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SUN NEWS COLUMN: How city halls might end up delaying economic recovery

Coming out of the COVID-19 pandemic, it will be important to pay attention to city hall and how it responds to the recession – municipalities are uniquely positioned to hurt or help our nation’s economic recovery.

Taxpayers should also be aware that despite what some city councillors and mayors insist, cities have more financial flexibility than they let on.

Note that the vast majority of provincial and federal government revenues come from income taxes and sales taxes. Your tax bill for both of those types of taxes drops off significantly when you’re laid off or not earning as much money.

At city hall, however, it’s the opposite. City hall is heavily dependent on property taxes and those tax bills will still be there regardless of what happens with your income, or what shape a business is in.

In that respect, city halls across the country could significantly hurt or help our nation’s recovery. If they raise taxes on businesses and families, they could push both into bankruptcy, compounding the problems our communities already face. In some cases, cities will need to reduce taxes to help households and businesses stay afloat.

At this point it’s hard to say where each city’s finances will end up. Given we’re in a truly unique emergency situation, there may be some legitimate cases for cities to receive financial support from other levels of government. But what is clear is that cities have options to ease the burden on you, your neighbours and local businesses.

First, they could prioritize spending. Now is the time to focus on core services, such as policing, fixing roads and our water and sewer systems – the services we can’t live without. Public art, grants for special interest groups and money for nice-to-have capital projects could be placed on the backburner.

For example, the City of Calgary is raising taxes by nearly 8% this year while sitting on millions in a reserve fund for public art. The latter could be used to help prevent tax increases on struggling families and businesses.

Second, labour costs represent the largest spending area of most municipal governments, but politicians are typically reluctant to make difficult choices to reduce these costs. In the interests of fairness, there’s no reason why city employees couldn’t feel the pinch just like those working outside of government.

In fact, politicians could lead by example. Winnipeg’s city council pension plan cost taxpayers $4.4 million between 2009-2018 while council members only contributed $0.9 million. Perhaps this plan could use a trim?

A third initiative would be for municipalities to innovate in order to deliver services more cost effectively. No doubt some white-collar city employees have demonstrated during the pandemic that they can do their jobs remotely. Cities could explore making such changes permanent to reduce their office space costs. Cities in the U.S. have had success with providing bonuses for employees who provide ideas that lead to cost savings. Perhaps a Canadian city might follow suit?

Certainly, there are other initiatives municipalities could pursue to help our nation recover. If your city chooses to instead raise taxes, keep your seatbelt fastened and prepare for a longer, more difficult road to recovery.

Colin Craig is the President of SecondStreet.org, a new Canadian think tank.

This column originally was published in April 16 edition of the Winnipeg Sun and Toronto Sun.

 
 

 

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Prevention – reduce demand in the first place

If Canadians lived healthier lives, we could reduce demand for emergency services, orthopaedic surgeries, primary care and more. 

For instance, if you visit the Canadian Cancer Society’s website, you’ll read that “about four in ten” cancer cases are preventable. The Heart and Stroke Foundation notes that “almost 80 percent of premature heart disease and stroke can be prevented through healthy behaviours.” A similar number of Diabetes cases are also preventable. 

Many joint replacements and visits to ERs and walk-in clinics could also be avoided through healthy living. 

To be sure, not all health problems can be avoided through healthy living – everyday the system treats Canadians with genetic conditions, helps those injured in unavoidable accidents and more.  

But there is an opportunity to reduce pressure on the health care system through Canadians shifting to healthier lifestyles – better diets, more exercise, etc. 

To learn more, watch our Health Reform Now documentary (scroll up) or see this column. 

Partner with non-profits and for-profit clinics

European countries will partner with anyone who can help patients. 

It doesn’t matter if it’s a non-profit, a government entity or a private clinic. What matters is that patients receive quality treatment, in a timely manner and for a competitive price.  

In Canada, governments often delivery services using government-run hospitals instead of seeing if non-profit or private clinics could deliver the services more effectively. 

When governments have partnered with non-profit and private clinics, the results have often been quite good – Saskatchewan, Ontario and British Columbia are just a few examples of where partnerships have worked well. 

Canada should pursue more of these partnerships to reduce wait times and increase the volume of services provided to patients.  

To learn more, watch our Health Reform Now documentary (scroll up) or see the links above. 

Make cross border care more accessible

In Canada, citizens pay high taxes each year and we’re promised universal health care services in return. The problem is, wait times are often extremely long in our health system – sometimes patients have to wait years to see a specialist or receive surgery. 

If patients don’t want to wait long periods, they often have to reach into their own pocket and pay for treatment outside the province or country. 

Throughout the European Union, we also find universal health care systems. But a key difference is that EU patients have the right to go to other EU countries, pay for surgery and then be reimbursed by their home government. Reimbursements cover up to what the patient’s home government would have spent to provide the treatment locally. 

If Canada copied this approach, a patient waiting a year to get their hip operation could instead receive treatment next week in one of thousands of surgical clinics throughout the developed world. 

Governments benefit too as the patient is now back on their feet and avoiding complications that sometimes come with long wait times – meaning the government doesn’t have to treat those complications on top of the initial health problem. 

To learn more, watch our Health Reform Now documentary (scroll up) or this shorter video. 

Legalize access to non-government providers

Canada is the only country in the world that puts up barriers, or outright bans patients from paying for health services locally. 

For instance, a patient in Toronto cannot pay for a hip operation at a private clinic in Toronto. Their only option is to wait for the government to eventually provide treatment or leave the province and pay elsewhere. 

Countries with better-performing universal health care systems do not have such bans. They allow patients a choice – use the public system or pay privately for treatment. Sweden, France, Australia and more – they all allow choice. 

Why? One reason is that allowing choice means some patients will decide to pay privately. This takes pressure off the public system. For instance, in Sweden, 87% of patients use the public system, but 13% purchase private health insurance. 

Ultimately, more choice improves access for patients. 

To learn more, watch our Health Reform Now documentary (scroll up) or watch this short clip on this topic. 

Shift to funding services for patients, not bureaucracies

In Canada, most hospitals receive a cheque from the government each year and are then asked to do their best to help patients. This approach is known as “block funding”. 

Under this model, a patient walking in the door represents a drain on the hospital’s budget. Over the course of a year, hospital administrators have to make sure the budget stretches out so services are rationed. This is why you might have to wait until next year or the year after for a hip operation, knee operation, etc. 

In better-performing universal health systems, they take the opposite approach – hospitals receive money from the government each time they help a patient. If a hospital completes a knee operation, it might receive, say, $10,000. If it completes a knee operation on another patient, it receives another $10,000. 

This model incentivizes hospitals to help more patients – to help more patients with knee operations, cataract surgery, etc. This approach also incentivizes hospitals to spend money on expenses that help patients (e.g. more doctors, nurses, equipment, etc.) rather than using the money on expenses that don’t help patients (e.g. more admin staff). 

To learn more about this policy option, please watch our Health Reform Now documentary (scroll up) or see this post by MEI.