The Final Push: Canada and the Trans-Pacific Partnership (TPP) Trade Deal

In this guest post, authors Arne Ruckert, Ronald Labonté and Ashley Schram outline what’s at stake for Canada in the Trans-Pacific Partnership Trade Deal. This is an update of a piece originally posted at the Centre for International Policy’s Blog (updated 28/9/2015). Arne Ruckert is a Senior Research Associate in the Faculty of Medicine and a part-time Professor in the School of Political Studies at the University of Ottawa. Ronald Labonté is Canada Research Chair in Globalization & Health Equity, and Professor, School of Epidemiology, Public Health and Preventive Medicine at the University of Ottawa. Ashley Schram is a PhD candidate in Population Health at the University of Ottawa studying the health impacts of international trade and investment agreements. 

The Trans-Pacific Partnership is nearing the end game of negotiations, creating a market of 800 million people with a combined economic clout of US$28-trillion annually. After the US Congress granted fast-track authority to President Obama, a final agreement amongst the 12 Pacific-rim countries involved in the trade deal is now within reach. Reportedly ‘98% done’ trade ministers are meeting in Atlanta in early October to see if they can clinch an agreement. So what’s at stake for Canada?

Agricultural market access remains a sticking point for some of the TPP’s prospective members. Media coverage of the TPP in Canada has been dominated by Canadian supply management in dairy and poultry, which limits market access in these products for other countries. Canada is under pressure in the press and from some TPP countries to dismantle supply management if it wants to remain part of the final negotiations. Yet Canada has participated in past free trade deals without dismantling supply management, with Canada’s Minister of International Trade Ed Fast stating that “supply management has never prevented us from concluding trade agreements, and we have confidence that we will be able to do that with the TPP as well” (cited in Lu, 2015).

There are good (health and broader public policy) reasons for why Canada would want to continue with supply management, including guaranteeing a safe and stable stock of dairy and poultry products at affordable cost. A reasonable compromise for Canada would be maintaining its supply management but making some concessions in terms of increasing market access for other TPP countries in these products. However, latest reports indicate that Canada could provide sufficient market access to American dairy producers that it could tip the supply-management system into a fast (or slow) track to its end. The triangulated deal would have New Zealand dairy gain greater access to the US, the US gain greater access to Canada and Canada (perhaps) gain greater market access across the TPP for its beef exports. Health concerns or food security issues do not appear prominent in any of these compromises, and Canada’s dairy farmers are not amused. Similarly, rules of origin for the auto sector to which two TPP countries have already agreed (the US and Japan) could cost a large number of already rather beleaguered Canadian autoworkers.

There are other areas of the TPP overlooked in most media discussions that have potentially much stronger and lasting impacts. Foremost is Investor-State–Dispute Settlement (ISDS) provisions, which will grant multinational corporations the right to sue TPP governments over public policy decisions perceived as damaging to their investments and business operations (Hilary, 2014; Ruckert, Schram, Labonté, 2015). Canada is already the most sued developed country in the world because of NAFTA’s ISDS process, and the TPP will significantly increase the number of foreign investors eligible to sue (Sinclair and Trews, 2015). Strong civil society and academic critiques of ISDS have recently led to greater caution about how they should be included within new trade treaties. The Transatlantic Trade and Investment Partnership (TTIP) under negotiation between the US and the EU also contains an ISDS chapter, with concerns about its provisions voiced on both sides of the ocean. Rather than reject ISDS outright, European parliamentarians in July passed a compromise amendment which calls for replacing the ISDS system “with a new system…subject to democratic principles and scrutiny, where potential cases are treated in a transparent manner by publicly appointed, independent professional judges in public hearings and which includes an appellate mechanism, where…the jurisdiction of courts of the EU and of the member states is respected, and where private interests cannot undermine public policy objectives.” (Bridges Weekly, 2015: 4). The EU amendment appears to address many of the critics’ concerns with ISDS, and the Canadian government should push for the TPP to adopt a similar position. Investor protection would be strengthened, but so would government’s ability to pursue new public policy objectives without fear of an investor challenge.

The TPP also proposes to extend intellectual property rights (IPRs) with implications for drug costs, whether paid for publicly or privately (Hirono et al, 2015; Sinclair, 2013). This is of particular relevance for Canada, which already has the second highest drug prices in the world (Sinclair and Trew, 2015). A recent leak of the TPP IPR chapter shows that the major outstanding disagreements over IPR relate to “patent linkage” and expanded protection of biologics (Grunwald, 2015). Patent linkage prevents the registration and authorization of generic medicines until after the expiry of patents, considerably delaying generic market entry (Canadian Generic Pharmaceutical Association, 2012). Although Canada already has a patent linkage system in place, the TPP is the first time this system would be written into trade treaty obligations, interfering with future cost-saving reforms (Sinclair and Trew, 2015) and weakening the vibrant Canadian generic pharmaceuticals industry which is responsible for the production of two out of every three prescription drugs in Canada. A recent analysis of the draft intellectual property chapter of the TPP suggests that the US has been advocating for patent linkage to extend to biologics, along with a request for longer periods for data exclusivity. It also notes that many TPP member states have been opposed to extended IPRs (Grunwald, 2015), which would provide Canadian negotiators with a platform from which to  limit any extension of IPRs in pharmaceuticals beyond those already present in the World Trade Organizations TRIPS agreement.

Finally, TPP provisions for regulatory coherence and transparency have received relatively little mention. As with all recent free trade agreements, the TPP is only marginally about trade, and more about harmonizing regulations (financial, health, and safety standards, etc.) (Sinclair and Trew, 2015). The leaked regulatory coherence chapter outlines various expectations, including the obligation to encourage the use of regulatory impact assessments (RIAs) as practiced in the United States. The proposed regulatory model contains numerous pro-market factors that governments should consider when making domestic regulations. The obligations outlined in the regulatory coherence chapter are explicitly linked those in the transparency chapter (Kelsey, 2015). The transparency chapter (which has not been leaked) is expected to confer rights to affected commercial interests to participate in regulatory processes. The two chapters together will essentially impose: high-level behind the border disciplines on governments through market-centric norms; an ideologically driven commitment to light-touch regulations (whose detrimental effects are best seen in the global financial crisis of 2008); and a structured role for private and especially corporate interests to shape domestic regulations and policy-processes (Kelsey, 2015). Some TPP countries, especially those with developing country status, have raised concerns about these two chapters. Canada should align with these concerns and support their resolution within any final agreement.

Canada should be courageous enough to stand up to the United States (the main force behind these negotiations) and to form coalitions with TPP member countries that have similar concerns about these remaining TPP issues. It has precious little time left to do so. Ultimately, there is no point in signing on to a free trade agreement that represents very little economic benefit to the Canadian economy (and quite possibly economic loss), but which has major political and social implications, including the potential to hamper Canadian sovereignty and to undermine its regulatory autonomy.

References:

Bridges Weekly (2015). TPP Countries Gear Up for High Stakes Ministerial Meeting. Retrieved from: http://www.ictsd.org/sites/default/files/review/bridgesweekly19-25.pdf

Canadian Generic Pharmaceutical Association (2012). Position on the Trans-Pacific Partnerships (TPP) Negotiations, Retrieved from: http://www.canadiangenerics.ca/en/advocacy/tradenegotiationi.asp

Gruwnald, M. (2015). Leaked: What’s in Obama’s Trade Deal? Retrieved from: http://www.politico.com/agenda/story/2015/06/tpp-deal-leaked-pharma-000126

Hilary, J (2014). The Transatlantic Trade and Investment Partnership and UK healthcare. BMJ 2014; 349: g6552.

Hirono, K. et al (2015). A Health Impact Assessment of the Proposed Trans-Pacific Partnership Agreement. Retrieved from: http://hiaconnect.edu.au/research-and-publications/tpphia/

Kelsey, J. (2015). How the Trans-Pacific Partnership Agreement Poses a Threat to National Sovereignty over Domestic Decision Making. Retrieved from: http://www.itsourfuture.org.nz/wp-content/uploads/2014/03/Regulatory-Coherence-paper.pdf

Lu, Seres (2015) Trade Minister Reassures Supply-managed Sectors ahead of TPP Talks, Retrieved from: http://www.theglobeandmail.com/report-on-business/trade-minister-reassures-supply-managed-sectors-ahead-of-tpp-talks/article25405222/

Ruckert, A., Schram, A. and Labonté, R. (2015). The Transpacific Partnership Agreement: Trading Away our Health? Canadian Journal of Public Health, accepted and forthcoming.

Sinclair, S. (2013, May). Opening remarks on Canada and the Trans-Pacific Partnership (TPP). Speech     presented at the House of Commons Standing Committee on International Trade, Ottawa Ontario. Retrieved from: https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2013/06/CanadaandtheTransPacificPartnership.pdf

Sinclair, S and Trew, S. (2015). The TPP and Canada. Fact Sheet, May 2015, Retrieved From: https://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2015/05/TPPandCanada.pdf

 

Canada and the post-2015 world: Part I

In this post, guest blogger Ronald Labonté introduces a two-part blog series about post-2015 development goals. Discussed are their relationship to health and specific steps Canada could take to encourage a healthy and progressive transition. Labonté holds a Canada Research Chair in Globalization and Health Equity at the Institute of Population Health, and is Professor in the Faculty of Medicine, University of Ottawa; and in the Faculty of Health Sciences, Flinders University of South Australia.

In 2000 the world committed to health and a paternalistic egalitarianism, as the Millennium Development Goals (MDGs) promised reductions in extreme poverty and hunger, and measurable progress in water and sanitation, education and a host of specific health targets. There was lots to criticize in the MDGs: lack of ambition in the targets (especially for poverty), failure to consider the already surging pandemic of noncommunicable diseases, lack of equity stratifiers for the targets, huge holes in the data used to measure progress, and a resounding silence on any of the economic and political systems that were fuelling global financial speculation, transnational corporate power and gross inequities in income and wealth. Still, the MDGs galvanized some important initiatives and have chocked up some successes.

As the 2015 clock on the MDGs ticks down, there’s been a flurry of intergovernmental, civil society and social mediated consultations on what the world’s nations should commit to next. If the 2000 MDGs were a bureaucratic exercise in synthesizing what states had already more or less agreed upon during the 1990s, the post-2015 has opened the floodgates to consultation processes to such an extent that one becomes either exhausted with keeping up with the opportunities to input, or cynical about why bothering to.

Bracketing an excess of cynicism to strike a balance between realism and defeatism, this two-part blog series offers a few reflections on the competing post-2015 goal streams and Canada’s potential role within them. The first post will reflect on sustainable development goals, the UN high-level panel, and health goals in the post-2015 context. The second post will discuss aid-for-trade and aid-for-taxation strategies, and summarize how Canada can prepare for the post-2015 world.

Sustainable Development Goals

No one outside of the US Tea Party any longer insists that climate change is a left-wing environmentalist plot. (Although it would be nice if there were more left-wing environmentalists at the political and economic levels where they are needed.) The problem with these goals, an output of the Rio+10 initiative, rests with the term itself, a throwback to the late 1980s Bruntland Commission (Our Common Future) (1) and the first wave of efforts to harness economic development to environmental sustainability. Back then Canada was a leader, jumping enthusiastically on the ‘roundtables on economy and environment’ governance ideal promoted by the Commission. I recall an environmental lawyer leaving one of such meeting, complaining that the business folks around the table ‘Just don’t get it!’ To which a senior government official gently chided, ‘Oh, but they do. You see, they got the noun and you got the adjective.’

We continue to live under the illusion that, with claims of a slowly greening economy, we can consume our way out of a problem of over-consumption. We can even invest our savings on the Dow Jones Sustainability Index, feeling better that our retirement returns derive from companies deemed to be operating in a ‘sustainable’ way. We just have to pretend that there is consensus on how to measure good corporate environmentalism so that we aren’t fooled by such as Pepsi-Cola’s claim that in India it is replacing more water than it takes to supply the sub-continent with its sugary beverages (2). As for our greening economy: Why should the USA use trade rules to challenge China’s heavy subsidization of its solar and wind turbine industries? Yes, it puts the US-based industries at a competitive disadvantage, but it drives up global prices and slows diffusion of possibly important climate change reducers. Why not exclude from trade rules subsidies on all new products that reduce the human environmental footprint, a race to the top rather than a slide to the bottom?

Canada scores very poorly on this account. Our exit from the Kyoto Accord in 2011 and our drive to become a fossil-fuel superpower have transformed Canada from a once-upon-a-time eco-leader (we were, after all, the birthplace of Greenpeace and home of the increasingly pessimistic David Suzuki) to one of the bottom-placing eco-destroyers. The potentially healthy challenge for Canada is that if the post-2015 goals achieve their mooted intent of applying to all countries, alongside the increasing anger of developing countries at the rich club reneging on its climate change commitments, we may be dragged back into accountable commitments to a greener future.

But the gravest challenge for a post-2015 sustainably developed future lies in the fallout of the Great Financial Crisis, which became the Great Recession and persists as the Great Austerity. Most domestic political attention has drifted back to conventional economics of spurring growth by re-energizing the real economy of production and consumption (jobs, jobs, jobs). This is saleable in the short-term, although the quality of new employment with respect to pay, benefits, security, and health and safety remain vexing complications under neoliberalism’s labour market ‘flexibilization’. But it grates against the reality that we cannot use conventional economics to grow incomes for a world of soon to be 9 billion producers and consumers (3). We don’t have enough of a planet to do so. Add to that our oft-proclaimed ‘time bomb’ – an aging population living longer, with demographers and politicians concerned with increasing the size of the active labour force (those aged 20 – 65 or 70) to sustain the social contract (health care, pensions and benefits) for the swelling cohort of elders. This continuous priming of the base of the demographic pyramid is simply an environmental ponzi scheme, one that only radical redistribution and economic regulation might prevent from imploding.

UN High Level Panel

The UN High Level Panel on the post-2015 goals (is there ever one called ‘low-level’?) came up with a number of useful suggestions that could partly forestall such a dystopian ponzi pyramid. These include a call for governments to regulate private finance, reform trade, crack down on illicit capital flows, stem transnational tax evasion, return stolen assets and promote sustainable patterns of production and consumption (4). Such recommendations are meatier than the Panel’s obligatory nudge to donor countries to honour their aid commitments. Been there, done that and, in Canada’s case, we don’t seem to care much. Despite our acknowledged if initially botched leadership on the ‘Muskoka Initiative’ for Maternal/Child Health, we are losing ground on our aid commitments, freezing the level of our disbursements, and restricting contributions to a smaller number of countries. Apart from issues of quantity, there are issues of quality. The 2012 Centre for Global Development’s Quality of ODA Index ranks Canada in the lower half of donors on efficiency and reducing the burdens or transaction costs of aid. We do better on fostering institutions, and are smack in the middle on transparency and learning; a middling assessment at best (5).

Returning to the Panel’s higher-level goals: Good as they are in intent, there is no operational guidance in the report. There is also too much emphasis on corporate social responsibility and partnerships between states and businesses to make global markets more just and equitable, rather than recognizing the pressing need for mandatory and enforceable market rules. It is in how we must move on the Panel’s goals that is of prime importance, which then requires an analysis of why we have these problems in the first place. As a People’s Health Movement commentary laments, none of the prevailing models for post-2015 priorities question, much less challenge, the prevailing paradigm of economic growth (6).

There is even the risk that the UN High Level Panel could reinforce some of the more egregious qualities of the prevailing paradigm. For one, it criticizes the core labour rights of the ILO-led initiative on social protection and ‘decent work’ (7) as too much of a ‘one size fits all.’ It calls, instead, for ‘good jobs’ and for ‘flexibly regulated labour markets’, an invitation to a continual reduction in labour’s power against that of capital. In sync with the World Bank and other economic development agencies, its poverty goal of ‘leave no one behind’ (commendable, depending on where one draws the poverty line) is based on the norm of ‘equality of opportunity.’ While the procedural justice inherent in this norm is important (all should be treated alike), in the game of economics it only becomes fair when all are alike when they start playing. This is patently not the case, not when fewer than 1500 people have more wealth than the combined populations of the continent of Africa and the sub-continent of India (8). Equality of opportunity only becomes fair when it is joined with a parallel commitment to equality of outcome – an ideal but measurable target – that relies on progressive tax/transfer programs within and between governments. Such a norm is unlikely to have much political traction in Canada at the moment, however, where reduced and regressive taxation have been the norm for the past decade or more. The same may be true for most of the austerity-addicted high-income countries and many of the recession-stuck middle-income ones.

What of health?

No one knows exactly how health goals in the post-2015 final list will be defined. Several of the goals from the sustainable development agenda and the high-level panel already deal with key health determinants, albeit imperfectly. The World Health Organization (WHO) is calling for completion of the 2000 health MDG’s unfinished agenda, and a ‘healthy life expectancy’ goal perhaps allowing some broader measurable target. But it seems most keen to bank on a post-2015 health goal of universal health coverage (UHC), a re-born concept still in search of consensus. The WHO defines it as “ensuring that all people can use the promotive, preventive, curative, rehabilitative and palliative health services they need” (a nod in the direction of the heady days of the Alma Ata Declaration on Primary Health Care), with services “of sufficient quality to be effective, while also ensuring that the use of these services does not expose the user to financial hardship” (9). This sounds reasonable enough, but it ducks the contentious issue of the relationship between public and private sectors in health care financing and provision. With private insurers and providers eager to carve out a larger piece of the annual $6.5 trillion health care ‘market,’ the risk is that the costly chaos now passing for Obamacare in the USA will come to define the global default position.

This is a debate in which Canada could aggressively insert its own comparatively positive experience with a universal, single-payer and mixed provider system. Canada’s national health insurance risk-pool and legislated public administration creates one of the fairest, most efficient and most accessible health care models on record (excepting Cuba). Sure, it has warts: wait-times, gaps in coverage, encroaching privatization. But compared to the American model, and to the dual public/private models dominating Latin America (which most countries in that region are trying to transform into a more public system), the warts on Canada’s system become mere cosmetic pimples.

References

1. Our Common Future, Report of the World Commission on Environment and Development, World Commission on Environment and Development, 1987. Published as Annex to General Assembly document A/42/427, Development and International Co-operation: Environment August 2, 1987.

2. See: http://www.indiaresource.org/news/2011/pepsipositivewater.html

3. Sustainable Development Commission, 2009. Prosperity without growth: the transition to a sustainable economy? London: UK Sustainable Development Commission.

4. High Level Panel on the Post-2015 Development Agenda, May, 2013. http://www.post2015hlp.org/wp-content/uploads/2013/05/UN-Report.pdf

5. See: http://www.cgdev.org/page/quality-oda-quoda

6. See:
http://www.phmovement.org/sites/www.phmovement.org/files/PHM%20statement%20submitted%20to%20the%20WHO.pdf

7. International Labour Organization (ILO), 2011. Social protection floor for a fair and inclusive globalization [online]. Report of the Advisory Group chaired by Michelle Bachelet convened by the ILO with the collaboration of the WHO. Geneva: ILO. Available from: http://www.ilo.org/wcmsp5/groups/public/—dgreports/—dcomm/—publ/documents/publication/wcms_165750.pdf

8. See my last blog: http://www.healthypolicies.com/2013/11/canadas-austerity-agenda-its-about-the-taxes/

9.  See: http://www.who.int/universal_health_coverage/en/

Provenance

Based on two plenary presentations at the 2013 Canadian Conference on Global Health, Ottawa, Canada, October 28-29.

 

 

Canada’s Austerity Agenda: It’s About the Taxes

Austerity policies pose major threats to the public’s health. In this guest post, Ronald Labonté argues that the austerity agenda in Canada stems not from a crisis in finances, but from a crisis in fair taxation. Labonté holds a Canada Research Chair in Globalization and Health Equity at the Institute of Population Health, and is Professor in the Faculty of Medicine, University of Ottawa; and in the Faculty of Health Sciences, Flinders University of South Australia.

The American Jurist, Oliver Wendell Holmes, once wrote that taxes are the price we pay for civilization. By that account we are becoming less civilized with each new budget cycle. We are being told that we have a crisis of public debt and deficit. We do not. We have a crisis in fair taxation for the public goods that sustain health and civility, and a 40 year uncontrolled experiment in global neoliberalism and free market fundamentalism that has seen the starkest rise in income and wealth inequalities in over a century. Canada is just one of scores of national examples.

Canada began its downward taxation spiral in the 1980s. Marginal rates paid by the highest income earners dropped from 43% in 1988 to 29% in 2010. Corporate taxes fell from 49% in 2004 to just 27% in 2010 (Simms 2013). As taxes as a percent of Canadian GDP declined, so did public spending. Canada now ranks 24th of 34 OECD countries in our overall rate of taxation. Since 2006 and the Conservative government, we have lost over $220 billion in federal government tax cuts (Fanelli and Lefebvre 2012). The Great Financial Crisis of 2008, the result of profligate greed on the part of a handful of unregulated financial gamblers, and the trillions spent by governments on bank rescues and stimulus spending to buffer the subsequent Great Recession, have since become a pretext for: not more and fairer taxation, but more tax breaks and government cutbacks.

This is the post financial crisis austerity agenda being rolled out around the world, with between 80% and 90% of the global population now coming under its yoke (Ortiz and Cummins, 2013). Who pays austerity’s heaviest cost in poorer health and wellbeing? The poor, the rural, women, children and the ever growing number of the ‘precariat’ – those whose globalization’s ‘flexibilized’ labour markets offer lower pay, fewer benefits, less security and often only part-time or temporary jobs. Throw in the massive global youth unemployment bulge and we have a recipe for domestic and international conflict, some of which (the Arab spring, rural China, parts of Africa) has already emerged.

Cuts in tax and government spending are good for the economic elites of the world who have seen their fortunes soar since the Great Financial Crisis. Consider that the world’s 1,426 billionaires between them had as much wealth in 2012 as the combined populations of Africa (1 billion people) and India (1.27 billion people), an inequality ratio of 1.5 million to 1 (Forbes 2013). But tax and spending cuts are actually bad for the economy, especially when private investment is drying up and the ‘real economy’ of production and consumption is sluggish, if not sclerotic.

Indeed, public spending has a little known fiscal multiplier effect, which, in high-income countries such as Canada, ranges between 1.6 and 1.7. For every dollar in new government spending there is $1.60 to $1.70 in new economic growth. That is because government spending buys goods and services made by workers and employs civil servants who buy more goods and services. Private companies see things improving and start investing more of their hoarded cash. Some forms of government spending (in health, education, environmental protection, the things that matter in most peoples’ lives) have much higher fiscal multipliers. By contrast, as the Canadian economist Jim Stanford has calculated, for every dollar in new corporate tax cuts, only 10 cents is re-invested in the real economy that employs people (Stanford 2013). The rest goes to dividends, financial reserves or gambling in the still unregulated shadow banking world of derivatives and hedge funds – the highly leveraged ‘casino capitalism’ that brought us the Great Financial Crisis. So a win-win-win (public spending on things people value, healthier citizens and faster economic recovery) becomes a lose-lose-lose (more wealth for those who don’t need it, slower economic growth and new, toxic asset bubbles primed for another burst).

Another comparison: Based on OECD data, if Canada taxed at the average rate of the EU15 countries (40% of GDP), we would raise almost $160 billion more each year in revenue. If we spent on health and social programs at the EU 15 average rate of 30%, we would be pumping $208 billion more each year into the goods, services and income transfers that improve peoples’ health and wellbeing. None of these EU 15 countries are in structural deficit, and several have been outperforming Canada in narrowly measured economic terms for years.

To repeat: there is no fiscal crisis. There is a taxation crisis. We are not living with scarcity where everyone must tighten his or her belt. We are living in an era of egregious inequality where increasing amounts of global income are escaping the redistributive bite of the taxman, transfer-priced or squirreled away in the (still burgeoning) number of offshore financial centers (aka ‘tax havens’). Most of these are located within or under the protection of the world’s wealthiest countries, the same ones now hollowing out their tax-gutted welfare states.

Canada’s tax crisis is not exclusive. It can be found in most of the world’s countries, engaged in a revenue race to the bottom in order to attract or retain foreign investors. But over the short-term the austerity this leads to is bad for health and for the economy. Even the IMF is doing a deep re-think over the macroeconomic wisdom of its austerity mantra. Over the long-term the gap it widens between those few who too much and those many with too little imperils a peaceful global future. And without strong market regulations and progressively financed redistributive spending, relying on economic growth in ‘real economy’ of production and consumption to lift the world out of poverty will destroy our planetary life supports long before we come even close.

When are Canadian politicians (and those in most of the world’s countries) going to realize that the neoliberal emperor of free markets, low taxes and minimal government has no clothes?

References

Fanelli, Carlo and Priscillia Lefebvre. 2012. “The Ottawa and Gatineau Museum Workers’ Strike: Precarious Employment and the Public Sector Squeeze.” Alternate Routes: A Journal of Critical Social Research 23: 121-46.

Forbes. 2013. “Inside the Billionaires List: Facts and Figures.” Forbes. http://www.forbes.com/sites/luisakroll/2013/03/04/inside-the-2013-billionaires-list-facts-and-figures/

Ortiz, Isabel and Matthew Cummins. 2013. “The Age of Austerity: A Review of Public Expenditures and Adjustment Measures in 181 Countries.” Initiative for Policy Dialogue and the South Centre. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2260771.

Simms, David. 2013. “Canada Best Place in G8 to Pay Business Taxes.” Canadian Broadcasting Coporation. http://www.cbc.ca/news/business/taxes/canada-best-place-in-g8-to-pay-business-taxes-1.1380380.

Stanford, Jim. 2013. “The Failure of Corporate Tax Cuts to Stimulate Business Investment.” In The Great Revenue Robbery, ed. R. Swift. Ottawa: Canadians for Tax Fairness.

 

 

Fraser Institute on Health Care in Canada and Sweden: Selective Evidence, Even More Selective Conclusions

In this guest post, Ronald Labonté discusses a recent report from the Fraser Institute which compares the healthcare systems of Sweden and Canada. While the report aims to promote the privatization of the Canadian healthcare system, Labonté argues that its conclusions are ideologically driven and that the evidence it draws on must be considered in the wider sociopolitical context of both countries.  Labonté holds a Canada Research Chair in Globalization and Health Equity at the Institute of Population Health, and is Professor in the Faculty of Medicine, University of Ottawa; and in the Faculty of Health Sciences, Flinders University of South Australia. 

The May 22, 2013 report from the Fraser Institute comparing Swedish and Canadian health systems is interesting, provocative and another example where ideology trumps evidence.

The Fraser Institute is a well-known Canadian conservative think tank that emphasizes small government, market fundamentalism and individual choice in its policy arguments. This does not detract from its report’s findings that Sweden’s health system generally performs better and for a lower expenditure of its GDP than does Canada; or that Sweden allows some private insurance to co-exist with its public system (between 2% and 4% of Swedes opt for such coverage), some small co-payments in its public system (with exclusions for those who find it difficult to pay), and a few privately managed hospitals. On this evidence, the report robustly concludes that Canada should therefore increase private provision of hospital and surgical services, allow private insurance to compete with its public system, and to introduce co-payments (user fees) for all health care.

In doing so, the report ignores that Canada already has a large private health insurance system for non-publicly insured health care. Its private health care expenditure (about 30% of total spending) far exceeds that paid by Swedish citizens (about 15%), partly because Sweden provides free or heavily subsidized dental care and prescription pharmaceuticals, which most of Canada does not. The report also ignores the context in which Sweden’s small medical and hospital co-payment policy exists: a high tax/transfer and high public spending social welfare state, still far outperforming Canada in health, poverty, unemployment and other key social indicators. In this context small out of pocket payments do not pose the same barrier to health care access that they might if transferred to a country like Canada, which ranks very low in the OECD league table for tax/transfers and social spending. One cannot cherry-pick an ideologically convenient public policy out of a total social welfare package.

Finally, that Sweden spends significantly less of its GDP on health care than Canada while outperforming on many health system and health outcome measures, may well be related to its physicians being salaried and much primary care being delivered by nurses. Though noting this, the Fraser Institute report simply concludes that these policies ‘will not work in Canada’ due to ‘a lack of physicians and an independent practitioner model of delivery.’ Whether Canada has a substantial lack of physicians is moot; but the report is silent on the nurse-centered, team-oriented approach to primary care that helps keep Sweden’s health care costs low and which would obviate much of the claimed doctor shortage in Canada. Although shifting some of the budgetary measures for hospitals (from global to activity based financing) may merit consideration, how increasing private sector provision, private financing and user fees would reduce Canada’s annual health care spending, and not launch us further along the American pathway of excess costs for limited returns, is never explained. In sum, the Fraser Institute’s recent report may make for some interesting reading, but with eyes critically wide open.