Pre-reading for Alberta Royalty Review

In a very short amount of time the Alberta Royalty Review is going to be made public and there will be lots, I am sure, to talk about. Alberta, Royalties, and natural resources are not really my bag (then what are you doing in Alberta? many ppl will wonder, but that is another tale of a sabbatical and a desire for winter), but taxation is and there is a lot of overlap between this review and taxation. If you want to read a good summary piece of these issues, read this great CD Howe piece coauthored by the esteemed Robin Boadway and Ben Dachis.

Let’s start with first principles. Under the Canadian Constitution (with some tumultuous history for the Prairie provinces), provinces own the natural resources within their boundaries. This means that natural resources are what we call “commonly owned public property.” So the idea of resource royalties is that we the people own these resources and we the people should therefore be paid for these resources should someone want to access them. And we can use resource royalties equally to discourage access if and when and for what we want to keep in the ground.

How do we do this? Well that is the hard part. We really only want to tax rents. What? Rents are just a short form way to refer to the benefits from that resource extraction that are in excess of costs to extract the resource. So in general we want to ‘tax’ “all revenues from resource sales less all current and capital costs accrued in the year.” (Boadway and Dachis p. 435). So resource sales minus things like wages and capital cost allowances.

Trevor Tombe had a great diagram representing this (though apparently a few people bitched about the use of a pie, but it looks fairly helpful to me.)

 

The hard part is that it is really hard to observe all these thing, there are many features of resource taxation (see for example Chen and Mintz) that interfere with the application of this concept, you have the never ending battle between the provincial and federal tax systems, and different resources face different tax treatments (e.g. mining vs oil and gas vs. clean energy). Of course, Alberta is most dependent on resource taxation so it is very important for it to design the right scheme to achieve the right objectives.

There are generally a number of ways to potentially tax ‘rent’:

  • Auctions where resource firms bid to the right to explore, develop, and extract (Norway does not use Auctions)
  • public participation where government shares ownership when they grant a license (Norway relies on this with rent taxes). The extreme end of this is that the resource firm is owned by the government.
  • rent taxes where the corporate resource tax is designed to be revenues minus costs on a cash, not accrual basis. One of the benefits of such a system is that it treats negative cash flows (common during exploration) equal to positive ones (common during extraction)

Most economists would, I think, lean towards a rent tax system. Now let’s see what Alberta does.

*UPDATE: Here is the report. In a nutshell, Alberta is sticking with rent tax system for its royalty system, but it will be to better account for costs and better extract benefits so that both industry and the public ‘wins’. And it has defined objectives for the system and it will monitor how the system meets these objectives. This is public policy design 101: define the problem, establish the objectives, see if the policy achieves those objectives, rinse and repeat.

*Of course, an important angle to this is what the province does with resource revenues. Let’s hope this time, it does not piss them all away!

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#iceholes

Many towns and cities in Canada (e.g., City of Toronto, City of Calgary, and the City of Saanich) have entered into a social contract with its residents. In exchange for residents shoveling the portion of sidewalks around their place of residence or business, the municipality will keep taxes and fees lower than they would be otherwise.

It is actually not a bad social contract. Most residences and businesses are adjacent to a very small stretch of sidewalk, perhaps 25 feet, so the marginal cost to the resident of the property to clear that portion of the walk is very low, residents can respond more quickly to clear this small portion than would occur if the municipality were to be responsible for clearing the walk, and the municipality frees up resources that would otherwise be dedicated to snow removal.

This system tends to work with the municipality passing a by-law stipulating the responsibilities of its residents regarding snow clearing and the costs associated with not complying so that everyone has full information. Unfortunately, compliance in such a system is an issue, because the municipality operates the system without dedicated resources for monitoring compliance. Instead, the system works by neighbours ratting out non-compliant neighbours.

As a result, the system is ripe for free riders. All residents get the benefit of lower taxes and fees whether or not they comply with the by-law. The probability of getting ratted out is low. After all, it is a pain to take your own time to report your neighbours, especially after shoveling your walk. In addition, those who use these sidewalks are subject to the cost of the resident not shoveling, having to slog through the snow which eventually becomes immensely icy as the snow gets packed. The more residents that do not shovel, the more the social contract unwinds leaving the municipality in a position of having to take back the task and increase taxes as a result.

Which brings me to Calgary. As I mention above, the City of Calgary has entered into such a social contract with its residents. And, as Albertans who are stereo-typically known as anti-government, anti-tax, pro-private sector kinda folk this seems like a reasonable contract. However, my experience so far is that compliance with the by-law is low.

I walk a lot, possibly a vestige of being a Victorian. I walk to and from public transit, I often run to and from work, and we walk regularly in the neighbourhood for errands and ‘fresh air’. My observation in my tony neighborhood of Capitol Hill along with surrounding areas is that compliance is about 50%. The worst offenders are those with residences on corner lots and houses that clearly appear to be rental houses.

There are several favourites along my commute. Like the house that has no observable address, and whose resident only shovels a narrow path from their front door to their car door that they park on the street. I am tempted to move my car into that spot when they go to work, but so far the car is always there. Then there is the house around the corner where the resident diligently fully clears the walk on their property, leaving the sidewalk untouched. A last gem is the dilapidated house on my walk to the train station where not only has the walk not been shoveled once this winter, but the hedge is so over grown onto the sidewalk that I scratched my eye walking by it in the dark. Of course I should warn the City, they are pretty slow at clearing the walks and paths that they are responsible for and, like many, I get irritated when a giant pile of snow is left at an intersection for pedestrians to climb over to cross the street.

I am so frustrated with this status quo that I sent this tweet out this morning:

See back in the summer there was a serious water shortage in many parts of BC due to an abnormally dry summer. Many municipalities put water restrictions in place, including a ban on lawn watering. Some residents chose to ignore this ban and kept their lawns plush and green, incurring the ire of most other residents. Upon that ire was launched #grasshole. Shaming those with green lawns on social media and vigilantly reporting offenders to the City. This was one response I received to that tweet:

And so begins #iceholes, a way to shame those with unshoveled walks into complying with the by-law. And a way to draw the City’s attention to an increasing problem. I also learned about the City’s 311 app that allows you to report offenders. I would have done that this morning except it was -18 and I was running. That last thing I wanted to do was (1) stop and (2) take my gloves off.

I encourage you to join my fight in your neighbourhood. If you want to keep taxes low, the exchange for that is, in fact, ensuring that we as residents provide the services in lieu. And since Albertans keep telling me how much more efficient the private sector is at delivering services (more on that another time), it is time for them to step up and show this by not being #iceholes.

What’s in a name? Pursuing a Masters of Public Administration degree versus a Masters of Public Policy

I am currently attached to two different programs in two different universities. My home university is the University of Victoria where I am appointed in the School of Public Administration (SPA) and where I mostly teach in the Masters in Public Administration (MPA) program. I am, however, currently on sabbatical and am spending it in the School of Public Policy (SPP) at the University of Calgary which offers a Masters in Public Policy.

Because of my dual affiliation, I have been trying to make sure I plug both programs, which have admissions deadlines around the same time. The SPA MPA applications for both the campus and online program are due Jan. 15 while SPP MPP applications are due Feb. 1.

Plugging both programs, however, raised some questions. First, how can I plug competing programs? Second, is there a difference between MPA and MPP programs? Third, how does someone pick between an MPA and MPP or advise students accordingly?

For me, there is (or at least SHOULD BE) a substantial difference between an MPA and MPP and several of my colleagues asked me if I could do up a blog post explaining the difference.

Rather than face just my perspective on this, I asked my good friend and colleague Dr. Catherine Althaus to help me with this. Her training is in public policy and public administration and seemed well suited to help with these questions.

Origins

I always like to talk to my students about the origins of economics, which are rooted in moral philosophy so I was pleased when Catherine started here. It was Woodrow Wilson back in 1887 who first distinguished between politics and administration by noting that administration was about operationalizing political decision, which concerns both implementation and management. 

But is operationalizing these political decisions good policy? That question led to the founding of public policy as a discipline. Public policy analysts are focused on challenging political decision makers with information about policy options and consequences of each of these policy options.

So the root origins of these disciplines are the public policy folks  work upwards to influence policy decisions whereas public administrators work downwards, implementing the decision that is made once the public policy folks have done their job.

Theoretical Distinguishment between MPA and MPP

This then leads into thinking about programs that are designed to train these players. Given the origins outlined above, an MPA is meant to be focused on implementation and management while an MPP is meant to be focused on design and analysis. Here are some ways to think about this difference:

  • An MPA is more practical and professional while an MPP is more technical, theoretical, and academic.
  • An MPA is more generalist (jack of all, master of none) where as an MPP is more specialized.
  • An MPA is about learning how to manage people, projects, programs, and things (including money), where as the MPP is about learning to analyze problems and develop solutions

As a result, you are more likely to see more technical courses in an MPP program (more focus on economics, statistics, and research methodology) and more management courses in an MPA (HR, leadership, financial management, and strategic planning)

Implementation Issues that Blur the Lines Between an MPA and MPP

While the focus of administrators vs public policy analysts may be moderately different, both players must interact with political decision makers and, hopefully, each other. The latter especially true since policy design and policy implementation are intricately linked. As a result, even within this understanding, there is still a fair amount of skills overlap between these two players and MPP and MPA programs can appear quite similar.

These programs are equally likely to include training in economics, statistics, government, and the public policy process. But the depth of training in these areas will differ (more economics in an MPP, more institutional and process courses in an MPA). In addition, how the same courses are delivered will also likely be quite different. For example, both programs are likely to include a core course is statistics, but the MPA program may be more concerned with numeracy, whereas the MPP program more concerned with actual data analysis.

Existing programs may also offer fluidity as well. All programs offer electives which allows students to build more depth. For example, the MPA program may allow specialization in data analysis through electives, making it appear very similar to an MPP.

Existing programs may target different audiences as well. For example, at UVic we have an MPA targeted to students with little or no job experience and are new graduates of undergraduate programs, along with an MPA that is targeted to students with at least five years of job experience. As a result, these two MPA programs are different. The former is about training entry level bureaucrats, the latter about training those who wish to move up to more senior administrative positions. The former includes more analysis, the latter more management.

Existing programs may also not be true to these outlined origins. Public policy training has become more popular than the traditional public administration training and programs have morphed over time as a way to chase students. In addition, there have also been a number of combination programs created, including a Masters in Public Service, Public Management, Public Governance, and Public Affairs. These variously combine administration and management, governance and policy, and so on.

Finally, these various programs across Canada are housed in very different faculties. Some MPA programs are delivered by business schools. Some MPP programs delivered by economics departments. And so on. Who delivers the program will also matter to the design and implementation of the program itself.

What do you do then?

If you don’t know what career possibilities exist or what the program titles actually mean or how the delivery of the content differs, how should one choose or advise a student? No wonder there is confusion.

First, what are your strengths and interests. If you excel at math and data analysis, the MPP might be a better fit. If you excel at softer skills, the MPA might be more suitable.

Second, what are your career aspirations? You need to look beyond the fact that you want a job when you graduate (who doesn’t) but more what you want to be and what do you want to do. What skills will get you there? What courses will you need to build those skills? One thing that I like about our School at UVic is that we don’t just deliver an MPA. We also deliver degrees and diplomas in community development, dispute resolution, and evaluation (and hopefully two more diplomas in in demand areas will come on line in short order). This diversity gives our MPA students a much broader access to courses and skills development.  For example, and MPA student can acquire skills in negotiation and community consultation and engagement or in working with the non-profit sector (all vital skills for modern day public administrators)

Third, how is the program delivered? Does it include coops? Real world case studies? What competencies does it build? What are the core course requirements? What electives are available (be sure not to rely on the calendar because all programs has courses on the books that rarely get taught)? Does the faculty have actual professional experience (yes it matters) to go along with the academic credentials? How up to date is the curriculum? Does the curriculum represent the current knowledge and skills desired and required by employers? Does the program have a vision for its graduates and does that accord with your aspirations?

Beyond that, you need to consider the reputation of the School and faculty that actually teach in the program along with the employment outcome of the graduates of the program? All the usual stuff.

Basically, look beyond the rhetoric and into the substantive content of the program and find the program(s) that best suit you! What appeals to a friend or neighbour may not be right for you.

Do not hesitate to contact the program to obtain more information (but be sure to have exhausted the information provided on their website first).

A Shameless Plug

So here is where we do a bit of a shameless plug. We at UVic SPA have put a lot of work into updating our MPA programs (we have two as noted above) and integrating it with our suite of programs. We did this because we  believe that our graduates need to navigate not just the public sector, but also the community sector and with skills that transcend policy analysis and implementation to address public engagement and alternative dispute resolution.

Our approach embraces a vision of society where we see our students being public entrepreneurs, able to navigate multiple jurisdictions, sectors, and disciplines to innovatively confront complex problems in order to make the world a better place. We see our education style inspired by our unique place on the west coast of Canada so we pay attention to our Indigenous beginnings, to cultural fluency, ecological awareness, and personalized, transformational, memorable learning. Our MPA grads emerge not just with work-ready skills to advise governments, engage with the public interest, manage resources, and take leadership roles. They also are able to connect in meaningful and innovative ways with the community sector, pursue collaborative partnerships, and negotiate respectfully and successfully through complex and contested issues.

We also promote problem-based learning using teamwork with live cases. In Fall 2014 this culminated in our newly admitted students presenting various stakeholder perspectives on BC’s Energy Policy to the actual Energy Minister Bill Bennett.

We boast a highly successful Coop program that places all our students in paid work experience, locally, and across the globe.

Conclusion?

What’s in a name? When considering a MPA versus a MPP, sometimes there is a lot more to a name than just a program title.