The large pension plan knows how long we'll live because it deals in large numbers of people and uses averages for life expectancy. Thus, large defined-benefit plans can estimate fairly precisely the amount of savings one needs for the lifespan of the average pensioner in their plan. The large defined-benefit plan can also take a long-term view of interest rates and market returns, a perspective not often available to the individual investor. This again increases the economic efficiency of such plans as the CPP.
Three obvious public policy conclusions flow from this analysis:
Substantially increase the size of the CPP so it provides for a much larger proportion of income replacement on the retirement of Canadians. Many studies have recommended this idea. An increase in CPP contributions and coverage could be done over several years in a way that ensures the CPP remains fully funded.
Develop a system whereby companies and their employees can buy additional defined-benefit pension coverage from the CPP. These supplementary pensions would need to be fully funded and would be fully portable (as they are held in the CPP). An add-on plan to the CPP would provide companies and individuals with the economic efficiencies and the substantial cost savings that only a large plan can generate.
Develop a strategy to get companies that have lost the incentive to provide defined-benefit plans back into the business of offering them. This will not be easy. Companies have moved away from such plans because of complex pension laws designed to protect workers, and their experience that such plans are costly and difficult to manage. In addition, employees are wary of such plans when they see large companies fail to fully fund their plans or go bankrupt with their pension plans underfunded.
A policy of both increasing the CPP and allowing companies and individuals to buy supplementary pensions from the CPP is one acceptable policy move. Another is a much closer monitoring of pension plans by regulators. A positive move in this direction would be the establishment of the proposed national pension guarantee system.
Another feature of such a system would be to require underfunded pension plans to pay higher premiums for coverage. In other words, any company that requests relief from its required funding - that is, additional time to make up a pension deficiency - should pay an additional premium for such forbearance.
Showing posts with label retirement. Show all posts
Showing posts with label retirement. Show all posts
Friday, June 05, 2009
Policy Prescriptions for Retirement
There's an excellent article in today's Globe called Saving for Retirement Baffles the Boomers, by Doug Peters and Arthur Donner. Unfortunately, the article's subtitle, "Take a breath, think longevity, public policy and type of plan," is somewhat misleading. The advice in the article is: change public policy so that we have larger public pensions. Here's part of what they have to say:
Thursday, January 29, 2009
More Bad News
Nortel employees and ex-employees have been sent letters informing them that they are now considered creditors. This appears to be a head's up that their pensions are toast.
If this country were run for the good of the people, rather than the good of the rich and the corporations the rich use to get richer, then there would be some effective protection for corporate pensions. It's bad enough that virtually noone outside the civil service gets pensions anymore; now those few remaining holdouts are starting to default.
Update
###
If this country were run for the good of the people, rather than the good of the rich and the corporations the rich use to get richer, then there would be some effective protection for corporate pensions. It's bad enough that virtually noone outside the civil service gets pensions anymore; now those few remaining holdouts are starting to default.
Update
Wednesday, December 31, 2008
New Public Policy Required Around Retirement
One of the most negative consequences of the current financial collapse is the effect on pensioners who live off savings. Their portfolios have collapsed. Government regulation forces them to remove a certain percentage of their savings every year, so they are forced to sell assets that have dropped greatly in value - resulting in an unfortunate forced situation of “buy high sell low”.
Now, back when I studied financial management, the rule of thumb was that you should have the percentage represented by your age in non-risky savings. If you’re 60, then only 40% of your savings should be in risky assets, with the rest in fixed return assets. It is obvious from the plight of seniors that this rule of thumb is no longer followed.
The reason, I imagine, is that it is not possible to get a high enough return on secure assets. The Rule of 25 tells us that to live off investment income, you need to save 25 times your desired income. To retire with $50,000/year income, you need to save $1.25M. This rule is based on a return of 4%. Where do people get a 4% real return (return above inflation)? Not from anywhere safe, certainly. That makes us have to contemplate a Rule of 50: to get $50K, you need to save $2.5M.... that kind of saving is simply beyond the ability of most people. (It also requires a higher interest rate while saving, which entails more risk.) If we moved to a Rule of 50 paradigm, we would need to rethink RRSP limits, which currently have an upper ceiling of $20K/year. But even that doesn't help when we have the severe business cycles of the last ten years, during which we have had two catastrophic market events (the tech bubble and subprime meltdown) that wiped out much of people’s savings.
Government bureaucrats and educators all have pensions and benefits till death, and many of them don’t seem to comprehend that most of us don’t have that security, and must finance our retirements through savings. That’s not the hard part though. The hard part is managing the savings so that we can actually retire on them. We are pressured to find investments with decent returns. Most of us aren’t gamblers – we try to find mutual funds that balance risk and return in a responsible way – but we’ve still lost our shirts twice in the past decade. The market bounced back after the tech bubble, but many investments were lost forever, whether we sold or not.
What is needed is a new approach to public policy around retirement savings that is based on the reality of most people. We have a crisis coming with the aging population, and it is a crisis of poverty. Affluent, hard-working people are facing a retirement in poverty – through no fault of their own. We saved, but the unavailability of appropriate savings options and the severity of business cycles have meant that we will have inadequate funds to live on. Sure, we can downsize and cut back, but how will we pay for our prescriptions, walkers and home care? The current system, designed by bureaucrats who have lifetime benefits attached to their pensions, is simply inadequate.
As the "bulge" of the baby boom is 10-15 years away from retirement, we need to make some changes to avoid human catastrophe. As we reregulate the financial industry we need to ensure the following:
* Citizens have appropriate places to invest retirement savings.
* Business cycles are less severe.
* There is more public education about investment, and better regulation of claims made by banks.
In addition, I think we need to consider some more dramatic and controversial ideas:
* Health benefits for seniors need to be improved, including prescriptions and prosthetics.
* Public service pensions should be scaled back and CPP/SocSec should be scaled up, resulting in a more equitable treatment for citizens.
Update: Funny that I wrote this just before things started to really get bad.###
Now, back when I studied financial management, the rule of thumb was that you should have the percentage represented by your age in non-risky savings. If you’re 60, then only 40% of your savings should be in risky assets, with the rest in fixed return assets. It is obvious from the plight of seniors that this rule of thumb is no longer followed.
The reason, I imagine, is that it is not possible to get a high enough return on secure assets. The Rule of 25 tells us that to live off investment income, you need to save 25 times your desired income. To retire with $50,000/year income, you need to save $1.25M. This rule is based on a return of 4%. Where do people get a 4% real return (return above inflation)? Not from anywhere safe, certainly. That makes us have to contemplate a Rule of 50: to get $50K, you need to save $2.5M.... that kind of saving is simply beyond the ability of most people. (It also requires a higher interest rate while saving, which entails more risk.) If we moved to a Rule of 50 paradigm, we would need to rethink RRSP limits, which currently have an upper ceiling of $20K/year. But even that doesn't help when we have the severe business cycles of the last ten years, during which we have had two catastrophic market events (the tech bubble and subprime meltdown) that wiped out much of people’s savings.
Government bureaucrats and educators all have pensions and benefits till death, and many of them don’t seem to comprehend that most of us don’t have that security, and must finance our retirements through savings. That’s not the hard part though. The hard part is managing the savings so that we can actually retire on them. We are pressured to find investments with decent returns. Most of us aren’t gamblers – we try to find mutual funds that balance risk and return in a responsible way – but we’ve still lost our shirts twice in the past decade. The market bounced back after the tech bubble, but many investments were lost forever, whether we sold or not.
What is needed is a new approach to public policy around retirement savings that is based on the reality of most people. We have a crisis coming with the aging population, and it is a crisis of poverty. Affluent, hard-working people are facing a retirement in poverty – through no fault of their own. We saved, but the unavailability of appropriate savings options and the severity of business cycles have meant that we will have inadequate funds to live on. Sure, we can downsize and cut back, but how will we pay for our prescriptions, walkers and home care? The current system, designed by bureaucrats who have lifetime benefits attached to their pensions, is simply inadequate.
As the "bulge" of the baby boom is 10-15 years away from retirement, we need to make some changes to avoid human catastrophe. As we reregulate the financial industry we need to ensure the following:
* Citizens have appropriate places to invest retirement savings.
* Business cycles are less severe.
* There is more public education about investment, and better regulation of claims made by banks.
In addition, I think we need to consider some more dramatic and controversial ideas:
* Health benefits for seniors need to be improved, including prescriptions and prosthetics.
* Public service pensions should be scaled back and CPP/SocSec should be scaled up, resulting in a more equitable treatment for citizens.
Update: Funny that I wrote this just before things started to really get bad.
Sunday, December 17, 2006
Churn
In the newspaper business, the word "churn" refers to the turnover in subscribers. Since there is a cost associated with attracting subscribers, low churn is an indicator of efficiency.
On This Week With George Stephanopoulos today, George Will provided a startling statistic: In the US every year, one-thirteenth of all jobs are lost. More jobs are created, but there is growing churn in the workforce, largely caused by globalization. This trend is not going away. If anything, employment churn will increase.
Other than during recessions, high employment churn is a new thing. We probably can't do anything to improve the degree of churn, but we need to adjust to it to help displaced workers. We need improved employee protection around the area of lay-offs and severance pay. We need better institutions to help people retrain and find work. We need UI payments to kick in sooner.
Our current systems were created not only for a time of lower employment churn, but also for a time of greater unionization. In today's world, most people do not have a union ready to fight for them. We need strong employment regulations that protect everybody. As in places like France, we need the state to step up and provide protection. But this isn't going to happen unless we demand it.
Unfortunately, elected officials all have extremely generous pension plans and the civil servants who provide much of the legislative initiative are already protected by the most powerful union contracts in the country. Stronger employment protection isn't going to happen unless the people rise up and make it an election issue, and even then it won't happen quickly.
If we don't act soon, many Canadians are going to find themselves in deep distressing poverty when they retire. When young people think their investment strategy is adequately preparing them for retirement, are they considering that they will almost certainly be laid off at some time during their career... and most probably will have to start again at a lower paying job? And that they may need to dip into their retirement savings during the period that they're unemployed? That stock market/housing market collapses could wipe out their personal retirement savings?
We do not have adequate employment protections for the current world.
Related Posts
In Praise of Regulations
Employee Protection
###
On This Week With George Stephanopoulos today, George Will provided a startling statistic: In the US every year, one-thirteenth of all jobs are lost. More jobs are created, but there is growing churn in the workforce, largely caused by globalization. This trend is not going away. If anything, employment churn will increase.
Other than during recessions, high employment churn is a new thing. We probably can't do anything to improve the degree of churn, but we need to adjust to it to help displaced workers. We need improved employee protection around the area of lay-offs and severance pay. We need better institutions to help people retrain and find work. We need UI payments to kick in sooner.
Our current systems were created not only for a time of lower employment churn, but also for a time of greater unionization. In today's world, most people do not have a union ready to fight for them. We need strong employment regulations that protect everybody. As in places like France, we need the state to step up and provide protection. But this isn't going to happen unless we demand it.
Unfortunately, elected officials all have extremely generous pension plans and the civil servants who provide much of the legislative initiative are already protected by the most powerful union contracts in the country. Stronger employment protection isn't going to happen unless the people rise up and make it an election issue, and even then it won't happen quickly.
If we don't act soon, many Canadians are going to find themselves in deep distressing poverty when they retire. When young people think their investment strategy is adequately preparing them for retirement, are they considering that they will almost certainly be laid off at some time during their career... and most probably will have to start again at a lower paying job? And that they may need to dip into their retirement savings during the period that they're unemployed? That stock market/housing market collapses could wipe out their personal retirement savings?
We do not have adequate employment protections for the current world.
Related Posts
In Praise of Regulations
Employee Protection
Thursday, November 02, 2006
Income Trusts
1. Income trusts were a tax loophole that needed to be closed. The Harperos did the right thing.
2. A lot of investors are losing money because of this new tax. Harper gave some tax relief to retirees and he softened the impact with a gradated implementation. It is still a going to be a financial loss for a lot of people.
3. There would not be this big a loss if Paul Martin had done something about income trusts back in the fall of 2005. Had he done this then, there wouldn't be such a mess now.
4. The stock market is a risky, risky place. Increasingly in recent years we have been sold the line that we should rely on the stock market (including mutual funds) to save for our retirement. We don't have a lot of options now that pensions are a luxury enjoyed mostly by civil servants. We need to revisit this whole area and start to think of regulations to help non-rich people who need a secure retirement fund.
5. Good government does not mean blindly following every campaign promise. Situations change (in this case, a flood of companies moving into the tax loophole of income trusts); people learn new facts (especially when they move from opposition to government); and opinions evolve. Good governance means being pragmatic and open-minded.
2. A lot of investors are losing money because of this new tax. Harper gave some tax relief to retirees and he softened the impact with a gradated implementation. It is still a going to be a financial loss for a lot of people.
3. There would not be this big a loss if Paul Martin had done something about income trusts back in the fall of 2005. Had he done this then, there wouldn't be such a mess now.
4. The stock market is a risky, risky place. Increasingly in recent years we have been sold the line that we should rely on the stock market (including mutual funds) to save for our retirement. We don't have a lot of options now that pensions are a luxury enjoyed mostly by civil servants. We need to revisit this whole area and start to think of regulations to help non-rich people who need a secure retirement fund.
5. Good government does not mean blindly following every campaign promise. Situations change (in this case, a flood of companies moving into the tax loophole of income trusts); people learn new facts (especially when they move from opposition to government); and opinions evolve. Good governance means being pragmatic and open-minded.
Sunday, April 16, 2006
Employee Protection
Since my last blog in praise of regulations, I have been thinking about what might happen if a movement started to promote stronger regulations in favor of employees.
We might think of this movement as an evolution of unionism from favoring a few groups of employees to a fair and universal system of employment standards. That this is overdue is clear from something I wrote a few weeks ago about the plight of upcoming retirees who aren't employed by government. While those who work for governments either directly (civil servants) or indirectly (school and university employees) have guaranteed, indexed, and very generous retirement pensions and benefits, virtually nobody else in society does. Those in private industry unions who thought they had pensions are finding that there's a movement in the corporate world to reduce or eliminate them, and those who have relied on the stock market to increase their savings have learned how quickly their savings can evaporate. And many just can't afford to save for retirement. As the baby boomers start to retire, we will see a sharp divide of haves and have-nots that I have described as a looming humanitarian disaster.
So point one in my employment standards package is going to have something to do with retirement benefits. Perhaps it will be as small as continuing employee health benefits when an employee retires (defined as quitting after the age of 65) and providing a severance package to retiring employees. Perhaps it will be more. Perhaps it should be structurally different: have employers contribute more to unemployment insurance or the government pension plan to cover retirement.
Point two might address the issue of layoffs. Since the 1980s, layoffs have become a fixture in the white collar working world. This kind of layoff is very different from the temporary laying off of factory workers when there's no work to do. Here's an example of the problem. In my town there is a company that lays off a lot of employees every year or two. In between they are active hirers and they hire for the same sorts of job that they lay off. The CEO recently boasted that his stock price does so well because he is responsive to market forces. In other words, he hires a worker (who probably is quitting another job to go there) knowing that if the stock slips he will put the person out of work, get a price boost, and rehire someone else.
Currently, severance laws do not have much teeth for employees. They could be improved. For example, a laid-off employee could get a minimum three month's salary (not overly generous when you consider how long it takes to find a job in the white collar world) plus health benefits extended for a certain amount of time. Perhaps companies should also have to prove that certain conditions exist to lay people off.
Some may counter that companies use layoffs to rid the company of deadwood employees who are reducing productivity. But if the employees really are unproductive, then this should be dealt with more fairly, following existing laws for firing. Layoffs are widely used to circumvent the laws of dismissal, often with minimal severance. Employers are frequently lax in their hiring process because they know that they can easily rid themselves of the employee if they don't work out.
A third issue is job contracts. I am forced to sign a job contract if I want to work, and the employer does not allow any negotiation of what it contains. I may have to agree to not work in the same industry for two years after I leave the company. Employees need some legal protection in what they are forced to sign.
Other than retirement, layoffs and job contracts, I'm not sure what our new employment standards should contain. I come from the white collar high tech world and would expect that representatives of other industries and employment types would need to contribute their own priorities. We should look at protections that are provided in union contracts and European laws as a start for our list of protections that should be universally applied.
But say we have a package of employment standards that we want to be enshrined in law. Step two is the political process of getting this proposal accepted. Again, I'm just sketching out some ideas here, but it's a fair guess that the main counter-argument is going to be that such a law will lead to companies moving jobs to other countries, thereby increasing unemployment.
We should remember that the current Canadian maternity benefits standards did not have such an effect, even though in many companies women are now entitled to over a year's leave at fully salary, with a shorter paternity leave also included. Also, while France arguably has over-the-top employee protections, the unemployment rate is less than 10%, and is partly caused by other structural factors. For example, French productivity is much lower, largely because on average American workers work 1,822 hours a year, while French workers work 1,431 hours a year.
Also, in the last 35 years the remuneration of the directors and officers of corporations has increased dramatically. Compensation of CEOs has increased 1300% in that time, versus a 13% increase in average employee compensation. When we're talking about the compensation of directors and officers of corporations, salary is only part of the mix. We got a rare peak into executive perks during the divorce proceedings of General Electric CEO Jack Welch, which revealed a slew of enormous perks in addition to salary, bonus, stocks, and pension. There are tricks that make compensation difficult to measure, such as huge loans that are forgiven when the CEO leaves the company. To get an idea of the money value of stock options to head honchos, go to http://finance.yahoo.com/, type a stock symbol or company name in the "Get quotes" box, and then scroll down the page and click on "Insider Transactions" in the left column. (Pure off-topic gossip here: if you type in the stock symbol MSFT you'll see that in February 2006 Bill Gates sold $1 billion of Microsoft stocks. Yikes.) For example, if you look up the stock symbol SY (for Sybase), you'll see a lot of transactions where high-ups exercised options at far below market value.
The dramatic rise in CEO compensation shows that companies can be competitive and increase payouts. In a company of 1,000 employees, a $1 million increase to the CEO is equivalent to a $1,000 rise in remuneration to each employee.
This leads me to think of another kind of citizen protection we should have in place: annual reports should be required to include a financial ratio that shows total remuneration of officers and directors as a percentage of profits. Perhaps there should also be regulations governing how they remunerate themselves.
###
We might think of this movement as an evolution of unionism from favoring a few groups of employees to a fair and universal system of employment standards. That this is overdue is clear from something I wrote a few weeks ago about the plight of upcoming retirees who aren't employed by government. While those who work for governments either directly (civil servants) or indirectly (school and university employees) have guaranteed, indexed, and very generous retirement pensions and benefits, virtually nobody else in society does. Those in private industry unions who thought they had pensions are finding that there's a movement in the corporate world to reduce or eliminate them, and those who have relied on the stock market to increase their savings have learned how quickly their savings can evaporate. And many just can't afford to save for retirement. As the baby boomers start to retire, we will see a sharp divide of haves and have-nots that I have described as a looming humanitarian disaster.
So point one in my employment standards package is going to have something to do with retirement benefits. Perhaps it will be as small as continuing employee health benefits when an employee retires (defined as quitting after the age of 65) and providing a severance package to retiring employees. Perhaps it will be more. Perhaps it should be structurally different: have employers contribute more to unemployment insurance or the government pension plan to cover retirement.
Point two might address the issue of layoffs. Since the 1980s, layoffs have become a fixture in the white collar working world. This kind of layoff is very different from the temporary laying off of factory workers when there's no work to do. Here's an example of the problem. In my town there is a company that lays off a lot of employees every year or two. In between they are active hirers and they hire for the same sorts of job that they lay off. The CEO recently boasted that his stock price does so well because he is responsive to market forces. In other words, he hires a worker (who probably is quitting another job to go there) knowing that if the stock slips he will put the person out of work, get a price boost, and rehire someone else.
Currently, severance laws do not have much teeth for employees. They could be improved. For example, a laid-off employee could get a minimum three month's salary (not overly generous when you consider how long it takes to find a job in the white collar world) plus health benefits extended for a certain amount of time. Perhaps companies should also have to prove that certain conditions exist to lay people off.
Some may counter that companies use layoffs to rid the company of deadwood employees who are reducing productivity. But if the employees really are unproductive, then this should be dealt with more fairly, following existing laws for firing. Layoffs are widely used to circumvent the laws of dismissal, often with minimal severance. Employers are frequently lax in their hiring process because they know that they can easily rid themselves of the employee if they don't work out.
A third issue is job contracts. I am forced to sign a job contract if I want to work, and the employer does not allow any negotiation of what it contains. I may have to agree to not work in the same industry for two years after I leave the company. Employees need some legal protection in what they are forced to sign.
Other than retirement, layoffs and job contracts, I'm not sure what our new employment standards should contain. I come from the white collar high tech world and would expect that representatives of other industries and employment types would need to contribute their own priorities. We should look at protections that are provided in union contracts and European laws as a start for our list of protections that should be universally applied.
But say we have a package of employment standards that we want to be enshrined in law. Step two is the political process of getting this proposal accepted. Again, I'm just sketching out some ideas here, but it's a fair guess that the main counter-argument is going to be that such a law will lead to companies moving jobs to other countries, thereby increasing unemployment.
We should remember that the current Canadian maternity benefits standards did not have such an effect, even though in many companies women are now entitled to over a year's leave at fully salary, with a shorter paternity leave also included. Also, while France arguably has over-the-top employee protections, the unemployment rate is less than 10%, and is partly caused by other structural factors. For example, French productivity is much lower, largely because on average American workers work 1,822 hours a year, while French workers work 1,431 hours a year.
Also, in the last 35 years the remuneration of the directors and officers of corporations has increased dramatically. Compensation of CEOs has increased 1300% in that time, versus a 13% increase in average employee compensation. When we're talking about the compensation of directors and officers of corporations, salary is only part of the mix. We got a rare peak into executive perks during the divorce proceedings of General Electric CEO Jack Welch, which revealed a slew of enormous perks in addition to salary, bonus, stocks, and pension. There are tricks that make compensation difficult to measure, such as huge loans that are forgiven when the CEO leaves the company. To get an idea of the money value of stock options to head honchos, go to http://finance.yahoo.com/, type a stock symbol or company name in the "Get quotes" box, and then scroll down the page and click on "Insider Transactions" in the left column. (Pure off-topic gossip here: if you type in the stock symbol MSFT you'll see that in February 2006 Bill Gates sold $1 billion of Microsoft stocks. Yikes.) For example, if you look up the stock symbol SY (for Sybase), you'll see a lot of transactions where high-ups exercised options at far below market value.
The dramatic rise in CEO compensation shows that companies can be competitive and increase payouts. In a company of 1,000 employees, a $1 million increase to the CEO is equivalent to a $1,000 rise in remuneration to each employee.
This leads me to think of another kind of citizen protection we should have in place: annual reports should be required to include a financial ratio that shows total remuneration of officers and directors as a percentage of profits. Perhaps there should also be regulations governing how they remunerate themselves.
Sunday, March 26, 2006
If I Ran the Zoo
Here are some issues I think should be topping political agendas this year.
You might notice that health care isn't on the list. I think health care is always important, but I'm starting to think that the Canadian health care problems that started about 10 years ago were a temporary transition after the federal government changed the system of transfers to provinces. Health care is no longer in crisis, and the past crisis has better prepared us for future potential problems because the Supreme Court has ruled on the acceptable level of delays for treatment.
Pension Reform
Most private sector workers have no pension coverage at all, and those who do are discovering just how insecure the coverage is as companies declare bankruptcy or restructure in order to end their pension obligations. Currently, civil servants are the only people who have guaranteed pensions. The unfairness of this situation is even greater because civil servant pensions are financed by the taxes of people who do not have pensions. We are soon going to have a large underclass of impoverished elderly while one sector of society can take early retirement, have full benefits into their twilight years, and receive high levels of income.
There aren't nearly enough subsidized houses for the upcoming generation of seniors. There are less and less family structures in place to help. The location of food banks and social services often assume that people are hale and hearty and can take buses, walk up stairs, or carry home heavy boxes. As the first wave of baby boomers approach 60 we have a looming humanitarian disaster.
One solution would be to provide much higher government pension benefits, perhaps financed by cutbacks in benefits to civil servants. Some government pension benefits are already clawed back if there are other sources of income, and the claw-backs should be increased. Another possibility is to greatly increase low-income senior benefits such as dental care and housing.
A big problem with getting a debate started is that the people who should be working on the issue (politicians, the civil service and academics) are all guaranteed nice fat pensions and seem to not understand the issue and not care.
Education Reform
Some suggestions for change:
Our school year was designed for an agrarian society in which children were needed to help out on the farm. Nowadays most mothers work outside the home, and their work does not take a hiatus in July and August. Likewise, students need to learn a lot more now than they did a hundred-odd years ago when the school year was set. We need to consider dumping the current 180-day school year and moving to a 240-day, year-round school year (as Germany and Japan have).
In Ontario, a big slice of the budget goes to bussing kids to school. This seems like a wholly unnecessary expense that is caused, in part, by our relatively new system of dual school boards (regular and Catholic). This system separates schools from neighborhoods. Although a high proportion of the population is Catholic and this initiative received unanimous bipartisan support in the Ontario legislature, it's bad for students and for communities and should be reconsidered.
All students in universities and community colleges should have the option of cooperative education in which one-third of every year is a coop work term. This would enhance their studies, help them finance their educations, and prepare them for the work world.
Community Development
We need to reform our approach to urban planning. We all agree that global warming is a problem, and yet we continue with endless urban sprawl that makes public transit unaffordable. After years of attempts to re-invigorate our city centers we still build megamalls on the outside of town. In my town a few years ago, City Council even wanted to move the public library way out on the outskirts of town.
There are systemic reasons that municipal governments often don't provide proper urban planning. In Ontario, there's the Ontario Municipal Board (OMB), which is pro-developer and which can override local governments. Also, it seems that we don't have strong or smart enough city and regional councils; we need more involvement in and commitment to this level of government.
Environmental Regulation
Politicians have started talking about reducing oil consumption, and Canada has signed on to the Kyoto Accord, but we are doing hardly anything to actually improve our environmental record. Some major causes of pollution are: industry; cars; personal consumption. For industry, we need more regulations on polluting. For cars, we need higher gas prices and a hefty surcharge on new car sales based on gas consumption. For consumption, we need public awareness campaigns. We also need regulations on packaging; for example, why not insist that pop and wine bottles be refillable.
China/India
We need a clear, non-ideological understanding of the ramifications of the industrialization and growing economic strength of two countries comprising over 2.5 billion people. Our theories of free trade envisioned countries of roughly equal size; I don't support protectionism, but we need to re-examine our approach based on current realities.
We also need to address the issue of pollution in these growing states and the looming environmental disaster from millions of new factories and hundreds of millions of new cars that have no emission controls or other environmental regulation. Perhaps we can tie access to our markets to better environmental regulations.
###
You might notice that health care isn't on the list. I think health care is always important, but I'm starting to think that the Canadian health care problems that started about 10 years ago were a temporary transition after the federal government changed the system of transfers to provinces. Health care is no longer in crisis, and the past crisis has better prepared us for future potential problems because the Supreme Court has ruled on the acceptable level of delays for treatment.
Pension Reform
Most private sector workers have no pension coverage at all, and those who do are discovering just how insecure the coverage is as companies declare bankruptcy or restructure in order to end their pension obligations. Currently, civil servants are the only people who have guaranteed pensions. The unfairness of this situation is even greater because civil servant pensions are financed by the taxes of people who do not have pensions. We are soon going to have a large underclass of impoverished elderly while one sector of society can take early retirement, have full benefits into their twilight years, and receive high levels of income.
There aren't nearly enough subsidized houses for the upcoming generation of seniors. There are less and less family structures in place to help. The location of food banks and social services often assume that people are hale and hearty and can take buses, walk up stairs, or carry home heavy boxes. As the first wave of baby boomers approach 60 we have a looming humanitarian disaster.
One solution would be to provide much higher government pension benefits, perhaps financed by cutbacks in benefits to civil servants. Some government pension benefits are already clawed back if there are other sources of income, and the claw-backs should be increased. Another possibility is to greatly increase low-income senior benefits such as dental care and housing.
A big problem with getting a debate started is that the people who should be working on the issue (politicians, the civil service and academics) are all guaranteed nice fat pensions and seem to not understand the issue and not care.
Education Reform
Some suggestions for change:
Our school year was designed for an agrarian society in which children were needed to help out on the farm. Nowadays most mothers work outside the home, and their work does not take a hiatus in July and August. Likewise, students need to learn a lot more now than they did a hundred-odd years ago when the school year was set. We need to consider dumping the current 180-day school year and moving to a 240-day, year-round school year (as Germany and Japan have).
In Ontario, a big slice of the budget goes to bussing kids to school. This seems like a wholly unnecessary expense that is caused, in part, by our relatively new system of dual school boards (regular and Catholic). This system separates schools from neighborhoods. Although a high proportion of the population is Catholic and this initiative received unanimous bipartisan support in the Ontario legislature, it's bad for students and for communities and should be reconsidered.
All students in universities and community colleges should have the option of cooperative education in which one-third of every year is a coop work term. This would enhance their studies, help them finance their educations, and prepare them for the work world.
Community Development
We need to reform our approach to urban planning. We all agree that global warming is a problem, and yet we continue with endless urban sprawl that makes public transit unaffordable. After years of attempts to re-invigorate our city centers we still build megamalls on the outside of town. In my town a few years ago, City Council even wanted to move the public library way out on the outskirts of town.
There are systemic reasons that municipal governments often don't provide proper urban planning. In Ontario, there's the Ontario Municipal Board (OMB), which is pro-developer and which can override local governments. Also, it seems that we don't have strong or smart enough city and regional councils; we need more involvement in and commitment to this level of government.
Environmental Regulation
Politicians have started talking about reducing oil consumption, and Canada has signed on to the Kyoto Accord, but we are doing hardly anything to actually improve our environmental record. Some major causes of pollution are: industry; cars; personal consumption. For industry, we need more regulations on polluting. For cars, we need higher gas prices and a hefty surcharge on new car sales based on gas consumption. For consumption, we need public awareness campaigns. We also need regulations on packaging; for example, why not insist that pop and wine bottles be refillable.
China/India
We need a clear, non-ideological understanding of the ramifications of the industrialization and growing economic strength of two countries comprising over 2.5 billion people. Our theories of free trade envisioned countries of roughly equal size; I don't support protectionism, but we need to re-examine our approach based on current realities.
We also need to address the issue of pollution in these growing states and the looming environmental disaster from millions of new factories and hundreds of millions of new cars that have no emission controls or other environmental regulation. Perhaps we can tie access to our markets to better environmental regulations.
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