Monthly Archives: June 2019

The High Cost of Low Corporate Taxes – another side of the equation

June 27, 2019

The Toronto Star investigative report entitled, “The High Cost of Low Corporate Taxes“, by Marco Chown Oved, Toby A.A. Heaps and Michael Yow,  was published on December 14, 2017. It outlines many points of interest if one is concerned with government deficits each year that lead to massive debt that leads to a possible crushing tax burden for future generations due to interest payments on said debt.

Although, before you go down the rabbit hole of thinking that governments ought to avoid deficits and subsequent debt at all costs, please have a read through a previous blog of ours entitled, “Why household overspending is worse than government overspending”.  In this previous blog, Olivier Blanchard, a former chief economist of the International Monetary Fund (IMF), counters the big criticism of government budget deficits – namely, that they can lead to a bigger tax burden for future generations due to interest payments. Blanchard suggests that deficit spending by governments can actually produce a net benefit if it results in improved hospitals, highway, or public transit that create economic growth.

 

We digress. Back to the Toronto Star report and those of you who worry about how government deficits each year can lead to a colossal debt-load with commensurate colossal interest payments. The overarching idea is that to balance any government’s books each year and avoid a deficit position, this government has a few levers with which to tinker:

  1. A government can raise our personal income taxes.
  2. A government can find “efficiencies”, which is a euphemism in most cases for delivering less to its citizens in any number of ways (for instance, a government can stop investing in maintaining and repairing its infrastructure – such as schools for example)
  3. A government may consider that the proportion of the public budget funded by personal income taxes has never been higher and look to increase revenues collected via corporate taxes from big companies – especially banks.

Now we realize that this entire investigative report was written from a federal perspective and that Fix Our Schools is a provincial campaign based on Ontario. However, the information presented in this report is fascinating and worthy of consideration and possible application at a provincial level too. The information, some of which is laid out in bullet-form for you to peruse below, is also a very good reminder that there is another option for governments to balance their books other than cutting service levels to its citizens – especially those citizens such as students, who aren’t even old enough to vote!

  • “For every dollar corporations pay to the Canadian government in income tax, people pay $3.50. The proportion of the public budget funded by personal income taxes has never been greater.”
  • “The amount of tax most big companies in Canada pay has been dropping as a proportion of their profits for years, and not only because the corporate tax rate has been cut repeatedly. Canada’s largest corporations use complex techniques and tax loopholes to reduce their taxes significantly below the official corporate tax rate set by the government.”
  • “The financial filings of Canada’s 102 biggest corporations shows these companies have avoided paying $62.9 billion in income taxes (between 2011 and 2016)”.
  • “The 2011-2016 audited financial statements of all large Canadian corporations (those worth more than $2 billion) reveal they paid an average of 17.7 percent tax. During that time, the average official corporate tax rate in Canada for this group of companies was 26.6 percent. That 8.9 percent gap translates into tens of billions of dollars that could have been used to pay for the schools, roads, hospitals, police and paramedics we all rely on.”
  • “In an average year, the 102 biggest companies in Canada pay $10.5 billion less than they would if they paid tax at the official corporate tax rate” of 26.6% (rather than taking advantage of tax loopholes). $10.5-billion could provide 1.2-million childcare spaces.
  • “The last year that corporations paid as much income tax as people was 1952. That year, the Canadian government was flush with money and used it to start setting up the social safety net with the establishment of the Old Age Security pension program. The private sector was also doing well, as corporate capital investments hit record levels and wages soared. The postwar boom was in full swing and the wealth was being enjoyed widely: Suburbs were exploding, schools and hospitals were built and new highways were laid down across the country.’
  • “Today (in 2016), Canada’s economy is the strongest in the G7, but municipal, provincial and federal governments have to borrow money every year, or dip into savings, to make ends meet. Inequality is at an all-time high. The rich are getting richer, the poor are getting poorer and public infrastructure — from transit to social housing — is failing and falling apart. While Canadian governments have trouble coming up with cash for public services, Canadian companies are rolling in dough.”
  • “Historically, businesses have argued that raising corporate tax will hurt investment. But StatsCan numbers show that drastic cuts to the corporate income tax rate over the last 20 years have not stimulated new business investment. Between 1997 to 2016, Canada’s corporate income tax rate was cut almost in half, from 43 percent to 26.7 percent. But investment in machinery and equipment and in intellectual property is still below the 1997 level as a percent of GDP.”
  • “Peter Nicholson, former Finance Canada deputy minister, says Canada has implemented a market-friendly tax rate but failed to reap the rewards in productivity and innovation.
  • According to Gabriel Zucman, a Stanford University economist cited in the Toronto Star report, “Some countries, including Canada, have attempted to dramatically cut taxes on the wealthy and let corporate tax avoidance prosper. The result of these ‘trickle down’ policies which started in the 1980s is now clear: income and wealth have boomed for a tiny fraction of the population, but this has not benefitted the rest of the population at all. We must learn the lessons from this big natural experiment. The main lesson is that to have broad-based growth, we need an equitable tax system, where big corporations and high-earners in the financial industry and elsewhere pay their fair share — otherwise Trumpism will prevail.”

These bullets, all taken from the Toronto Star report cited above, offer a lot to ponder. We hope that readers will consider all the levers that a government could use to balance its budget each year and we also hope that you take to heart that a government deficit may not be the end of the world so long as the government’s investments lead to a rate of economic growth that is higher than the interest rate on the accumulating debt.

The Economic Case for Investing in Education

June 25, 2019

The Conference Board of Canada, Canada’s foremost independent, evidence-based applied research organization, released a report entitled, “The Economic Case for Investing in Education” on June 19, 2019. The report explores how changes in spending on publicly funded education in Ontario impact the economy and also examines the wider social and fiscal impacts.

Notable findings from the report:

  • Each dollar that our provincial government spends on publicly funded education generates $1.30 in total economic benefits to Ontario. At the same time, the inverse holds true for each dollar cut from public education.
  • Publicly funded education can generate social benefits, such as a healthier population, a higher standard of living, and a reduction in crime. These social benefits have a positive impact on our provincial budget because they all lessen demands for Ontario’s social assistance, public health care, and criminal justice services.

  • Each additional high school graduate saves the Ontario government (on average) $2,767 each year on social assistance, health care, and criminal justice. On the other hand, each additional high school non-completer costs the province $3,128 each year.
  • Through increases in public education spending, Ontario could lift its high school graduation rates to 90%, matching the highest in the country and seeing average fiscal savings of $16.4 million per year. That could accrue to total savings of $3.5 billion over the course of two decades.
  • In a reverse scenario, where high school graduation rates instead fall to 82.6%, Ontario would spend an additional $18.0 million each year. Over a 20-year period, that could amount to total fiscal costs of $3.8 billion. It is clear that compared with high school graduates, individuals without a high school diploma are more costly to the province’s public resources.

While this report does not specifically mention investing in school buildings, we know that school conditions impact student achievement, student health and student attendance. Therefore, we extrapolate that provincial spending on education to benefit Ontario’s economy would include provincial spending on actual school buildings as well.

We Need to Listen to Custodians Across the Province

June 20, 2019

The Fix Our Schools campaign has often heard from custodians in both rural and urban school boards.

“The lack of funding for maintenance and infrastructure repair creates cascading problems. When we have to close down part of an aging building because we don’t have the funds to maintain or repair it, students get squeezed, and the learning environment suffers. When maintenance and infrastructure budgets are stripped of funds to pay for other vital but underfunded programs – like mandated small class sizes or full-day kindergarten – kids suffer. We know very well that the physical infrastructure of schools contributes to the learning environment of the child.”

This statement is from an Ontario custodian. His sentiments underscore the need for a provincial approach to funding education that takes into account differences in geography, demographics and the age of school buildings when it comes to school renewal funding and also to operational maintenance funding.

We heard from another Ontario caretaker that, “A clean and well-maintained building = better student success and future”.

https://twitter.com/RobcRob/status/1110189889335844870?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1110189889335844870%7Ctwgr%5E393039363b74776565745f6d65646961&ref_url=http%3A%2F%2Ffixourschools.ca%2F%3Fp%3D3189%26preview%3Dtrue

 

Ensuring classroom environments in Ontario’s publicly funded schools are optimum for learning is the reason that Fix Our Schools asked MPP’s to commit to a State of Good Repair Standard for our schools in the June 2018 provincial election. Our call to action resonated for a vast number of MPP candidates and, in fact, 58 elected MPPs in Ontario signed the Fix Our Schools Pledge. 

The $15.9 billion of disrepair that has accumulated in Ontario’s schools is due to the chronic and gross provincial underfunding for two decades…

  • Underfunding of school renewal
  • Underfunding of operational maintenance
  • Underfunding of new schools

The conditions in Ontario’s publicly funded schools must be addressed sooner than later and this is going to require a concerted effort by our provincial government and a new approach to funding schools as critical infrastructure. To truly Fix Ontario’s schools, we need an estimated additional $1.6-billion/year.

We know this is a lot of money. We also know that:

  • Schools are a critical element of our public infrastructure
  • 2 million Ontario children spend their days in school buildings and need safe, healthy, well-maintained, clean places to learn.
  • Teachers, education workers, adult learners, and pre-schoolers who attend childcare facilities in local public schools also need safe, healthy, well-maintained, clean environments in which to work and learn.
  • Repairs in Ontario’s schools are only going to get more expensive if we do not fully address the $15.9 billion repair backlog as soon as possible. The limiting factor should be, “how quickly can we get people to DO the work … NOT the amount of money available to fix schools”

So if we collectively agree that we value our children and we value their education then we will start to do what it takes to truly fix Ontario’s schools and fix the broken provincial funding approach to education that has allowed $15.9 billion of disrepair to accumulate in Ontario’s schools.

People for Education Annual Report 2019

June 18, 2019

People for Education released its Annual Report on Ontario’s Publicly Funded Schools on June 17, 2019, with a press conference at Queen’s Park highlighting that in a time of rapid social and economic change such as the one we are currently living in, well-resourced public schools are more important than ever. In fact, the results from the 2019 People for Education Annual Ontario School Survey, which includes data from 1254 schools, clearly demonstrated the positive impact when provincial government education policy change is accompanied by resources and coherent strategies.

People for Education also emphasized at their press conference that the main focus must be on how provincial government education policy and provincial funding decisions around education actually impact the 2-million students in Ontario who attend publicly funded schools each day. 

Fix Our Schools applauds the systematic and detailed research collected and shared each year by People for Education, an independent, non-partisan organization that creates evidence, instigates dialogue, and build links so that people can see — and act on — the connection between publicly funded education and a fair and prosperous society. At Fix Our Schools, we know how key research and data can be in making effective change to any system and have relied very heavily on school disrepair data in our own campaign over the years.

If you are interested in publicly funded education, we encourage you to read the whole Annual Report, which covers wide-ranging topics from special education to technology in the classroom. For the Fix Our Schools campaign, we were particularly struck by the following findings that clearly demonstrate how important it is for our provincial government to provide the adequate, stable funding required for all Ontario publicly funded schools to be safe, healthy, clean and well-maintained buildings in which to learn and work. 

  • From page 7 of the Annual Report: “Custodians School custodians support the school in many ways, ensuring healthy and functioning facilities. Custodians play a critical role in keeping schools clean and addressing health and safety issues. In elementary schools, there is an average of one custodian for every 198 students, and in secondary schools the ratio is 1:231.”

Bill Houlden, one of the head custodians at O’Neill CVI, has been a custodian with the Durham District School Board for 12 years. On Nov. 19 he was recognized with the DDSB’s Educational Services Staff Award, an annual award that recognizes school staff such as custodians, clerical staff and educational assistants who go above and beyond.

  • From page 7 of the Annual Report: “On last year’s Annual Ontario School Survey, 22% of principals in elementary schools reported that managing facilities was the most time-consuming part of their jobs.” (People for Education, 2018a, 2018b).
  • From page 7 of the Annual Report: “The custodian works 5.5 hours. 7- 9 am and 2- 5:30 pm (the provincial education funding model means our custodian must split their time between schools so we do not have a full-time custodian on site). The hours in between I am responsible for the custodian duties that arise (toilet cleaning, cleaning bodily fluids, shoveling walkway if we have lots of snow fall, putting out sand on the parking lot in winter months). I also teach for .5 of the day as LRT (special education) and Reading Recovery teacher and have full Principal duties.” Principal of an Elementary school, Huron Superior CDSB
  • From page 8 of the Annual Report: “Principals and vice-principals are feeling increasingly overwhelmed by the number of initiatives they are responsible for. The risk of burn out has increased dramatically over the past 10-15 years. Principals and vice principals wish to focus on instructional leadership, but they must spend time on other organizational challenges such as Plant or Facilities issues, IT, HR, mental health of students and staff, health and safety legislation, transportation, finance, etc.”  Secondary school, Renfrew County DSB

What people are saying in Doug Ford’s riding

June 13, 2019

Fix Our Schools was happy to volunteer this past weekend with Progress Toronto. We knocked on doors with other Progress Toronto volunteers in Etobicoke North to understand how people there are feeling about proposed cuts by Doug Ford’s government. Other teams of Progress Toronto volunteers knocked on doors in many other ridings.

Almost all the people we spoke with who expressed concerns about the provincial government’s proposals said that a properly funded public education system was a priority for them. Furthermore, we spoke with one teacher who works at many schools in Etobicoke North and she said the conditions she routinely sees in these schools are substandard and concerning. Not surprising, given that $178.4-million of disrepair exists in the publicly funded schools in Etobicoke North.

We also met many of Premier Ford’s constituents who support his provincial government unequivocally. These people most often said their largest concern was the provincial debt and its associated interest payments, which they believe will be a large financial burden to future generations.  We posted a blog a while back entitled, “Why household overspending is worse than government overspending“, citing a well-respected economist who suggested that while household debt is almost always a bad thing, governments are a bit different.  Unlike households, governments can make investments that stimulate economic growth. If a government takes on a deficit position to make these types of investments and the resulting economic growth is larger than the interest rate payments – then this is actually a very good thing. Hmmmm… some food for thought.

Doug Ford’s riding: $9.4-million of disrepair at Elmbank JMA and $13.9-million of disrepair at West Humber CI

June 11, 2019

Fix Our Schools was so pleased to be able to volunteer with Progress Toronto on June 8 to knock on doors in Etobicoke North – a riding that is represented by Premier Doug Ford and a riding that has $178.4-million of disrepair in its publicly funded schools.

On our way to canvass, we passed a couple of publicly funded schools, both of which look pretty good from the outside. Therefore, it can be easy for parents and the general public to think that these schools are in good shape. However, they’d be wrong.

At West Humber CI, $13.9-million of repairs are needed as per most recent data released, including 3 URGENT ones and 27 HIGH PRIORITY repairs. The 3 urgent repairs include: Fire Alarm System renewal, Major Repair to Standard Foundations – Parging Repair, and Roofing. So you can see that all three of these repairs, despite their being marked urgent in nature, remain invisible and unnoticeable until there is system failure. Students, teachers and education workers who all spend their days in this building would have no way of knowing the fire alarm system may not work until there was a real fire and it failed. The same can be said for the roof – it may be fine for another year or two or perhaps many leaks will emerge after the next rain storm, leading to damage inside the building and possible unsafe electrical situations. Would you want your child attending a school where the number one repair needed was Fire Alarm System renewal? 

At Elmbank Junior Middle Academy, $9.4-million of repairs are needed, including 21 repairs marked URGENT. 

Unfortunately, since so much of the disrepair in Ontario’s publicly funded schools is on the inside of the schools and since so much of the disrepair in Ontario’s schools is invisible, people often mistakenly assume that local school conditions must be good. After all, children spend their days in these publicly funded buildings so how could we have possibly allowed so much disrepair to accumulate in this important public infrastructure? 

We encourage you to click the link above to better understand how we have, indeed, allowed a gobsmacking $15.9-billlion of disrepair to accumulate in the school buildings where 2-million Ontario children spend their days. And we also encourage you to have a look at some of the photos we’ve collected over the years that illustrate some of the substandard conditions that students face in their schools.

 

Ontario’s Public Education System One of the Best in the World

June 6, 2019

Ontario’s publicly funded education system is often cited as one of the best in the world, despite what we’ve been hearing in the news the past few months. Many politicians and citizens have weighed in on this topic.

Fix Our Schools found data on student achievement from the Organization of Economic Co-operation and Development (OECD) that shows Ontario students’ high performance in reading, math, and science was a significant contributing factor to Canada’s overall rankings of 7th in Science, 3rd in reading and 10th in mathematics, for an overall ranking of 7th in the world.

The OECD is an established organization, with 63 member countries, and has a goal of stimulating economic progress. Since education is tightly linked to economic progress, the OECD ranks the quality, equity, and efficiency of school systems worldwide every three years.

PISA is the OECD’s Programme for International Student Assessment. To compile the PISA data, the OECD tests over half a million students from over 70 countries in science, reading, and math. The most recent PISA rankings were published in 2016 and the next ones are due out in December 2019.

Another interesting gauge of Ontario’s publicly funded education system can be found in the Pan-Canadian Assessment (PCAP) program, conducted by the Council of Ministers of Education, Canada (CMEC).  According to page 23 of the most recent report, Ontario students are second in the country in reading achievement. As per the tweet above, and found on page 36 of the PCAP report, Ontario students are also second in the country in math.

Fix Our Schools continues to advocate for improved school conditions. We strongly urge Doug Ford’s government to institute a standard of good repairs for all publicly funded schools and to provide the adequate, stable funding required to quickly eliminate the $15.9-billion of disrepair that plagues Ontario’s schools. For the past five years, the Fix Our Schools campaign has also consistently messaged how many amazing things happen inside these broken schools every single day. The results we’ve outlined here in terms of Ontario student performance seem to confirm this messaging. Ontario’s students have been achieving despite often learning in poor school conditions. 

Accessibility in Ontario’s schools

June 4, 2019

Over 1.9 million Ontarians live with disabilities. For these people, lack of accessibility is an ongoing barrier, given that Ontario’s accessibility standards are not currently meeting people’s needs. The Province’s standards lag behind where Ontario pledged we would be by now, as laid out in the 2005 Accessibility for Ontarians with Disabilities Act (AODA).

In an Ottawa Citizen opinion piece entitled, “Ontario’s accessibility standards are falling woefully short”, David Onley, former lieutenant governor of Ontario and a disability rights advocate, expresses concern about the how slowly Ontario is moving when it comes to setting or enforcing accessibility standards. “Every day, in every community in Ontario, people with disabilities encounter formidable barriers to participation. For most disabled persons, Ontario is not a place of opportunity but one of countless, dispiriting, soul-crushing barriers.”

 

Accessibility within many of Ontario’s publicly funded schools is a big issue. Let’s consider only one aspect of accessibility for a moment – the ability for a student to get to their classroom and participate fully in a rotary class schedule. Elevators are a rarity in Ontario’s schools, making it challenging or impossible for students on crutches or in wheelchairs to attend school. When an Ontario school does have an elevator, maintenance for the elevator is ongoing and provincial funding for said maintenance is inadequate therefore often, elevators in a school are not working. Similarly, school boards are not provided with any special provincial funding to ensure that school buildings are retrofitted to become accessible for children with mobility issues.

My daughter needed crutches to get around for 8 months in her grade 8 year. I still marvel at the physical and emotional strength needed for her to participate in school that year. Clearly, many aspects of a full school experience were off the table for her that year as she focused on the bare minimum of getting to each class on her rotary schedule in a 3-story building with no elevator. She was physically and emotionally exhausted most days as she routinely met with “dispiriting, soul-crushing barriers”. Ontario can and must do better. We owe it to all Ontarians with disabilities, including students.