The Pearson Centre for Progressive Policy

Progressive Dialogue and Policy for a Better Canada

Social Infrastructure & the Digital Economy 2018

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December 22, 2017

Social Infrastructure & the Digital Economy 2018

By Terrance Hunsley

Third in a series, Futures Entwined: The Nation State and the Welfare State
For Ortega it was not a shared past that brought and kept diverse peoples together but a captivating vision for the future.(1)
Justin Trudeau was elected in part because he was promising a bright future for a multicultural country embracing a global economy and global society. But the vision is not yet clear. There is work still to be done.
Many of the issues of globalization, robotization and artificial intelligence are apparent. We have better and cheaper products, fewer manufacturing jobs, more high tech jobs, and decreasing overall returns to labour. Work is becoming more and more “non-standard”. According to the 2016 census only about half of prime age Canadian workers are employed full-time, year-round. The automation process is accelerating and moving into sophisticated occupations. People talk daily of algorithms, a word that ten years ago, few would know or understand. And Big Data is being recognized as a commodity growing rapidly in value.
A part of globalization that is just emerging is a global society. People are increasingly able to be present in many parts of the world – in person and digitally. Just check out the posts on your Facebook page. As the ever-changing fusion of people and technology evolves, the nation state has to be concerned not only about mobile supply and production, mobile financial capital, mobile technology and mobile intellectual property, but also about mobile work, mobile families, mobile cybercrime, and mobile human capital. Manufacturing is not the only economic activity that does not need a home nation. Services – the major job providing sector – can also be provided remotely. And so can management. Canadian workers are highly exposed to the waves of disruption that are moving through the global workplace.
So updating the nation’s social infrastructure takes on a new kind of importance.
We need rapid development of skilled human capital, since that is the occupational currency. People need the skills that are valued in the global market, and they need to be able to bring their skills to the market and to be paid for them. They also need to keep expanding their skillsets throughout their career.
The EU has discussed for several years now, the concept of flexicurity – realizing that employers need flexibility in how they hire, fire, and pay workers, and that workers need to be provided the tools to be flexible and to take advantage of opportunities. But the discussion has somewhat broken down over the concept of flexible security, since in most cases the net effect of policy changes has been to reduce the security of workers. In North America we can learn from the discussion but our labour markets are already more flexible than most of the European ones, and our workers have less security.
In order to be flexible, workers need portable security. They need their employers,( broadly defined) to make contributions to individual packages of flexible security. They need savings and investment opportunities and social insurance which will underpin their needs to constantly adapt to change and opportunity.
They need attachment to the country, and the country needs attachment to them, even though they may be globally mobile in their work and lives. In the global economy and the global society which is forming under it, people are increasingly able to choose where they will pay their taxes, and where they will claim benefits. There are for example, many people who maintain a legal presence in Canada but actually live most of their lives abroad, often in several locations where they may have family or business interests. Some establish citizenship and then move on, but maintain eligibility for citizenship benefits. Or people can work for digital platforms, being paid from different parts of the globe, and with their pay going to different parts of the globe if they wish. We send significant numbers of temporary foreign workers around the globe, especially to the USA. And we bring many here.
So Canada’s package of taxes, benefits and services has to be competitive in the eyes of citizens, and Canada needs to collect the revenues to pay for them. Since young and mobile workers tend to place less value on collective security if they don’t see the benefits, the overall quality of Canadian life and the social cohesion of Canadian democracy will be important economic and social factors.
Here are five adjustments in public policy infrastructure to help keep Canada socially and economically competitive:
First, take life-long-life-wide learning seriously. From early childhood through tertiary education, from classrooms to online to in-work and at-home. Learning and skills acquisition, and connection to the occupational community, should be available to every person. This is an area of public economic investment with huge opportunity, and Canada already has a competitive advantage. The education system has received well-deserved accolades. High school students perform at the top of international comparisons. We have the highest percentage of working age people with postsecondary education. The system has been credited with sustaining a higher level of intergenerational social mobility than for example, the USA.
So we need to build on this strength and go beyond. Cost, not only for tuition, but also for room, board, transportation and communication, should not be an impediment to education and skills attainment to anyone at any stage of life. Financial support should be generous and easy. But it can and should be accompanied by a long term obligation to repay, which can include working and paying taxes in the country. This should be a clearly-understood sub-clause of the social contract.
Canada has great potential to become an education powerhouse, selling education globally and putting Canadians at the top of the ladder of human capital. We have an opportunity to take advantage of our multiculturalism to develop the intercultural knowledge to excel in relationship building throughout the world. The people who build bridges across cultures in the future will be as needed as those building them over rivers in the past. We need to develop educational partnerships and accredited apprenticeships in all occupational areas, where people can advance at as fast a pace as they can maintain. We have long ago learned that our learning processes can be accelerated. We need to invest heavily in individualized programs for disadvantaged and marginalized youth. The gains of successful transitions to adulthood are so great for the person, the economy and the society that almost any investment will pay off handsomely. And the specialized educational knowledge and technology developed in the process will be globally marketable.
Second, we need to tilt the playing field to ensure that the lower half of the income scale gets a fair share of the wealth and growth of the country. Canada has huge assets, in capital, infrastructure, resources, land, altruism (volunteerism, patriotism, heroism), and rule of law. A right of citizenship should be a share in the economy. This could include a basic income guarantee, a right to educational financial support, a guaranteed living wage through minimum wage and income supplementation for housing affordability and child care. It will require increasing taxes on wealth and on the top third of the income scale. But tax increases do not need to be onerous. We have some room without exceeding tax rates of previous decades. Staged implementation can benefit from increased economic performance of our enhanced human capital, decreased costs of poverty, and enhanced efficiency of the social infrastructure.
Third, savings programs to support periods of leisure and personal development (including lifelong education, variable work-leisure patterns and retirement), need to be rethought and integrated into individualized programs backed up by the state. Obviously, the country’s economy will depend on global markets. However, the individual should not, unless he or she chooses, be subjected directly to the volatility of global financial markets. They should not have to pay the exorbitant fees that banks currently charge to put their investments into conservative portfolios which are managed by robots. Collective investment through an instrument like an expanded Canada Pension Plan (perhaps called an economic adaptation and savings plan) should be a right of citizenship. The policy concept that underpins the current public sector retirement system basically combines a guaranteed benefit to individuals based on their contributions, while the “investment fund” is an integrated component of the overall system of government finance. The “guarantor” is, in the first instance, the government, but in the final analysis, it is the Canadian economy, since the guarantee would eventually be compromised if the economy could not sustain the public finance. This concept is sustainable and should be extended to the savings programs described above. This does not preclude individual rights to opt for higher risk, nor a private sector role in the investment stream.
Fourth, the social infrastructure of the future will require a new kind of social budgeting and accounting system:
All Canadians should have online individual contribution and benefit accounts with CRA, much like our online bank accounts with deposits and withdrawals, links to credit card charges and payments, savings certificates and investments, etc. The Individual contribution and benefit account would provide real time information on contributions including taxes, social security payments, retirement and educational development savings and credits. It would include debts outstanding, such as student loans, child support obligations, taxes owed. It would also provide information on benefits available, such as status of eligibility for tax credits, income supplements, employment insurance, parental leave, health insurance, education subsidies, etc. All employer contributions would be shown as well, with contributions required for any work performed even if part-time or piecework, even with pay coming from other countries.
The current system of departmental budgets with underlying budgets from branches, divisions, and sections, makes sense for the old model of administration and spending control. But the effectiveness of resource flows around the individual is limited by the complex processes built into the myriad of organizations and sub-organizations across the range of health, social service, education, law enforcement, and special population services (eg immigrants, veterans, elderly, etc). We know very well that providing the right service at the right time, (for example to a troubled adolescent) can produce massive savings over time in other public (and private) expenditures. However, the organizations responsible for those other expenditures do not currently have a way to recuperate those savings and therefore the organization which might have been able to provide the intervention does not have access to the resources to do it.
There has recently been recognition by the human rights tribunal that a responsibility to provide a needed service should not be abrogated by bureaucratic border guarding. “Jordan’s Principle” was articulated after a five year old first nations boy died in hospital while federal and provincial governments spent two years arguing about which one was responsible for the cost of providing care service so he could be at home with his family. The principle says that the government agency of first contact is responsible to provide the needed service and to work out the financial and jurisdictional issues later. It has been applied so far only in relation to first nations peoples. But when you consider that people who need help often need a range of services – counselling, debt management, housing assistance, emergency needs, retraining, mental health intervention, addiction services, income support, child care, protective services, etc, a principle that empowers the first level of contact to provide the service needed and to charge the cost back to appropriate sources after, is a good one. This would require a secondary system of charge backs and credits for units of service, but would also provide impetus for early and complete service intervention, eliminating layers of fragmented assessment, verification, contract administration and authorization processes. A new human service accounting system should cover all services.
Fifth, bearing in mind the previous recommendation about an integrated human service accounting system, we also need an integrated (perhaps “uber-ized”) delivery system for the broad spectrum of human services. The current complexity of federal, provincial, territorial, municipal, first nations, non-profit and commercial organizations delivering human (social, educational, health, justice, emergency, etc) services is mind boggling. The federal government has not looked at this for awhile, but eye-balling data from the 2003 Statscan survey of non-profits, suggests that of that type alone, some sixty thousand organizations, each with its own staff, board and volunteers, were delivering some form of human service. The majority of funding comes from government, but is uncoordinated and comes from multiple layers of departments, agencies and organization subdivisions. (Some community services people refer to the morass as a multiple silo system.)
The Parliamentary Budget Office recently found seventy-five different federal programs just providing money to the poor. Add all the other kinds of services and multiply by at least three layers of government, and then try to imagine how efficient our system is in providing services. When you think for example, of all the church and community organizations, the food banks, soup kitchens, shelters, emergency services, social workers, police, paramedics, nurses, and all the supporting volunteers, all serving the homeless; we probably have as many people serving them as there are homeless. But the homeless still die in the streets, still fill up the shelters, the hospital emergency rooms, the jails. Because no one has the mandate to provide all services needed. And this is the same problem across the whole spectrum of services. There is no governing model, in part because no one government is fully responsible. And no one is responsible to ensure that a person needing help, gets that help.
We have information referral services, such as the United Way’s 211 service. We have innumerable public sector organizations which boast “client-centred,” “seamless service coordination” models, but all bounded by their own narrow operating mandates and budget-confined operations, constrained in turn by legal liability protections. To pick just one example of evaluation, there are scores of projects which have attempted to prevent crime by working intensively with young people “at risk”. But the evaluations show that their efforts are undermined by bureaucratic obstacles such as budgetary, operational and information-sharing protocols among schools, police forces, children’s services and community organizations. Fragmented mandates lead to fragmented services and fragmented and disappointing results. And this despite the best and often heroic efforts of professionals and volunteers.
We need a generic form of first-contact service assistance. It should be online for those whose needs can be served that way, and it should be available in multiple convenient locations throughout our towns, cities and villages. There should be a System Navigation Assistant, who will fill out with the person seeking help, one basic application form applicable to any service, and supplemented as needed for specific service eligibility. The application would be contained in a database to be accessed for any future application and updated as needed. The Navigation Assistant should provide intake assessment for any service offered by any publicly-funded service, regardless of jurisdiction. Their job is not only to help with the process, but to advise and assist the person in relation to the entire range of services which could be appropriate, including income support, counselling, health and medical service, housing assistance, education and training programs, child care, elder care, and specialized services. And they stay with the case after the service connections are made, to record the results. They should be empowered to provide emergency assistance as required, and the resources necessary to access services. If intensive case management or “wraparound services” are needed they should start immediately from that intake service. Jordan’s Principle could be expanded to become Jordan’s Mandate, with the first point of service being authorized to arrange and coordinate services as required by the intake assessment.
The time and cost should then be apportioned and charged to the appropriate service provider. The file (with appropriate protection of personal information) should be reviewed and updated regularly to ensure services are completed, active followup is done, and the process evaluated. Regardless of who funds, who regulates, the individual’s case begins there and accountability for service provision begins and stays there. The navigation service should probably be a municipal government responsibility, but could be done by the province, or it could be contracted to the United Way. There are many organizations that understand the range of services that people need and could provide the service. This will require that service organizations develop a different planning and budget model so they can respond to demand. Total costs for all services can thereafter be reconciled between governments based on year-end accounts, with expenditures in various service streams determined by demand.
Eyes will roll when some people who work in the various human service systems read this. They may joke about the organizational chaos which they believe would be unleashed by such a development. They will talk of the obstacles of legislative mandates, budget processes, professional judgement requirements, scheduling issues, staffing and human resources issues, and the multi-layered labyrinth of bureaucratic process required to ever reach such a state. “Impossible!” They will say. And if one tried to do this the way government bureaucracies normally work, they would be right. The process would be never-ending. But if Uber had asked all the taxi companies to work together on a better system, or AirBnB had asked all the BnB associations, the response would have been the same. The change will of necessity have to be disruptive. An app can transform an industry. In earlier days, Microsoft Windows created a platform for the integration of a whole range of separate computer programs like word processing, statistical programs, presentation software, and many others. Disruptive change could permit more accurate, timely and effective services, and enable human service professionals to shift from jobs of verification, control, and enforcement, to better, more direct, and more enabling service. And yes, we could have an app for that.
(1) Manuel Muniz, Social Europe, Dec 13, 2017, referring to writings of Spanish author of early 20th century, Jose Ortega y Gasset.

Terrance Hunsley is Senior Fellow with The Pearson Centre, and Editor of The International Social Policy Monitor (politudes.com)