Friday , May 20 2022

Paying the Premiums

During this pandemic, there has been no shortage of people on television and radio, in the newspapers and on social media expressing the view that governments at every level have been woefully unprepared for this pandemic. The argument invariably centres on resources – or lack thereof. The common theme across the board is that not enough was invested or spent on staff, on equipment, on training and a whole host of other things that would have made things far better for all of us.

It would be wrong to dismiss these calls as a cynical ploy to get more money, more influence, and resources for a group of self-interested professionals. The fact is that we do not do enough in many respects. We do not spend nearly enough to address many of the challenges we face.

In the context of COVID, yes – we need more HEPA filters and revamped HVAC in schools and other public buildings, we need more staff, and those staff need more N95 masks, more PPE, more hand sanitizer, and higher wages to compensate for the additional workload and stress.

That is the easy part, and that is probably why it is the part that everyone who appears in front of a camera or a microphone on behalf of a group or a cause is on point. The harder part is how to bankroll these investments to the extent they call for. Not a lot of detail on that, and that is likely by design.

You see, while it is fair to say that government actions in the middle of a crisis are lacking (because they always will be), it can also be slightly disingenuous as well – especially when the recommended remedy often contains a little something-something under the tree for the person who makes the argument.

But if we strip away both extremes – the ineffective and negligent politicians who knew the danger and did nothing all the way to the head of a lobby group whose ‘solution’ conveniently includes more money and more clout for them – we are left with large and expensive bureaucracies that need to be resourced to meet challenges and deciding exactly what is enough.

Government preparation for emergencies is, in essence, an insurance policy and the coverage a policy gives you is in direct relation to the value of the policy and how extensive it is. More importantly, though, it also dictates the size of the premium you must pay. Higher coverage dictates a higher payment.

If you own a car and you want coverage that will 100 percent cover when little Timmy scuffs the buffed finish of your Jaguar with a Nerf ball, you are going to pay through the nose. On the other hand, if you are looking at your premium and get a full body shudder, then you need to decide what coverage you’re dropping and just how high a deductible you are willing to assume if you get T-boned at an intersection.

Government works no differently.

So, lets start with a thought experiment. Let us assume that governments should prepare for emergencies that are within the realm of probability. Let us also assume that a good measure of what is probable is whether something has happened before. If we use the benchmark that is often referenced about flood plains – a once in roughly 100-year occurrence – then let’s say we need to adequately prepare for a once in a century event.

Nearly 118 years ago, on April 19th, 1904, a major fire erupted in downtown Toronto, in the vicinity of Bay and Wellington Streets. It took nine hours to get under control and destroyed more than 100 buildings. Flames could be seen for miles in every direction, and fire departments from Hamilton and Buffalo, New York were enlisted. As this has happened, and within a roughly 100-year envelope, let us consider that to be our benchmark for a possible ‘worst case scenario.’

At present, Toronto Fire Services (TFS) is the largest fire department in Canada – it has 83 stations staffed by roughly 3233 firefighters. It has 55 pumper trucks and 28 rescue-pumpers, 18 “quints” (pumper plus ladder) and 81 other trucks of varying capabilities. The budget for the service is in the neighbourhood of $426 million a year.

Assuming a large multi-storey building ablaze in the downtown core would require a minimum of 200 firefighters and a dozen trucks of varied capacity, one could say that the TFS would probably be maxed out if 10 separate tower blocks in the Bay Street area were simultaneously ablaze.

The problem is that the 1904 fire involved 100 buildings, not 10. Yes, those buildings were smaller, but that does not play to our favour. 45-storey skyscrapers require far more than a 4-storey brick building with a tavern at street level.

So, to adequately address a fire of the same scope, magnitude and physical footprint as the 1904 blaze, one would logically require – at a minimum – a ten-fold increase in current resources.

That means if the City of Toronto were being truly responsible – not “short-sighted” – it would need to invest in a fire service with 833 stations, over 30,000 firefighters, 550 pumper trucks, 280 rescue pumpers, 180 “quints” and 810 other assorted varies of response vehicle. It would also need an operating budget exceeding $4.2 billion a year.

Consider this a minimum because a fire service with 30,000 fighters would have wage inflation. After all, you need more Captains, Deputy Chiefs, and such if you have that many front-line people. You might find some economies of scale where you don’t need as many trucks or pumpers, but the offsets aren’t likely to be enough.

If the taxpayers of Toronto truly believe that their local government should be able to fully and adequately respond to the “next (fire) emergency”, then they should be quite willing to shoulder the burden of an additional $3.5 billion in property taxes, user fees and the like? Would they be willing to see cuts to garbage pickup, swimming classes and day-care programs, or maybe snow plowing or pothole patching as an offset to those tax hikes?

Of course, we know the answer. They won’t and they would utterly humiliate any politician who would dare even suggest those things.

COVID is no different. Yes, we wanted to be fully prepared for the next pandemic, and we demand that government pull out all the stops. We just do not want to pay for it or be told what we can and cannot do. We all want collective commitment and sacrifice but each of us would like to have a personal exemption carved out from those demands.

But it doesn’t work that way.

It is both disingenuous and obtuse to scream about tougher lockdowns if you think the police should give you and your family a pass, or if you think that governments should spend multiples more cash, but somehow exempt your paycheque whilst raiding everyone else’s. The law in a democratic society where all citizens are equal is a blunt instrument – what you do to one you do to all. It is one of the reasons why some of us who have had experience in voting to ratify everything from municipal bylaws to federal legislation do so with great caution. Like the carpenter who measures twice, but cuts once, you only get one shot to get it right.

It really is not an exaggeration to say that if you want a society where federal, provincial, and municipal governments have put in place the optimum safeguards and measures to protect us from fire, flood, earthquake, war, disease and the like, your taxes are going to have to increase to such an extent that your take home pay will only afford you a medium coffee at Tim Horton’s each week. Again, with any kind of insurance, the greater the coverage and the bigger the risk being taken on, the higher the monthly premiums. Comprehensive cradle-to-grave coverage for every eventuality ain’t cheap.

An adult conversation would involve discussing how much people are willing to invest of themselves to support whatever they want government to do. That is, how much skin in the game they are willing to commit. Human nature dictates that people are more likely to order the sirloin steak and a fine bottle of Bordeaux if they know the meal is being comped.  After all, who wouldn’t drive a Rolls Royce Phantom for the same monthly payment as a Honda Civic. Paying the full non-discounted rate is an entirely different matter.

Technological innovation can help, and it dramatically does. Using the Toronto Fire example, full coverage would need to be tenfold based on 2022 standards and equipment. If you were dealing with circa 1904 standards, a ten-thousand-fold increase wouldn’t even scratch the surface. Advances in techniques and training may still leave us “a day late and a dollar short”, but without them it would be more like “a month late and a grand short.”

All that said, it still leaves us with a troubling idea – that there will be times when our best may not be good enough.

And it is discomforting. Human beings evolved and thrived based on survival instincts, which really are nothing more than reducing risk in our lives. The global insurance industry is a multi-trillion dollar concern whose sole product is giving you the ability to sleep at night, knowing that you have a personal hedge if bad things happen. There are people with nice houses, expensive cars and lots of frequent flyer miles who paid for all that from the commission they earned selling protection from “bad things” happening to us. Clearly, they would not be taking golf trips to Myrtle Beach or Palm Springs, running up healthy bar tabs, if the rest of us did not worry about the “what ifs” in our lives.

But none of that is not an argument for giving up or giving in. You’re not going to cancel your policies, and neither am I. But we need to assess societal risk rationally, applying solutions that do not cause negative knock-on effects elsewhere. Where possible, it is about embracing new practices and technologies that make our existing resources – human and financial – go much further.

Saying that “more should be done” is not as useful a declaration as the one yelling it may think because there is no human being alive who would disagree. It is as useful as saying water is wet or the sky is blue. Those Cassandras really owe the rest of us a tad bit more than bellowing self-evident bromides as they make the rounds of television news networks. They need to explain the details of their plan, how much it will cost, how easily it can be implemented, and demonstrate that there is no personal profit motive other than the satisfaction that comes from doing some good for society.

Do that, and more of us would listen.

About Brent Cameron

A writer and commentator on Commonwealth trade issues, Brent Cameron is the author of 'The Case for Commonwealth Free Trade' (2004, 2018) and numerous essays and articles. He is also a member of the Advisory Board of Commonwealth Exchange, a London, UK-based research group. Cameron worked as Telecommunications Coordinator for the Federal Ministry of Labour in Ottawa, Canada before joining SES Canada Research (now Nanos Research) as a Research Associate. He also worked as an assistant to former Ontario MPP Harry Danford, Member for Hastings-Peterborough and Parliamentary Assistant to Ontario's Minister of Agriculture and Rural Affairs. Cameron was a member of the Advance Team for Prime Minister Brian Mulroney during the 1988 Canadian federal general election. During the 2007 Ontario Referendum on Electoral Reform, he acted as Coordinator for the 'No MMP' campaign for eastern Ontario (excluding Ottawa). Cameron has also served as a member and contributing columnist on the Community Editorial Board of the Kingston (ON) Whig-Standard newspaper. He holds an honours degree in politics from Queen's University and a Certificate in Municipal Administration from St. Lawrence College (Kingston, ON). In 2014, Brent Cameron was elected to the municipal council for the Township of Central Frontenac, in southeastern Ontario, Canada, and serving as Deputy Mayor in 2017.

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