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Ernest Chong

China’s official defence budget is set to rise by 11.2 percent this year to an estimated 670 billion RMB ($106B US).

Hold the Chicken Little routine. Is the budget increase really that big of a deal?

Not really.

The news should not be surprising. China has been increasing its military spending annually by double-digits for nearly two decades, largely to make up for when military budgets were neglected in favour of the country’s budding economic reforms. Now that the Chinese economy has taken off, the People’s Liberation Army (PLA) is merely reaping the rewards of its sacrifice.

Nor should the news be all that alarming. Like any other sovereign nation, China has every right to develop military capabilities to defend itself and its interests. Moreover, the budget increases still place Chinese military spending far below that of the United States or the United Kingdom as a proportion of GDP. The PLA is nowhere near parity with their Western counterparts, as the Chinese inventory consists predominantly of antiquated equipment that is only now being slowly phased out with modern fleets. In this regard, China’s military build up more closely resembles a catch up.

To be sure, the PLA has certainly achieved some tremendous milestones. It has built a stealth fighter prototype, launched more than a dozen satellites in the last year, and has joined the exclusive aircraft carrier owners club, among other achievements – but significant work remains. Possession does not necessarily equal capability. A refurbished aircraft carrier, for example, does not a power projection tool make. The modern American carrier strike group is the product of decades of trial and error, training, doctrinal refinement, and operational experience – ingredients presently lacking in the PLA.

These are skills that no amount of money can buy. Materiel quantity cannot replace doctrinal competency. The historically coast-patrolling PLA Navy (PLAN), for example, is only beginning to explore the intricacies of deploying an ocean-going task force despite shipyards full of new warships. Indeed, the PLA as a whole does not yet seem to have mature modern operational doctrines or true joint inter-service cooperation. At the small-unit level, the professional development of junior leadership and initiative – a foundational part of modern Western militaries’ inherent flexibility – has only just begun. All of these skills are arguably still in their infancy, and will take time to foster and refine.

This having been said, there are some concerns with the new budget.  Queue Chicken Little.

We would be mistaken to assume that China requires the same amount of time as the West to ‘catch up’ with modern capabilities. As a latecomer to modern military development, China has a number of offsets that will shorten the time it takes to overcome the abovementioned technological and doctrinal hurdles. The PLA can learn from the trials and errors of Western militaries, absorb a wide selection of openly-disseminated publications, and participate in military exchanges with other nations. The PLA can also ‘leapfrog’ technologically by reverse-engineering foreign equipment, legally obtained or otherwise. In fact, as a cursory look at the PLA’s domestically-produced equipment can attest, the Chinese have proven to be remarkably adept at producing copies with indigenous additions.

At the same time, we are not entirely sure what the PLA is spending its ever-increasing budgets on. Beijing has historically disclosed less information about its military spending because it was (and remains) the weaker party. It has used ambiguity in part to compensate for technological and strategic inferiority. Indeed, some experts believe that Beijing’s actual military spending is far more than what is publicly acknowledged – as much as double the official numbers.

This lack of concrete information is disconcerting. When combined with Beijing’s equally-murky foreign policy, it paints an incredibly opaque and incomplete picture of Chinese intentions. Without more concrete answers to these Rumsfeldian ‘known unknowns’, China’s neighbours and the United States can only extrapolate from what little there is to see: exponential growth in modern equipment fleets, maturing offensive weapons technology, and aggressive diplomacy in the South and East China seas.

As a result, the region is bracing for conflict. China already outmatches any nation-member of the Association of Southeast Asian Nations (ASEAN) and is on track to dwarf the combined defence spending of the entire Asia-Pacific by 2015. The region has responded by embarking on military modernization programs of their own and has rekindled ties with the region’s traditional hegemon, the United States.

Washington has also responded to China’s information asymmetry. It has repeatedly asked for Beijing to clarify its military intentions and budgetary allocations. Last November’s “America’s Pacific Century” in Foreign Policy and the subsequent Asia ‘pivot’ was meant in part to reassert American strategic dominance in the Pacific and reassure the region that the United States remains firmly entrenched in its affairs.

Such reactions, of course, only serve to stoke Beijing’s fears of encirclement. This drives further Chinese military spending, in turn heightening tensions with its neighbours, leading to a self-perpetuating cycle of deepening mutual animosity.

Conflict is not inevitable, however. A more nuanced examination shows that China’s military growth is likely to be more bridled than commonly believed. Wait one, Chicken Little.

To start, China’s traditional advantage in lower military production costs is lessening as the PLA inches closer to technological parity with Western militaries. Despite obvious differences in operational capabilities, the PLA was previously getting more ‘bang for buck’ with lower-tech equipment. To match their Western counterparts, however, a substantial boost in high technology development is required. For example, indigenous production of high-performance turbofan engines for combat aircraft remains a significant qualitative technological hurdle for Chinese aerospace engineers. These and other endeavours are expensive and time-consuming, negating much of China’s low-skill labour and manufacturing cost savings.

The budget pressures do not end after development. The complexities of new hardware come with commensurate increases in maintenance costs. Training and paying personnel to operate this sophisticated equipment will consume ever-increasing portions of the military budget, as the PLA must compete with civilian Chinese industries for educated individuals. Beyond simply having and crewing the equipment, there is the added but necessary expense of deploying those assets to gain critical operational experience.

In contrast, the U.S. and its NATO allies already have modern equipment and a wealth of operational experience. The challenge for them is to balance rising personnel and maintenance costs with the development of new technologies for the future. The PLA, on the other hand, does not yet have an equivalent base of comprehensive technologies, nor does it have an established pool of skilled personnel. In seeking to modernize virtually every part of its organization and develop indigenous competencies in many major technological areas, Beijing has actually placed itself in a double-ended budget crunch.

China must therefore play the long game. Upgrading an entire establishment does not happen overnight. Despite new fleets of aircraft, ships, and satellites, the PLA is well aware that technological parity will take time to achieve. Institutional reform of specialty trade schools and junior leadership education has begun, but these will not see fruition before the end of the decade. We must remember that while the PLA is slowly accruing operational experience with task forces to the Gulf of Aden, expatriate rescue operations in Libya, and the annual ‘Miyako Run’, they remain far from fielding a force capability of starting, surviving, and prevailing in combat.

More importantly, we must also remember that military modernization is not Beijing’s overriding priority. National development remains the paramount objective. Monetary and commodity inflation, social divisions and stratification, social welfare pressures, and economic diversification all vie for Beijing’s attention. Given the domestic events that have unfolded ahead of this year’s leadership transition, Beijing is expecting more political, social, and economic instability on the horizon. Domestic, not military, issues will occupy Beijing’s attention in the near and medium term.

Chicken Little can sleep easy for another night.

Ernest Chong graduated from the Master of Public Policy program at the School of Public Policy and Governance in 2011. He also holds a Master of Arts in War Studies from King’s College London. He is currently assistant publisher at Global Brief magazine and is an affiliated analyst for Polaris Strategies, a Washington D.C.-based geo-political consultancy start-up. His areas of interest focus on defence and security issues in Canada, the United States, and the Asia-Pacific. This post is an updated summary of an analysis of China’s 2012 military budget announcement prepared for Polaris Strategies in March 2012. 

The Public Policy and Governance Review is pleased to announce the release of its 2012 Spring Issue.

Click here for the new issue.

Spring is here and, as has become tradition, so too is the second and final issue of the PPGR for the academic year. It has been an eventful year, full of debt crises and revolutions abroad, federal and provincial budgets and the much-anticipated Drummond Report, and a new political movement in Occupy Wall Street that brought the issue of inequality into mainstream conversation. It has been an exciting year for public policy, and it has been a privilege to showcase the fresh thinking of emerging policy leaders from around the country.

This issue features an interview with Professor David Zussman, whose distinguished career in public policy has taken him in and out of government during economic conditions similar and dissimilar to the present. We also take on issues of sovereignty with an analysis of recent developments in Libya, as well as recommendations for Aboriginal self-government here in Canada. Other papers discuss the role of social media in elections, the orientation of newly elected MPPs in Ontario, Toronto Amalgamation, Nitrate Contamination in PEI, and Land Use Agreements in the British Columbia treaty process.

THE UNLIKELY NDP LEADER

Last weekend Thomas Mulcair defied the odds. After four ballots delayed by a mysterious cyber attack against the NDP’s sophisticated voting system, the former Quebec Liberal cabinet minister sailed to victory garnering a decisive 57.2 per cent over Brian Topp’s 42.8 per cent among NDP members. Just how did this transpire?  In short, tens of thousands of New Democrats rebelled against the party establishment – a coalition of union leaders, academics, journalists, and youth – to elect an outsider without traditional NDP pedigree.

Mr. Mulcair’s rapid ascension to the NDP throne concludes an astonishing career resurrection for the man dubbed ‘Grizzly’ for his hot-tempered demeanour in the Quebec National Assembly. Less than six years ago, Mr. Mulcair was without a job: in late 2006, he had abruptly resigned from Quebec Premier Jean Charest’s cabinet on a point of principle. But within months, the late Jack Layton actively recruited him as the NDP’s Quebec lieutenant. Wasting no time, Mr. Mulcair romped to victory in a 2007 by-election in the Liberal bastion of Outremont (he won the first Quebec NDP seat under Layton’s leadership and the second Quebec seat in NDP history). He then racked up commanding wins in 2008 and 2011, paving the foundation for the NDP’s historic 59-seat breakthrough in La Belle Province. This remarkable sequence of events now has the Ottawa commentariat wagging their tongues in pursuit of one question: will Mr. Mulcair ultimately win the keys to 24 Sussex Drive?

To tackle this question is premature, for it’s first worth underscoring that Mr. Mulcair is the unlikeliest leader the NDP and its predecessor – the CCF – have ever had at the helm. To say the 57-year-old fluently bilingual lawyer has politics engraved in his blood would be an understatement: Mr. Mulcair’s lineage on his francophone mother’s side includes that of Honore Mercier, a Quebec Liberal premier from 1887-1891. He can appear bourgeois or patrician and launched his political career with the centre-right Quebec Liberal Party in the mid-1990s. Even more controversially – not least of which for New Democrats – is the Conservatives’ claim Mulcair would have joined the Harper government had the Conservatives agreed to his demands for a cabinet post in 2007. While Mr. Mulcair adamantly denies such claims, he has acknowledged he entered into discussions with the Tories prior to eventually joining the NDP.

FROM PROTEST TO POWER?

In spite of his unlikely ascension to the NDP leadership, the elite chattering classes of downtown Toronto and Montreal have already begun to wax-poetic on the merits of a Mulcair-led NDP. Could he eventually secure his place in the Canadian left’s pantheon by forming the first national NDP government? Perhaps, but not without explicitly altering the trajectory of Canada’s NDP. In other words, Mr. Mulcair will need to swiftly refurbish the NDP as a centre-left, pragmatic brokerage party open to cooperation with the third-place Liberals. As Globe and Mail columnist Lawrence Martin recently articulated, Mr. Mulcair is uniquely qualified to accomplish just that. According to Martin, Mulcair boasts four precious qualities:

1. He’s an eloquently bilingual politician with deep roots in Quebec who holds the single best shot at consolidating Mr. Layton’s Quebec breakthrough last spring;

2.  Mr. Mulcair is a seasoned political operator who boasts executive experience in government: he can hit the ground running as Leader of the Official Opposition in Ottawa;

3. He is a man of strength and political-savvy ready to confront his equally talented adversaries: Stephen Harper and Bob Rae; and

4. Mr. Mulcair is a quintessential centrist – that is, he is not weighted down by dogmatic ideology and is therefore well positioned to modernize the party, and – to borrow his own words – demonstrate the party’s capacity for ‘good public administration.’

Now that Thomas Mulcair is entrenched as the Leader of the Official Opposition, watch for the dynamics in Parliament and in the NDP to quickly change. And while she was thrust into the unenviable task of leading the party on an interim basis, it’s now clear Nycole Turmel’s brief tenure as leader did little to inspire rank and file New Democrats. Over the past few months, it became painfully apparent that Mme. Turmel – a rookie Quebec MP and former union leader – was most unsuited for the interim leadership position. This was, after all, on showcase for months in Ottawa’s daily Question Period, where Mme. Turmel consistently underperformed due to her lack of political experience and poor proficiency in English. The net result: Liberal leader Bob Rae hastily assumed the role of the ‘Leader of the Unofficial Opposition’, garnering considerable media attention – and in doing so – bolstering his party’s public opinion standing considerably.

But with Mr. Mulcair’s victory last week, the Liberals’ competitive edge in Parliament is on the cusp of dissipating. Since arriving in Ottawa, Mr. Mulcair has exhibited a razor-sharp focus in Question Period, on committees, and in media scrums; now that he is leader, expect Mr. Mulcair to focus his ammunition exclusively on Prime Minister Harper. Buoyed by a recent poll that had them tied for first place with the Conservatives, for the first time in its history the federal NDP can smell power. As Toronto Star columnist Chantal Hebert recently observed: “In politics, little is more irresistible than the alluring scent of power.” In this vein, Mr. Mulcair’s election as leader confirms a large faction of the NDP now places political expediency above traditional social democracy, as championed by party luminaries Broadbent and Layton.

The essential question remains a simple one: can Mr. Mulcair shrewdly navigate the turbulent waters of Canadian democracy and shepherd his party from protest to power? Astute political observers will recall a book entitled: ‘From Protest to Power’ – in fact it’s the name of Mr. Rae’s memoires; indeed it’s a rich irony that Mr. Mulcair, a former Liberal, now leads the NDP and Mr. Rae, a former New Democrat, leads the Liberals. But in spite of swapped allegiances among the NDP and Liberal leaders, the NDP – buttressed by official opposition status – are now most suitably positioned to dislodge Mr. Harper from power.

A NEW (CENTRIST) ERA FOR SOCIAL DEMOCRACY

Understood in this light, Mr. Mulcair’s victory last week sparked the dawn of a new era for social democracy in Canada. To be fair, the late Jack Layton set the party on a more pragmatic path upon assuming the leadership in early 2003. From that critical point onward, Mr. Layton incrementally transitioned the party from political obscurity – a rural rump of 13 MPs – to that of a robust national party holding seats in every region of the country. But in defeating Layton confidante Brian Topp, B.C. MP Nathan Cullen, and Ontario MPs Paul Dewar and Peggy Nash, the adroit Mulcair has been handed a clear mandate to take the party in an even more ambitious direction – toward the corridors of power.

It’s an entirely new pathway for the party: one that acknowledges the challenges facing – not merely the union movement – but the business community and other societal actors not customarily associated with Canada’s NDP. To that end, it would seem Mr. Mulcair is intent on eschewing his party’s erstwhile pacifism and aligning it as unconditionally pro-Israel, while preaching an economic centrism that seeks to champion environmental sustainability without jeopardizing Canada’s fragile economic recovery. Among the political class, many perceive him as a Liberal dressed in NDP apparel.

But Mr. Mulcair’s brand of centrism is bound to alienate a large swath of core NDP supporters – perhaps even some of those who actively supported him for leader. For years now, the NDP has undergone futile resistance to modernizing and adapting to the New Labour philosophy as implemented in Great Britain by former Prime Minister Tony Blair. As political observers will know, the NDP is the only social democratic party in the western world that has not presided over genuine modernization in the New Labour/Third Way mould. Oddly enough, New Democrats have long championed this historical footnote as a badge of honour, illustrative of their steadfast resolve to reject political pragmatism in exchange for honouring their CCF-era roots.

Enter party icon Ed Broadbent. It was precisely this – the fear of moving the NDP too close to the political centre – that thrust Mr. Broadbent into the political spotlight in recent weeks, cautioning rank and file NDP members against the perils of crowning Mr. Mulcair as the new face of social democracy in Canada. And it wasn’t merely Mr. Broadbent who felt compelled to break his silence: his views were reinforced by core supporters, many closely aligned with the Brian Topp and Peggy Nash campaigns.

CHALLENGES AND OPPORTUNITIES ABOUND

As the Mulcair New Democrats actively prepare for the next election over the coming years, they will invariably confront new challenges and opportunities. Their first public test will be party unity and cohesion. Thus far, it appears Mr. Mulcair is extending an olive branch to political rivals within his own party. Upon assuming the leadership, he signalled he would keep Vancouver MP Libby Davies as deputy leader – a clear concession to the left flank of his party. But in due course, expect the new leader to reward his most ardent supporters with influential positions, both within the caucus and in the Opposition Leader’s Office (OLO).

In essence, Mr. Mulcair’s central challenge will lie in distributing key positions equitably, among caucus supporters and former rivals reluctant to accept his leadership. Moreover, as Chantal Hebert notes, Mr. Mulcair should be under no illusion as to the terms of his mandate as leader. Hobbled by dwindling polling figures, the NDP has historically proven rather patient with its leaders; after all, Jack Layton’s last campaign was also his fourth one – a prolonged tenure neither the Liberals nor the Conservatives would extend to a leader losing consecutive elections. In this regard, it’s unlikely Mr. Mulcair will be afforded the latitude Mr. Layton clearly benefitted from. Put plainly, his strongest supporters – those that propelled him to victory amid establishment opposition – will just as easily reverse their support should he not deliver convincing electoral results.

NDP-Liberal Cooperation?

Another challenge and possible opportunity will likely manifest itself in the manner in which the new leader responds to the media’s fixation on potential cooperation with the third-place Liberals. While New Democrats have gone to considerable lengths to rule out such a scenario, rival candidate Nathan Cullen’s insurgent campaign was premised on formal cooperation with the Liberals as an antidote to Conservative rule. In boldly proposing joint candidates between both parties – enabling local New Democrats and Liberals in Tory-held ridings to run a single candidate – Mr. Cullen has stoked the once taboo subject among NDP partisans. And while many New Democrats continue to scoff at Cullen’s idea, it did find traction among the broader Canadian public. According to a recent Harris-Decima poll, Canadians said they felt the Cullen proposal had legs.

Less than 24 hours into his new role, Mr. Mulcair had already ruled out formal or informal cooperation with the Liberal Party. Said Mulcair: “It’s absolutely not in the cards,” responding to a question on a potential merger from the CBC’s Peter Mansbridge. Added Mulcair: “We’ve got all these great ideas in the NDP but now for the first time we’re poised. We’ve got to take a state of fact – because the Official Opposition is just the party that gets the second-highest number of seats – and turn it into a state of mind…that the NDP can actually form the next government.” In spite of Mr. Mulcair’s tough language, it’s unlikely the perennial question of uniting the centre-left will dissolve in the near future. What is more, the rationale underpinning NDP-Liberal cooperation is compelling on numerous fronts.

The fundamental argument is that, in spite of Mulcair’s current advantage, Canada will not enjoy a progressive majority government in the foreseeable future without a structural realignment of the party system. If Mr. Harper is to remain in power, he must do all he can to maintain the current party system in tact; that is, he must ensure the Liberal and NDP parties remain divided in pursuit of the progressive majority. As long as these two parties continue to claw back at the same pool of progressive voters, the Conservatives win.

Albeit, the merger idea remains a highly controversial one among Liberals and New Democrats. At some point, however, Mr. Mulcair will need to confront the political reality on the ground as he contemplates election strategy moving forward. Of all the challenges he will inevitably rub up against as leader, this may prove to be the most confounding.  In many respects – the presence of Mr. Rae, a former New Democrat and Mr. Mulcair, a former Quebec Liberal – as leaders of their respective parties produces the ‘perfect storm’ for NDP-Liberal cooperation. Moreover, Mr. Mulcair’s centrist policies and focus on ‘good public administration’ would seem palatable for the Rae-led Liberal Party.

THE REAL BATTLE LIES AHEAD

The real battle begins this week as Mr. Mulcair will be tested on his response to the Conservative’s 2012 Budget. He says his years in Quebec politics convinced him of the need to build a structured Official Opposition, with an emphasis on thorough opposition research. Said Mulcair: “We’re going to do that work and bring the tough fight in 2012 and 2013 to the Conservatives, and in the last year really prepare for the election of 2015.” But as the party seeks to turn the page after a divisive leadership campaign, top-of-mind for the NDP are the fresh Conservative attacks against Mr. Mulcair.

There is a real fear within the party that the Tories will be able to effectively tarnish his reputation, just as they tarred Mr. Dion and Mr. Ignatieff. In fact, the Conservatives have been quick out of the gate, already attempting to brand Mr. Mulcair as ‘hard left’, vicious, and overly aggressive. Said NDP MP Francoise Boivin: “No organization should allow its leader to be attacked. Still, we can’t change who we are and we can’t get down into the gutter like the Conservatives and start throwing mud around – that’s not our style”

But perhaps the NDP’s most arduous challenge in the lead up to the next federal vote will be selling their leader – not to Quebec – but rather, to Ontario and the West. Indeed, as the old adage goes: ‘Elections are won in Ontario.’ Despite the incessant media coverage surrounding the ‘Orange Wave’ in Quebec, it’s worth noting the NDP made few gains elsewhere in the country. Of the 233 seats outside of Quebec, the NDP won an underwhelming eight more seats than it had in the 2008 election. In raw numbers, the party gained a mere seat in the West, two in Atlantic Canada, and five in Toronto. In order to gain power in 2015, the NDP has two mutually exclusive strategies to draw upon. The party could seek to marginalize the Liberals as a spent force – a task that will prove dubious and short sighted. Alternatively, the more prescient strategy would see the NDP seek common cause with the Liberal Party, looking for avenues in which to build informal or formal cooperation, whether it be in Parliament or in an extra-parliamentary environment. For this strategy to succeed, Mr. Mulcair and Mr. Rae will need to join forces in some capacity; while this prospect might be unlikely in the near future, it will prove necessary if the will of the progressive majority in this country is to be realized.

Andrew Perez attended the NDP Leadership Convention in Toronto March 23^rd-24^th, on behalf of the PPGR. He is a second-year student in the Master of Public Policy program at the School of Public Policy and Governance, University of Toronto. He holds an Honours Bachelor of Journalism from Carleton University and previously worked for several elected officials of varying political stripes on Parliament Hill, Capitol Hill in Washington D.C., and most recently at Queen’s Park in Toronto.

I’ve been thinking a lot in the last few months about how to make government work better.

We talk about the silos that stone-wall or inhibit collaborative policy efforts, we hear about information asymmetries across ministries, and we see the disagreements that occur publicly between the federal and provincial (and provincial and municipal) governments regarding transfers and financing.

Amidst these issues, we know that we now live in a perpetually globalizing, inter-connected, and multi-polar world. The global village McLuhan predicted is indeed operating in full force. Furthermore, as University of Toronto Professor Dr. Irvin Studin noted, one of the cardinal tautologies of this century is that the Canadian state has become very complex (Studin 2008, 43).

“This complexity means that there is nary a policy issue that fails to straddle the discrete constitutional responsibilities assigned to the federal and provincial governments,” he noted. This includes energy, immigration, strategic infrastructure, Aboriginal questions, the environment, and health care.

However, First Ministers’ Meetings are now rare. Moreover, they have come to be marred by media frenzies that focus on the clashing of provincial interests and premiers’ highly elastic asks. The centrifugal stress on the Prime Minister is immense, and the federation’s functionality appears weakened to the electorate. Steps should be taken to make First Ministers’ Meetings more policy focused so that pan-Canadian challenges can be tackled in a meaningful way without the omnipresent debate over transfers and finances.

It is important to note that some efforts have been effective in breaking down silos in government. The Service Ontario model is a great example of government streamlining services in a way that makes sense, is effective, and illustrates how meaningful collaboration can occur.

But after I attended a Mar. 30, 2012 lecture given by a former Head of the Ontario Public Service, it became apparent from their speech that some silos remain within our government, and they are difficult to break down. Silos exist for different reasons. For instance, some ministries are simply unaware of the work others are doing on similar policy portfolios, and some large ministries have intra-silo challenges due to their great size. They are probably impossible to overcome altogether; thus, the impetus for change should be to make silos more networked, rather than abandoning them altogether.

In summation, if there truly is “nary a policy” that fails to cross inter-jurisdictional lines and inter-ministerial lines, we must find a way of better collaborating.

Recommendations

1. The federal government should create a National Grants Commission (NGC) to recommend the transfer amount and allocation formula for federal-provincial financing and transfers.

While tensions over such fiscal allocations will likely always exist, there is much opportunity to better mitigate these tensions in pursuit of more collaborative, inter-governmental policymaking between Canada’s First Ministers. I recommend modeling the NGC after the Australian Commonwealth Grants Commission (CGC). The CGC experts propose strictly non-partisan recommendations to the Australian government for resource allocation to the Australian territories.

According to a recent Mowat Centre report on the topic, the “CGC’s recommendations are generally adopted because they come with a seal of neutral fiscal expertise,” and the result has been very few conflicts over federal-territorial financing and transfers since the CGC was implemented in 1933 (Beland and Lecours 2012, 3). Furthermore, Australia’s CGC has been used as the model for the creation of both South Africa’s and India’s non-partisan grants commission. Given the fact that Australia and Canada are both constitutional monarchies, using Australia’s CGC is a viable example for Canada.

Finally, although thousands of intergovernmental meetings are held between public servants in Canada each year on a myriad of topics, it ultimately takes “political oxygen” (Studin 2008, 44) from elected officials to give intergovernmental policies their impetus.

2. To break down more barriers between ministries and departments, inter-ministerial/inter-departmental projects and policymaking should be incorporated into Employee Performance and Development Plans. Those employees who undertake meaningful efforts to diminish information asymmetries between ministries/departments and engage in collaborative inter-ministerial policymaking should be rewarded by way of their merit pay increase.

Working to diminish information asymmetries across departments and ministries could be part of policymakers’ annual work plan they devise with their supervisor. Moreover, tying merit pay directly to this objective could further incentivize such undertakings, whilst helping to either break down or better connect silos.

One area where this could be particularly useful is in policymaking related to mental health and mental illness. During a Nov. 2012 presentation from a policy expert working on the Commission for the Review of Social Assistance in Ontario (jointly being lead by Munir Sheikh and Francis Lankin), it was illustrated that at least 15 different Ontario ministries or departments were undertaking policies related to mental health and mental illness. These efforts were largely  uncoordinated.

If policymakers’ work plans stipulated they undertake inter-ministerial dialogue when identifying and researching the opportunities and risks of a list of policy options, and modest merit pay could be awarded upon effective fulfillment of this expectation, perhaps silos could be better connected and information asymmetries lessened within a government.

Parting thoughts:

I’d like to further explore these two recommendations in a more thorough manner; evaluating and weighing the risks associated with them, as well as the feasibility of their respective implementation. For instance, would a National Grants Commission actually lessen disputes over transfers and help facilitate more policy-focused First Ministers’ Meetings? Next, how would policymakers’ inter-ministerial endeavours to diminish information asymmetries and better network silos actually be measured and evaluated?

However, what I do know is that I’ve given this topic some thought.
And if I ever share an elevator ride with a Minister who asks little old me for two policy options on the topic, I have them ready.

______________________________________

Margaret Cappa is Co-Editor of the Public Policy and Governance Review. She is in the second year of the Master of Public Policy program at the School of Public Policy and Governance, and received a Bachelor of Journalism from Carleton University. Margaret has worked as a journalist both in Canada and abroad, with publications in The Globe and Mail, The Associated Press, The Rwanda News Agency, and The Barents Observer. Her research interests include immigration, intergovernmental affairs, the Arctic, and questions of sovereignty and intervention.  

______________________________________

Work Cited:

Beland, Daniel and Andre Lecours. 2012. “Equalization at Arm’s Length.” The Mowat Centre.

Studin, Irvin. 2008. “Process Before Product: A New Federal-Provincial Logic for a New Century.” Policy Options, September Issue pg. 43 – 46.

It was a race between forty students, divided into four teams, with four hours to reach the finish line.

This policy battle, better known as the 3^rd annual Ford-SPPG Conference hosted this past weekend in Toronto, is a joint initiative of the Gerald R. Ford School of Public Policy at the University of Michigan and our own School of Public Policy & Governance at the University of Toronto.

Students daring enough to take on the challenge were given four hours to understand the current gaps and challenges of the Great Lakes – St. Lawrence Region, develop options and make recommendations on the costs and benefits of establishing a Great Lakes Partnership Council[1], and then present their proposals to a panel of faculty experts.

The case was framed as a rising issue that groups of policy makers, economists, and thought leaders are currently trying to solve, making the prospects of developing recommendations even more interesting.

Before the weekend began, many of the participants would have been unaware of the rich economic and environmental value of the Great Lakes – St. Lawrence Region, or the factors that have contributed to its slowed progress and transformation. Upon leaving the conference, participants realized the complexity of the situation, while also better understanding the region’s importance and strategies to ensure its future prosperity and sustainability.

This conference demonstrated the benefits of bringing together the right players. Americans, Canadians – convening around a table to discuss the similarities and differences in our governments’ priorities, our nations’ socioeconomic challenges and political realities. The team environment provided participants the chance to work closely with our public policy counterparts from the Ford School, encouraging a fusion of diverse backgrounds and expertise. This was ultimately reflected in the spectrum of recommendations presented at the end of the day.

Planned by and for students from Ford and SPPG, this conference required us to put our skills to work and grow our knowledge quickly, and for much more than the pursuit of winning. We all crossed the finish line – taking many lessons with us as we move onto our next race.

Ann Arbor Michigan 2013? … See you there!

Meaghan Coker is a first-year student in the Master of Public Policy program at the School of Public Policy & Governance, University of Toronto. She graduated from The University of Western Ontario with two degrees, a Bachelor in Management and Organizational Studies and an Honors Bachelor of Arts in Political Science.

The United States is returning to the Asia-Pacific region.

Last November, Secretary of State Hillary Clinton wrote of “America’s Pacific Century” in Foreign Policy, and Washington announced the basing of Marines in Australia. Shortly thereafter, President Obama began reversing years of perceived American disengagement by participating in the East Asia Summit (EAS) for the first time and spearheading the Trans-Pacific Partnership free trade framework through the Asia Pacific Economic Cooperation (APEC) forum. Washington is providing military aid to Indonesia, likely stationing littoral combat ships in Singapore, and looking to increase its presence in the Philippines and Thailand, in addition to boosting existing relationships with Japan, South Korea, and Taiwan. Elsewhere, The United States has begun reconnecting with its historical foe Vietnam while also supporting continued reform in Myanmar. This flurry of retrenchment has tangibly demonstrated Washington’s recommitment, but it also carries a number of implications for the region.

Implications for the Asia-Pacific

To start, this is not a significant strategic paradigm shift. Washington has always had an interest in the Pacific, not least because of the ever-rising volume of maritime trade and a number of longstanding allies. Those allies and their neighbours have flourished in a security environment historically underwritten by the United States. Washington has, however, been distracted for the better part of a decade in the Middle East and Southwest Asia. The consequence of this distraction has been a shift in Asia-Pacific regional dynamics.

China has taken advantage of Washington’s post-9/11 focus. Over the last few years, Beijing has combined its rapid economic ascent with increasingly aggressive “gunboat” diplomacy in disputes, raising tensions in the region. China’s neighbours see a dangerous correlation between China’s rapid but opaque military modernization and its ham-fisted territorial claims. In addition to the Taiwan issue, Japan and South Korea continue to spar with Chinese claims over East Asian islands, while several ASEAN states are being bullied by Beijing’s assertion of sovereignty over virtually the entire South China Sea. The lack of an effective strategic counterweight to China’s aggression meant Beijing got its way more often than not.

The American “return,” then, could not be better timed. Although the region’s major powers – Japan, South Korea, and Australia – have sufficient clout to protect their domestic interests, they do not, even together, have sufficient power to provide regional security. Southeast Asia does not have any collective power, and remains heavily reliant on the United States as the guarantor of stability. Given the rising tensions and its position as the predominant military power in the area, Washington is signaling reassurances that it will remain involved in the region.

The signal is doubly significant given the intense budgetary crisis in the United States. Its Asian allies worry that the Pentagon’s need to balance its books will impact the military provision of regional stability. To assuage those fears, US Secretary of Defense Leon Panetta has reassured the region that “the Pacific remains a priority for the US.” Maintaining forward-deployed American forces overseas remains a good idea. Withdrawing these tangible commitments now would put the US at a severe political and strategic disadvantage, the diplomatic and military fallout from which it may never recover.

Continued American security dominance also buys time for the region to progress in other domains. Governments can focus their resources on addressing domestic issues without the costly obligation of also contending with an unstable neighbourhood. This is particularly the case for ASEAN states as they go through socio-political upheaval over better governance and economic opportunity, in addition to longstanding internal religious or ethnic strife.

At the same time, Southeast Asia is home to several significant emerging markets and investment opportunities. Without US coverage, these states would inevitably come under Chinese economic influence, for better or for worse. The region also contains the busiest maritime commerce lanes in the world and is a vital throughway for the US Navy, making Washington’s return all the more important.

The unspoken implication, of course, is that the United States is there to stay. The Asia-Pacific is the center of the global economy and world trade, and Washington has a long list of friends and allies in the area. That these friends and allies are increasingly nervous about China will keep the US engaged in the region for the foreseeable future.

Implications for China

China will undoubtedly see these moves as further attempts to contain its economic growth and rise as a regional power, but Beijing should not read too deeply. While they certainly illustrate Washington’s desire to re-engage the region, it would be a hawkish exaggeration to read it as containment. A mere 2,500 Marines in northern Australia will not have any significant impact on the balance of power. Littoral combat ships, although modern and purportedly stealthy, are not carrier strike groups. Handfuls of fighter jets and pockets of new military equipment do not fundamentally change the already-lopsided military calculus in Southeast Asia.

Washington’s refocus does signal, however, an end to the relative free reign Beijing has had in its backyard in the post-9/11 era. To date, China has preferred to engage its neighbours bilaterally so it can bring its superior political and economic weight to bear, sometimes resorting to overtly aggressive pressure outside of normal diplomatic parameters. Whether it is Beijing’s version of realpolitik or merely the product of immature statecraft, China’s recent foreign policy record has antagonized its neighbours and drawn significant suspicion and scorn. Washington’s re-engagement is thus meant to strengthen resolve and lessen Beijing’s ability to run roughshod over the region.

This is not to say that the end goal is to isolate China. The Obama administration has repeatedly stated that it stands ready to diplomatically engage with Beijing. The objective is to coerce China into abiding by established international rules. For all its bluster, Beijing knows that greater engagement and a diplomatic solution to territorial disputes are China’s best options for continued economic growth and regional stability. Despite its rapid modernization and expansion, the PLA remains militarily incapable of projecting significant power beyond China’s coasts. Nor is the region ready for Chinese leadership – both because Beijing has yet to demonstrate any semblance of it, and because the region continues to default to the US for security assurance given Washington’s relatively transparent agenda.

But China’s position will not remain static. For now, stability will come through good relations with the United States. If Beijing is seen to be on better terms with Washington, its neighbours will be more inclined towards fruitful relations as well. China currently does not want conflict, largely because it does not have much to gain through escalation. The region is already suspicious of China’s opaque intentions. Any further aggression would encourage Asia-wide anti-Chinese sentiment. Given time or sufficient reason, however, and that calculus will change.

Future Implications

Despite its economic power and authoritarian regime, China remains a deeply insecure nation. In this perspective, Washington’s latest moves can be interpreted as the positioning of weiqi pieces to encircle the Chinese mainland. Beijing is also keenly aware that Washington’s insistence on engagement by established international rules is reminiscent of China’s historical experience with ‘other people’s rules’ – the unequal treaties imposed by European powers and Japan in the nineteenth and twentieth centuries. This ‘century of darkness’ remains a traumatic scar on China’s cultural psyche. In large part, Chinese foreign policy and its perception of the international system stem from the desire to avoid similar future situations.

This is perhaps the greatest danger. Despite the burgeoning economic relationship, Beijing and Washington have misconceived but deeply held perceptions about the other. China sees the American-led championing of Western socio-cultural ideals as an existential threat to domestic stability. Indeed, Beijing remains wary of the impact and compatibility of such ideas with the pace and direction of Chinese socio-economic development.

On the other hand, Washington fundamentally opposes Beijing’s one-party authoritarian regime, a perception that underpins its wider conception that China is a security threat to Asia. The United States’ relative decline as a world power vis-à-vis China’s rise only heightens suspicions that Beijing has hegemonic intentions for the region and beyond.

Most critically, policies based on one’s own perceptions alone without regard for the other will only mutually reinforce misunderstanding and the potential for unnecessary tension. Worse, if left unaddressed, these fears have the potential to become self-fulfilling prophecies.

One can hope, then, that Washington’s latest moves in Asia are the first in a sustained effort to reconcile differences with Beijing. For its part, China is somewhat justified in approaching the implicit invitation cautiously. As the dominant power, the onus remains with the United States to show genuine intentions and assuage Chinese fears. But diplomacy is always reciprocal.  Beijing must also be willing to be transparent and negotiate in good faith.

Ernest Chong graduated from the Master of Public Policy program at the School of Public Policy and Governance in 2011. He also holds a Master of Arts in War Studies from King’s College London. He is currently assistant publisher at Global Brief magazine and is an affiliated analyst for Polaris Strategies, a Washington D.C.-based geo-political consultancy start-up. His areas of interest focus on defence and security issues in Canada, the United States, and the Asia-Pacific. This post is an updated summary of an assessment of the United States’ Asia ‘pivot’ for Polaris Strategies in December 2011. A follow-up piece on China’s latest military budget will appear next week.

What does the future of the Great Lakes Region look like?

We tend to forget that we are part of a vital region that has everything a region needs to succeed. Consisting of Ontario and Quebec along with eight other U.S. States, the region is an economic powerhouse that produces $4.6 trillion GDP per year as of 2009 – if it were a country, it would be ranked the third largest GDP in the world after the U.S. and Japan! It is rich in human capital, talent, and natural resources. The region contributes $180 billion to Canada-U.S. trade and its Great Lakes represents 21% of the world’s freshwater stores. So, the region looks pretty good, right?

Forty students from the School of Public Policy & Governance at the University of Toronto and the Gerald R. Ford School of Public Policy at the University of Michigan will be collaborating this weekend to ask themselves this question at the 3rd annual Ford-SPPG Conference. Using the Mowat Centre’s The Vital Commons report, they will be challenged to address the leadership, information-sharing and advocacy gaps that threaten the region’s ability to effectively tackle its challenges and capitalize on its significant opportunities. Some say that regional collaboration is required to overcome these gaps and recommend that a Great Lakes Partnership Council be created. However, where would one start?

This is an ambitious but exciting challenge, and we expect that many great ideas will be brought forth. As the interests of our Canadian students conflict with our American counterparts, we anticipate heated debates and collaboration will only challenge ideas to be more creative and strategic. Perhaps the future of the Great Lakes Region may be determined over this weekend!

To start this exciting conference off, we will be joined by Laura Dawson, President of Dawson Strategic, and Jeffrey Izzo, Chief of Political and Economic Affairs from the US Consulate in Toronto, at our reception on Friday, March 23 at 6:00pm at the School of Public Policy and Governance. All students and faculty are invited to join us at the reception!

We will be actively posting Twitter updates and photos throughout the conference. To follow the events and activities, visit our website: http://fordsppgconference.wordpress.com/

What protections will the world’s nations put in place to try to protect the planet and its inhabitants from greed, economic recklessness, barbarism and environmental despoliation? What will be — in Plato’s words — the art of measurement that saves our lives?

Your student colleagues at SPPG and across the campus at Massey College have spent seven months scouring the country for speakers to address these issues. They’ve commissioned one of Canada’s leading pollsters, Ekos Research, to examine Canadians’ attitudes toward the international role they want their country to play. The curtain goes up Tuesday, March 20, on this year’s Walter Gordon Symposium on public policy, jointly organized by Massey and SPPG.

It begins at 10:30 a.m. in Massey with a disturbing presentation by Ekos president Frank Graves of an increasingly fragmented Canada, values-fractured by age, by education, religion and increasingly by differences between recent immigrants and native-born Canadians. Our social cohesion is eroding, our imagined community of Canada is increasingly harder to identify.

From the Ekos poll, the symposium moves on to examine global governance and finance — with speakers Prof. Lou Pauly from the Munk School, Prof. Tony Porter of McMaster and Andrew Spence, head of global research for TD Bank. Former UN ambassador Robert Fowler, University of Ottawa international law specialist Amir Attaran and former diplomat (and U of T visiting professor) David Wright address the issue of global security and Dr. Roger Gibbins, head of the Canada West Foundation, Prof. John Duncan of the U of T Centre for Ethics, and Pembina Institute analyst Clare Demerse wade through the ethics of the oil sands.

At 8 p.m. in Isabel Bader Theatre, Ambassador Fowler brings the day’s thoughts together in conversation with Michael Ignatieff. There are still some spaces available for the daytime session but you need to register — rsvp.wgs2012@gmail.com. Your mind will thank you.

Thailand’s Got 99 Problems … and it just can’t seem to catch a break.

After a virtual political ‘honeymoon’ through the first four months of her administration, rookie Prime Minister Yingluck Shinawatra has seen a mounting number of issues that are straining her government’s already-limited capabilities. Governing the politically-divided and economically-precarious nation that Ms. Shinawatra’s administration inherited now threatens to become even more challenging.

In part, some of these issues are the latest manifestations of underlying problems that predate Ms. Shinawatra’s landslide July 2011 election victory. Thailand remains deeply divided over political differences stemming from the 2006 coup d’etat and self-exiled ex-prime minister Thaksin Shinawatra – Yingluck’s brother. The political unrest since 2005 has resulted in a fractured society – best exemplified by the Red Shirt and Yellow Shirt movements – with bitter grievances that will be difficult to reconcile.

Existing economic troubles add to this difficulty. Thailand’s late-industrializing, lower-wage neighbours are now catching up, meaning Bangkok’s export-oriented, labour-intensive industrial growth strategy has run its course. A new strategy is needed for further growth, but systemic neglect of the nation’s education system, poor public infrastructure, and an antiquated taxation system has mired Thailand in a middle income trap.

To this laundry list of woes is added a new set of challenges. The military remains unable to make headway against the long-running Malay insurgency in the south. The unusually heavy flooding in October devastated the country’s most productive industries and called into question the nation’s preparedness against future natural disasters. Flood damage, the deepening euro crisis, and lacklustre American economic recovery caused the Thai economy to contract sharply in the last quarter of 2011. The government has been criticized for its mishandling of the October floods while its populist campaign promises raise questions about its monetary discipline. A spate of botched bomb plots early this year has highlighted national security gaps and now threatens to undermine even the country’s previously-indefatigable tourism industry.

To any government, this is already an unenviable menu of challenges. It seems, however, that Thailand is intent on adding to its misery: late last month, the Thai Parliament passed a controversial but long-awaited Constitution amendment proposal that promises further dichotomization.

This will be a gargantuan task for Ms. Shinawatra’s fledgling administration. The proposal sets the stage for a constitution drafting assembly (CDA) that will have 180 days to rewrite the charter before it is put up for public approval through national referendum. Thailand has had 17 constitutions in its 80-year history as a constitutional democracy, with five iterations in the last 20 years alone – an indication of the country’s intrinsic political instability.

Conflict is almost guaranteed. The current constitution was written by a military-appointed committee after the 2006 coup to include a number of punitive clauses intended to politically devastate Thaksin’s party and its allies. Some of these articles will now be up for amendment review. Anti-Thaksin groups, including royalist Thai elites and the military, see amending these clauses as a way to eventually grant Thaksin amnesty and revive his political support base. Such a direct challenge will not go unanswered. Though soundly defeated in the 2011 elections, the anti-Thaksin movement still control some critical parts of the state and have popular support among country’s upper and middle classes. This small but powerful segment of Thai society therefore retains the capability to destabilize the current government. Indeed, the last time such a charter amendment attempt was made in 2008, the protests that erupted in response eventually brought down the government of the day.

Given the possibility of such a volatile response and the plethora of other problems her government faces, it is not immediately clear why Ms. Shinawatra would choose this moment to push through a charter amendment.

The answer, it seems, lies in Ms. Shinawatra’s need to do something. With public confidence in her administration wavering (here, here, here) and very little to show in terms of economic progress or development,  Ms. Shinawatra needs to take a greater leadership role. The Prime Minister has to show critics, supporters, and the public alike that she has the political courage to tackle the tough issues on her plate.

At the same time, Ms. Shinawatra is beholden to her political patrons. After more than six months in office, she has done very little for the supporters who helped secure her election victory. Anti-Thaksin “Yellow Shirts” and the military still dominate government appointments and budgeting, and have further polarized the population by becoming increasingly cavalier with the country’s lese majeste laws. A number of pro-Thaksin “Red Shirts” now have prominent government positions – and are pressuring her to do more – but the vast majority of her brother’s political allies remain outside of Thai politics by virtue of the charter she now seeks to change.

Ms. Shinawatra is therefore also flexing her legally-elected government mandate in preparation for a larger political showdown in the near future. A detente between the royalist military and the populist government that allowed some artificial calm since July is rapidly coming to an end. With the five-year political activity ban on Thaksin’s allies expiring soon, the Yellow Shirts and the military face a narrowing window before Ms. Shinawatra’s administration is rejuvenated with experience and wider appeal. Such confidence would allow the government to push forward with its agenda, including rolling back elitist influence. Similarly, the military’s oppressive conduct in response to the 2010 protests has convinced Red Shirt leaders of greater civilian control over the military.

The pending charter amendment process is therefore likely to be a political watershed. While such amendments may be seen as entirely reasonable to external observers, Thai elites and the military will not accept this aggressive curtailment of their political domination lightly. The Yellow Shirts stand to lose substantial portions of their traditional benefits. The military, heavily connected to the monarchy, perceive this as an existential threat to their political independence (and their access to lucrative sources of commercial income). Their positions are made all the more precarious given the King’s increasing frailty and the uncertainty of outcomes in the inevitable royal succession.

In this regard, Thai politics are remarkably short-sighted. As much as Thaksin and lese majeste are immutable issues for monarchists, elites, and the military, a declining Thailand is of little benefit to either side. Whether they are in opposition or power (and thus are charged with rectifying ostensibly worsening problems), it is in both sides’ respective interests to work towards a Thailand that is economically viable rather than inherit one that is fiscally devastated. Thailand remains a manufacturing centre, and economists believe it is poised to make a strong comeback this year. Given its geo-strategic position, Thailand has the potential to become a major transport, logistics, and distribution hub for Chinese and Southeast Asian goods. Such potential is only attainable by a nation with its domestic house in order. One wonders whether this charter amendment is a step in the right direction. 

Ernest Chong graduated from the Master of Public Policy program at the School of Public Policy and Governance in 2011. He also holds a Master of Arts in War Studies from King’s College London. He is currently assistant publisher at Global Brief magazine and is an affiliated analyst for Polaris Strategies, a Washington D.C.-based geo-political consultancy start-up. His areas of interest focus on defence and security issues in Canada, the United States, and the Asia-Pacific.

THE DIAGNOSIS

Ontario is in a funk. Enter technocrat Don Drummond, the former federal mandarin tasked with writing a seminal report for the McGuinty government. The undertaking: revolutionize the way in which public services are delivered in Ontario. Never in recent memory has a government-commissioned report – a two-volume, 668-page document at that – garnered so much anticipation and pervasive speculation among the chattering classes. The refrain ‘Waiting for Drummond’ –popularized by a YouTube video produced by the public affairs program The Agenda with Steve Paikin – cleverly poked fun at the feverish anticipation surrounding the release of Mr. Drummond’s  report on February 15^th.

But in many respects, this is merely ‘the end of the beginning,’ as Toronto Star columnist Martin Regg Cohn aptly put it in a recent column.  Now that Mr. Drummond has terminated his unrelenting work on The Commission on the Reform of Ontario’s Public Services, it will now hinge upon Dalton McGuinty’s Liberal government to ‘operationalize’ Drummond’s most pertinent recommendations. To that end, this is a watershed moment in Ontario politics. “Don Drummond’s report on reforming Ontario’s public services is the most significant blueprint for government reform ever seen in Canada”, says Tony Dean, the former Secretary of Cabinet and Head of the Ontario Public Service from 2002-2008.

And yet support for Mr. Drummond’s influential report is by no means unanimous in public policy circles. Armine Yalnizyan, a senior economist at the Canadian Centre for Policy Alternatives, says the report is laced with a ‘$30-billion scare tactic’ – a direct reference to Mr. Drummond’s warning that Ontario is on pace for a $30-billion deficit and a debt-to-GDP ratio above 50 per cent by 2017-2018 if no action is taken. The suggestion here – one that Ms. Yalnizyan pointedly rejects – is that to avoid financial ruin, the province must slash public spending to a degree that will dwarf the cuts made in the early years of the Common Sense Revolution.

In spite of the mostly ideological debates that exemplify the lack of consensus surrounding the report, it is difficult to quibble with the fiscal diagnosis that Mr. Drummond laid at the government’s feet: that is, Ontario’s economy is vulnerable to external shocks, including those of the Eurozone debt crisis, the weakening of the global economy, and a heavy reliance on the fragile U.S. economy. Moreover, government expenditures are projected to outpace government revenues in 2011-2012; more explicitly, government revenues are projected to be $108.3 billion while expenditures are forecast to be $124.1 billion in 2011-2012. As Mr. Drummond stipulates, the projected 2011-2012 deficit is forecast to be $16 billion – 2.5 per cent of GDP – while the net debt is expected to soar to 238.4 billion: an increase of 56 per cent compared to 2005-2006.

Irrespective of these daunting figures, the McGuinty Liberals are intent on safeguarding an activist policy agenda: one that includes the likes of full-day kindergarten, generous tuition grants for post-secondary education, and robust social supports for the most disadvantaged among us. And so it’s within this ideological framework that Mr. Drummond was handed his mandate; in this vein, expect Mr. McGuinty to eschew the unsophisticated solutions emblematic of Mike Harris’s neo-liberal era – draconian cuts, across-the-board wage freezes, and considerable asset sales that produced temporary revenues – in favour of long-term efficiencies. In other words, almost every public service in the province will be rigorously assessed against a rubric that stresses ‘evidenced-based policy’, integration of services, and merit-based hiring practices where productivity is plainly rewarded and lack thereof is penalized.

THE TREATMENT

As it becomes readily apparent when sifting through the report, Mr. Drummond cloaks many of his findings in ‘reimagining how public services are delivered’ lingo. To be sure, this axiom has almost become engraved in the minds of senior public servants and influential political aids; to that end, the ‘reimagining ethos’ is the common thread interwoven throughout the document.  In it, Mr. Drummond examines a multitude of policy silos and government programs, charting 362 recommendations in total. It’s anticipated the government will cherry-pick from these recommendations, executing only those deemed politically palatable.  Following the release of Budget 2012 in late March, expect the government to move swiftly with muscular reforms in the following areas:

Public Education

The Drummond report’s 57 education recommendations amount to a forensic audit on several of the government’s flagship initiatives. While Mr. Drummond suggests modest spending increases – 1 and 1.5 per cent respectively – for elementary/secondary and postsecondary spending, the report also includes some thornier prescriptions.

Since coming to office in 2003, Mr. McGuinty has justifiably hung his hat as the ‘education premier’; true to his electoral commitments, he has presided over unprecedented investments in public education. In spite of the Liberals’ penchant for human capital investments, Mr. Drummond leaves no stone unturned in the education chapter of his report. Says Drummond: “We recommend the cancellation of the Full-Day Kindergarten (FDK) program with appropriate phase-out provisions.” But having already passed the baton, it’s now clear the Liberals will march to their own drummer; this was, perhaps, most evident when Finance Minister Duncan took to the airwaves in recent weeks repeating the refrain: “the commission advises, we decide.”

That being said, watch for the government to delay implementation of the FDK program from 2014-2015 to 2017-2018 and reduce FDK costs by adopting a more affordable staffing model of one teacher for about 20 students, rather than a teacher and an early childhood educator for 26 students. In fact, Drummond advises as much in his report: acutely aware the government is unlikely to heed his advice on scrapping the entire program, he provides, what is in his view, the next best option for the government.  And while temporarily delaying implementation of the FDK program may prove unpopular, watch for Mr. McGuinty to turn to his sturdy Education Minister, Laurel Broten, to stickhandle this thorny issue over the comings months and years.

Another signature policy put through the grinder by Mr. Drummond and his commission is that of small class sizes in the formative years. Over the previous nine years, the government’s principal strategy to improve student achievement has been to reduce class sizes in primary schools (JK – Grade 3). In fact, some 90 per cent of classes now enjoy 20 students or fewer and none have more than 23. Albeit, empirical evidence presents a more complex picture; it’s true that Ontario’s recent improvements on provincial assessments and quality indicators have coincided with reduced class sizes, but there is no evidence of causality.  As the report notes: “even if smaller classes had some impact on outcomes, the evidence suggests that investments in smaller classes do not offer the most efficient means for improving results.” Given this lack of convincing empirical evidence, Drummond recommends the province’s scarce resources not to be applied to reducing class sizes.

Will Mr. McGuinty adhere to Drummond’s cautious advice on class sizes? The short answer:  yes.  Increasing the class-size cap by two or three students in primary classes will be strongly considered by the government. Watch for the government to increase the cap for primary schools from 20 to 23 students and increase the class-size averages in junior/intermediate schools from 24.5 to 26. And while Mr. McGuinty may be reluctant to renege on some of his legacy commitments, expect these reversals to be among the least painful decisions he will be confronted with in the lead up to Budget 2012.

Labour Relations & Compensation

 Labour peace has been a staple of the McGuinty government’s nine years in office, but it was not established without a considerable price tag on the part of the public purse. Currently, there are over one million employees in the broader public service (BPS) – approximately 70 per cent of whom are unionized, compared with 15 per cent in the private sector. According to Drummond, labour costs account for approximately half of all Ontario government spending; as such, the commission’s target of 0.8 per cent overall program spending growth cannot be attained without moderation in the growth of public-sector total compensation. Translation: the government will need to come to the bargaining table armed with a public sector compensation restraint strategy that includes public pensions, salaries, and employee benefits.

Mr. Drummond also shrewdly suggests the province strongly consider raising the retirement age for teachers. He points out the typical teacher retires at age 59 – having worked for merely 26 years – but then collects a pension for 30 years. Based on this logic, Drummond recommends the government reject any further employer rate increases to the teachers’ pension plan and instead calls for reduced benefits. This all sets the stage for potentially acrimonious negotiations when teachers return to the drawing board to negotiate a new contract later this year.  Add to that another mammoth collective bargaining agreement up for renewal: that of the province’s 25,000 physicians. Says Drummond: “Ontario’s doctors are the best paid in the country, so it is reasonable to set a goal of allowing no increases in the total compensation envelope.” In other words, across all departments it is recommended there be zero budget increases for wage costs; what is more, any increases must be absorbed by departments finding savings elsewhere.

But in spite of the strong language referenced above, Mr. Drummond is quick to return to his ultimate goal: the nurturing of a highly competent public service working at a high level of productivity and delivering excellent public services. In this regard, tactics geared toward short-term fiscal gains – namely wage freezes and limits to new hires – ought to only be executed as last resorts, for these measures all too often damage labour relations, says Drummond. Most importantly, the report proclaims: “there should be no ideological or other bias towards or away from public or private-sector delivery of services, only a consideration of practical logic.”

Expect the government to follow the broad strokes of what Mr. Drummond proposes in the labour relations section of his report. Watch for the government to work collaboratively with members of the broader public service and bargaining agents to reach compromises that recognize the fiscal reality. Anticipate that the government will provide employers with the latitude to adopt and maintain iron-clad positions in the face of disagreement and disruption, while remaining results-oriented.

Intergovernmental Relations & ‘Ontario’s Campaign for Fairness’

One aspect of the Austerity Czar’s report that has garnered noticeably less media scrutiny is that of the intergovernmental environment Ontario must operate within. As Globe and Mail columnist John Ibbitson recently opined, things have become so dyer in the previous decade that the province has become two Ontarios. Says Ibbitson: “The first Ontario is Toronto, a Canadian New York whose economy is powered by financial services, education, biosciences, cultural industries, tourism, and more.” But says Ibbitson:“Outside Greater Toronto is a whole lot of Ohio, as the manufacturing sector follows other Great Lakes economies into rustbelt status.”

Independent of these facts, Ontario continues to finance the social programs that many provinces depend on. Its taxpayers contribute 39 per cent of federal revenues, but receive only 34 per cent of federal spending in return. Moreover, each year, 2 per cent of the province’s GDP – or $12.3-billion – bleeds to the rest of the country, even as Queen’s Park ratchets up a $16-billion deficit.  Fortunately, this reality was not lost on Mr. Drummond; he fittingly calls the current situation “a clear demonstration of the perverse structure of Canadian fiscal federalism.” As Ibbitson notes, Ontario voters can no longer afford to finance Employment Insurance programs that favour Atlantic fisherman over laid-off auto workers in southern Ontario.

Provincial Ontario politicians – most notably Dalton McGuinty – have been courting publicity on this important issue since the early 1990s. In fact, Mr. McGuinty has shown leadership, spearheading ‘Ontario’s Campaign for Fairness’ in his first term in office. It’s also an issue federal politicians of all stripes have done a lousy job on, says trusted Liberal strategist Bob Richardson. Fortunately, Richardson notes, Drummond cautions the government on why it can’t afford to lose momentum on this issue. According to the report, the government must forge an understanding with Ottawa as to why federal actions do in fact pose fiscal risks on Ontario. Drummond outlines four major risks:

1.      Changes to the common tax base:  common personal and corporate income tax bases simplify filing. Proposed federal changes to income splitting and Tax-Free Savings Accounts could cost Ontario $1.3 billion in lost revenue.

2.      Changes to Canada’s Criminal Code: changes to the federal Criminal Code will impose new demands on the provincial court and corrections system, adding to the fiscal burden. The Harper government’s omnibus anti-crime bill is expected to result in substantially higher costs for Ontario.

3.      Reducing support for immigration settlement services: in 2005, Ottawa and Queen’s Park agreed to increase funds for immigration settlement services in Ontario. However since then, Ottawa has underspent by more than $220 million under the agreement, reducing potential service to help newcomers settle, integrate, and find work.

 4.      Long-term health costs outstripping federal funding:  the long-run cost of health care will almost certainly grow faster than nominal GDP; moving to a GDP-based growth rate would cost Ontario about $239 million in 2017-2018, but could reach nearly $421 million if GDP growth is below 3 per cent..

Over the coming months, expect the McGuinty government to push hard for a more reliable and predictable federal partner in addressing Ontario’s fiscal gap. Watch for the government to exert pressure on Ottawa to modernize the federal programs that directly serve Ontarians or fiscal arrangements that support provincial services. Having recently received a clear mandate from the Ontario people, it’s likely the premier will bring his fight to Mr. Harper’s doorstep in Ottawa, resurrecting ‘Ontario’s Campaign for Fairness.’ Look for this campaign to pressure Ontario MPs to bring this issue to Ottawa, holding the federal government’s feet to the fire.

THE (POLITICAL) NARRATIVE

As senior Liberal strategists convene in the premier’s corner office on the second floor of the Ontario Legislature in the coming days, they will ultimately be confronted with two confounding questions: one, of the 362 recommendations, which ones will they execute? Two, how will they do so in a manner that is politically palatable? Veteran Liberal strategist John Duffy believes there is a constituency for genuine austerity measures, provided they are cautiously implemented. But public opinion polling may illustrate a different narrative: a recent Forum Research survey reveals unease at the spectre of all-encompassing government cuts.

“Liberal core voters are not on board with this. It’s going to be difficult for the Liberals. The education cuts hit their core supporters,” says Forum president Lorne Bozinoff.  The Forum Research survey revealed, overall, 30 per cent of those surveyed approve of the Drummond report, while 32 per cent oppose it and 38 per cent are undecided. But as avid political followers will know, public opinion polls are merely a snapshot in time. The fact remains these are still very early days in the government’s quest to transform the way in which it delivers public services. Over the coming weeks, look for a highly sophisticated government communications rollout on pending austerity measures. Its objective: to wet the public’s appetite for anticipated reforms across all sectors of government. Watch for the premier’s office to paint the reforms not as the politics of labour versus management, but rather, as pro-consumer politics: the idea that Ontarians are not getting enough in the form of top-drawer services for the tax dollars they dole out. Sold on these grounds, it’s less likely the reforms will ignite ideological conflict.

Dalton McGuinty has fashioned a professional political career as a resilient underdog. Unlikely to seek a fourth term, the premier is relishing the opportunity to tackle yet another determining public policy challenge. Somewhat encumbered by his government’s minority mandate, expect Mr. McGuinty to work constructively with the opposition parties in the lead up to the March 2012 Budget; the strategy will be to effectively neutralize the Drummond Report as a taxing political issue. Ultimately, the goal will be to garner Progressive Conservative and/or NDP support for next month’s budget. Thus far, it appears the opposition parties have not chartered a coherent response to the report’s findings. NDP Leader Andrea Horwath is intent on opposing the entirety of Mr. Drummond’s recommendations, with few exceptions. Meanwhile, Tim Hudak is all over the map: one moment calling on the Liberals not to cherry-pick from the report, the next moment rejecting recommendations that he himself finds politically toxic. Irrespective of the opposition, Mr. McGuinty must forge ahead unabated: he must uncover ways in which to begin rewarding Mr. Drummond’s rigorous analysis and faith in government’s ability to refurbish itself. The alternative – a complete collapse of public services and government revenues – would see Ontario replicate the economic crisis unravelling in Greece.

Bon Courage, Premier.

Andrew Perez is a second-year student in the Master of Public Policy program at the School of Public Policy and Governance, University of Toronto. He holds an Honours Bachelor of Journalism from Carleton University and previously worked for several elected officials of varying political stripes on Parliament Hill, Capitol Hill in Washington D.C., and most recently at Queen’s Park in Toronto.