*The Idea Peddlers

Worth A Look, Think Tanks, Frontier Centre

Can a think tank save the country? A year after the breathtakingly narrow federalist victory in the 1995 Quebec referendum, the C.D. Howe Institute published a lengthy paper on how Ottawa should change its tactics with regard to Quebec secession. Respected constitutional lawyer Patrick Monahan and two co-authors argued that it was imperative for the federal government to establish “clarity” on the issue by creating a legal framework for separation. In 1999, following up on this provocative suggestion, Ottawa requested a reference from the Supreme Court on the possibility of creating such terms. And this year the Clarity Act, setting out the parameters as Monahan had suggested, was passed by Parliament.

Can a think tank privatize a province’s health care system, create a national child benefit program or re-index personal taxes? Each of these policy innovations was preceded by forceful arguments from one or more Canadian think tanks. The Fraser Institute, for instance, has long advocated introducing market forces into medicare (as Alberta recently did on a limited basis), while Ken Battle, president of the Caledon Institute of Social Policy, first proposed the idea of a national child tax benefit and then helped the government implement it. For its part, the C.D. Howe Institute, along with Fraser and Caledon, argued for indexing the tax system to end bracket creep, before the February 2000 budget turned the proposal into law.

Think tanks thus play an important role in Canadian policy debate by providing new and independent views that can presage or influence actual events, as the above examples demonstrate. There may be no scientific paternity tests for most public policy innovations – media, public opinion and a government’s own research also serve as major influences on politicians and policy developers – but clearly the public is well served by a robust think tank community. One can argue for or against their specific proposals, but it would be a barren and unimaginative world without them. Certainly the current election campaign has been shaped in no small way by the contributions of think tanks. The acceptance of the necessity for lower taxes among the main political parties, for example, reflects the work of numerous institutes over the past several years.

“Think tanks are idea brokers,” offers Don Abelson, a political scientist at the University of Western Ontario who is currently working on a book, Do Think Tanks Matter? “They might create their own or simply market the ideas of others – regardless, they put those ideas into an easily digestible form, educate the public and provide expertise to policy-makers.” While varying greatly in size and philosophy, all think tanks want to change the country. Some use the media to popularize their proposals; others aim their work directly at bureaucrats or politicians. Their work can be ideologically motivated, consensus-seeking or simply vexatious. As the accompanying five profiles reveal, Canada’s most successful think tanks have all created their own niches. But if think tanks play such a vital role in shaping or promoting policy debate, why does the federal government deliberately hobble them?

Because of a perceived shortage of public policy research, in 1997 Ottawa created a Policy Research Secretariat to do exactly what think tanks already do, but under the watchful, and perhaps censorious, eye of the federal government. With an annual budget of $3 million (greater than all but a handful of Canadian think tanks), this secretariat has the ability to lure well-known researchers away from private think tanks and therefore limit the amount of independent policy research that goes on. If Ottawa really cared about cultivating a wide and useful pool of independent research, however, it would stop duplicating their work and let private think tanks get on with the business of thinking. For when think tanks are able to make full use of their abilities, the results can be stunning. In 1980, for example, the Heritage Foundation provided Ronald Reagan with a template for his first term’s agenda; the 1,200-page Mandate for Leadership included such policies as the Strategic Defense Initiative and tax reform. The same scenario played out in 1992 when Bill Clinton took office. The Progressive Policy Institute provided a road map for his policy course, including welfare reform (which was successful) and health care reform (which was not).

U.S. think tanks often have direct influence on government. Staff members are seconded by politicians or campaigns. Agendas borrowed. Ideas planted. Recognizing his lack of foreign policy experience, for instance, Republican presidential nominee George W. Bush tapped into the prestigious Hoover Institution to bolster his credentials by associating himself with such luminaries as Condoleeza Rice. Think tanks provide an independent source of information and policy for American politicians and voters. While much of it may be partisan, who ever said diversity was a bad thing? It is certainly better than having to rely on government as the sole provider of policy research. “If you believe in democracy, then it is a good thing to have public debates. And think tanks are an important source of expertise for such debate,” says Evert Lindquist, director of the School of Public Administration at the University of Victoria.

The most obvious obstacle facing Canadian think tanks is a lack of funding. The Hoover Institution enjoys an endowment of US$250 million and an annual budget that dwarfs Canada’s entire think tank community, while the RAND Corp. has a larger staff than our top 25 think tanks put together. These differences are due in part to the fact that the philanthropic urge to fund political research is much greater in the U.S. (plus there are more billionaires around feeling philanthropic). But perverse Canadian tax regulations also inhibit our think tanks.

Our tax laws foolishly classify think tanks as run-of-the-mill charities. From the perspective of the Canada Customs and Revenue Agency, there should be no difference between the operations of the Fraser Institute and the Make-A-Wish Foundation. Neither can spend more than 10% of its resources trying to influence government on pain of losing the ability to hand out tax receipts and accept donations from private foundations. Thus Michael Walker, executive director of the Fraser Institute, is forced to claim his organization has no ideological objectives when it is obviously the most right-wing think tank in the country. Walker must constrain his activities and strain credulity with gymnastic statements such as: “We are not trying to change legislation, rather, we are informing the general public about the benefits that might arise from changes to laws,” in order to keep his valuable charitable status. The Fraser Institute, the left-leaning Canadian Centre for Policy Alternatives and many others in between have been scrupulously audited to ensure they aren’t trying to influence government, which is, of course, exactly what they are trying to do.

Bill Robson (and Jack Mintz)
C.D. Howe Institute

Inaugural year:1973

Annual budget: $1.7 million
Full-time staff:15
Major funding sources: corporate donations

Perspective: Canada’s tallest foreheads ponder the nation’s biggest problems

In September 1999, Joel Fried, a University of Western Ontario economics professor, co-authored an article in the academic journal Canadian Public Policy on the costs the 20% foreign content rule for RRSPs imposed on Canadian investors. It was a thoughtful piece of work that received precisely zero attention. Three months later, essentially the same article was dressed up with a C.D. Howe Institute logo at the top. A media release made note of the fact that the 20% rule was costing Canadians $4 billion per year. And this time the work generated headlines and debate across the country. Two months after that, Finance Minister Paul Martin bought the argument and raised the foreign content limit to 30% over two years. More than any other think tank in the country, the C.D. Howe Institute commands attention by mastering all the tools a think tank has at its disposal: academic credibility, the ability to generate media attention and the promise of practical advice.

While the in-house staff at C.D. Howe Institute provides comprehensive analysis of Canadian monetary and fiscal policies, the organization’s most important role is pushing outside academic research into the public spotlight. “We spend a lot of time figuring out what the important topics are going to be and finding the best people to write on them,” says Bill Robson, the institute’s director of research. By commissioning experts in the field and rescuing worthy work such as Fried’s from dusty journals and giving it a broader audience, the C.D. Howe Institute sends forth a continual stream of noteworthy publications. Last year, for instance, the institute published a paper by well-known economists Tom Courchene and Richard Harris that argued for a North American currency union. It sparked a national debate that included Senate hearings.

While the C.D. Howe Institute is frequently characterized as a right-wing think tank, some might find it surprising to discover that when Keynesian views were in vogue in the 1970s, it produced work favourable to wage and price controls. In the 1980s it switched tack and became a strong proponent of free trade, lower deficits and an end to activist government. Guided by Robson and new president and CEO Jack Mintz, the C.D. Howe Institute is now hoeing the familiar rows of tax relief and fiscal restraint. And as the debate over health care escalates, the institute is seeking out more research in that area. With the institute’s role in Canadian policy debate obvious and substantial, Mintz is setting even more ambitious goals by building relationships and planning joint work with foreign think tanks and experts. “This will give us a reach that we haven’t had before,” he predicts.

Ken Battle
Caledon Institute of Social Policy

Inaugural year: 1992

Annual budget: $1.5 million

Full-time staff: 4

Major funding sources: The Maytree Foundation

Perspective: Social justice with a twist

Becoming overly predictable can be death for a think tank – no one will pay attention to its research if the conclusions are all too obvious. To his credit, Ken Battle, president of the Caledon Institute of Social Policy, has made a career out of eschewing predictability. As a life-long advocate for society’s disadvantaged and vulnerable, Battle’s leanings are clearly left of centre. And yet he has earned a valuable reputation as a renegade by casting aside ideological straitjackets. His rejection of universality for social programs and his campaign to make re-indexation of personal income tax a top priority, for instance, are most uncharacteristic of the left. In this way, he has made the Caledon Institute one of the most successful think tanks in Ottawa.

Until the early 1990s, Battle was director of the National Council of Welfare, a government-funded group that gives advice to the federal government on social issues. But his sense that Ottawa was failing the people he was supposed to be defending did not sit well with him. “I was a public servant, but to be in charge of a place that was regularly slamming the government was an awkward situation,” he recalls. Getting out of government proved to be the best way for Battle to get Ottawa’s attention.

The Maytree Foundation, a Toronto-based philanthropic foundation with a social justice bent, rescued Battle from civil servitude by setting up the Caledon Institute in 1992 and installing him as director. From this new, and independent, bully pulpit, Battle has achieved an enviable batting average for his policies. He has twice appeared before the Chrétien cabinet to argue for social policies of his own creation, a rare occurrence for a private-sector researcher. First was his vision for an integrated national child benefit, which he helped to become a reality in 1997. His plan to create a new seniors’ benefit by combining various existing programs such as Old Age Security and Guaranteed Income Supplement was also accepted by cabinet but never implemented for political reasons. Tax measures aimed at people with disabilities promoted by Battle can also be found in the 2000 budget. “I guess [Finance Minister Paul] Martin trusts us. It is fortuitous for us to have that kind of influence inside government,” he says.

While many of his social policy peers complain that he has abandoned some of the sacred trusts of the cause, Battle’s innovative and non-conformist stance gives politicians and bureaucrats greater comfort in recommending and implementing his proposals. Says Maurizio Bevilacqua, chair of the House of Commons finance committee: “When the C.D. Howe Institute and the Caledon Institute agree on an issue, in all likelihood you have an issue that makes perfect sense.”

Michael Walker
Fraser Institute

Inaugural year: 1974

Annual budget: $4.5 million

Full-time staff: 40

Major funding sources: Ford Foundation, Tinker Foundation, Lilly Foundation, corporate and individual memberships

Perspective: A market- based solution for every policy problem

Few people are as closely identified with a think tank as Michael Walker is with the Fraser Institute. Over the past 26 years, Walker has been in front of the Canadian public promoting the Fraser Institute’s mantra of market logic and smaller government. He has become, to many, the embodiment of the intellectual right wing in Canada.

And yet while his views and that of his institute have not changed over the past quarter-century, the world around him certainly has. The institute was born in 1974 into a world where government was big and getting bigger. Because of his strident views, Walker was frequently dismissed as an extremist. Now his views seem much more mainstream. On issues such as privatization, deficit control, taxation and health care, Walker can indulge himself in the satisfaction of seeing the world unfold as he always said it would. He can point to countless government policies at the federal and provincial levels – surpluses and tax cuts in Ottawa, the sale of CN Rail and Alberta’s private health care strategy to name a few – that bear remarkable similarities to many long-time Fraser Institute causes.

And yet Walker doesn’t consider politicians or bureaucrats to be the main audience for his work. Instead, he aims squarely at the general public. “The purpose of a think tank is to change the climate of opinion. If you want to change small bits of policy, then the best place to be is the Department of Finance or the Bank of Canada. But I want to change what is politically possible.” To do this, the institute expends great effort to achieve maximum media exposure for its research. Its radio and print media visibility programs are so effective that Judy Rebick, the left-wing commentator and natural born enemy of the institute, has called its ability to publicize its work “truly chilling.”

Indeed, the Institute’s Tax Freedom Day campaign is arguably the greatest achievement by any think tank in Canada. This bit of pop economics (the day of the year when a Canadian has paid off the entirety of his or her annual tax obligations) simplifies a complex subject for popular consumption. When even DJs are discussing the implications of Tax Freedom Day, you know the notion of over-taxation has been inserted deep into the national consciousness.

Next on Walker’s list is a market view of the public education system and environmental issues such as global warming, causes which will chill the hearts of another generation of lefties. And as the Fraser Institute grows, Walker is finding himself ceding much of the spotlight to others. “A great satisfaction to me is to see the young people who have gone through our doors and who are now out there changing the world,” he says, contemplating the future of a Fraser Institute without Michael Walker.

Judith Maxwell
Canadian Policy Research Networks Inc.

Inaugural year: 1994

Annual budget: $3.8 million

Full-time staff: 32

Major funding sources: Government endowments, corporate donations, unions

Perspective: A bureaucracy without the boardrooms

The country’s first “virtual think tank” may not have a large physical presence, but Judith Maxwell, the president of the Canadian Policy Research Networks Inc., still wields considerable clout in Ottawa. Maxwell calls the CPRN “virtual” because most of the research it produces is the work of independent scholars who remain at their own universities under contract. This research, primarily on employment, family and health, is produced with the federal and provincial governments firmly in mind – the mission of the CPRN is to fill the void that was created after years of budget cutbacks and program reviews in departments such as Human Resources Development and Health. (Maxwell herself was head of the Economic Council of Canada until it was disbanded in 1992.) “The policy capacity has been shrunk inside government to the point where now it is even difficult for a department to have a real relationship with a think tank,” Maxwell observes. “The departments may not even have people that can ask the important questions.”

A recent $9-million endowment grant from the federal government is seen by Maxwell as proof that her plan to allow Ottawa to outsource its policy work has filled a niche and that she is making an impact. And despite the “virtual” tag, the operation is run in much the same way that government research departments operate. Maxwell talks of her work in terms of key audiences, formal evaluations and stakeholder groups. The research tends to be wonkish but influential. The recent $2.2-billion five-year agreement between federal and provincial ministers on the national child tax benefit program can be traced back to the CPRN’s firm focus on a children’s agenda and its report titled A Policy Blueprint for Canada’s Children. Says Maxwell: “I do feel we made a difference on that file.”

While this tight relationship between her think tank and the federal government has provided stable funding in uncertain times, it has also led to accusations that CPRN’s work will be “captured” by Ottawa. Some rivals argue that an institution heavily reliant on government grants will soon learn that its survival depends on telling Ottawa what it wants to hear.

“It is a travesty of public policy research,” snaps Michael Walker, director of the Fraser Institute. “It is really inappropriate for a government to fund organizations that are posing as independent sources of information. The government is just greasing the skids for its own logs.” Maxwell defends her endowment from Ottawa as well earned and necessary and her research as useful. “I don’t think the government takes all our advice. And when they do, I would hope it is good advice and will make us a better country,” she says.

Gordon Laxer
Parkland Institute

Inaugural year: 1996

Annual budget: $150,000

Full-time staff: 2

Major funding sources: Individual donations, Alberta Federation of Labour, United Church of Canada

Perspective: A socialist thorn in the side of Canada’s most capitalist government

By his own admission, Gordon Laxer would be stunned if the Alberta government adopted any of his think tank’s recommendations. Indeed, suggestions such as increasing oil royalties or banning private medical enterprises are anathema to the government of Premier Ralph Klein. But then again Laxer isn’t in the business of trying to get his policies implemented. He is happy enough to get the premier’s goat and public attention. And he has often succeeded.

The Parkland Institute, initiated with a seed grant from the University of Alberta in 1996, was conceived to provide “a counterpoint to the corporate-funded think tanks, such as the Fraser Institute or the C.D. Howe Institute,” says director Laxer. “We’re David and they’re Goliath.” With a modest budget of $150,000 per year (the university grant has since expired) and two staff, Laxer has so far managed to punch far above his weight, if, feel his opponents, somewhat below the belt.

Most think tanks require media visibility, and hence controversy, to promote their views. Challenging the notion that Alberta, with its balanced budgets and falling taxes, is in good shape has brought about a steady stream of outrage directed right at Laxer. In 1997, Klein declared the very first Parkland Institute publication to be the work of “a communist.” Last year, in response to a conference organized by the institute that argued Alberta was witnessing a growing gap between rich and poor, Klein fired off an ill-advised letter to the U of A president demanding an explanation as to why the university was funding an organization that was dedicated to spreading “the apparent doctrine that Alberta is bad.” When a Parkland Institute study recommended that oil royalties be doubled to pay for increased health and welfare expenditures, Klein sent his cabinet ministers to the airwaves to attack the idea.

The quality of research from Parkland is open to debate. The argument on doubling royalties, for instance, glossed over the possibility that oil companies might drastically curtail production rather than pay Scandinavian-style taxes – lowering revenues, not raising them. The aforementioned conference on poverty was also a bit of a stretch. Nonetheless, each time he has pricked the Alberta government’s surprisingly thin skin, Laxer has been lavished with media attention, allowing him to promote his views to a much wider audience than would normally be possible on such a tiny budget. It also serves to make the government appear rather intolerant of dissent. “The Klein government doesn’t like opposing positions,” he says, unable to resist taunting the premier yet again. “It’s a kind of Soviet system from the right.”

~Reprinted with permission – Copyright 2000 NationalPost Business Magazine.