Downloading of Respon- from the Federal Government Slashed

ALTERNATIVE FEDERAL BUDGET 2013 DOING BETTER TOGETHER ISBN 978-1-77125-059-7

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With your support we can continue to produce high quality research — and make sure it gets into the hands of citizens, journalists, policy makers and progressive organizations. Visit www.policyalternatives.ca or call 613-563-1341 for more information. The opinions and recommendations in this report, and any errors, are those of the authors, and do not necessarily reflect the views of the publishers or funders of this report. 5 Introduction 8 Macroeconomic Policy 24 Fair and Progressive Taxation 31 Aboriginal Women 37 Arts and Culture 41 Cities and Communities 48 Communications 54 Defence 58 Early Childhood Education and Care 63 Employment Insurance 67 Energy 71 Environment 77 First Nations 82 Food Sovereignty 89 Health Care 96 Housing 103 Immigration 110 International Development 114 Official Languages 116 Post-Secondary Education 121 Poverty and Inequality 128 Sustaining Public Services 135 Sector Development Policy 141 Seniors and Retirement Security 146 Trade Policy 151 Water 158 Women’s Equality 163 Youth 167 Appendix 170 Ackowledgements

Introduction

Fragile growth. Strong headwinds. We know enues and expenditures but triggered another how hard it has been for governments, many round of recession across Europe. businesses, and people to make progress Even the International Monetary Fund these days. But we can do better. has admitted that they got it wrong: the ef- With the federal government a willing fects of austerity on economic recovery were partner, Canadians can seize the opportun- much worse than anticipated. ities presented by growth, and counteract Despite this evidence, the Harper gov- the factors that are increasing inequalities ernment is sticking with austerity, a position between generations and between regions. it has promoted for years. Only after it was In order to do this, the next federal budget threatened with political defeat, and pushed needs to offer a plan for how everyone in Can- by the international community, did it imple- ada can prosper. ment a stimulus program in 2009. However, The 2008 global financial and economic it was a flawed program with poorly target- crisis continues to plague the prospects for ed tax cuts that outpaced spending by three recovery five years later. Europe and Japan to one. Moreover, tax cuts were made perma- are mired in recession. The Canadian and nent while spending increases were tempor- U.S. economies are struggling with sluggish ary, inadequate, and also poorly targeted. growth and high unemployment. The emer- The government’s so-called Action Plan ging economies of Asia and Latin America for Jobs and Growth — referenced endlessly by are slowing. government spokespeople and reinforced by Fiscal stimulus is over in most industrial- a massive advertising campaign — has been ized nations, and yet private sector expansion unable to document how the action plan cre- has not resumed. Many nations have turned to ated jobs or growth that was unrelated to expansionary monetary policy to bring about the global demand for commodities. Today, growth. It’s not working. From the U.K. to the Conservatives only priority is to elimin- Greece, austerity plans have done the oppos- ate the deficit which, once achieved, will al- ite of what governments said they’d accom- low them to bring in a whole new round of plish. By cutting spending to reduce budget tax and spending cuts. This strategy doesn’t deficits, the resulting job and income losses take advantage of either the power of the have slowed the economy further, which has market or the power of government to help not only widened the budget gap between rev- us do better, together.

Doing Better Together: Alternative Federal Budget 2013 5 Despite scaremongering from business, households with the highest profits and in- media pundits, and government spokes- comes — to contribute their fair share. people, it bears repeating: Canada faces no Since the mid-1990s, tax cuts at all lev- fiscal deficit crisis. But we do face plenty of els of government (which have dispropor- other deficits — infrastructure deficits, defi- tionately benefited wealthy corporations cits in how we have invested in future gen- and the very richest among us) have reduced erations. governments’ revenue-raising capacity. Yet The federal budget deficit is entirely man- the demand on government-provided servi- ageable at 1.5% of GDP. Debt servicing costs ces is escalating. Businesses, communities, are at historic lows. This leaves the federal and families alike require the repair and ex- government plenty of fiscal room to jump- pansion of their physical and human infra- start the economy and make the necessary structure if they are going to be able to con- investments in our social, economic, and en- tinue to contribute to the Canadian economy vironmental future. to their fullest potential. We are unlikely to see a solid recovery If the overall tax level were simply restored until they do. Household debt continues to to what it was in the mid-1990s, Canadian gov- grow, breaking all historic records of indebt- ernments would have $90 billion more per edness. People are borrowing more just to year to invest in the public services essen- stay in place. Trade deficits continue to be a tial to our collective health and well-being. drag on economic expansion, as more Can- We think of Canada as a kinder, gentler adian cash goes offshore than is brought in. country. Since the mid-1990s, however, Can- Companies are sitting on almost $600 billion ada has fallen from 14th most equal nation in cash reserves but are not investing, fear- to 22nd among 32 OECD nations (a more rap- ful that there will be insufficient demand for id decline than even the U.S.). Meanwhile 15 their products. Provincial and municipal gov- OECD nations — including peers such as Nor- ernments have done more of the heavy lift- way, Italy and the U.K. — were reducing in- ing in this recession than in the recessions of equality. Why can’t we do better? the 1980s and 1990s. Today the federal gov- AFB 2013 spurs economic recovery, cre- ernment is the only major sector which has ates jobs, invests in infrastructure, boosts the fiscal room to expand. green industries necessary for the transition Alternative Federal Budget 2013 shows to a low-carbon economy, strengthens the tax how we can use a federal budget plan to do system, and reduces inequality. better, together. AFB 2013 allows us to take back our fu- AFB 2013 says it’s time to end the fiscal ture. It shows how we can restore a sense of fantasy that we can do better without paying the public good — a sense that we can do bet- for the world we want. AFB 2013 sets out a ter together rather than continuing on the plan that builds fiscal capacity responsibly. dead-end path of austerity and market-driv- It phases in tax increases, as recovery per- en “solutions” that don’t benefit the major- mits, and asks those with the greatest ability of Canadians. ity to pay — the fortunate businesses and Alternative Federal Budget 2013 stands in solidarity with the Occupy movement, with

6 Canadian Centre for Policy Alternatives Idle No More, with the labour movement, can the health of the so-called job creators with the environmental movement, and with become more important than the health of all who work for social, environmental, and the rest of us? How do we put people and the economic justice. natural world that sustains all else, at the As Alex Himmelfarb, former Clerk of the centre of the agenda?” Privy Council, speaking at a recent CCPA Alternative Federal Budget 2013 says we forum, said: “How did fiscal health become can meet these challenges and do better, more important than human health? How together.

Doing Better Together: Alternative Federal Budget 2013 7 Macroeconomic Policy

Canada on Austerity Auto-Pilot ing back up again as government austerity bites into growth. Since the expiry of Canada’s stimulus pro- While the government is fond of laud- grams two years ago, little thought has been ing Canada’s economic growth since the re- put into getting the country back on its feet cession, an international comparison puts again. Instead of focussing on sustaining a our performance into better relief. From a fragile recovery by putting Canadians back Gross Domestic Product (GDP) perspective, to work, governments have switched rapid- Canada’s economy has returned an annual ly into “austerity mode” by cutting govern- average of 0.9% growth between 2008 and ment services when they are needed the most. 2011, the most recent year for which the Or- Growth is the problem in Canada, not defi- ganisation for Economic Co-ordination and cits. Austerity is not the answer to growth. Development (OECD) has consistent data.1 In fact, austerity provides just the opposite This is slightly better than the OECD aver- of growth, pulling much-needed spending age of 0.4% over the same period. Develop- out of the economy just when it is recovering countries like China, Turkey and Mexico ing. With 1.4 million Canadians still unem- performed better than Canada. ployed, and the country still in a strong fiscal GDP by itself is only part of economic position, further depressing weak economic prosperity. The economy needs to not only growth is not the answer. grow but to at least keep up with Canadian Without intervention, stagnant growth population growth. Despite growing inequal- appears to be the new normal for Canada. ity, as long as GDP keeps up with population Instead of seeing 3% real growth, as was growth there is at least the same or more GDP traditionally the case in the 2000s, 2% real per Canadian over time. growth is projected going forward. This con- Once GDP is adjusted for population and straint on growth slows job creation, it slows compared to other OECD countries, however, deficit reduction, and it makes the economy the picture is less flattering. Between 2008 more vulnerable to future depressions be- and 2011, Canadian GDP per capita actually cause it leaves so little wiggle room. fell by 0.7%. In effect there is less wealth to- Despite it being now five years since the day per person than in 2008. In the midst of Great Recession started, the Canadian econ- the extreme levels of inequality that already omy still hasn’t closed the output gap. That exist, negative GDP per capita will widen is to say the economy is still operating below this gap further. its potential, leaving Canadians out of work Canada’s GDP per capita growth is slight- and governments with large deficits. The ly better than the OECD average, which lost gap did appear to be closing, but the latest 0.9% between 2008 and 2011. However, many Bank of Canada estimates show it is open- of the world’s developing countries are do-

8 Canadian Centre for Policy Alternatives Figure 1 Canada’s Output Gap ($2007, Trillions)

1.70 Potential GDP ($2007) GDP At Market Prices

1.65

1.60

1.55

1.50

1.45

1.40 Q1 2006 Q1 2007 Q1 2008 Q1 2009 Q1 2010 Q1 2011 Q1 2012

Source Bank of Canada and Statistics Canada

ing substantially better than Canada on this periment is long-term and extreme. Follow- front. China, Poland, South Korea and Tur- ing the Great Recession of 2008–09, south- key have all managed GDP per capita growth ern Europe was hit hard by a collapsing real of over 8% despite strong population growth. estate bubble. Economic growth plummeted Developed European countries such as Ger- and deficits soared. Government bonds in many and Sweden have managed GDP per Greece and Portugal and to a lesser degree capita growth of over 2% despite the ongoing Spain and Italy came under attack, with in- European financial crisis. Perhaps Canada’s terest rates spiking to unsustainable highs. closest comparator in terms of population The European Commission, the European size, geography and reliance on trade, par- Central Bank and the International Monetary ticularly in raw resources, Australia has man- Fund stepped in to buy government bonds aged GDP per capita growth of 1.9%. from euro members who couldn’t obtain sus- Internationally speaking, Canada’s recov- tainable bond rates on private markets. In re- ery looks downright average. Our ongoing turn for this support, countries such as Portu- stagnation isn’t keeping pace with popula- gal and Greece were required to make drastic tion growth. reductions in government spending in order Stagnant growth won’t be solved by aus- to rapidly reduce their deficits. Extreme austerity. One of the largest real world experi- terity was imposed on European countries in ments in austerity is currently underway in exchange for lower-cost government bonds. southern Europe and the British Isles. The ex-

Doing Better Together: Alternative Federal Budget 2013 9 Figure 2 Fiscal Drag Selected Sectors (% Change Q3 2011 to Q3 2012)

-2%

-4% GDP Households Housing Business Investment Governments Exports

Source Statistics Canada and author’s calculations

In the case of the U.K., austerity was im- For southern Europe extreme austerity posed voluntarily out of a misplaced belief has been devastating, leading to plummeting that draconian cuts to social services and GDP for Greece of 14%. The U.K. is now in the health care would impress bond traders, midst of a triple-dip recession following sig- who weren’t particularly concerned in the nificant cutbacks there. Austerity has led to first place given record low interest rates on depression-level unemployment rates of 26.6% British government bonds. in Spain, with youth unemployment at 55%. Instead of shrinking government defi- While Canadian austerity is not as severe cits, as the International Monetary Fund as that in Europe, similar principles apply. (IMF) and others imagined, extreme aus- When governments cut back during a fragile terity caused economic growth to plummet recovery they act as a drag on growth. In the and deficits to become ever larger. The IMF’s Canadian situation, at least some of the sav- Chief Economist Olivier Blanchard, in a sud- ings expected from austerity will not be real- den turnaround, points out that austerity is ized as lower government spending leads to acting as a “brake” on economic recovery.2 slower growth. As Canadians make less, they He notes that “recent efforts among wealthy pay less in taxes, resulting in lower govern- countries to shrink their deficits — through tax ment revenues. hikes and spending cuts — have been caus- Over the past year in Canada, government ing far more economic damage than experts austerity policies at both the federal and prov- had assumed.”3 incial levels have been a drag on economic

10 Canadian Centre for Policy Alternatives Figure 3 Full-Time Employment Ratio

53%

51%

49%

47%

45%

43% 2008 2009 2010 2011 2012

Source Cansim 282-0087 and author’s calculations

growth. As Figure 2 shows, over the past year terity agenda can only lead to weaker growth Canadian governments have reduced econom- and the potential for another recession. ic growth by 0.8%. Austerity has slowed the recovery instead of encouraging it. Canadian Employment: Households directly and through real es- Treading Water tate have continued to be an important source of recovery although this spending power is Although there have been some recent improve- being built on record-high household debt ments in Canada’s employment statistics, there levels. Canadian exports continue to fall as has yet to be a sustained jobs recovery since they have for over the past decade, exposing the 2008–09 recession. In January 2013, the the impotence of the current free trade agree- unemployment rate dropped to 7.0% down ment signing spree undertaken by the federal from 7.1% the month previous, although this government. The strongest driver of econom- was entirely due to discouraged Canadians ic growth over the past year has been busi- giving up their job search. Unemployment ness investment. However, at the same time lows of this sort have been seen before, but as corporations are investing a small amount have not been sustained. In September 2011, in the economy they have continued hoard- unemployment was also at 7.1%. However, ing most of their cash. this lower rate did not last. Just one month With such weak prospects for continued later the rate jumped back up to 7.6%. growth, government cutbacks through the aus-

Doing Better Together: Alternative Federal Budget 2013 11 Figure 4 Unemployment for Youth (15–24)

18%

16%

14%

12%

10%

0% 2008 2009 2010 2011 2012

Source Cansim 282-0087

The overall full-time employment rate has at or above 14%, approximately twice the remained stuck at approximately 50%. That general unemployment rate. Approximate- is to say, only 50% of the Canadian popula- ly 400,000, or about one-third of all unem- tion of working age is in fact working in a full- ployed in Canada, are youth who are active- time position. This rate is nowhere near the ly looking for work but who cannot find it. In 52% that Canadians enjoyed during the late fact, the unemployment rate for those aged 2000s. Put another way, there are 570,000 25 or older has been coming down relative- Canadians that would have had full-time em- ly steadily and now sits just below 6%. At ployment in 2008, but who today are either the other end of the spectrum, employment working part-time, are unemployed or have rates for Canadians over 65 have been rising, given up looking for work. likely due to the pension crisis not allowing In broader terms, the current unemploy- them to retire. In part, the pension crisis is ment situation means that 1.4 million Can- also causing the youth unemployment crisis. adians continue to look for work but can’t While the unemployment rate has seen find it. Despite some small declines in the some improvement since the worst days of unemployment rate, the actual number of 2009, wages for employees have seen little Canadians who are looking for work has been if any improvement. Median hourly wages fairly consistent at 1.4 million since late 2010. (smoothed over 12 months) remain near their Youth unemployment has had no substan- recession low of $16.50/hr. tial change at all since mid-2010; it remains

12 Canadian Centre for Policy Alternatives Figure 5 Median Hourly Wages ($2002, 12-Month Rolling Average)

$17.20

$17.00

$16.80

$16.60

$16.40

$16.20

$16.00

$15.80

$15.60 2008 2009 2010 2011 2012

Source Cansim 282-0071 & authors calculations

Corporate Canada: corporate income tax, tax benefits and other The Party Continues taxes like property tax. Canadian governments only take 15% of corporate profits in tax, ac- Corporate Canada has never had it so good. cording to KPMG. This puts us four percent- Combined federal and provincial statutory age points below the nearest jurisdiction, the tax rates (before tax loopholes and exemp- Netherlands. Canada is 11 percentage points tions) have fallen from 42% in 2000 to 26% below the nearest G8 country, the U.K., which today. Combined effective tax rates (that cor- charges its companies a 26% tax. Canada’s porations actually pay) have fallen even fur- effective rate, according toKPMG , is a mere ther from 30% in 2000 to 16% today. The dif- third of what the U.S. charges its companies ference between what companies should pay at 41% of profits. (statutory) and what they do pay (effective) It is clear from these types of internation- is how effectively they can use tax loopholes al comparisons that Canada has “won” the that reduce their tax bill. This may take the global race to the bottom. However, we still form of tax havens or using the myriad of gov- have our foot on the gas, with one final cut ernment programs that can reduce a com- to the federal corporate rate introduced last pany’s tax bill. year reducing it to 15%. Many other coun- KPMG’s semi-annual 2012 tax report ranked tries, like Germany and Australia can main- Canada lowest in corporate taxes. We had the tain solid economic growth and do so with lowest overall net tax rate, which includes double our current corporate tax rate.

Doing Better Together: Alternative Federal Budget 2013 13 Figure 6 International Comparison of Corporate Tax and Benefit Levels

60%

Corporate Income Tax Other Corporate Tax

50%

40%

30%

20%

10%

0% Canada Netherlands China UK Australia France Russia India Mexico Germany Italy US Brazil Japan

Source KPMG, Competitive Alternatives 2012 — Focus on Tax, Pg.22

Despite the generosity of Canadian gov- Despite substantially lowered corporate ernments over the past decade, corporate tax rates, Canadian corporations are increas- Canada has been downright miserly. The sav- ingly turning to tax havens to pay even lower ings from corporate tax breaks have not gone rates. In fact, five of Canada’s top eight des- into new machinery or R&D, as corporations tinations for foreign direct investment are tax promised. Instead that money has ended up havens.4 In 2011, a quarter of Canada’s “in- in corporate bank accounts being complete- vestment” abroad was with tax havens, up ly unproductive. The Governor of the Bank of from 10% in 1987. Paying corporate taxes in Canada, Mark Carney, aptly called it “dead Canada should not be optional. money” that does nothing to improve the The combination of lower tax rates on cor- productivity of individual companies or of porate profits and depressed median wages the economy as a whole. has led to another year where profits are up Last year saw the corporate cash stash and wages are down. Corporate profits took reach a new record of $584 billion in the up 14% of Canada’s GDP at the end of 2012, second quarter. To put this into perspective, down slightly from the high of 16% in late there is now enough money in corporate bank 2011. At the same time wages make up 44% accounts to almost completely pay off the of Canada’s GDP, down substantially from federal debt. The amount in those bank ac- where they sat in the 1980s. counts could have paid off almost every sin- When the economy grows, more of that gle CMHC-insured mortgage in the country. growth is being funnelled through corporate

14 Canadian Centre for Policy Alternatives Figure 7 Canada’s Corporate Cash Stash ($Mil)

$700,000

$600,000

$500,000

$400,000

$300,000

$200,000

$100,000

$0 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Source Cansim 378-0121 Total Currency and deposits of non-financial corporations

profits instead of through wages. This enrich- The Alternative: es corporate managers and those who hold Doing Better, Together large quantities of stocks, but does little for middle-class families that rely on wages to Government austerity is already biting into make their living. economic growth. Other key drivers of growth, While Corporate Canada is awash in cash, such as households and real estate, are rely- Canadian households are awash in debt as they ing on ever more dangerous levels of house- continue to rack up larger and larger mort- hold debt. Signing marathons for free trade gages. Households’ ratio of debt to disposable agreements have only weakened exports, and income has topped 160% this year — double corporations for the past decade have been the 1990 level of just over 80%. much more interested in hoarding cash than As of 2012, Canadian households have investing in Canada. now surpassed the indebtedness level of It is time for the federal government to take Americans at the peak of their real estate a more active role in the economy, to turn off bubble in 2007. With households now mak- the auto-pilot and steer Canada away from ing up 56% of GDP at the end of 2012, a re- austerity-weakened stagnant growth. Such verse wealth effect caused by falling house a plan needs to put Canadians first and ac- prices could have a substantial impact on knowledge that government cuts and austerity economic growth going forward. can only worsen an already weak economy.

Doing Better Together: Alternative Federal Budget 2013 15 Figure 8 Corporate Profits and Wages as a Proportion ofGDP

52% 21% Wages vs GDP (Left) Corporate Proﬁts vs GDP (Right)

50% 18%

48% 15%

46% 12%

44% 9%

42% 6%

40% 3%

38% 0% 1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

Source Cansim 380-0063

As shown in the federal government base tems on First Nation reserves and in our cit- case, real economic growth remains well ies, along with longer-term transfers to mu- below 3%, its level for most of the 2000s. nicipalities for infrastructure to repair our The government’s plan over the next three crumbling roads, will be provided. years will leave between 1.3 million and 1.4 While the AFB does run a larger deficit million Canadians unemployed. At the same compared to the base case, particularly in time, as small deficits are being run, the debt years one and two of the forecast, the debt burden or debt-to-GDP ratio is actually fall- to GDP ratio declines throughout the forecast ing. Put another way, the federal government horizon. In economic terms, the AFB doesn’t does not have a debt problem, but the econ- have a debt or deficit problem. In fact the debt omy has a growth problem. burden declines under the AFB plan. The AFB would take the economy off aus- The real benefit of theAFB can be seen on terity auto-pilot. Deficit reduction will take a the employment side where between 200,000 backseat to job creation and more, not less, and 300,000 full time jobs are created in any government spending in the economy. New given year. programs such as national child care, com- For a complete list of all AFB programs, munity-based health care, and long-term care see Table 4. facilities will provide Canadians with much- needed services while driving employment in these areas. New funding for water sys-

16 Canadian Centre for Policy Alternatives Figure 9 Maxing Out On Debt

180

160

140

120

100

60 U.S. Personal Debt to Disposable Income Credit Market Debt to Disposable Income 40

0 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012

Source U.S. Federal Reserve, Cansim 378-0123

com/blogs/wonkblog/wp/2012/10/12/imf-austerity-is-much-worse-for-the- Notes economy-than-we-thought/)

4 For a fuller discussion see http://www.progressive-economics. 1 GDP figures are at purchasing power parity, in constant dollars. They can ca/2012/08/16/canadian-banks-use-of-tax-havens-keeps-growing/ be found at http://stats.oecd.org/Index.aspx?DatasetCode=SNA_TABLE1 5 The AFB is using the Parliamentary Budget Officer’s estimates of gov- 2 http://blog-imfdirect.imf.org/2012/01/24/driving-the-global-economy- ernment revenues and expenditures from the Parliamentary Budget Office, with-the-brakes-on/ Economic and Fiscal Outlook Update, October 29, 2012, p. 7.

3 Brad Plummer, IMF: Austerity is much worse for the economy than we thought, The Washington Post, October 2012 (http://www.washingtonpost.

Doing Better Together: Alternative Federal Budget 2013 17 table 1 Macroeconomic Base Case5

Macroeconomic Indicators ($Mil) 2012 2013 2014 2015 Nominal GDP 1,822,000 1,895,000 1,984,000 2,074,000 Nominal GDP Growth 4.6% 4.0% 4.7% 4.5% Real GDP Growth 2.1% 2.0% 2.5% 2.5% Participation Rate 66.70% 67.10% 67.20% 67.30% Labour Force 18,963 19,344 19,644 19,949 Employed (000s) 17,579 17,951 18,308 18,632 Employment Rate (As % of Working Age Population) 61.8% 62.3% 62.6% 62.9% Unemployed (000s) 1,384 1,393 1,336 1,317 Unemployment Rate 7.3% 7.2% 6.8% 6.6%

Budgetary Transactions ($Mil) 2012–13 2013–14 2014–15 2015–16 Revenues $257,000 $267,500 $279,300 $295,900 Program Spending $244,100 $249,800 $254,400 $261,700 Debt Service $31,100 $31,200 $29,700 $31,000 Budget Balance -$18,200 -$13,500 -$4,800 $3,200 Closing Debt (Accumulated Deficit) $600,300 $613,800 $618,500 $615,300

Budgetary Indicators as Percentage of GDP 2012–13 2013–14 2014–15 2015–16 Revenue/GDP 14.1% 14.1% 14.1% 14.3% Expenditures/GDP 13.4% 13.2% 12.8% 12.6% Budgetary Balance/GDP -1.0% -0.7% -0.2% 0.2% Debt/GDP 32.9% 32.4% 31.2% 29.7%

18 Canadian Centre for Policy Alternatives table 2 AFB Case

2012–13 2013–14 2014–15 2015–16 Nominal GDP 1,822,000 1,933,038 2,014,505 2,095,247 Nominal GDP Growth 4.6% 6.1% 4.2% 4.0%

Revenues ($Mil) Base Case 257,000 267,500 279,300 295,900 Net AFB Revenue Measures 20,126 26,168 39,927 Multiplier Effect 5,522 4,777 4,271 Total 257,000 293,148 310,245 340,098

Expenditures ($Mil) Base Case 244,100 249,800 254,400 261,700 Net AFB Program Measures 39,069 39,800 45,636 Total 244,100 288,869 294,200 307,336 Debt Service 31,100 31,554 30,602 32,255 Budget Balance (Deficit) (18,200) (27,275) (14,557) 507 Closing Debt (Accumulated Deficit) 600,300 627,575 642,132 641,625

Budgetary Indicators as Percentage of GDP Revenue/GDP 14.1% 15.2% 15.4% 16.2% Expenditures/GDP 13.4% 14.9% 14.6% 14.7% Budgetary Balance/GDP -1.0% -1.4% -0.7% 0.0% Debt/GDP 32.9% 32.5% 31.9% 30.6%

table 3 AFB Job Creation

2012 2013 2014 2015 AFB Jobs Created (000s) 312 279 207 Employment Rate (As % of Working Age Population) 61.8% 63.3% 63.5% 63.4% Unemployed (000s) 1,384 1,196 1,174 1,199 Unemployment Rate 7.3% 6.2% 6.0% 6.0%

Doing Better Together: Alternative Federal Budget 2013 19 table 4 AFB Program List ($Mil)

Program Name 2013–14 2014–15 2015–16 Aboriginal Women Inquiry Into Missing and Murdered Aboriginal Women 10 10 10 National Strategic Framework to End Violence Against Aboriginal Women 10 10 10 Arts & Culture Canada Council for the Arts 120 120 120 Ensure Increases in Canadian Heritage Funding to Cover Cost of Living 21 41 62 Develop Artistic and Cultural Markets in Canada and Abroad 25 25 25 Cities and Communities Rebuild Canada Program: Public Transit 1,350 1,350 1,350 Rebuild Canada Program: Core Infrastructure 2,250 2,250 2,250 Community Economic Development Framework 2.5 2.5 2.5 Neighbourhood Revitalization Program 100 100 100 Defence Military Spending Back to Pre-9-11 Levels -1,280 -2,600 -4,000 Stopping Growth of National Security Establishment -547 -1,094 -1,641 Early Childhood Education and Care Expand Affordable Child Care 2,393 3,409 4,237 Cancel the Universal Child Tax Benefit -2,786 -2,817 -2,873 Employment Insurance Renew Extended Employment EI Benefits Pilot 400 400 400 Working While on Claim Exemption 200 200 200 Continued Support for Long Tenured Employees 100 100 100 Extended Training Benefits 300 300 300 Pilot Universal Entrance of 360 Hours 300 300 300 Environment National Conservation Plan 175 135 145 Expand Environmental Law and Science Capacity 7 7 7 Sustainable Energy R&D 562 562 562 First Nations First Nations Education 800 800 800 First Nations Housing 1,000 1,000 1,000 First Nations Safe Drinking Water 470 470 470 Non-Insured Health Benefits Program 470 637 805

20 Canadian Centre for Policy Alternatives Food Sovereignty National Food Policy 10 20 20 National Student Nutrition Program 200 250 300 Sugary Drink Tax -150 -150 -150 Cultivating Agriculture (Family Farm Supports) 650 650 650 Food Security for Northern Communities 100 100 100 Health Care National Pharmacare 3,390 3,800 5,500 Community-Based Health Care 2,600 2,652 2,705 140 New Community Health Centers 300 0 0 Long Term Care Facilities 2,300 2,369 2,440 Dental Health for Children 50 100 200 Aboriginal Health Care providers 50 50 0 Cancel Centers of Excellence for Commercialization and Research -73 -73 -73 Expand Women’s Health Contribution Program 10 10 10 Community-Based Mental Illness 30 30 30 Interim Federal Health Program 20 20 20 Community Health Innovation Fund 1,000 1,000 0 Housing New Affordable Housing Supply 2,000 2,000 2,000 Immigration Equity Seeking Group internships 10 10 10 Incentives for Employment Equity 10 10 10 Court Challenges Program 3 3 3 Reform the Temporary Foreign Worker’s Program 5 5 0 International Development Maintain Development Funding at 0.31% of GNI 401 661 961 Internet Communications Modernize Broadband 400 450 500 National Public Access Program 40 40 40 Official Languages Minority Language Arts and Culture 0.5 0.5 0.5 Minority Language Media 10 10 10 Youth Outreach 10 10 10 Extend the Roadmap Canada’s Linguistic Duality 200 204 208

Doing Better Together: Alternative Federal Budget 2013 21 Post Secondary Education Reduce Tuition to 1992 Levels 1,700 1,751 1,804 Create New Income Tested Grants 1,519 1,560 1,599 Cancel Textbook Tax Credit -41 -41 -41 Cancel Scholarship Tax Credit -43 -43 -43 Cancel Tuition Fee and Education Tax Credit -510 -510 -510 Cancel RESP -155 -155 -155 Cancel Canada Education Savings Grant -770 -811 -850 Increase Research Funding by 10% 231 231 231 Add 3000 New Canada Graduate Scholarships 17 17 17 Poverty/Inequality Poverty Reduction Transfer to Provinces 2,000 2,000 2,000 Increase CCTB/NCB to $5,400 for First Child 1,489 1,422 1,343 Double Refundable GST Credit 4,258 4,456 4,524 Sectoral Development Sectoral Development Councils 50 50 50 Extended Producer Responsibility 300 300 300 Green Car Levy -300 -300 -300 Green Energy Manufacturing Tax Credit 50 50 50 Sustainable Forestry and Skills 300 300 300 Green Skills Development Program 100 100 100 Eliminate Biofuel Crop Subsidies -200 -200 -200 Reinstate 28% Rate on Oil and Gas Industries -1,000 -1,000 -1,000 Capitalize Canadian Development Bank 1,000 0 0 Seniors Bring All Senior Households to Poverty Line (lim) 1,411 1,701 1,574 Limit RRSP Contributions to $20,000/Year -232 -289 -364 Tax Chapter New Income Tax Above $250,000 (35%) -2,710 -2,884 -2,971 Reinstate 2007 Corporate Tax Rates 0 -4,000 -6,000 Eliminate Tax Loopholes and Simplify Tax System -10,000 -10,200 -10,404 Financial Transactions Tax -4,000 -4,080 -4,162 Inheritance Tax on $5 Mil+ Estates 0 -1,500 -1,530 Carbon Tax 0 0 -11,250 National Green Tax Refund 0 1,875 7,500

22 Canadian Centre for Policy Alternatives Water National Public Water and Wastewater Fund 2,600 2,600 2,600 Implementation of Wastewater Systems Effluent Regulations 1,000 1,000 1,000 Great Lakes Action Plan 500 0 0 Clean Up Priority Waterways 950 950 950 Implement Water Quality and Quantity Monitoring Frameworks 109 109 109 Reinstate the Experimental Lakes Area 2 2 2 Environmental Assessments for All Energy and Mining Projects 50 50 50 Study on Water Effects of Tar Sands and Fracking 28 2 2 Woman’s Equality Implement National Plan to Address Violence Against Women 127 127 127 Implement Equal Pay at the Federal Level 10 10 10 Cancel Pension Income Splitting -1,035 -1,066 -1,098 Youth Youth Employment Measures 100 100 100 Youth Voting study 10 0 0

Total AFB Expenditure Changes 39,069 39,800 45,636 Total AFB Revenue Changes -20,126 -26,168 -39,927

Doing Better Together: Alternative Federal Budget 2013 23 Fair and Progressive Taxation

Background equitable tax system that supports sustainable economic growth based on the princi- The tide is finally turning. ples of good tax policy. After decades of tax cuts that largely bene- Good tax policy demands that our taxes fited the most affluent and large corporations, be designed as an integrated system. Income there is now growing recognition around the from different sources — whether from em- world that these policies have failed. Regres- ployment, business, or investments — should sive and unfair tax cuts have done little to be subject to relatively similar rates of tax; grow the economy. Instead they’ve reduced otherwise those with the means to shift in- revenues, increased deficits, increased income to lower-taxed areas will do so. This is a equality and led to cuts in public services. deadweight loss for the economy and under- Public pressure and political change have mines the integrity of the tax system. finally led to the introduction of progressive To prevent widespread tax avoidance, tax tax measures by many governments to help collection must be supported by fair, effect- raise higher revenues and make tax systems ive enforcement. Regressive taxes that fall fairer. But it’s not just the public and polit- more heavily on lower incomes — such as icians who are now advocating progressive sales, property, and payroll taxes — should tax measures. Economists and traditionally be balanced with much more progressive in- conservative organizations such as the Inter- come taxes and tax credits to make the over- national Monetary Fund (IMF) and the Or- all tax system fair. ganisation for Economic Co-operation and The tax system also needs to be simpli- Development (OECD) are advising govern- fied by eliminating ineffective and unfair de- ments to eliminate regressive tax loopholes ductions and loopholes. In many cases dir- and introduce progressive tax measures to ect public support — e.g., for children’s sports raise revenues and improve the effectiveness and recreation, public transit, research and of their tax systems. Business organizations development, post-secondary education, and and some of the world’s wealthiest individ- child care — is much more cost effective and uals have also urged politicians to increase fair than tax deductions and benefits for these taxes on business and top incomes. activities. Some tax preferences — such as for The Alternative Federal Budget (AFB) has stock options — have not only been highly in- called for progressive tax measures in Canada equitable, but have also had a perverse and for many years. There is even greater urgency negative effect on the economic behaviour of to reform our tax system now. These meas- CEOs and their companies. Reforms to sim- ures must take account of current economic plify these aspects of the tax system will not circumstances and not undermine econom- only make it more effective economically, ic recovery, while establishing a fairer, more they will also reduce the costs of adminis-

24 Canadian Centre for Policy Alternatives tration and compliance for the government make more than $250,000 and will only apply and public alike. to their income above this level. The following sections summarize ma- Estimated revenue: $2.7 billion (explicit- jor tax measures included in this year’s AFB. ly accounts for elasticity and other impacts, More details on specific measures and esti- e.g., capital gains).1 mated revenues are included in a background document. Restore Corporate Tax Rates

Introduce A New Federal The federal government has slashed tax rates Tax Bracket of 35% on for business over the past decade, cutting the Income Over $250,000 corporate tax rate in half from 29.12% in 2000 to 15% in 2011 while also eliminating capital Canada’s richest 1% has taken the lion’s share taxes and reducing taxes on capital gains. of income growth over the past decade, but it These and other cuts for business were pays a lower overall rate of tax than all other supposed to stimulate investment and trickle income groups, including the poorest 10%. down in the form of higher wages for work- Three decades ago, before a succession ers, but instead the opposite has happened. of Conservative and Liberal governments cut Corporate profits have escalated along with their tax rates, Canada’s top federal income CEO and executive compensation, while busi- rate was 43% for taxable income over $119,000 ness investment as a share of the economy (equal to about $290,000 today) and 39% for has declined and productivity along with real incomes over $77,400 (about $190,000 in cur- wages have been stagnant. As a result, cor- rent dollars). Now Canada’s highest income porations have stockpiled over $600 billion tax rate is only 29% for taxable income over in cash and short-term securities — equiva- $135,054. This applies whether your taxable lent to more than a third of Canada’s annual income is $150,000 or $15 million. economic output.2 Canada’s top federal income tax rate is far Little of this has trickled down to ordin- below the top U.S. federal income tax rates. ary Canadians and increasing amounts are These were raised from 35% to 39.6% for in- flowing out of the country. come over $400,000 in President Obama’s Canada’s average combined federal and recent budget agreements with the Repub- provincial corporate tax rate, at 26%, is low- licans. Effective income tax rates on top in- er than most other major industrialized na- comes in the U.S. are even higher because tions, and notably lower than the United States the value of personal exemptions are phased combined average federal-state corporate tax out for higher incomes and because payroll rate of 39%. Corporate income tax rates in taxes aren’t capped. Ireland, Iceland, Greece and some Eastern The AFB will restore badly needed pro- European countries remain at 20% or lower. gressivity to Canada’s tax system by intro- These countries led the race to the bottom ducing a new federal tax rate of 35% for tax- with corporate tax cuts during the last dec- able income over $250,000. This new rate will ade. These corporate tax cuts helped fuel an only affect the less than 1% of Canadians who unsustainable boom and then financial crisis

Doing Better Together: Alternative Federal Budget 2013 25 and bust in their economies from which they Eliminate Tax Loopholes and are still trying to recover. Our federal govern- Simplify the Tax System ment should learn from their mistakes and not continue to try and emulate them. Even Canada’s tax system has become riddled with business groups, such as the New Bruns- an array of ineffective, regressive, and expen- wick Business Council have called on their sive tax preferences and loopholes. While some government to increase corporate tax rates. tax credits and deductions are effective and Tax rates on corporate income that are progressive, others do little more than bene- significantly lower than personal income tax fit the wealthy and distort our tax system. rates also fuel wasteful tax avoidance activ- In most cases, providing direct funding ities by those with the ability to channel and for public programs — such as public transit, retain income through corporations taxed at child care, post-secondary education, research a lower rate. This makes it appear that low- and development, sports and arts programs, er tax rates stimulate economic activity and and services for the disabled — is much more higher revenues, when in fact much of it is effective than tax preferences or benefits in just accountants shifting income to take ad- these areas. The 2012 Federal Budget took a vantage of lower rates. positive step in this direction by limiting and The Alternative Federal Budget will ramp reducing the value of the Scientific Research up the federal general corporate income tax & Experimental Development tax credit and rate to 21% by January 1, 2016. This is the increasing direct grants — as the AFB and the same rate that applied in 2007 but without the federal Expert Panel on Support to R&D had 1.12% surtax that was in effect until that year. recommended. The corporate income tax rate on the oil, Eliminating costly tax preferences would gas and minerals sector will be restored to not only supply funds to provide more effective the higher rate of 28% outlined in the Sector- and targeted programs in these areas, it would al Development chapter. These are the most also simplify the tax system. This might mean profitable in Canada, yet they benefit from less work for tax accountants, but it will also large direct and indirect subsidies — including mean fewer headaches and less time spent tax preferences and low royalty rates — with filling out tax forms for Canadians. a large share of the profits going to foreign One of the most egregious tax loopholes owners. Canada’s wealth of non-renewable is the stock option deduction, which allows resources should be shared, and not exploited high-paid executives to pay tax on their com- and exported as rapidly as possible at the ex- pensation at half the rate ordinary Canadians pense of future generations. Higher tax rates pay on their employment income. Not only is on this sector will also help to stabilize the it highly regressive, but it also helps fuel the economy by moderating the boom-bust epi- kind of reckless speculation and stock ma- sodes they generate. nipulation that resulted in the financial crisis. Estimated revenue: $8 billion. The related capital gains deduction allows investment income to be taxed at half the rate of employment income, but it doesn’t adjust for inflation or encourage longer-term

26 Canadian Centre for Policy Alternatives table 5 Tax Loopholes and Preferences

2013 Revenue

Eliminate stock option deduction, which costs the federal government an estimated $760 million a $760 million year, with 90% of the benefits of this loophole going to the top 1% of tax filers.

Tax personal and corporate capital gains at the full rate, instead of at half the rate of ordinary $6,300 million employment and business income. However, the gains would be adjusted for inflation so taxpayers don’t pay taxes on increases solely due to inflation.

Eliminate the corporate meals and entertainment expense deduction. This allows businesses to $400 million deduct the cost of meals and entertainment, such as private boxes at sports events.

Eliminate mining and fossil fuel tax subsidies. The fossil fuel and mining industries, which benefit $1,400 million from low provincial royalty rates, also continues to benefit from significant federal tax subsidies. These include the accelerated depreciation, the Canadian exploration expense, the development expense and flow-through share deductions. The federal government has promised to reduce some of these subsidies, but these are limited.

Cap Tax Free Savings Accounts (TFSAs). TFSAs, which now provide taxpayers with $20,000 in $100 million tax-sheltered investment room and are increasing every year, could eventually cost the federal government over $6 billion a year in foregone revenues. The AFB will cap TFSAs at a total lifetime amount of $20,000. The savings from capping this program may be relatively low in the first year, but they escalate in future years.

Withholding tax on assets held in tax havens. Wealthy Canadians and businesses hold over $160 $1,600 million billion in tax havens, kept there both to avoid scrutiny and taxes. Applying a modest 1% annual withholding tax to these assets would generate $1.6 billion annually and encourage those with funds offshore to bring their assets back home.

Total $10+ billion

investment. The AFB would make the tax sys- free filing for all tax returns through the Can- tem fair by taxing income from capital at the ada Revenue Agency. Canadians shouldn’t same rate as employment income after ad- have to spend money to file their taxes. justing for inflation. Estimated revenue: approximately $10 The AFB would eliminate a number of billion. other tax loopholes and preferences. These include tax preferences for meals and enter- Increase Taxes on tainment expenses, fossil fuel tax subsidies, Banks and Finance and other areas. The AFB would increase the effectiveness of public spending by eliminat- Canadian banks are racking up another year ing these tax expenditures while increasing of record profits. Not only have banks and program funding in these areas. other financial institutions benefited more In addition to eliminating costly, regres- than any other industry sector from corpor- sive and ineffective tax preferences and loop- ate tax cuts, but they also benefit from the holes and simplifying tax returns, the AFB exemption of financial services from value- will make filing taxes much easier and less added taxes such as the GST and provincial expensive by providing online software for Harmonized Sales Taxes.

Doing Better Together: Alternative Federal Budget 2013 27 Following the global financial and eco- annual revenues (assuming a 50% reduction nomic crisis, there’s been a strong revival of in volume, largely high-frequency trading). interest around the world in financial trans- If there are obstacles to introducing a fi- actions taxes (FTTs) and other forms of taxing nancial transactions tax as a result of provin- finance. These are being implemented to pay cial jurisdiction over securities, the AFB will for some of the costs of the crisis, to reduce proceed with a Financial Activities Tax on the excessive financial speculation and activity, financial sector, as proposed by theIMF to steer more resources into productive invest- compensate for the exemption of financial ments, and reduce the risk of further finan- services from value-added taxes. A Finan- cial crises. Taxes on finance are also highly cial Activities Tax at a rate of 5% on finan- progressive, since they are paid almost en- cial sector profits and compensation would tirely by the financial sector and by wealthy generate approximately $5 billion annually. individuals, and thus reduce inequality. Estimated Revenues: $4 billion. France and Hungary have just introduced FTTs at a national level over the past year Introduce Smart Green Taxes, while Italy, Spain and Portugal have also an- Including a Progressive nounced their intention to do so. The Euro- Harmonized Carbon Tax pean Parliament also overwhelmingly voted to allow 11 member states to proceed with Following the failure of the Kyoto Protocol, a harmonized FTT through the European which was based on an international cap- Union’s process of “enhanced cooperation.” and-trade scheme, worldwide greenhouse The European Commission estimates that a gas emissions are now 58% higher than they European-wide FTT at rate of 0.1% on stocks were in 1990 and not five percent less as was with even lower rates on bonds and deriva- set out in the climate change treaty. tives could generate $85 billion annually. It’s not just the Kyoto Protocol that has Financial transactions taxes can be more failed, but regional emission trading schemes effective if they are implemented through inter- such as Europe’s have had numerous prob- national agreements at a global level, but that lems, including high price volatility, fraud and hasn’t stopped numerous countries — includ- windfall profits. Some suggest that, despite ing Switzerland, the U.K. and China among costing close to $300 billion, they have had many others — from having very effective fi- almost no effect4 in reducing emissions; at the nancial transactions in place for decades same time, providing carbon credit funds to (and for centuries in the case of the U.K.).3 certain projects has often had perverse and The Alternative Federal Budget would seek negative5 consequences for impoverished and an agreement with provinces to introduce a indigenous people in the developing world. broad-based financial transactions tax at a It’s time for a new approach. rate of 0.5% on transactions of stocks — the Canada should move forward with a na- same rate as exists in the U.K. — and at low- tional carbon tax integrated with provin- er rates on bonds and financial derivatives. cial carbon taxes, with a large share of the This would generate over $4 billion a year in revenues going towards a strongly progressive green tax refund. This will ensure that a

28 Canadian Centre for Policy Alternatives majority of Canadian households would al- To maximize its effectiveness, a nation- ways be better off after accounting for their al carbon tax will be combined with comple- increased costs as a result of the carbon tax. mentary investments in research and develop- Carbon taxes are more transparent, less ment, energy efficiency, renewable energy, corruptible and economically more efficient incentives, regulations, and education and mechanisms for putting a price on carbon other measures to help industry, commun- than quantity quotas through cap-and-trade ities, and workers adapt. schemes. Carbon taxes also provide a clear A national carbon tax at a rate of $30/ price signal for business, organizations, and tonne would be introduced on July 1, 2015, consumers, and avoid the speculation, un- raising approximately $10 billion a year from certainty and unfair windfall gains associat- the 350 megatonnes emitted from transpor- ed with cap-and-trade systems. Many Euro- tation, heating and other relatively small pean nations have effective carbon taxes and sources. It would generate another $7.5 billion there’s increased interest in the United States annually from the approximately 500 large for carbon taxes, with a proposal for a $30/ industrial facilities responsible for 250 mega- tonne carbon tax from MIT even endorsed by tonnes, or more than a third of Canada’s total David Frum, the Canadian-born U.S. Repub- greenhouse gas emissions. The federal tax lican party advisor. would apply where provincial carbon taxes A national carbon tax would also include are not in effect or are at a lower rate. Gross border tax adjustments on imports and ex- revenues net of provincial adjustments and ports to ensure Canadian industry isn’t put border tax adjustments would be approxi- at a competitive disadvantage. mately $15 billion annually. Imports from countries that don’t have A green tax refund would be introduced similar measures will be taxed at an appro- earlier on January 1, 2015, at an approximate priate rate to reflect emissions associated with cost of $7.5 billion annually, with cheques sent their production, processing and transport, out for $300 per person and amounts phased with an exemption for imports from high- out for family incomes above $100,000. This ly impoverished nations. Exporters to coun- annual amount is higher than the quarter- tries without similar climate change meas- ly GST credit payments and would be avail- ures would be provided rebates. These border able for family income levels at twice the tax adjustments would put pressure on other maximum GST income threshold. Additional countries to enact climate change measures. credits would be provided for those living in As with all forms of carbon pricing, car- northern and rural communities where fuel bon taxes are regressive. They most hurt and energy use is generally higher. those on low incomes, who also have the It would be increased as necessary to least ability to adapt and invest in more ef- meet Canada’s greenhouse gas reduction tar- ficient measures. Hence a large share of the gets. The credit would be increased together revenues raised would be devoted to a pro- with increases in the carbon tax at a rate of gressive green tax refund which would pro- $10 per $1/tonne increase in the carbon tax. vide a majority of Canadians with a larger an- This would ensure that a majority of Can- nual credit than they pay out in carbon taxes. adian households would always be better off.

Doing Better Together: Alternative Federal Budget 2013 29 Gross revenue: $15 billion This inheritance tax would only apply to Green Tax refund: $7.5 billion amounts in excess of $5 million (e.g., after a $5 Net income: ~$8 billion million deduction). Capital gains taxes would continue to apply for inheritances below $5 Inheritance tax million, but at the full rate and indexed for inflation. This means for inheritances of cot- tages or other property that have been held Unlike the United States and most European in the family for decades, taxes would like- countries, Canada has no wealth, inherit- ly be lower than under the existing system. ance, or estate tax. Capital gains taxes may Revenue: approximately $1.5 billion in be levied on some portion of inheritances, 2014–15. but they don’t apply to the base amounts and are often avoided. This means those who are lucky enough to be born into a privileged Notes family can benefit from enormous inherit- 1 This analysis is based on Statistic Canada’s Social Policy Simulation Data- ances without paying any tax. base and Model (SPSD/M). The assumptions and calculations underlying the simulation results were prepared by David Macdonald and the respon- The AFB proposes a minimum inheritance sibility for the use and interpretation of these data is entirely that of the authors. The SPSD/M simulation “morning after” estimate is $3.9 billion. tax of 45% on large estates that are passed on However, the AFB assume only 70% will be collected, leaving $2.7 billion.

to the heirs of wealthy families on amounts 2 Stanford, Jim. (2013). “The Failure of Corporate Tax Cuts to Stimulate Business Investment Spending” in The Great Revenue Robbery, Between in excess of $5 million. It would apply in a the Lines Publishing. similar way as the Estate Tax in the United 3 Sanger, Toby. (2013). “Financial Transaction Taxes: The Battle for a Small but Important Tax” in The Great Revenue Robbery, Between the Lines Pub- States, prior to and integrated with capital lishing; also Fair Shares: How Banks, Brokers and the Financial Industry Can Pay Fairer Taxes, (2011). CCPA. gains taxes, and at similar rates that have 4 http://www.theaustralian.com.au/national-affairs/europes-287bn- 6 applied there. carbon-waste-ubs-report/story-fn59niix-1226203068972 Estate and Gift Taxes have generated be- 5 http://www.thecarbonrush.net/ 6 The U.S. Estate Tax was at a 55% rate for estates above $675,000 in 2001, tween $20 billion and $30 billion in revenue but has been reduced since then. It was gradually reduced to a 45% rate annually7 in the United States. It is reason- that applied from 2007 to 2009, but has been temporarily re-introduced at a 35% rate for estates over $5 million for 2011 and 2012.

able to assume that a similarly designed es- 7 http://www.cbo.gov/ftpdocs/108xx/doc10841/Estate_GiftTax_Brief.shtml tate tax in Canada would generate approximately $1.5 billion a year in revenues.

30 Canadian Centre for Policy Alternatives Aboriginal Women

Background Aboriginal women and children. Although billions of dollars are spent each year for Strategic investments in equality and em- programs and support services, inadequate powerment for Aboriginal women are not allocation of funding, piecemeal approach- only integral to the development of a more es, and band-aid solutions have failed to ac- just society, they are likely to prove more cost- knowledge, much less address, the unique effective than current efforts to manage the needs of Aboriginal women. Until there is a negative effects of inequality. Despite signifi- genuine political commitment to provide sig- cant progress, inequality between men and nificant, strategic, long-term investments pro- women in Canada remains, and the gap be- moting equity, self-sufficiency, and safety for tween First Nations, Métis, and Inuit people Aboriginal women and their children, feder- and the rest of the Canadian population per- al budgets will continue to bear the ever-in- sists — with predictable results. creasing costs of health care, child protec- While historic and continual exploitation services, welfare assistance, policing, tion and abuse of Aboriginal people have re- justice, and corrections services in order to sulted in a persistent and pervasive lack of manage the results of poverty. Increased inaccess to economic opportunity, education, vestment in Aboriginal women is therefore health care, housing, and even clean water not only ethically preferable it is also finan- in many communities, there are dispropor- cially prudent. tionately more Aboriginal women and children living in poverty, facing hunger and Current Issues homelessness. In fact, compared to immigrant women and visible minorities, Aborig- Ending Violence inal women face greater levels of poverty resulting in a “higher risk of violence and October 4 has become a day of remembrance depression” and increased vulnerability to as communities across Canada hold vigils to exploitation and abuse.1 Given that many honour the memory of the almost 600 mis- Aboriginal mothers — often the sole provid- sing and murdered Aboriginal women iden- ers — struggle to raise their children in less tified through the Sisters in Spirit initiative of than ideal circumstances, the fact that a dis- the Native Women’s Association of Canada. proportionately high number of Aboriginal Such tragic loss of life is the direct result of children are apprehended by child welfare the alarmingly high rates of violence against authorities is also predictable. Aboriginal women in Canada.2 There exists a It is in the context of historic, ongoing per- glaring disparity as First Nations, Métis, and secution of Indigenous nations that we must Inuit women are significantly more likely to be understand the current marginalization of victims of violence, more likely to experience

Doing Better Together: Alternative Federal Budget 2013 31 more severe and potentially life-threatening original Women and Girls, and a National forms of violence than their non-Aboriginal Strategic Framework for Action to begin ad- counterparts, and less likely to receive jus- dressing this crisis more effectively. Through tice.3 Furthermore, due to the continued fail- an “unbiased, independent, and public in- ure of governing bodies, policy-makers and vestigation” it is hoped we can identify the the justice system to adequately address on- root causes and the factors that contribute to going exploitation, the majority of domestic the high levels of violence and the low levels victims of human trafficking are Aboriginal of response to such violence. The findings of women and girls.4 a comprehensive inquiry would inform the Even though the 1996 Royal Commission development of an effective national frame- on Aboriginal Peoples identified violence as work for the coordination and implementa- one of the most important issues faced by Ab- tion of specific, appropriate, concrete actions original communities,5 the shameful lack of aimed at reducing violence directly and in- an adequate response by the Canadian gov- creasing self-sufficiency, thereby reducing ernment has drawn international attention vulnerability and violence indirectly.8 While and is increasingly being viewed a human the federal government has consistently de- rights violation. Although the Canadian gov- clined calls for a National Inquiry and a Na- ernment voted in favour of the Universal Dec- tional Framework, citing the prohibitive costs laration of Human Rights in 1948, enacted the of such undertakings, it has been argued that Canadian Bill of Rights in 1960, and included conducting one comprehensive inquiry to pro- the Canadian Charter of Rights and Freedoms vide the foundation of a more coordinated, with the Constitution in 1982, it would seem appropriate, and effective approach, would the belief that “everyone has the right to life, be more cost effective than continuing to im- liberty and security of the person”6 has been plement piecemeal, time-limited, uncoordin- conveniently forgotten in the case of Aborig- ated actions.9 Moreover, given the long-term inal women and girls. Indeed, the role of the social and economic implications of the cur- state as protector of such basic human rights rent response to the crisis of violence, not to is affirmed by theUnited Nations Declaration mention the high cost in lost lives, immedi- on the Rights of Indigenous Peoples, where- ate full funding of a National Public Inquiry in Article 22.2 clearly demands: “States shall and a National Strategic Framework is jus- take measures in conjunction with Indigenous tified. If the federal government can see fit Peoples to ensure that indigenous women and to spend $26 million for an inquiry into the children enjoy the full protection and guar- survival of the Sockeye Salmon in the Fraser antees against all forms of violence and dis- River, surely it can afford $30 million dollars crimination.”7 By endorsing this Declaration (over three years) for an inquiry into the sur- in July 2012, the Canadian government, offi- vival of First Nations, Métis and Inuit women. cially and publicly, accepted its obligation to protect Aboriginal women and their children. Child Welfare Aboriginal families, communities, and There are arguably more Aboriginal children leaders are calling for both a National Pub- currently in the care of child welfare author- lic Inquiry on Missing and Murdered Ab- ities than ever before in our history. Figures

32 Canadian Centre for Policy Alternatives indicate that Aboriginal children comprise children from inadequate living conditions 30–85% of children in care (percentages rather than working to improve living condi- vary by province).10 Such massive overrep- tions for the entire family is much too high. resentation is largely the result of pervasive Significant investments should therefore be poverty, inadequate housing, and a lack of made to improve the socio-economic circum- food security, as children are removed from stances of Aboriginal people generally, and families that cannot provide the basic neces- Aboriginal women specifically. sities. Any effort to address the overrepresen- tation of Aboriginal children in care must Housing therefore begin with addressing the socio- While it is widely known that poverty, un- economic status of Aboriginal families and employment, and low levels of educational communities. While recent legal arguments attainment put women at increased risk of suggest that the underfunding of Aborigin- violence, the lack of safe and affordable hous- al child welfare authorities relative to non- ing has often meant a lack of opportunity for Aboriginal child welfare services constitutes Aboriginal women fleeing violence, increased deliberate and blatant discrimination, allo- risk of homelessness, and increased risk of cating increased funds for Aboriginal child child apprehension. The situation for Aborig- welfare services will not in itself provide an inal single mothers is particularly troubling adequate solution to the larger problem. as more than 40% of female-led Aboriginal The continued focus on child apprehen- single-parent families were in core housing sion as the primary form of intervention is need.12 Although much of the research tends tragically short-sighted. The social and eco- to focus on younger female populations who nomic costs of continuing to remove children are more likely to report being the victims of when their families cannot provide necessi- violence, we must acknowledge the unique ties (rather than ensuring that mothers re- needs of elderly Aboriginal women. Given ceive adequate financial support in the first their comparative financial insecurity, the place) are extremely high. A veritable army of high rates of physical disability among the social workers, foster parents, group homes, senior Aboriginal population, and a lack of therapists, and, eventually, corrections work- appropriate housing in many communities, ers will be employed to “care” for the chil- many Aboriginal women are struggling to sur- dren after they are torn from their homes vive on fixed incomes in substandard homes. and communities, and to cope with the emo- Substantive investments must be made to tional and psychological trauma as they ma- ensure all Aboriginal women are provided ture into adulthood. Connections have been basic human dignity and the opportunity to established between the apprehension of a choose a life free of violence. child and the likelihood of subsequent poorer health and low educational success, as Education well as an increased risk of experiencing violence, sexual exploitation, conflict with the In the increasingly knowledge-oriented Can- law, and involvement in the sex-trade.11 Clear- adian economy, lack of educational attain- ly, the social and financial cost of removing ment translates directly into lack of oppor-

Doing Better Together: Alternative Federal Budget 2013 33 tunity, as formal education is critical for the for the pursuit of higher education, after the provision of the skills and credentials neces- increased costs of housing and food are taken sary for success.13 While Aboriginal women into account, lack of affordable child care is are increasingly achieving better education- often cited as the biggest barrier to educa- al outcomes than Aboriginal men, such ad- tional success for Aboriginal women. While vances do not necessarily reflect an equal- lack of access to quality child care is a bar- ity of opportunity. In fact, one might suggest rier to employment and education for many the increase in educational attainment for women in Canada, and low-income women Aboriginal women is the result of a distinct specifically, according to the Urban Aborigin- lack of equality of opportunity in Canadian al Task Force (2007),17 affordable child care is society. Aboriginal men who fail to com- an absolute necessity for Aboriginal women plete high school still earn approximately living in urban settings who hope to obtain three times the wages of Aboriginal women education, training, and ultimately employ- with the same lack of education. However, ment and self-sufficiency. Moreover,quality income differences lessen with increases in child care programs with proper early learn- education as women not only earn more in- ing environments and educators have been dividually, they begin to catch up with men, shown to actually benefit children by en- and Aboriginals begin to catch up with non- couraging early literacy skills, school read- Aboriginals.14 iness, and long-term educational perform- Aboriginal women with a university de- ance. However, for women with more than gree actually have higher median incomes one child, those with less income, or those than non-Aboriginal women possessing the without a partner to share the financial bu- same level of education.15 With anything less rden, the exorbitant cost of daycare throws than a university degree, Aboriginal peoples into question the economic feasibility of at- as a group continue to earn much less than tempting to work or study as child care bills non-Aboriginals with equivalent education surpass university tuition fees. (Tax credits and Aboriginal women continue to earn less only benefit those who have the financial than Aboriginal men.16 Clearly, the potential- wherewithal to pay upfront and wait for an- ly liberating effects of educational achieve- nual returns.) Regardless of the eventual fi- ment have greater significance for Aboriginal nancial payoffs, and the increased potential women. Moreover, it is widely accepted that for long-term economic security, the short- increased levels of education for mothers re- term costs are often insurmountable. sult in a corresponding increase in educational attainment levels for their children, and Investment therefore a larger return for every AFB dollar Given the disproportionate level of Aborig- spent educating an Aboriginal woman gen- inal women facing extreme poverty, hunger, erally, and Aboriginal mothers specifically. homelessness, violence, and other socio-economic stresses, targeted funding is needed Child Care to provide Aboriginal women with sufficient Although a desire to provide a better life for personal safety and appropriate social sup- their children is often the primary motivation ports to obtain the skills needed to provide

34 Canadian Centre for Policy Alternatives for their families and improve their circum- tions, mental health issues or treatment stances. Such funding is not only an invest- programs. (See the First Nations chapter ment in individual women, but will be felt on page 77.) in the larger communities and eventually in • The AFB directs 25% of the $1 billion in our nations as a whole. Increased opportun- a supportive First Nations housing pro- ity for Aboriginal women and girls will gen- gram specifically for vulnerable Aborig- erate stronger, healthier families, improved inal women, prioritizing those who are circumstances for future generations of Ab- homeless and/or fleeing violence, single original children and grandchildren, and ul- mothers, and senior Aboriginal women, timately stronger, healthier Aboriginal com- to be designed, implemented, and con- munities. trolled by the Aboriginal community organizations who are in the best position AFB Actions to understand the unique needs of First Nation, Métis, and Inuit families in both • The AFB directs 5% of child care and ear- urban and rural environments. (See the ly learning funding to Aboriginal-specific First Nations chapter on page 77.) programs to be developed, designed, and • The AFB invests $30 million (over 3 years) implemented by local Aboriginal commun- for a National Public Inquiry into Missing ities, utilizing leading practice examples and Murdered Aboriginal Women across from across the country while acknowledg- Canada and $10 million annually for the ing the unique needs of First Nation, Mé- development and initiation of a Nation- tis, and Inuit populations. These programs al Strategic Framework to End Violence will be designed to foster strong cultur- Against Aboriginal Women. The frame- al identities, promote language preserva- work will advance an integrated, com- tion and/or revitalization, and the early prehensive approach based on the prin- learning/literacy skills necessary for fu- ciple that all people affected by violence ture educational success. (See the Child against Aboriginal women (including the Care chapter on page 58.) victim, abuser, the families impacted and • The AFB also invests $800 million a year the witnesses of the violence) need specif- into alternative schools and learning pro- ic and appropriate supports. The capacity grams and gender-specific supports so of Aboriginal communities and govern- that we can provide the kind of holistic, ments to respond to violent crimes com- flexible, culture-based, supportive learn- mitted against Aboriginal women must ing environments necessary to allow First be strengthened. Adoption and imple- Nation, Métis, and Inuit students to suc- mentation of the framework will involve ceed. These schools will foster academ- changes in research, legislation, policy, ic achievement for those students who programs, education, community de- are simultaneously coping with the pres- velopment, leadership, and accountabil- sures of pregnancy, parenting, full- and ity. Gender-based analysis must underlie part-time employment, and/or addic- all work involved with this strategy.

Doing Better Together: Alternative Federal Budget 2013 35 10 Blackstock et al., (2004). Keeping the Promise: The Convention on the Notes Rights of the Child and the Lived Experiences of First Nations Children and Youth. Ottawa: First Nations Child and Family Caring Society.

1 National Association of Friendship Centres (NAFC). Urban Aboriginal 11 Native Women’s Association of Canada. (2010). What Their Stories Tell Women: Social Determinants of Health and Wellbeing. p. 9. http://www. Us: Research Findings from the Sisters in Spirit Initiative. Ottawa: NWAC. laa.gov.nl.ca/laa/naws/pdf/NAFC-UrbanAboriginalWomen.pdf. 12 Ibid. 2 Lamontagne, M. (2011). Violence Against Aboriginal Women: Scan and 13 Brayboy, B. (2004). Hiding in the Ivy: American Indian Students and Report. Canadian Women’s Foundation. Visibility in Elite Educational Settings [Electronic version]. Harvard Edu- Native Women’s Association of Canada. (2010). What Their Stories Tell cational Review, 74, 125–152. Us: Research Findings from the Sisters in Spirit Initiative. Ottawa: NWAC. Brayboy, B. (2005). Transformational Resistance and Social Justice: Amer- Native Women’s Association of Canada (in press). Each One a Daughter: ican Indians in Ivy League Universities [Electronic version]. Anthropology Missing and Murdered Aboriginal Women and Girls in Canada. Addressing & Education Quarterly, 36, 193–211. the Crisis through a National Framework and a National Inquiry. Schissel, B., and Wotherspoon, T. (2003). The Legacy of School for Aborig- Ontario Native Women’s Association and Ontario Federation of Indian inal People: Education, Oppression, and Emancipation. Toronto, ON: Ox- Friendship Centres (ONWA and OFIFC). (2007). Strategic Framework to End ford University Press. Violence Against Aboriginal Women. Toronto: OFIFC. 14 Ashenfelter, O., and Rouse, C. (2000) Schooling, Intelligence, and In- Ontario Native Women’s Association. (in press). Sex Trafficking of Aborig- come in America, in inal Women and Girls. Kenneth Arrow, et. al (Eds): Meritocracy and Economic Inequality. Princet- 3 Native Women’s Association of Canada. (2010). What Their Stories Tell on, NJ: Princeton University Press. Us: Research Findings from the Sisters in Spirit Initiative. Ottawa: NWAC. Howe, E. (2004). Education and Lifetime Income for Aboriginal People 4 Ontario Native Women’s Association. (in press). Sex Trafficking of Ab- in Saskatchewan, in J. White, P. Maxim, and D. Beavon (Eds.), Aborigin- original Women and Girls. al Policy Research: Setting the Agenda for Change, Vol. 1 (pp. 175–189). To- ronto: Thompson Educational. 5 Royal Commission on Aboriginal Peoples (RCAP) Report of the Roy- al Commission on Aboriginal Peoples. Ottawa: Canada Communication 15 Wilson, D., and McDonald, D. (2010). The Income Gap Between Aborig- Group Publishing; 1996. inal Peoples and the Rest of Canada. Ottawa: Canadian Centre for Policy Al- ternatives. Online at http://www.policyalternatives.ca/sites/default/files/ 6 Canadian Charter of Rights and Freedoms, s.7, 1982, Department of Jus- uploads/publications/reports/docs/Aboriginal%20Income%20Gap.pdf. tice, Canada. 16 Ibid. 7 United Nations Declaration on the Rights of Indigenous Peoples. (2008). United Nations. 17 Urban Aboriginal Task Force (2007). Urban Aboriginal Task Force: Final Report (available from www.ofifc.org). Toronto, ON: Ontario Federation 8 Native Women’s Association of Canada (in press). Each One a Daugh- of Indian Friendship Centres, Ontario Native Women’s Association, and ter: Missing and Murdered Aboriginal Women and Girls in Canada. Ad- Ontario Métis and Aboriginal Association. dressing the Crisis through a National Framework and a National Inquiry.

9 Ibid.

36 Canadian Centre for Policy Alternatives Arts and Culture

Background arts cannot flourish without adequate, stable, sustained investment. For generations of Canadians, arts and cul- Investments in arts and culture benefit ture have been a source of inspiration and our country as a whole. The sector is a sig- national pride. Countless Canadian children nificant employer, with an estimated 616,000 have thrilled at the opportunity to meet and workers in 2003, including 140,000 artists.1 learn from artists in schools. Musicians, dan- The sector — which includes for-profit cre- cers, and actors have led us in celebration ative and cultural industries, not-for-profit and moved us with works that reminded us arts organizations, and independent entre- of the depths of our humanity. We have been preneurs — comprises 3.9% of the overall awed by the work of our visual and media art- labour force. This is double the level of em- ists and captivated by Canadian films. We are ployment in the forestry sector (300,000) transported by Canadian books that tell our and more than double the level of employ- stories the world over. ment in Canadian banks (257,000). Accord- Today, more than ever, sustaining a vi- ing to the Conference Board of Canada, the brant cultural sector is a strategic means arts and culture sector directly contributes of ensuring that Canada remains one of the $46 billion to Canada’s gross domestic prod- best places in the world to live, invest, innov- uct (GDP), and generates approximately $25 ate, and compete. A thriving arts and culture billion in taxes for all levels of government, sector is an integral part of Canadian soci- more than three times higher than the $7.9 ety and a key contributor to Canada’s eco- billion that is invested.2 nomic vitality. The arts sector is poised to play a key role Current Issues in the prosperity of Canadian communities as an efficient engine of job creation across Each day Canadian artists and arts organiz- many sectors including industry, hospitality ations create new works, push the envelope and transportation. Indeed, there is a grow- of artistic practices, make our lives more ening consensus among leaders in all econom- joyable and meaningful, engage larger and ic sectors that arts investment is a cost-effect- more diverse audiences, contribute to educa- ive catalyst for high economic returns. In a tion, strengthen national identity, and help 2008 report entitled Valuing Culture: Meas- us to better connect and understand each uring and Understanding Canada’s Creative other in an ever more pluralist and global- Economy, the Conference Board of Canada ized environment. Sadly, the resources with noted that cities rich in cultural resources which they achieve this are at best stagnant, are hotbeds of creativity, economic wealth and frequently diminished. The arts and cul- generators, and magnets for talent. But the

Doing Better Together: Alternative Federal Budget 2013 37 ture sector has not been immune from recent contribution programs, or subsidizing some global economic hardships. Artists, arts or- aspect of cultural production. ganizations, and government agencies have The federal government’s primary vehicle all tightened their belts and contributed to for sustaining the work of artists and arts Canada’s emergence as an economic leader organizations is the Canada Council for the on the world stage. Arts. The Canada Council is a highly respect- Public investment is the backbone of Can- ed, accountable, and efficient arms-length ada’s cultural ecosystem. All too often, Can- agency of the Government of Canada, with adian artists struggle to get by and arts or- a 54-year track record of fostering the arts ganizations struggle to keep the lights on. across the country. In 2009–10, the Council The buying power of cultural agencies has re- awarded 6,200 grants to artists and arts or- mained static for decades, and they current- ganizations, reaching more than 652 Can- ly lack the resources to enable extraordinary adian communities through a highly-com- Canadian artists to fulfill their potential and petitive peer review process. 4 achieve their ambitions. Increased investment through the Can- Investing in the arts is sound, strategic ada Council will ensure that the core of Can- economic policy. Research by the Conference ada’s cultural milieu — artists and arts organ- Board of Canada has shown that for every $1 izations — are supported in the shared public of real value-added GDP produced by Can- purpose of exploring and expressing what ada’s culture industries, $1.84 is added to defines us as Canadians. It will also help to overall real GDP and that performing arts ensure that Canadians have better access to organizations generate $2.70 in revenues for artistic work from all regions of Canada that every dollar they receive from governments.3 reflects our rich and multi-faceted cultural landscape. Canadian communities of all Sustaining Artists and backgrounds will have the opportunity to Arts Organizations participate in and benefit from the broadest possible range of artistic experiences. Jobs in the not-for-profit arts sector are created and sustained by three revenue streams: Ensuring Access and Strengthening earned revenues (from admissions, product Ties Across Canada sales, or fees), contributed revenues (from individuals, corporations or foundations), and Arts and culture, creators and other cultural government funding (from all three levels of workers are tremendous economic and social government). While the ratios vary between assets. In order for arts and culture to con- subsectors and regions, the cultural policy tinue to improve our quality of life, strength- and spending priorities of the Government of en our connections to one another, and pro- Canada have a significant influence — whether vide us with valuable insights into who we by facilitating the development of new mar- are as a country, government must nurture kets and venues for arts and cultural products, these assets by investing in people at the providing incentives for donations and spon- fore of Canadian innovation and creativity: sorships through the tax system or matching artists and arts organizations. Government must also ensure that Canadians throughout

38 Canadian Centre for Policy Alternatives the country have access to a range of artis- realize organizations’ artistic visions, leverage tic works and cultural products, reflective of private sector investment through matching our nation’s contemporary cultural identity. contributions to endowment funds as well Along with the Canada Council for the as build and maintain physical infrastruc- Arts, the Department of Canadian Heritage ture. It is critically important that govern- (DCH) is a key source of government investment investments made through these pro- ment for arts and heritage organizations and grams be renewed. culture enterprises across the country. Funds awarded through DCH directly sustain jobs Aligning Cultural Policy With within the creative sector. Moreover, many Canada’s Global Economic Policy of the department’s programs strengthen Historically, artists and arts organizations national identity, foster lasting cultural de- have always been effective cultural ambassa- velopment, and ensure that families across dors for Canada on the world stage. Markets Canada have increased, affordable access to developed abroad for Canadian arts and cul- arts and culture. Canadian communities of ture have diversified revenue streams for cul- all backgrounds will have the opportunity to tural industries, created jobs here at home, participate in and benefit from the broadest contributed to economic growth and sta- possible range of artistic experiences. bility, and fostered a broadly positive inter- Access and innovation are intimately tied national perception of Canada. Whereas Can- to built infrastructure in the arts sector — new ada has more recently been lauded for sound and retrofitted facilities. Canadians deserve to economic stewardship and robust econom- experience the arts in optimal settings. This is ic policy, we have long been recognized as a achieved, in part, through the Canada Cultur- bold, diverse, and peaceful bastion of arts al Spaces Fund. Maintaining and increasing and culture. this investment in the future will ensure the Canada’s track record of participation in vitality of Canada’s cultural spaces for cur- global commerce has already positioned us rent and future generations of Canadians. The as one of the most successful and prosperous Canadian Arts Presentation Fund also sup- economies in the world. Expanding access to ports access to cultural content through in- global markets and networks for Canadian vestment in the circulation of cultural prod- cultural products is essential to furthering ucts across the country. This program ensures Canada’s creative advantage in a global so- that Canadians have the opportunity to en- ciety that values economic prosperity, social gage in high-quality cultural experiences in cohesion, creativity, innovation and excel- their home communities. lence. Over the past several years, the govern- Over the coming year, a suite of fund- ment has sought to multiply and strengthen ing programs managed by the Department ties with strategic economic allies, notably of Canadian Heritage — including the Can- in Asia and Europe. Moving forward, it is ada Cultural Spaces Fund and the Canadian essential that Canadian culture and cultur- Arts Presentation Fund — will come to term. al products be an integral part of Canada’s These programs help extend public access to Global Commerce Strategy, thereby distin- the arts, build and diversify a resource base to

Doing Better Together: Alternative Federal Budget 2013 39 guishing Canada as a key trading partner in could play an even greater role in helping identified markets. Canadian artists and arts organizations cre- In 2006, the United States accounted for ate arts jobs, engage with the Canadian pub- over 90% of Canada’s culture goods exports lic (at home, and across the country), and de- and 78% of culture service exports.5 But inter- velop international markets as well. national markets promise other opportunities for greater market access and diversification, AFB Actions thereby expanding the reach of Canadian culture. Expanding ties to the European Union The 2013 AFB will: and Asia would be notable avenues for gain- ing greater market access for Canadian cul- • Increase the annual parliamentary allo- tural products. cation for the Canada Council for the Arts Canadian artists, arts organizations, and by $120 million so that the total alloca- cultural products are important elements of tion reaches $300 million. Canada’s “brand” — and this was nowhere • Renew investment in a suite of programs better demonstrated than during the open- delivered by the Department of Canadian ing and closing ceremonies at the 2010 Van- Heritage and insure that funds available couver Olympics. Canadian artists, arts or- through these programs are increased ganizations, and cultural producers must be over time by indexing them to the an- equipped to serve as cultural ambassadors if nual cost of living. the Government of Canada is to leverage the brand and build trade opportunities inter- • Align Canada’s cultural diplomacy strat- nationally. The Government of Canada must egy with Canada’s Global Commerce Strat- ensure that Canadian Trade Commissioners, egy, and capitalize on opportunities to pro- diplomats and other key officials are trained mote Canadian values as well as business and resourced to position Canadian arts and and cultural interests in key markets by culture as a key asset in today’s integrated investing $25 million annually in support global economy; and that artists and arts or- of artistic and cultural market develop- ganizations are enabled to take their work to ment initiatives in Canada and abroad. foreign markets, to meet with potential pre- senters and consumers of cultural products, Notes and to explore and establish innovative part-

nerships with foreign counterparts and col- 1 Statistics Canada: Economic Contribution of the Culture Sector to Can- ada’s Provinces (2007), p. 20. laborators. 2 Conference Board of Canada: Valuing Culture: Measuring and Under- Recently, the Canada Council announced standing Canada’s Creative Economy (2008). a re-allocation of $2 million from its existing 3 Conference Board of Canada, Valuing Culture: Measuring and Under- standing Canada’s Creative Economy, August 2008.

parliamentary appropriation, directing these 4 Canada Council for the Arts, Funding to Artists and Arts Organizations funds towards international market develop- 2009–10: National Overview, p. 1. 5 Conference Board of Canada: Valuing Culture: Measuring and Under- ment. With an increased parliamentary ap- standing Canada’s Creative Economy (2008), p. 48. propriation, beginning in 2013, the Council

40 Canadian Centre for Policy Alternatives Cities and Communities

Background rent — vulnerable populations carry a disproportionate share of the burden while receiv- Canada is an urban nation. Over 80% of us ing fewer benefits. now live in cities, which serve as centres of job Unlike cities in other countries, Canadian creation, immigration, and innovation critic- cities are severely restricted in how they can al to sustaining our quality of life. But urban raise revenues to fund operations. They can- communities large and small have been hit not levy income or sales taxes, and rely most- hard by recent changes. As urban populations ly on property taxes and user fees to provide grew, investment failed to keep pace and the over 75% of their revenues. In contrast, most infrastructure deficit expanded. Aggravating major U.S. cities levy income and/or sales this neglect is increased traffic, congestion, taxes, and many European cities also rely pollution, urban sprawl, an underperforming heavily on income taxes. Municipalities in economy, lost jobs, worries about loss of im- other countries also obtain a larger share of migration status, declines in manufactur- their revenues through transfers from upper ing, and disappearing pensions. The health levels of government. of urban communities is of national concern Transfers from federal and provincial gov- and federal investment is crucial to ensuring ernments in Canada provided approximate- cities continue to play their vital role. ly 26% of the revenues of local governments The backbone of Canada’s current mu- in the early 1990s. After 1995, these trans- nicipal infrastructure system was built be- fers were severely cut by the federal govern- tween approximately 1950 and 1980. Since ment, but, more significantly, by provincial then, cities have been slowly starved. Cuts governments that had their own transfers in transfers and the downloading of respon- from the federal government slashed. By the sibilities have led to decay and an estimat- year 2000, federal and provincial transfers ed replacement cost for aged infrastructure provided only 16% of local government rev- of $171.8 billion.1 The added costs associat- enues. As a result: ed with aging infrastructure make it harder • Local governments across Canada, espe- for cities to meet the needs of the most vul- cially in Ontario, ended up hiking prop- nerable, including single mothers, the work- erty taxes, increasing user fees and ser- ing poor, immigrants and social assistance vice charges, reducing public services, recipients. Adding insult to injury, property and delaying their investments in, and tax rates in some provinces are among the maintenance of, public infrastructure. highest in the world. Since property taxes are regressive — lower-income households pay a • Transfers to local governments continued much higher share of their income, directly, to be squeezed even while federal and through property taxes or, indirectly, through provincial governments ran surpluses

Doing Better Together: Alternative Federal Budget 2013 41 and cut tax rates on higher incomes and At present, the federal government, the businesses. provinces, the Federation of Canadian Muni- cipalities and other stakeholders are crafting • Property taxes, especially in Ontario, in- “Canada’s Long-Term Infrastructure Plan.” It creased significantly while the municipal is imperative that any new funding arrange- infrastructure deficit grew larger. ment take meaningful steps towards fix- Local governments, with rising popula- ing longstanding problems. It must provide tions and increased responsibilities, need long-term, predictable funding and include access to different and growing sources of increased transparency and accountability revenue. Likewise, cities suffering econom- to prevent partisan channeling of funds. It ic and population declines need help rein- should be linked to national strategic plan- vesting in the infrastructure necessary for ning that includes local government input on urban revitalization. With few minor excep- key concerns such as climate-change mitiga- tions, Canada’s cities and municipalities are tion and adaptation, national transportation dependent on higher levels of government infrastructure, housing, child care strategies, to fund the large-scale projects needed to and social services improvements. begin renewal. In recent years — after much pressure, a Current Issues recession, and the collapse of a few bridg- es — federal and provincial governments did We are at a critical point. The wide reaching eventually increase transfers to local govern- benefits that healthy public infrastructure ments. The Building Canada Plan, launched affords are being eroded by a generation of in 2007, saw $33 billion of new federal money neglect. Municipal stakeholders are anxious invested in infrastructure. While this certain- because they know there is no guarantee that ly represented an opportunity for desperate this brief period of investment will be sus- cities in the short-term, it did little to fix the tained long enough to correct problems in flawed funding structure. Grants were still a meaningful way. Underneath this anxiety awarded after application on an ad hoc basis is a broader fear that the existing principles through a mysterious, lottery-style approval that guide the provision of public infrastruc- process, which caused many to level accusa- ture — equal access and universality — are tions of pork barrelling and that grants em- being replaced with a for-profit model that phasized publicity over functionality. More- often excludes those most in need and sub- over, the lack of predictability meant cities sidizes those most able to pay. had to snatch up any funding they received, regardless of how the project fit into their Funding Shortfall long-term goals. Looking beyond 2014, only the $2-billion Gas Tax Fund is guaranteed The fundamental issue facing municipalities to continue, meaning the modest gains of today is lack of funds. Most improvements recent years could easily be eroded if a new made in the last four years are scheduled to plan isn’t put in place. end in 2014. The only consistent source of funding that cities have moving forward is

42 Canadian Centre for Policy Alternatives a fixed amount doled out annually through community resource centres, daycares, and the federal Gas Tax Fund — which loses real other physical assets creates employment value every year since no mechanism current- and enhances the well-being and productiv- ly exists to adjust for price increases. As aus- ity of citizens. Matching funding programs terity rolls down hill and programs get cut, are often the only resources available to com- the underlying problems remain and cities munity enterprises. Generating the required are forced deal with the fallout. When times matching funds can be extremely difficult are tough, residents rely even more on ser- for organizations that represent disinvested vices such as homeless shelters, food banks, communities. In order for these valuable or- libraries, and public transit.2 Cities are also ganizations to flourish there needs to be more on the front line supporting new Canadians, flexibility for non-profits to access matching many of whom are low-wage earners.3 Stable funds programs. municipal infrastructure needs to exist to maintain the position of Canadian cities as Public Transit competitive engines of commerce but also to Canada has no national transit strategy. As prevent people from falling through the cracks. of 2011,we were the only country in the OECD without one. Canadian cities have some of the Maintaining Public Ownership longest commute times of anywhere in the Decaying infrastructure and the high cost of world.4 Transport Canada estimates the an- replacing it present new opportunities for nual cost of unnecessary congestion to be $5 profiteers. A by-product of the recent federal billion per year.5 As the population increas- stimulus was an attempt to increase reliance es, so does ridership, putting added strain on Public Private Partnerships (P3s) in muni- on underfunded systems. As a percentage cipal infrastructure projects. In practice, the of the population, ridership has remained attempt failed but the inclination to provide relatively constant,6 meaning policymakers public services privately remains. Whereas a have not instituted the improvements need- publicly-owned, arms-length entity will use ed to encourage Canadians to leave their cars its advantage to lower fees or increase access- at home. The lack of a national plan means ibility, a private entity must extract a profit, that public transit advocates compete for the leading to either higher fees or reduced ser- same pool of infrastructure money as every- vice levels. If a community decides collect- body else and that one-off, band-aid projects ively to invest in a project, the community are often favoured over meaningful, long- should reap the rewards. term investments.

Nurturing Community Ownership Wastewater

Well-established community enterprises and In July 2012 new federal wastewater regu- organizations provide much-needed social lations came into effect. As a result, cities services, training, and employment to dis- across the country are now required to up- invested communities. Providing the finan- grade their wastewater facilities to meet the cial leverage for these entities to develop more stringent requirements. It is expected to

Doing Better Together: Alternative Federal Budget 2013 43 cost municipalities $20 billion over the next of added costs with developers. As of now, 20 years. Without federal funding, this will the formulas used to set these development increase the national infrastructure deficit charges only take into account the immediate by over 15%.7 Without independent control costs of production, not any dynamic long- over a predictable stream of income, muni- term costs.8 The lack of a national strategy cipalities could be forced to privatize waste- for municipal asset management costs cities water treatment, even if communities prefer money and is a barrier to building smarter, the service to remain public (see the Water more sustainable communities. chapter on page 151). Community Economic Development Sustainable Asset Management Canadian communities understand that chal- A disadvantage of the current ad hoc, appli- lenges such as unemployment, urban and cation-style funding formula is that it dis- rural decline, income inequality, poverty, courages proper asset management. Muni- social exclusion, and environmental deg- cipalities, especially small ones, barely have radation can only be effectively addressed by the resources to prepare a professional ap- community-led strategies that take a multi- plication, let alone develop and implement faceted and integrated approach. The Com- a methodology for managing the coordinat- munity Economic Development (CED) mod- ed integration and maintenance of multiple el provides that approach. infrastructure investments over time. Even CED is community-led action that cre- if they did have a plan, there’s no guaran- ates economic opportunities while enhan- tee that the application “lottery” would re- cing social and environmental conditions. sult in funding that matches their long-term Through social enterprises, co-operatives, strategy. The end result is poorly maintained and other CED organizations, Canadians are infrastructure with a shorter lifespan and a working together to strengthen local econ- patchwork of disjointed projects that cost omies, while providing access to child care much more than necessary. A lack of organ- services, housing, local food, capital, train- ization also permeates other allocation prac- ing, skill development opportunities, and tices. For example, urban sprawl often occurs much-needed services that enable marginal- on inexpensive land far away from existing ized people to overcome barriers and develop infrastructure, resulting in additional ongoing capacity. Their efforts build fairer, stronger costs, loss of prime agricultural land, and local economies, and create sustainable, re- the expense of reinvesting in older brown- silient communities. fields. Similarly, natural resource develop- Communities working together are the ment in remote areas often requires signifi- primary drivers of CED initiatives. However, cant investment beyond the limits of existing governments have an important role to play infrastructure, resulting in added costs and in supporting CED given the significant re- urban planning designed for extraction of raw sources, capacities, and policy levers at their materials rather than long-term use. Muni- disposal as well as their mandate to ensure cipalities establish development charges as the well-being of their citizens and the com- a source of revenue and to share the burden munities they live in.

44 Canadian Centre for Policy Alternatives Canada can play a lead role in supporting Funds will be allocated on a modified per CED, addressing complex community challen- capita basis, affording small and remote com- ges, and improving the quality of life for all munities the opportunity to invest in new Canadians by developing and implementing infrastructure. The plan will also dedicate a a federal CED Policy Framework along with portion of the funds for urgent, needs-based a Neighbourhood Revitalization Program. investment in smaller communities. An effective, national CED Policy Frame- Projects will be proposed by municipal- work can be modeled after the one employed ities based on each city’s individual long- by Manitoba. It would pose a series of ques- term priorities. Different categories of infra- tions to help departments assess how well structure will be divided into separate pools they incorporate CED principles into govern- of dedicated funds. The federal government ment initiatives. This would ensure that CED will commit: principles, such as local skills development • $1.35 billion per year dedicated to public and employment, are incorporated into gov- transit infrastructure. Projects must be de- ernment initiatives to better respond to the signed to increase ridership and reduce economic, social, and environmental needs commute times for public transit users. of local communities. • $2.25 billion per year for core economic AFB Actions and sustainable infrastructure. Projects must facilitate economic development with an emphasis on sustainable build- ReBuild Canada Program ing practices or make existing facilities The AFB will introduce the ReBuild Canada more environmentally sustainable. Program to address Canada’s crumbling • $470 million per year will go to on-re- infrastructure after the Building Canada serve waste water systems (see the First Plan expires. The ReBuild Canada Program Nations chapter on page 77). will provide municipalities with $16 billion annually for the first six years and $13.5 bil- • $2.6 billion per year to replace and up- lion for the following 14 years from all lev- grade aging water infrastructure (see the els of government. Water chapter on page 151). The ReBuild Canada Program, like other The federal government will be obliged programs, will require matching funding from to approve proposals provided the basic cri- other levels of government. However, given teria are met. Funds will be guaranteed and the disproportionate burden that municipal- carried over if unused in any given year. All ities have born for infrastructure costs, the projects will abide by a set of sustainable AFB requires the federal government to pay asset management principles to be admin- 40% of costs, the provinces to pay 40% and istered by the federal government. municipalities to only pay 20% (except for First Nations water systems which are entirely a federal responsibility).

Doing Better Together: Alternative Federal Budget 2013 45 Office of the Commissioner of Community Economic Development Cities and Communities Policy Framework

The AFB will create the Office of the Com- The AFB will develop and implement a fed- missioner of Cities and Communities (OCCC) eral CED Policy Framework housed within within the Transport, Infrastructure and Com- the Office of the Commissioner of Cities and munities Portfolio. The OCCC will coordinate Communities. Sufficient resources will be pro- federal actions in cities, develop community vided to ensure there is capacity within the economic development strategies, adminis- department to research and develop CED inter funding and provide oversight to protect itiatives based on best practices, and to deliv- against corruption. The OCCC will establish er an internal communications strategy that a more formal and permanent link between will facilitate implementation of the frame- federal and municipal governments, maxi- work throughout the department. mizing the positive impact of increased fund- It will create and invest in a roundtable ing. The OCCC will develop and administer mandated to develop a working relationship Sustainable Asset Management criteria, en- with all three orders of government and cit- suring that investments are sustainable and izens in order to encourage the ongoing co- assets are managed in a way that best serves construction of public policy in support of the community over the long run. It will also CED. (Cost: $2.5 million) ensure that those who profit from infrastruc- The AFB through the CED Policy Frame- ture investment pay their fair share of de- work will develop and implement a purchas- velopment costs. ing strategy that incorporates social and en- The OCCC will ensure that future fed- vironmental value weighting in all Requests eral infrastructure programs maximize po- for Proposals and Community Benefit Agree- tential benefits for local communities and ments on contracts over $500,000. The strategy citizens by adopting a Community Benefit will also include a Living Wage requirement Clause Policy. This will provide a framework for all contractors, including subcontractors, along with guidelines and templates for in- on all government contracts. corporating social benefit analysis into the The traditional “price prevails” purchas- evaluation processes for federal infrastruc- ing analysis does an injustice to the taxpay- ture projects. These contractual clauses will er. Greater return on investment to taxpayers help ensure projects generate economic and can be achieved by using a blended value an- social value that benefits local communities alysis in government purchasing that incor- and their citizens. Community Benefit Clauses porates price, quality, environmental, and can be used to boost training, apprenticeship social considerations. and employment opportunities for designated groups that are under-represented in the Neighbourhood Revitalization Fund workforce and/or that have multiple barriers The AFB establishes a Neighbourhood Revital- to employment. ization Fund as part of a federal Neighbour- hood Revitalization program. This fund will provide multi-year core funding to support

46 Canadian Centre for Policy Alternatives the establishment and ongoing operations Notes of Neighbourhood Renewal Corporations 1 Federation of Canadian Municipalities (FCM) (2012) Canadian Infra- (NRCs) in under-invested urban commun- structure Report Card. ities throughout the country. NRCs will be 2 Federation of Canadian Municipalities (FCM). (2010). Quality of Life in Canadian Communities: Mending Canada’s Frayed Social Safety Net: The locally-governed, democratic organizations Role of Municipal Governments. responsible for coordinating ongoing revital- 3 Federation of Canadian Municipalities (FCM). (2011). Starting on Solid Ground: The Municipal Role in Immigrant Settlement. ization efforts within their communities. Re- 4 Toronto Board of Trade (2012). Toronto as a Global City: Scorecard on vitalization efforts will be based on five-year Prosperity. 5 Transport Canada (2008). Estimates of the Full Cost of Transportation in neighbourhood revitalization plans that take Canada. http://www.tc.gc.ca/media/documents/policy/report-final.pdf a CED approach and are developed with the 6 Stantec Consulting and the Victoria Transport Policy Institute (2011). National Strategies on Public Transit Policy Framework. community. In addition, NRCs will assist 7 Federation of Canadian Municipalities (FCM). (2012). Proposed Federal community-based organizations within their Wastewater Regulations — Backgrounder. http://www.fcm.ca/Documents/ backgrounders/Proposed_federal_wastewater_regulations_EN.pdf neighbourhoods to develop proposals and 8 Sustainable Prosperity. (2012). Managing Urban Sprawl: Reconsidering apply for funding to support projects con- Development Cost Charges in Canada. http://www.sustainableprosperity. ca/dl719&display sistent with the neighbourhood’s five-year revitalization plan. (Cost: $100 million per year for five years.)

Doing Better Together: Alternative Federal Budget 2013 47 Communications

Background Current Issues

A National Communications Strategy Recognize “Effective” Connectivity is an Economic Building Block as an Essential Service

Canada continues to fall behind peer nations On May 11, 2011, the Canadian Radio-television in the strategic policy area of information and Telecommunications Commission (CRTC) set communications technology (ICT) and infra- a target for broadband Internet access ser- structure. A recent report from the Internation- vices across the country. By the end of 2015, al Telecommunications Union (ITU), Meas- said the Commission, all Canadians should uring the Information Society 2012, ranked have access to broadband speeds of at least Canada 32nd out of 155 countries according to 5 megabits per second (Mbps) for downloads their level of ICT access, use, and skills. The and 1 Mbps for uploads.3 top five were Korea, Sweden, Denmark, Ice- But the target set by the CRTC is not enough land and Finland. According to the ITU, all to fuel economic growth and job creation. top-30 countries are “high-income countries, Rural respondents to a 2011 national survey underlying the strong link between income of economic development professionals in and ICT progress.”1 It is becoming increas- the U.S. reported that 100–120 Mbps was the ingly clear that a national communications minimum needed over the next three years.4 strategy is an essential part of long-term eco- A study done for the U.S. Federal Communi- nomic planning. cations Commission (FCC) recognized broad- Communities with affordable high-speed band “as a key enabler of economic growth Internet access can attract businesses, en- that can benefit services such as telemedi- courage local entrepreneurship, and main- cine in rural areas, allow better management tain high standards in education and health of transportation and energy systems and re- services, all of which support local sustaina- duce infrastructure costs for businesses.”5 bility. The recommendations in this chapter Modernizing such infrastructure is costly. are designed to return Canada’s communica- At the 2012 CRTC hearings that considered basic tions infrastructure to world-class standards.2 service obligations, one telephone company estimated it would cost $700 million annual- ly6 for 10 years to bring high-speed Internet to all Canadians, including those who live in the country’s most remote areas. “It’s a task that can never be achieved by market forces alone, [MTS Allstream Inc.] told the CRTC, in one of the first such estimates to be made

48 Canadian Centre for Policy Alternatives for Canada.” Experts agree that the market online consultation about a digital econ- alone will not resolve Canada’s communica- omy strategy, then Industry Minister Tony tions infrastructure deficit.7 Governments will Clement offered an interim report with few have to facilitate the transition with various specifics.11 The holding pattern continues. programs to bridge the gap. Current Industry Minister Christian Paradis suggested that a strategy might be released • In order to return Canada to a leadership at the end of 2012. role in the availability and use of new On the other hand, in its February 2011 communications technologies, “effective” report on emerging and digital media, the broadband that supports a wide range of Standing Committee on Canadian Heritage communications applications must be- “encouraged the Government of Canada to come a vital part of policy and programs proceed as quickly as possible with the de- at the federal level. The AFB believes that velopment of a national digital economy strat- “effective” broadband means high-speed egy,” and recommended that the strategy be Internet of 100 Mbps or more.8 reviewed every five years.12 The AFB agrees with the Heritage Com- Develop a National mittee and will immediately begin a nation- Communications Strategy al consultation on these issues. The process The CRTC, among others, has pointed out will invite multi-stakeholder input on a wide the need for a comprehensive national digit- range of communications issues from copy- al strategy to secure the nation’s economic right to infrastructure and access policies future.9 Digital infrastructure planning else- through meetings across the country, online where has been on fast forward for years: and written submissions. Australia (National Broadband Strategy), These discussions will also seek ways to 2004; Great Britain (Digital Britain Report), improve the environmental sustainability 2009; Germany (Information Society Germany of the ever-growing use of digital technolo- 2010), 2006; France and New Zealand, 2008; gies. ICT devices currently contribute 2–3% and the U.S., 2010. of global greenhouse gas emissions.13 As the The benefits of a well-designed and im- availability and use of “always on” broad- plemented plan are significant. According to band rises, this amount will likely increase. a new report by IBISWorld, Australia’s infor- Technical solutions such as “power saving” mation and communications technology in- devices, and upgraded standards for them, dustry, combined with the planned national will be explored. Incentives for telecommut- high-speed network, is expected to generate ing and video-collaboration to support de- around $1 trillion in revenue for 2050 — al- creased use of fossil fuels for land and air most eight times the $131 billion it gener- transportation will also be considered. ates today.10 • The AFB allocates $250,000 to fund a broad Canada still lacks a national plan for uni- national consultation to modernize com- versal access to effective broadband. This munications policy in Canada. We will stalls our economy and negatively affects present a transparent process that can productivity. In May 2010, after a six-week be implemented before September 2013.

Doing Better Together: Alternative Federal Budget 2013 49 A comprehensive plan based on these dis- • A 2009 report by the Information Tech- cussions will be presented to Canadians nology and Innovation Foundation (U.S.) by April 2014. suggested that a broadband subsidy of $10 billion would directly create or re- Create Jobs With Next Generation tain 500,000 jobs.18 Broadband Networks In Canada, the most recent federal pro- Growing evidence supports the connection gram that addressed connectivity (2009) allo- between jobs and modern information and cated a scant $225 million over three years to communications infrastructure. Although fund the expansion of rural broadband infra- there are no firm estimates of the number structure.19 In this program, broadband con- of Canadian jobs that might be at stake, es- nectivity was defined as “access to Internet timates from other jurisdictions can offer service that supports data transmission at a some guidance: minimum speed of 1.5 Mbps to a household.”20 Although it is considerably better than no con- • A 2009 study by the World Bank suggested nectivity, 1.5 Mbps is a short-term solution, that an increase of 10% in broadband pene- not enough to support applications such as tration in high-income countries correl- e-health or e-education or intensive e-com- ates with GDP growth increases of 1.2%.14 merce. This speed will not provide the kind • According to a 2011 report from global of Internet access that Canadian commun- management consultants McKinsey and ities need to ensure their economic future. Associates, over the past five years, the By contrast, in April 2009 the Govern- Internet has been responsible for 21% of ment of Australia announced it would build the growth in mature economies and has a national high-speed broadband network created 2.6 jobs for every job it has dis- to deliver up to 100 Mbps to 90% of its cit- placed.15 izens. The eight-year, AU$43-billion project will be one of the largest state-sponsored In- • “Rural counties in the United States that ternet infrastructure upgrades in the world. embraced broadband adoption at the start The Australian Prime Minister has suggested of this decade enjoy access to more jobs that the project will support up to 37,000 jobs than those that did not,” states a 2009 at the peak of construction.21 study by the U.S. Department of Agricul- To bring Canadian communications infra- ture. Their residents also make more money structure up to such standards, the AFB ramps than their less-connected counterparts.16 up to $1 billion per year to make effective • In 2008, the Communications Workers of broadband a reality for all Canadians. The America predicted that a $5 billion stimu- decade-long infrastructure project will start lus on broadband infrastructure would in 2014–15 and will be guided by the recom- create almost 100,000 new jobs directly mendations of a National Communications in the short term and 2.5 million jobs as Strategy. Because it is such a major commit- “network effects.”17 ment of public funds, Canadians will follow the Australian example and retain majority ownership of the resulting infrastructure.

50 Canadian Centre for Policy Alternatives • The AFB ramps up to $1 billion annual- Program was a national network of 3,500 ly over 10 years to modernize Canada’s community technology centres that helped digital communications infrastructure. thousands of people per day26 incorporate new technologies into their lives. These sites The Standing Committee on Canadian and their young facilitators, along with a le- Heritage recommended that the Government gion of volunteers, provided job search and of Canada reinvest some of the money it re- software training, technology literacy pro- ceives from spectrum auctions into the programs, access to community services, and cess of designing and implementing a digital cultural integration opportunities. They part- strategy and into extending rural and remote nered with the local private and public sec- connectivity programs.22 The AFB agrees with tor to provide services and experienced per- these recommendations. sonnel in diverse areas, from film editing to • The AFB will reinvest some of the pro- website building. Along the way, thousands ceeds from the upcoming spectrum auc- of youth gained valuable job experience. Both tion (Spring 2013) to support the mod- internal and external evaluators agreed that ernization of our digital infrastructure this program had been successful and cost- according to the recommendations of a effective for years.27 comprehensive communications strategy. Certain populations are particularly in need of such programs. New research from • The AFB will immediately revive rural and the U.S.-based Pew Internet and American remote connectivity programs. Life project shows that, while many seniors are currently using e-mail and the web, Rebuild the National Public only 39% have broadband at home. They Access Program use public access sites in libraries and com- National programs that provide access, edu- munity centres.28 In Australia, only 62% of cation and support for the effective use of those with a reported disability are online new communications technologies in com- and just over one-half of those age 60 or over munities are considered essential in coun- have Internet access at home.29 In Canada, tries that rank high in their use of on-line not only do we lack data on such issues, the tools. In Korea, for example, such programs only program in place to address them, was are considered investments that generate disbanded. The AFB would immediately re- demand and build human capacity to meet introduce and expand support for a nation- that demand.23 al public access program. At the CRTC hearings on basic service • The AFB allocates $40 million to sup- (2010), concerns were raised about the 25% port new and existing national public of Canadians who have no Internet service access sites. even where service is available and questions were asked about programs that might address The AFB also agrees with the Standing that gap.24,25 Sadly, in March 2012, the federal Committee on Canadian Heritage, which rec- government cancelled the one program that ommended that the Government of Canada addressed such issues. The Canadian Access work with provincial authorities to support

Doing Better Together: Alternative Federal Budget 2013 51 2 For rankings see: Berkman Center for Internet and Society. (2009). Next programs that encourage the development of Generation Connectivity: A review of broadband Internet transitions and policy from around the world. Harvard University, October (draft). p. 112. a digitally literate population and that the De- 3 Canadian Radio-television and Telecommunications Commission. (2011). partment of Human Resources and Skills De- “The CRTC sets speed target for broadband Internet and maintains obligation to provide basic home telephone service.” News release. Ottawa- velopment review its policies and programs in Gatineau, May 3. http://www.crtc.gc.ca/eng/com100/2011/r110503.htm order to ensure that priority is given to train- 4 Settles, Craig. (2011). “After the stimulus: broadband and economic development,” Fighting the Next Good Fight. Oct. 4. http://roisforyou. ing in digital skills. The Committee also rec- wordpress.com/2011/10/04/after-the-stimulus-broadband-and-economic- development/ ommended that the Government of Canada 5 Nowak, Peter. (2009). “Canadian broadband blasted by Harvard study.” examine the proposal of the Canadian Asso- CBC News, Oct. 15. http://www.cbc.ca/technology/story/2009/10/15/ harvard-fcc-broadband-study.html ciation of Community Television Users and 6 Marlow, Iain. (2010). “High speed internet for rural areas.” The Globe Stations (CACTUS) for the establishment of and Mail Oct. 27. http://www.theglobeandmail.com/news/technology/ high-speed-internet-for-rural-areas-pegged-at-7-billion/article1774621/

community-operated multimedia centres and 7 Van Praet, Nicolas. (2011). “Universal Internet access key to the econ- access to its material online as a way of en- omy: Google CFO,” Financial Post, FP Tech Desk. Oct. 24. http://business. financialpost.com/2011/10/24/universal-internet-access-key-to-economy- couraging people to develop digital skills.30 google-cfo/ 8 As part of its broadband plan, the U.S. government is currently com- • The AFB will ensure that the Department mitted to connecting “at least 100 million American homes to 100 Mbps service over the next 10 years.” Middleton, Catherine. Canadian Federa- of Human Resources and Skills Develop- tion for the Humanities and Social Sciences “Big Thinking” Lecture, Oct. 7, 2010. http://www.fedcan.ca/images/File/Middleton_BigThinking.pdf

ment continues to support digital literacy 9 Canadian Radio-television and Telecommunications Commission (CRTC). with its CAP-YI youth initiatives program. (2009) “CRTC extends exemption for new media and calls for a national digital strategy.” News release, June 4. http://www.crtc.gc.ca/eng/news/ RELEASES/2009/r090604.htm

• The AFB will support community-oriented 10 Ruthven, Phil. (2012). “A snapshot of Australia’s digital future to 2050.” IBISWorld, June. http://www-07.ibm.com/au/pdf/A_Snapshot_of_ multimedia centres as part of a digital lit- Australia_s_Digital_Future_to_2050_Executive_Summary.pdf

eracy program. 11 Clement, The Hon. Tony. (2010). “An interim report on the digital economy and telecom strategies.” Address to the International Institute of Com- munications Conference. Industry Canada, Nov. 22. http://www.ic.gc.ca/ eic/site/ic1.nsf/eng/06098.html

AFB Actions 12 Chong, Michael, Hon. (chair). (2011). Emerging and Digital Media: Op- portunities and Challenges. Report of the Standing Committee on Canadian Heritage. 40th Parliament, 3rd Session. Canada: House of Commons. Febru- ary 11, 2011. http://www.parl.gc.ca/HousePublications/Publication.aspx? • The AFB allocates $250,000 to fund a broad DocId=4838683&Language=E&Mode=1&Parl=40&Ses=3

national consultation to modernize com- 13 Kim, Yongsoo and Siddhartha Raja. (2010). Building Broadband: Strat- egies and Policies for the Developing World. World Bank. Chapter 4. p. munications policy in Canada. 48. http://siteresources.worldbank.org/EXTINFORMATIONANDCOM MUNICATIONANDTECHNOLOGIES/Resources/282822-1208273252769/ • The AFB ramps up to $1 billion annual- Building_broadband.pdf 14 Scott, Sheridan. (2009). “Get ready, CRTC, digital economy is com- ly over 10 years to modernize Canada’s ing.” Globe and Mail. Nov.2. http://www.theglobeandmail.com/news/ digital communications infrastructure. technology/get-ready-crtc-digital-economy-is-coming/article1347786/ 15 Bughin, Jacques and James Manyika. (2012) “The macroeconomic impact of the Internet.” White paper written for a keynote speech at the first • The AFB allocates $40 million to support global e-G8 Summit, France, May 2011. In Internet Matters, Essays in Digit- al Transformation. McKinsey & Company. March. http://www.mckinsey. new and existing national public access com/insights/mgi/research/technology_and_innovation/essays_in_ sites in the 2013–14 budget year. digital_transformation 16 Lasar, Matthew. (2009) “Rural broadband = more jobs, better salaries.” Ars technica Aug.20. http://arstechnica.com/tech-policy/news/2009/08/ rural-broadband-more-jobs-better-salaries.ars Notes 17 Communications Workers of America. (2008). “Proposals to stimulate broadband investment.” Letter to the House Speaker and Senate Major- ity Leader. December 9 mentioned in Qiuang, Christine Zhen-Wei. (2009). 1 International Telecommunications Union (ITU). (2012) “ITU releases “Broadband infrastructure investment in stimulus packages: relevance latest global technology development figures.” Press Release. ITU. Gen- for developing countries.” World Bank. eva: October. http://www.itu.int/net/pressoffice/press_releases/2012/70. aspx#.ULPApodZXvI 18 Atkinson, R., D. Castro and S. Elzell. (2009). Digital Road to Recovery: A Stimulus Plan to Create Jobs, Boost Productivity and Revitalize Amer- ica. Report by the Information Technology and Innovation Foundation. January 7. http://www.itif.org mentioned in Qiuang, Christine Zhen-Wei.

52 Canadian Centre for Policy Alternatives (2009). “Broadband infrastructure investment in stimulus packages: rel- 26 This network was built under the Industry Canada Community Ac- evance for developing countries.” World Bank. cess Program (CAP) and its companion Youth Initiative Program (CAP-YI). Telecommunications Policy Review Panel. (2006) Final Report. Chapter 19 Office of the Prime Minister of Canada. (2009). “PM announces ma- 8. Industry Canada. http://www.telecomreview.ca/epic/site/tprp-gecrt. jor improvement to broadband internet access in rural Canada.” Ottawa: nsf/en/rx00055e.html News release, July 30. http://pm.gc.ca/eng/media.asp?category=1&id=2702 27 See, for example: Ekos Research Associates. (2004). Evaluation Study 20 Industry Canada. (2009). “Broadband Canada: Connecting Rural Can- of the Community Access Program (CAP). Industry Canada. Audit and adians. Frequently Asked Questions.” Last modified Sept. 22.http://www. Evaluation Branch, January 16. http://www.ic.gc.ca/epic/site/ic1.nsf/ ic.gc.ca/eic/site/719.nsf/eng/h_00004.html#BPQ3 en/01420e.html and Coleman, Ronald. (2002). “Economic value of CAP 21 Foley, Maraiah. (2009). “Australia moves to build high-speed net- sites as investments in social capital” and “Impact of CAP sites on volun- work.” New York Times. April 07. http://www.nytimes.com/2009/04/08/ teerism.” GPI Atlantic. http://www.gpiatlantic.org/publications/abstracts/ technology/internet/08broadband.html econvalue-cap-ab.htm

22 Ibid. Chong, Michael, Hon. (chair). 2011. 28 Zickuher, Karen and Mary Madden. (2012) “Older adults and Internet use.” Pew Research Internet and American Life Project. January. http:// 23 Berkman Center. (2009). http://www.fcc.gov/stage/pdf/Berkman_ pewinternet.org/Reports/2012/Older-adults-and-internet-use/Main-Report/ Center_Broadband_Study_13Oct09.pdf Internet-adoption.aspx

24 CRTC. (2010). “Transcript of proceedings on obligation to serve and 29 O’Leary, Tim. (2012) “Making connections to end digital divide.” Op- other matters.” Discussion on adoption rates of new technologies be- ed. National Times: October 12. http://www.smh.com.au/opinion/making- tween Commissioner Katz and Denis Henry appearing for Bell Aliant. connections-to-end-digital-divide-20121009-27aul.html Timmins, Ont. Vol. 1, Oct. 26. para. 640–654. http://www.crtc.gc.ca/eng/ transcripts/2010/tt1026.html 30 Ibid. Chong, Michael, Hon. (chair). 2011.

25 CBC News. (2011). “No internet in 1 out of 5 Canadian homes.” May 25th. http://www.cbc.ca/news/technology/story/2011/05/25/technology- internet-use-statistics-canada.html

Doing Better Together: Alternative Federal Budget 2013 53 Defence

Background For the moment, however, DND’s “cuts” are more apparent than real. In fact, it can Canada is one of the 15 top military spend- be argued that although the DND budget has ing nations in the world, and the sixth-largest levelled off, it has not yet undergone signifi- military spender among the 28 members of cant reduction. NATO. The level of Canadian military spend- The apparent reductions of recent years ing in recent years has been higher than at are almost entirely attributable to accounting any other time since the end of the Second changes and the declining incremental cost of World War. Canada’s overseas military missions. The de- According to the federal government’s cision to grant the Communications Security latest budget figures, the Department of Na- Establishment (CSE) separate agency status tional Defence (DND) plans to spend $20.5 effective November 2011 and the creation of billion this year (FY2012–13). That level is 2% Shared Services Canada (SSC) and the conse- higher than it was before the beginning of the quent transfer of various IT responsibilities global recession, 9% higher than at the end out of DND and other departments were re- of the Cold War, and 30% higher than im- sponsible for a large part of these apparent re- mediately before the terrorist attacks of Sep- ductions. According to DND’s Report on Plans tember 11, 2001. While the current build-up and Priorities (RPP), the removal of CSE from in spending began in 1999, Canada’s partici- the DND budget saved the department $387 pation in the U.S.-led “global war on terror- million in 2012–13, while the creation of SSC ism” has been the primary driving force be- saved the department $306 million. DND re- hind the increases. ceives the same services from these programs By comparison, the actual amount spent as it received in earlier years, but their com- by DND in 2011–12 was $20.2 billion, or about bined $694 million cost in 2012–13 no long- $20.8 billion in 2012 dollars. Similarly, the er appears in the DND budget. 2010–11 and 2009–10 figures were about The continuing decline in the scope of the $22.0 billion and $22.2 billion respectively, in Afghanistan mission also has the effect of re- 2012 dollars.1 These figures suggest that, like ducing the department’s spending without many other government departments, DND diminishing its ability to pay its core person- has undergone significant budget cuts, with nel, operations, maintenance, and capital ex- this year’s spending projected to be 1.5% low- penses. (In fact, it probably frees up resources er ($0.3 billion) than 2011–12 spending, 6.8% not fully accounted for in the department’s lower ($1.5 billion) than 2010–11 spending, estimates of the incremental cost of the mis- and 7.8% lower ($1.7 billion) than 2009–10 sion, and thus improves DND’s budget pos- spending, after adjusting for inflation. ition.) DND is projecting that the incremental costs of the Afghanistan mission will decline

54 Canadian Centre for Policy Alternatives by $435 million this year, and that the over- crease. This ambitious build-up over the last all incremental costs of the Canadian Forces’ decade has allowed large military equipment overseas missions will decline by $508 mil- programs to proceed without the department lion. Overall incremental costs are expected adequately demonstrating their relevance to to total $476 million this year, down from $1.9 the essential security of Canadians. billion (in 2012 dollars) in 2009–10. On the global stage, worldwide military As a result, although DND’s projected 2012– spending is estimated to have reached US$1.7 13 budget is approximately $1.7 billion low- trillion in 2011, about the same level as it was er (in 2012 dollars) than its budget of three the year before. Like Canadian military expendi- years ago, the department’s ability to fund tures, global military spending is now higher its core programs could be as much as $400 than it was during the Cold War. Within this, million higher. the 28 members of NATO collectively account A new wrinkle has been introduced this for about 60% of world military spending. year by the government’s failure to provide any details of the spending cuts it promised Current Issues in Budget 2012. According to data DND provided to the Parliamentary Budget Officer, the Afghanistan department expects to make cuts related to Budget 2012 totalling $319 million this year. DND documents indicate that the incremental There is no way to know, however, whether cost of Canada’s military operations in Afghan- any or all of these cuts are already reflected istan during the 12 years from 2001–02 to 2012– in the measures reported in the RPP (i.e., sav- 13 has been about $8.6 billion. However, Par- ings due to the winding down of the Afghan- liamentary Budget Officer Kevin Page’s 2008 istan mission, savings due to establishment report on the cost of the Afghanistan mission of CSE as a separate agency, etc.). Some of concluded that the actual incremental costs the budget-related “savings” reportedly will of the mission were even higher than DND re- come through the delay of certain procure- ported — between $5.9 billion and $7.4 billion ment programs, but the degree to which these just for the seven years from 2001–02 to 2007– delays may already be built into the spend- 08 (the departmental figures show incremental ing plans is not known. costs of just $3.4 billion during this period). If Further reductions are supposed to be the figures for 2008–09 through 2012–13 were made in 2013–14 and 2014–15, ultimately similarly underestimated, the incremental amounting to $1.1 billion, but again the ac- costs for the Afghanistan mission are prob- tual effect of these plans on the department’s ably closer to $15–19 billion to date. budget remains to be seen. Even that figure arguably underestimates Adjusted for inflation, Canada has devot- the ultimate cost of the Afghanistan mission. ed roughly $70 billion to total national secur- Canada’s presence in Afghanistan tied up not ity expenditures over and above the amount just the troops deployed in the country, but it would have spent had budgets remained also many thousands of personnel preparing in line with pre-9/11 levels, with military ex- for deployment, recovering from deployment, penditures representing the bulk of that in- or supporting the operation from Canada. If

Doing Better Together: Alternative Federal Budget 2013 55 Canada had chosen not to participate in the of 30 military personnel (and 119 civilian po- Afghanistan mission, we could have main- lice officers) to the cause of UN peacekeeping. tained smaller armed forces while continu- Canada’s switch from major supporter of UN ing to participate in other missions, such as peacekeeping to an almost exclusive focus on peacekeeping. Depending on the actual per- U.S.-led or NATO-led “coalitions of the willing” sonnel level maintained, additional savings, was not a result of the disappearance of UN mis- potentially as much as several billion dollars, sions. Notwithstanding the claim often heard might have been realized over that period. in Canada that UN peacekeeping is dead, the demand for peacekeepers has actually grown Peacekeeping in recent years. As of October 2012, there are 83,700 UN peacekeeping troops and military During the Cold War, Canada provided about observers (and an additional 13,600 civilian 10% of all UN peacekeeping troops. The huge police officers) serving in 16 operations over growth in the number, size, and scope of UN four continents. Of the 107 military contribu- operations after the end of the Cold War made tors to UN peacekeeping, Canadians are tied this level of support no longer possible, but with tiny Brunei for 66th in terms of person- Canada continued to provide about 1,000 nel. Peru, which has one-tenth of Canada’s peacekeepers (and sometimes more than GDP, contributes more than 10 times as many 3,000) well into the 1990s. In 1997, however, personnel. The only Canadian contribution Canada began to dramatically reduce its con- that remains substantial is a non-military tribution to UN operations. The initial reduc- one: our cash contribution to the UN peace- tion can be explained in large part by the keeping budget, currently $228 million a year. extensive Canadian contribution to the NATO- However, this payment, a legal obligation of led Stabilization Force (SFOR) in Bosnia and our membership in the United Nations, comes Herzegovina. SFOR was then followed by the out of the budget of Foreign Affairs and Inter- 1999 Kosovo war, participation in the NATO- national Trade, not National Defence. led Kosovo Force (KFOR), and then the post- In the meantime, the overwhelming bu- 9/11 Afghanistan mission. rden of current UN peacekeeping operations By 2005, only 83 Canadian military per- has been transferred to the poorer countries sonnel were assigned to UN peacekeeping of the world, whose soldiers are normally missions. Though the Canadian government much less well-equipped, and in some cases promised that year that the Canadian Forces also less well-trained. “Middle powers” such would “maintain their contributions to inter- as Canada are not bearing their share of the national organizations such as the United Na- burden of these operations, and the resulting tions,” the decline continued unchecked. In equipment and training shortfalls threaten 2008, Canada and other governments voted to undermine the effectiveness of the oper- to shut down the UN’s Multinational Standby ations currently underway. High Readiness Brigade (SHIRBRIG), an innovative rapid-reaction peacekeeping unit that had once been championed by Canada, and AFB Actions the shutdown was completed in June 2009. As of October 2012, Canada contributes a total The AFB resolves to take the following actions:

56 Canadian Centre for Policy Alternatives • Reduce Department of National Defence contracts, and the future of Canada’s subma- spending, with a goal of returning to pre- rine fleet would all be subject to this review. September 11, 2001 levels. By comprehensively assessing whether these major capital expenses are essential to Can- The DND budget must be brought in line adian security, and whether the contract pro- with the changed realities that Canada faces in cesses are producing the best value for pub- the world, a decade after the events of Septem- lic dollars, important fiscal adjustments can ber 11, 2001. The most prominent threats facing be made in line with current global realities. the security of Canadian citizens are economic, rather than military, and an attitude of un- • Increase oversight of DND equipment limited military spending only heightens the spending by establishing a parliament- challenges of high unemployment and large ary committee or sub-committee respon- deficits. With Canadian involvement in Afghan- sible for Major Crown Projects. istan winding down and our commitment to The Auditor General of Canada, the Par- addressing the global financial crisis, an im- liamentary Budget Office, and other fiscal mediate reduction in the defence budget and monitoring agencies have repeatedly warned an eventual return to pre-2001 levels are real- about the dangers of unchecked spending istic goals that would set Canada on the path increases in the Department of National De- to fiscal responsibility in the field of expendi- fence, but have had little effect. The lack of tures. Prior to September 11, 2001, the defence transparency and democratic mechanisms budget was the equivalent of $15.3 billion in to- affecting the current military procurement day’s dollars, $6.4 billion less than this year’s regime must be addressed through great- estimated level. In order to return to pre-2001 er parliamentary oversight. Contracts that levels in the next five years, theAFB will under- must go through a parliamentary committee take an immediate reduction of $1.28 billion in or sub-committee before receiving approval the next fiscal year. This reduction is to con- are significantly more likely to guarantee job tinue every year until 2016–17. offsets, include specific costs, and generally • Review planned equipment spending to involve a greater degree of open competition ensure projects still meet Canada’s na- for the public dollars involved. tional defence policy priorities. • Freeze non-defence portions of the Na- Given that a major element of defence tional Security Establishment, including spending consists of materiel procurement, a Canada Border Security, CSIS, Corrections review of all major equipment spending pro- Canada, Public Safety and related programs currently in the works is needed to en- grams. Stopping their significant growth sure a reversal of the trends of the last decade. will lead to incremental savings of ap- Many current projects have not been subjected proximately $500 million a year. to the intense scrutiny faced by other departments and programs in the government. Ma- Notes jor Crown Projects such as the F-35 purchase plan, the awarding of naval and Coast Guard 1 Public Accounts 2010, 2011, 2012.

Doing Better Together: Alternative Federal Budget 2013 57 Early Childhood Education and Care

Background not standards for high-quality programming that benefits children. Canada’s Market-Based Child Care The results of this failed market approach are visible, tangible and regularly docu- We’re used to hearing that Canada has no mented. Not only is there significant varia- national child care program and that early tion, inequity, and gaps across Canada in af- childhood education and care (ECEC) is se- fordability, supply of services, and quality, verely under-provided and under-funded. but many (if not most) families across Canada While these criticisms are true, two import- cannot find or afford high-quality child care. ant points are less often noted: first, how much Canada relies on the market for child The Right Thing and the care; and, second, the substantial negative Smart Thing To Do effects of this approach. The market approach shapes every as- Child care has long been considered a key re- pect of ECEC in Canada: market-based de- quirement for women’s equality, social jus- velopment of services means that the private tice, and equity and a key part of good family sector — both for-profit entrepreneurs and policy aimed at work/family balance. More re- non-profit or charitable organizations — de- cently, a consistent body of evidence1 shows termine when and where services are locat- that building a public ECEC system is not just ed, often with little public planning. Private the right thing to do for parents and children non-profit and for-profit operators finance but the smart thing to do for Canada social- much of the capital cost, and deliver most of ly and economically. In 2012, TD Econom- the regulated child care services across Can- ics, in a special report titled Early childhood ada. Parents’ private funds pay the bulk of the education has widespread and long lasting cost in both regulated and unregulated child benefits, also urged increased public spend- care, while public funding is spent primarily ing when “finances move back in balance.” through more market-oriented demand-side The report observed Canada lags far behind measures such as vouchers, cheques, or fee other countries but that “Overall, having an subsidies. There is little public management efficient, high-quality early childhood proof services or public planning for expansion gram in place, which is accessible for all to meet needs. The role of governments is children and affordable for parents, would largely limited to developing and minimal- be beneficial for children, parents as well as ly monitoring health and safety regulations, the broader economy.”2

58 Canadian Centre for Policy Alternatives In its most recent review of Canada’s com- ability for eligible low-income families has pliance with the Convention on the Rights of been relatively stagnant or even shrunk rela- the Child, the UN confronted Canada over its tive to 2001, although the supply of regulated lack of a national child rights strategy and its spaces has grown by about 400,000 spaces lack of progress on child care in particular. since that time. The Geneva committee’s report noted con- Comparing best policy practices with the cerns regarding the “lack of funding directed current state of Canadian early childhood towards the improvement of early childhood education and child care reveals a vast gap development and affordable and accessible between what we know and what we do. The early childhood care and services” and the research suggests that delivering high-qual- “high cost of child care and lack of avail- ity, equitable, accessible ECEC programs for able places.”3 children and families requires a systematic, coherent, integrated approach, with well- Too Little Money, Too Little Policy defined public management,7 while pointing out the pitfalls of relying on services that “We would but we can’t afford it” was the ex- are unplanned, fragmented, rely on private cuse for inaction on child care prior to 2000. methods of financing and operate on a for- Then, as federal and provincial surpluses profit basis.8 Overall, much good evidence began to mount annually — reaching a dizzy- is readily available on which to build a solid ing $30 billion combined in 20074 — a small ECEC system but ECEC policy-making in 21st but increasing federal commitment to child century Canada continues not to be based care funding finally emerged. However, at the on the best available knowledge, leaving an height of Canada’s economic success, the cur- extensive evidence gap. rent federal government terminated Canada’s sole significant national child care initiative. As a result, federal transfers in 2007–08 were Current Issues reduced by 37% from 2006, and by 61% from the previous government’s commitment for Child care in Canada today demonstrates 2009.5 Canada’s public spending on ECEC multiple market failures9: programs is only 0.25% of GDP — about one- Parent fees are often higher than univer- third the OECD average (0.7%) and far short of sity tuition, while subsidy programs in some the international minimum benchmark of at provinces/territories fail to make child care least 1% of GDP for ECEC for 0–5 year olds.6 financially accessible to the low-income par- In short, child care in Canada can be ents eligible for them. Parent fees range from summed up by the comment “too little pub- those in Quebec (at $154/month the lowest in lic money, too little public policy.” Child care Canada), to Manitoba, which sets maximum today is plagued by stagnant provincial and parent fees province-wide ($414/month for territorial budgets, expansion and contrac- a two-year-old), to other jurisdictions where tion of services unconnected to planning or parents pay, on average, up to $700 or $800/ community need, and shockingly unafford- month for regulated child care. In large cit- able parent fees. Fee subsidies are even more ies, child care costs are even higher. In Van- inadequate than in the past; subsidy avail- couver, for example, commercial child care

Doing Better Together: Alternative Federal Budget 2013 59 chain Kids and Company tops the chart with Child care chains are growing in Can- parent fees of $1,915/month — almost $23,000 ada, but until recently most have been small- annually — for toddler care, while the non- scale, local endeavours. The last few years profit University of British Columbia Child- have witnessed not only small chains be- care Services’ fee for a toddler of non-UBC- come medium (5–10 centres) and even large affiliated parents is $1,570.10 (15 or more centres) chains but the addition The supply of services is far below either of mega-sized, for-profit corporations such as the demand or the need for child care yet ex- Edleun, Canada’s first publicly listed big-box pansion of child care spaces has been ex- child care chain, and the privately-held Kids tremely slow, slowing to a crawl in the last and Company. Each of these now operates few years. More than 70% of mothers of young approximately 50 centres in multiple prov- children are in the paid labour force but in inces, and purports to be positioned for ex- 2010 (the most recent available data) there pansion, as venture capital and mainstream were regulated spaces in child care centres investors provide significant capital. Business for only about 21% of children 0–5 years old. analysts such as the Globe and Mail’s David While low staff wages have shown some Milstead have questioned their profitability signs of improvement in some provinces/ter- potential, while a report authored by B.C. ritories, wage levels, benefits and working Certified Management Accountant Gerald conditions are still far too low to ameliorate Dragomir challenged the idea that the child ongoing staffing issues such as recruitment care chain business model can provide and and retention across Canada. sustain the high-quality, affordable services Quality issues, which concern both regu- that families need.11 lated services and the unregulated arrange- Countries such as Australia, the United ments that many parents are obliged to use, Kingdom and the United States, where for- persist. profit big-box chains now dominate child care, provide useful lessons for Canada about our For-Profit Child Care: Growing prospects if this threat isn’t addressed.12 In Almost Everywhere in Canada other words, public funds will support private profits rather than the public goals of quality, Although the benefits of a more publicly-man- affordability, and access. The threat of even aged system are clear, and the failures of mar- higher fees, lower wages, unmet demand, and ket-based ECEC are in plain sight across the quality concerns should be a wake-up call to country, from the perspective of quality and governments about the fundamental ineffect- access, it is disturbing to observe that the for- iveness and inequity of their longstanding profit child care sector is growing in almost market-based approach to child care servi- all provinces/territories. In 2010, for-profits ces. The evidence-based response to Can- delivered 28% of all centre-based spaces, ada’s high rate of labour force participation up from 20% in 2004. The most recent data among mothers and contemporary knowledge show for-profit services dominating the lim- of the benefits of early childhood education ited overall expansion, accounting for more should be a national policy framework lay- than two-thirds of growth in six provinces/ ing out a publicly managed, publicly fund- territories between 2008 and 2010.

60 Canadian Centre for Policy Alternatives ed system that blends early childhood edu- To protect and promote the public inter- cation and child care, and prioritizes equity est, the AFB provides leadership and signifi- in both access and service provision. cant funding support to provinces and terri- A key barrier to advancing a system of ear- tories that commit to building public systems ly childhood education and care in Canada of early childhood education and care. The has been the federal government’s absence goal of the AFB’s early childhood education from the table. The current federal govern- program is to reach at least 1% of GDP, start- ment has gone one step further than even pre- ing this year with a $2.3 billion investment vious governments by abandoning virtually that increases over the next 10 years. all responsibility for the file. Indeed, funding A reallocation of current expenditures for federal Aboriginal ECEC programs — for provides a starting place for realizing this which the federal government has consider- funding commitment. We propose to incor- able responsibility — has been largely stat- porate the $2.8 billion annual funds currently ic since 2006, and even dropped in 2009.13 spent through the Universal Child Care Bene- Doing nothing is poor policy. The feder- fit (UCCB) into federal expenditures both on al government’s lack of leadership on child the early childhood education and care pro- care limits provincial, territorial and First Na- gram, as described, and on improvements to tions progress today and restricts our ability the Canada Child Tax Benefit (CCTB), includ- to act in the future. ing the National Child Benefit Supplement. There is neither evidence that the consider- AFB Actions able public expenditures on the UCCB furthers ECEC goals of improved access and quality nor is the UCCB an effective income support There is compelling evidence that public in- program that can help lift families with chil- vestment in early childhood education and dren out of poverty. Thus, these consider- care — with its multiple benefits to multiple able public funds would be more effectively groups — offers among the highest bene- spent on ECEC and on the CCTB and should fits that nations can adopt. Studies have re- be moved into these columns. peatedly shown that well-designed public The AFB will establish a policy frame- spending on ECEC promotes health, advan- work to guide collaboration with provinces ces women’s equality, addresses child and and territories, providing federal funds to family poverty, deepens social inclusion, and those that are accountable for developing grows the economy. and maintaining: But wishful thinking and a market-based approach won’t make it happen. The feder- • Public plans (including legislated univer- al government must move to accountability sal entitlement, targets, and timetables) for results by beginning to build, with the for developing comprehensive and in- provinces/territories, a system of high-qual- tegrated systems of ECEC services that ity, affordable, inclusive, and publicly owned meet the care and early education needs early childhood education and care services of both children and parents. across Canada, with equitable access for all children and families.

Doing Better Together: Alternative Federal Budget 2013 61 • Public expansion through publicly de- more inclusive, more flexible maternity/par- livered and publicly managed ECEC ser- ental leave benefit program, including ear- vices (including integration of existing marked paternity leave, should be developed community-based services into publicly in the near future. managed systems).

• Public funding delivered to ECEC sys- Notes tems, not to individual parents, designed 1 Centre for Spatial Economics, (2009). Literature Review of Socioeconom- to create and maintain high-quality, ac- ic Effects and Net Benefits: Understanding and Addressing Workforce Short- ages in ECEC Project. Child Care Human Resources Sector Council. Retrieved cessible services. from http://www.ccsc-cssge.ca/sites/default/files/uploads/Projects-Pubs- Docs/2.8-WFS_LitSocioMain_Eng.pdf

• Public monitoring and reporting in the 2 Alexander, C. & Ignjatovic, D. (2012). Special Report: Early Childhood Education has widespread and lasting benefits. TD Economics. Retrieved legislatures (federal, provincial/ territorial) from http://www.td.com/document/PDF/economics/special/ di1112_ on the quality of, and access to, the ear- EarlyChildhoodEducation.pdf 3 UN Committee on the Rights of the Child (2012). Consideration of reports ly childhood education and care system. submitted by States parties under article 44 of the Convention. Conclud- ing observations: Canada. Retrieved from http://www2.ohchr.org/english/ bodies/crc/docs/co/CRC-C-CAN-CO-3-4_en.pdf Within these broad recommendations, the 4 Calculated from Canada. Department of Finance. (2008) Fiscal Ref- AFB acknowledges the right of Canada’s First erence Tables. Ottawa. http://www.fin.gc.ca/toc/2008/frt08_-eng.asp Nations and Aboriginal peoples to design, 5 http://www.fin.gc.ca/taxexp-depfisc/2009/taxexp0901-eng.asp#taxexpend 6 The .07% and 1% come from Bennett, J. (2008), “Benchmarks for Early deliver, and govern their own ECEC services Childhood Services in OECD Countries,” Innocenti Working Paper 2008-02. while pointing out that Aboriginal ECEC pro- Florence, UNICEF Innocenti Research Centre. Retrieved from http://www. unicef-irc.org/publications/pdf/iwp_2008_02_final.pdf, p. 38. The 0.25% grams have been especially neglected by the of GDP is Starting Strong II. (2006). Organisation for Economic Cooperation and Development. Directorate for Education. Paris: Author.

federal government. The AFB also respects 7 Public management is used here to mean a planned, coherent ap- Quebec’s right to develop social programs. proach using public administration tools, by a level of government, usu- ally local, on behalf of a “common good” rather than on behalf of indi- However, it is clear that additional federal vidual or private interests. 8 Lloyd, E. and Penn, H. (Eds.) (2012). Childcare markets: Can they deliver funding and more focused public policy are an equitable service? Bristol, UK: The Policy Press; Friendly, M. and Pren- required to further advance both quality in tice, S. (2009). About Canada: Childcare. Winnipeg: Fernwood Publishing. and equitable access to Quebec’s system, so 9 The sources for the data in this section is HRSDC, 2012 and Friendly, 2013. 10 Coalition of Child Care Advocates of BC (2012). Letter to MCFD request- the AFB encourages the federal government ing moratorium on new approvals of Child Care Operating Funds (CCOF) for commercial child care chains. Retrieved from http://www.cccabc.bc.ca/ to work with Quebec to achieve the province’s cccabcdocs/pdf/CCCABC_Moratorium_CCOF_May12.pdf goals for child care. 11 Milstead, D. (2012, February 8). The real daycare challenge: making money. The Globe and Mail. Retrieved from http://www.theglobeandmail. Finally, the AFB recognizes that, in addi- com/globe-investor/investment-ideas/the-real-daycare-challenge-making- money/article544691/; Pace Accounting Inc. and Coalition of Child Care tion to high-quality accessible child care, fam- Advocates of BC (2012). Commercial child care in Canada: Can child care thrive in a speculative investment environment? Pace Accounting Inc. and ilies with young children also require, and Coalition of Child Care Advocates of BC. Retrieved from http://www.cccabc. have a right to, well-paid maternity/parental bc.ca/act/actions/NFS/files/Commercial_Child_Care_in_Canada.pdf 12 Canadian Union of Public Employees (CUPE), (2012). The pursuit of profit leave. But many parents — mothers and fath- in Ontario child care: Risky business for parents and government. Retrieved ers — cannot afford to take or are ineligible from http://cupe.on.ca/a4488/Ontario%20Childcare%20At%20Risk.pdf 13 Friendly, M. (2013).The state of early childhood education and care in for the maternity/parental leave benefit as it Canada 2010: Trends and analysis. Toronto, ON: Childcare Resource and Research Unit. currently exists. An improved, better-paid,

62 Canadian Centre for Policy Alternatives Employment Insurance

Background The basic parameters of Canada’s EI system are notoriously ungenerous. The bene- Employment Insurance (EI) is a vital part of fit rate is low — just 55% of earnings aver- Canada’s social safety net. While prior AFBs aged over the previous six months, which have criticized key gaps in Canada’s Employ- often include weeks of very low earnings. As ment Insurance program, EI and temporary women still face a significant earnings gap in enhancements in the Economic Action Plan Canada, their EI earnings are also lower. Be- helped hundreds of thousands of unemployed tween 2006 and 2011, women’s average week- workers and many hard-hit communities ly benefits were consistently about $60 low- to weather the worst stage of the economic er than men’s.1 crisis. The number of regular EI beneficiaries A worker qualifies for benefits based on peaked at over 800,000 in mid-2009, equal to hours of work over the previous year, and 53% of all unemployed workers. Some $12–14 depend upon the local unemployment rate. billion in regular EI benefits were provided Fewer hours are needed to qualify in regions to unemployed workers in each of 2009–10 with high unemployment rates, and claimants and 2010–11, even though the average benefit in these regions receive more weeks of bene- paid was well under $400 per week. Special fits. The qualifying level for new entrants and measures to support work-sharing under EI re-entrants to the workforce is 910 hours or helped prevent many layoffs, and some un- almost six months of steady full-time work. employed workers benefited from extended In an average EI region with a 7% to 8% training benefits. unemployment rate, a worker needs at least That said, even at the peak of the reces- 630 hours — about four months of full-time sion, most unemployed women and young- work — to qualify for EI. That worker will be er workers fell through the cracks, and one eligible for between 17 weeks and 40 weeks of in four workers who were laid-off and quali- benefits, depending upon how long they’ve fied for EI exhausted their benefits before worked over the previous year. That leaves finding a new job. out many workers who work part-time or in Even though the jobs crisis is still a real- temporary jobs, or combine such precarious ity, special EI measures introduced as part of work with spells of self-employment. the Economic Action Plan in the 2009 budget EI is not keeping up with the realities of have come to an end. On top of that, amend- today’s job market in which one in five jobs ments to EI introduced in the 2012 budget, are part-time, and one in seven jobs are con- such as changes to the Working While on tract or seasonal jobs. A key problem with Claim Pilot Project, make the most vulner- temporary and part-time employment is able beneficiaries worse off. that, when the job ends, a worker is unlike-

Doing Better Together: Alternative Federal Budget 2013 63 ly to qualify for EI, or may qualify for as few job vacancy in Newfoundland and Labra- as 14 weeks of benefits. dor. There were nearly 300,000 more Can- Today there are still almost 1.4 million adians looking for work in October 2012 than unemployed workers in Canada and the there were in October 2008, at the start of the unemployment rate has been around 7.4% Great Recession. In October 2008, 63.5% of throughout 2012, well above the pre-reces- Canadians were employed. This number has sion level of 6.0%. been at or below 62% since February 2009. It is troubling that the number of regular Fewer than 40% of Canada’s 1.4 million EI beneficiaries has fallen much more rapid- unemployed workers collect regular EI bene- ly than the number of unemployed workers fits. This is a lower proportion than before the over the course of the recovery. Between June Great Recession, even though the national 2009 (when the recession was at its worst) unemployment rate is higher than in 2008. and August 2012, the percentage of unem- Our EI system fails the unemployed and fails ployed workers collecting regular EI benefits to reflect the new realities of the job market. fell sharply, from over 50% to a low of 37%. In 2010 and 2011, 54% of new jobs for This is a lower proportion than before the re- persons aged 25–44 were temporary, 57% cession, even though the national unemploy- of new jobs for women were temporary and ment rate is higher than in 2008. 95% of new jobs for women aged 25–44 were Unemployed workers find themselves in- temporary. creasingly ineligible for EI benefits for two In 2011, the rate of eligibility for regu- key reasons. First, many (about 25% of all lar benefits from EI was the lowest since claimants) run out of benefits before they can 2003, the earliest year that there is compar- find a new job. Second, many unemployed able data. The reason for the lower eligibil- workers are laid off from temporary and part- ity rate in 2011 was an increase in the num- time jobs that don’t provide sufficient hours ber of workers without sufficient qualifying of work to qualify, or only qualify them for hours. And the reason for this, Statistics Can- very few weeks of benefits. ada says, is an increase in the proportion of The situation is especially grim in Ontario. unemployed workers who last worked a tem- Fewer than one in three (26%) of unemployed porary, non-seasonal job. Ontario workers received regular EI benefits Changes to EI made in the 2012 feder- in August 2012. This is well below the national budget will result in lower wages and al average of 37%, even though the Ontario worsening working conditions for workers, unemployment rate was above the national by changing the definition of suitable work, rate (7.9% compared to 7.4%). and creating three categories of EI beneficiaries based on their claim history. Current Issues The definition of suitable work was removed from the legislation and placed in regulations. The clear intent of having suit- There remains significant slack in the Can- able work defined in legislation was to allow adian labour market, with over five unem- for a period of job search to find a job match- ployed workers to every job vacancy,2 reaching previous employment wages and condi- ing just over 11 unemployed workers for every

64 Canadian Centre for Policy Alternatives tions, making sure to appropriately match tion on the first $100 per weekor 50% of skills and work and to prevent the unemployed weekly earnings, whichever is greater. from driving down wages and conditions. (Cost: $200 million/yr.)5 Instead, what constitutes suitable work • The AFB provides an additional benefit is now dependent on a claimant’s EI history. extension to long-tenure displaced work- All three categories of claimants will be ex- ers who face the most difficulties finding pected to accept work at lower wages at some new jobs, and often experience large in- point during their claim, or risk being cut off come losses due to a permanent layoff. from benefits. Frequent claimants must ac- The government’s own Expert Panel on cept work at a 20% pay cut immediately, and Older Workers recommended special EI this rises to 30% after six weeks.3 measures to support this group as a perma- The pan-Canadian Working While on Claim nent feature of the EI system. (Cost: $100 Pilot Project allowed claimants to earn 40% of million/yr.) weekly benefits without benefits being clawed back. This project had the greatest effect on • The AFB continues extended training women, single parents, part-time, and tem- benefits under EI for unemployed work- porary workers.4 The 2012 budget amended ers, and promotes work-sharing arrange- the clawback to start at 50% of all earnings. ments that have a training component. This makes work more expensive for those The Economic Action Plan provided spe- who can only find part-time employment. cial training benefits to 12,000 long-ten- Finally, as recently emphasized by the Or- ure unemployed workers under programs ganisation for Economic Co-operation and that have now expired. Extended income Development, there is a danger that the long- replacement is especially needed by dis- term unemployed will lose touch with the job placed workers who lack the literacy and market and current skills and become perma- numeracy skills needed to enter vocation- nently unemployed. This would be especial- al skills training programs. (Cost: $300 ly regrettable in both human and economic million/yr.)6 terms, given that few new workers are pro- • The AFB also introduces a pilot project to jected to enter Canada’s workforce in the years establish a uniform national entrance re- ahead as the baby-boom generation retires. quirement of 360 hours. Only about four in ten workers now qualify for regular AFB Actions EI benefits due to the disproportionate growth of temporary and part-time jobs. • The AFB renews the Extended Employ- The annual cost of a national 360-hour ment Insurance Benefits Pilot Project, entrance requirement has been estimat- phasing regions out only when their un- ed by the Parliamentary Budget Officer employment rate falls below 8% for 12 con- to be $1.1 billion. The pilot project will secutive months. (Cost: $400 million/yr.) allow the government to judge whether concerns about the labour-market impli- • The AFB replaces the Working While on cations of a lower entrance requirement Claim Pilot Project with an earnings exemp- are well-founded. The lower entrance re-

Doing Better Together: Alternative Federal Budget 2013 65 quirement should also apply to new labour Notes force entrants and re-entrants, who now 1 Canadian Employment Insurance Commission. (2012). Monitoring and must jump over a 910-hour hurdle. ($300 Assessment Report 2011. Gatineau, Quebec. p. 211. million/yr.) 2 Job vacancies, three-month average ending in September 2012, Statistics Canada http://www.statcan.gc.ca/daily-quotidien/121212/dq121212a-eng.htm

3 http://www.hrsdc.gc.ca/eng/employment/ei/BIA/defining.shtml

4 Canadian Employment Insurance Commission. (2011). Monitoring and Assessment Report 2010. Gatineau, Quebec., p.149.

5 Budget 2011 estimated $130 million for $75 per week or 40% of weekly earnings.

6 The average Career Transition recipient benefited from 36 extra weeks of EI regular benefits. $300 million gives us 20,000 trainees at $400 per week for 36 weeks.

66 Canadian Centre for Policy Alternatives Energy

Background Interprovincial Disparities

The “bitumen boom” is fundamentally reshap- Income flows from commodity industries, ing Canada’s economy, our federation, our en- as currently managed, are increasing inter- vironment, and our place in the world — for personal and interprovincial inequality and decades to come. heightening social, economic and politic- Within the past 10 years, Canada has under- al tensions within Canada. Through its ac- gone an historic shift from being a country tions and inactions, the federal government with a diversified export base, the majority of is reinforcing these inequalities and econom- it value-added products, to being an export- ic imbalances. er of predominantly unprocessed and semi- In the wake of the petro-boom, Alberta processed goods. The decline of manufac- is rapidly distancing itself from other prov- tured exports has outweighed the expansion inces in its revenue-raising capacity and its of resource exports, and hence Canada’s trad- income per capita. (It should be noted that itional merchandise trade surplus has turned inequality among Albertans is growing fast- into a deficit. Indeed, with the exception of er than the Canadian average and there is an the U.S., Canada has trade deficits with all increasing concentration of the super-rich its major trading partners. Since 2008, it has in Alberta.) Rather than strengthen the fed- also registered large current account deficits eral-provincial transfer system to mitigate (including goods, services, travel, and invest- this growing interprovincial inequality the ment income). federal government has weakened it further. The Harper government is reinforcing The Harper government’s recently an- Alberta’s efforts to accelerate the extraction nounced cuts to health transfers and espe- and export of unprocessed bitumen, includ- cially to the equalization transfer program ing through proposed new pipelines to the will make the Government of Canada less U.S. and the Pacific coast. able to fulfill its constitutional obligation to Canadians, including Albertans, have ensure that all provinces have sufficient rev- been short-changed by the current develop- enues to provide a comparable level of pub- ment model, which deliberately suppress- lic services at comparable levels of taxation. es the incomes flowing to workers and com- The federal government’s only direct ac- munities, and shows no interest in leveraging cess to petroleum revenues is through the 15% long-term opportunities associated with sup- general corporate income tax (CIT), which has ply-chain deepening and other secondary been gradually lowered from 29.1% in 2000. development associated with the industry. Factoring in tax subsidies, the oil and gas sector’s effective federal tax rate is just 7%.

Doing Better Together: Alternative Federal Budget 2013 67 Climate Change pacts of C-45 on environmental protection of First Nations lands. Along with fossil fuels generally, the bitumen Serious concerns exist about the infusion industry has become Canada’s fastest grow- of public funds to help already-profitable pet- ing source of greenhouse gas (GHG) pollu- roleum companies develop carbon capture tion. As carbon emissions from bitumen pro- and storage (CCS) technology, which, without duction continue to grow, they swamp efforts a realistic price on carbon, is not economic- to reduce GHG emissions in other sectors of ally viable (not to mention the many technic- Canada’s economy. al and environmental safety obstacles facing Canada has broken and formally aban- the technology.) CCS funding is not remotely doned its Kyoto commitments and will not matched by support for conservation, renew- likely meet even its much weaker Copenhagen able energy, or energy efficiency initiatives. commitments. The federal government refus- Moreover, it is highly unlikely that existing es to put a price on carbon, either through a CCS projects will make any meaningful con- carbon tax or through an emissions trading tribution to meeting Canada’s climate targets system. Its regulations on the petroleum infor 2020 and beyond. dustry are weak, postponed and easy to avoid. With the increase in political power of the Through its omnibus Bill C-38, the Harper petroleum industry, the federal government government gutted the federal environment- has acquired the characteristics of a classic al review process in order to facilitate rapid “petro-state”: an industry-dominated lobby resource and pipeline development. system, tight control over information, vilifi- Its current climate “plan” calls for per- cation of perceived enemies, unprecedented formance standards for each of Canada’s foreign lobbying, and general denial of the so- industrial sectors. Its recently announced cial and environmental problems associated regulations to cut emissions from coal-fired with the bitumen boom (e.g., climate change power plants will allow them to run for up to and the impact on First Nations). The over- 50 years without any limit on their GHG emis- all policy mentality of government seeks to sions. Regulations for GHG emissions from oil reaffirm and reinforce the power and profit- and gas operations continue to be delayed. ability of the petroleum industry. Bill C-38, the 2012 budget implementa- Government politicians downplay the tion bill, and its sequel, Bill C-45, amended international scientific consensus on the ser- dozens of pieces of legislation. Many of these iousness of the climate threat, muzzle govern- changes were aimed at facilitating faster un- ment scientists, exaggerate the effectiveness impeded development of petroleum projects of their own measures and pit environment- and associated export infrastructure, such as al priorities against the economy. pipelines and shipping terminals. The implications of these unprecedented and far- Current Issues reaching measures are only now becoming understood — sparking, for example, the Idle The Alternative Federal Budget addresses the No More campaign’s efforts to expose the im- negative impacts of the current unregulated approach to energy extraction and ex-

68 Canadian Centre for Policy Alternatives port through a portfolio of measures aimed and upgrading for workers along with at managing and mitigating the economic adequate income and mobility support. and environmental side-effects of energy de- • A long-term plan to transition to a low- velopments — and enhancing the net bene- carbon economy, shifting Canada’s econ- fits of those projects that are allowed to pro- omy from over reliance on the resource ceed. The broad goals of the AFB’s energy sector to a more balanced sectoral struc- strategy include: ture, and to a greater reliance on renew- • Macro-economic measures to proactively able energy sources. Some specific policy monitor and regulate Canadian currency measures toward this end are described fluctuations, stimulate capital investments more fully in the following chapter on in value-added non-resource sectors of the Sector Development Policy. They include: economy, and generate funds required to • Sector development councils that bring finance these public investments. together stakeholders in strategic sectors • Measures to achieve energy security for to develop plans for the transition to a eastern Canadian provinces that are heav- low-carbon economic future. These coun- ily dependent on insecure, expensive cils will access eco-industrial expertise, sources of imported oil. and assist in supporting the implementation of such plans through capital-fi- • An energy policy that asserts more demo- nancing, public procurement and relat- cratic control over Canada’s petroleum in- ed incentives. dustry by regulating the export of oil to achieve energy and environmental con- • A plan to develop new clean or green servation objectives, puts a moratorium technologies through, for example, a na- on the construction of new pipelines for tional low-carbon energy grid, renewable the export of bitumen, and redirects pet- energy (e.g., wind, solar, geothermal) in- roleum supplies to Eastern Canada. dustries, a high-speed public rail network in selected corridors, and the manufac- • A foreign investment review process that ture of greener products. provides a clearer definition of the “net benefit” to Canadians from foreign take- • Bold actions on energy conservation and overs, specifies performance measures efficiency by setting green building stan- used to evaluate net benefit, and desig- dards and retrofitting residential, com- nates energy as a strategic sector in which mercial, and public buildings in Canada foreign control is limited. over the next 20 years.

• A just transition strategy for workers affected by energy regulations that promotes AFB Actions the development of new green industries, which can adapt and use the knowledge • Initiate a process to develop a nation- and skills acquired in that industry, and al energy plan in collaboration with the that provides coordinated skills training provinces, territories and First Nations to: slow the pace of bitumen development,

Doing Better Together: Alternative Federal Budget 2013 69 use petroleum production for domestic conditional on the bitumen industry in- needs first, upgrade and refine resour- stituting a targeted plan for progressive ces in Canada before export, and develop reductions in carbon emissions in their stronger linkages to upstream and down- bitumen production to ensure Canada stream energy-related activities (thereby meets and exceeds its international cli- sparking more investment and employ- mate commitments. ment in secondary and supply-chain in- • Reverse federal corporate income tax cuts dustries). This plan would address and on petroleum producers (both upstream mitigate the effects on the climate and and downstream) and restore the former interprovincial inequality of bitumen de- 28% federal CIT rate that prevailed before velopment. 2000. This rate change is justified by both • To ensure that production and distribu- the extraordinary and excessive profitabil- tion of petroleum to eastern provinces is ity of the sector, and by the need for the part of a clearly defined and timed tran- industry to internalize (via government sition strategy from oil dependency to a fiscal policy) the broader external costs of renewable energy future, a surtax will their operations, including environment- be applied (e.g., based on the difference al costs. The proceeds of this higher CIT between the lower cost of Alberta bitu- rate will help to capitalize the proposed men and the higher cost of current oil National Investment Fund described in imports), with the revenue that is gener- the next chapter on Sector Development ated earmarked for public investments Policy. Additional AFB measures (de- in renewable energy development in the scribed in the Environment chapter be- eastern provinces. Such a plan would ginning page 71) will seek to eliminate have clear phase-in and phase-out per- remaining fossil fuel subsidies and imple- iods. To be effective, the initiative will be ment a harmonized national carbon tax.

70 Canadian Centre for Policy Alternatives Environment

Background Market Prices That “Tell the Environmental Truth” Canada’s environment is central to Canadians’ Market prices do not currently “tell the en- prosperity. It provides clean air and water for vironmental truth.” Indeed, as Sir Nicholas daily living, natural resources that power our Stern has pointed out, “climate change is the lives and economy, and unique wild spaces greatest market failure the world has seen.”1 and species. Canada’s economy will only be truly sus- Delaying action on environmental sustainable when market prices for goods and tainability will result in missed business services reflect the true value of the resour- opportunities, increased financial and eco- ces they consume, and the full costs to the nomic costs for future environmental protec- environment and human health created by tion, and greater risks to Canadians’ health their development, production, transporta- and the climate. tion, sale, use and disposal. Two fiscal strategies are of particular im- Adherence to the “polluter pays” prin- portance: ciple2 is central to both of these strategies. Such policies will reward environmental Subsidy Reform for Natural Resource business leaders, preserve natural resources Exploration and Development for higher-value uses, stimulate environment- Governments need to “level the playing field” al innovations with global export potential, for natural resource exploration and develop- and expedite the development of economies ment (including recycling and conservation where success leads to concurrent environ- options) so that the fiscal treatment of dif- mental and human health benefits. ferent natural resources is equitable, or so Implementing a well-designed price on that fiscal policies favour resources whose greenhouse gas (GHG) emissions3 is the most life-cycle and human health impacts are crucial step towards matching Canada’s econ- more positive. omy with a healthy environment, because it The first step in implementing such re- will set a price on pollution that spurs emis- form is to end subsidies for energy sources sion reductions throughout the economy. But that are non-renewable or whose develop- market-based economic instruments alone ment or use is significantly environmental- cannot do the job. They must be combined ly damaging. with government leadership, strong regulations, education and R&D, pro-active industrial policies, and significant public investment. The necessary change will lead to job losses in some sectors, and gains in others.

Doing Better Together: Alternative Federal Budget 2013 71 Full-cost pricing to protect our climate and efficient use of clean, renewable energy. This other resources will impose proportionate- switch will not happen overnight. But it has ly greater costs on lower-income families, to begin now and be unrelenting for the next who are less financially able to adapt to three to four decades in order for Canada’s change. Polluter-pay and user-pay policies resulting GHG pollution to be reduced virtu- must therefore be balanced with the ability- ally to zero by 2050. to-pay principle. The best climate science indicates that in order to have a likely chance of keeping global Current Issues warming from exceeding dangerous levels, greenhouse gas pollution from rich, industrialized countries such as Canada must be The Government of Canada has made some virtually eliminated in the next forty years.4 progress over recent years on conservation, The federal government’s role, there- subsidy reform, fresh water, and green infra- fore, is to develop and implement policies structure for First Nations communities. How- that facilitate that transition, by reducing ever, much more is needed to complete these the amount of energy we need to power our efforts, and to strengthen Canada’s crucial en- economy, and shifting from dirty fossil fuels vironmental law and science capacity. Tak- to the efficient use of renewable energy. The ing these actions sooner rather than later climate change-related policies presented in will increase their benefits and decrease the this chapter — funding sustainable energy related costs. programs, phasing out fossil fuel subsidies, The AFB believes the best current budget and introducing carbon pricing — are import- opportunities in this area relate to: ant steps in the fight against climate change • Implementing a price on greenhouse gas but are insufficient by themselves to get Can- emissions through a carbon tax; ada on the path to virtual elimination of fossil fuel use. • Subsidy reform in the extractive industries; To contribute fully to that goal, the fed- • A national conservation plan: securing eral government must implement a compre- Canada’s natural advantage for future hensive suite of policies that addresses all generations; the major users of fossil fuel and sources of greenhouse gas pollution. That suite must in- • Strengthening Canada’s environmental clude broad policies, such as carbon pricing, law and science capacity; and that encourage the switch to clean, renew- • Sustainable energy for Canada: from re- able energy. Many more policies must target search to deployment. specific sectors or activities, including: the electricity sector; the manufacturing sec- Implementing a Price on Greenhouse tor; the oil, natural gas, and refining sec- Gas Emissions Through a Carbon Tax tors; residential, commercial, and institutional buildings; transportation sub-sectors Tackling climate change will involve an on- such as personal vehicles, freight transpor- going switch away from using fossil fuels such tation, public transportation, rail, domes- as coal, oil, and natural gas, and towards the

72 Canadian Centre for Policy Alternatives tic and international aviation, and off-road house gas emissions, maintain strong eco- vehicles; the waste sector; the agricultural nomic growth, and generate jobs. The HCT sector; and energy-consuming goods such will be integrated with and consistent with as furnaces, water boilers, appliances, and provincial carbon taxes — such as B.C.’s tax, air conditioners. which rose to $25 a tonne on July 1, 2012 and Some of these require budgetary and is set to rise to $30 a tonne by 2013 — with fiscal measures. Others are best addressed half the revenues going to provincial govern- using regulatory measures, but will none- ments. The HCT will apply to all non-renew- theless require budget allocations in order able fuels based on their CO2 emission factors. for sufficient capacity to exist within gov- • The AFB will transfer half of HCT rev- ernment for developing and implementing enues to the provinces to fund tax reduc- those regulations. tions — including direct payments to in- Implementing a robust price on GHG emis- dividuals — and further climate-change sions is crucial, and will accelerate Canada’s abatement measures. (See the Tax chap- transition to a low-carbon economy. ter for costing.) The AFB will introduce a price-based carbon tax — a measure that noted econo- Subsidy Reform in the mists and climate experts5 say is more effi- Extractive Industries cient and effective than a quota-based cap- and-trade system. Further reducing tax preferences for the oil A carbon tax doesn’t guarantee specific and gas, and mining sectors will create mul- emission reductions, but it does allow busi- tiple benefits, particularly in reducing the defi- nesses to plan for the future. It also elimin- cit, increasing the neutrality of the tax sys- ates the speculation, windfall profits, and tem, and advancing Canada’s commitment false savings that accompany a cap-and- to the G20 to eliminate inefficient fossil fuel trade system. subsidies. Many of these tax preferences were introduced in the 1970s, when corporate in- • The 2013 AFB introduces a national Har- come tax rates were higher, the environment- monized Carbon Tax (HCT), set at $30 al assessment process was more thorough, per tonne, which will commence on July and the resource sector was less dominant. 1, 2015. (See the Tax chapter for costing.)

Detailed analysis by Marc Jaccard, Can- A National Conservation Plan ada’s foremost climate-change economist, The AFB will take action to begin implemen- has shown that to meet the 2˚C target to pre- tation of Canada’s National Conservation vent significantly damaging climate change, Plan — a commitment in the 2011 Speech from Canada needs to introduce a carbon price of the Throne — and ensuring it focuses on scal- $30 a tonne immediately and raise that price ing up efforts to value and conserve nature to $200 a tonne by 2020.6 If the federal gov- for the benefit of current and future genera- ernment invests HCT revenues in renewable tions of Canadians, and on ensuring all par- energy and tax refunds for individuals, Can- ties work together in a coordinated way to ada can achieve deep reductions in green- achieve this goal.

Doing Better Together: Alternative Federal Budget 2013 73 Restoring Environmental Law • preserve current federal environmental and Science Capacity science capacity; and

The Government of Canada’s environmental • ensure that any proposed changes to en- laws and science capacity are fundamental vironmental laws are reviewed by the most to its ability to protect Canadians’ economic relevant House of Commons committee(s), prosperity, health, and quality of life, and the and that public input is incorporated. ecosystems and natural resources on which they depend. Sustainable Energy for Canada: However, the Government of Canada From Research to Deployment passed two omni-budget bills in 2012 that Last year, the global market for clean tech- could have serious impacts on the environ- nologies reached US$1 trillion. Canada has ment. The repeal and replacement of the an excellent resource base for renewable Canadian Environmental Assessment Act re- energy and a strong track record of energy sulted in the cancellation of 3,000 environ- innovation. A federal sustainable energy mental assessments thereby stifling critical strategy that spans the full spectrum of clean information on many oil, gas and other pro- energy development — from innovation to de- jects. The budget bills also clawed back en- ployment — will help Canada compete inter- vironmental safeguards through the Fisheries nationally. The AFB will invest in five target- Act, the Species at Risk Act and the Navig- ed initiatives that encompass each phase of able Waters Protection Act. the clean technology spectrum. To ensure Canada’s environmental laws and science capacity continue to effectively Canada’s Next Long-Term fulfill their critical roles, the AFB will restore Infrastructure Plan the enforcement and implementation of Can- ada’s environmental laws by: A new ReBuild Canada Program has the unique potential to build on the Building • establishing a comprehensive, web-ac- Canada Plan’s progress and to collaborate cessible and continually updated data- with provincial, territorial and municipal base of all federal environmental enforce- governments to strengthen and re-envision ment and compliance data ($2 million per Canada’s infrastructure to set us on a com- year for five years); and petitive and resilient path for the 21st century. • financially supporting the provinces and (See Cities and Communities chapter on page territories to ensure they can effectively 41 for more details.) deliver these laws where intergovernmental arrangements have been adopted ($5 Green Infrastructure in First million per year for five years). Nations Communities

As a fundamental complement, the AFB There are major opportunities to pursue co- will also affirm the importance of existing benefits with First Nations communities by environmental laws and science capacity by integrating green infrastructure thinking committing to: into the programs and policies needed for

74 Canadian Centre for Policy Alternatives planning, building, updating and repairing • not renewing the Mineral Exploration Tax First Nations infrastructure. (See First Na- Credit for flow-through shares (mining). tions chapter on page 77 for more details.) Investments Canada’s Fresh Water The AFB will also invest in these priority en- Canada’s freshwater ecosystems are a tremen- vironment and conservation measures: dous asset deserving of world class protec- • A National Conservation Plan: tion. (See Water chapter on page page 151 for more details.) • Oceans: $65 million per year, ongoing.

AFB Actions • New National Parks: $20 million per year, ongoing, plus a $50 mil- National Harmonized Carbon Tax lion one-time investment.

• Protecting National Parks’ Eco- • The AFB will implement a national Har- logical Integrity: $10 million in monized Carbon Tax (HCT) in July 2014, 2013–14, rising over five years to combined with strategic measures to pro- $50 million per year, ongoing. tect Canadians and vulnerable trade sectors from adverse financial impacts. More • Migratory Birds: $30 million per than half of HCT revenue will fund a pro- year, ongoing. gressive annual green tax refund of $300 • Environmental Law and Science Cap- per adult and $150 per child. acity: $7 million per year for five years Eligibility for the tax refund will start on • Sustainable Energy for Canada: From January 1, 2015, preceding implementation Research to Deployment: The AFB will of the HCT, to ensure that all middle- and invest in five targeted initiatives that en- low-income families are reimbursed with a compass each phase of the clean tech- credit equal to the direct impact of the car- nology spectrum. bon tax for an average family. 1. Fostering innovation in energy Subsidy Reform in the storage ($100 million per year for Extractive Industries 5 years).

The AFB will enact the following subsidy 2. Increasing investment in Sustain- reforms (see Taxation chapter for costing): able Development Technology Can- ada ($100 million per year for 5 • enabling the Canadian Exploration Ex- years). pense only for unsuccessful exploration; 3. Supporting “Green Energy Bonds” • removing the Accelerated Capital Cost Al- to increase private investment in lowance for the mining sector; and low-carbon initiatives ($100 million per year for 5 years).

Doing Better Together: Alternative Federal Budget 2013 75 4. A National Green Homes Strategy Notes to build on energy efficiency suc- 1 October 30 2006, Press note: Publication of the Stern Review on the Eco- cesses in Canadian houses ($250 nomics of Climate Change, http://www.hm-treasury.gov.uk/newsroom_ and_speeches/press/2006/press_stern_06.cfm million per year for 5 years). 2 In Budget 2005, the Government of Canada defined “polluter pays” as meaning that “the polluter should bear the costs of activities that directly 5. Securing Arctic and remote com- or indirectly damage the environment. This cost, in turn, is then factored into market prices.” [http://www.fin.gc.ca/budget05/bp/bpa4e.htm] On munities’ local energy supply ($12 May 29, 2007, as Environment Minister, the Hon. John Baird re-affirmed the government’s commitment to this principle by telling the House of million per year for five years). Commons Standing Committee on the Environment and Sustainable De- velopment that the government “believes that the polluter should pay.” http://www.parl.gc.ca/HousePublications/Publication.aspx?DocId=297 7081&Language=E&Mode=1

3 A price on greenhouse gas emissions — a “carbon price” — can be implemented through a cap-and-trade system or a carbon tax. For details on recommended design, see later in this chapter and the Green Budget Coalition’s Recommendations for Budgets 2008 and 2009, available at www.greenbudget.ca.

4 Intergovernmental Panel on Climate Change, analyzed and cited in “A Copenhagen Climate Treaty: A Proposal for a Copenhagen Agreement by Members of the NGO Community,” pp. 16–18.

5 http://www.project-syndicate.org/commentary/stiglitz121/English; http://www.carbontax.org/; http://www.nytimes.com/2009/12/07/ opinion/07hansen.html?_r=2

6 See Climate Leadership, Economic Prosperity, Pembina Institute and David Suzuki Foundation, October 2009. http://www.pembina.org/pub/1909

76 Canadian Centre for Policy Alternatives First Nations

Background • Strengthening First Nations economies

While economic crisis and austerity measures Transforming the Fiscal Relationship have become the focus of Canadian politics First Nation governments seek fair and trans- over the last few years, First Nations have parent fiscal transfers, reflective of the ori- experienced a prolonged state of crisis since ginal nation-to-nation relationship. Estab- the colonization of Turtle Island. As a result lishing adequate, stable, and predictable of dispossession and marginalization, First federal transfers constitutes a prudent and Nation citizens fare worse than Canadians effective policy and is the most fiscally re- on virtually every indicator of well-being — in sponsible course of action. high rates of poverty, lack of adequate hous- Funding provided to First Nation governing, lack of clean drinking water, barriers to ments is too low to meet the growing needs of economic and educational opportunities, their citizens. In 2010, First Nations received and high rates of violence experienced by less than half of the per capita amount spent Indigenous women and girls. in local programs and services on Canadian This crisis poses complex challenges that citizens ($8,750 compared to $18,724). Cur- require a holistic and principled approach rent financial transfers are also not flexible founded in the original nation-to-nation re- enough to provide decision-making power lationship between First Nations and the for First Nation governments. Furthermore, Crown. It requires an approach that must fur- funding is treated as “discretionary” with- ther the implementation of Treaties and rec- out legal protections, resulting in unpredict- ognize and support the restoration of First Na- able funding, instability, and the inability to tion nationhood, jurisdiction, and prosperity. engage in long-term planning. In addition, It is time for the federal government to the true service population for many First make economically prudent decisions, ful- Nation governments includes all citizens of fill its legal and fiduciary obligations, and the First Nation, not just status Indians liv- abandon its paternalism so that First Na- ing on-reserve, and in some cases the cur- tions can implement change. The following rent approach excludes 50% or more of the areas are highlighted as requiring a marked actual membership. departure from current federal spending pat- A new funding relationship is required. terns and priorities: It must reflect the spirit and intent of Treat- • Transforming the fiscal relationship ies and inherent jurisdiction, be a mechanism to ensure parity with provincial funding • Investing in First Nations education rates, and reflect the real costs of delivering • Supporting safe and healthy communities services.

Doing Better Together: Alternative Federal Budget 2013 77 Investing in First Nations Education Supporting Safe and Healthy Communities A considerable gap between educational achievement and inputs exists with respect Health outcomes are directly tied to a num- to First Nations education. A discriminatory ber of social determinants, including edu- double standard in the provision of compar- cation, employment, gender, environment- able inputs has been allowed to exist despite: al health, cultural connectedness, housing, i) numerous pledges by the federal govern- and degree of individual and collective self- ment to address the education attainment determination. Improving First Nations health gap; ii) the fact that the First Nations popu- outcomes therefore requires significant in- lation is growing at twice the rate of the Can- vestment in First Nations infrastructure, es- adian population; and iii) that by 2020 over pecially water, housing, education, health, 50% of the First Nations population will be and emergency services. under the age of 25. First Nations water quality continues Significant long-term economic returns to be a national concern. The National En- for the Government of Canada can be de- gineering Assessment released by the fed- rived from improved educational outcomes eral government on July 14, 2011 concluded for First Nation citizens. The ongoing cost that 73% of First Nation water systems are of the status quo in lost productivity and in- at high or medium risk, which is particular- creased support for First Nations may now ly disconcerting given that the 2003 Nation- be over $12 billion per annum. al Engineering Assessment identified 29% The federal government estimates that of First Nations systems to be at high risk. over 600,000 Indigenous youth will enter In any given month of 2012, approximately the labour market between 2001 and 2026. 120 First Nations communities were under a This presents a unique opportunity at a mo- boil water advisory. ment when the Canadian economy faces a The housing crisis in Attawapiskat — the huge wave of retirements and the problems focus of media attention last winter — is not associated with an aging population. Accord- an isolated event but indicative of the urgent ingly, access to professions and trades must and massive housing needs in First Nation ensure First Nation citizens can participate communities. A February 2011 evaluation of more fully in the job market as well as in cre- on-reserve housing concluded: “despite on- ating jobs. This entails investing in all levels going construction of new housing on-re- of First Nation education, training and skills serve, the shortfall still exists and appears development. to be growing rather than diminishing.”1 First Nations must have jurisdictional Overcrowding and the prevalence of mould space to pursue their own initiatives related in many First Nation homes has heightened to productivity and economic growth. The pri- the urgency for funding to protect the health ority must be on education and investments of occupants. Substandard housing has been to create First Nation education systems that exacerbated by environmental challenges, serve the needs and goals of First Nations, such as floods and forest fires. More than 18 as well as benefiting the Canadian economy. months after the 2011 floods in Manitoba, almost 2,000 First Nation citizens remain

78 Canadian Centre for Policy Alternatives away from their homes, which are no long- cess; and by ensuring that the Government er habitable. of Canada respects its obligations to First Na- It is estimated that to fill the gap for First tions by undertaking negotiations on a 2014 Nations education facilities, 40 new schools Health Accord and including a parallel com- are needed at an average cost of $12.5 mil- mitment for a First Nations Health Transfer. lion each. This figure does not include oper- First Nation leaders and communities ations and maintenance (O&M) funding or have urged a coordinated and comprehen- needed renovations to existing schools. Ac- sive approach to mental health and addic- cording to a 2009 report prepared by the Of- tions programming. In addition, the feder- fice of the Parliamentary Budget Officer, Ab- al government needs to provide continued original Affairs and Northern Development support for culturally safe mental health Canada’s planned capital expenditures over services, such as those through the Cultur- the next three years are insufficient by $169 al Support Providers, which are supported million to $189 million annually, while O&M by the Indian Residential School Resolu- expenditures will be underfunded by $11 mil- tion Health Support Program and commun- lion annually.2 ity-based healing programs by the Aborigin- Another emerging consideration is the im- al Healing Foundation. pact of climate change, especially on northern and remote communities. Forest fires, flooding, Strengthening First and the early closing of winter roads all have Nations Economies profound impacts on the health and safety of Maximizing economic opportunity for First communities, and highlight the critical need Nations in the resource and energy sectors is a for inter-governmental protocols and robust clear priority. Specific steps required include: emergency services. The need for all-weather roads is becoming more evident, linking • Advancing and equipping First Nations not only remote communities, but also pro- with enhanced technical capacity to sup- viding access to resource development in port engagement and development of conjunction with First Nation interests and First Nation proposals on resource rev- economic development. For instance, link- enue sharing and reinvestment funds. ing Ontario’s remote communities may re- • Establishing frameworks and principles for quire a $3-billion investment. dialogue between jurisdictions to appro- Improving the health and wellness of First priately define Crown resource revenues Nations will improve their economic pros- and approaches to engagement with First pects. Canada has a fiduciary responsibility Nations on resource revenues, re-invest- to uphold the health of First Nations people, ment and/or partnership, as well as af- regardless of where they reside. Solutions to firming ongoing co-governance with an jurisdictional gaps and inequities abound — for interest to ensuring environmental sus- example, by engaging federal, provincial and tainability. First Nations governments in a collaborative First Nations-controlled health care system, • Supporting First Nation governance and as exemplified by the British Columbia pro- institutional capacity to ensure fairness,

Doing Better Together: Alternative Federal Budget 2013 79 equity and sustainability of resource rev- AFB Actions enues for the economic and social benefit of all members through transparent The social and economic costs of the status structures and processes accountable to quo are too high. The proposed structural the members. changes and investments outlined below will have a significant positive impact on First Na- As Treaty rights and title holders, First tions and our future generations. Nations seek willing partners to create economic opportunities. However, due to the Transforming the Fiscal Relationship unique relationship between First Nations and the lands we occupy, careful and thor- A new funding relationship is required. It ough consideration must be given to major must reflect the spirit and intent of Treaties projects that may result in adverse environ- and First Nations’ inherent jurisdiction, re- mental and cultural impacts. This requires spond to the real costs of delivering services, adequate time and capacity, both of which and provide incentive for leveraging addi- have been reduced by federal program cuts tional resources and maximizing perform- and changes to legislation under Bill C-38. ance standards. Since free, prior, and informed consent is the • The AFB will implement stable, equitable, foundation for successful economic partner- and long-term funding transfer mechan- ships, and since strong relationships require isms for First Nation programs and services. accountability and transparency, the direction of Canada’s fiscal policy and legislative Investing in First Nations Education agenda significantly impedes First Nations’ ability to enter into mutually beneficial part- According to First Nation studies, the total nerships in the resource sector. shortfall in the area of First Nations educa- Furthermore, First Nations traditional tion is an estimated $3 billion. For instance, economies are a rich source of economic, so- to equitably fund First Nations post-second- cial, cultural and health benefits that need to ary education, a 149% (or $481 million) in- be considered as part of larger socio-econom- crease in federal support is required. Also, ic planning, particularly in the context of in- $126 million is needed for First Nations lan- creased focus on resource development and guage instruction in schools in order to be energy generation. As such, First Nation eco- comparable with provincial funding. nomic pursuits (hunting, fishing, and other • The AFB will invest $800 million a year forms of harvesting like trapping, medicine in First Nations education systems. This gathering, etc.) should be supported through will slowly bridge the $3-billion gap built fully collaborative environmental regimes up since 1996. that respect First Nations as full partners. Supporting Safe and Healthy Communities

The National Engineering Assessment released by the federal government on July 14,

80 Canadian Centre for Policy Alternatives 2011 identifies needs of $4.7 billion in the area elders will face an uphill battle in address- of water treatment. ing basic health care needs.

• The AFB will address this need by spend- • The AFB will invest $4.7 billion over ten ing $470 million a year on water treatment years in First Nations water treatment sys- facilities over 10 years. tems, $1 billion annually to address the housing crisis, as well as $470 million in In addition, there is currently a demand the NIHB Program in 2013–14 and $805 of an estimated 85,000 new housing units million overall by 2015–16. to alleviate overcrowding and backlogs; approximately 44% of the existing housing stock Strengthening First needs major repair and another 15% requires Nations Economies outright replacement. Coupled with this is the requirement to provide lot servicing for Maximizing economic opportunities for First every new housing unit. A conservative es- Nations is a clear economic interest for all of timate to build a house is around $150,000 Canada. As title and rights holders and Treaty and about $25,000 per service connection. signatories, First Nations must be full partners in decision-making on any development • The AFB will spend $1 billion a year to al- in their territories, based on the principle of leviate the housing need. free, prior, and informed consent, and must There is also an urgent need for new in- receive a fair share of the wealth generated vestments for the Non-Insured Health Benefits from First Nation lands and resources. (NIHB) Program. The absence of these invest- • The AFB will support First Nations cap- ments will mean a shortfall of approximate- acity-building in the area of resource rev- ly $470 million next year, nearly $573 mil- enue sharing and enhanced mechanisms lion in 2013–14 and $805 million overall by to ensure free, prior and informed con- 2015–16. In 2010–11, NIHB program expendi- sent, as per the United Nations Declara- tures increased by 3.9% over 2009–10 levels. tion on the Rights of Indigenous Peoples. However, the Assembly of First Nations has This entails investments as well as legis- estimated that increases of 6.3% to 9.3% are lative and policy changes. required in various benefit areas to properly account for growth of the existing client population, new clients generated from Bill C-3, in- Notes flation, changes in health service utilization 1 Aboriginal Affairs and Northern Development Canada. (2011). Evalua- and health status, and effects of technologic- tion of INAC’s On-Reserve Housing Support (Project Number: 1570-7/07068). Ottawa: Evaluation Performance Measurement and Review Branch Aud- al change. Without a resolution to this fund- it and Evaluation Sector. http://www.aadnc-aandc.gc.ca/eng/132509936 9714/1325099426465#chp4. ing crisis, First Nation children, adults, and 2 Office of the Parliamentary Budget Officer. (2009). The Funding Re- quirement for First Nations Schools in Canada. Ottawa: Office of the Par- liamentary Budget Officer.

Doing Better Together: Alternative Federal Budget 2013 81 Food Sovereignty

Background develop its own food strategy. Both of these initiatives are primarily about the prosper- Canada urgently needs a national food policy. ity of the industrial food system — now the More than two million Canadians are food biggest, and one of the most concentrated, insecure and over 882,000 turned to food manufacturing sectors in Canada. Many Can- banks each month in 2012, a 31% increase adians believe governments have an obliga- since 2008, when the recession began.1 Farm- tion to ensure that the essentials of life, par- ers and fishers are going out of business, our ticularly food and water, are regulated in the natural environment is being pushed to the public interest, not controlled by a few cor- limit, a quarter of Canadians are overweight porations “too big to fail.” or obese, and we are one of very few indus- The People’s Food Policy2 was the first- trialized countries without either a nation- ever national food policy to be developed al food policy or student nutrition program. through a genuinely public process. Led by Having no national food policy is expen- the food movement — a diverse network of or- sive: we could be saving tax dollars by pre- ganizations and individuals working to build venting chronic, diet-related diseases; we a healthy, ecological and just food system — it could be stimulating local economies by en- is rooted in the concept of food sovereignty.3 couraging consumption of local foods; we This internationally recognized approach fea- could be revitalizing rural communities by tures several key policy elements, including: supporting family farms; we could be pro- • Ensuring that food is eaten as close as pos- tecting and enhancing our environment by sible to where it is produced (e.g., domes- promoting ecological food production; we tic/regional purchasing policies for insti- could be developing policies that assist the tutions and large food retailers). hundreds of thousands of Canadians who still experience hunger on a regular basis. Yet we • Supporting a widespread shift among are doing none of these things. food providers to ecological production in The need for change is widely recognized both urban and rural settings (e.g., organ- and plans to develop national food policies or ic agriculture, community-managed fish- strategies are being advanced by many sec- eries, indigenous food systems), as well as tors, including all five federal political par- the entry of new farmers into agriculture. ties and influential industry groups. The On- • Enacting a strong poverty elimination and tario Federation of Agriculture went so far as prevention program, with measurable tar- to trademark the expression “national food gets and timelines, to ensure Canadians strategy,” while the Conference Board of Can- can afford healthy food. ada has brought together a group of corporate investors and government departments to

82 Canadian Centre for Policy Alternatives • Creating a nationally funded Children tive initiatives at the municipal and provin- and Food strategy that ensures all chil- cial levels on student nutrition, urban gar- dren at all times have access to the food dening, emergency food relief, healthy diets, required for healthy lives (including school chronic disease prevention, farmers mar- meal and/or snack programs that provide kets, sustainable agriculture, etc., the fed- healthy, minimally-processed and -pack- eral government has largely ignored the in- aged foods from nearby farms, school gar- creasing preoccupations of Canadians about dens, school cooking, school composting, what we eat — and in some cases are not able and food literacy programs). to afford to eat.

• Ensuring that the public, especially the National Student Nutrition Program most marginalized, are actively involved in decisions that affect the food system. Canada is one of very few developed countries that does not have a national student Current Issues nutrition program. Dr. David Butler-Jones, Canada’s Chief Public Health Officer notes:

The AFB focuses on five key issues: 1) a pro- When children go to school hungry or poor- cess for food policy development; 2) a na- ly nourished, their energy levels, memory, tional student nutrition program to combat problem-solving skills, creativity, concen- hunger and malnutrition; 3) government tration and behaviour are all negatively procurement (i.e., purchasing power) as a impacted. Studies have shown that 31% means to improve our food system; 4) iden- of elementary students and 62% of sec- tifying key policies to support family farms; ondary school students do not eat a nutri- and 5) revamping the Nutrition North Canada tious breakfast before school. Almost one program to better serve the needs of north- quarter of Canadian children in Grade 4 ern communities. do not eat breakfast daily and, by Grade 8, that number jumps to almost half of National Food Policy Process all girls. The reasons for this vary — from a lack of available food or nutritious op- Despite an election promise to enact a Na- tions in predominantly low-income homes, tional Food and Farm Strategy, the federal to poor eating choices made by children government has failed to include any pro- and/or their caregivers. As a result of be- cess towards building such a strategy in its ing hungry or malnourished at school, Growing Forward 2 policy framework. Rather, these children may not reach their full food policy remains ad hoc with the depart- developmental potential — an outcome ments of Foreign Affairs and International that can have a health impact through- Trade, Environment, Agriculture and Agri- out their entire lives.4 food, Health, Aboriginal Affairs and North- ern Development, and Fisheries and Oceans, The benefits of a national student nutri- all operating independently, with more re- tion strategy are immediate — better learn- gard for export markets than for domestic ing, increased number of high school gradu- food needs. Likewise, despite many innova- ates — and long-term: higher incomes, lower

Doing Better Together: Alternative Federal Budget 2013 83 incidence of chronic diseases, lower health government procurement, including provin- care costs. Networks of farmers, food proces- cial and municipal governments, crown cor- sors, food distributors, educators, academics, porations and the broader public sector. This and others across the country are seeking solu- would remove the ability for these actors to tions. Only the federal government is missing. restrict tendering to local companies or to give preference to sustainable or local goods Supporting Local Sustainable and services.7,8 It would represent the loss to Procurement governments and public institutions of an important tool for supporting and strength- The benefits of local sustainable food procure- ening local and sustainable food systems. ment are vast and include reducing environmental impacts, supporting local economies, Family Farms creating employment, and improving health. For these reasons, support for getting local, At the same time that consumers and some healthy, and sustainable food into schools, governments are beginning to make a sus- health care facilities, and other public insti- tainable, healthy, and regional food supply tutions is growing. In 2011, a national Farm to a priority, our farming communities are ag- Cafeteria network emerged to share informa- ing, and structural, economic and practical tion, ideas, resources, policies, and best prac- challenges are preventing new and young tices. Provincial and municipal governments farmers from getting into agriculture. have begun to support local food procure- With the average age of farm operators ment. In 2009, Ontario committed $24 million now 54,9 and 75% of current farmers seeking to “develop the logistics to get more Ontario- to sell or transfer their farms in the next 10 grown food into the province’s schools, hos- years without a successor,10 agriculture faces pitals, food service companies and other in- difficult succession/intergenerational trans- stitutions.”5 In 2008, the City of Toronto also fer issues. The imminent retirement of this ag- adopted a policy that aims to have 50% local ing cohort will mean the further disintegra- food in city services. By June 2009, the city re- tion of the social fabric of rural communities ported a 13.4% increase in local food procure- and of the long-term stewardship of our farm- ment to a total of 33.4%.6 Support for local food lands, unless there are young or new farm- procurement is also strong in British Colum- ers to take its place. However, the difficulties bia where a provincial student snack program in accessing land and capital, lack of appro- has provided fresh B.C. fruits and vegetables priate processing and distribution, weather- to students in more than 14,000 B.C. schools. related risks, and the social disincentives fa- The Canadian government, however, con- cing those who wish to start a farm enterprise tinues to negotiate trade agreements likely to are often overwhelming and discouraging. restrict the ability of sub-federal governments and public institutions to support local sus- Food Security for Northern tainable procurement. Under the Compre- Communities hensive Economic Trade Agreement (CETA) In many communities in Northern Canada, being negotiated with the European Union prices for goods and services (such as food, (EU), the EU is seeking access to sub-federal

84 Canadian Centre for Policy Alternatives housing and transportation) can be double tional value), and many non-food necessities or triple those in southern Canadian loca- (e.g., disposable diapers, baby wipes, femin- tions. The high cost of living in the North is a ine hygiene products, bathroom tissue, den- result of the distance from suppliers, as well tal care items, non-prescription drugs, hunt- as the extreme climate and isolated geog- ing and fishing equipment). raphy of most communities, many not access- Although touted by AANDC as being trans- ible by road. When combined with relatively parent and successful at lowering the cost of low earned income, this high cost of living healthy food, Nutrition North Canada fails often results in widespread hunger as people to fully benefit Northerners for the follow- struggle to adequately feed their families. In ing reasons: 2005, the median after-tax income (15 years • NNC does not serve Northerners based on and older) in Nunavut was $20,042 (near- “actual need” or inability to afford food. ly $5,000 less than the Canadian average).11 The after-tax income level for the aborigin- • There is no formal process by which new al population, which makes up a majority of communities can apply to participate in the territory, was even lower at $16,069.12 In NNC, nor a plan to expand the program comparison, the cost to feed a family of four or budget. in Nunavut in 2005 ranged from $17,600 to • NNC cannot guarantee that any savings $21,100 per year.13 are passed on by participating retailers In response to the high cost of food in the to northern consumers. North, the federal government, through Ab- original Affairs and Northern Development • NNC’s cumbersome retailer obligations Canada (AANDC), administers the Nutrition limit competition on which the program’s North Canada Program (NNC), a market-based “market-driven model” relies to reduce subsidy program “designed to ensure that food costs. healthy foods are more accessible and afford- • As of 2011, the federal government no able to Canadians living in isolated Northern longer effectively monitors the cost of communities.”14 The NNC Program, which food in the North, since it relies exclu- replaced the Food Mail Program on April 1, sively on unverified food price data fed 2011, provides community-specific weight- to AANDC by a few northern retailers par- based subsidies directly to retailers on eligible ticipating in NNC. foods transported into communities by air. NNC also includes an education component • AANDC’s assumption that retailers would administered by Health Canada. Community use more cost-effective methods (e.g., eligibility and NNC subsidy rates are based sealift, barges, winter roads, warehous- on past levels of Food Mail use. Many items ing) to stock an adequate supply of non- previously covered under Food Mail are no perishable food and necessities has not longer eligible under NNC, including: most materialized. non-perishable foods (which can be trans- • NNC was implemented without meaning- ported by more cost-effective means), some ful consultation with residents of isolat- perishable foods (deemed to be low in nutri-

Doing Better Together: Alternative Federal Budget 2013 85 ed northern communities and consider- To fund this initiative the AFB implements ation of traditional foods. a 5-cent-per-litre tax on sugary soft drinks and energy drinks similar to that advocated by 16 AFB Actions Quebec’s Weight Coalition. Canadians consume over 3.5 billion litres of sugar-sweetened beverages per year.17 The tax should yield ap- National Food Policy Process proximately $150 million (roughly the entire The AFB provides a transparent, cross-sec- first year of a three-year phase-in) while dis- toral, multi-stakeholder process to establish couraging the consumption of unhealthy bev- a national food policy. This process brings erages that are much more costly in human together civil society, experts, food busi- and financial terms down the line. ness interests (including small-scale, local farmers and fishers), various levels of gov- Local Sustainable Procurement ernment involved in food policy and all rel- The AFB adopts a policy that all federal insti- evant federal departments to examine na- tutions, offices, and crown corporations (in- tional priorities for making our food system cluding prisons and military bases) set a goal fairer (reducing hunger, ensuring economic- that 25% of foods served, where suitable, will ally viable farms and fisheries, and ensuring be local and sustainable. The AFB also sup- access for Indigenous peoples to their trad- ports local and sustainable procurement poli- itional food lands and water), healthier (re- cies at public institutions at the sub-federal ducing obesity and other chronic diseases), level, including schools and hospitals. This and more sustainable (reducing the environ- means that no trade agreements or invest- mental footprint and specifically greenhouse ment protection agreements will be signed if gas emissions associated with industrial food they restrict the ability of governments, crown production). corporations, or the broader public sector to implement preferences for local and sustain- National Student Nutrition Program able food procurement. The AFB commits to pay 20% of the costs of a No genetically modified organisms shall national mid-morning snack program deliv- qualify as local and sustainable under these ering healthy, minimally processed and pack- programs and specific policies will favour or- aged foods from nearby farms to all elemen- ganic food and fair trade products when im- tary and secondary students. This program ported. The AFB financially supports certifica- will be phased in over a three-year period, tion programs related to local and sustainable with a first-year allocation of $200 million food so that farmers do not bear those costs and the amount gradually increasing over alone. Greenhouse gas emissions (e.g., for time, according to local capacity and prior- transportation) will be integrated into the ities, and the contributions of other levels of comparative cost analysis of foods sourced government. The federal contribution will locally vs. those shipped from a distance. build on existing partnerships at the local Funding incentives will be devised to assist level rather than establish a new set of na- farmers to reduce the use of pesticides and to tional priorities.15 compensate for short-term losses that could

86 Canadian Centre for Policy Alternatives occur from transitioning to a less chemical- water management or migratory wildlife ly dependent mode of production. habitat provision).

• Effective and affordable financing pro- Family Farms grams for new and young farmers that The AFB launches a Cultivating Agriculture minimize interest and debt. These will program that supports new, established and take the form of loan guarantees, “patient retiring farmers. The underlying goal of the capital,” start-up grants and equity finan- program is to increase the number of farmers cing programs, as well as partial student in Canada, reversing a seven-decade trend. loan forgiveness for those who remain in The program consists of financial and educa- the profession for a minimum of five years. tional components (Cost: $650 million/yr.): Educational Incentives • Financial — income support and investment initiatives. The educational component of Cultivating Agriculture will foster knowledgeable and • Educational — training initiatives that resilient farmers by establishing: cover production and specific business management needs of new and estab- • Appropriate and responsive research and lished farmers. extension services focused on practices and technique rather than simple prod- Financial Incentives uct development. These services will be delivered through farmer organizations The financial component ofCultivating Agri- and help farmers innovate, become re- culture will provide stability and new poten- silient, farm better, and increase environ- tial for farm operations by including: mental goods and services. Farm organiz- • Net farm income targets and programs to ations will set the research priorities and attain those targets. Net farm income targets drive field and farm-centred innovations. will ideally be obtained from the market- • New farmer training and support pro- place and cover average costs of sustain- grams based on a sustainable livelihoods able production as well as a reasonable in- framework that provide business train- come and return on investment. When the ing, mentoring and apprenticeship pro- net farm income targets cannot be met due grams, land-link and transfer programs, to weather conditions or market failure, a production practices, conservation strat- capped aid program that supports appro- egies, marketing and market access. Pro- priate-scale family farms will be available. grams tailored for new farmers will also • Incentives (e.g., tax reductions or classifi- include “farm experience” programs that cations) for sustainable agriculture prac- help new entrants decide if agriculture is tices such as those demonstrated through the right career for them. Environmental Farm Plans, or for environ- • Extension services across Canada, utiliz- mental goods and services provided by ing a range of traditional and innovative farms (e.g., a tax reduction for floodplain service delivery models. Programs will

Doing Better Together: Alternative Federal Budget 2013 87 promote collaborative initiatives between The results of the research undertaken agricultural organizations, new farmer will be combined with an evaluation of the initiatives, provincial and regional gov- efficacy of the program expansion to deter- ernments, and educational institutions. mine a nutrition program that truly serves northern communities. Food Security for Northern Communities Notes The AFB supports food security in northern 1 Food Banks Canada. (2012). Hunger Count 2012, p. 4. (http://www. communities by increasing the funding for foodbankscanada.ca/getmedia/3b946e67-fbe2-490e-90dc-4a313dfb97e5/ HungerCount2012.pdf.aspx) Nutrition North Canada to a level that allows 2 Resetting the Table: A People’s Food Policy for Canada. (2011). http:// all isolated communities to take full advan- peoplesfoodpolicy.ca/policy/resetting-table-peoples-food-policy-canada tage of the program, estimated to be $100 mil- 3 See, for example, the Declaration of Nyéléni: http://www.nyeleni.org/ spip.php?article290

lion annually. It also undertakes a review of 4 David Butler-Jones, The Chief Public Health Officer’s Report on the State the program and of the needs of all isolated of Public Health in Canada 2009, (Ottawa: Public Health Agency of Can- ada, 2009) at 31.

communities to determine how best to sup- 5 Office of the Premier. More Ontario-Grown Food in Schools, Hospitals. April 6, 2009 (http://news.ontario.ca/opo/en/2009/04/more-ontario- port food security in northern communities. grown-food-in-schools-hospitals.html)

An interim NNC program expansion will 6 City of Toronto Staff Report.Local Food Procurement Policy and Implemen- tation Plan — Update. June 8, 2009. (www.toronto.ca/legdocs/mmis/2009/ include: gm/bgrd/backgroundfile-22345.pdf)

7 Sinclair, Scott. Negotiating from Weakness: Canada-EU Trade Treaty • Additional funds to maintain current sub- Threatens Canadian Purchasing Policies and Public Services, Ottawa: Can- sidy rates for all “full subsidy” commun- adian Centre for Policy Alternatives. 8 Shrybman, Steven. Municipal Procurement Implications of the Proposed ities as well as subsidies for all isolated Comprehensive Economic and Trade Agreement (CETA) between Canada and the European Union, Vancouver: Centre for Civic Governance. communities at levels sufficient to bring 9 Statistics Canada. Census of Agriculture 2011 (http://www.statcan.gc.ca/ prices into line with those in “full sub- pub/95-640-x/2012002/00-eng.htm) sidy” communities, and consistent an- 10 James, Lois. A Canadian Perspective on Intergenerational Farm Trans- fers and Succession Planning. Ottawa, August 2007: International Farm Suc- nual funding for education. cession Conference. (Department of Agriculture and Agri-Food Canada.) 11 Source: Statistics Canada, 2006 Census of Population, Statistics Can- • An enhanced NNC education program ada catalogue no. 97-563-XCB2006014 (Nunavut, Code62; Canada, Code01) 12 Statistics Canada. 2007. Nunavut (Code62) (table). Aboriginal Popula- with a focus on cooking classes. tion Profile. 2006 Census. Statistics Canada Catalogue no. 92-594-XWE. Ot- tawa. Released January 15, 2008.

• A surface transportation subsidy on healthy 13 Based on the 2005 weekly cost of the Revised Northern Food Bas- ket in Nunavut communities. Source: http://www.aadnc-aandc.gc.ca/ food and hunting/fishing supplies, and a eng/1100100035967/1100100035969

warehousing subsidy. 14 Source: http://www.aadnc-aandc.gc.ca/eng/1100100035925/ 1100100035926 The purpose of the review will be to re- 15 See Food Secure Canada submission to Standing Committee on Finance, November 20, 2012 at http://foodsecurecanada.org/sites/foodsecurecanada. vamp the NNC program to work for people, org/files/FinanceCommitteesubmission20nov2012.pdf not corporations and will include: 16 http://www.cqpp.qc.ca/en/priorities/tax-on-soft-and-energy-drinks 17 Sugar-sweetened beverages in this context are defined as liquids that are sweetened with various forms of sugars (monosaccharides and/or di- • A full, arms-length evaluation of the NNC saccharides) that add calories. These beverages include, but are not lim- program ited to fruit-flavoured drinks, soft drinks, sports and energy drinks, and sweetened hot or cold drinks. See Health Canada’s Childhood Obesity program: http://www.healthycanadians.gc.ca/kids-enfants/obesity-obesite/ • A needs assessment of all isolated com- risks-risques-eng.php munities that takes the form of direct and transparent consultations with Northerners.

88 Canadian Centre for Policy Alternatives Health Care

Background sequent decline in workers’ wages, working conditions, and morale.6 Canadians are less equal today than at any When the Canada Health Act was passed, other time in the country’s history, with the 57% of total health spending went to phys- richest 1% taking a third of all growth in in- icians and hospitals,7 compared to 43% to- comes between 1997 and 2007.1 Growing mar- day. 8 Many services once provided in hos- ket-driven income inequality along with gov- pitals, including psychiatric facilities, were ernment cuts to income supports are strongly shifted to community-based providers; hospi- associated with poor health.2 Canada’s uni- tals, as a matter of public policy, were down- versal health care system has helped mitigate sized. These actions, along with delisting and income-related disparities in access to hospi- privatization, have contributed to a decline in tal and physician care, but other health care the public share of health expenditures, from services are becoming increasingly inaccess- 75.5% in 1985 to 69.7% today.9 There has been ible to a growing number of Canadians. Re- a significant increase in the role played by the duced federal health transfers and changes in insurance industry, which, in 1988, financed the equalization formula,3 delisting and pri- 29.2% of private health expenditures10 com- vatization are threatening to undermine the pared to almost 40% today.11 Mounting evi- achievements of the post-war period. Current dence suggests that there are growing gaps federal policies also are frustrating efforts to in how Canadians utilize private health servi- move medicare beyond the narrow scope of ces — including dental care, home care, long- doctors and hospitals, something that has term care, mental health, and rehabilitation been on the public agenda since Saskatch- services — based on ability to pay.12 ewan introduced North America’s first sys- Barriers to many preventative and out- tem of universal health care. patient rehabilitation services are rising at Internationally, governments have opened the same time that Canadians are seeing an up health care systems to both national and increase in poverty and unemployment, de- global investors, with an attendant increase clining access to higher education and to ad- in privatization, deregulation, and unequal equate, affordable housing — all determinants access to services.4 While Canadians have of health. Income inequality and poor living maintained a firm commitment to universal standards increase the need for health care medicare,5 there has been a significant rise of services.13 For example, studies have indicat- corporate involvement in health service deliv- ed that poor people are twice to three times ery. Hospital administrators have outsourced more likely to develop Type 2 diabetes14 re- maintenance, laundry, food, and other servi- gardless of ethnicity.15 In addition, the poor, ces to multinational companies such as So- both working and non-working, are more dexho, Compass and Aramark, with a con- likely to suffer the complications of diabetes,

Doing Better Together: Alternative Federal Budget 2013 89 including heart disease, kidney failure, and gotten smaller, in part because hospital ser- blindness.16 And diabetes isn’t the only prob- vices as originally defined have moved into lem linked to poverty: suicide rates are high- the community and into the home. er among the poor, along with cardiovascular Technology has enabled many of what disease and higher rates of chronic disease were once considered “core” hospital servi- and disability. These facts have led many ces — including surgery — to relocate outside Canadian and international researchers to the hospital sector. In 1995–96, researchers es- conclude that “Reducing inequalities in in- timated that, on average, about 70% of Can- come and wealth through progressive taxa- adian surgeries were performed on an out- tion is a highly recommended policy option patient basis. By 2002, this percentage had shown to improve health.”17 increased to an average of 87% of all surger- Supporters of health care privatization ies, a growing portion of which are being have warned that public health expendi- provided (sometimes illegally) in for-profit tures are threatening to consume an ever- non-hospital facilities. A number of studies growing share of provincial budgets. But in indicate that, for appropriate patients, sur- relation to the overall economy, health care gery provided on an outpatient is more cost spending has remained stable over the last effective than inpatient surgery and that pa- 25 years. It is provincial revenues that are tient outcomes are similar. However, a recent shrinking, boosting health care’s share of Canadian study20 found that outpatient knee budgets. In fact, while total medicare costs surgery provided in a for-profit setting did not since the mid-1990s have increased by 1.5%, improve disability duration among injured of GDP, the total amount spent on tax cuts workers. It found that the fee paid for exped- was 6%.18 During the last two years, data ited knee surgery in a for-profit surgical clin- indicate that increases in public health ex- ic was $3,222 compared to $859 for the same penditures slowed to 3.3% and 2.9% in 2011 procedure performed in a public hospital. and 2012, respectively. By way of compari- Despite the higher fee paid to for-profit sur- son, private spending grew at a significant- gical clinics there were minimal differences ly higher rate of 5.4% and 4.6%, respective- in wait times for the expedited surgeries and ly during the same two years.19 small differences in return-to-work outcomes What the data don’t show is that the that favoured public hospitals. amount spent on services covered by the Provinces that are in violation of the Can- Canada Health Act (hospitals and doctors) ada Health Act are subject to both mandatory consumes only 42% of total health expendi- dollar-for-dollar deductions in cash trans- tures, while another 26% of public spending fers and discretionary penalties. However, went to private goods and services outside where mandatory penalties have been im- the “medicare basket”: prescription drugs, posed they are inadequate and discretion- home and long-term care, and services such ary penalties have never been applied. In as physiotherapy provided in the commun- 2011, Health Canada reported that the most ity. The portion of health services covered by “prominent concern” about CHA compli- the CHA hasn’t increased since the introduc- ance “remained patient charges and queue tion of universal health care; in fact, it has jumping for medically necessary health ser-

90 Canadian Centre for Policy Alternatives vices at private clinics.”21 Yet, since 2000 ploited by pharmaceutical, health and insur- only $1 million has been deducted from fed- ance corporations. eral cash transfers to the provinces,22 despite widespread violations. Much more needs to Current Issues be done, and this year’s AFB will continue to support the Canada Health Act Division, An Alternative Vision which is responsible for enforcement of national standards. The Health Accord, which laid out the fed- With the federal government negotiat- eral government’s financial commitment ing a free trade agreement with Europe that to health care in Canada for a decade, ex- could increase annual costs of prescription pires next year. Discussions among feder- drugs by another $2.8 billion a year,23 the al/provincial/territorial governments about time has come for Canadians to insist on bet- renewing the Accord — and the foundations ter cost management. We can do better using of medicare — should be well underway. In- a single, public system24 that manages drug stead, the federal government unveiled a costs through four levers: universal public new unilateral funding formula that will con- insurance; a national formulary of essen- tinue to provide an automatic, no-strings-at- tial drugs; independent evidence-based drug tached 6% a year increase in cash transfers evaluation; and bulk purchasing. A National to the provinces for health, but only until Pharmaceutical Strategy can save more than 2016–17. Thereafter, transfers will grow at $10.7 billion in annual costs for prescription 3.9% a year, well below the 5.1% annual in- medicines — or an estimated 43% of Canada’s crease expected in provincial and territorial $25.1-billion drug bill.25 spending. Changes to the escalator will sig- We must think seriously about ways to nificantly reduce the federal share of health both improve our public health care system expenditures from 20.4% to 18.6% over the and expand it in ways that are cost effective next 25 years.26 These revisions to the escal- and sustainable. The federal government ator and funding formula will reduce feder- must commit to discussions with provincial al transfers by an estimated $36 billion over and territorial health ministers for a renewed the first ten years alone.27 Health Accord, with a particular emphasis The AFB provides an alternative vision for on integration across the continuum of care health care, with a strategy to increase both and including health promotion and illness the public share of total health expenditures prevention. Discussions with the provinces from its current level of 69.7% as well as fed- and territories must also focus on a nation- eral contributions to provinces and territor- al strategy to strengthen the links between ies. An integrated health system is key to health and social care to better address de- supporting such a strategy, and to ensuring terminants of health. We must also invest in patients move seamlessly through a co-or- non-profit mental health services, subject to dinated system of health services. But such the criteria of the Canada Health Act, to en- efforts confront a number of challenges, insure those who require support are not excluding an increase in private delivery and funding that supports greater competition and

Doing Better Together: Alternative Federal Budget 2013 91 fragmentation;28 the reliance on lower wages of-pocket and private insurance — and in- and salaries for non-physicians employed in crease the public portion of the health dollar. the community to achieve cost savings; and We have known for years that we under- hospitals with higher-than-safe occupancy invest in measures that can prevent or man- levels above 85%. To address these challen- age ill health — including mental health ser- ges and achieve a system of integrated health vices, home care, dental care, and physical care delivery medicare must expand its lens. activities for all. These measures can improve health and reduce costs in the current fiscal Expanding Medicare year; but the real return on such investments comes years down the road. Savings and im- Despite declining hospital stays, Canadian proved outcomes can also be achieved by bet- hospitals are overcrowded and we have one ter managing what we spend. Pharmacare is of the lowest bed-to-population ratios29 and one example. The development of a nation- highest occupancy rates30 among OECD coun- al formulary for a core set of commonly pre- tries. Hospital cuts during the last two dec- scribed drugs and single-desk bulk purchas- ades have compromised the safety of patients ing of those pharmaceuticals could shave while pushing publicly insured and delivered more than 40% off total drug expenditures. services into the hands of private providers Effective allocation of resources within the and insurers. public system, a decrease in private spending Many provinces hope to save money by and better management of pharmaceuticals transferring services out of the publicly- can help contain the biggest cost drivers of funded, highly-unionized hospital sector health care — but only if we pursue these at to unorganized, privately-funded, for-profit a national scale. providers. But a better plan would include reductions in unnecessary diagnostic test- ing and the movement of alternate level of AFB Actions care patients to more appropriate providers. Instead, privatization and delisting are The Health Accord undermining public access to community- The guarantee of a 6% increase in feder- based venues that are known to reduce reli- al cash funds in each of the next five years ance on the most expensive part of the health adds an accumulated $26 billion to provin- care system, emergency rooms. Corporations cial and territorial coffers over this period. In are targeting health services and in many prov- year one of the AFB, two percentage points inces they are being encouraged to invest, es- will go towards provincial and territorial in- pecially in surgical services, long-term care, itiatives that advance primary health care rehabilitation and home care. Between 2000 reform. In each successive year an addition- and 2012, private spending on many of these al percentage point of the escalator will be services increased by 140%, a much higher dedicated to measures that support integra- rate of growth than public expenditures for tion of community health services and de- the same services.31 We need strategies that creasing the role of private for-profit provid- will reduce private expenditures — both out- ers. By year five the entire 6% increase will

92 Canadian Centre for Policy Alternatives be devoted to measures that speed the inte- members working in the health system. The gration of health care services to support and same standard, if applied to all health care strengthen continuity of care between hos- workers, would support integration both be- pitals and community providers. tween and within hospital and community providers. To facilitate integration incentives Targeting the Federal Dollar, will be provided to help provinces and terri- Expanding Medicare tories facilitate recruitment and retention of health personnel by providing home, com- Canada lags behind most industrialized na- munity, and long-term care workers compen- tions in the degree of public funding available sation levels on par with hospital workers. for health care services.32 The public portion of health spending has declined to 69.7%, National Pharmacare lower than our international peers. The AFB The AFB will initiate a National Pharmacare will prohibit the use of out-of-pocket and Program to replace private spending on pre- private insurance to support queue-jump- scription drugs and significantly reduce pub- ing. Cash transfers will be tied to compliance lic expenditures. This will preclude Canada’s with the Canada Health Act, including its re- participation with the European Union in the porting requirements. The public portion of Comprehensive Economic Trade Agreement, total health expenditures over the next dec- which would extend drug patents to up to 25 ade will be increased using a multi-pronged years. It allocates $2 billion plus 10% of pri- approach including: vate expenditures, or $1.39 billion, in 2012– 13 towards a National Pharmacare Plan for a Targeting federal dollars to public total expenditure of $3.39 billion. In 2013–14, and/or non-profit providers the AFB increases the allocation by 13% for a The Federal-Provincial Fiscal Arrangements total of $3.83 billion. In 2014–15, this amount Act will be amended to prohibit the use of increases by 20% to $4.59 billion. Future sav- federal cash transfers to subsidize private, ings will offset the program’s start-up costs. 34 for-profit providers of acute, chronic, and re- habilitative care or to compensate physicians Apply 1995 Marleau ruling to all acute, who practise in both the public and private rehabilitation and chronic care services, sectors. Provinces will also be required to re- regardless of where they’re delivered port on how federal funds are used to sup- In 1995, then Minister of Health Diane Marleau port the criteria of the CHA.33 ruled that user charges for surgical services were illegal “regardless of venue.”35 At the Supporting measures to establish time this ruling did not apply to other acute, wage parity across the health system chronic or rehabilitation services. This year’s The CHA stipulates that provinces must pro- AFB changes that. vide reasonable compensation to all phys- The AFB will re-establish a dedicated trans- icians but is silent on others employed in the fer for community-based services at 1995 lev- health care system. Provincial and territor- els, plus an annual escalator based on popula- ial medical associations engage in a form of tion growth and inflation. This would amount sectoral bargaining that applies to all of their

Doing Better Together: Alternative Federal Budget 2013 93 to $75 per capita, or $2.6 billion, for commun- able disease. Research shows poor oral health ity-based health services, including home care is also an indicator of other health problems and allied health services, subject to the cri- like diabetes and cardiovascular disease. teria of the Canada Health Act upon physician The AFB seeks to improve access to basic referral. A one-time $300-million investment dental care by putting a strategic focus on in 140 new community health centres to re- prevention. A good place to start is through gions lacking this model of delivery will cre- a cost-shared school-based program that pro- ate 10,000 new jobs and increase access to vides children and youth preventative and necessary health services.36 basic curative dental care, as per historic precedent. The AFB will offer $90 per capita Long-term care to any province undertaking such an initia- Total expenditures in long-term care reached tive which, if fully implemented across Can- $20 billion in 2010, split among federal/prov- ada, would cost the federal purse $280 mil- incial/territorial governments and out-of-pock- lion. The AFB allocates $50 million to start et payers. The public share, $14.4 billion, was the program, and doubles that contribution divided between federal (20.4% or $2.9 bil- in the next two years of the AFB plan. lion) and provincial/territorial governments ($11.5 billion).37 The remaining $5.64 billion Health Equity came out of the pockets of some of Canada’s In each of the next two years, the AFB allocates most economically vulnerable citizens.38 At $50 million to post-secondary institutions for the same time, an estimated 7% of acute care Aboriginal students in health education pro- beds (7,550) are occupied by patients await- grams who work to advance health outcomes ing rehabilitation or placement in a long-term of Aboriginal peoples and communities. care facility, at an annual cost of $2.3 billion.39 The AFB will end the remaining $440 mil- It’s time to bring these services into the lion, or $73 million a year (from 2012–18), in public insurance system. The AFB invests $2.3 funding to the Centres of Excellence for Com- billion in long-term/residential care to enable mercialization and Research.41 Of this, $10 mil- hospitals to move Alternate Level of Care pa- lion a year will be used to restore and expand tients currently in acute care beds to a more the Women’s Health Contribution Program, appropriate setting. This, in turn, will free up which supported community-academic partner- hospital resources to reduce unacceptably high ships in the development and dissemination of occupancy rates and wait times and support policy research and information on the health the establishment of outpatient rehabilitation of women and girls. The remaining $30 million clinics. The AFB also invests $3.2 billion to re- will be used to provide community-based ser- duce health care user charges applied to resi- vices targeted at people with mental illnesses. dents of long-term care facilities by 50%. 40 Annual funding of $20 million will be restored to the Interim Federal Health Program Dental Services to ensure that refugees, regardless of country Almost six out of ten Canadian children and of origin or designated category, have health youth have dental caries, as do a stunning care coverage equivalent to Canadian citizens 96% of adults. Yet tooth decay is a prevent- in the same economic circumstances.

94 Canadian Centre for Policy Alternatives 15 Riste L,, Khan, F, Cruickshank, K.(2001). High prevalence of type 2 The AFB implements the long-delayed diabetes in all ethnic groups, including Europeans, in a British inner city: relative poverty, history, inactivity, or 21st century Europe? Diabetes Jordan’s Principle, a child-first policy to re- Care; 24(8): 1377–1383; solve jurisdictional disputes within and be- 16 Pilkington, B. & Daiski, I., Bryant, T., Raphael, D., Dinca-Panateiscu, M. and Dinca-Panateiscu, S. (2010). “The Experience of Living with Dia- tween federal and provincial/territorial gov- betes for Low-income Canadians.” Canadian Journal of Diabetes Care. ernment. Jordan’s Principle requires that the 17 The Social Determinants of Health: The Canadian Facts. Mikkonen J., Raphael D. (May 2010). government of first contact pay for the service 18 Mackenzie, H. and M. Rachlis. (2010) The Sustainability of Medicare. to the child without delay or disruption. The Ottawa: Canadian Federation of Nurses’ Unions. 19 Canadian Institute for Health Information, National Health Expendi- paying government can then refer the matter ture Trends, 1975 to 2012 (Ottawa, Ont.: CIHI, 2012). to inter-governmental processes to pursue re- 20 Koehoorn M., McLeod C., Fan J., McGrail K., Barer M., Côté P., Hogg- Johnson S. “Do private clinics or expedited fees reduce wait- or return-to- payment of the expense. The AFB also reach- work times for injured workers following knee surgery?” Healthcare Policy es out to communities to allow them to set August 2011;7(1): pp. 55–67. 21 Health Canada/Santé Canada. Canada Health Act annual report 2010- their own health care priorities with partici- 2011. Ottawa, Canada: Health Canada/Santé Canada; 2011 patory budgeting through the “Community 22 Op.Cit. CIHI, Health Care Cost Drivers, p. 4 (footnote) Health Innovation Fund” worth $2 billion over 23 Grootendorst, Paul and Hollis, Aidan, The Canada-European Union Comprehensive Economic & Trade Agreement: An Economic Impact As- 2 years. For more details see the Appendix. sessment of Proposed Pharmaceutical Intellectual Property Provisions, (Toronto: Canadian Generic Pharmaceutical Association, February 2011)

24 Gagnon, Marc-Andre (2010). The Economic Case for Universal Pharma- care. Canadian Centre for Policy Alternatives (Ottawa) and the Institut de Notes recherche et d’information (Montreal) 25 Based on 2008 expenditures of $25.1 billion, an estimated saving of 43% would apply to the $24,995,800 spent in 2009. 1 Yalnizyan, A. (2010). The Rise of Canada’s Richest 1%. Canadian Centre for Policy Alternatives. Ottawa. 26 Office of the Parlimentary Budget Officer. (2012).Renewing the Canada Health Transfer: Implications for Federal and Provincial-Territorial Fiscal 2 Bezruchka, S. (2009). “The effect of economic recession on population Sustainability. Matier, C.: Ottawa, ON. health.” CMAJ 181, pp. 281–285. (doi:10.1503/cmaj. 090553) 27 Council of the Federation Working Group on Fiscal Arrangements (July 3 Office of the Parlimentary Budget Officer. (2012). Renewing the Canada 2012). Assessment of the Fiscal Impact of the Current Federal Fiscal Proposals. Health Transfer: Implications for Federal and Provincial-Territorial Fiscal Sustainability. Matier, C.: Ottawa, ON 28 Béland, F. Services integration (geriatric). In: J.H. Stone, M. Blouin, editors. International Encyclopedia of Rehabilitation. 4 Hall, D. (2003). “Multinational corporations and the pattern of priva- tisation in healthcare,” in Kasturi Sen (ed.) Restructuring Health Services: 29 Organization for Economic Co-operation and Development. 2012. Changing Contexts and Comparative Perspectives, London: Zed Books. “OECD Health Data 2012.”

5 Connor, F. and Tsang, E. “Healthcare in Canada: Privatization and How 30 Organization for Economic Co-operation and Development. 2011. to Contain It,” Editorial. UBC Medical Journal, Vol. 4, No. 1 (2012). “Health at a Glance: OECD Indicators.”

6 Zuberi, D. (2011). “Contracting Out Hospital Support Jobs: The Effects of 31 Canadian Institute for Health Information, National Health Expendi- Poverty Wages, Excessive Workload and Job Insecurity on Work and Family ture Trends, 1975–2006 (Ottawa: CIHI, 2006). Life.” American Behavioral Scientist 55(7), pp. 920–940. 32 OECD citation. 7 Coyte, Peter. 2000. Home Care in Canada: Passing the Buck. Dialogue on Health Reform. 33 In 2005, the NDP proposed the FPFAA be amended to target federal cash transfers, while both the NDP and Liberals proposed a prohibition on dual 8 Canadian Institute for Health Information, National Health Expendi- physicians practices. See Madore, O. (2006, March 20). Duplicate private ture Trends, 1975–2012 (Ottawa: CIHI, 2012). health care insurance: Potential implications for Quebec and Canada [Report No. PRB 05-71E]. Ottawa: Parliamentary Information and Research service. 9 Ibid. 34 Gagnon, M-A. 10 This is the earliest year for which this figure is available. Canadian In- stitute for Health Information, National Health Expenditure Trends, 1975– 35 Letter from D. Marleau to provincial and territorial Ministers of Health 2006 (Ottawa: CIHI, 2006). (6 January 1995).

11 CIHI (2012). 36 Wellesley Institute (2009).

12 Hurley, J. and Guindon, E. (2008). Private Health Insurance in Canada. 37 These figures are based on the federal share of public health expenditures. CHEPA Working Paper Series Paper 08–04. 38 The contribution from private insurers to the total bill was negligible 13 Provincial Health Services Authority, (2011).Towards Reducing Health at only $12 million, the amount paid out in benefits. See Canadian Life & Inequities: A Health System Approach to Chronic Disease Prevention. A Health Insurance Association. Improving the Accessibility, Quality and Sus- Discussion Paper. Vancouver, BC: Population & Public Health, Provincial tainability of Long-Term Care in Canada. (Toronto) June 2012. Health Services Authority. 39 Ibid. Based on an estimated $842 per day for each acute care bed. See CLHIA 14 Dinca-Panaitescu, S., Dinca-Panaitescu, M., Bryant, T., Daiski, I., Pilk- ington, B., and Raphael, D. (2010). Diabetes prevalence and income: Results 40 CIHI NHEX 1975-2012; also Grignon 2011; MacGregor 2011. of the Canadian Community Health Survey. Health Policy, doi:10.1016/j. 41 http://www.budget.gc.ca/2012/plan/chap3-1-eng.html healthpol.2010.07.018

Doing Better Together: Alternative Federal Budget 2013 95 Housing

Background ing suitable for single people or small households creates significant housing challenges A “Perfect Storm” Tears at Canada’s for larger households. National Housing System Canada’s ownership housing market — which provides for about two-thirds Affordable housing in Canada remains in of households — is increasingly out of reach crisis and the federal government’s long- financially.RBC Economics, in its latest hous- term cuts to housing investments continue ing affordability report,1 estimates that at the to make a bad situation worse. Despite mak- national level a standard condominium (the ing major housing investments in 2006 and entry level to the private ownership housing 2009, the housing needs across Canada con- market) requires an annual income of $52,000 tinue to grow. and a cash down payment of $59,000. The ac- Ongoing funding cuts and increasingly tual cost of an entry-level condo in the na- precarious housing conditions create a vi- tion’s biggest cities, including Vancouver, To- cious circle in which the cuts trigger worse ronto, Ottawa, and Calgary, is higher, which housing conditions, placing more pressure on puts home ownership even further out of austerity-obsessed governments to increase reach in many parts of the country. emergency support and services for the home- Canada’s private rental housing market is less, and prompting even more housing cuts also in deep distress. At the national level, the to cover increased social costs. private rental vacancy rate continues to fall, Conditions on the ground in virtually every and is a critically low 2.3%.2 The vacancy rate part of the country include: private owner- in most major centres is lower. Meanwhile, ship and rental markets that are increasing- although renter household incomes (which ly out-of-reach for low-, moderate- and even are about half of owner household incomes) middle-income households; a lack of new af- have been stagnant or falling, average mar- fordable homes to meet growing need; de- ket rents continue to rise faster than the rate teriorating physical conditions to Canada’s of inflation. aging housing stock; and persistent home- While Canada’s housing crisis is truly na- lessness (including hidden homelessness) tional in scope, experiences differ according in urban, rural, and Northern communities. to region. For example, areas experiencing a The impact of the housing crisis falls resource boom (parts of Saskatchewan, Al- heaviest on groups pushed to the econom- berta, Quebec, and Newfoundland and Labra- ic and social margins, including Aborigin- dor) often experience a severe housing crisis. al people, newcomers, racialized people, Well-paid jobs may be available, but the high women, youth, and seniors. In many parts cost of housing or the absolute shortage of it of the country, an overabundance of hous- in boom areas creates local crises.

96 Canadian Centre for Policy Alternatives Unable to find adequate housing in the private ownership or private rental markets, a growing number of Canadians are adding their names to wait lists for affordable housing in most parts of Canada. While there is no reliable national waiting list number, the figures from local communities presents a stark picture. For example, Toronto Hous- ing Connections reported an all-time record 87,301 households (161,222 women, men, and children) on its central wait list in October 2012.3 The Toronto wait list has set a new record every month since the recession of 2008. While the numbers are different in other communities, the trend is the same. Another grim indicator of housing need is the annual Hunger Count from the Can- adian Association of Foodbanks. Many Can- adians are forced to rely on foodbanks because they cannot pay the rent and feed the kids. In March 2012, a total of 882,188 people were forced to rely on foodbanks.4 poorer health for many, which leads to per- While unsheltered homeless people are vasive but avoidable health inequalities.”5 visible on the streets, most housing needs Adequate housing is also critical to a strong are hidden from public view. The Welles- and stable economy. It provides a base that al- ley Institute’s Precarious Housing iceberg lows individuals and households to fully par- shows that millions of Canadian households ticipate in the economic life of their commun- are quietly suffering from unaffordable, sub- ities and the country. It also boosts economic standard and otherwise inadequate housing. activity by generating good jobs in a sound, The numbers generated in the iceberg rely on sustainable economy. And good homes can data from 2006, and are likely higher today, reduce government health and other spend- but the overall grim trend remains the same. ing, providing fiscal benefits. The Wellesley Institute, in its Precarious Housing in Canada research and policy com- No National Housing Plan, Eroding pendium, notes: “People’s ability to find, Federal Housing Investments and afford, good quality housing is crucial to their overall health and well-being, and is While every other major country in the world a telling index of the state of a country’s so- has a national housing plan that seeks to co- cial infrastructure. Lack of access to afford- ordinate the efforts of government, non-prof- able and adequate housing is a pressing prob- its, and the private sector, Canada’s federal lem, and precarious housing contributes to government has no plan and remains com-

Doing Better Together: Alternative Federal Budget 2013 97 Figure 10 Erosion of Federal Housing Investments (Millions)7

$3,100

$2,900

$2,700

$2,500

$2,300

$2,100

$1,900

$1,700

$1,500 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

mitted to ongoing cuts in national housing in- housing units. Addressing Aboriginal vestments that were set in place in the 1990s. housing issues on reserve remains a prior- The trend has been a steady downward de- ity. Canada provides support through pro- cline in federal housing investments for more grams targeting the construction of new than two decades. housing units, the renovation of existing In 2009, Canada faced a harsh review of housing stock, and subsidies for existing its international housing rights obligations rental housing. Since 2006, new funding in front of the United Nations’ Human Rights for Aboriginal people has been dedicat- Council. In June of that year, Canada’s for- ed to resolving challenges of poverty and mal response to the UN’s Universal Periodic housing…Canada…is undertaking meas- Review acknowledged that the federal gov- ures to respond to the social and economic ernment had failed to meet its housing obli- needs of Canadians. Canada acknowledg- gations and the federal government made es that there are challenges and the Gov- this promise: ernment of Canada commits to continuing to explore ways to enhance efforts to ad- “Canada is working to improve housing dress poverty and housing issues, in col- choice and affordability. Governments laboration with provinces and territories.” are making substantial investments in housing through programs targeting af- After promising to the UN in 2009 to do fordability, housing renovation, home- more, the federal government then embarked lessness and support for existing social on a new round of housing cuts in 2011. The

98 Canadian Centre for Policy Alternatives Figure 11 Declining Number of Federally Subsidized Homes8

640,000

620,000

600,000

580,000

560,000

540,000

520,000 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

government has failed to meet the commit- and there have been sharp cuts since, which ments that it made in Geneva, and the situa- are expected to bite even deeper until 2016. tion will worsen considerably in the coming As wait lists for affordable housing grow years as the housing cuts continue.6 longer, the number of federally-subsidized affordable homes is scheduled to be cut by Current Issues more than 100,000 by 2016 due to the ongoing erosion of federal housing investments, according to Canada Mortgage and Housing Federal Housing Cuts Now, Corporation (CMHC). More On the Way Meanwhile, the federal government’s Af- The federal government launched several fordable Housing Initiative, the signature na- housing and homelessness initiatives four tional affordable housing program, is sched- years ago. In September 2008, it announced uled to be “terminated” in 2015 as investments a five-year extension of three national pro- reach zero. grams, promising $387.59 million per year Since the federal Affordable Housing In- until March 31, 2014. itiative, along with certain other national In its “economic stimulus” budget of 2009, housing investments, is matched by provin- the federal government announced funding of cial, territorial, municipal, private and com- $2.075 billion for affordable housing over two munity dollars, every federal funding dollar years. The short-term boost in housing and cut means up to $3 or $4 housing dollars lost homelessness investments peaked in 2010, at the community level.

Doing Better Together: Alternative Federal Budget 2013 99 Figure 12 Termination of Federal Affordable Housing Initiative (Millions)9

700

600

500

400

300

200

100

0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Canada, unlike other major countries, framework agreement, were also signed. The doesn’t have a national housing framework term of the original agreement has lapsed. to allow for the quick and orderly flow of While affordable housing expenditures capital and operating funding from govern- through CMHC are being cut, the agency re- ments to the affordable housing sector. In ports a large and growing net income, mainly Canada, the main structure for inter-govern- from premiums on the sales of mortgage in- mental collaboration is the Canadian Inter- surance. CMHC revenues generated by hous- governmental Conference Secretariat. Be- ing-related activities could be used to finance tween 2009 and 2012, the secretariat reports, affordable housing investments, but the fed- there were 274 inter-governmental conferen- eral government has refused to do so. ces on issues from health to taxation to im- The massive housing cuts started in 2011 migration and sports and recreation. There are part of a long-term erosion of federal have only been three meetings on housing: housing investments begun in 1996, when two in 2009, and one in 2010. No meetings the government announced it was transfer- were held in 2011 or 2012, and none planned ring administration of most national hous- for 2013 or subsequent years. ing programs to the provinces and territor- In 2001, the federal government signed ies. As long-term operating agreements with a short-term Affordable Housing Framework individual non-profit and co-op housing pro- Agreement with provinces and territories. Bi- viders expire, federal funding is cut. The pro- lateral housing deals, pursuant to the 2001 grams will terminate more rapidly over the

100 Canadian Centre for Policy Alternatives Figure 13 Net Income, Canada Mortgage and Housing Corporation (Millions)10

$2,000

$1,800

$1,600

$1,400

$1,200

$1,000

$800

$600

$400

$200

$0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

next decade, leaving low- and moderate-in- Government-Backed Housing come households to face the likelihood of Financing Options large rent increases. If the hundreds of thou- In 2008, Ontario launched a $500-million af- sands of households that are affected in the fordable housing loan fund that was capital- coming years cannot pay these increases, ized with government-backed bonds. Several they face eviction and the downward spiral affordable housing projects have been com- towards homelessness. pleted using the new provincial financing. The dramatic cuts to spending in the cur- Housing and finance experts are proposing rent fiscal year foreshadow more cuts sched- that a new Government of Canada-backed uled for 2014 (the same year that the Canada bond (perhaps tax-exempt) could finance a Health Transfers and the Canada Social Trans- national affordable housing trust fund to pay fers are due to be re-negotiated). The federal for new housing supply and repairs to exist- homelessness program — which was extended ing housing. The fund would take pressure for five years starting in 2008 — will “termin- off the expenditure side of the federal budget ate,” in 2014. The latest federal-provincial- by raising capital for housing infrastructure territorial housing agreement, announced through financial markets. in 2008 and signed in July 2011, is also set to Federal politicians have also announced expire in 2014. their support for social finance options to fund housing initiatives, including social impact bonds. SIBs are used in the U.K. and U.S.

Doing Better Together: Alternative Federal Budget 2013 101 to generate private sector funding, with the the ongoing cuts to federal housing invest- government paying interest on the bonds to ments begun in the 1990s. In addition to private investors based on social outcomes. maintaining federal housing investments at There are many instances where government the 2010 level, can achieve net savings by intelligently in- • The AFB will commit $2 billion annually vesting to prevent problems in the first place. to the affordable-housing sector. This will Private money from banks and corporate so- double the allocation for both the federal cial responsibility funds is not needed and Homelessness Partnering Strategy and the the additional layers of complication for so- Residential Rehabilitation Assistance Pro- cial service agencies can interfere with rap- gram and provide significant funding for id deployment of programs. new home construction. It will also sup- The AFB proposes an alternative to Social port maintenance of the existing stock of Impact Bonds through the Scale-Up Imple- affordable housing. mentation Fund. Like Social Impact Bonds, the Scale-Up Implementation Fund will identify programs that yield significant defined Notes savings to governments and have been proven 1 RBC Economics, Housing Trends and Affordability, November 2012 http:// to work in other jurisdictions or on a smaller www.rbc.com/newsroom/pdf/HA-1122-2012.pdf scale. These programs will be implemented 2 Canada Mortgage and Housing Corporation, 2012 Spring Rental Market Report, http://www.schl.ca/en/corp/nero/nere/2012/2012-06-12-0815.cfm with well-understood targets that will be 3 Toronto Housing Connections, 2012 http://www.housingconnections. rigorously tracked. However, if the project ca/information/Reports.asp 4 Canadian Association of Foodbanks, Hunger Count 2012. http://www. succeeds, instead of the private sector fund- foodbankscanada.ca/getmedia/3b946e67-fbe2-490e-90dc-4a313dfb97e5/ er receiving a 15% profit, gains will be shared HungerCount2012.pdf.aspx between the government and the social ser- 5 Wellesley Institute, Precarious Housing in Canada 2010. 6 Wellesley Institute, Submission to United Nation’s Universal Periodic vice agency. (See the Public Services chap- Review, October 2012 http://www.wellesleyinstitute.com/news/canada- has-failed-to-meet-its-international-housing-commitments/ ter on page 128.) 7 Canada Mortgage and Housing Corporation, Corporate Plan to 2016.

8 Canada Mortgage and Housing Corporation, Corporate Plan to 2016. AFB Actions 9 Canada Mortgage and Housing Corporation, Corporate Plan to 2016. 10 Canada Mortgage and Housing Corporation, Corporate Plan to 2016. Stem the Bleeding, Make the Investments

To counteract the growing crisis in affordable housing in Canada, the AFB reverses

102 Canadian Centre for Policy Alternatives Immigration

Background America, and the Caribbean than other regions in the world. That Canada’s immigrants are not faring Yet by any measure — income, employment, well economically is something about which housing conditions, health, etc. — immigrants all Canadians need to be worried. A declin- and members of racialized communities are ing birth rate coupled with an aging popu- falling behind their Canadian-born and/or lation means that immigrants will soon be non-racialized neighbours. The Canadian the key driving force behind Canada’s eco- government should be developing policies nomic engine. and committing resources to address grow- The 2011 Census found that Canada’s ing socio-economic racial inequities. Instead, population grew by 5.9% between 2006 and the approach adopted by successive govern- 2011, the highest among G8 countries. Statis- ments has been to treat this sizeable segment tics Canada has noted that two-thirds of the of the population as an afterthought. population growth in the last 10 years is due to immigration. Given the accelerated aging Current Issues of the population between 2011 and 2031, the agency warns that without a sustained level Persistent, Growing Disparities of immigration or a substantial increase in fertility, Canada’s population growth could The 2006 Census reported one in five Can- be close to zero in 20 years. adians as foreign-born, the highest propor- Thanks to the substantial increase in tion in 75 years. Recent immigrants born in immigration since the mid-1980s, the pro- Asia made up the largest proportion of new- portion of allophones in the population has comers (58.3%). Another 10.8% were born in more than doubled since 1981, growing from Central and South America and the Carib- less than 10% to 20% in 2006. According to bean. Not surprisingly, 68.9% of recent im- Statistics Canada projections, the allophone migrants lived in three metropolitan areas: population could nearly double again to com- Toronto, Montreal, and Vancouver.2 prise around 29% to 32% of the total popu- In 2006, most recent immigrants experi- lation by 2031.1 enced higher unemployment rates and lower By 2017, nearly all new entrants into the employment rates than their Canadian-born labour market will be immigrants. Also by counterparts. The exceptions were immigrants 2017, one in five Canadians will be a “vis- from the Philippines and those born in Eur- ible minority”—due largely to the continu- ope, who had labour market outcomes simi- ing trend of Canada receiving more and more lar to the Canadian-born. Immigrants born in immigrants from Asia, Central and South Africa had the most difficulties in the labour market, regardless of how long they had

Doing Better Together: Alternative Federal Budget 2013 103 lived in Canada. For the very recent African- sented nearly half of university-educated born immigrants, their unemployment rate, very recent immigrants, their participation in at 20.8%, was four times higher than that of the labour force was significantly lower, par- the Canadian-born.3 Higher unemployment ticularly for those born or educated in Asia.7 rates are also found among younger, recent The only exceptions to this troubling pat- immigrants between the ages of 15 and 24, ir- tern of employment gaps are recent and es- respective of where they were born.4 tablished immigrants who received their In case anyone is wondering whether the highest university education in Canada or high unemployment rates among recent im- Europe; they had comparable employment migrants are due to their inferior education- rates in 2007 to the Canadian-born. In con- al background, statistical studies have contrast, many of those who obtained these cre- clusively disproved that assumption. With dentials in Latin America, Asia, or Africa had few exceptions, very recent immigrants who lower employment rates, with the one excep- had any level of post-secondary education tion being immigrants who received their uni- had employment rates lower than their Can- versity degree from a Southeast Asian (main- adian-born peers. This was true irrespective ly Filipino) educational institution.8 of where they obtained their post-secondary If immigrants are not getting employed at education. Statistics Canada reports that, in the same rates as others, they are not earn- 2007, very recent immigrants aged 25 to 54 ing the same levels of income, either. The who received their highest university edu- immigrant’s birthplace — a proxy for ethni- cation in Canada were less likely to have city — turns out to have the strongest influ- significant Canadian work experience than ence over the immigrant’s earnings, as a Sta- their Canadian-born peers. The same study tistics Canada study has shown. This finding showed that almost one in five very recent im- coincides with the repeatedly noted fact that migrant university graduates were attending immigrants to Canada increasingly come school in Canada in 2007, even though they from “non-traditional” sources, are members already had a university degree, yet the ma- of visible minorities, and are more likely to jority of university-educated very recent im- be educated than persons born in Canada. migrant students were not participating in Despite an increasing number of university the 2007 labour market.5 graduates among immigrants, the relative Despite higher workforce participation, earnings of immigrants have not improved people of colour (racialized people) are more in recent times.9 likely to be un- or under-employed or living Hiding behind the statistics is the dis- in poverty.6 While a larger share of racial- turbing trend of the ever-growing racial in- ized workers is looking for work, fewer of equities in Canada among immigrant group them have found jobs. Even when employed, members, as well as racialized individuals racialized people suffer lower wages and are born in Canada. Disturbingly, the employ- disproportionately represented among the ment inequities and the resulting income in- ranks of precarious and unprotected workers. equities experienced by recent immigrants Gender also seems to play a role in this with degrees (excepting those with Euro- respect. Although immigrant women repre- pean or Filipino background) are shared by

104 Canadian Centre for Policy Alternatives young visible minority men born in Canada mented any of the recommendations that to immigrant parents. Everything else be- would truly make a difference to a woman ing equal, their annual earnings are signifi- who is trafficked, such as not tying the tem- cantly lower than those of young men with porary resident permit to the requirement to native-born parents.10 Canadian-born mem- testify in court, or clearly delineating a path- bers of racialized communities, who have way to permanent residency and citizenship even higher levels of education than other for those who wish to stay in Canada. Canadians in the same age group, are faring Bill C-10 introduced mandatory minimum the worst.11 Immigrants and those of racial- sentencing, as well as increasing sentences ized background are 2.5 times more likely to for some crimes including petty crime. One live in poverty than all Canadian residents.12 of the outcomes is that minor, non-violent offences will require mandatory jail time, and Refugees the resulting increase in individuals thus sentenced will require that new prisons are With the passage of Bill C-31, the Protecting built. This Bill will have its greatest impact Canada’s Immigration Act of 2012, the federal on Canada’s most vulnerable residents such government passed regulatory changes that as aboriginal people and racialized individ- significantly cut down on the amount of time uals of whom many are likely to be born out- to file refugee claims and submit appeals to side Canada. Although the price tag is not the Refugee Appeal Division, and that treat known, its implementation would have sig- claimants differently based on the country nificant financial costs attached. Despite ma- of origin.13 Through Bill C-31, the govern- jor concerns from a broad segment of society, ment has passed measures previously con- including those in law enforcement, the Bill tained in Bill C-4, which give broad power to was rushed through Parliament and became the Immigration Minister to detain asylum law in March 2012, less than five months af- seekers — including women and minors 16 ter first reading. or above — for an extensive period of time. Shortly after, the government introduced All these new measures will result in signifi- Bill C-43, which reduces the threshold for de- cant cost to Canadian taxpayers, not to men- porting immigrants who have served a crim- tion the deprivation of the right to life, lib- inal sentence from two years to six months. erty and security of refugees as well as their It is no coincidence that it was introduced af- equality right under the Canadian Charter of ter the passage of Bill C-10, which imposes a Rights and Freedoms. minimum six-month sentence for even petty crimes. The Bill aggravates the double pun- Other Bills, Regulations ishment already imposed on immigrants of Bill C-10, the omnibus crime bill, professes to subjecting them to deportation in addition protect women from being trafficked, and pro- to serving a sentence. Included in its broad poses to give overseas visa officers the power sweep is the very real possibility of deporting to deny women work visas for their own good those who arrived in Canada as infants to and to protect them from being trafficked. countries they have never known and for- Meanwhile, the government has not imple- cibly separating them from family.

Doing Better Together: Alternative Federal Budget 2013 105 In addition, the government has passed is no room to look at circumstances, and the regulations to impose conditional perma- ban will effectively punish the family mem- nent residence on sponsored spouses. Such ber who is waiting to be sponsored. regulations will trap women victims of spous- Finally, the government introduced new al abuse in abusive relationships. While the evidentiary (paper) proof of language pro- government proposes to exempt women who ficiency on those applying for citizenship. are abused from this regulation, most newly This requirement creates new barriers to cit- arrived women do not know their rights and izenship for many immigrants and refugees, are often isolated within the sponsoring especially those who are less educated and family. As a result, the exemption will still those who have no or limited access to Eng- leave women vulnerable to spousal abuse and lish language programs. Even those who have control. The government justified the chan- lived in Canada for many years and have a ges on the basis of curbing marriage fraud, sound knowledge of English will be forced but has not released any evidence of its ex- to pay to take the test to provide the paper tent or shown that it cannot be addressed proof required. under existing laws. At the same time, the government has im- Immigrant Settlement Services posed a two-year moratorium on the spon- Immigrant settlement services help newcom- sorship of parents and grandparents. Such ers deal with systemic barriers, including a measure effectively prevents Canadian barriers to economic integration. The feder- permanent residents and citizens from real government has different bi-lateral immi- uniting with their parents, many of whom are gration agreements with all the provinces an important part of the family network and and territories. In 2012, the federal govern- provide much-needed emotional and other ment reclaimed control of the administration support to family members in Canada. The of immigrant settlement programs in Mani- government’s promise to ease the visa re- toba and B.C., the only two provinces where quirements for parents and grandparents to the federal government devolved control over visit their loved ones in Canada, even if im- settlement service funding. That control al- plemented, will only benefit families with suf- lowed B.C. and Manitoba to work around fed- ficient funds to cover the frequent travel and eral government restrictions on eligibility for associated medical insurance costs. The gov- services. This loss of provincial control will ernment portrays parents and grandparents likely reduce service access for immigrants. as a burden on the Canadian society, with- In addition, the bi-lateral agreement with On- out considering the familial and emotional tario has ended and the federal government support they bring and the resulting positive is unlikely to negotiate a new one. impact on the Canadian society. After increasing investment in immigrant The five-year sponsorship ban on those settlement in 2006 by $1.4 billion over five convicted of a violent offence came into ef- years, in December, 2010, the federal govern- fect in January 2012. This is a blanket ban ment cut $53 million from settlement agen- that will prohibit anyone convicted of such cies and programs across Canada, exclud- offences to sponsor family members. There ing Quebec. The government also brought

106 Canadian Centre for Policy Alternatives all provinces and territories into the national 2010.14 Meanwhile, on April 1, 2011 changes funding formula that is tied to a rolling three- to the TFW program came into force that, in year average of immigrant arrival numbers the words of the Canadian Council for Refu- in each province. Provinces that have seen gees, will ensure “a revolving door of migrant an increase in immigration numbers will re- workers willing to accept inferior wages and ceive an increase in funding, some of which working conditions [is] available to Canadian can offset previous cuts. However, the for- employers.” The most problematic of the chan- mula does not account for specific settle- ges is the provision that there be a four-year ment challenges that immigrants may face limit on the stay of a TFW and a subsequent in a particular province or territory. four-year period during which the worker is Ontario bore more than $43 million of not allowed to work in Canada.15 Included the 2010 funding cuts, forcing the closure with this is an additional change that proof some agencies and resulting in job loss- hibits an employer who violates the terms of es across the sector. Ethno-specific agencies the agreement with the worker from hiring that serve racialized communities were over- any more TFWs for a two-year period. How- represented among those who lost 100% of ever, the government has not implemented their settlement funding. The Ontario sector a mandatory employer monitoring system to faced a further 6% cut to settlement fund- protect workers. The failure of the program ing in 2012. to protect workers was evident in the recent The cuts were imposed at a time when controversy surrounding the use of tempor- more complex interventions are needed to ary foreign workers from China by a north- facilitate labour market participation by new ern B.C. coal mine company, which purport- Canadians and to address complicated social edly advertised the jobs for $10 to $17 less and health issues of refugees. Apart from the than what is paid at a nearby mine for sim- destabilizing effects of the cuts, there is con- ilar work.16 While the federal government cern that the current investment is insuffi- has since promised a review of the tempor- cient to address the many systemic barriers ary workers program in light of this contro- that immigrants (especially racialized immi- versy, it remains to be seen what, if any, chan- grants) face in the settlement process. ges will be implemented. The federal government has also closed a number of Citizenship and Immigration Can- Live-In Caregiver Program ada service offices across the country. This Research continues to show that family sep- has had the impact of increasing the service aration has a significant negative impact on burden for immigrant-serving agencies. families separated for long periods under this program. Findings include increasing Temporary Foreign Workers intergenerational conflict (parent-children), Employer demand for temporary foreign work- a sense of alienation felt by children left be- ers (TFWs) has continued unabated. In 2007 hind and who join their mother years later, and 2008 more TFWs than immigrants en- and general upheaval in the family. Groups tered Canada. In 2011, 190,842 TFWs entered such as the Canadian Council for Refugees Canada, representing a 6.5% increase from have urged the removal of the requirement

Doing Better Together: Alternative Federal Budget 2013 107 for caregivers to live at their place of employ- immigrants and would benefit from increased ment so as to allow them to migrate with their government investment. families as other TFWs (excluding seasonal farm workers) do. Long-Form Census

The cancellation of the Long-Form Census Employment has a disproportionate impact on equity-seek- The 2011 report by the Wellesley Institute ing groups, particularly racialized groups. To and Canadian Centre for Policy Alternatives add injury to insult, while allowing certain found racialized workers — both immigrants questions based on gender to remain in the and Canadian-born — are falling behind in mandatory short-form census, the govern- earnings. In Canada’s colour-coded labour ment refused to include questions regarding market, researchers found that earnings by race and disability, making it impossible for male newcomers from visible minorities were these equity-seeking groups to collect any just 68.7% of those who were white males.17 data that will assist in policy development. Racialized and immigrant workers are The federal government has also ended over-represented in contingent-type work funding for Canada’s Metropolis Project, a and such work conditions don’t allow them national network of researchers and a ma- to qualify for EI even though they pay into jor source of data and research for immigra- the plan. The report by the Mowat Centre EI tion policy in Canada. The project will be Taskforce18 concluded that workers who have sustained at a smaller scale. The federal gov- not made significant contributions to the pro- ernment has signaled that it expects the in- gram (over time) cannot collect benefits and itiative to sustain itself. new immigrants and young workers are disproportionately affected. At the same time AFB Actions the report found unemployment among new immigrants and young workers was higher To address challenges faced by new Can- than the Canadian average. The government adians and those within racialized commun- has yet to implement the recommendations ities, the AFB will: of the report. The majority of government investment • Ensure that funding in immigrant settle- in immigrant-centred employment programs ment services is predictable, flexible and are devoted to “improving” the immigrant. based on the level of need of all immi- There is little or no acknowledgement of sys- grant and refugee groups. temic labour market barriers that immigrants • Provide paid internships for recent gradu- face and no attempt to dismantle them. Re- ates from equity-seeking groups. cently, non-government initiatives to educate and encourage employers to hire immigrants, • Provide financial incentives for employ- and mentoring programs for international- ers to practice employment equity, in- ly-trained immigrants are receiving a lim- cluding tax incentives to hire, train, retain ited amount of government support. These and promote workers from equity-seek- initiatives have proven successful for some ing groups/backgrounds and recent im-

108 Canadian Centre for Policy Alternatives migrants who have been in Canada for Notes 10 years or less. 1 Statistics Canada (2011). Languages. http://www.statcan.gc.ca/pub/11- 402-x/2011000/chap/lang/lang-eng.htm • Reinstate the Court Challenges Program. 2 Statistics Canada. (2007). Immigration in Canada: A Portrait of the For- eign-born Population, 2006 Census. Ottawa, pp. 5, 19. • Reform the Temporary Foreign Worker’s 3 Gilmore, Janice. (2007). The Immigrant Labour Force Analysis Series, program by introducing periodic rotating The Canadian Immigrant Labour Market in 2006: Analysis by Region or Country of Birth. Ottawa. p.6.

workplace inspections, and/or providing 4 Ibid, p.7.

funding to provinces to strengthen prov- 5 Statistics Canada. (2008). The Immigrant Labour Force Analysis Series, The Canadian Immigrant Labour Market in 2007: Analysis by Region of incial employment standards enforcement Postsecondary Education. Ottawa. p.6.

programs and create workers’ rights in- 6 Sheila Block, Canadian Centre for Policy Alternatives, Ontario’s Grow- ing Gap: The Role of Race and Gender (June 2010). formation materials for individuals in the 7 Ibid. p.6. TFW program. 8 Ibid, p.7.

9 Ostrovsky, Yuri. (2008). Statistics Canada Analytical Studies Branch Re- • Bring back the long-form census to en- search Paper Series: Earnings Inequality and Earnings Instability of Im- sure that Canada collects data on equity- migrants in Canada. Ottawa. 10 http://www.cbc.ca/consumer/story/2007/10/29/immigration-statscan. seeking groups. html

11 Leslie Cheung. October 2005. Racial Status and Employment Outcomes. • Require all government ministries to col- Research Paper #34, Canadian Labour Congress. Ottawa: CLC. lect, track and disclose disaggregated 12 Campaign 2000. Needed: An Action Plan to Eradicate Child and Family Poverty in Canada; Campaign 2000 Report Card — 2012. Toronto. 2012. data for racialized groups — particularly 13 Canadian Council for Refugees: http://ccrweb.ca/en/protect-refugees- as recommended by the Canadian Human c31-statement 14 Citizenship and Immigration Canada. (2012). Annual Report to Parlia- Rights Commission in its report Human ment on Immigration 2012, Section 2: Managing Permanent Immigration Rights Accountability in National Secur- and Temporary Migration. 19 15 Canadian Council for Refugees (2011). “Changes to the Temporary For- ity Practices eign Worker Program Leave Workers Unprotected.”

16 http://bc.ctvnews.ca/coal-mine-looked-for-chinese-workers-at-lower- • Conduct an in-depth costs analysis of the pay-union-1.1041983 implementation of the new refugee deter- 17 Block, Sheila and Grace-Edward Galabuzi, (2011). Canada’s Colour-Coded Labour Market: The Gap for Racialized Workers. Wellesley Institute. Toronto. mination system and release the analy- 18 Mowat Centre (2011). Making It Work: Final Recommendations of the sis to the public. Mowat Centre EI Taskforce. School of Public Policy and Governance, Uni- versity of Toronto. Toronto. • Lift the moratorium on the sponsorship 19 http://www.chrc-ccdp.gc.ca/publications/srp_2011_rsp/toc_tdm-eng.aspx ban for parents and grandparents.

• Repeal the conditional permanent residence on a sponsored spouse.

Doing Better Together: Alternative Federal Budget 2013 109 International Development

Background velopment’s (OECD) Development Assistance Committee (DAC) signaled that “ODA in 2011 Canada, International fell by 2.7% in real terms, breaking 14 years Development, and the MDGs of real growth in aid since 1997 (discounting years of unusually high debt relief).”1 DAC On October 17, 2013, approximately six months projections for 2013–14 are no more hopeful, after the federal government will have tabled anticipating a further decline in core aid re- Budget 2013, the world will mark the 20th an- sources, particularly for Africa.2 niversary of the International Day for the That said, several donors, including the Eradication of Poverty. In 1993, as the United U.K. and Australia, are bucking the trend. De- Nations (UN) began a series of internation- spite much harder economic conditions than al conferences on a range of social and en- Canada, they have continued to honour am- vironmental issues, the UN General Assem- bitious commitments for aid increases. The bly designated a day to promote awareness U.K. will achieve 0.7% of Gross National In- that poverty and destitution in all countries come (GNI) in 2013 and Australia will move must be wiped out. from 0.32% in 2010 to 0.5% in 2016–17. 2013 will also see donors and developing Canada, however, announced in Budget countries put forth a range of proposals to 2012 that Canadian aid will decline over the replace the Millennium Development Goals next three years. The International Assistance (MDGs), which expire in 2015. To be success- Envelope (IAE)3 that was frozen in Budget 2010 ful, this will require accepting the challenge at $5 billion — and with it the aid budget — will of ensuring inclusive social and economic now drop, relative to the 2011 budget, by more development, environmental sustainabil- than $350 million over the next three years to ity and peace and security for all as a global $4.6 billion in 2014 and beyond, just ahead public good. of the 2015 MDG milestone date. While donor commitments at the turn of Over the past decade, the global commun- the century helped reverse the downward ity has made significant progress towards trend of official development assistanceODA ( ) achieving the MDGs. At a time when MDG spending to help countries realize the MDGs, commitments have begun to make a real dif- since the global financial meltdown in 2008, ference in the lives of people living in poverty, many donor countries have broken past prom- now is not the time to decrease resources ises and begun slashing aid budgets. for international development. Europe has As the “Global Aid Trends” chapter in the entered into a second recession. Growth in 2012 Reality of Aid report notes, after a 63% China is on the decline. Food prices threaten increase between 2000 and 2010, the Organ- to increase again. Along with climate change, ization for Economic Cooperation and De- these crises continue to have a detrimental

110 Canadian Centre for Policy Alternatives and highly unequal impact on the lives of the almost $320 million, assuming no addition- poorest and most marginalized. al supplementary estimates in 2012–13. This In 1990, 94% of people below the poverty is equivalent to the Canadian International line lived in low-income countries (LICs); twenty Development Agency (CIDA) pulling all of its years later, some of these countries have “gradu- funding for the Global Fund to fightHIV AIDS, ated” to “low middle-income countries,” and Tuberculosis and Malaria ($180 million), for the vast majority (74%) of poor people con- water and sanitation ($70 million), and for tinue to live in these middle-income coun- the World Food Programme ($70 million). tries.4 Despite sometimes marginal increases These cuts are also projected to move Can- in wealth, income is concentrated among a ada from 0.34% of GNI in 2010 to 0.25% of more wealthy minority and many people live GNI by 2014–15. The last time the ODA ratio precariously on the margins of poverty. This performance for Canada was as low was in is not the time to abandon targeted aid pro- 2003–04, just as Canada began to increase grams aimed at increasing the capacities and its aid annually by 8%. sustainability of the progress made to date. Globalization and free trade may have Where Will the Impact Be Felt? brought with it growth in some parts of the Canada’s ODA is implemented mainly through world, but it certainly has not been equit- three departments: Finance (World Bank), able — neither between countries and regions, Foreign Affairs (UN mandatory dues) and nor within them. Ahead of 2015, we need to re- CIDA (about 72% of ODA). Relative to 2010– double our efforts to eradicate global poverty, 11 ($3.59 billion), the cut to CIDA’s share of and Canada must do its part, including re- ODA between 2010–11 and 2014–15 will be commit the resources required to keep its aid 8.9%. Over this period, CIDA will be com- program on a modest growth track. pletely cutting its geographic funding to eight countries (Cambodia, China, Malawi, Nepal, Current Issues Niger, Rwanda, Zambia, and Zimbabwe) and will reduce program funding by $69 million to From Flatline to Free Fall: Canada’s five of its 20 countries of focus (Bolivia, Ethi- International Development Budget opia, Mozambique, Pakistan, and Tanzania). African countries, where poverty is still en- Overview of the 2012 Budget Cuts demic, are taking a big hit, with eight coun- Against this backdrop, Budget 2012 delivered a tries in this continent losing funding. Ten punishing message to the world’s poor. Between of the 13 countries affected lie in the bottom FY2011–12 and FY2014–15, the IAE for Canadian quarter of the United Nations Development aid is set to decrease by 7.6%, from $5 billion in Programme’s Human Development Index 2011 to $4.66 billion in 2014–15. Between 2011– (HDI) ranking for 2011.6 In fact, according to 12 and 2015–16, when the time period to reach CIDA’s 2012–13 Plans and Priorities (RPP),7 the MDGs will have elapsed, Canada will have LICs will take the biggest overall cut both in reduced Canadian ODA by close to $1.2 billion.5 terms of actual cuts and as a percentage of Between 2011–12 and 2012–13 alone, it is their budget — $126.4 million and 13.2%. The estimated that Canada’s ODA will drop by

Doing Better Together: Alternative Federal Budget 2013 111 government will at least maintain its com- 2015 global framework for sustainable, mitment to respond to humanitarian crises. inclusive and equitable growth and development for all by implementing the New Priorities at CIDA? following:

Contrary to the ODA Accountability Act which • Help build an accountable and effective requires that poverty reduction and human framework to ensure sustainable develop- rights standards be the determining factors, ment outcomes for all, in particular the most Canada is following in the footsteps of other marginalized and impoverished. Minister bilateral donors, who are using aid to promote Fantino has recognized the risk that dis- their country’s national economic interests. For- parity in the world poses to our own secur- mer CIDA Minister, Beverley Oda, said as much ity.11 In 2013, the UN will be assessing prog- in an interview, when asked how she separ- ress on the MDGs and preparing the ground ates Canada’s trade and foreign policy inter- for 2015. The AFB provides international ests from Canadian development goals. Minis- leadership for this agenda and proposes ter Oda replied, “I really don’t separate them.”8 a set of indicators and an accountability In November 2012, CIDA Minister Julian framework that address the root causes of Fantino delivered a speech to the Economic poverty for the post-2015 world, building Club of Canada,9 confirming CIDA’s intent on its experience with the UN Commis- to engage the Canadian private sector more sion on Information and Accountability actively in its Sustainable Economic Growth for Women and Children’s Health. strategy. While envisaging a more engaged • Increase and enhance Canada’s aid com- private sector as the only way to achieve the mitments to end global poverty in the MDGs, he also noted the huge business op- world. To achieve this, the AFB will fol- portunities available to Canadian companies low the OECD-DAC’s suggestion12 and peg in developing countries (especially in the ex- ODA at 0.31% of GNI (DAC donor perform- tractive sector), and that working together, ance as a whole) until such time as the the two (aid and business) could contribute to economy recovers. Using the latest figures “Canada’s long-term prosperity and security.” for GNI for 2013, 2014 and 2015 from the Cognizant of the fine line that donors are November Fiscal Update, this would en- treading in terms of promoting their own tail increasing Canada’s IAE to $5.22 bil- country’s commercial interests over develop- lion in 2013–14, $5.48 billion in 2014–15 ment objectives, the OECD-DAC’s most recent and $5.78 billion in 2015–16.13 Although Peer Review called on Canada to ensure that the leap from 2012–13 would be a big one development objectives and partner country ($401 million or 8.3%), subsequent years ownership are paramount in the activities would be 5.0% and 5.5% respectively, low- and programs Canada supports.10 er than the increase the government was implementing up until 2010. Any increas- AFB Actions es would also be linked to growth of the Canadian economy and Canada’s cap- The AFB will provide leadership on a post- acity to pay. In keeping with the criteria

112 Canadian Centre for Policy Alternatives of the Official Development Assistance Notes Accountability Act and the recommen- 1 Tomlinson, Brian (2012). “Global Aid Trends” in Aid and the Private Sector: dation of the OECD-DAC, these resources Catalysing Poverty Reduction and Development?, Reality of Aid Network. Phil- ippines: IBON Books for the Reality of Aid Network, p. 118. On-line at http:// should be prioritized for the poorest and www.realityofaid.org/roa-reports/index/secid/377/Aid-and-the-Private-Sector most marginalized populations in Africa. 2 Organization for Economic Cooperation and Development-Develop- ment Assistance Committee (OECD-DAC) (November 2011). 2011 OECD Re- port on Aid Predictability: Survey on Donors’ Forward Spending Plans, • Enhance the quality and effectiveness of 2011–13. Paris: OECD. On-line at http://www.oecd.org/document/30/0,37 Canadian aid. In 2013, Canada needs to 46,en_2649_3236398_46010014_1_1_1_1,00.html 3 The International Assistance Envelope contains the budgetary allocations develop a forward-looking agenda and ac- by the federal government to programs for international cooperation. This includes allocations to CIDA, Foreign Affairs, the Department of Finance tion plan on aid effectiveness that builds and other departments. However, not all of the allocations in the Envelope are eligible to be counted as Canadian aid or ODA. This includes some dis- on the outcomes of the Fourth High-Level bursements for peace and security (decommissioning of nuclear warheads in the former U.S.S.R., security programs in non-ODA eligible countries). Forum on Aid Effectiveness in Busan in 2011. Nor does the Envelope include all items that can be included when calcu- Among other aspects, this should align lating Canadian ODA since they are allocated through other government expenditures (first year of supporting refugees from developing countries Canadian aid spending with developing in Canada), are non-budgetary (bilateral debt forgiveness) or are imputed values (developing country students studying in Canada). Total Canadian country priorities and development plans, Official Development Assistance is therefore made up of:ODA -eligible line items in the International Assistance Envelope less IAE items not eligible make our spending more predictable and for Canadian ODA plus non-budgetary items that can be included as ODA. continue to make progress on aid transpar- 4 Sumner, Andy (September 2012) Where Will the World’s Poor Live?An Update on Global Poverty and the New Bottom Billion. Working Paper ency. Issues of ownership, harmonization, 305. Washington: Center for Global Development. On-line at http://www. cgdev.org/files/1426481_file_Sumner_where_in_the_world_FINAL.pdf alignment, results, and accountability will 5 The Alternative Federal Budget interprets the cuts differently thanCIDA . become even more pressing as Canada in- The AFB counts the cuts cumulatively to the flatlined $5bn IAE, whereas CIDA counts just the individual successive cuts. For example, in 2012–13 creasingly engages new actors like the pri- and 2013–14, they would be $180.7mn + $242.1mn = $422.8mn. For CIDA, this would be 180.7mn + (242.1mn-180.7mn) = $242.1mn. vate sector. Finally, CIDA should reassess 6 Available on-line at http://hdr.undp.org/en/media/HDR_2011_EN_ its current funding arrangements in Part- Table1.pdf 7 The numbers included here are derived from an Order Paper that asked nerships with Canadians Branch to align CIDA specific questions on the Budget 2012 cuts. Numbers here vary sig- with the Busan commitment to provide an nificantly from the numbers in the 2012 RPP. This is because the RPP was prepared prior to the Budget announcements and was only able to antici- enabling environment for Civil Society Or- pate cuts but not their amounts. It therefore did not actually reflect the real 2012 numbers. Departments will reflect the real budget cuts in their ganizations (CSOs) “consistent with inter- Departmental Performance Reports (tabled Fall 2013). See Canada, Par- liament (2012). Sessional Papers, Paper no. 578, pp. 2–22. national rights, that maximizes the contri- 8 Payne, Elizabeth (2012). “Private Sector becomes key player in Can- butions of CSOs to development”. ada’s overseas aid.” The Ottawa Citizen, Jan. 26. On-line at http://www. ottawacitizen.com/business/Private+sector+becomes+player+Canada+o verseas/6057931/story.html

• Echo efforts to tackle poverty abroad with 9 CIDA (November 23, 2012). Speaking notes for the Honourable Julian leadership and robust action at home. Fantino Minister of International Cooperation for the Economic Club of Canada ‘Reducing Poverty — Building Tomorrow’s Markets’. Ottawa: Can- The federal government must urgently adian International Development Agency. 10 Organization for Economic Cooperation and Development - De- address poverty, homelessness, and hun- velopment Assistance Committee (OECD-DAC) (2012). Canada - Develop- ger in Canada starting with the adoption ment Assistance Committee (DAC) Peer Review. Paris: OECD, p. 11. On- line at http://www.oecd.org/development/peerreviewsofdacmembers/ of national intergovernmental strategies canadapeerreview2012.pdf. based on national and international hu- 11 CIDA (2012). 12 OECD-DAC (2012). man rights principles including equality 13 Using the estimate of GNI from the November fiscal update for each and non-discrimination. This should in- of the years 2013–14 (1,880), 2014 (1,965), 2015 (2,060), multiply the GNI (1,880) by 0.0031 to get the ODA number; then subtract refugees (280), stu- clude independent monitoring and review dents (160) and non-aid estimates (170) in the IAE to arrive at the aid-related IAE for 2013–14 of $5,218 million. with enforceable targets and timelines. (See the Poverty chapter on page 121.)

Doing Better Together: Alternative Federal Budget 2013 113 Official Languages

Background tion of the Action Plan for Official Languages and the Roadmap for Linguistic Duality, two The vitality of Official Language Minority Com- horizontal initiatives that consolidate a num- munities (OLMCs) and linguistic duality are ber of initiatives intended to support the vital- core values and help build a strong, unique ity and development of official languages and Canadian identity. In fact, ever since the British linguistic duality in Canada. North America Act, French and English have The federal government’s investments sup- had special status as languages in Canada. In porting the development of official language 1969, to implement the recommendations of minority communities have helped establish the Commission on Bilingualism and Bicultur- a strong organizational and institutional net- alism, the federal government passed the Of- work made up of associations, schools, col- ficial Languages Act. This legislation, which leges, theatres, galleries, artist centres, cul- has since been amended, covers the status tural and community centres, etc., that is the equality, usage rights and privileges of French product of the ceaseless work of thousands and English as Canada’s official languages and of stakeholders across the country. Today, it seeks to better define the support that the fed- is a service continuum that ensures the com- eral government must provide to OLMCs for munity, cultural, economic and educational promoting the development of francophone development of 2.6 million francophones and and anglophone minorities. This legislation nearly 1 million anglophones in Quebec who also sets out the powers and obligations of live in a minority situation in the country. federal institutions with respect to official The government has also invested con- languages. In 1982, the Canadian Charter of siderable amounts in supporting Canadians Rights and Freedoms strengthened the Can- who wish to learn the other official language. adian government’s commitment by codify- Second language education is still a priority ing French and English as the country’s two investment that produces concrete results official languages and by entrenching them throughout the country. In fact, the num- in our constitution. ber of students registered in immersion pro- Over the years, the federal government has grams across the country is remarkable (over equipped itself with many tools for properly 1.8 million students across Canada, accord- fulfilling its official language commitments. ing to Canadian Parents for French), and the Among those efforts, there is the creation of number of Canadians who know both official the Commissioner of Official Languages pos- languages continues to increase. ition, a set of federal-provincial/territorial Interest in official languages has not agreements, the creation of the Official Lan- stopped growing, and Canada’s two official guages Support Programs at the Department languages are more vibrant than ever. At the of Canadian Heritage, as well as implementa- same time, due to the contribution of French

114 Canadian Centre for Policy Alternatives language immigration, the face of Canadian provide adequate services to citizens. That in- francophonie is increasingly diversified. vestment would add many high-quality jobs, which will contribute to the economic growth Current Issues of the regions and the country as well as to the community and cultural development of OLMCs over the coming years. Over the coming year, the Government of Can- The AFB will renew the federal govern- ada will launch a new official languages strat- ment’s commitments in the Roadmap for Lin- egy that will be the successor to the Roadmap guistic Duality, by launching a new horizon- for Linguistic Duality, which expires in March tal framework on official languages. To better 2013. It will renew all the federal-provincial/ maximize returns on the government’s invest- territorial agreements in minority language ments as part of the next Roadmap, the AFB and second language education, as well as will double the amounts available for the key the federal-provincial/territorial agreements initiatives in step with the provinces/territor- supporting the development of OLMCs. It is ies (intergovernmental components of vari- therefore a pivotal year for the future of offi- ous programs) that will be included in the cial languages in Canada. next Roadmap, over the amounts invested However, the amounts allocated through from 2008 to 2013. (Cost: $200 million/year) these various mechanisms have barely in- Lastly, the AFB will enhance the govern- creased in 20 years, with the result that the ment’s investments by incorporating the fol- intervention power of the organizations that lowing initiatives into the strategy that will deliver services has been slowly whittled follow on from the Roadmap: away. The government must not only renew the amounts allocated to OLMCs, it must en- • $2.5 million over 5 years for a market and hance its investments. Therefore, it is import- audience develop program for OLMC art- ant for the amounts needed for this to be pro- ists and arts organizations; vided for in the 2013 federal budget. • A programming contribution equal to 30% of the annual budgets of community radio Actions stations and community newspapers in OLMCs to ensure their long-term surviv- The AFB will strengthen service delivery cap- al; (Cost: $10 million/year) acity in the minority language through in- • Creation of an initiative promoting increased investment in funding the program- creased integration of arts and culture ming of OLMC organizations, associations into French language education, and in- and networks. Those programming invest- creased participation of young people ments will be indexed with the current cost in artistic and cultural activities outside of living. Such support would ensure that the the school environment. (Cost: $10 mil- association environment, a major employer lion/year) for OLMCs and an essential service-delivery partner, would be better able to develop and retain a specialized, high-end workforce and

Doing Better Together: Alternative Federal Budget 2013 115 Post-Secondary Education

Background or more times the Canadian average, driving student debt for many future health profes- Since the federal funding cuts of the mid- sionals into the six-figure range. 1990s, an increasing portion of the cost of The most recent funding increase for post- post-secondary education has been passed secondary education came with the 2009 eco- on to students and their families. Although nomic stimulus budget: $2 billion was allocat- post-secondary education is within the juris- ed for college and university infrastructure. diction of provincial governments, the fed- Though this funding provided much-need- eral government also has a responsibility to ed material resources on campus (as well ensure the best possible system of post-sec- as an economic stimulus to the economy), it ondary education and has the ability to use did little to resolve the gap in core funding. its spending power to intervene without al- The 2012 federal budget provided no in- tering the Constitution’s division of powers. crease in core funding for post-secondary Despite the federal government’s significant education and did little to address barriers role in post-secondary education, Canada is to access and the student debt crisis. one of few industrialised countries without a national oversight for higher education. Current Issues Between 1979 and 2009, government grants as a share of university operating revenue Core Funding plummeted from 84% to nearly 58%. As a direct result, the share of university operat- Starting in 1967, federal funding was provided ing budgets funded by tuition fees more than on a cost-sharing model. The provinces made doubled during the same period of time, from spending decisions and administered the 12% to 35%.1 Unsurprisingly, in the last 15 system and the federal government matched years, tuition fees have become one of the lar- their spending dollar-for-dollar. Under this gest expenses for university and college stu- arrangement, federal expenditures on high- dents, increasing on average over five times er education tripled. In 1977, the government the rate of inflation. abandoned this cost-sharing model and intro- In 2012–13 alone, average tuition fees in duced the Established Program Financing Canada increased by 5% to a total of $5,581. (EPF) framework, whereby funds were trans- Combined with additional compulsory fees ferred through tax points and cash transfers. that most institutions charge to circumvent The EPF was replaced by the Canada Health provincial tuition fee regulation, total average and Social Transfer (CHST) in 1996 and the undergraduate fees climbed to over $6,331.2 Canada Social Transfer (CST) in 2004. These In specialised programs such as medicine, changes not only reduced the overall fund- law, and dentistry, students often pay three ing allocated to the transfer, but also reduced

116 Canadian Centre for Policy Alternatives the accountability of transfers to the prov- els of funding also impair the ability of in- inces for post-secondary education and pro- stitutions to hire an adequate number of in- vided no guarantee that federal monies in- structors and support staff, resulting in a tended for post-secondary education would reduction in the quality of Canada’s univer- reach students and their families. Thus, the sities and colleges.5 level of funding for the transfer reached its This situation was not inevitable, nor is peak in 1981 at 0.56% of GDP, before declin- it now beyond government control. A sim- ing through the remainder of the 1980s and ilar situation existed with federal funding 1990s to reach a low of 0.15% in 2005. Cur- for health care, until the introduction of the rently, the federal transfer for post-second- Canada Health Act in 1984. This act estab- ary education stands at 0.21% of GDP.3 The lished guiding principles to maintain high CST will be re-negotiated in 2014. These inter- standards in quality and accessibility, and governmental negotiations provide an oppor- made federal funding conditional on these tunity for the federal government to play a principles being respected. much stronger role in funding post-secondary education. Student Financial Aid The 2007 federal budget took a step in Past government decisions at the federal and the right direction by earmarking increased provincial levels are forcing students and funds for post-secondary education, but while their families to assume more education-re- it seemingly added some degree of transpar- lated debt than any previous generation, dur- ency, provincial governments are still under ing a time when earnings for the majority of no obligation to ensure that federal monies families have been stagnant for the past 20 transferred to them are actually directed to years. High tuition fees and an increasing increasing the quality of post-secondary edu- reliance on loans have pushed student debt cation. There is consensus in the post-second- to historic highs. In 2011, the total amount of ary education community that the current student loans owed to the government ap- design of transfer payments is insufficient proached $15 billion, the legislative ceiling to meet any objectives set out by the federal set by the Canada Student Financial Assist- government for post-secondary education. ance Act. This figure only accounted for a por- The Canadian Federation of Students esti- tion of total student debt; it did not include mates that the federal contribution is $1.7 bil- provincial and personal loans, lines of cred- lion short of 1992–93 levels4 after university- it, and education-related credit card debt. In specific inflation and enrolment growth are response, the government altered the defin- factored in. Lagging federal funding for col- ition of “student loan” to exclude over $1.5 leges and universities is directly connected billion in federal student debt and amend- to higher tuition fees, as costs are passed on ed the Canada Student Financial Assistance to students. As the value of federal transfers Act to increase the limit to $19 billion while diminished in the 1990s, tuition fees for full- at the same time dramatically reducing par- time students increased significantly from liamentary oversight of the program. an average of roughly $1,460 in 1990 to over Student debt driven by high tuition fees three times that in 2012 of $5,581. Lower lev- has been linked to lower degree completion

Doing Better Together: Alternative Federal Budget 2013 117 rates and a reduced likelihood of continuing First Nations Students studies beyond a bachelor’s degree or college The federal government has both a moral and diploma. Heavy debt loads are also a nega- legal responsibility to provide for the well-be- tive factor in an already weakened economy. ing of First Nations peoples, including access Student loan obligations reduce the ability to post-secondary education. First Nations’ of new graduates to start a family, work in rights and treaty rights, including the right public service careers, invest in assets, build to access education, are recognized and af- career-related volunteer experience, or take firmed in the Canadian Constitution Act of lower-paying work in order to get a “foot in 1982. These rights are further recognized in the the door.”6 United Nations Declaration on the Rights of In fall 2009, the federal government estab- Indigenous Peoples, which Canada endorsed lished the Canada Student Grants Program in 2010. The Post-Secondary Student Support (CSGP). This new program greatly increases Program (PSSSP), which is only available to support for students but, in order to mean- status First Nations and Inuit students, is the ingfully reduce student debt, a much larger primary mechanism by which status First Na- investment is required. The CSGP will dis- tions students receive financial support from tribute roughly $614 million this year, while the federal government. the Canada Student Loan Program expects Since 1996, annual growth in funding for to lend $2.3 billion. the PSSSP has been capped at 2%. With in- Although a substantial amount of funds flation, population growth, and tuition fee are being distributed through the CSGP, it increases in most jurisdictions, this cap ac- pales in comparison to the $2.81 billion the tually results in an annual decrease in per- government spends on education-related tax capita funding. In fact, the number of First credits and savings schemes. Despite their Nations students receiving funding from the large price tag, federal tax expenditures are PSSSP declined from 22,938 in 1997 to 18,729 a poor instrument to either improve access in 2009. It is estimated that between 2006 to post-secondary education or relieve stu- and 2011, over 18,500 students were denied dent debt, since everyone who participates funding, with roughly 3,200 more students qualifies for tax credits regardless of finan- per year denied funding since as a result of cial need. The federal government is divert- the funding cap. ing vast sums of public funding where they This is not solely a matter of equity of ac- are not necessarily required. cess. It is also estimated that the additional The non-refundable education and tu- GDP contribution of First Nations peoples, if ition fee tax credit alone will cost the federal all educational attainment gaps were closed government over $1.54 billion this year. Tax between First Nations and non-First Nations credits are found to disproportionately bene- populations, would exceed $400 billion over fit wealthy families.7 For those students who a 25-year period.8 do earn enough to claim the credits and get money back on their taxes at the end of the financial year, these rebates do little to help them afford tuition fees in the first semester.

118 Canadian Centre for Policy Alternatives University Research velopment infrastructure will give way to a publicly backed university system that does A highly educated workforce is the founda- not have a consistent track record of bring- tion of a knowledge-based economy. Graduate ing innovation to the marketplace. students are instrumental in the production of basic research that lays the groundwork for future innovation and a better and broad- AFB Actions er understanding of our world. Recent federal budgets have invested heav- • The AFB will introduce a new, dedicated ily in university research. However, much of post-secondary education cash transfer, the investments are directed towards produ- to be guided by federal legislation based cing a commercially beneficial end product, on principles of accessibility, comprehen- while offering comparatively little new invest- siveness, collegial governance, public ment to basic research. By funding a narrow administration, and academic freedom. range of research disciplines — mostly in sci- This new cash transfer will return post- ence, engineering, and business — funding de- secondary funding to pre-1992 levels by cisions have led to a deterioration of a com- 2014–15, allowing for the reduction of tu- prehensive research environment based solely ition fees. (Cost: $1.7 billion/yr.) on the academic merits of the work. Feder- • The AFB will eliminate the need for new al granting councils have seen a steady de- federal student loans by increasing the cline in base funding over the past five years. value and number of up-front grants Since 2007, funding for the Social Sciences available to students. This will be fund- and Humanities Research Council (SSHRC) ed by redirecting funds currently used for has decreased by 11%; the Natural Science education-related tax credits and savings and Engineering Research Council (NSERC) schemes to up-front grants through the saw funding decline by 1.2%; and the Can- Canada Student Grants Program.11 (Sav- adian Institutes of Health Research (CIHR) ings: $1.5 billion/yr, Cost: $1.5 billion/yr, saw a 4.1% drop in funding.9 Net Cost: $0.) The federal government’s science and technology strategy is focussed on generat- • To reduce socio-economic disparities being products that can yield short-term results, tween First Nations and non-First Nations with little consideration to long-term innov- students, the AFB will remove the cap on ation. In addition, federal funding increases funding for the Post-Secondary Student directed towards market-driven research pro- Support Program and increase funding grams are leading to an unhealthy private- and expand eligibility to meet the needs sector dependency on universities for their of all First Nations post-secondary stu- research and development. This corporate dents. The AFB will also clear the back- subsidy contributes directly to Canada lag- log of students who have been denied ging behind other OECD countries10 in private- funding (see the First Nations chapter sector investment in in-house research and on page 77). (Cost: part of $800 mil- development capacity. As this trend deep- lion/yr education investment in First Na- ens, Canada’s private-sector research and de- tions chapter.)

Doing Better Together: Alternative Federal Budget 2013 119 • Recognizing the importance of funding Notes based on an independent, peer-reviewed, 1 Almanac of Post-Secondary Education in Canada. Canadian Association and merit-based approach, the AFB in- of University Teachers (2012) creases the federal granting agencies’ base 2 The Daily (2012). University Tuition Fees. Ottawa: Statistics Canada. budgets by 10%, with greater funds allo- 3 Almanac of Post-Secondary Education in Canada. Canadian Association of University Teachers (2012).

cated to the social sciences and human- 4 http://www.cfs-fcee.ca/downloads/CFS-2011-Public_Education_for_ ities.12 (Cost: $231 million/yr.) the_Public_Good-EN.pdf 5 Newstadt, Eric. “Key Performance Indicators: A Policy Critique.” Nov- ember 25, 2012. http://citizenspress.org/pdfs/key-performance-indicators- • The AFB will increase the number of Can- a-policy-critique-1

ada Graduate Scholarships to 3,000 — con- 6 UK Higher Education Statistics Agency, 2012: http://www.bbc.co.uk/ news/uk-wales-17663300; sistent with the average growth of the Kwong, Jeff C. et al. “Early Effects of Rising Tuition Fees on the Medic- program since 2003 — to be distributed al Student Population.” Canadian Medical Association Journal Vol. 166, No. 8, April 2002. proportionally among the research grant- Ontario Bar Association. “Money, Jobs, and Fear: Tuition report from the ing councils according to enrolment fig- OBA student division.” Young Lawyers’ Division Newsletter, Vol. 10, No. 2, January 2003. ures. (Cost: $17 million/yr.) 7 Registered Education Savings Plans: A Grant Program for the Wealthy, CFS Research, 2012.

8 Sharpe, Arsenault, Lapointe, Cowan. (2009). “The Effect of Increas- ing Aboriginal Educational Attainment on the Labour Force, Output and the Fiscal Balance.” Ottawa: Centre for the Study of Living Standards.

9 Canadian Association of University Teachers. “Statement Regarding the 2012 Federal Budget”. http://www.caut.ca/uploads/2012_CAUT_ FinanceBrief.pdf

10 The Global Competitiveness Report 2012–13. World Economic Forum (2012).

11 Canadian Federation of Students. (2010). Post-Secondary Education Tax Credits: Billions in misdirected “financial aid”. Ottawa: Canadian Fed- eration of Students.

12 Specifically, increase granting portions of NRC, CIHR, SSHRC, NSERC by 10%.

120 Canadian Centre for Policy Alternatives Poverty and Inequality

Background For millions of Canadians, the economic crisis is far from over. Hundreds of thou- The Occupy Movement and a growing chor- sands have exhausted their EI coverage and us of national and international reports have are discovering a provincial social assistance propelled the issue of income inequality onto system that is a shadow of what it was during the public stage — and with it renewed calls the recession of the early 1990s. Real welfare for governments to tackle the problem. benefit rates are much lower, while new rules At the sub-national level, all the provinces have made provincial assistance much less and territories with the exception of British accessible, often forcing people to liquidate Columbia and Saskatchewan have poverty- their savings before receiving help.3 Those in reduction plans in place or in development. desperate need of income support — due to a At the federal level, in 2009, all parties sup- job loss, the loss of a spouse, the loss of good ported a House of Commons motion direct- health, old age, or any number of other life ing the federal government to “develop an circumstances — find that the social safety immediate plan to eliminate poverty in Can- net meant to catch them has been shredded. ada for all.” A Senate report the same year Yet there is nothing inevitable about also urged the federal government to “adopt poverty in a society as wealthy as ours. Evi- a poverty-eradication goal.”1 In November dence from other countries demonstrates how 2010, a House of Commons Committee re- governments that commit to bold action plans leased a report on the federal role in poverty get results.4 Canada had a similar experience reduction, recommending “That the federal when we chose to tackle poverty among the government join with the provinces to intro- elderly in the 1960s: as a result, the lowest duce an action plan for reducing poverty in rate of poverty for any demographic group Canada.”2 in Canada has been, by far, that for seniors. Thus far, all that has occurred federally is that a group of MPs has formed an all-party Inequality anti-poverty caucus. While most provincial Poverty and income inequality are distinct governments are taking steps, the Govern- yet related phenomena. Without question, ment of Canada has the lead responsibility reducing poverty is a matter of urgency. But for poverty rates among Aboriginal people, inequality shapes our view of that urgency. seniors, children, recent immigrants, and International research reveals an important people with disabilities. It must also ensure link: the higher the rate of inequality among Canada abides by the relevant conventions people, the higher the rate of poverty that to which we are signatory, such as the Inter- is tolerated.5 That could explain why high national Covenant on Economic, Social, and poverty levels have continued to be politic- Cultural Rights.

Doing Better Together: Alternative Federal Budget 2013 121 ally abided in Canada, even when the econ- or just spending less. And so it turns out that omy was firing on all cylinders. rising inequality is bad for business too.10 Between 1997 and 2007, the Canadian economy enjoyed the most sustained period We All Pay for Poverty and Inequality of robust growth since the 1960s, resulting in a Study after study links poverty with poorer gradual decline in the prevalence of poverty.6 health and higher health care costs, higher Simply put, when there are jobs, people work. justice system costs, more demands on so- But this period also witnessed unprecedent- cial and community services, more stress ed growth in income inequality. By 2010, the on family members, and diminished school average after-tax income of the richest 10% of success, not to mention huge costs associat- non-elderly households was 21 times that of ed with reduced productivity and foregone the average incomes of the poorest 10%, and economic activity. rising. That’s much higher than for much of A study published by the Ontario Asso- the 20 years preceding the mid-1990s, when ciation of Food Banks calculated the cost of average incomes of the richest were between poverty in Canada to be between $72.5 billion 13 and 15 times that of the poorest. The rich- and $86.1 billion (or about 6% of Canada’s est 1% enjoyed 32% of all income gains from GDP).11 A more recent report by the National economic growth in the decade before the Council of Welfare (shortly before the Harp- crisis, and their share of total income rose to er government cut its funding) notes: almost 14%, rivaling the levels of the Roaring Twenties.7 In the wake of the crisis, there are • “The poverty gap in Canada in 2007—the no signs that these trends are abating. And money it would have taken to bring every- while inequality in Canada may be less ex- one just over the poverty line — was $12.3 treme than in the U.S., according to a recent billion. The total cost of poverty that year report by the Conference Board of Canada, was double or more using the most cau- it is growing at a faster rate here.8 tious estimates.” Income inequality in Canada is also high- • “There is a consistent pattern of studies ly racialized. As a March 2011 CCPA report from Canada and other countries show- notes, “a colour code is still at work in Can- ing that investing to eliminate poverty ada’s labour market.” The study found that costs less than allowing it to persist.”12 racialized Canadian workers earned only 81.4 cents for every dollar paid to non-racialized And just as we all pay for poverty, so too Canadian workers.9 inequality itself is correlated with a host of In very concrete terms, in more unequal higher societal costs. The groundbreaking societies the rich bid up the cost of basics, work of epidemiologists Richard Wilkinson such as housing, causing affordability prob- and Kate Pickett, for example, surveys indus- lems for lower-income households. trialized countries and finds that income in- The squeeze-play on household incomes equality is correlated with a great number (downward pressure on wages, rising costs) of social ills, including more addiction and is being managed by higher household debt mental health problems, more teenage pregnancy, and more violence and crime. Critic-

122 Canadian Centre for Policy Alternatives ally, their evidence shows it is not just the by increasing inequality in earnings, and poor who experience worse health in more by the Harper government’s approval of in- unequal societies, but middle- and upper-increasing numbers of temporary foreign work- come households as well.13 ers, whose acceptance into Canada now out- Recent academic attention has turned paces that of economic immigrants, for the to the fact that greater income inequality is first time in our history.15 linked to diminished generational income Historically low levels of income support mobility.14 This speaks directly to the widely and a growth in insecure, poor-paying jobs held Canadian value of equality of opportun- led an estimated 882,000 individuals to food ity. And in concrete terms, when inequality banks across Canada in March 2012, an all- means lower-income children are more like- time high and a 31% increase over the same ly to remain poor, we are all denied their fu- month in 2008 (before the recession hit).16 ture economic contributions. Given an ag- Poverty rates in Canada moved upwards ing population, the economy of the future with the onset of the recession. According to can ill afford to discount the skills and con- Statistics Canada’s low-income cut-off after- tributions of a significant and growing share tax (LICO-AT), in 2010, the overall poverty rate of the next generation. returned to its pre-recession level (a low of 9%).17 But other poverty measures tell a dif- Current Issues ferent story. According to Statistics Canada’s low-income measure (LIM), the poverty rate in 2010 remained at 13%, well above its pre- The Case for a Federal Plan recession level. Employers are looking to trim costs, and in- As Figure 14, a chart of poverty rates for creasingly expect workers to accept wage adults in Canada, shows, the choice of meas- and benefit cuts in return for the privilege of ure speaks to different trends.18 working. Job growth has been concentrated in Depending on the measure used, between temporary positions and self-employment in three and four million Canadians — more than the private sector, while in the public sector, 600,000 of them children — live in poverty. In it has been due to health care and stimulus First Nations families, one in four children spending (now coming to an end). Thus far live in poverty. Poverty rates are also higher the private sector has shown no signs it will for recent immigrants, off-reserve Aborigin- add enough jobs to fill the breach, let alone al people, and people with disabilities. Cam- jobs offering similar incomes or benefits. Even paign 2000’s most recent report card notes without a further downturn, the number of that a greater proportion of Canadian fam- working poor is increasing. ilies raising children are living in poverty to- Indeed, a majority of poor people live in day than in 1989, when parliamentarians of households with people employed in the paid every political stripe committed to eliminat- labour force. While deep poverty is primari- ing child poverty by the year 2000. The rate of ly a story of inadequate provincial social as- child poverty was higher despite the fact that sistance, the breadth of poverty is primarily a Canada’s inflation-adjusted GDP grew from low-wage story. This reality is only worsened roughly $800 billion in 1989 to $1.3 trillion in

Doing Better Together: Alternative Federal Budget 2013 123 Figure 14 Adult Poverty Rate in Canada (18–64), Three Measures

4 LICO-AT MBM LIM-AT 2

0 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010

2010. Of concern, a higher child poverty rate AFB Actions was accompanied by a greater proportion of poor families with children that had at least Setting Clear Targets one parent working full-time, full-year (36% The AFB adopts the following indicators, tar- in 2010, compared to 33% in 1989).19 gets, and timelines: For these Canadians, the issue is not just making ends meet, but being able to plan for • Reduce Canada’s poverty rate by 25% the future, develop skills, or participate in the within five years (by 2018), and by 75% social, cultural, and political life of their com- within a decade. munities. Temporary bouts of poverty may • Ensure the poverty rate for children and be overcome, but evidence shows that the youth under 18, lone-mother households, depth of poverty is deepening and its dur- single senior women, Aboriginal people, ation lengthening, leaving a scarring legacy people with disabilities, and recent immi- on individual lives and communities across grants also declines by 25% in five years, the country. Persistent poverty represents a and by 75% in 10 years, in recognition violation of economic and social rights en- that poverty is concentrated within these shrined in international law, and a squan- populations. dering of human potential.

124 Canadian Centre for Policy Alternatives • In two years, ensure every person in Can- continue to receive federal support. The in- ada has an income that reaches at least tent of this transfer is to ensure that the li- 75% of the poverty line. on’s share of these funds helps provinces improve social assistance and disability benefit • In two years, ensure there is sufficient rates and eligibility. emergency shelter that no one has to sleep outside, and within 10 years ensure there 3. Provide adequate and accessible in- is sufficient stock of quality, appropriate, come supports. and affordable housing for all Canadians. • Legislate an Act to reinstate minimum na- • Reduce the number of Canadians who re- tional standards for provincial income as- port both hunger and food insecurity by sistance (to ensure that welfare is access- half within two years. ible and adequate).

• Reduce, every year, the share of workers • Immediately double the refundable GST earning less than two-thirds the medi- credit and lengthen the phase out to in- an wage. clude more families. (Cost: $4.3 billion/yr.)20

To achieve these targets, the AFB will • Increase the Canada Child Tax Benefit to take action in the following key policy areas: a maximum of $5,400 per child. (Cost: $1.5 billion/yr.) 1. Establish a legal framework by which the federal government will provide leader- 4. Improve the earnings and working con- ship on poverty and inequality issues. ditions of those in the low-wage workforce.

• Work collaboratively with the provinces, • Re-establish a federal minimum wage (set territories and Aboriginal organizations at $12 and indexed to inflation). to renew and extend the Canada Social • Commit the federal government to be- Transfer. coming a Living Wage employer, and 2. The AFB introduces a new federal trans- ensure that federal contracts go only to fer payment to the provinces, tied to helping service providers who similarly pay the them achieve their poverty-reduction goals Living Wage.21 (as recommended in the 2010 HUMA report). • Review and scale-back the Temporary This innovative transfer will be worth $2 Worker Programs, and extend to those billion in both the first and second year, over who come to Canada for work landed and above the costs associated with the fed- immigrant status with full labour rights. eral measures outlined below. It is specifically designed to assist provinces and territor- 5. Prioritize the needs of those most like- ies to meet clear poverty-reduction targets. In ly to be living in poverty. the first year, there are no strings attached to • The plan focuses its efforts on those groups the transfer. In subsequent years, however, with higher poverty rates, such as Aborig- only provinces that demonstrate improve- inal people; people with disabilities, ad- ment in income supports and show progress dictions and mental illness; recent im- on a number of other outcome indicators will

Doing Better Together: Alternative Federal Budget 2013 125 migrants and refugees; single-support Reducing Inequality mothers; and single senior women. The AFB’s comprehensive strategy to tackle 6. Address homelessness and the lack of the growing gap in Canada will be based on affordable housing. a five-point plan:

• Pass a National Housing Strategy (see the 1. Halt and reverse Canada’s drift towards Housing chapter on page 96). an economy based primarily on resource extraction and a low-paid service sector • Immediately start building new units of by establishing an industrial policy that social housing (not counting conversions, emphasizes the creation of value-added rental subsidies, or shelter spaces), start- jobs in the primary sector of the econ- ing with at least 20,000 units per year. omy, rebuilds manufacturing capacity 7. Provide universal publicly funded child with well-paid jobs, and invests in R&D care. to accelerate energy-efficient production and use of sustainable energy sources. • Within one year, develop a comprehensive plan and timeframe for the implementa- 2. Enhance the infrastructure and public tion of a high-quality, universal, public- services upon which most Canadians rely ly funded Early Learning and Child Care (child care, housing, transit, etc.), there- program. Initial phase-in should start by stretching paycheques and improv- immediately (see the Child Care chapter ing the purchasing power of the broad on page 58). middle class.

8. Provide support for training and edu- 3. Rebalance the bargaining relationship be- cation. tween capital and labour. A larger share of Canada’s income is going to corpor- • Immediately increase the availability of ate profits, at the expense of wages. This post-secondary grants for low-income trend can be reversed by measures that students, and increase overall transfers support collective bargaining, enforce for post-secondary education (see the and enhance the employment standards Post-Secondary Education chapter on of vulnerable workers, and rethink the page 116). use of temporary foreign workers. The • As part of a Green infrastructure initia- federal government has a leadership role tive, provide Green Jobs apprenticeship to play on all these fronts. training to the unemployed and to eco- 4. Prioritize improvements in the incomes of nomically marginalized groups (Aborig- all low- and middle-income households inal people, women, recent immigrants, (better public pensions, higher minimum etc.), so that they gain skills in the high- wages, the widespread adoption of living er paid jobs that will be in high demand wage policies, and improved supports as we take action on climate change (see for the ill, unemployed, young and old). the Sectoral Development chapter on page 135).

126 Canadian Centre for Policy Alternatives 9 Block, S., and Grace-Edward, G. (2011). Canada’s Colour Coded Labour Mar- 5. Increase the progressivity of Canada’s ket: The Gap for Racialized Workers. Ottawa: CCPA and Wellesley Institute. overall tax regime, and reduce tax exemp- 10 See http://www.canadianbusiness.com/article/39123--inequality-is- bad-for-business tions for high income and highly profit- 11 Laurie, Nathan. (2008). The Cost of Poverty: An Analysis of the Econom- able corporations. (See the Tax chapter.) ic Cost of Poverty in Ontario. Toronto: Ontario Association of Food Banks. 12 National Council of Welfare. (2011). The Dollars and Sense of Solving These two sets of measures would better Poverty. Ottawa: NWC, p. iv.

offset rapid growth in market income in- 13 Wilkinson, R., and Pickett, K. (2009). The Spirit Level: Why More Equal equality and raise more public revenues Societies Almost Always Do Better. London: Penguin Allen Lane. 14 Corak, M., Curtis, L., Phipps, S. (2010). Economic Mobility, Family Back- required to provide better services for all ground, and the Well-Being of Children in the United States and Canada: http:// www.iza.org/en/webcontent/publications/papers/viewAbstract?dp_id=4814 Canadians and tackle poverty. 15 Yalnizyan, A. (2012). “Changes to Immigration Policy Could Trans- form Society” The Globe and Mail, May 3: http://www.theglobeandmail. com/report-on-business/economy/economy-lab/changes-to-immigration- Notes policy-could-transform-society/article4105208/ 16 Food Banks Canada. (November 2012). Hungercount 2012. Toronto.

17 For a helpful summary of the most recent poverty trends, see Citizens 1 The Standing Senate Committee on Social Affairs, Science and Tech- for Public Justice. (2012). Poverty Trends Scorecard: Canada 2012. Ottawa. nology. (December 2009). In from the Margins: A Call to Action on Poverty, Housing and Homelessness. Ottawa: Report of the Subcommittee on Cities. 18 The chart also includes the more recent market-basket measure (MBM), which shows little recovery since the recession. But some methodological con- 2 The House of Commons Standing Committee on Human Resources, cerns have been raised about the MBM. See: http://www.policyalternatives. Skills and Social Development, and the Status of Persons with Disabil- ca/publications/commentary/how-destroy-good-poverty-line ities. (November 2010). Federal Poverty Reduction Plan: Working in Part- nership Towards Reducing Poverty in Canada. Ottawa: Report of the HUMA 19 Campaign 2000. (2012.) Needed: A Federal Action Plan to Eradicate Child Committee. p. 249. and Family Poverty in Canada - 2012 Report Card. Ottawa, November 21. http:// www.campaign2000.ca/reportCards/national/C2000ReportCardNov2012.pdf 3 For a full review of provincial social assistance rates and eligibility rules, see: National Council of Welfare. (2010), Welfare Incomes, 2009. Ottawa: NCW. 20 Specifically the Federal Sales Tax for filer, for spouse and for depend- ents is doubled. The credit reduction rate has been changed from 0.05 to 4 See for example, Waldfogel, Janet (2008). “Improving Policies for the 0.037. The credit reduction level remains unchanged. This analysis is based Working Poor: Lessons from the UK Experience.” Policy Options. September. on Statistics Canada’s Social Policy Simulation Database and Model. The 5 Fortin, Pierre. (2010). “Quebec is Fairer”, Inroads, Winter/Spring, Issue assumptions and calculations underlying the simulation results were pre- No. 26, pp. 58–65. pared by David Macdonald and responsibility for the use and interpretation of these data is entirely that of the authors. 6 Statistics Canada. (2012). Incomes in Canada 2010¸ CANSIM Table 202-0804 21 The living wage is understood here to be the living family wage, as calcu- 7 Yalnizyan, Armine. (2010) The Rise of Canada’s Richest 1%. Ottawa: Can- lated by the CCPA for numerous Canadian cities. For more on this definition adian Centre for Policy Alternatives. and methodology, see: http://www.policyalternatives.ca/livingwage2012 8 See: http://www.conferenceboard.ca/hcp/hot-topics/worldInequality. aspx#anchor6a

Doing Better Together: Alternative Federal Budget 2013 127 Sustaining Public Services

Background ployment insurance and old age benefits, of statisticians to collect statistics, of veterans Strong, effective public services are essential to access services to which they’re entitled, to address the challenges Canadians face. Pub- of regulators to protect the food supply — all licly owned and operated services are more are being undermined. Ideological decisions efficient, less expensive, of higher quality, that celebrate austerity and the undemocratic and more accountable than privatized servi- protection of global investor rights are trans- ces. They have been shown repeatedly to re- ferring correctional, health care, and other duce inequality and promote economic, so- regulatory costs and burdens to provinces cial, and environmental security. and municipalities. The 2012 federal budget announced direct cuts to ongoing spending of $5.2 billion Debt and Austerity and cuts of 19,200 public service workers The current government pretends to address over three years. Ordinarily, personnel esti- the deficit through cuts to public spending mates and services would be detailed in the and the public sector. In reality, public costs Reports on Plans and Priorities (RPPs) that are transferred to the private sector and down- the government publishes around the time loaded to the public, with questionable, if any, the budget is released. In an unprecedented impact on the deficit. In any other sector the move, seemingly designed to hide the im- deliberate elimination of 30,000 well-pay- pacts of personnel cuts on services, the gov- ing jobs2 over seven years would be viewed ernment eliminated this information from a travesty and a failure, especially when un- the RPPs when they were finally released.1 employment has stubbornly remained above 7% and the jobs being created are tempor- Current Issues ary and low-paying. A recent paper from the Chief Economist of the International Monet- Attacks on Public Services Are ary Fund concludes that austerity has a de- Part of a Broader Agenda pressing effect on weak economies, and that the premature turn to austerity in the EU Government spending cuts are undermin- and the U.K. has made things worse. Deficits ing the ability of public service workers to haven’t been reduced. In fact, deep spend- do their jobs. Important environmental and ing cuts have slowed the economy in those human rights protections are being eliminat- countries causing increased unemployment ed along with the public service workers who and reduced revenues. The U.K.’s deficit has regulate and enforce them. Other important actually increased.3 services are being stripped of resources. The ability of workers and seniors to collect em-

128 Canadian Centre for Policy Alternatives The full onslaught of cuts and the collat- debt is only postponed to another time, an- eral damage to the Canadian economy have other government, and a future generation. yet to be fully absorbed. It is unlikely, how- Although the federal government is only be- ever, that the public service cuts announced ginning to ramp up its P3 activity there are now will have much impact on Canada’s rela- a lot of provincial examples. For instance, tively small deficit. Any savings will likely be year-end Public Accounts published by the short-term and, in the case of regulatory cuts B.C. Finance Department demonstrate the to the environment, food safety, and health, extent of this sleight-of-hand. In 2009, B.C. lead to crises and long-term costs for future government contingencies and contractual generations. obligations to its P3 partners were calculated to be more than $50 billion.6 Privatization and Public- P3 consortiums borrow money from inter- Private Partnerships national investment banks at higher interest rates than do governments.7 Over the average Privatization can be defined as “the transfer 25-to-30-year span of a P3 contract, the public of responsibility and control from the public pays much more than it would have had the sector to the corporate and voluntary sectors, government borrowed the money directly to or to families and individuals.”4 finance a traditional design/build contract.8 Public Private Partnerships (P3s), some- The long-term outcomes of such privatized, times called Private Finance Initiatives, Stra- hidden debt erode government’s flexibility tegic Service Delivery Partnerships and other to provide public services as more and more obtuse titles designed to blunt public op- public money becomes tied up paying pri- position, are all types of privatization. The vate providers, guaranteeing private prof- public interest and public dollars are trans- its, and institutionalizing private for-profit ferred to the private sector so private individ- monopolies.9 uals can profit. Because the details of private-sector con- P3s are multi-decade contracts that in- tracts become the property of the contractor, clude private-sector financing, construc- the public isn’t allowed to view the books of tion, management, and ownership or oper- their P3 partner, even though it is ultimate- ation of vital public services or infrastructure. ly responsible for the costs. The main supporters of P3s are investment The public rightly expects governments to banks, law firms that organize P3 consortia, deliver services, regardless of whether P3 pro- and governments that hope to be re-elect- jects or their funders meet their obligations. ed by appearing to be good fiscal managers. Citizens and their governments bear the ul- They are not. P3s result in higher costs, low- timate risk for the provision of public servi- er quality, and loss of public control.5 ces. P3s fail regularly and must be bailed out Governments try to hide the long-term by the public.10 Business must make money costs of P3s by claiming they enable much- for its shareholders and, as recent experi- needed infrastructure to be built without in- ence shows, won’t hesitate to take quick ac- curring more debt. In fact, public-sector action, including bankruptcy and liquidation, counting processes create the illusion that P3s to protect investor interests. are paid for by the private sector, when the

Doing Better Together: Alternative Federal Budget 2013 129 Federal governments have a history of funded by private institutions, and to substi- supporting P3 growth. The Harper govern- tute secure public funding with more risky ment created PPP Canada Inc, a Crown cor- private sources of finance. Canadians’ tax dol- poration dedicated to encouraging P3s at lars will be diverted to leverage their partici- all levels of government, P3 funding criteria pation. Those who need public services cov- like that found in the Building Canada Fund, ered by social impact bonds will be forced to and the $1.25 billion P3 Canada Fund, which rely on the charity of financial institutions. subsidizes the development of P3 projects in provinces, territories, municipalities, and Privatization By Strategic Review First Nations communities. PPP Canada act- Recent federal budgets have announced stra- ively encourages federal government depart- tegic reviews that include criteria that elim- ments and agencies to use P3 solutions for inate public capacity. The criteria for such infrastructure and service renewal. reviews are arbitrary and secretive. The Parlia- The most recent federal budget further mentary Budget Officer has taken the govern- commits to ongoing reviews of federal cor- ment to court over its unprecedented secrecy porate assets, including Crown corporations, about the strategic review cuts announced especially those that the government believes in the 2012 budget. He has told Canadians compete with the private sector. The criteria that the lack of government co-operation is for selling these assets are arbitrary, based preventing him from properly analyzing the on an ideologically driven interpretation of country’s finances. Government department “core responsibilities.” In addition to help- and agency responses have for the most part ing to fund and support provincial and mu- been inadequate.14 nicipal P3s, PPP Canada is supporting other In 2012, the federal government announced federal departments in implementing P3s, that it was cutting 19,800 public-sector jobs including the Public Health Agency of Can- and $5.2 billion in spending from its oper- ada, Public Works and Government Services ational budget. Canadians still don’t know Canada (PWGSC), Indian and Northern Affairs how this will impact them. On November 16, Canada, and Library and Archives Canada, 2012, Treasury Board announced that 10,980 and is exploring opportunities for others.11 jobs had been eliminated in the preceding six months. Public service workers were already Social Impact Bonds over-extended.15 On November 8, 2012, the Conservative gov- In 2010, the Treasury Board Secretariat ernment elaborated on a 2012 budget promise published a demographic snapshot of the to implement Social Impact Bonds,12 a form public service. It stated that between 1983 of public-private partnership for social servi- and 2010, the Canadian population expanded ces that allows banks and financiers to profit by almost 34% from 25.4 million to 34 mil- from government services. Copying the fail- lion, while the size of the public service over ing “Big Society” program in the U.K.,13 the this period increased from 251,000 to 283,000 initiative plans to replace frontline public- workers, or 12.7%.16 Federal program spend- sector workers with volunteers, retirees, and ing has not kept up with Gross Domestic Prod- subsidized, low-wage private sector workers uct (GDP) growth. Real GDP has increased by

130 Canadian Centre for Policy Alternatives almost 100% since 1983, while federal pro- lem worse. The recent food safety recall at XL gram spending has only increased by 60.9%. Foods was no accident and was predicted. In Federal program spending as a proportion of order to cut Red Tape for the former operators GDP decreased over the last three decades of XL and increase production capacity food from 18.8% in 1983 to 14% in 2011–12.17 The safety officers were directed to ignore contam- 2012 federal budget forecasts a further drop inated carcasses since 2008 until the prob- to 12.7% by 2016–17. lem finally came to light.22 Cutting 1,144 jobs from the Canada Rev- Polls have shown that 90% of Canadians enue Agency, 3,008 from Agriculture and Ag- believe the government should do much more ri-foods, 2,008 from Human Resources Skills to protect the environment and public health Development Canada, and 1,416 from Health and safety, and 83% believe that inspectors Canada and the Public Health Agency doesn’t who enforce regulations should work for mean the demand for services from those de- government agencies, not the industries be- partments and agencies is eliminated. It only ing regulated.23 The government is seriously means that someone else is going to provide undervaluing the public’s demand for strong them or the work will be downloaded to the regulations and regulatory enforcement with public in the form of self-service and much its plans to enact the recommendations of its longer wait times.18 Red Tape Action Plan in 2013.24 One example Government departments have includ- of the length the government is prepared to ed as yet un-costed contracting-out plans as go is “the one-for-one rule,” which requires part of deficit reduction plans submitted to regulators to remove a regulation when a new Treasury Board. Without transparent business one is introduced.25 Health and Safety advo- plans that authentically examine the bene- cates involved with the Canada Labour Code, fits, costs, and risks there is no evidence this for example, report that if a new regulation is does anything but transfer public dollars to required to provide for the health and safe- the private sector.19 ty of workers then one that already protects them will have to be eliminated. Privatization of Regulatory Oversight and Enforcement Contracting-Out, Marginal Jobs, and Temporary Staffing Agencies Recent budgets have included measures to increase competitiveness and reduce “red The federal government has relied increas- tape.” As a result, federal inspectors in all ingly on contractors and temporary staffing sectors have seen their numbers and enforce- agency contracts. There is no evidence that ment powers diminished.20 Strategic Review this saves money. On the contrary, growing programs further undermine inspectors’ abil- evidence suggests that it costs the govern- ity to do their job. Their responsibilities have ment more money and undermines federal largely been transferred to individuals and public service staffing legislation.26 businesses that sell goods and services or ex- Workers hired under these arrangements tract Canada’s natural resources.21 The 2012 often feel marginalized. Some may prefer federal budget and the government’s Red Tape temporary employment relationships, but Reduction Action plan only make the prob- others become disillusioned and see little

Doing Better Together: Alternative Federal Budget 2013 131 opportunity for job security, advancement, • recommend revenue targets and tax in- or equitable wages and benefits.27 There are itiatives to intelligently support federal indications in some departments that casual- public service programs; ization is increasing,28 but lack of transpar- • reconcile public service staffing, training, ency surrounding the current cuts makes it and retention strategies with citizen-cen- impossible to assess the extent. tred program goals; The 2011–12 Main Estimates indicate that the government plans to spend $9.96 bil- • treat all federal government employees lion on contracting out for professional and equally, and ensure temporary staffing special services.29 Rather than consult Can- agencies are used only for short-term un- adians and departments about the services anticipated work; Canadians require the government contracted • enact legislation that protects all tem- Deloitte Inc., at $90,000 a day, to recommend porary workers employed by the feder- the kind of cuts that should be put in place.30 al government, and review and reduce contracting-out where required with a AFB Actions view to redirecting the anticipated savings into programs and projects in the The budgetary process must be transparent, broader public interest; accountable, and democratic. The Auditor • reinstate the integrity and timing of the General, the Parliamentary Budget Officer, government’s reporting cycle to increase and the people of Canada must understand the quality of information included, and the relationship between the programs that ensure that government spending and are wanted and needed, and the revenues cuts to programs are transparent; and that the government receives. Existing programs and services must be • introduce social impact “weighting” that leveraged to achieve social and environment- includes a combination of price, quality, al outcomes for both current and future gen- environmental and social impact criteria erations. as part of all decisions. Community Bene- The AFB is committed to public service fit Agreements (CBA), including employ- renewal and ensuring transparent public ment objectives, employment equity goals, spending and public spending decisions. and local content requirements should be The AFB will introduce a transparent a mandatory consideration for all feder- Program Review Process to examine strat- al government programs and contracts egies that: above $1 million.

• explore the impact of cuts made in the last The AFB supports strong public regu- two federal budgets and omnibus bills latory oversight and enforcement. To that and restore programs that have been lost end, it will: where it is in the public interest to do so; • review Canada’s regulatory regime in a • determine the economic and human costs transparent and balanced way to ensure of a citizen-centred program renewal; that regulations support all public inter-

132 Canadian Centre for Policy Alternatives ests, not conform to ideologically-based tions. The fund will not have a fiscal im- formulas; and pact as savings in other government departments will pay for it, as would have • ensure the interests of Canadians are pro- been the case with social impact bonds. actively protected and that adequate resources are attached to federal monitoring and enforcement obligations. Notes

The AFB will convert PPP Canada into a 1 The Parliamentary Budget Officer, Parliament and unions representing impacted workers have all asked for more transparency, without receiving Public Assets Office that will: any. Federal government directors have been muzzled. A CCPA report on job loss in Atlantic Canada tried to conduct interviews with thirty federal department directors, or individuals in similarly senior positions in the • stop forcing federal departments, muni- Atlantic Region. Four consented to be interviewed, seven declined, and the remainder did not respond. Michael Bourgeois, Joanne Hussey, Chris- cipalities, provinces, and territories to tine Saulnier, and Sara Wuite (2012) Public Disservice: The Impact of Fed- use P3s for their infrastructure projects; eral Government Job Cuts in Atlantic Canada, p.36 and McKenna, Barrie “Ottawa’s true spending and cuts shrouded in a fog of bafflegab,” Globe and Mail, May, 13, 2012

• eliminate the P3 Canada fund; http://www.theglobeandmail.com/report-on-business/rob-commentary/ ottawas-true-spending-and-cuts-shrouded-in-a-fog-of-bafflegab/ • assist in the creation of a green economy article4170461/ 2 Macdonald, David. (2012). Federal job cuts: Clarity is always one year through training and the renewal of crum- away, Progressive Economics Forum http://www.progressive-economics. bling infrastructure through environment- ca/2012/05/17/federal-jobs-cuts-clarity-is-always-one-year-away/ 3 Krugman, Paul. “The Big Fail,” New York Times, Jan. 6, 2013. http:// ally sustainable practices; www.nytimes.com/2013/01/07/opinion/krugman-the-big-fail.html?_r=1&

Blanchard, Olivier. (2012). World and Economic Outlook: Coping with High • work internally with departments and Debt and Sluggish Growth IMF agencies, and externally with other lev- Sanger, Toby. (2012). “Austerity isn’t working: Europe in recession, deficits rising” Economy at Work, CUPE Research http://cupe.ca/updir/Economy_ els of government, to examine infrastruc- at_Work_ENG_Final_Web.pdf ture priorities, green infrastructure prac- 4 Whitfield, Dexter. (2010).Global Auction of Public Assets. Spokesman. 5 There is a lot of evidence of this, see Whitfield, Dexter. (2010).Global tices, and comprehensive investment Auction of Public Assets. Spokesman

strategies; and and P3s Flawed, Failed and Abandoned, 2009, and recently, NUPGE Re- search (2012) New Forms of Privatization http://www.nupge.ca/files/ publications/New_Forms_of_Privatization.pdf and McKenna, Barrie “The • cancel all planned federal P3 projects hidden price of public-private partnerships,” Globe and Mail, Oct. 14, 2012.

where possible. 6 $1 billion of this is for the Sea to Sky Highway alone, not to mention other B.C. P3 obligations. McInnis, Craig. (2009). “P3 financing wins favour by limiting political risk,” Vancouver Sun, Oct. 28. The AFB will create a Scale-Up Imple- 7 McKenna, Barrie. “The hidden price of public-private partnerships,” mentation Fund Globe and Mail, Oct, 14, 2012. “Based on a new study of 28 Ontario P3 projects worth more than $7-billion, • The AFB will create a $300-million revolv- University of Toronto assistant professor Matti Siemiatycki and research- er Naeem Farooqi found that public-private partnerships cost an average ing Scale-Up Implementation Fund that of 16 per cent more than conventional tendered contracts. That’s mainly because private borrowers typically pay higher interest rates than gov- will replace the Social Impact Bonds cur- ernments. Transaction costs for lawyers and consultants also add about 3 per cent to the final bill.” rently being proposed. This fund will only 8 The Sea to Sky Highway would have cost taxpayers $300 million less back projects that have been rigorously over the life of the 25-year contract if the government had chosen the traditional contracting method as opposed to a P3. McInnis, Craig. (2009). “P3 proven to work in other jurisdictions or on financing wins favour by limiting political risk,”Vancouver Sun, Oct. 28. a smaller scale and will be transparently 9 Whitfield, Dexter. (2010). Global Auction of Public Assets. Spokesman, p. 36. 10 Mehra, Natalie. (2005). Flawed, Failed and Abandoned. Ontario tracked. Private-sector money will not be Health Coalition.

sought and the gains will be shared with 11 PPP Canada website http://www.p3canada.ca/federal-p3-projects.php social service agencies and the government 12 Government of Canada News Release, (2012) The Government is Tak- ing Action to Address Local Challenges, Toronto with no profit paid to banks or corpora-

Doing Better Together: Alternative Federal Budget 2013 133 13 Scoffield, Heather. (2012). “Ottawa Courts Private Sector Funding 22 Kane, Laura. (2012). “Inspectors Told to Ignore Contaminated Carcass- for New Approach to Social Policy,” The Canadian Press http://www. es,” Toronto Star http://www.thestar.com/news/canada/article/1294763- canadianbusiness.com/article/105984--ottawa-courts-private-sector- -xl-foods-inspectors-told-to-ignore-contaminated-carcasses funding-for-new-approach-to-social-policy 23 Lee, Marc. (2010). Canada’s Regulatory Obstacle Course: The Cabinet 14 The argument is made in government circles that the lack of informa- Directive on Streamlining Regulation and the Public Interest. CCPA. tion is as much a result of poor planning and of departments and agen- 24 cies simply not knowing the impact of the cuts. If this is true then it only Treasury Board Secretariat (2012) Red Tape Reduction Action Plan means that the secrecy is intended to hide bad management practices http://www.tbs-sct.gc.ca/rtrap-parfa/index-eng.asp associated with strict centralized government management of the cuts. 25 Treasury Board Secretariat (2012) “One-for-One Rule http://www.tbs- 15 The 2011 Federal Public Service Employee Survey found that 21% of fed- sct.gc.ca/rtrap-parfa/ofo-upu-eng.asp eral public service employees or about 42,000 workers could only some- 26 An investigative study prepared by the Public Service Commission of times, rarely or never complete their assigned work. This will only get Canada shows that expenditures for temporary help services increased worse with the 2012 budget cuts. Scratch, Lydia. (2010). Public Service Re- by 178% over the 10-year period ending 2009, from $108 million in 1999– ductions in the 1990s: Background and Lessons Learned, p. 11, wrote that 2000 to $299 million in 2008–09, while overall government expenditures “The quality of federal program delivery arguably suffered in the 1990s. only increased by 35.5%. Research by David MacDonald clearly shows that In addition, following the Program Review exercise, the workload for the personnel contracting costs rose to around $1 billion by 2011. Macdonald, public servants who remained had increased, in some cases, to unman- David. (2011). The Shadow Public Service: The swelling ranks of federal gov- ageable levels. The Program Review exercise led to, among other things, ernment outsourced workers. Ottawa: CCPA. the downloading of services to provinces and the reduction in the size of the Canadian forces. In any future reduction in the size of the public ser- 27 May, Kathryn. (2009). “Ontario law rewrites rules for temp firms.”Ot - vice, the government should be mindful of the level of service it wishes tawa Citizen, Nov. 6. to provide to Canadians.” 28 This is certainly the case at DND. The Public Accounts show that spend- 16 Treasury Board Secretariat (2011) Demographic Snapshot of the Federal ing for Professional and Special Services at National Defence went from Public Service 2010 http://www.tbs-sct.gc.ca/res/stats/demo-eng.asp#toc1-1 $2.7 billion in 2009–10 to $3.2 billion in 2011–12. Army commander, Briga- dier General Omer Lavoie wrote a letter to staff on October 31, 2012, say- 17 Fiscal Reference Tables 2012 Table 8 http://www.fin.gc.ca/frt-trf/2012/ ing that “In essence, we have to lay off people only to hire them back for frt-trf-1202-eng.asp#tbl8 other initiatives” because of growing workload. He also noted that term 18 Treasury Board Secretariat (2012) Harper Government Announces 10,980 and casual hiring to do the work of those being laid off wasn’t working Public Sector Positions Eliminated in Past Six Months http://www.tbs-sct. and that full-time experienced workers were required. gc.ca/media/nr-cp/2012/1116-eng.asp CBC News (Jan. 19, 2013) Ex-top army commander sounds the alarm on de- 19 In their discussions with unions representing members who work in fence spending http://www.cbc.ca/news/politics/story/2013/01/19/pol- these departments and agencies, officials specified contracting-out as part the-house-retired-lieutenant-general-andrew-leslie.html of the reason they were cutting jobs. Pugliese, David. (2013) “Ontario army chief worries about DND civilian cut- 20 The government-appointed commission made 57 recommendations backs,” Ottawa Citizen, Jan. 13. http://www.ottawacitizen.com/business/ following the 2008 Listeriosis outbreak. The government appears unwill- Ontario+army+chief+worries+about+civilian+cutbacks/7813775/story.html ing to implement many of them. At the time of the outbreak the Canadian 29 The government estimates that the major areas where contracting for Food Inspection Agency employed 220 inspectors to verify compliance with services in the federal public service occur are found in the Professional, meat preparation safety procedures. CFIA, despite the Commission’s rec- Special, Purchased, Repair Maintenance and Information Services line es- ommendation that more inspectors were needed, now estimates it only timates of the Main Estimates. Main Estimates by Standing Object http:// needs 150 inspectors to do the same work. Kingston, Bob. (2010). “Gov- www.tbs-sct.gc.ca/est-pre/20112012/me-bpd/docs/beso-dbacd-eng.xls ). ernment Spins Food Safety,” Press Release, Nov. 4. 30 Beeby, Dean. (2011). “Tories hire $90,000 a day consultant to help cut 21 For a broader discussion of the government’s deregulatory actions spending,” CP/Globe and Mail, Sept. 20. http://www.theglobeandmail. see: Campbell, Bruce and Lee, Marc. Putting Canadians at Risk: How De- com/news/politics/tories-hire-90000-a-day-consultant-to-help-cut-federal- regulation Threatens Health and Environmental Standards. (2006). CCPA, spending/article4256641/ and Lee, Marc. (2010). Canada’s Regulatory Obstacle Course: The Cabinet Directive on Streamlining Regulation and the Public Interest. (2010). CCPA

134 Canadian Centre for Policy Alternatives Sector Development Policy

Background trial power in its own right, gradually escaping its dependence on resource extraction. The goal of sector development policy is to Since the turn of the century, however, this promote more investment, production, em- progress has been reversed. A global com- ployment, and exports in strategically im- modity price boom, the dramatic expansion portant sectors of the economy. The result of resource sectors (especially the bitumen is a more desirable sectoral mix of output industry), and structural crises in several of and employment, with a stronger presence Canada’s traditional secondary success stor- of high-value, high-wage, innovation-inten- ies (such as the automotive industry) have all sive, export-oriented sectors. These types of combined to produce a sustained deindustri- sector-focused interventions have played an alization of Canada’s economy. On top of the important role in Canada. Ever since Confed- cyclical problems associated with the 2008– eration, policy-makers have recognized the 09 recession and the subsequent halting re- over-arching challenge of developing second- covery, Canada is also grappling with a struc- ary and value-added industries, and escaping tural reorientation of the national economy, Canada’s historical reliance on the extraction re-establishing the primacy of resource ex- and export of unprocessed natural resources. traction. The “staples trap,”1 created a self-reinforcing Canadian innovation and productivity reliance on foreign capital, foreign markets, performance has been chronically weak in and expensive export-oriented infrastructure recent decades, but this lagging performance in resource industries. To escape the “trap” re- has deteriorated further under deindustrializ- quires pro-active measures to limit and man- ation. Labour productivity grew by just 0.5% age resource developments, channeling na- per year over the last decade (the worst record tional capacities (including capital, labour, of the entire post-war era); the declining pro- and innovation) into building a more diversi- ductivity of resource industries (reflecting the fied sectoral structure. Designing and imple- exhaustion of readily available deposits, and menting these policies confronted a political dependence on more expensive and less pro- challenge, not just an economic one: name- ductive extraction strategies) has been a ma- ly, to overcome the vested interests of a do- jor factor in that performance. The dramatic mestic business sector oriented around the shrinkage of manufacturing (which demon- profits (temporary as they may be) associat- strates higher-than-average productivity) re- ed with resource extraction and export. inforced the decline. Despite a universal rec- Decades of pro-active efforts to support ognition of the importance of innovation, R&D industrialization and diversification paid spending by Canadian business remains far dividends through the latter half of the 20th below levels of the 1990s. Resource sectors century, as Canada became a major indus- spend less than average on innovation, and

Doing Better Together: Alternative Federal Budget 2013 135 so the growing resource orientation of the ly depressed prices for our own production; economy is only reinforcing Canada’s poor global oil price uncertainty is undermining innovation performance. Apart from resource further energy investments; environmental sectors, very few Canadian-based firms have concerns are (quite rightly) inhibiting further successfully penetrated international markets infrastructure expansion; and Canadians for high-value, technology-intensive products. are increasingly concerned about the grow- Ironically, therefore, despite the supposedly ing degree of foreign control (including from increasing reach of globalization, Canadian foreign state-owned corporations) over our exports have declined markedly as a share resource industries. It is time for Canadians of GDP (suppressed in part by a petroleum- to question our renewed status as “hewers fueled exchange rate trading far above its fair of wood and drawers of water.” value). The decline in non-resource exports The successful state-led policies of sev- has far outweighed the expansion of resource eral Asian and Latin American economies in exports, so Canada’s overall trade perform- recent decades suggests that innovative, pro- ance has suffered as we become more reliant ductivity-enhancing growth does not occur on resource extraction. Canada now experien- spontaneously from market forces. The tool- ces a large and chronic balance of payments box used by these other countries is diverse deficit, which translates into growing inter- and creative: including targeted subsidies, national indebtedness. Our structural under- strategic trade interventions, active indus- development is the root cause of our trade trial strategies in high-tech industries, do- woes — yet the Harper government’s only re- mestic procurement strategies, and even pub- sponse is to call for the signing of still more lic ownership of key firms. These approaches free trade agreements, which only reinforce have been far more effective in promoting in- the dominance of resource industries over novation and export success than Canada’s our economic trajectory. hands-off approach. The market-oriented policies of the Harp- er government (including free trade agree- AFB Actions ments, tax cuts, and the weakening of environmental regulations implemented as part We hope for a Canadian economy in which of last year’s omnibus budget exercise) are re- high-value, innovative industries have a lar- inforcing the primacy of resource exports (and ger presence, creating higher-income jobs, particularly petroleum) in Canada’s econom- enhancing environmental sustainability, and ic development. This whole direction impos- generating adequate revenues from success- es substantial economic, environmental, and ful international trade. geopolitical risks on Canada. Non-renewable The following are the major components resources eventually run out, and commodity of the AFB’s vision for sector development: price bubbles always collapse. Already there are growing signs that an economic strategy based on unconstrained resource exports is reaching a limit: the southward flood of unprocessed Canadian petroleum has artificial-

136 Canadian Centre for Policy Alternatives Establish a System of Sector Enhance Value-Added Production Development Councils and Investment in Key Sectors

The federal government will work with other The Sector Development Councils will begin stakeholders (including provincial govern- the medium-term task of developing com- ments, labour organizations, industry associ- prehensive strategies for key tradable sec- ations, businesses, universities, and colleges) tors. In some sectors, immediate measures to establish a network of Sector Development can be taken. These initiatives will include: Councils. These councils will be established Green Energy Manufacturing: Current in a range of goods- and services-producing initiatives in energy policy hold great poten- industries that demonstrate many or all of tial to stimulate the Canadian manufacture of the following characteristics: technologic- components for solar, wind, and other green al innovation, productivity growth, higher- energy systems. Federal policy can comple- than-average incomes, environmental sus- ment and support these initiatives with a 10% tainability, and export intensity. The councils refundable investment tax credit for new cap- will identify opportunities to: stimulate in- ital and tooling in green energy manufactur- vestment and employment in Canada, de- ing, and support for skills development for velop and mobilize Canadian technology, newly hired “green collar” jobs. These initia- utilize technologies developed in education- tives will be budgeted at $50 million per year. al institutions for broader commercial appli- Automotive: A comprehensive new auto cations, invest in sustainable products and industry strategy will include support for prod- practices, and better penetrate export mar- uct development and tooling for alternative kets. In this way, the councils will constitute fuel vehicles (including electric and hybrid the first step in rebuilding Canada’s broad- vehicles); skills support to assist the industry er national capacity for sector development through the coming demographic transition of planning (a capacity which has atrophied in its skilled workforce; and trade policy meas- the wake of decades of laissez faire orienta- ures to address the debilitating one-way im- tion). Each council will develop a medium- balances in automotive trade between North range plan for developing its sector, and a America, Asia, and Europe. The auto strategy short-list of actionable items to help attain would also feature a new Extended Producer that plan’s targets. The Sector Development Responsibility (EPR) initiative, consisting of Councils will be given an annual operating investments in motor vehicle recycling, end- budget of $50 million to support their work, of-life conversion, and green motor vehicle commission research, and perform other components production. This EPR program infrastructural tasks. (The actionable items will be self-financed from a new $200-per- that arise from their recommendations will vehicle Green Car Levy imposed on all sales be financed through other policy vehicles, of new motor vehicles in Canada (raising a including those listed below.) total of $300 million per year). Aerospace: The federal government recently undertook a comprehensive review of Canada’s aerospace industry. This review recognized the strategic importance of the indus-

Doing Better Together: Alternative Federal Budget 2013 137 try, and confirmed the need for continuing Much of the cost of the program will be public participation in major investments (in- offset by the elimination of subsidies for bio- cluding training) and product developments. fuel crops (saving $200 million per year). The The first priority of theAFB ’s national aero- collective marketing authority of the Canadian space strategy will be to maximize Canadian Wheat Board will be reinstituted. production of domestic civil aviation products. This will require further active partner- National Green Industries Initiatives ships with Canadian aerospace producers, The AFB recognizes that adjustment to a sus- with special emphasis on supporting new tainable, greener economy entails significant product programs to improve fuel efficiency costs and challenges, but also many benefits. and reduce greenhouse gas emissions. To maximize the environmental upside and Forestry: Forestry and wood/paper prod- facilitate faster growth of green industries, ucts are important export industries that the AFB proposes a $100-million-per-year employ workers in many regions of Canada. National Green Skills Initiative to support Sadly, the industry has been hammered by college and on-the-job training to enhance the decline in the U.S. housing market, the the capacity of Canadian workers to perform overvalued Canadian dollar, and a vast in- high-level services in green industries. sect infestation in Western Canada induced by global warming. Support for the indus- Higher Corporate Tax Rate try’s sustainable recovery will be provided for Petroleum Producers through a $300-million-per-year fund to enhance the production of value-added forestry, As described in the previous chapter on Energy wood, and paper products; implement energy Policy, the AFB will reinstate corporate in- conservation and other sustainable practices; come tax rates on petroleum production to and invest in skills required for sustainable the former 28% rate that prevailed prior to the forestry and forestry products production. series of corporate tax reductions that began Agriculture: Farm incomes in Canada in 2001. This measure will raise in excess of have been devastated by the recession and $1 billion per year in additional revenues for low prices, and will be further undermined the federal government (to be used to cap- by the Harper government’s abolition of the italize the Canadian Development Bank, as Canadian Wheat Board. Farm income supports described below). Together with stricter en- must be restructured to emphasize produc- vironmental regulations on new energy de- tion that is sustainable, organic, and for lo- velopments and greenhouse gas pollution cal use (reducing much of the pointless trade (as described elsewhere in this budget), the in foodstuffs that can be produced locally). higher tax rate will help to slow down the Operating income supports must be capped overheated expansion of new petroleum pro- at $250,000 per farm, to avoid making subsidy jects. (See the Tax chapter.) payments to large corporate farms. To achieve these aims, the AFB proposes a $650-million Replace the Investment Canada Act annual Cultivating Agriculture program. (See Continuing foreign ownership and control the Food Sovereignty chapter on page 82.) is both a consequence and a cause of the

138 Canadian Centre for Policy Alternatives structural regression in the sectoral make- The Bank of Canada can play a complement- up of our economy. The Investment Can- ary role by indicating its intention to move ada Act, with its vague and ineffective “net the exchange rate closer toward its purchas- benefit test,” will be scrapped and replaced ing power parity value; this stance will help with a new Canadian Ownership Act, which to shift the expectations of financial invest- will specify the methodology for a transpar- ors and currency traders. ent cost-benefit test. For a takeover to be ap- proved, a foreign investor will have to make A New Approach to binding commitments to production and em- International Trade ployment levels, new investments in fixed The federal government is pressing hard for capital and technology, and an expansion several new free trade agreements (FTAs), in- of Canadian content in supply contracts and cluding a comprehensive trade pact with the other inputs. In general foreign takeovers of EU that poses enormous threats to Canadians resource properties will be prohibited, un- in numerous areas, ranging from the liberal- less a strong case is made that the applica- ization of public procurement to stronger in- tion of technology and capital by the foreign tellectual property rules (and hence higher purchaser will truly enhance the productive prices) in pharmaceuticals and the general capacity of Canadian firms. loss of jobs and markets for a wide range of manufactured products. In fact, our exports Target a Lower Canada- have grown more slowly with FTA partners U.S. Exchange Rate than with other trade partners, but our im- Canada’s currency has been trading at levels ports have grown more quickly, and bilateral far above its “fair value” for most of the last balances have deteriorated.2 Other trade agree- several years, driven higher by speculative ments being pursued by the Harper govern- financial pressures and global commodities ment include deals with Korea, Japan, India, prices. This over-valuation has contributed and the so-called Trans-Pacific Partnership. substantially to the deterioration of all non- Instead of more FTAs, the federal gov- resource export industries in Canada, includ- ernment should pursue a different model ing manufacturing, tourism, and tradable of trade agreement with key partners. This services. The OECD and other internation- model would seek to extract commitments al agencies estimate that the fair value of to balanced two-way trade flows, recognize the Canadian dollar, based on comparisons the need for and the legitimacy of govern- of purchasing power, unit production costs, ment policies to promote sectoral develop- and other benchmarks, is around 80 cents ment and economic diversity, and spread ad- (U.S.). The efforts described in this and the justment costs more evenly across all parties previous chapter to rein in the rampant, un- (both surplus and deficit nations). planned development and foreign takeover of energy extraction and export projects, and to regulate and limit foreign takeovers, will automatically lead to an immediate and substantial pullback in the Canadian currency.

Doing Better Together: Alternative Federal Budget 2013 139 table 6 2013 AFB Sector Development Measures

Policy Measure Annual Impact ($million) Revenue Expense Sector Development Councils - $50 Corporate Tax Increase to 28% for Petroleum Industries $1,000 - Reduce Exchange Rate - - New Model for Trade Negotiations - - Canadian Ownership Act - - Canadian Development Bank • Including Social Enterprise Division $1,000 share capital Other Sector Initiatives • Automotive EPR program $300 $300 • Aerospace Canadian content offsets - - • Green energy manufacturing - $50 • Green skills development - $100 • Sustainable forestry & skills - $300 • Eliminate biofuel crop subsidies $200 -

Establish a Canadian the cyclical whims of private finance. It also Development Bank allows for potential projects to be evaluat- ed and funded on the basis of broader cri- To provide financing for the ambitious de- teria, including an integrated social cost- velopment programs prepared by the Sector benefit analysis. Development Councils, the federal government will create and endow a new publicly-owned economic development bank, the Notes Canadian Development Bank. This new pub- 1 The classic reference is Harold Innis, The Fur Trade in Canada: An Intro- lic bank will have the power to create credit duction to Canadian Economic History, revised ed. (Toronto: University of Toronto Press, 1956). For more modern statements of the problem see Mel and allocate it to innovative projects in tar- Watkins, “Staples Redux,” Studies in Political Economy 79 (2007), pp. 213– 226; Jim Stanford, “Staples, Deindustrialization, and Foreign Investment: geted sectors of the economy. This expan- Canada’s Economic Journey Back to the Future,” Studies in Political Econ- omy 82 (2008), pp. 7–34; and Brendan Haley, “From Staples Trap to Car- sion of public lending capacity will reduce bon Trap: Canada’s Peculiar Form of Carbon Lock-In,” Studies in Political the extent to which key long-term econom- Economy 88 (2011), pp. 97–132. 2 Stanford, Jim. (2010). Out of Equilibrium. Ottawa: Canadian Centre for ic development priorities are vulnerable to Policy Alternatives, pp. 29–32.

140 Canadian Centre for Policy Alternatives Seniors and Retirement Security

Background faced having to postpone their retirement. Since workplace pension plans are regulat- Canada’s aging population and the implica- ed by the provinces (the federal government tions for retirement incomes have been high regulates only those plans sponsored by em- on the policy agenda for the past four or five ployers under federal jurisdiction), sever- years — although by the end of 2012, other al provinces set up pension committees to issues were being given priority. The only consider what was then viewed as the “pen- mention of pension reform in the Harper sion crisis” and recommendations for chan- government’s omnibus budget bill, put be- ges in the rules governing workplace pension fore Parliament in October 2012, was legisla- plans were made. Federal and provincial fi- tion to establish Pooled Registered Pension nance ministers continued to meet regularly Plans (PRPPs), which are supposed to pro- to discuss pension reform and their discus- vide pensions for those workers who do not sions were expanded to review the status of have them. Minor administrative changes to the retirement income system as a whole. the Canada Pension Plan (CPP) were also in- While finance ministers were concerned cluded in the bill. The government had al- mainly with the rules governing workplace ready announced its intention to extend the pension plans, it was noted that most Can- age of eligibility for Old Age Security from 65 adian workers do not have a workplace pen- to 67. Other than changes to income tax pro- sion plan. Coverage under these plans has visions for income splitting and changes to dropped from 45% of employees in 1992 to the pension plans of public sector workers, just 38.8% in 2010. The reality is that 11 mil- these two measures were the only actions the lion Canadian workers don’t have a work- Harper government has taken to address the place pension plan. pension crisis. Neither action does anything To make matters worse, most Canadians meaningful to address the pension crisis now are not making up for their lack of a pension facing Canadians. plan by saving for retirement on their own. Following the meltdown of financial mar- In 2009, only 31% of those eligible to contrib- kets in 2007–08 many workplace pension ute to an RRSP actually did so. This number plans were underfunded — i.e., the funds dropped significantly in 2010 to just 26%. were insufficient to pay the promised bene- Among people about to retire — i.e., those age fits. As well, people who were saving for re- 55 to 64 — the typical person with an RRSP tirement through Registered Retirement Sav- has saved about $55,000. That’s enough to ing Plans (RRSPs) found the value of their provide a monthly income of about $250. investments had dropped so much they now There is now more than $600 billion in un-

Doing Better Together: Alternative Federal Budget 2013 141 used RRSP contribution room being carried The AFB will address these issues by ex- forward. And the Canadian Institute of Actu- panding the CPP. Since changes to the CPP aries says “only about one-third of Canadian must receive the approval of two-thirds of households are currently saving at levels that the provinces representing two-thirds of the will generate sufficient income to cover their population, each of the provincial govern- non-discretionary expenses in retirement.” ments will have to pass enabling legislation Public pension plans available to every- to complete the process. The AFB will nego- one — Old Age Security (OAS) and the Can- tiate this commitment at the federal, prov- ada Pension Plan — don’t provide enough for incial and territorial levels so that increased people to live on in retirement. The expecta- CPP contributions will commence in 2016. tion is that people will supplement the benefits available from these plans with member- Current Issues ship in a workplace pension plan or with their own savings. Clearly that has not happened. The doubling of CPP retirement benefits will Finance ministers were then faced with require a modest increase in contribution two key issues: how to expand pension cover- rates — about 0.43% of pensionable earnings age so that most Canadians are covered by the each year for seven years. This proposal will system, and how to make sure the pension mean increasing the replacement rate of CPP system provides them with adequate incomes retirement benefits from 25% of covered earn- in retirement. The simplest and most straight- ings to 50% of average adjusted pensionable forward way of addressing these issues would earnings. The worker contribution (matched be to improve the Canada Pension Plan. The by the same percentage of wages contribut- coverage problem would be addressed since ed by the employer) is estimated to rise from the CPP covers all workers, whether employed 4.95 % of covered earnings in 2010 to 7.95% or self-employed. (It also provides benefits by 2016. Combined employer/employee con- for their dependants.) It is also fully portable tributions will then be 15.9% of earnings up from one job to another. And the adequacy to the Year’s Maximum Pensionable Earn- issue would be addressed by increasing the ings (YMPE), currently $50,100. The YMPE benefits available from theCPP . is roughly equivalent to the average wage. Improving the replacement rate of CPP (It should be noted that a doubling of bene- retirement benefits would provide better re- fits does not require a doubling of contribu- tirement pensions to virtually all Canadians. tion rates since part of the current premium A relatively modest increase in contribu- is used to bring down the previous unfund- tion rates would be required, but that could ed liability, whereas an expansion of bene- be phased in over a period of time. This op- fits will be fully pre-funded — a requirement tion would address the two key issues in the of the CPP legislation. In fact, while higher pension system causing concern: the lack of contributions could be phased in over a sev- coverage of workplace pension plans, and the en-year period, a doubling of benefits would fact that individuals are not saving for retire- take 40 years to achieve.) ment on their own. Expectations were high that federal and provincial finance ministers would finally take

142 Canadian Centre for Policy Alternatives action on pension reform at their meeting in Savings Accounts (TFSAs) through which they Alberta in December 2010, and it was widely can save for retirement. Self-employed work- believed they would favour CPP expansion. ers are covered by the CPP. But that idea was shelved in favour of a pri- Like other defined contribution plans, vate-sector solution in which employers will amounts contributed to PRPPs will repre- be able to offer defined contribution pension sent a percentage of the employee’s salary plans run by financial institutions such as and will be invested by the insurance com- insurance companies. Insurance companies pany or financial institution, which will of had lobbied hard for this option for the past course charge fees to run the program. No couple of years. The ministers agreed their particular pension will be guaranteed. PRPPs officials would continue to work on a “mod- will be regulated by pension regulatory au- est expansion” of the CPP. It is believed that thorities, so rules could vary from one prov- all provinces except Alberta and Quebec sup- ince to another. Since very few people take ported CPP expansion. advantage of existing voluntary retirement More recently, CPP expansion has re- savings schemes, it is not clear why officials appeared on the agenda as officials discuss are claiming the proposed PRPPs will prove possible options for expansion. However, fed- more attractive than existing programs. So eral finance minister Jim Flaherty has said far, the only advantage being promoted for that increasing CPP contributions at this time PRPPs is that management fees will be low- is not possible due to “the fragile economy.” er than for individual RRSPs, since contri- In effect, the ministers proposed a vol- butions will be pooled. But, of course, there untary savings scheme to be operated by in- is no guarantee of lower fees, nor is there surance companies and other financial in- any certainty that this will prove a big sell- stitutions — the Pooled Registered Pension ing point for the plans. It’s also worth not- Plan — which pools the savings of those who ing that there is no evidence people are not sign up in a defined contribution plan. Em- saving through RRSPs because of high man- ployers will be able to sign up their employ- agement fees. ees for the scheme (self-employed workers Access to this “private pension plan” will will be able to register too) but will not be depend on whether or not employers decide required to contribute to the plan. Employ- to opt into the scheme. There will be no re- ers will select a plan for their employees, but quirement for them to do so — although since they will also apparently be able to choose to the proposed plans will be regulated by the stop offering the plan if they wish. provinces, a province could decide to make It was described by the federal finance PRPPs mandatory for employers under their minister as “a major breakthrough for the jurisdiction. Canadian Pension Market,” which would The federal government introduced the make “low-cost private-sector pension plans Pooled Registered Pension Plans Act on Nov- accessible to millions of Canadians who have ember 17, 2011 (Bill C-25), claiming it would up to now not had access to such plans.” How- “make saving for retirement easier for mil- ever, employees and self-employed workers lions of Canadians.” The government said already have access to RRSPs and to Tax-Free provincial enabling legislation will need to

Doing Better Together: Alternative Federal Budget 2013 143 be introduced for the framework to become dividuals, who are more likely to spend every fully operative. To date, no province has additional dollar provided to them, this will introduced PRPP legislation. While Quebec be a direct economic stimulus to the com- had a version of PRPPs, its legislation died munities, large and small, where Canadian on the order paper when the recent provin- seniors live and spend their money. cial election was called, although the prov- The AFB will reverse the decision to change ince has committed to tabling new legisla- the age of eligibility for OAS from 65 to 67 and tion in the spring. restore age 65 as the age at which individuals become eligible for OAS and GIS.

AFB Actions • The AFB commits the federal government to examining ways in which immigrant It is estimated that total government spend- seniors living in poverty who do not ne- ing on OAS and the Guaranteed Income Sup- cessarily benefit fromOAS payments can plement (GIS) for 2012–13 will be $40 bil- be better supported. lion — payable to just over 5 million seniors. • The AFB increases the GIS to ensure that Together, OAS and GIS provide a guaranteed all senior households meet at least the af- annual income for 95% of Canadian seniors ter-tax low-income measure (LIM) poverty aged 65 or older and do not depend on the re- line, which is approximately $19,000 for cipient’s participation in the workforce. Dif- a single-person household in 2013. (Cost: ferent GIS rates apply for singles and couples, $1.4 billion/yr.)1 with the rate for each spouse in a couple depending on the joint income of both. • The AFB will double the CPP’s replace- Effective July 1, 2011,GIS was amended ment rate from 25% to 50% of a retiree’s to provide a top-up benefit of up to $50–$70 pensionable earnings. Increased contribu- per month for GIS recipients. These top-ups tions will be phased in over a seven-year will be indexed to inflation as the OAS and period. Also, the basic personal exemp- GIS are currently. tion in the tax system will be doubled to Despite this paltry sum, the Finance De- offset the impact on lower-income workers. partment estimates that in 2012 about 700,000 • The AFB will phase in a new regime of in- Canadian seniors will be entitled to receive dexing for public pensions (OAS, GIS and these additional GIS benefits. The top-up for CPP) based on wages instead of prices. single GIS recipients is recognition of the extreme poverty among single elderly women • The AFB will cap RRSP contributions at in Canada. $20,000, a level that will affect only those The AFB will further increase GIS bene- making $110,000 or more, saving $232 mil- fits to ensure GIS recipients receive at least lion a year.2 The provinces would also col- $16,000 (including OAS benefits). These meas- lect more in taxes. ures should help to eliminate poverty among • The AFB will withdraw the flawed PRPP older women, recent immigrants, First Nations legislation, and enhance the only parts people, and seniors with disabilities. Since of our pension system that have actual- GIS payments are targeted to low-income in-

144 Canadian Centre for Policy Alternatives ly demonstrated success over successive Notes generations — OAS/GIS and the Canada 1 This analysis is based on Statistic Canada’s Social Policy Simulation Pension Plan. Database and Model (SPSD/M). The assumptions and calculations underlying the simulation results were prepared by David Macdonald and the responsibility for the use and interpretation of these data is entirely that of the authors.

2 This analysis is based on Statistic Canada’s Social Policy Simulation Database and Model (SPSD/M). The assumptions and calculations underlying the simulation results were prepared by David Macdonald and the responsibility for the use and interpretation of these data is entirely that of the authors.

Doing Better Together: Alternative Federal Budget 2013 145 Trade Policy

Background • The environmental costs of overreliance on natural resource exploitation, particularly Modern trade and investment treaties are less of unconventional fossil fuels such as tar about trade and more about limiting how so- sands and shale gas, have become clear. cieties organize themselves democratically • The regulatory authority of all levels of and restricting the authority of governments government has been weakened, in part to influence their national economies. The by investors using the NAFTA’s notori- treaties create maximum freedom for inter- ous investor-state dispute settlement national traders and investors. Supporters mechanism. claim that the benefits of international trade and globalization will trickle down, but Can- Canada’s trade and investment treaties ada’s experience since the North America Free have clearly reinforced these troubling trends. Trade Agreement (NAFTA) indicates that this Multilateral trade negotiations at the World laissez-faire approach has not worked for Trade Organization (WTO) are at an impasse, most Canadians. with many developing countries convinced There has been a significant restructuring that WTO rules went too far, too fast, in open- of the Canadian economy and society, par- ing their domestic markets and in restricting ticularly in the following areas: the ability of governments to promote goals such as economic development. • Canada has become increasingly depend- The stalemate in Geneva underlines the ent on the production and export of un- need for rethinking the trade treaty agenda. processed or semi-processed natural re- Yet the federal government’s response has sources. been simply to redirect its negotiating efforts • The manufacturing sector is in decline towards bilateral trade and investment treat- and our manufacturing trade balance ies with willing partners. has swung sharply downward. Since taking power in 2006, the government has concluded six bilateral trade deals.2 • Productivity has continued to stagnate, It is currently negotiating or considering at slumping to 70% of U.S. levels. Canada least 11 more.3 No other country in the world currently ranks 30th of 34 OECD nations has a more aggressive trade and investment in productivity growth.1 treaty negotiating agenda than Canada. Be- • Inequality has increased significantly, cause existing tariffs are generally very low,4 with the biggest share of income growth current trade treaty negotiations now deal accruing to the very richest, while incomes primarily with regulatory and other so-called of those below have stagnated. “non-tariff barriers” to trade.

146 Canadian Centre for Policy Alternatives Current Issues • The loss of provincial and municipal government autonomy to use government CETA purchasing as a tool for local and regional economic development. The Canada-European Union Comprehensive Trade and Economic Agreement (CETA) is the • The erosion of Canada’s supply manage- latest attempt to limit democratic policy op- ment system, through increased market tions and enhance corporate power in this access for European dairy products. country. The on-going negotiations main- • The curtailment of Canada’s ability to ly concern government purchasing, invest- create new public services or to reverse or rights, regulatory standards, public ser- failed privatizations, without facing liti- vices, intellectual property, labour mobility gation and demands for compensation and other primarily non-trade matters. from affected foreign investors. The benefits to Canada of such an agreement are unclear. The federal government • Undermining the ability of governments constantly asserts that the CETA would re- at all levels to pursue policies that add sult in a $12-billion boost to Canada’s GDP, value to natural resources prior to export based on a 2008 study commissioned by the and maximize local benefits. EU and Canada. Jim Stanford has debunked In return for this long list of concessions, this dubious claim, noting that the comput- Canada is pressing for additional market ac- er model which generated the estimate as- cess for a mere handful of agricultural ex- sumed constant full employment, balanced ports, notably cereals, pork and beef. trade, no international capital flows, and no impact from fluctuating exchange rates.5 Canada-China Foreign and But even these unrealistic assumptions gen- Investment Promotion and erated only a small boost in Canadian GDP; Protection Agreement (FIPA) the modellers had “to go further, with more farfetched assumptions, to boost their pre- On September 9, 2012, the Conservative gov- diction.”6 ernment signed a Foreign and Investment While the gains invoked to support the Promotion and Protection Agreement (FIPA) CETA are mostly spin, the potential costs are with China. The treaty was quietly tabled in real. Some of the most significant include: the House of Commons in late September.7 There was a rising wave of public protest, • The impact of extended terms of patent however, when it became clear that the gov- protection on Canadian drug costs and ernment intended to ratify the FIPA without the sustainability of the Canadian health any parliamentary vote or debate. care system. While the treaty’s formal obligations are • The effects of powerful foreign investor the same for both parties, it is fundamentally rights and investor-state dispute settle- imbalanced in its effects. China exempted all ment on democratic authority and the existing discriminatory measures governing right to regulate in the public interest. foreign investment, of which there are many more than in Canada.8 While Canada excluded

Doing Better Together: Alternative Federal Budget 2013 147 the Investment Canada Act, China exempted in exports to these markets would be almost the full range of its current restrictions on in- insignificant in terms of total Canadian out- ward investment, including at the state and put and employment.”11 local level. Finally, China’s stock of foreign Nonetheless, the federal government has direct investment in Canada is much larger pursued TPP membership with its character- than our investment in China. This asymmetry istic fervour. While claiming that it made no will only increase as China’s prodigious ap- substantive concessions to gain entry, the petite for natural resources spurs further in- government almost certainly signalled its vestment in Canada. flexibility on key stumbling blocks such as But the greatest public controversy was agricultural supply management and the pro- generated by the treaty’s inclusion of an in- tection of intellectual property rights. vestor-state dispute settlement mechanism. Canada’s terms of entry to the talks can This powerful investor right continues to be only be described as demeaning. The United abused under the NAFTA.9 Under the FIPA, States Trade Representative set out tough con- for example, if an established Chinese invest- ditions for Canada’s admission. Sight unseen, or objects to stronger environmental regula- the Government of Canada agreed to accept tion over the oil sands or shale gas fracking, any negotiating text on which the nine cur- it would be left up to an unaccountable arbi- rent members had already reached consen- tration tribunal to decide if these new meas- sus.12 This acceptance telegraphed a despera- ures are “necessary” or applied in an “arbi- tion to be part of this agreement, whatever the trary” or “unjustifiable” manner. In another ultimate cost to Canadians. The high price to nod to the Chinese government’s concerns, dairy, poultry and egg farmers, our artists and the FIPA’s transparency requirements for in- cultural industries, Internet freedom, health vestment arbitrations are weaker even than care, and a wide range of other public inter- those under the NAFTA. Finally, the treaty, ests will eventually become all too obvious. once ratified, will remain in effect for a minimum of 31 years. Conclusion

This pattern of unbalanced trade-offs and Trans-Pacific Partnership concessions raises the question: Why would Agreement (TPP) anyone embrace this agenda? The current During the last year, Canada has also joined federal government views these sacrifices the Trans-Pacific Partnership Agreement TPP( ) of basic interests or key policy flexibility as talks with the U.S. and nine other Pacific Rim desirable, but unpopular, domestic reforms. nations. Canada already has trade and invest- Similarly, the most vociferous corporate sup- ment treaties with four current TPP members porters, such as the brand-name pharmaceut- (U.S., Chile, Peru, and Mexico). The other six ical companies or agri-food corporations, ad- (Australia, New Zealand, Malaysia, Singa- vocate trade and investment treaties as a way pore, Brunei, and Vietnam) combined ac- to change Canadian domestic policies. Alter- count for less than one per cent of Canada’s ing key domestic policies through the back- exports.10 As a brief from the United Steel- door of international trade treaties, while workers points out, “any conceivable increase

148 Canadian Centre for Policy Alternatives locking in unpopular policy reforms, is fun- tween the date when a company applies damentally illegitimate and anti-democratic. to Health Canada for regulatory approval and the date when Health Canada grants AFB Actions market authorisation to a drug, up to a maximum of five years.15

The AFB makes the following commitments: • The federal government’s own research es- That Canada follow Australia’s lead and timates that this counter-proposal would refuse to sign any further bilateral or region- extend patent terms on new drugs by an al trade and investment agreements that in- average of 1.23 years. The study estimates clude investor-state dispute settlement. that implementing this option would result in an increase in Canadian drug costs • Under investor-state dispute settlement of between $317 million and $903 mil- claims Canada faces unfunded liabilities lion annually. that could amount to hundreds of millions, perhaps billions, of dollars. • Any concessions on drug patents made in the CETA would become the starting • Nevertheless, federal government officials point for further negotiations in the Trans- assert that “Canada has not estimated a Pacific Partnership negotiations, leading potential fiscal liability under the [Can- to further cost increases. ada-China investment agreement] because it has no intention of violating the terms That the Department of Foreign Affairs of this or any other International agree- and International Trade shift its focus from ment to which it is a Party.”13 negotiating new bilateral and regional free trade agreements to the promotion of Can- • Canada has already paid out approxi- adian trade, especially high value-added ex- mately $160 million to investors to settle ports of goods and services, including cul- NAFTA investor-state claims and incurred tural services. tens of millions more in legal costs. • The AFB will reverse the cuts to the Trade That Canada reject demands by the EU Commissioner Service, which assists Can- in the CETA and by the U.S. in the TPP to ex- adian businesses to sell their goods and tend patent terms for brand-name pharma- services in international markets. ceuticals (averting cost increases in drugs estimated at hundreds of millions of dollars • The AFB will restore funding to consul- annually). ar offices and services in the U.S., which advise and assist Canadian exporters in • Hollis and Grootendorst estimate the cost our largest foreign market. of implementing EU demands for changes to Canada’s patent system for drugs at $2.8 billion annually.14 Notes

• The federal government is actively consid- 1 Stanford, Jim. (March 2012). “A Cure for Dutch Disease: Active Sector Strategies for Canada’s Economy,” Technical Paper, Alternative Federal ering meeting one of these EU demands Budget. Ottawa: Canadian Centre for Policy Alternatives, p. 5. by extending patent terms by the time be-

Doing Better Together: Alternative Federal Budget 2013 149 2 With Colombia, Peru, Jordan, Panama, Honduras and the European and incurred tens of millions more in legal costs. Scott Sinclair. (Novem- Free Trade Association (comprised of Iceland, Norway, Lichtenstein, ber 4, 2010). “NAFTA Chapter 11 Investor-State Disputes,” Ottawa: Can- and Switzerland). adian Centre for Policy Alternatives. http://www.policyalternatives.ca/ publications/reports/nafta-chapter-11-investor-state-disputes-1. 3 Canada is in various stages of negotiations with: South Korea, Moroc- co, the Caribbean Community, Dominican Republic, Costa Rica, Turkey, 10 Stanford, Jim. (June 19, 2012). “Trans-Pacific Partnership: A Few Ques- Ukraine, India, Japan and the European Union. Canada also recently tions,” Progressive Economics Forum, http://www.progressive-economics. joined the Trans-Pacific Partnership negotiation. Trade talks with China ca/2012/06/19/trans-pacific-partnership-a-few-questions/. are also under consideration. 11 United Steelworkers. (February 12, 2012). United Steelworkers’ Submission 4 In 2010, Canada’s simple average tariff was 3.7%. World Trade Organiz- to the Government of Canada on the Trans-Pacific Partnership, p. 2.http:// ation. (2011). World Tariff Profiles, 2011. www.progressive-economics.ca/wp-content/uploads/2012/02/TPP.pdf.

5 Stanford, Jim. (October 2010). “Out of Equilibrium: The Impact of EU- 12 According to the USTR, this includes all agreed text within chapters Canada Free Trade on the Real Economy.” Ottawa, Canadian Centre for that are still open, not just completed chapters. See Inside U.S. Trade. Policy Alternatives. (June 22, 2012). “Mexico Stresses It Will Be a Full TPP Partner, Despite Terms of Entry.” Washington: World Trade On-line (subscription required). 6 Stanford, Jim. (November 2, 2012). “$12 bil CETA GDP Claim from Sim- City, not Real World,” Progressive Economics Forum blog. “They assume 13 Department of Foreign Affairs and International Trade (October 18, 2012), that invisible, unspecified non-tariff barriers will be fully eliminated by Response to questions by MP Wayne Easter, House of Commons Stand-

the CETA. They assume Canadian service providers will do as much busi- ing Committee on International Trade (CIIT), p. 1. http://www.liberal.ca/ ness in Europe as European firms currently do. Finally, they assume Can- files/2012/11/CIIT_18Oct2012_Suivi_Follow-up.pdf.pdf. adians will save a strong share of new income, all of which is invested in 14 new capital here (thus spurring even more growth). This latter effect alone Grootendorst, Paul and Aidan Hollis. (February 7, 2011). “The Canada- accounts for over half the predicted $12 billion.” European Union Comprehensive Economic & Trade Agreement: An Eco- nomic Impact Assessment of Proposed Pharmaceutical Intellectual Prop- 7 Curry, Bill and Shawn McCarthy. (September 27, 2012). “Tories quietly erty Provisions.” http://www.canadiangenerics.ca/en/news/docs/02.07. table Canada-China investment treaty,” Globe and Mail. 11CETAEconomicImpactAssessment-FinalEnglish.pdf.

8 With the exception of the most-favoured nation obligation, the FIPA 15 Scoffield, Heather. (October 14, 2012). “EU drug demands would cost largely applies to investments only after they have been established in Canadians up to $2B a year: federal research.” The Canadian Press, http:// either country. www2.macleans.ca/2012/10/14/eu-drug-demands-would-cost-canadians- up-to-2b-a-year-federal-research/. 9 To date, Canada has faced over 30 investor-state claims under the NAFTA, lost or settled five cases, been forced to pay over $157 million in damages,

150 Canadian Centre for Policy Alternatives Water

Background living in disadvantaged, marginalized, and vulnerable situations; Canada needs a national water policy based • ensure the maximum available finan- on the principles of water as a commons, cing and that services are affordable for public trust, and human right. The notion of everyone; and the “commons” asserts that water is a common heritage owned by no one yet belong- • provide a framework of accountability ing to everyone — not just us but future gen- with adequate monitoring mechanisms erations, other species, and the Earth itself. and legal remedies. A commons framework requires a shift in After opposing the human right to water water governance to prioritize the human and sanitation and attempting to undermine right to water, public participation, and the advances at the UN, Canada finally recognized inclusion of First Nations and communities the human right to safe drinking water and in decision-making. Public trust principles sanitation last year at the Rio+20 UN Confer- would require governments to protect water ence on Sustainable Development. The AFB sources for communities’ reasonable use, supports Canada’s recognition and imple- and to make private use subservient to com- ments concrete action on the human rights munity rights. obligations set out by the UNHRC resolution. On July 28, 2010, 122 countries voted to The AFB advances the human right to water pass a resolution at the UN General Assem- and sanitation by rolling back changes to en- bly recognizing the human right to water and vironmental legislation in the omni-budget sanitation. On September 23, 2011, the UN bills; investing in infrastructure; improving Human Rights Council (HRC) passed a reso- water quality and sustaining water quantity; lution (A/HRC/18/L.1) on the human right protecting the Great Lakes Commons; and to safe drinking water and sanitation1 and protecting water sources from hydraulic frac- called upon governments to: turing, tar sands development, the Schedule • develop comprehensive plans and strat- 2 loophole, and trade agreements. egies, including clearly defined responsibilities for all water and sanitation sec- Current Issues tor actors;

• monitor and assess the implementation Omni-Gutting Environmental of plans of action and ensure the free, ef- Legislation fective, meaningful, and non-discrimina- The omni-budget bills implemented sweeping tory participation of all people and com- changes to environmental laws and removed munities concerned, particularly those

Doing Better Together: Alternative Federal Budget 2013 151 Table 7 Water Infrastructure in Canada ($ billions)3

20-year 20-year maintenance maintenance Replacement Replacement costs for fair costs for good Replacement value of assets value of assets Replacement assets (2% of or better (1% of value of assets in in poor or worse in good or better Value of Total total replacement total replacement fair condition condition condition Assets value) value)

Drinking Water 23 3 145 171 Wastewater 31 8 83 122 Stormwater 12 4 53 69 Total 66 15 281 362 26 56

critical safeguards for water protection. The The Federation of Canadian Municipalities Canadian Environmental Assessment Act (FCM) estimates the cost of replacing sys- was replaced with a new act that eliminat- tems graded “poor” or “very poor” to be $15 ed 3,000 federal environmental assessments. billion. These systems need to be replaced The federal government also gutted the Fish- (see Table 7).2 eries Act, abdicated responsibility for 99% of The AFB will embark on an ambitious 20- lakes and rivers by overhauling the Navig- year program to maintain and replace water able Waters Protection Act, and put in ques- infrastructure across the country. Over the tion work safety and disclosure of fracking next six years, the AFB will replace the $15 and other chemicals by eliminating the Haz- billion worth of water infrastructure current- ardous Materials Information Review Com- ly rated “poor” or worse. The remainder re- mission. The bills not only marked a troub- quire a transparent, long-term maintenance ling move that stifled democratic debate on plan. In order to maintain water infrastructure environmental policy but also cast doubt on assets currently graded “fair,” a total invest- the government’s ability to uphold the hu- ment of $26 billion over the next 20 years is man right to water and sanitation. needed, assuming an annual re-investment The AFB will rollback the changes to en- rate of 2% of the total value of water, waste- vironmental legislation within the omni- water, and stormwater assets currently worth bus budget bills and require that any subse- $66 billion. Systems graded “good” or better quent amendments be introduced separately will require a total investment of $56 billion and trigger thorough assessments, includ- over the next 20 years, assuming an annual ing public hearings and consultations with re-investment rate of 1% of the total value of First Nations. water, wastewater, and stormwater assets currently worth $281 billion. The total value of National Public Water and water system maintenance and replacement Wastewater Infrastructure Fund will be $97 billion over the next 20 years. As with other infrastructure programs, The total replacement value of water, waste- the AFB will require matching funding from water, and stormwater assets is $362 billion. the provinces and municipalities. However,

152 Canadian Centre for Policy Alternatives given the disproportionate burden that mu- First Nations’ Water Rights nicipalities already carry for infrastructure,4 Despite repeated pledges from the federal the federal government will pay 40%, the government to ensure clean drinking water, provinces 40%, and municipalities only 20%. Health Canada reports approximately 120 boil Of the total $97 billion from all levels of water advisories in First Nations communities government, the federal government will in any given month of 2012.7 There are rou- therefore contribute $39 billion over the com- tinely over 100 water advisories in effect, with ing 20 years. The AFB allocates $2.6 billion some communities living under advisories for annually for the first six years to maintain over 10 years.8 The “Safe Drinking Water for “fair” or better water systems and replace First Nations Act” was reintroduced in Par- “poor” or worse infrastructure. liament in February 2012. The AFB makes a After the first six years, the AFB com- significant 10-year investment in on-reserve mits $1.67 billion annually for the remaining water and wastewater facilities worth $4.7 14 years to maintain water systems that are billion. For more details, see the First Na- currently “fair” or better. The provinces will tions chapter on page 77. match this funding and municipalities will The AFB respects Aboriginal self-deter- pay 50% of those levels to maintain the feder- mination, the authority of Indigenous gov- al-provincial-municipal split specified above. ernments and First Nations’ water rights. Over 150 billion litres of raw sewage are It incorporates Indigenous knowledge and flushed into waterways every year.5 While the seeks the consent of and participation of In- federal government has passed new waste- digenous peoples on water and wastewater water regulations, municipalities depend on policies, including the development of legis- federal and provincial funding to implement lation of drinking water standards for First the regulations and protect wastewater treat- Nations reserves. ment as a public service. The FCM calculates that the new regulations will cost at least $20 Sustaining Quantity and billion for plant upgrades alone, with further Improving Quality spending on system-wide upgrades required over the next two decades.6 The responsibility for monitoring water quan- Canada drew lessons from the Walker- tity and quality is shared among all three lev- ton disaster and established provincial regu- els of government. Canada has the resour- lations and mandatory certification require- ces to be a leader in environmental research ments for water operators. The AFB commits but Canadian scientists are concerned that $150 million over two years for water oper- research is under threat because of legisla- ator training, public sector certification and tive changes, severe funding cuts and a lack conservation programs, including restoring of coordination. the water efficiency labeling program cut in The Harper government’s cuts to the Ex- May 2011. More needs to be done, however, perimental Lakes Area (ELA) and other critic- including enacting national, legally binding al environmental programs will hinder the standards for drinking water to replace the ability to develop freshwater policies and current guidelines. respond to threats to water. Since 1968, the

Doing Better Together: Alternative Federal Budget 2013 153 ELA, a world-renowned freshwater research Canada is a top net exporter of bottled centre, has conducted groundbreaking stud- water.11 The AFB introduces stricter regu- ies on the health of freshwater, including the lations that require bottled water corpora- impacts of human activities and chemical tions to identify their sources on labels and contamination, acid rain, climate change work with provinces to demand restrictions and the effects of mercury on fish and water. on water-taking permits. To address the numerous information gaps In recent years, right-wing think-tanks in in water quality and quantity the AFB will re- both the United States and Canada have float- instate the ELA and include funding for the ed proposals to export water from Manitoba UN Global Environmental Monitoring Sys- and Quebec. The AFB bans bulk water ex- tem/Water Programme, a global water qual- ports as these projects would be tremendous- ity database. As advocated by Liberal water ly costly, require vast amounts of energy, and critic Francis Scarpaleggia in 2007,9 the AFB pose serious threats to watersheds. It will al- will create a water minister position to co- locate $3 million to identify and map Canada’s ordinate the more than 20 departments that groundwater sources, coordinate a strategy set federal policies affecting water. to prioritize water use and introduce strict- Since a third of Canadian communities er regulations on the bottled water industry. rely on groundwater for drinking water, the Virtual water is the amount of water used AFB commits to implementing a thorough to produce or process a good or a service. groundwater protection plan including: Canada net exports 59.9 Bm3 of virtual water each year, making it the second net virtual • the application of the public trust doc- water exporter in the world.12 The govern- trine to groundwater, which will give pri- ment must track how much virtual water is ority to basic human needs and water for exported from Canada. The AFB commits $1 ecosystems; million to complete a comprehensive review • prohibiting the extraction of ground- on virtual water exports from Canada. water in quantities that exceed its re- charge rate; and Protecting the Great Lakes Commons and Other Priority Waterways • a “local sources first” strategy that gives first rights to local people, farmers, and The Great Lakes hold the majority of Can- communities. ada’s fresh water and provide drinking water to 42 million people. They also face signifi- Water Withdrawals and Exports cant threats, including pollution, extraction, loss of wetlands, and invasive species. The Although Canada holds nearly 20% of the last federal budget failed to commit any new world’s fresh water, only 1% of our water is funding to the Great Lakes. renewable, or replenished by rain or snow- The AFB commits $500 million to estab- fall every year. A 2010 Statistics Canada study lishing a Great Lakes commons framework13 showed that renewable water in southern based on empowering local decision-mak- Canada declined 8.5% from 1971 to 2004.10 ing and a co-management model that ensures true collaboration between commun-

154 Canadian Centre for Policy Alternatives ities and governments. Funding will also be bec, would transport oil from Northern Al- dedicated towards cleaning up areas of con- berta across the country, exacerbating cli- cern and priority zones, controlling invasive mate change and putting water, food, and species, calculating the amount of water in public health at risk. The AFB allocates $30 the Great Lakes and total water withdrawals, million to conduct an in-depth study on the protecting wetlands, and creating an inven- effects of tar sands development on water. tory on pollutants that are not covered by the The study will include ongoing monitoring Great Lakes Water Quality Agreement and the and the development of a strategy to reduce National Pollutant Release Inventory. and eliminate water pollution from tar sands The AFB also calls for a moratorium on development. oil and gas in the Gulf of St. Lawrence. The First Nations and communities across Gulf of St. Lawrence borders five provinces: Canada are raising concerns about hydraul- Newfoundland and Labrador, Nova Scotia, ic fracturing (fracking), a controversial meth- Prince Edward Island, New Brunswick, and od that uses sand, water and chemicals to Quebec. The fishery is vital to the region, but blast rock formations to extract natural gas. oil and gas interests are looking to the Gulf There are many risks associated with frac- for the next big oil production boom. Com- king, including groundwater contamina- mentators have suggested that the Gulf of St. tion, the impacts on air quality and climate Lawrence is the Northern Gateway pipeline change, the lack of safe options for dispos- of the East. The risks posed to aquatic spe- ing of fracking wastewater, and the links to cies, ecosystem health and coastal commun- earthquakes. The Minister of the Environ- ities are far too great for any type of drilling ment has requested that Environment Can- to move ahead. ada and the Council of Canadian Academies conduct reviews on fracking. The AFB calls A Just Transition from Fossil Fuels for a moratorium on fracking until these reviews are complete and allocates $2 million Tar sands projects release four billion litres to ensure public input in the reviews. of contaminated water into Alberta’s ground- The 2008 report by the Intergovernmental water and natural ecosystems every year. Tox- Panel on Climate Change highlighted the ef- ins connected to tar sands production have fects of climate change on water in Canada, been found as far downstream as the Atha- including droughts, intense precipitation, and basca Delta, one of the largest freshwater del- increased temperatures. The federal govern- tas in the world. ment has failed to plan for the impact of cli- Incidents of rare forms of cancer, respira- mate change on Canadian watersheds and tory diseases, and cardiovascular diseases in water infrastructure. A just transition away communities nearby and downstream have from the tar sands and all fossil fuels, given increased with the accelerated rate of tar the reality of climate change, is imperative. sands development. Major proposed pipe- In the meantime, the AFB allocates $5 mil- line projects, including the Enbridge North- lion for research on the impacts of climate ern Gateway and Kinder Morgan Trans Moun- change on watersheds and infrastructure, tain Pipeline in British Columbia as well as renewal of the Flood Damage Reduction Pro- the reversal of Line 9 in Ontario and Que-

Doing Better Together: Alternative Federal Budget 2013 155 gram, drought and flood planning, and sup- provincial water rights that it cannot legally port for Indigenous communities. own in Canada, setting a dangerous precedent. By excluding water in trade agreements, Removal of Schedule 2 the AFB will avert threats to Canada’s water from Fisheries Act and costly NAFTA challenges. It will also protect the rights of municipalities, prov- The AFB removes the Schedule 2 loophole from inces, and territories to regulate or create new the Fisheries Act. Lakes that would normally public monopolies for the delivery of water be protected as fish habitat by the Fisheries services and sanitation without having to Act are now being redefined as “tailing im- worry about trade and investment challenges. poundment areas” in a 2002 schedule added The AFB will ensure Foreign Investment Pro- to the Metal Mining Effluent Regulations of tection and Promotion Agreements such as the Act. Once added to Schedule 2, healthy the one being negotiated with China are no freshwater lakes lose all protection and be- longer signed and that existing treaties are come dump-sites for mining waste. Canada is cancelled to protect communities’ rights to the only industrialized country to allow this develop regulations on water protection, in- practice. By closing this loophole, the AFB cluding bans on fracking. will save taxpayers millions in remediation, wastewater treatment, and health care costs as well as protect our watersheds for current AFB Actions and future generations. The following measures begin the process of Exclude Water from NAFTA, CETA developing a national water policy that makes and All Other Trade Agreements the conservation and protection of our water a public trust and safe, clean drinking water The AFB excludes water as a good and ser- and sanitation a human right. vice from all international trade agreements, including the North American Free Trade Recognizing the Human Right Agreement (NAFTA) and the Canada-EU to Water and Sanitation Comprehensive Economic and Trade Agree- ment. When water is considered a tradable The AFB allocates: good and service under international trade • $97 billion to be invested in a National agreements, water-related policy and other Public Water and Wastewater Fund over measures become vulnerable to investor- the next 20 years from all levels of gov- state challenges that involve a proprietary ernment. The federal portion, making up interest in water. In 2010, the federal gov- 40% of the funding, would start at $2.6 bil- ernment settled a NAFTA challenge brought lion a year for the first six years and $1.67 against the Government of Newfoundland billion a year for the following 14 years; and Labrador by AbitibiBowater, one of the largest pulp and paper mills in the world, for • An additional $1 billion for implementing $130 million. Part of this amount was under- the new Wastewater Systems Effluent stood by the firm to include compensation for

156 Canadian Centre for Policy Alternatives Regulations with a further $1 billion per study of the effects of tar sands development year over the next 19 years. and incorporating public input in the federal reviews on fracking. Sustainability

The AFB allocates: Notes

• $500 million to implement a comprehen- 1 UN Human Rights Council, September 23, 2011, A/HRC/18/L.1 The human right to safe drinking water and sanitation, www.ewash.org/files/ sive action plan to protect to the Great library/water%20res.sep.2011%5B1%5D.pdf. Lakes and an additional $950 million/ 2 Federation of Canadian Municipalities, The Canadian Infrastructure Re- port Card, http://www.canadainfrastructure.ca/en/index.html year for four years to clean up priority 3 Federation of Canadian Municipalities, The Canadian Infrastructure waterways; Report Card, p. 20, http://www.canadainfrastructure.ca/en/index.html 4 Mackenzie, Hugh. (2013). Canada’s Infrastructure Gap: Where It Came • $327.5 million (over three years) to im- from and Why It Will Cost So Much to Close. Canadian Centre for Policy Al- ternatives. Ottawa. http://www.policyalternatives.ca/publications/reports/ plement water quality and water quan- canadas-infrastructure-gap 5 Environment Canada, Wastewater. http://www.ec.gc.ca/eu-ww/default. tity monitoring frameworks, increase the asp?lang=en&n=BC799641-1

number of monitoring stations, train staff 6 Federation of Canadian Municipalities, The Canadian Infrastructure Re- in water monitoring, contribute to the UN port Card, http://www.canadainfrastructure.ca/en/index.html 7 Health Canada, Drinking Water and Wastewater, http://www.hc-sc. Global Environment Monitoring System, gc.ca/fniah-spnia/promotion/public-publique/water-eau-eng.php#adv and create a new junior water minister 8 Health Canada, First Nations Communities with Drinking Water Advisories as of December 31, 2010, http://www.scribd.com/mobile/documents/52564707. position; and 9 Canwest News Service, “Liberal government would name water minister,” December 5, 2007, http://www.canada.com/topics/news/national/ • $2 million to reinstate the Experiment- story.html?id=f5d0da84-1d9a-4553-949d-100a96535d2f al Lakes Area. 10 Statistics Canada, Study: Freshwater supply and demand in Canada, September 13, 2010, http://www.statcan.gc.ca/daily-quotidien/100913/ dq100913b-eng.htm

11 Agriculture and Agri-Food Canada, Agriculture, Food and Beverages Pollution Profile — Republic of Korea 2010, updated April 12, 2010, http://www.ats. agr.gc.ca/asi/4379-eng.htm

The AFB allocates $50 million for environ- 12 Rahman, N., Barlow, M., and Karunananthan, M. (2011). Leaky Exports: A Portrait of the Virtual Water Trade in Canada. Ottawa: Council of Can- mental assessments of all energy and mining adians. http://canadians.org/water/documents/virtual-water-0511.pdf. projects as well as $32 million for an in-depth 13 Maude Barlow, Our Great Lakes Commons: Protecting Our Great Lakes For- ever, http://canadians.org/water/documents/greatlakes/GreatLakes-0311.pdf.

Doing Better Together: Alternative Federal Budget 2013 157 Women’s Equality

Background also contribute to economic growth. A recent analysis of developed countries, esti- Sustainable economic policy must address mates that closing the gap between male and the distinct roles of women and men within female employment rates would boost GDP the economy and the distinct impact of eco- by at least 9%.4 nomic crisis and recovery strategies on women The Canadian gender pay gap is the fifth- and men. To do so is good fiscal sense and largest among 28 OECD countries.5 In Canada, good public policy. The AFB will foster sus- women with full-time jobs earn 23% less than tainable economic growth by ensuring that men. The pay gap is particularly pronounced women are able to participate fully in the among single mothers, racialized women, First economic and social life of Canada. The AFB Nations women, and women with disabilities. will address the key barriers to that partici- For these groups there is both a wage gap be- pation: the wage and income gap between tween women and men of the same group, women and men; the lack of investment in and a significant gap between their earnings social infrastructure; and the personal, so- and the national average. For example, the cial, and economic devastation caused by average income for women with disabilities violence against women. in Canada is 32% lower than women in Can- According to the OECD, “rising female ada overall at $22,013; their income is 33% participation in the labour force has been the lower than the income of men with disabil- mainstay of per capita real income growth [for ities and their income is 57% lower than men Canada] over the last decade.”1 Following the in Canada overall.6 Racialized women earn economic crisis of 2008, women were among only 70.5% as much as racialized men, and the first to return to the post-recession labour First Nations women living off-reserve earn force. Their return, however, did not lead to 68.5% as much as First Nations men living increased economic security for them or sus- off-reserve.7 The average income for racial- tainable growth for Canada. The jobs women ized women is $22,993, and for First Nations filled tended to be part-time or temporary, an women, living off-reserve, the average income ongoing trend in women’s employment.2 In is $22,035. It is therefore unsurprising that, Canada, 27% of working women work part- in spite of increasing levels of education and time, compared to 12% of working men.3 This work experience, these women are dispro- percentage has remained nearly unchanged portionately affected by the economic reces- over 30 years, from 26.1% in 1981 to 27% to- sion.8 Not only are these gaps a violation of day. Closing the gap between women’s and the basic principle of equality and non-dis- men’s shares of paid work would not only crimination, but they represent a huge loss increase women’s economic well-being and in potential revenue for governments at all their access to economic supports, it would levels. Even the most conservative estimates

158 Canadian Centre for Policy Alternatives state that closing the gender wage gap could raises employment prospects and reduces increase Canada’s GDP by as much as 10%.9 duration of unemployment if it occurs…. It During a period of economic contraction can also reduce poverty and help to address and slow recovery, Canada cannot afford to income inequality.”12 leave such a large economic resource un- The current budget is also looking to fuel tapped. Closing the gap between women’s job creation in the private sector while cutting and men’s economic status in Canada will jobs in the public sector. Yet the public sector provide a significant engine for long-term has been the place where women have real- economic growth, as well as an immediate ized the greatest level of economic equality. increase in women’s social and economic These gains were significantly undermined well-being. in the 2009 budget, which stripped public employees of the right to pay equity — mak- Current Issues ing equality rights subject to market forces. In 2012, Bill C-38 made similar changes to the Federal Contractors Program, leaving com- The government’s current economic poli- pliance with the Employment Equity Act for cies come at a high price to women and the contractors of the federal government to the economy. They do not create jobs in indus- discretion of the Minister. Marjorie Griffin Co- tries where women work, they increase the hen points out that “there would be no rea- tax burden on working women while decreas- son to change this legislation if the Minister ing access to pension and income supports, intended to continue to apply the employ- and they continue to undermine basic equal- ment equity provisions.”13 ity rights. Moreover, they do so in a manner The current job cuts being rolled out in that allows for little public debate or scrutiny. the public sector are having a dispropor- Set to “fuel the next wave of job creation”10 tionate impact on women. Women working the government’s budget has depended on in the public sector earn an average of 4.5% infrastructure projects to fill the tank.11 Infra- more than their peers in the private sector.14 structure projects have been successful in Women seeking comparable work in the pri- creating jobs, but they do so in the very in- vate sector, even if economic stimulus were dustries in which women are least likely to to generate those jobs in the private sector, find work. An equal investment in industries would see an estimated $2,000 reduction in such as health care, child care, and educa- their annual income.15 Overall, this means tion would yield a double benefit. It would that women seeking paid work will have few- create more jobs in sectors in which women er employment choices, earn less income are likely to be employed and would de- where they are able to secure employment, crease the burden of unpaid work for both and experience no relief from their burden men and women by strengthening Canada’s of unpaid work. social infrastructure. A recent review by TD For women who do experience unemploy- Economics reiterates the economic and so- ment, there is little respite. The gap between cial benefits of investing in child care and men’s and women’s access to EI benefits con- early childhood education: “it can help to tinues to expand: “At the outset of the 2008/9 foster greater labor force participation…. It

Doing Better Together: Alternative Federal Budget 2013 159 recession, when female employment rates pact on their incomes than will their male were at an all-time high, the gender gap be- counterparts.19 tween women vs. men receiving EI benefits For young women, the continued roll- was only 2.3%, but grew to 14% during the back of equity guarantees, the changes to recession.”16 The lack of affordable child care the age of retirement, and the failure to in- and the concentration of women in part-time vest in industries where women work, mean work further decrease their access to EI. In that those women will have fewer job oppor- the period immediately following the reces- tunities, will earn less, will work two years sion, married women lost the largest propor- longer before they can access OAS, and will tion of jobs: “176 percent of all jobs lost by pay more for the privilege. women were lost by married women. Mar- ried men also lost the largest share of men’s Inequality and Insecurity jobs, but on a much smaller scale than mar- Violence against women and girls is an en- ried women (98 percent of all men’s jobs were demic social ill and a violation of the basic lost by married men)….of the 176 percentage rights of security of person and non-dis- points of jobs lost by married women, 102 crimination. Violence against women and percent were lost from full time employment girls is exacerbated by economic insecurity and 74 percent from part time employment. and is itself a cause of long-term economic In contrast, while single women gained 230 insecurity. A recent study found that women percent of the number of women’s jobs lost who had left abusive domestic partners relied during the recession, all these gains were in on food banks at nearly 20 times the rate of the form of temporary full time employment.”17 average Canadians, up to three years after One final irony of the government’s cur- leaving the abusive situation.20 rent economic policies is that unemployed Current estimates suggest that intimate- workers will likely have to wait longer to re- partner violence alone costs the Canadian ceive EI, if they do qualify, because public economy nearly $7 billion per year.21 Although sector job cuts are diminishing Service Can- notoriously difficult to track, the violence ada’s capacity to process EI claims.18 directed at women and girls because they At the end of their working lives, women are women or girls is prevalent across the will also feel the impact of changes made in Canadian population. Statistics Canada re- the 2012 and 2013 budgets. First, only 30% of ports that “6% of Canadians with a current women employed in the private sector have or former spouse reported being physically pensions of any kind. Second, everyone is or sexually victimized by their spouse in the going to have to work two years longer be- [past] 5 years.”22 Eighty-three percent of vic- fore they are eligible to receive OAS. How- tims of spousal violence are female. Govern- ever, because women’s earnings peak in their ment estimates suggest that as many as 70% 40s, while men’s earnings peak in their 50s, of incidents of spousal violence are never re- the first generation of women to be affected ported.23 Rates of sexual assault remain stable, by the phase in of the OAS changes (in 2023) with approximately 2 of every 100 Canadians will be less able to mitigate against the im- over the age of 15 reporting that they have experienced a sexual assault in the previous

160 Canadian Centre for Policy Alternatives year.24 However, only 1 in 10 sexual assaults AFB Actions is reported and police have recorded a further decrease in reporting over the past dec- The AFB will: ade.25 Rates of violence against women and • Invest in a National Action Plan to Address girls vary by region and group, with Aborig- Violence Against Women (cost: $380 mil- inal women, women with disabilities, young lion29 over 3 years). women, and women living in northern Can- ada experiencing significantly higher than • Invest in social infrastructure, including average rates of violence.26 a federal child care program (see the Ear- The federal government continues to make ly Childhood Education and Care chap- minimal investments in addressing a prob- ter on page 58). lem that directly affects at least 2.8 million • Increase funding for Status of Women Canadians.27 Status of Women Canada cur- Canada and fund women’s groups to rently spends an average of $10 million per carry out independent policy research year. The mandate of Status of Women pre- and advocacy. cludes advocacy and research, thus the $10 million is directed largely at the provision of • Provide consistent and secure funding for services for the 2.1 million Canadians experi- a non-partisan, arm’s length, independ- encing domestic violence and the 0.7 million ent research body to focus on issues and Canadians who have reported a sexual assault. policies relating to and affecting women Yet a longitudinal study of interventions to and that would be free to publish with- combat violence against women has demon- out ministerial consent. strated that support for civil society organ- • Take pro-active measures to ensure equal izations and feminist activism has been the pay for work of equal value by repealing most significant factor in a successful public the Public Service Equitable Compensa- policy response to violence against women.28 tion Act, establishing pro-active pay equity While Status of Women carries the man- legislation, and implementing the recom- date to address this issue, the Department of mendations of the 2004 Pay Equity Task Aboriginal Affairs and Northern Development Force (cost: $10 million/year). has spent over $30 million per year over the past three years on grants and contributions • Eliminate inequitable tax breaks and tax to organizations addressing violence against policies that exacerbate women’s eco- women. Additional funds are dispersed by nomic insecurity, such as income-split- HRSDC and Health Canada. This scattershot ting measures for pension income (~$1 approach is plainly inadequate. The United billion savings), and including for Re- Nations Secretary General has called on all tirement Compensation Arrangements states to implement a national action plan and Tax Free Savings Accounts (see the to address violence against women by 2015. Tax chapter).

• Implement the recommendations of the 2009 Report of the Auditor General on gender-based analysis, including provid-

Doing Better Together: Alternative Federal Budget 2013 161 15 Sanger, Toby (2011). Battle of the Wages: Who Gets Paid More, Public ing adequate human resources to conduct or Private Sector Workers? Ottawa: Canadian Union of Public Employees. cupe.ca/updir/Battle_of_the_Wage_ENG_Final-0.pdf gender-based analysis in all government 16 Lahey, Kathleen A (2012). Canada’s Gendered Budget 2012: Impact of departments and agencies. Bills C-38 and C-45 on Women: A Technical Report. 17 Lahey, Kathleen A (2011). “At the Intersection of Global Economics Crisis and State Anti-Feminism: Women in Canada, 2008–09.” Investig- aciones Feministas. Vol. 2.

Notes 18 Galloway, Gloria. (2012). “Growing backlog of EI claims forces Service Canada to boost staff.” Globe and Mail. Jan. 13. www.theglobeandmail. 1 Bibbee, Alexandra. (2008). “Tax Reform for Efficiency and Fairness in com/news/politics/growing-backlog-of-ei-claims-forces-service-canada- Canada: Economics Department Working Paper No. 631.” Paris: Organisa- to-boost-staff/article542476 ; Galloway, Gloria. (2012). “Pensioners, unem- tion for Economic Co-operation and Development. p. 22. ployed still facing long waits with Service Canada.” Globe and Mail, Nov. 1. www.theglobeandmail.com/news/politics/pensioners-unemployed-still- 2 Living With Economic Insecurity: Women in Precarious Work (2011). facing-long-waits-with-service-canada/article4806279/ International Trade Union Confederation; Elson, Diane and Devaki Jain. (2010). Vision for a Better World: From Economic Crisis to Equality. New 19 Lahey, Kathleen A (2012). Canada’s Gendered Budget 2012: Impact of York: United Nations Development Program. Bills C-38 and C-45 on Women: A Technical Report.

3 “Full-Time and Part-Time Employment by Sex and Age Group.” CANSIM 20 Varcoe C. et al. (2011). Attributing Selected Costs to Intimate Partner table: 282-0002. Ottawa: Statistics Canada, last modified: January 6, 2012. Violence in a Sample of Women Who Have Left Abusive Partners. Canadian Public Policy, vol 37.3. 4 Daly, Kevin. (2007). “Gender Inequality, Growth and Global Ageing.” Global Economics Paper No: 154. New York: Goldman Sachs Econom- 21 Varcoe C. et al. (2011). Attributing Selected Costs to Intimate Partner ic Research Group. Violence in a Sample of Women Who Have Left Abusive Partners. Canadian Public Policy, vol 37.3. 5 “Gender Wage Gap: Full Time Employees.” OECD. Available online at: http://www.oecd.org/gender/data/genderwagegap.htm 22 Mahony. Tina Hotton. (2011). “Women and the Criminal Justice Sys- tem.” Women in Canada: A Gender-Based Statistical Report. Ottawa: Sta- 6 Disability in Canada: A 2006 Profile. (2011). Ottawa: Human Resource tistics Canada. and Skills Development Canada.; Galarneau, Diane and Marian Radulescu. (2009). Employment Among the Disabled. Ottawa: Statistics Canada. 23 Family Violence in Canada: A Statistical Profile. Statistics Canada. Gov- ernment of Canada, 2009. 7 “Average Incomes by Racialized Census Groups and Gender.” (2007). 2006 Census of Population. Ottawa: Statistics Canada. 24 Sexual Assault in Canada 2004 and 2007. Statistics Canada and Can- adian Centre for Justice Statistics. Government of Canada, 2008. 8 “Study: Aboriginal People and the Labour Market.” The Daily. Statis- tics Canada. November 23, 2011. 25 Sexual Assault in Canada 2004 and 2007. Statistics Canada and Can- adian Centre for Justice Statistics. Government of Canada, 2008. 9 Oostendorp, Remco H. (2009). “Globalization and the Gender Wage Gap.” World Bank Economic Review. 23(1): pp. 141–161. 26 Brennon, Shannon. The Violent Victimization of Aboriginal Women by Canadian Provinces. Juristat, 2011; “Family Violence in the Canadian Arctic.” 10 Jobs, Growth, and Long-Term Prosperity: Canada’s Economic Action Plan Pauktuutit, 2009; Perreault, S. (2009), Criminal Victimization and Health: 2012: The Budget in Brief. Department of Finance, Government of Canada, 2012. A Profile of Victimization Among Persons with Activity Limitations or Other Health Problems. Ottawa, Ontario: Canadian Centre for Justice Statistics. 11 Infrastructure spending in the 2012 budget consists primarily of the $33-billion Communities Infrastructure Fund. However, there are clear 27 Mahony. Tina Hotton. (2011). “Women and the Criminal Justice Sys- plans for further infrastructure spending in the near future, including the tem.” Women in Canada: A Gender-Based Statistical Report. Ottawa: Sta- $35-billion National Shipbuilding Procurement Strategy, over $30 billion tistics Canada; Sexual Assault in Canada 2004 and 2007. Statistics Canada for shipyards contracts, $5.2 billion for the Canadian Coast Guard fleet, and Canadian Centre for Justice Statistics. Government of Canada, 2008. and continued spending on the F-35 jets. 28 Htun, Mala and S. Laurel Weldon (2012). The Civic Origins of Progressive 12 Alexander, Craig and Dina Ignjatovic (2012). Early Childhood Educa- Policy Change: Combating Violence against Women in Global Perspective, tion Has Widespread and Long Lasting Benefits. Toronto: TD Econom- 1975–2005. American Political Science Review Vol. 106, No. 3. ics. http://www.td.com/document/PDF/economics/special/di1112_ EarlyChildhoodEducation.pdf 29 Estimate based on current expenditures towards Ontario’s action plans to address domestic violence and sexual violence — calculated on 13 Cohen, Marjorie Griffin (2012). “Budget Bill and the Federal Contract- a per capita basis for Canada. Ontario currently spends $141 million/year ors Program,” Progressive Economics Forum. www.progressive-economics. or $11.06 per capita. ca/2012/05/31/budget-bill-and-the-federal-contractors-program

14 Sanger, Toby (2011). Battle of the Wages: Who Gets Paid More, Public or Private Sector Workers? Ottawa: Canadian Union of Public Employees. cupe.ca/updir/Battle_of_the_Wage_ENG_Final-0.pdf

162 Canadian Centre for Policy Alternatives Youth

Background fined from the perspective of major institutions rather than by young people themselves. There are currently an estimated 10.2 million No matter whose perspective dominates, people under the age of 25 in Canada, and 12.7 however, it is difficult to consider or deal with million under age 30.1 The fact that “youth” “youth issues” in isolation, because young account for about one-third of the popula- people’s concerns and challenges cut across a tion may seem like a lot, but it is substan- wide range of spheres of social life and policy. tially less than what it used to be. Indeed, For example, nearly half (44%) of all Can- the Canadian population is ageing, with the adians aged 15–29 are pursuing some form of median age rising markedly from 26.2 years schooling, and are therefore directly affected in 1971 to 39.9 years in 2011.2 by public policy on secondary and post-sec- Population ageing might, at first glance, ondary education.5 The amount of money gov- offer a partial explanation for the fact that the ernments commit to education, the propor- concerns and challenges of young people often tion of the cost that is individualized, credit fail to factor as political and government pri- transfers between institutions, the presence orities. However, the under-25 demographic or absence of an overarching national strat- is still more than double the number of sen- egy — all impact the institutions and systems iors (65+). Moreover, they are among the first young students encounter. impacted, the last heard, and the longest Yet more than half of Canada’s young “scarred” whenever the economy struggles.3 people are not in school, so it is incorrect to This is not to say that young people are assume that attention to “student issues” suf- not a government concern. On the contrary, fices as attention to “youth issues.” A majority they are prime targets for government inter- of young non-students (and roughly half of all vention and societal anxiety. There is a broad young students) are also in the labour force, sense that young people are mainly important either employed or looking for employment.6 (and dangerous) insofar as they will be the These people have a stake in labour policy political leaders, voters, tax base, consum- and legislation, as do prospective graduates ers, and stewards of the environment in the who hope for employment. Labour and em- future. Therefore, much effort goes into en- ployment policy at the other end of the life suring that they grow up “right.” Their lives course — for example, age of retirement, ac- are carefully governed, through compulsory cess to the Canada Pension Plan and Old Age education, laws and social programs (to name Security, retirement income security — affect only a few influences), with the purpose of the behaviours of older workers, and subse- creating productive, obedient, “normal” cit- quently the job prospects of younger work- izens.4 Thus, “youth issues” tend to be de- ers. Labour legislation that affects unpaid internships is also extremely relevant in

Doing Better Together: Alternative Federal Budget 2013 163 shaping the job opportunities available to tions” coming of age in a world where con- recent graduates.7 ditions demand radically different structures Taking an even wider view, the relation- and practices of government than those de- ships between school, work, and home have veloped by preceding generations. shifted dramatically over the last several decades, with significant consequences for the Current Issues timing of major life events and transitions. The average ages at which people marry, leave In recent years, three topics have domin- their parents’ homes, settle into full-time ated political and public discourse around jobs, finish school, and start families have youth in Canada: unemployment, electoral all risen, spurring a flurry of writing about participation, and mental health. However, “delayed life transitions” and “extended ado- all three have yet to elicit much in the way lescence.”8 Much of this research has point- of concrete policy responses from the feder- ed to political and economic shifts, such al government. as the expansion of post-secondary education, the increasing participation of women Youth Un- and Underemployment in the labour force, the stagnation of median wages, and the shift towards a so-called Record-breaking levels of youth unemploy- “knowledge economy,” as explanations for ment around the world have thrust the issue protracted pathways to adulthood. into the media spotlight. Worldwide youth un- Research has also shed light on the divers- employment has reached crisis proportions, ity of young people’s pathways, raising the with 75 million young people unemployed important point that “youth” by no means globally.9 Fortunately, the situation in Can- constitute a homogeneous group. Young ada is not as dire: around 14%10 of 15-to-24- people from rural areas and low-income fam- year-olds here are unemployed, compared ilies, those who leave school early, aboriginal to over 50% in Spain and Greece, and 35% youth, recent immigrants, young people with in Italy.11 However, there has been a substan- physical and cognitive disabilities, young partial rise in part-time, non-permanent work ents, LGBTQ, racialized, homeless, and un- among young Canadians — jobs that tend employed young people, each face different to be lower-paid and lack access to benefits challenges. Disproportionately marginalized, and training opportunities — increasing the these subsections of “youth” often lack so- precariousness of many young workers’ em- cial, financial, and cultural capital to over- ployment situations.12 come common barriers to employment, civic Moreover, youth unemployment in Canada participation, family and personal stability, has risen over the last decade. The last time as well as post-secondary education. it was this high was in the 1990s, although it Complicating this still further is the fact is considerably lower today than in the early that young people’s participation in Canada’s 1980s, when it passed 20%.13 Nevertheless, electoral system is waning. There is a growing in the 1980s, the federal government intro- sense that party politics and elected govern- duced several measures under the umbrella ments fail to connect with younger “genera- of a “youth employment initiative,” which

164 Canadian Centre for Policy Alternatives included wage subsidies for “employment politicians at the municipal, provincial and disadvantaged” young people, funding for federal levels have tried to deal with bullying community projects with a youth focus, and through government legislation and motions “youth units” at Canada Employment Cen- for a National Anti-Bullying Strategy. The cur- tres.14 While a Youth Employment Strategy rent federal government has said, however, with a similar basic structure has survived, that bullying should be dealt with at the lo- no significant adjustments have been made cal or community level.18 to respond to the current rate of youth unemployment, its effects on individuals and AFB Actions the economy, and the significant political economic transformations that have taken The AFB will introduce several measures place since the 1980s (e.g., the expansion of under the umbrella of a “Youth Employment post-secondary education, and the decline Initiative.” Notably, the definition of “youth” in permanent, full-time work).15 for each measure will be people aged 16–29, in acknowledgement of the increasingly pro- Electoral Participation tracted period of education and economic de- During the last two federal elections, young pendence or semi-dependence that youth ex- Canadians were singled out as a particular- perience. Measures will include: ly apathetic segment of the voting-age popu- • Wage subsidies for employers that hire lation. In 2011, only 38.8% of eligible voters 31,000 young workers. Employers that under age 25 voted in the federal election; in hire new workers aged 16–29 will be eli- 2009, turnout was slightly lower, at 37.4%.16 In gible to apply for a $10/hr wage subsidy comparison, the overall voter turnout in 2011 for the first two months of employment was 58.5%, and the oldest voters turned out (or $3,200). Conditions include that the in droves — for example, 75% of those aged wage meet provincial living-wage stan- 65–74 cast ballots.17 Although Elections Can- dards, that the jobs offer some training ada has developed some campaigns to en- component, are above entry level and/or courage young people to vote, most action offer realistic possibilities for advancement on this front has been undertaken at the civic within the organization, and are perma- level by organizations such as LeadNow, or nent, not temporary. (Cost: $100 million.) through events such as “Vote Mobs.” • Linking young workers with employers. The Mental Health and Bullying AFB will improve upon the existing Service Canada youth job bank19 by creating a stand- Several high-profile teen suicides in Canada, alone job bank that explicitly connects young along with related grassroots and celebrity- workers with the employers and industries led campaigns to end bullying, have helped facing labour shortages. Data on industry promote the understanding of bullying as a job openings and losses, as well as gradu- social problem (rather than an isolated, inter- ate placement rates of university and college personal issue) that is deeply interconnected programs, will be housed on the website, to the holistic health of young people. Many to assist young people who are deciding if

Doing Better Together: Alternative Federal Budget 2013 165 and where to train for a specific job. Work- Notes ers and employers that connect with one 1 Statistics Canada. Table 051-0001 - Estimates of population, by age group another via this program will be supported and sex for July 1, Canada, provinces and territories, annual (persons unless otherwise noted), CANSIM (database). in applying for and accessing the subsidies 2 Human Resources and Social Development Canada. (2012). “Can- and relief funding available. adians in Context--Aging Population.” Online at http://www4.hrsdc. gc.ca/[email protected]?iid=33 • Public Works projects for young workers: 3 International Labour Office. (2011). Global Employment Trends for Youth: 2011 update. International Labour Organization, Geneva. All federally funded infrastructure pro- 4 Comacchio, Cynthia. (2006). The Dominion of Youth: Adolescence and jects will reserve, at minimum, one-third the Making of a Modern Canada, 1920 to 1950. Waterloo, ON: Wilfrid Lau- rier University Press; Foster, Karen and Spencer, Dale. 2012. Reimagining of the jobs they create for young workers Intervention in Young Lives. Vancouver, BC: UBC Press. (aged 16–29). 5 Statistics Canada. (2012). “Education indicators in Canada: An international perspective, 2010.” The Daily, June 21. Online at http://www. statcan.gc.ca/daily-quotidien/120911/dq120911b-eng.htm

The AFB will make it an explicit govern- 6 Unpublished data from the Statistics Canada labour force survey, 2012 ment priority to assess and address the prob- (author’s calculations). 7 For ongoing coverage of the use of unpaid interns in Canada, follow An- lem of youth electoral participation. It will drew Langille’s blog, Youth and Work: www.youthandwork.ca hire an independent research firm to conduct 8 Beaujot, Roderic. (2004). Delayed Life Transitions: Trends and Impli- cations. Ottawa: Vanier Institute of the Family; Clark, Wayne. (2007). De- an in-depth, nationwide study of youth elec- layed Transitions of Young Adults. Statistics Canada. Accessed November 6, 2012 at http://www.statcan.ca/english/freepub/11-008-XIE/2007004/ toral participation, using quantitative survey pdf/11-008-XIE200700410311.pdf methods as well as qualitative focus groups 9 International Labour Organization. (2012). Global Employment Trends for Youth. Online at http://www.ilo.org/global/research/global-reports/ and town hall meetings. The study will also global-employment-trends/youth/2012/WCMS_180976/lang--en/index.htm include a survey of global youth electoral 10 Cansim 282-0087 participation, in search of “best practices” 11 http://epp.eurostat.ec.europa.eu/cache/ITY_PUBLIC/3-31102012-BP/ EN/3-31102012-BP-EN.PDF

or the conditions that appear to lead to in- 12 Foster, Karen. (2012). Youth Employment and Un(der)Employment in Canada: More Than a Temporary Problem? Ottawa: Canadian Centre for creased youth participation. The goal will be Policy Alternatives.

to identify possible changes to the elections 13 http://www.statcan.gc.ca/pub/75-001-x/2012002/charts- process and legislation, as well as the polit- graphiques/11639/cg00c-eng.htm 14 Employment and Immigration Canada. (1982). “What does the new ical system, in Canada. Specifically, it will employment initiative mean?” The Windsor Star, Friday, Sept. 17, p. B5. explore the potential of online voting and 15 For the official line on the new Youth Employment Strategy, seehttp:// actionplan.gc.ca/en/initiative/enhancing-youth-employment-strategy. For compulsory voting, and the connection bean evaluation of the YES program from 1997-2002, see Human Resources and Skills Development Canada. (2004). “Youth Employment Strategy (YES) tween public education curricula (e.g., the 1997–2002: Summary of Recent Summative Evaluation Results.” Online at http://www.hrsdc.gc.ca/eng/publications_resources/evaluation/2007/sp_ presence or absence of civics classes) and ah_211_05_04e/page01.shtml. On economic transformations since 1980, see Vosko, Leah F. (2009). Managing the Margins: Gender, Citizenship, voting behaviour. and the International Regulation of Precarious Employment. OUP Oxford.

The AFB will acknowledge that mental 16 Horgan, Colin. (2011). “Canada’s Youth Vote Edges up in 2011, but Still a Drag on the Total Turnout.” Ipolitics.ca. Online at http://www.ipolitics. health issues among young people are em- ca/2011/11/24/canadas-youth-vote-edges-up-in-2011-but-still-a-drag-on- bedded in wider socio-political and econom- the-total-turnout/. 17 Elections Canada. (2011). “Estimation of Voter Turnout by Age Group ic contexts. Adopting a “social determinants and Gender at the 2011 Federal General Election.” Online at http://www. elections.ca/content.aspx?section=res&dir=rec/part/estim/41ge&docum of health” perspective, it will launch the de- ent=report41&lang=e#p4 velopment of a mental health strategy that 18 Kirkup, Kristy. (2012). “NDP accuses Tory of bullying following anti-bullying strategy debate.” The Welland Tribune, Oct. 16. Online at seeks to identify and address the context- http://www.wellandtribune.ca/2012/10/15/ndp-pushes-for-national- anti-bullying-strategy. ual factors that contribute to mental illness 19 http://www.jobbank.gc.ca/rch-eng.aspx?ProvId=02&OpPage=50& as a social problem and exacerbate its nega- Stdnt=Only tive effects.

166 Canadian Centre for Policy Alternatives Appendix

One of the values of the Alternative Federal • Funding for a safe injection/consump- Budget process is to create a more inclusive tion site budget. Far too often, budgets are developed • Better mental health outreach in secret and revealed to Canadians with little opportunity for input. The federal govern- • Prescription drug coverage for seniors ment could do a much better job at involving • Increased support for Community Health Canadians in the budget process. Centres By involvement, the AFB envisions something very different from the current pre- The results of that poll are detailed below. budget consultations that the federal gov- A preferable scenario for implementation ernment conducts. There is little connection would forgo an online poll in favour of actual between the ideas generated from those con- community meetings where Canadians could sultations and the actual federal budget. In- more fully participate with their neighbours stead of the top-down nature of the consulta- in implementing policy. Unfortunately, such tions, the AFB would adopt a more bottom-up engagement was outside of the scope of the approach that allows individual Canadians AFB process this year. to come together and discuss how programs The three Canadian cities with the largest are created and implemented. response rate to the online tool were Toron- This year’s the AFB will create a Health to, Ottawa and Vancouver. Across all three, Care Innovation fund worth $2 billion over the three largest priorities were home care for 2 years. The goal of this new fund is to allow seniors, mental health outreach, and dental communities to decide how the money is care for children. spent on the priorities that matter to them. Based on its population, Vancouver would As part of the process, the AFB implemented have $36 million of the overall fund. The lar- an online tool that allowed Canadians to bal- gest priority for Vancouverites was mental ance how they’d like to see the money spent health outreach to which they’d devote $9 mil- on the various program choices. The avail- lion. Their second largest priority was home able choices were: care for seniors to which they’d devote $8.6 million. Their third priority was dental care • Improved home care services to allow sen- for children which would receive $5.8 million iors to live longer in dignity in their homes Based on its population, Toronto would • Improved access to family physicians and have $156 million to spend. Its top prior- primary care teams ity was mental health outreach to which it would devote $35.9 million. The second pri- • A dental care program for low income ority would be home care services for seniors children which would receive $32.3 million. Its third

Doing Better Together: Alternative Federal Budget 2013 167 Figure 15 Poll Results, Vancouver, BC

HomeCare Seniors Community Health Centres

Free Prescription Drugs For Seniors Family Doctors

Free Dental Mental Health For Kids Outreach

Safe Injections

Figure 16 Poll Results, Toronto, ON

HomeCare Seniors Community Health Centres

Free Prescription Drugs For Seniors Family Doctors

Mental Health Outreach Free Dental For Kids

Safe Injections

168 Canadian Centre for Policy Alternatives Figure 17 Poll Results, Ottawa, ON

HomeCare Seniors

Community Health Centres

Free Prescription Family Drugs For Seniors Doctors

Free Dental Mental Health For Kids Outreach Safe Injections

priority was dental care for children which receive $16.4 million. The city’s second high- would have a budget of $29.6 million. est priority was mental health outreach which The amount for Ottawa would be $53 mil- would receive $9.8 million. Its third largest lion based on its population. Ottawa’s top pri- priority was more family physicians, that por- ority was home care for seniors which would tion would receive $8.3 million.

Doing Better Together: Alternative Federal Budget 2013 169 Ackowledgements

From its beginnings, the fundamental prem- Service Alliance of Canada), Kirsten Bernas ise of the Alternative Federal Budget is that (Canadian Community Economic Development budgets are about choices and choices re- Network), Peter Bleyer (Professional Insti- flect the values and priorities of those who tute of the Public Service of Canada), Sheila make them. The AFB starts from a set of so- Block (Wellesley Institute), Diana Bronson cial justice values — human dignity and free- (Food Secure Canada), Abra Brynne (Food dom, fairness, equality, environmental sus- Secure Canada), Charles Campbell (United tainability and the public good-embraced by Steelworkers), Karen Campbell (Assembly of representatives of a broad spectrum of civil First Nations), Ryan Campbell (Profession- society organizations: labour, environment, al Institute of the Public Service of Canada), anti-poverty, church, students, teachers, edu- Amy Casipullai (Ontario Council of Agen- cation and health care, cultural, social de- cies Serving Immigrants), John Connolly, velopment, child development, international Eve-Lyne Couturier (l’Institut de recher- development, women, disability, Aboriginal. che et d’informations socio-économiques), The AFB’s credibility speaks volumes Graham Cox (Canadian Union of Public Em- about what can be achieved by a dedicat- ployees), Roxanne Dubois (Communication, ed group of volunteers working together far Energy and Paperworkers Union of Canada), away from the ivory and glass towers of the Judy Duncan (Acorn Canada), Myles Ellis government and corporate worlds. We would (Canadian Teachers’ Federation), Susan Eng like to acknowledge the very valuable finan- (Canadian Association of Retired Persons), cial assistance provided by the Canadian Nick Falvo (Carleton University), Leilani Labour Congress, the Canadian Auto Work- Farha (Canada Without Poverty), Debbie ers, the Canadian Union of Public Employ- Field (FoodShare Toronto), Michael Fitzger- ees, the Canadian Union of Postal Workers, ald, Karen Foster, Martha Friendly (Child- the National Union of Provincial and Gener- care Resource and Research Unit), Colleen al Employees, the Public Service Alliance of Fuller (PharmaWatch), Kathleen Gibson Canada, the Communications, Energy and (Food Secure Canada), Avvy Go (Metro To- Paperworkers Union, and the United Steel- ronto Chinese & Southeast Asian Legal Clin- workers. ic), Tam Goossen (Urban Alliance on Race This document was prepared thanks to Relations), Joe Gunn (Citizens for Public Jus- the generous volunteer contributions of many tice), Sue Hamilton, Dawn Harvard (Native people, including: Women’s Alliance of Canada), Teresa Healy (Canadian Labour Congress), Guillaume Hé- Lynell Anderson (Child Care Advocacy Asso- bert (l’Institut de recherche et d’informations ciation of Canada), Adam Awad (Canadian socio-économiques), Brian Hendry (As- Federation of Students), Ken Babich (Farm sembly of First Nations), Fred Hill, Dennis to Cafeteria Canada), Joanne Bays (Farm to Howlett (Canadians for Tax Fairness), An- Cafeteria Canada), Morna Ballantine (Public

170 Canadian Centre for Policy Alternatives drew Jackson (Canadian Labour Congress), Stanford (Canadian Auto Workers), Steven Norma Kassi (Arctic Institute of Commun- Staples (Rideau Institute), Anne Taylor (Kai- ity Based Research), Cathleen Kneen (Ram’s ros), Simon Tremblay-Pepin (l’Institut de Horn), Julie Lalonde (Feminist Alliance for recherche et d’informations socio-économ- International Action), Jarrett Laughlin (As- iques), Julie-Ann Tomiak (Assembly of First sembly of First Nations), David Lepage (En- Nations), Rebecca Torretti (Feeding My terprising Non-Profits),Joshua Libben (Ri- Family), Monica Townson (Monica Town- deau Institute), Keith Lowe (CCPA Manitoba son Associates), Pat Van Horne (United Board), Emma Lui (Council of Canadians), Steelworkers), Andrew Van Iterson (Green Angella MacEwen (Canadian Labour Con- Budget Coalition), Howie West (Public Ser- gress), Jessica McCormick (Canadian Fed- vice Alliance of Canada), Erin Weir (United eration of Students), Bob McGahey (Can- Steelworkers), Tony Wohlfarth (Carleton Uni- adian Teachers’ Federation), Kate McInturff versity Academic Staff Association), Megan (Amnesty International), Don Mills (Local Yarema (Canada Without Poverty), Christie Food Plus), Anil Naidoo (Council of Can- Young (FarmStart). adians), National Farmers Union, Michael The dedicated staff, volunteers, and research Nicin (Canadian Association of Retired Per- associates at the Canadian Centre for Policy sons), Fraser Reilly-King (Canadian Coun- Alternatives, as always, pull the AFB project cil for International Co-operation), Kate together with no deficit of enthusiasm, gen- Rexe, Laurel Rothman (Campaign 2000: erosity and good humour: Melanie Allison, End Child Poverty in Canada), Toby Sang- Bruce Campbell, Simon Enoch, Lynn Fernan- er (Canadian Union of Public Employees), dez, Ed Finn, Kerri-Anne Finn, Anskia Gin- Sylvain Schetagne (Canadian Labour Con- gras, Trish Hennessy, Iglika Ivanova, Kaley gress), Paul Shaker (Centre for Community Kennedy, Seth Klein, Marc Lee, David Mac- Study), Michael Shapcott (Wellesley Insti- donald, Hugh Mackenzie, Shauna MacKin- tute), Brynne Sinclair-Waters (Food Secure non, Marita Moll, Jason Moores, Jennie Roy- Canada), Vicky Smallman (Canadian Labour er, Tim Scarth, Erika Shaker, Scott Sinclair, Congress), Sri-Guggan Sri-Skanda-Rajah Diane Touchette, Emily Turk, and Armine (Urban Alliance on Race Relations), Isabelle Yalnizyan. St Germain (Farm to Cafeteria Canada), Jim

Doing Better Together: Alternative Federal Budget 2013 171