C.D. Howe Institute

Ottawa's Swelling Hidden Pension Deficit Adds $120 Billion to Federal Debt

TORONTO, - Ottawa's unfunded liabilities for employee pension plans rose to $272 billion in 2013, far larger than reported, according to a new C.D. Howe Institute study. In "Ottawa's Hidden Deficit: The Widening Gap between Federal Government Pension Liabilities and Assets," authors William B.P. Robson and Alex Laurin find the value of federal employee pension promises is much larger than shown on the books, and still growing.

Unequal Pay for Equal Work: Fixing Ottawa's Pay Problem: C.D. Howe Institute

TORONTO, - Federal public servants have pension guarantees in their defined-benefit pension plans that are mispriced, causing Ottawa to seriously underestimate the cost of the pension plans and the total compensation of its employees, according to a report released today by the C.D. Howe Institute. In "Evaluating Public-Sector Pensions: Are Federal Public Servants Overpaid?" respected pension expert Malcolm Hamilton says this advantageous situation for members of the main Public Service Pension Plan exacerbates the growing compensation gap between federal public-sector employees and their private-sector counterparts.

Blown Budgets: Canada's 2013 Fiscal Accountability Rankings

TORONTO, - Canada's senior governments have regularly missed budget spending and revenue targets during the last decade, with spending overruns of $47 billion combined, according to a report released today by the C.D. Howe Institute. In "Credibility on the (Bottom) Line: The Fiscal Accountability of Canada's Senior Governments, 2013," authors Colin Busby and William B.P. Robson rank the performance of Canada's federal, provincial and territorial governments for hitting budget targets and providing transparent financial reports. Each spring, legislatures vote budgets that set out their spending and revenue goals for the fiscal year, note the authors. Budget votes are critical for holding governments accountable to legislators, and in turn to voters and taxpayers. Over the last decade, however, Canada's senior governments have significantly overshot their spending targets. "More accuracy in hitting budgeted amounts would have made today's taxes and public debt lower," Robson points out.

The Real Problem with Public-Sector Pension Plans

TORONTO, - While public debate has mainly focused on the "gold-plated" defined benefits of many public-service pension plans, the real problem lies in a flawed approach to managing compensation costs, according to respected pension expert Malcolm Hamilton. In, "Evaluating Public-Sector Pensions: How Much Do They Really Cost?" Hamilton says the problem is government sponsors who typically underestimate the cost of guaranteeing pay-outs in the future, leading to the undervaluation of employee pension costs and the mismanagement of employee compensation.

Ontario Should Consider the Merits of the "Middle-Way" to Pension Reform

TORONTO, - As Ontario pushes ahead with pension reform to improve retirement security for its citizens, it should consider a "middle-way" solution between current competing visions for reform, according to a report released today by the C.D. Howe institute. In "Helping Ontarians Save for Retirement: How the Province Could Adapt the Canada Supplementary Pension Plan," author Keith Ambachtsheer recommends an approach that avoids the potential pitfalls of two existing options: an expanded Canada Pension Plan (CPP) on one hand, or reliance on Pooled Registered Pensions Plans (PRPPs), on the other.

Canada’s Vulnerability to Potential Eurozone Turmoil

Toronto – The continuing possibility that things could take a turn for the worse in the eurozone ought to be a concern for Canadian policymakers, according to a report released today by the C.D. Howe Institute. In “The Ill Wind that Blows from Europe: Implications for Canada’s Economy,” author Pierre Siklos explores the linkages between the Canadian and eurozone economies and the extent to which contagion from European financial shocks would negatively affect Canada’s economy.

Needless Duplication of Registration Requirements Hinders Business Expansion across Canada

TORONTO, - Canadian businesses face costly red tape when they want to do business across provincial borders; a problem that is hindering business expansion and economic growth, according to a report released today by the C.D. Howe Institute. In "Registering in Harmony: The Case for Pan-Canadian Corporate Registration," authors Daniel Schwanen and Omar Chatur note that while harmonization of corporate registries is proceeding apace around the world, in Canada, incorporated companies are required in most cases to register separately in every province where they want to conduct business.

The False Security of Complex Financial Regulation - and What to Do About It

In the wake of a series of crises, international and domestic financial regulation has become highly complex and prescriptive, but doesn't address the fundamental issues behind the crises, according to a report released today by the C.D. Howe Institute. In "Shareholder Liability: A New (Old) Way of Thinking about Financial Regulation," author Finn Poschmann finds the regulations ignore history and human behavior. He recommends greater reliance on an incentives-based approach for financial institutions, which shares the risks among bond buyers, shareholders and depositors, as a better backstop to financial stability.

Missed Inflation Targets and the Case for Price-Level Targeting

While the Bank of Canada has quietly shelved consideration of moving to price-level targeting as a basis for monetary policy, the merits of this approach remain strong, according to a report released today by the C.D. Howe Institute. In "Price-Level Targeting: A Post-Mortem?" author Steve Ambler finds price-level targeting has convincing advantages over inflation-targeting, especially as a tool for avoiding the worst consequences of economic downturns.

Controlling Ottawa's Employment Costs Key to Achieving Durable Surplus: Shadow Budget 2014

In "Equipping Canadians for Success: A Shadow Budget for 2014," authors William B.P. Robson and Alexandre Laurin urge a near-term focus on the average compensation cost of federal employees as part of spending control measures to achieve a durable surplus.

How to Lower the High Cost of Flying

TORONTO, - Canada's airports and airlines are hobbled by federal government policies that send travelers' costs soaring, according to a report released today by the C.D. Howe Institute. In "Full Throttle: Reforming Canada's Aviation Policy," author Benjamin Dachis finds high fares are symptomatic of wider problems in the aviation industry that Ottawa should address with sweeping policy reforms.

Report Shows Cities with Best and Worst Fiscal Accountability

TORONTO, - Opaque budgeting methods and financial reports in Canada's major cities baffle councilors and taxpayers, according to a report released today by the C.D. Howe Institute.

Service Exports Help Drive Growth in Well-paying Jobs

TORONTO, - While manufacturing has been struggling to recoup job losses, Canada's tradable services sectors have been expanding, providing an increased number of well-paying jobs in Canada in the midst of tough economic times, according to a report released today by the C.D. Howe Institute. In "Tradable Services: Canada's Overlooked Success Story," author Daniel Schwanen finds the relative strength of the Canadian economy has shifted towards the services side, and policy should now seek to exploit that strength. "Tradable services are an area of strength for the Canadian economy, and certainly one of relative success when it comes to exports and the creation of 'good' jobs," commented Schwanen.

Investors from US, Mexico to Benefit from Canada-EU Trade Deal

TORONTO, - Investors from US and Mexico and other third-party countries will benefit from the Canada-EU trade deal when it comes to investing in Canada, according to a report released today by the C.D. Howe Institute. In "Who Else Benefits from CETA? Some Implications of Most-Favoured Nation Treatment," respected trade lawyer Lawrence L. Herman concludes that investors from countries that have preferential trade agreements with Canada will be entitled to the same preferential benefits as EU investors under the Canada-EU trade deal.

Low Investment Returns Expected to Squeeze Retirees, Pension Plans

TORONTO, - Low investment returns loom in the decades ahead, spelling bad news for retirement savers and pension plan managers, according to a report released today by the C.D. Howe Institute. In "Long-Term Returns: a Reality Check for Pension Funds and Retirement Savers," authors Richard Guay and Laurence Allaire challenge widely used "optimistic" assumptions for investment returns based on historic experience, with more realistic ones using current Canadian data.

Making Canada’s Foreign Aid Work: Lessons from the Bangladesh Tragedy

Toronto, ON – Canada’s foreign aid could be more effective, were strategies in place that addressed the problem of weak host-country governance, which currently renders aid inefficient or even counter-productive, according to a report released today by the C.D. Howe Institute. In “Diplomacy, Trade and Aid: Searching for “Synergies,” author John Richards proposes a mix of corporate social responsibility for Canadian firms engaged in trade with low-income countries, diplomatic involvement in aid projects, and aid projects designed to address problems of “weak” host-country governance.

Time to Focus on Patient Use of "Outside" Doctors for Primary Care - C.D. Howe Institute

TORONTO, - Ontario healthcare reforms have made headway in improving access to primary care by implementing the "capitation" model where doctors are paid mainly for a roster of patients rather than fee-for-service - but too many of patients are still using "outside" doctors, according to a report from the C.D. Howe Institute. In "Accountability and Access to Medical Care: Lessons from the Use of Capitation Payments in Ontario," authors Åke Blomqvist, Boris Kralj and Jasmin Kantarevic suggest an area for further reform would be to encourage patients to stick to their regular doctor.

Who Benefits Most from Billions in Postsecondary Tax Credits? Not Low-Income Families

TORONTO, - Postsecondary tax credits cost the federal and provincial governments billions of dollars each year, but are not distributed equitably and may have no proven effect in boosting enrolment, according to a report released today by the C.D. Howe Institute. In "What You Don't Know Can't Help You: Lessons of Behavioural Economics for Tax-Based Student Aid," author Christine Neill finds flaws in the design of postsecondary tax credits and recommends they be better-targeted at low-income families that need them most.

Canada Lagging Peers in 2013 Business Investment Growth: C.D. Howe Institute

TORONTO, - After several years of relatively robust performance, Canada is lagging its peers in business investment growth, according to a new report by the C.D. Howe institute. In "Equipping Canadian Workers: Business Investment Loses a Step against Competitors Abroad," authors Benjamin Dachis and William B.P. Robson find 2013 growth in new private-sector plant and equipment spending per worker in Canada seems likely to lag investment abroad, with strength in the more natural-resource-oriented provinces offset by weakness in Central Canada and the Maritimes.

Business Property Taxes Bite into New Investment

TORONTO, - Business property taxes are a major part of the tax burden on new business investment that can tip the balance in the competition for capital among Canadian cities and provinces, according to a report released today by the C.D. Howe Institute. In "What Gets Measured Gets Managed: The Economic Burden of Business Property Taxes," authors Adam Found, Benjamin Dachis, and Peter Tomlinson conduct groundbreaking research into the impact of business property taxes (BPTs) in localities across Canada and show where they are highest and lowest.