Halifax – The Economic Survey of Canada, 2006 published by the prestigious Organisation for Economic Co-operation and Development (OECD) echoes much of the work previously published by the Atlantic Institute for Market Studies (AIMS).
The OECD’s Policy Brief delivers a prescription for Canada’s enduring economic health. It recommends diminishing the incentive for employers to rely on employment insurance to tide over their seasonal workers. It calls for the dismantling of agriculture marketing boards. It suggests equalization needs to be revamped and has become a disincentive to receiving provinces to boost economic performance. All of these measures have been promoted by AIMS in its substantial depth of public policy work.
“The OECD is singing our song,” saying AIMS president Brian Lee Crowley. “If you think of this as a second opinion on what to do to promote Canada’s economic health, this international specialist confirms our original diagnosis and treatment exactly.”
As an example, AIMS has long talked about tax transparency and federal-provincial disentanglement explaining that Ottawa should cut federal taxes and give each province the tax room to generate its own revenues to fund services. In the area of equalization, AIMS’ prolific research repeatedly shows the program actually does more harm than good to receiving provinces. The OECD says, “one effect for receiving provinces is to induce some trade-offs between equalization payments and provincial policies that would boost economic performance,” exactly the argument Crowley has made in speeches from Calgary to St. John’s to Harvard University in recent years.
The more comprehensive OECD Economic Survey of Canada, 2006 references AIMS’ work in its chapter on Adapting fiscal policy and financial arrangements in the federation. It uses a recent AIMS Commentary, “The Perils of Being a Poor Region in a Rich and Frightened Country”, to explain that the equalization system reduces incentives for low-income provinces to adopt policies that encourage economic growth. “Indeed, the benefits of undertaking growth-enhancing policies are reduced, as some of the resulting pay-offs will be deducted from the receiving province’s equalization payments. The average claw-back is estimated to be 90% for revenue from new economic activity.”
“The OECD Survey should be further evidence to the federal and provincial governments that they need to act on these crucial public policy issues to create the best possible economic environment for Canada,” says Crowley. “Lowering corporate taxes, eliminating inter-provincial trade barriers, eliminating EI as a subsidy to seasonal work, and revamping equalization to encourage economic growth are all sound economic policies. The OECD Survey offers further credibility to the arguments in favour of such measures.”
The Paris-based OECD is a unique forum where the governments of 30 market democracies work together to address the economic, social, environmental, and governance challenges of globalization. The Organisation provides a setting where governments can compare policy experiences, seek answers to common problems, identify good practice and co-ordinate domestic and international policies. The OECD helps governments to foster prosperity and fight poverty through economic growth, financial stability, trade and investment, technology, innovation, entrepreneurship and development co-operation.
The Organisation’s Economic Survey is published every 1½ to 2 years for each OECD country. The survey identifies the main economic challenges faced by the country and analyses policy options to meet them.
For further information, contact:
Brian Lee Crowley, AIMS President