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Alternative Federal Budget Is Dedicated to the Mem- Ory of Michael Mccracken (1940–2015)

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Alternative Federal Budget Is Dedicated to the Mem- Ory of Michael Mccracken (1940–2015) It’s time to move on climate change It’s time to move on poverty reduction It’s time to move on child care It’s time to move on income inequality It’s time to move on jobs It’s time to move on gender-based violence It’s time to move on soaring tuition It’s time to move on affordable housing It’s time to move on health care It’s time to move on indigenous rights Alternative 2016 Federal Budget It’s time to move on retirement security It’s time to move on equal pay It’s time to move on responsible trade It’s time to move on infrastructure It’s time to move on respectful immigration It’s time to move on progressive taxation It’s time to move on quality public services It’s time to move on clean water It’s time to move on food sovereignty It’s time to move on pharmacare ISBN 978-1-77125-269-0 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 CCPA is an independent policy research organ- ization. This report has been subjected to peer re- view and meets the research standards of the Centre. The opinions and recommendations in this report, and any errors, are those of the authors, and do not necessarily reflect the views of the funders of this report. This year’s Alternative Federal Budget is dedicated to the mem- ory of Michael McCracken (1940–2015). In the 1990s, when the consensus of the decision-making estab- lishment swung toward balanced budgets and reduced government spending, Mike remained unswervingly committed to full employ- ment as the top policy priority, and to the power—and responsibil- ity—of government to achieve this goal. Mike’s contribution to the AFB cannot be overstated. From almost the very start of our exercise in civil society budget-making, Mike lent the considerable weight of his macro forecasting model to valid- ate the AFB’s fiscal and economic plan. In other words, he put his reputation on the line to assert the AFB could meet its goals; that the numbers added up. Mike’s validation provided a major boost to the legitimacy of the AFB, thereby helping to establish the project as a fixture on the fed- eral public policy scene. His endlessly generous support, both per- sonal and institutional, provided methodological rigour to our work, and broadened our perspectives as analysts and people. But obviously Mike’s impact went far beyond the AFB. His tow- ering intelligence provided those of us who worked with him a last- ing legacy on how to approach economic problems—with the best technical skills possible, and based on profoundly humane princi- pals. Mike set a high bar that continues to challenge and encourage us to do better and be better. 7 Introduction 10 Macroeconomic Policy 25 Fair and Progressive Taxation 32 Agriculture 37 Arts and Culture 42 Child Care: Early Childhood Education and Care 48 Cities and Communities 53 Defence 57 Employment Insurance 60 Environment and Climate Change 65 First Nations 71 Gender Equality 79 Health Care 85 Housing and Neighbourhoods 90 Immigration 97 Income Inequality and Poverty 106 International Development 111 Post-Secondary Education 117 Public Services 125 Sector Development Policy 132 Seniors and Retirement Security 137 Trade Policy 144 Water 150 Youth 156 Acknowledgements Introduction The past decade in Canada has taught us to All of this is reversible. The right poli- think small, be cautious, exercise restraint. cies can help create jobs, grow wages, and It’s time to think big again. renew our faith that the future will deliver The federal government is the small- more than the past. est it’s been since before the Second World Without question there is room to grow. War. Federal total spending as a share of Persistently low oil prices do not spell the the economy stands at 13% of GDP, its low- end of our fiscal capacity. They point to the est point in the past 60 years. The last time need to build a more diverse economy and the government was this small we had no do more to redistribute the resources avail- national health care plan, no pension plan, able to us already. In spite of slow growth, no guaranteed income supplement, no em- low oil prices, and the falling value of the ployment insurance. Federal revenues have loonie, corporate profits maintain the gains been diminished by cuts to the corporate tax they held over wages dating back to the rate, regressive income tax policies, and tax 1990s. The distribution of wealth remains evasion on an ever-widening scale. highly uneven, with more of it in the hands The result has been a measurable with- of the 86 people at the top of Canada’s in- drawal of public services and support pro- come spectrum than belongs to the bottom grams upon which many rely, and at pre- 34% of the population. cisely the moment they will need those Canada’s overall tax system has become services the most. The current period of slow so regressive that the top 1% pays a lower growth has crept up on us, but it was not share of income in taxes than the poorest invisible. The previous government mere- 10%. There are many changes we could make ly ignored it to pursue laissez-faire auster- to our tax policies that would make the sys- ity measures instead — policy choices that tem more equitable while generating sub- have narrowed employment opportunities, stantial additional revenues. For example, depressed wages, and shrunk Canada’s so- the AFB proposes to tax income from cap- cial safety net. ital investments at the same rate as employ- ment income, increase the federal corporate It’s Time to Move On: Alternative Federal Budget 2016 7 income tax rate from 15% to 21% (still lower ing, will ensure those cities are livable for than it was in 2006), and increase the gov- everyone. ernment’s capacity to reduce the use of tax Employers are demanding higher levels havens by corporations. These three meas- of training and greater flexibility from young ures alone could raise at least an addition- people entering the workforce. Enrolment in al $20 billion annually. post-secondary education is growing — dem- With that renewed capacity, the AFB onstrating that young people are willing to proposes government policies that could invest in that training. But the cost to stu- deliver a better life for millions of people dents is increasing. The government’s share in Canada. They include increased access of education funding has fallen by nearly to employment insurance for the jobless, 30% over the past three decades, with stu- more help for children and seniors living dents filling the gap by paying ever-rising in poverty, and clean water and safe hous- tuition fees. The collective student debt load ing for First Nations communities that have now totals $28 billion. The AFB would fos- been living without these basic human rights ter a highly skilled workforce, and ease the for far too long. burden on young people entering the job The economic policies of the past dec- market, by eliminating university tuition ade have focused single-mindedly on the fees altogether. resource sector, ignoring the diversity of Those starting families face additional our population and regions. We have be- hurdles. Record-high household debt means come exporters of raw materials, failing to that in most two-parent families both parents utilise the capacity of a highly skilled work- need to work. Single-parent families strug- force to add value and provide innovative gle just to stay above the poverty line. There and sustainable goods and services. Far are a million families in Canada made up of from expanding economic opportunities, two working parents and a child under the an equally tunnel-vision trade policy has age of five, but only enough regulated child made it progressively more difficult to -in care spaces for half of them. Fees for child sist that some domestic upgrading of raw care can consume as much as three months’ resources should happen in Canada. worth of a parent’s median income in most The AFB would invest in infrastructure, Canadian cities outside Quebec. education, and culture in Canadian cities, The AFB would modernize social policy building the urban centres that attract em- to meet the needs of today’s families, in- ployers and jobs. Concerted action on cli- vesting in affordable child care and increas- mate change — including a carbon tax rate ing the number of available spaces. It would that demonstrably reduces emissions — and provide parental leave tailored to the par- investment in green infrastructure will make ent — lowering the threshold for qualifica- Canadian communities healthier and more tion to reflect the fact that mothers are far sustainable. A national housing strategy, more likely than fathers to work part time, including investment in affordable hous- and creating a parallel paternity leave pro- 8 Canadian Centre for Policy Alternatives gram based on the Quebec model, which will be an estimated 50% reduction in the has tripled the number of fathers taking number of seniors living below the poverty parental leave in the province.
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