Investing in human capital policy priorities for canada

These currently include high-value manufacturing, resource sector spin-offs and already profitable green industries. By promoting economic diversity, more Canadians will have access to good jobs across a wider geographic area. We need to do a better job of showing students how their education choices affect their employment future and help them match post-secondary courses to market realities.

We also need to give schools greater access to advanced technology in the classroom, do a better job of teaching financial literacy and encourage students to pursue math, engineering and computer sciences early on. Reform immigration policies Canadian businesses have immediate vacancies for skilled jobs that the domestic workforce in its current configuration simply cannot fill. Only by streamlining the immigration system to allow for the entry of qualified workers can those positions be filled in a timely fashion and our country maintain its competitive edge.

Canada currently lags behind the U. At the same time, income has shifted towards the resource-rich western provinces, while the regional economies of Ontario and Quebec are still adapting to increased external competition resulting from the high exchange rate. The OECD identifies two key priorities for meeting this long-term challenge. First, Canada needs to boost innovation. The government should maintain the current system of tax credits; however, particularly generous credits to small Canadian-owned private firms should be reined in and partly replaced by more targeted direct grants.

Opening up network industries and liberal professions to more competition would also enhance incentives for innovation, thereby generating higher productivity. Second, Canada should invest further to improve both quality and access to tertiary education, to maintain the supply of highly skilled workers as the population ages. Financial assistance to students should become more targeted and granted on a means-tested basis.

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Ottawa seized the opportunity to revoke, uni- laterally, all commitments to a fixed share of provincial costs. Our welfare state is now frayed because 10 years ago, in the budget, the coopera- tive federalism that built it was brusquely shattered. That is, of course, the interdependence of nations in the technological age of instant information: in current short-hand, globalization. Even in big economies, politicians can do less than they used to claim, and sometimes deliver, for the jobs and incomes of their constituents.

The limitation is particularly sharp for a relatively small economy so closely interconnected with its giant neighbour. It will become more international. The nature of markets is that they work by exaggeration; a small shortage or surplus produces a large movement of prices; adjustments to all kinds of change are magnified by the herd instinct driving most specula- tion; one corporate miscalculation or crime destroys thousands of jobs.

The corrective role of government is more rather than less necessary to safe- guard the public interest. The difference is that more of it must be multinational action. That is evolving: too slowly, of course, with some steps forward and some back.

Too much of it may too long be dominated by a cabal of rich nations. But international economic management will evolve in one way or another. Globalization compels it. One implication for Canada is plain. It is increasingly in our interest to return to a significant role in international counsels. That was earned, for the first 25 years or so of the postwar world, by the quality of Canadian politicians and public ser- vants.

The necessary talents have sure- ly not disappeared. With leadership, they could be recruited again. The re-focus needed in domestic policy is just as plain, but considerably more complicated to achieve. Money can be moved readily any- where. So can applied technology. The industrial facilities required to produce easily-shipped consumer goods can be established wherever there are plenty of eyes and hands to do routine work.

In this competitive world, a society can be affluent only if many of its jobs use advanced technology or are otherwise highly specialized. They have to add enough value, in the language of eco- nomics, to earn high incomes within the global economy. And many of the jobs that do so today will before long migrate, their product outsourced. None of this is altogether new, but it has accelerated, and is set to go on accelerating, faster perhaps than any previous economic trend.

The prosperity of an advanced economy turns as never before on the knowl- edge, the advanced skills, the enter- prise and ability to innovate, of its people. The crucial investment, as economists have come to say, is investment in our human capital. The public services that will do most for the national product, for employment and income, are the services that enhance people, that enable them to develop their abilities and enlarge their opportunities.

They are, in large part, the services that used often to be thought to be in conflict with the hard realities of economics. The consequences for the governance of Canada are pro- found. The constitutional responsibility for the economy is federal, because otherwise there would have been no nation in and there could be none today. To serve us still they must be accompanied by the services classed as social, by the educa- tion and health care that belong jurisdictionally to the provinces.

As Paul Martin most forcefully demon- strated when he snatched at survival last June, the promises by which feder- al governments stand or fall are main- ly to fix programs in provincial jurisdiction. This evolution of our federalism was necessary because, while the juris- diction for most social programs is provincial, the financial capacity to discharge it varies greatly among our disparate provinces.

Comparable levels of taxation across the country are essential to a national economy but are possible only if a good part of the cost of provincial programs is provided from federal revenue. We have long recognized that as crucial to our social union. It is now equally central to the strength of our economy. Societies are bonded by people sharing purposes important to them.

Occasionally they are invigorated by consensus on a new emphasis of pur- pose. The emphasis that might do that today seems clear. Opinion leaders from Right to Left agree that the mak- ing and sustaining of a prosperous, equitable, equable society now requires, above all, investment in the abilities of people. The opinion is robust, as yet the action is not. The reason goes deeper, I think, than the familiar, jostling con- fusion between federal and provincial responsibilities.

It is the fundamental democratic deficit: not the failings of Parliament, which are a symptom, but the disconnect of people from political parties, which is the cause. One consequence of that discon- nect is the elitism of most political opinion about investing in human capital; it concentrates on the quali- ties and fees of universities. For years the federal government has involved itself in funding for academic chairs and scholarships.

Its professed con- cern for early childhood care is only now, under the pressure of the almost-lost election, emerging into some kind of action. Certainly post-secondary educa- tion needs attention. But inadequately served university students are a lesser part of our wastefulness with human capital.

Deprived children are a far greater part. Contemporary research has estab- lished what the Jesuit order was remarkable for recognizing long ago. The adult is shaped, in large measure, by experience early in childhood. The implication is plain. Child poverty is not only a disgrace to an affluent society.

The capability of our econo- my requires us to give the highest pri- ority to public services that counter obstacles to the development of youthful abilities. Those disadvantages are most closely associated with poverty, but by no means con- fined to it. Well-to-do couples can lack time and energy for good parenting. Rich homes may be broken, lifestyles anti-social, health little cared for, mental stimulus minimal, lack of siblings uncorrected by socializing play.

Combating deprivation does not mean targeting poor children. It calls for universal access, free from any discrimination. Inevitably, the extent to which the new childhood serv- ices are used will vary in part with income; how the services are paid for certainly should.

But the aim is that even class-conscious parents should have minimal motivation for taking their children out of the public system. Investment in human capital is a democratic purpose. A purposeful government could give popular mean- ing to it. The Charter of Rights and Freedoms is precious for all.

The appro- priate derivation from the Constitution is an act of Parliament declaring that Canadians old enough to vote will dis- charge their civic obligation to those who are not old enough. Those words can certainly be improved but the intent, I hope, is plain. More eloquently expressed, it could be a call to action that resonates powerfully across Canada. It could be brought most forcefully home by embodying its terms in a certificate issued to a parent or guardian of every child.

Whatever the words, however, they will fade into another promise forgotten, unless we have politicians who know how to fit the mechanisms of a federal system to the requirements of the times. The mechanisms that used to work are broken now. The present gov- ernment is determined not to repair cost-sharing. Instead it improvises, when political pressures compel, dona- tions to provincial programs. What I call sugar- daddy federalism can give the federal politicians of the day more recognition than the continuing commitment of cost-sharing.

It elevates the politics of the moment over reliable, sustainable pub- lic policy. It ensures continual tension in federal-provincial relations. In the scheme of the s and s, cost-sharing was supplemented by equalization, topping up the finances of the poorer provinces. In theory, more equalization could replace support for particular pro- grams. The present government is therefore mov- ing away from it. The supposedly con- stitutional principle of equalization has just been subverted by using it as a cloak for another donation.

Globalization makes it more neces- sary than ever that, in a land of provincial disparities, federal taxation be brought to the aid of the major socio- economic programs. That is now required equally for the justice of our social union and for the strength of our economy. It calls for a different mecha- nism: neither a return to cost-sharing nor its present replacement by impro- vised donations. The focus we need now is on using federal money, not to subsi- dize provinces but to empower people.

On the contrary, the first social program that transformed the lives of millions of Canadians was begun sixty years ago. It was, of course, the federal program paying family allowances directly to mothers. Computerization enabled that to be replaced by a more efficiently tar- geted program, but the principle of direct payment to people is in no way changed. Riddell notes that the proportion of post-secondary education funded by Canadian governments has declined in recent years and is now well below the OECD average.

He also observes that Canada ranks near the bottom of OECD countries with respect to spending on early childhood education. A consequence of reduced public expenditure is a decline in the quality of education, most evident at the university level. Another is a widening of earnings differentials by educational attainment, which would suggest that the supply of highly educated workers is not keeping up with demand.

Options for Addressing the Challenge Riddell argues that government intervention in human capital development is justified on both equity and efficiency grounds. Efficiency arguments are based on three market imperfections. First, because benefits to society are not taken into account in the private decision on how much schooling to acquire, there would likely be underinvestment in education in the absence of government intervention. Second, there are credit market failures because potential students cannot use their human capital as collateral for education loans.

Finally, some evidence suggests that education markets suffer from imperfect and incomplete information on the quality of programs, making it difficult for students and parents to make informed decisions. Equity rationales for government intervention involve the promotion of equal opportunity, social mobility and a more equal distribution of economic rewards. With these criteria in mind, Riddell argues that three key dimensions of the human capital policy challenge deserve attention: Public expenditure in Canada on skills formation has been losing out to other priorities at a time when the economic importance of human capital is growing.

Additional public investment should be directed to areas that have high potential returns both private and social , and that would otherwise receive insufficient private investment. Policies ought to narrow gaps in educational attainment and skills among key subsets of the population for both equity and efficiency reasons.

Three Preferred Policies Increase public support for early childhood education and care ECEC Based on overwhelming evidence of large benefits relative to costs, Riddell proposes an ECEC program targeted toward children at risk of developmental and educational failure. The program would include a mix of public and private providers or private providers alone; standards to ensure quality service provision; and vouchers paid directly to families to encourage the participation of families with a wide range of educational and income characteristics.

While Riddell presents arguments for and against a targeted approach as opposed to a universal system, he opts for the former in order to maximize the return to public investment. Increase the compulsory school attendance age to 18 and improve programs in secondary school for those at risk of dropping out Data from the census reveal that about 20 percent of Canadians in their 20s have neither completed high school nor obtained any post-secondary education, and this proportion is significantly higher in rural areas and among Aboriginal students.

Based on evidence that shows significant gains from an additional year of school, Riddell proposes a statutory increase in the school-leaving age coupled with programs to encourage children to stay in school. Coulombe cautioned that keeping and year-olds in school against their will might create as many problems as it solves, but agreed that investing in their human capital development would pay dividends.

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But international economic management will evolve in one way or another. Globalization compels it. One implication for Canada is plain. It is increasingly in our interest to return to a significant role in international counsels. That was earned, for the first 25 years or so of the postwar world, by the quality of Canadian politicians and public ser- vants. The necessary talents have sure- ly not disappeared.

With leadership, they could be recruited again. The re-focus needed in domestic policy is just as plain, but considerably more complicated to achieve. Money can be moved readily any- where. So can applied technology. The industrial facilities required to produce easily-shipped consumer goods can be established wherever there are plenty of eyes and hands to do routine work. In this competitive world, a society can be affluent only if many of its jobs use advanced technology or are otherwise highly specialized.

They have to add enough value, in the language of eco- nomics, to earn high incomes within the global economy. And many of the jobs that do so today will before long migrate, their product outsourced. None of this is altogether new, but it has accelerated, and is set to go on accelerating, faster perhaps than any previous economic trend. The prosperity of an advanced economy turns as never before on the knowl- edge, the advanced skills, the enter- prise and ability to innovate, of its people.

The crucial investment, as economists have come to say, is investment in our human capital. The public services that will do most for the national product, for employment and income, are the services that enhance people, that enable them to develop their abilities and enlarge their opportunities. They are, in large part, the services that used often to be thought to be in conflict with the hard realities of economics.

The consequences for the governance of Canada are pro- found. The constitutional responsibility for the economy is federal, because otherwise there would have been no nation in and there could be none today. To serve us still they must be accompanied by the services classed as social, by the educa- tion and health care that belong jurisdictionally to the provinces.

As Paul Martin most forcefully demon- strated when he snatched at survival last June, the promises by which feder- al governments stand or fall are main- ly to fix programs in provincial jurisdiction. This evolution of our federalism was necessary because, while the juris- diction for most social programs is provincial, the financial capacity to discharge it varies greatly among our disparate provinces.

Comparable levels of taxation across the country are essential to a national economy but are possible only if a good part of the cost of provincial programs is provided from federal revenue. We have long recognized that as crucial to our social union. It is now equally central to the strength of our economy. Societies are bonded by people sharing purposes important to them. Occasionally they are invigorated by consensus on a new emphasis of pur- pose.

The emphasis that might do that today seems clear. Opinion leaders from Right to Left agree that the mak- ing and sustaining of a prosperous, equitable, equable society now requires, above all, investment in the abilities of people. The opinion is robust, as yet the action is not. The reason goes deeper, I think, than the familiar, jostling con- fusion between federal and provincial responsibilities. It is the fundamental democratic deficit: not the failings of Parliament, which are a symptom, but the disconnect of people from political parties, which is the cause.

One consequence of that discon- nect is the elitism of most political opinion about investing in human capital; it concentrates on the quali- ties and fees of universities. For years the federal government has involved itself in funding for academic chairs and scholarships. Its professed con- cern for early childhood care is only now, under the pressure of the almost-lost election, emerging into some kind of action.

Certainly post-secondary educa- tion needs attention. But inadequately served university students are a lesser part of our wastefulness with human capital. Deprived children are a far greater part. Contemporary research has estab- lished what the Jesuit order was remarkable for recognizing long ago. The adult is shaped, in large measure, by experience early in childhood.

The implication is plain. Child poverty is not only a disgrace to an affluent society. The capability of our econo- my requires us to give the highest pri- ority to public services that counter obstacles to the development of youthful abilities. Those disadvantages are most closely associated with poverty, but by no means con- fined to it. Well-to-do couples can lack time and energy for good parenting. Rich homes may be broken, lifestyles anti-social, health little cared for, mental stimulus minimal, lack of siblings uncorrected by socializing play.

Combating deprivation does not mean targeting poor children. It calls for universal access, free from any discrimination. Inevitably, the extent to which the new childhood serv- ices are used will vary in part with income; how the services are paid for certainly should.

But the aim is that even class-conscious parents should have minimal motivation for taking their children out of the public system. Investment in human capital is a democratic purpose. A purposeful government could give popular mean- ing to it.

The Charter of Rights and Freedoms is precious for all. The appro- priate derivation from the Constitution is an act of Parliament declaring that Canadians old enough to vote will dis- charge their civic obligation to those who are not old enough. Those words can certainly be improved but the intent, I hope, is plain.

More eloquently expressed, it could be a call to action that resonates powerfully across Canada. It could be brought most forcefully home by embodying its terms in a certificate issued to a parent or guardian of every child. Whatever the words, however, they will fade into another promise forgotten, unless we have politicians who know how to fit the mechanisms of a federal system to the requirements of the times. The mechanisms that used to work are broken now. The present gov- ernment is determined not to repair cost-sharing.

Instead it improvises, when political pressures compel, dona- tions to provincial programs. What I call sugar- daddy federalism can give the federal politicians of the day more recognition than the continuing commitment of cost-sharing. It elevates the politics of the moment over reliable, sustainable pub- lic policy. It ensures continual tension in federal-provincial relations. In the scheme of the s and s, cost-sharing was supplemented by equalization, topping up the finances of the poorer provinces.

In theory, more equalization could replace support for particular pro- grams. The present government is therefore mov- ing away from it. The supposedly con- stitutional principle of equalization has just been subverted by using it as a cloak for another donation. Globalization makes it more neces- sary than ever that, in a land of provincial disparities, federal taxation be brought to the aid of the major socio- economic programs.

That is now required equally for the justice of our social union and for the strength of our economy. It calls for a different mecha- nism: neither a return to cost-sharing nor its present replacement by impro- vised donations. The focus we need now is on using federal money, not to subsi- dize provinces but to empower people.

On the contrary, the first social program that transformed the lives of millions of Canadians was begun sixty years ago. It was, of course, the federal program paying family allowances directly to mothers. Computerization enabled that to be replaced by a more efficiently tar- geted program, but the principle of direct payment to people is in no way changed. There are only two things wrong with the Canada Child Tax Benefit.

Raising it to the minimum cost of adequate nurture has not been given the priority it should have. And its value for children is limited because it has not been accompanied by a parallel reform for other family income. That would begin if the basic tax allowance were replaced by a refundable credit.

For early childhood care and edu- cation, the federal responsibility would be best discharged by reimbursing the fees parents have to pay for the service. For a parent whose income is too low to be taxable, there would be the same full reimbursement that a refundable tax credit provides.

For others, the ben- efit would be taxed, at moderate rates on moderate incomes and to its full amount on very high incomes. The desperate Liberal promises of the election campaign have also established priority for federal aid to cities. Nothing in the Constitution is clearer than provincial jurisdiction for municipal affairs. Federal intervention will relieve the pressure on, say, the B. How much else it will do, even for the big-city mayors who have so actively promoted it as a counter- weight to their provincial govern- ments, can at this stage only be guessed.

Efficiency arguments are based on three market imperfections. First, because benefits to society are not taken into account in the private decision on how much schooling to acquire, there would likely be underinvestment in education in the absence of government intervention. Second, there are credit market failures because potential students cannot use their human capital as collateral for education loans. Finally, some evidence suggests that education markets suffer from imperfect and incomplete information on the quality of programs, making it difficult for students and parents to make informed decisions.

Equity rationales for government intervention involve the promotion of equal opportunity, social mobility and a more equal distribution of economic rewards. With these criteria in mind, Riddell argues that three key dimensions of the human capital policy challenge deserve attention: Public expenditure in Canada on skills formation has been losing out to other priorities at a time when the economic importance of human capital is growing. Additional public investment should be directed to areas that have high potential returns both private and social , and that would otherwise receive insufficient private investment.

Policies ought to narrow gaps in educational attainment and skills among key subsets of the population for both equity and efficiency reasons. Three Preferred Policies Increase public support for early childhood education and care ECEC Based on overwhelming evidence of large benefits relative to costs, Riddell proposes an ECEC program targeted toward children at risk of developmental and educational failure. The program would include a mix of public and private providers or private providers alone; standards to ensure quality service provision; and vouchers paid directly to families to encourage the participation of families with a wide range of educational and income characteristics.

While Riddell presents arguments for and against a targeted approach as opposed to a universal system, he opts for the former in order to maximize the return to public investment. Increase the compulsory school attendance age to 18 and improve programs in secondary school for those at risk of dropping out Data from the census reveal that about 20 percent of Canadians in their 20s have neither completed high school nor obtained any post-secondary education, and this proportion is significantly higher in rural areas and among Aboriginal students.

Based on evidence that shows significant gains from an additional year of school, Riddell proposes a statutory increase in the school-leaving age coupled with programs to encourage children to stay in school. Coulombe cautioned that keeping and year-olds in school against their will might create as many problems as it solves, but agreed that investing in their human capital development would pay dividends. Increase merit-based post-secondary scholarships for students from low-income families With the increasing cost and importance of post-secondary education, there are reasons to be concerned about ensuring equitable access for students in low-income families.

This would be accompanied by a deregulation of tuition fees, allowing universities and colleges to invest in quality improvements. Gaskell cautioned that given the current complex array of student aid programs, the design of any new initiative must be simple, transparent and well understood by parents and voters if it is to increase access and succeed politically.

Additional public investment should be directed to areas that have high potential returns and that would otherwise receive insufficient private investment. He also cited the need for better assessment of foreign educational credentials.