that not only uphold key values such as safety, but also address the changing needs of the public.

Wynne focused on three key cultural shifts:

• The new economy: Ontario is an “export-driven economy” which relies heavily on the transportation of exports and imports more so than in the past. This is extremely important to Ontario’s transportation infrastructure because 70 percent of Canada’s imports and exports travel through the Ontario/ U.S. border.  It is vital that the transportation infrastructure meets the needs of today’s new economy.
• New focus on the environment: There is an increasing desire to consider the environment when implementing plans and policies. Effort is being made to develop and encourage sustainable models of transport, including electric cars. Wynne described an ambitious goal of having 1 in every 20 cars on the road be electric by 2020. Rebates have already been put into place in order to generate more incentives for the public to make this shift to hybrid vehicles.
• Continued pursuit of safety: Safety has long been a key goal and continues to rank high in terms of importance within the transportation industry. New policies on acceptable blood alcohol levels and the move to deter people from using cell phones and other electronic devices while driving have already been put into effect.

These new policies not only reflect the transportation industry’s desire to stay on top of cultural shifts, but also a need to engage the public, as well as the government. As Wynne stated, the “government is part of the solution but not the whole solution,” an idea that has been expressed throughout the day.

Tomorrow’s keynote address will focus on changes to the global economy and what this means for Ontario.

Written by: Elizabeth Morris and Milica Petkovic

Paul Lucas, President and CEO of GlaxoSmithKline Inc., spoke about one of the main themes of this year’s Ontario Economic Summit (OES) – innovation. Lucas believes that “innovation is a do or die issue for Ontario.”

In Canada, the act of innovation is failing. “If businesses do not act quickly Canada’s standard of living and competitiveness are at risk,” Lucas says. Over the past decade, Canada has only risen 0.7% in innovation and productivity. This is only half the pace Canada attained in the last two decades. As a result of this decline in innovation, Lucas and the Coalition for Action on Innovation in Canada imposed the Action Plan of Prosperity.

“Canada must become a nation of innovators,” Lucas advises with concern of the coming demographic challenge.  Changing demographics (aging population and shrinking workforce) will require Canadians to earn more money for their work. With the decrease in employed Canadians and taxpayers, employers will find it difficult to bring in proficient employees.

The emphasis on the responsibility for innovation lies within the private sector of Canada. Lucas and guest panelists believe that businesses, academia and the government must work together to execute successful innovations in Canada’s economy. “Public sector funding alone is not in the cards for the future,” Lucas predicts, “the government needs to instill the right policy framework, while the private sector is under pressure to increase innovation.”

Dr. Rafi Hofstein, President and CEO of MaRS Innovation, referenced local initiatives for innovation, stating, “Local governments have to help us establish the right ambiance. Every region has unique features that need to be nurtured.” At all levels of Canadian government and businesses, innovation is a necessity in today’s economy.

Written by: Katie Laviolette and Stephanie Porter