Sustainable Policies


Economic Policies

With a number of notable strengths, Canada’s market-oriented policy regime receives high rankings in international comparison (rank 12). Its score on this measure is unchanged relative to its 2014 level.

Growth is moderate, with real rates slowing to about 1.5% in 2019. The slowdowns are due to reduction in business investment and exports, and a decline in energy-sector investment. Deficits are moderate, and the net debt-to-GDP ratio is low by international standards and falling. However, household debt levels remain high, and rising healthcare costs are endangering provincial-level fiscal sustainability.

The official unemployment rate has reached a 40-year low. Employment rates remain a concern particularly among the Indigenous population. Labor-market regulation is relatively light, although regional unemployment benefits and high urban living costs may reduce labor mobility.

Despite income-tax progressivity, inequality has risen in recent decades. Corporate taxes have been reduced in recent years, but there has been no effort to keep up with U.S. tax cuts. New provisions seek to block multinational corporations’ use of tax havens. Research output is good, but investment levels trail the world average.

Social Policies

Featuring high-quality education at all levels and a generally well-performing, universally available healthcare system, Canada’s social policies score well in international comparison (rank 7). Its score in this area has gained 0.2 points relative to 2014.

Redistributive policies reduce income inequality and support inclusion. While social disparities tend to diminish for second-generation immigrants, gaps remain for the Indigenous population. A new poverty-reduction strategy is ahead of schedule. Education quality is high, with impressive equity in access. The latest budget has placed a new focus on post-secondary education for the Indigenous community.

The labor-force participation rate for women with children is high. Child-benefit levels have been increased. There is no universal childcare system, and the net cost of childcare is very high. The pension system is relatively effective at reducing poverty among the elderly. High-quality healthcare is provided for the entire population, though waits for health procedures are a problem.

While crime rates are low, violence against Indigenous women is a serious problem, with initial efforts to address the issue having drawn criticism. The government is generous in terms of accepting immigrants, refugees and asylum seekers. Net employment growth over the last five years was almost wholly accounted for by immigrants.

Environmental Policies

With a mixed environmental record, the country falls into the lower-middle ranks worldwide (rank 24) on this issue. Its score in this area has improved by 1.5 points relative to 2014.

The country ratified the Paris climate agreement in 2016, and has created a legally binding target of net zero emissions by 2050. While renewable-energy policy is largely a provincial policy area, a national framework seeks to meet targets through carbon pricing, energy-efficiency investments and renewable-energy strategies.

Several bills seeking to preserve marine resources have been passed. However, the government has also worked to approve and even nationalize highly controversial pipeline projects. and biodiversity in forests and waterways has declined over the past several years.

A new policy imposing carbon taxes in provinces lacking such a mechanism has been criticized for setting the tax level too low to achieve the country’s commitments. The new Canada-United States-Mexico trade agreement, while generally weak in the area of environmental protection, removes NAFTA dispute-settlement provisions that had been used to challenge Canadian environmental laws.

Robust Democracy


Quality of Democracy

Canada’s democracy is robust, with a fair, open and transparent electoral process, and thus scores well in international comparison (rank 11). Its score in this area has improved by 0.3 points since 2014.

Civil rights and political liberties are well protected. While anti-discrimination laws are broad and proactive, the Indigenous community in particular reports persistent problems, and the gender-based pay gap is large. An overhaul of national-security laws removed powers granted under the previous government, and improved oversight. Critics say it opens the door to digital surveillance.

Private-media ownership is strongly concentrated. The government has begun providing financial assistance to traditional media outlets suffering from advertising-revenue losses. The law mandating access to government information has been updated, but does not apply to ministerial offices. A court ruling has given overseas Canadians the right to vote no matter how long they have lived abroad.

While corruption is minimal by international standards, several recent high-profile cases have emerged, including a scandal involving Prime Minister Trudeau. Parties receive individual donations and government funding. Transparency concerns have been raised by news of top politicians’ “cash-for-access” meetings with donors.

Good Governance


Executive Capacity

Canada’s highly skilled, comparatively powerful government office falls into the top ranks worldwide in terms of executive capacity (rank 6). Its score in this area has improved by 0.2 points relative to 2014.

Planning capacity is robust, though decentralized. Draft bills are vetted by central policy and finance-oriented agencies with highly skilled analysts with sectoral expertise. A new impact-assessment act has come into force, substantially expanding the scope of assessments.

Consultation with external stakeholders is generally robust and wide-ranging, though work with Indigenous communities remains uneven. Communication policies are considerably more open than under the previous government. Much of the government’s first-term agenda was implemented effectively, and promises to increase transparency have resulted in improved independent monitoring.

The quality of regulatory enforcement is generally high. While provinces have broad policy discretion, the federal government imposes funding-related standards in areas such as health care and carbon reduction. International engagement has again become a priority.

Executive Accountability

Though legislative and civil-society resources are significant, Canada falls only into the upper-middle ranks (rank 15) with regard to executive accountability. Its score in this area has improved by 0.4 points relative to 2014.

Surveys show citizens’ policy knowledge to be weak in international comparison, with young people showing a particular political-literacy gap. Public broadcasters’ policy coverage is extensive, with news representing a high proportion of content, while private-sector broadcasters are more superficial.

Parliamentary oversight powers are generally strong. Legislators can request audits from the auditor general or analyses from the parliamentary budget officer. A federal privacy commissioner can audit suspected government breaches of the Privacy Act. A third ombuds office has been created, responsible for Canadian businesses both domestically and abroad.

Political parties vary strongly with regard to internal decision-making procedures. Proposals by economic associations tend to be sophisticated, taking broad societal concerns into account. Other interest groups offer well-researched but less consistently feasible proposals.
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