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Downloading of Respon- from the Federal Government Slashed ALTERNATIVE FEDERAL BUDGET 2013 DOING BETTER TOGETHER ISBN 978-1-77125-059-7 This report is available free of charge at www. policyalternatives.ca. Printed copies may be or- dered through the CCPA National Office for $10. PleaSe make a doNatIoN... Help us to continue to offer our publications free online. 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 progres- sive 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 abil- ity 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 recover- ing 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.
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