Alternative Federal Budget 2017 ISBN 978-1-77125-329-1

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HIGH STAKES,, CLEAR $ CHOICES Alternative Federal Budget 2017 ISBN 978-1-77125-329-1

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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 CCPA is an independent policy research organization. This report has been subjected to peer review 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. 5 Introduction 10 Macroeconomic Policy 27 Taxation 35 Agriculture 40 Arts and Culture 46 Child Care 52 Defence 57 Employment Insurance 63 Environment and Climate Change 69 First Nations 74 Gender Equality 81 Health Care 88 Housing and Neighbourhoods 93 Immigration 99 Infrastructure and Cities 105 International Development 111 Post-Secondary Education 118 Poverty 125 Public Services 131 Sector Development Policy 137 Seniors and Retirement Security 143 Trade: International Trade and Investment 149 Water 155 Youth 161 Acknowledgements

Introduction

We are at a pivotal moment in Canadian High stakes politics. In 2015, a new Liberal government Canadians are giving a lot to the economy, was elected on a wave of public desire for but it is not giving back as much as it could. more: more empathy, more investment, more The median income in Canada was acknowledgement that we can and must $32,800 a year in 2014. Albertans did bet- do better for each other and especially for ter with $41,000 a year while in PEI the medi- the most vulnerable. Some positive steps an income was a low $25,200.1 Lower on the have been taken in this direction. But much spectrum, more than 1 million people in more needs to be done to address Canada’s Canada worked for minimum wage in 2015.2 persistent inequalities and to get the econ- At current rates, if they were lucky enough omy moving. to work 40 hours a week, a minimum-wage This would be a very bad time to re- worker would have brought home a low of treat into the rhetoric of fairness while fall- $22,152 a year in New Brunswick and as ing short on implementing the policies that much as $28,288 in Alberta.3 Miss one week would take us there. Better than nothing — or of work at $10.65/hour, however, and you better than Trump — is not good enough. are officially living below the poverty line. We must be clearheaded and unapologetic The average house price in Canada is in our vision for change or be ready to face closing in on half a million dollars — double the backlash from half-measures or broken that if you live in Vancouver.4 A loaf of fac- promises. More than ever Canadians need tory bread will put you out nearly $5 if you to see action on inequality, climate change, live in Nunavut.5 The cost of enlisting your poverty, and jobs.

High Stakes, Clear Choices: Alternative Federal Budget 2017 5 two-year-old in child care in Toronto now sistently provides greater benefits to high- tops $16,000 a year.6 income earners.18 More than 4.5 million Canadians lived For example, over 90% of the benefit of below the poverty line in 2014, 991,000 of the capital gains tax break goes to the top them children.7 Poverty rates are higher for 10% of income earners; 87% of the benefit women, racialized people, and immigrants, goes to the top 1%.19 Over 10 years, federal and they skyrocket for people living with corporate tax rates have been cut by nearly disabilities, single mothers, and Aborigin- 50%, while those same corporations amassed al people. More than half of all First Nation over $500 billion in excess cash.20 children live in poverty.8 In 2016, the federal government took One in eight Canadians regularly experi- steps toward narrowing this income and ence food insecurity and more than 800,000 wealth gap. It made significant investments people visit a food bank each month.9 Near- in housing and clean water for First Na- ly 100 First Nation communities continue to tion communities, for example, and im- go without clean drinking water.10 plemented the Canada Child Benefit (CCB), More than a third of Inuit households which should reduce child poverty in Can- live in overcrowded or unsafe housing.11 ada by 14%. The government also introduced And 3.5 million Canadians lack basic drug a 10% increase to the Guaranteed Income coverage, leading many to simply go with- Supplement (GIS) top-up for poor single sen- out important prescription medication.12 iors, which we estimate will reduce poverty Canada is on track to miss its green- among seniors by 5%. house gas emissions target by a mile, leav- While these are positive measures, all of ing future generations to foot the bill of cli- them advocated in past Alternative Feder- mate change. al Budgets, they do not get us nearly close Canadian household debt exceeded the enough to the goal of more equally shared size of our economy (GDP) for the first time prosperity. last year. The average Canadian owes $21,348 Economists and financial institutions in consumer debt (not including mortgage around the world have recognized the detri- debt).13 Canada’s farmers are now carrying mental effects of inequality on social co- over $92 billion in total debt.14 Public stu- hesion, health, and tolerance for ever-higher dent debt in Canada had reached $28 bil- levels of poverty. This year’s AFB demon- lion at last count.15 strates that the money and tools are there On the other side of the divide, the two to transform Canada’s economy so that it is richest Canadians hold the same amount working for everyone. of wealth as the poorest 30% of the population.16 The 100 highest-earning CEOs in Clear choices Canada took home an average of $9.5 million each in 2015.17 And our tax system con- The AFB would establish a federal minimum wage of $15 an hour, indexed to inflation, so

6 Canadian Centre for Policy Alternatives that no full-time worker finds themselves liv- ous people living off reserve, people with ing in poverty at the end of a 40-hour week. physical disabilities, and seniors). By lowering the eligibility requirement for The AFB would increase access to pri- employment insurance, our plan would pro- mary health care and mental health care tect an additional 250,000 workers in pre- while introducing a national pharmacare carious, contract, and part-time jobs from program. This would allow more than 3.5 downturns in the economy. million Canadians to fill prescriptions that The AFB recognizes the diversity of Can- they would not otherwise be able to afford. ada’s workforce and would rebalance invest- The AFB would support struggling fam- ments across different sectors of the econ- ilies by providing access to affordable child omy. Young workers would receive support care and home care, and ensuring the people through the creation of paid internships and who provide those services are paid a living greater access to apprenticeships. wage. It would eliminate tuition for post- Investments in physical infrastructure secondary education and improve funding would be dramatically larger and immedi- for First Nations students. ately implemented. This money would be Parents would no longer need to trade more responsive to community needs and in their own financial security to provide for create jobs in predominantly male employ- their children’s education. New graduates ment sectors, while investments in care ser- would no longer enter the workforce with vices would create jobs in predominantly crippling debt. The 10,000 First Nations female employment sectors. students on waiting lists for post-second- Investments in Farm Credit Canada will ary education would be able to start school. allow a new generation of farmers to con- Some of the money for these commit- tinue without unmanageable debt loads. ments will come from ending the special The AFB would direct funds raised tax treatment Canada gives to domestic and through carbon taxes to low-income house- foreign corporations. For example, the AFB holds, and to training for those affected by would tax capital gains at the same rate as the shift to a greener economy. It would in- we tax employment income or profits, creat- vest in making existing industries more sus- ing an additional $10 billion in government tainable, and in supporting new industries, revenue. It would apply a 1% withholding creating green-collar jobs and ensuring a tax on Canadian assets held in tax havens, just transition for workers and their families. generating over $2 billion a year. The AFB would ensure the federal gov- The AFB would eliminate provisions ernment helps shoulder the burden of the in trade agreements that allow foreign in- rising cost of living by increasing investments vestors to sue the Canadian government for in basic necessities. It would build 10,000 lost business revenues that result from pub- new units of affordable housing each year, lic interest regulation and other democrat- with an additional 5,000 units for popula- ic decisions. This could be a key Canadian tions with high housing needs (e.g, Indigen- demand in looming NAFTA renegotiations.

High Stakes, Clear Choices: Alternative Federal Budget 2017 7 Finally, governments need to do a better Notes

job of explaining who benefits from public 1 Statistics Canada. Table 206-0053 - Distribution of em- spending. Growth in the economy is mean- ployment income of individuals by sex and work activ- ingless if it is enjoyed only by a lucky few. ity, Canada, provinces and selected census metropolitan areas, annual, CANSIM. The AFB demonstrates how its measures 2 Diane Galarneau and Eric Fecteau. (2014). The Ups would impact households across the in- and Downs of Minimum Wage. Ottawa: Statistics Canada. come spectrum. 3 Government of Canada. “Hourly Minimum Wages in The bottom 90% of families (the vast ma- Canada for Adult Workers.” Online: http://srv116.services. jority who make less than $170,000 a year) gc.ca/dimt-wid/sm-mw/rpt2.aspx?lang=eng&dec=1

will be better off under our plan. Families 4 Canadian Real Estate Associtaion. “National Aver- making between $63,000 and $170,000 a age Price Map.” Online: http://www.crea.ca/housing- market-stats/national-average-price-map/ year will pay slightly more taxes but receive new and better services like pharmacare, 5 Nunavut Bureau of Statistics. Nunavut Food Price Survey. Online: http://www.stats.gov.nu.ca/en/Economic%20 free tuition, and affordable child care. The prices.aspx AFB will lift one million Canadians out of 6 David Macdonald and Martha Friendly. (2016). A poverty, reducing the overall poverty rate Growing Concern: 2016 Child Care Fees in Canada’s Big from 12% to 9%. Cities. Ottawa: Canadian Centre for Policy Alternatives. Our country is diverse and the challen- 7 Statistics Canada. Table 206-0041 - Low income statis- ges we face are complex. The solutions to tics by age, sex and economic family type, Canada, provinces and selected census metropolitan areas (CMAs), our problems don’t fit in a tweet. However, a annual, CANSIM (database). The low-income measure more equal and sustainable society, a more after tax is used as the poverty line.

shared prosperity, is within our reach. 8 David Macdonald and Daniel Wilson. (2016). Shame- If 2016 taught us anything it is that people ful Neglect: Indigenous Child Poverty in Canada. Ottawa: Canadian Centre for Policy Alternatives. are not happy with the status quo. The consequences of not taking action now to fix 9 V. Tarasuk, A. Mitchell, and N. Dachner. (2015). House- hold food insecurity in Canada, 2013. Toronto: Research to Canada’s inequalities — through a fairer Identify Policy Options to Reduce Food Insecurity (PROOF). tax system, renewed physical and social Online: http://nutritionalsciences.lamp.utoronto.ca/ infrastructure, and enhanced public servi- wp-content/uploads/2015/10/foodinsecurity2013.pdf ces — will be severe. 10 Health Canada. “Drinking Water Advisories in First Nations Communities.” Ottawa. Online: http://www. The rhetoric of fairness has never been hc-sc.gc.ca/fniah-spnia/promotion/public-publique/ enough. As recent events have shown us, water-dwa-eau-aqep-eng.php

the decision to cling to words rather than 11 Statistics Canada. National Household Survey 2011. action to address inequality can have un- Ottawa.

tenable consequences. The stakes are high, 12 Julie White. (2016). A National Public Drug Plan For but the choices are clear. All. Ottawa: Canadian Health Coalition. 13 Trans Union of Canada. “TransUnion Q3 2016 Indus- try Insights Report.” Burlington.

14 Statistics Canada. CANSIM Table 002-0008 - Farm debt outstanding, classified by lender.

8 Canadian Centre for Policy Alternatives 15 Statistics Canada. Survey of Financial Security, 2014. 19 Brian Murphy, Mike Veall, and Michael Wolfson. (2015). “Top-End Progressivity and Federal Tax Prefer- 16 Oxfam Canada. (2017). “An economy for the 99 per- ences in Canada: Estimates from Personal Income Tax cent.” Online: https://www.oxfam.org/en/research/ Data.” Canadian Tax Journal 63, no. 3. economy-99 20 Statistics Canada. CANSIM Table 378-0121: National 17 Hugh Mackenzie. (2017). Throwing Money at the Prob- Balance Sheet Accounts, quarterly (dollars). See also: lem: 10 Years of Executive Compensation. Ottawa: Can- Jordan Brennan. (2015). Do Corporate Income tax Rate adian Centre for Policy Alternatives. Reductions Accelerate Growth. Ottawa: Canadian Cen- 18 David Macdonald. (2016). Out of the Shadows: Shin- tre for Policy Alternatives. ing a light on Canada’s unequal distribution of federal tax expenditures, Canadian Centre for Policy Alternatives.

High Stakes, Clear Choices: Alternative Federal Budget 2017 9 Macroeconomic Policy

Slow growth is a choice, a bad one before tapering off in the following years (see Table 2). Slow growth continued through 2016. The The Alternative Federal Budget (AFB) second quarter of 2016 actually saw negative chooses to do more. Our basic assumption growth due to the Alberta wildfires. Thank- is that employing people is good for eco- fully, we avoided another recession. But as nomic growth. The AFB therefore focus- disruptions in the Canadian economy are to es spending in areas with the highest job be expected, and slow growth forecasted for growth potential, including physical infra- at least the short term (economists expect structure, health care, and child care. The real GDP growth of 2% in 2017, see Table 2), investments we make would lift nominal recession is not out of the question. GDP growth back up to pre-recession levels That said, slow growth is a choice for Can- of 5.4% and 4.7% respectively in years one ada, not an economic necessity. There are and two — the result of creating hundreds things the government can do to speed up a of thousands of jobs (see Table 3). full recovery and the longer we wait, the larger the cost will be in terms of employment and wage growth. The Liberal government A dangerous way has shown an interest in using fiscal policy to balance the books to spur growth. However, its expansionary What little growth Canada has experienced instincts have been fairly muted. Expected since the 2008 recession has been financed deficits never go higher than $27.8 billion by rapidly expanding private debt. The ex- (in 2017-18) in Finance Canada’s base case

10 Canadian Centre for Policy Alternatives Figure 1 Debt-to-GDP by sector3

120%

Non-Financial Corporations 100%

80%

Households and Non-Proﬁts 60% AFB Federal Government Federal Government 40% Planned Federal Provincial Governments Government 20%

Local Governments 0% 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

Source Cansim 378-0121, 385-0032, 380-0063, Update of Economic and Fiscal Projections (November 2016), and author’s calculations.

pansion of that debt makes those sectors could have been — but wasn’t — used to make of the economy much more vulnerable to productive investments in machinery and interest rate fluctuations as well as asset equipment. Instead, this corporate money price changes. Households are way outside was mostly consumed by non-productive of their historical debt range: total mortgage mergers and acquisitions. and consumer credit surpassed Canada’s The provinces are also hitting all-time GDP in 2016 for the first time. For compari- high debt levels worth 43% of national GDP, son, the household debt-to-GDP ratio was which is just outside the historic range. Since 54% in 1990 (see Figure 1). 2015, the provinces have held more debt There are no signs of this expansion than the federal government, a situation stopping. If anything, the trend seems to that does not appear to be reversing itself. have accelerated since the 2010–2015 pla- Historically, the provinces have held much teau. In the last 12 months alone households less debt than the federal government. In expanded their debt load by $77.1 billion.1 fact, the federal government is at the low Likewise, non-financial corporations end of its historical debt-to-GDP range, sit- hold total debt worth 120% of GDP after a ting currently at 39%. That includes all debt, substantial two-year borrowing binge. This not just accumulated deficits as presented in is well above their historical debt-to-GDP budgets. Municipalities have little debt and range of 80% to 100%. And it is debt that

High Stakes, Clear Choices: Alternative Federal Budget 2017 11 Figure 2 Employment rate and AFB impact

64% AFB Plan

63%

62%

Employment Rate Federal 61% Government Plan

60%

59% 2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

Source Cansim 282-0087, Update of Economic and Fiscal Projections (November 2016), and author’s calculations.

operate mostly on a cash basis, as they gen- However, since the 2009 recession, the op- erally cannot run operating budget deficits. posite has occurred. The unemployment The federal government’s current plan rate has fallen, but relatively fewer people is essentially to maintain the present fed- are looking for work. It is more helpful in eral debt-to-GDP level for the next three this context to study the employment rate, years. The AFB also maintains that level for since it will show the proportion of work- the foreseeable future, as shown in Table 3. ing-age Canadians who have a job irrespec- We can do this while running higher defi- tive of who is and isn’t looking. cits thanks to higher growth in the econ- The employment rate is lower today than omy under our plan. The result is a stable it was at the worst point of the Great Reces- ratio similar to what bank economists have sion, as shown in Figure 2. The federal gov- endorsed.2 ernment’s current plan has this rate remaining at its present all-time low for another year and then slowly climbing to where em- Weak GDP growth hides ployment sat in 2012. There appears to be a weaker job market no plan to get anywhere near the employ- Intuitively, as the unemployment rate falls, ment levels of the mid-2000s. more Canadians decide to enter the job mar- The AFB, on the other hand, would sub- ket presuming jobs will be easier to find. stantially boost the employment rate over

12 Canadian Centre for Policy Alternatives Figure 3 Federal total expenditures as a share of GDP and AFB impact

60%

50%

40%

30%

AFB Plan 20%

Federal 10% Government Plan

0% 1931 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2019

Source Statistics Canada catalogue 11-516-X, Fiscal reference tables, Update of Economic and Fiscal Projections (November 2016), and author’s calculations.

several years, as shown in Figure 2 and Table ing much larger than they were then. One 3. Actually, we improve on the federal base of the reasons the federal government has case by 460,000 jobs by year three. The un- had a limited impact on economic and job employment rate hits 6.4% under our plan, growth is that it is simply too small, by his- not because people have giving up look- torical standards, for the task. ing for work, but because they found a job. In comparison, the AFB spends $69.8 billion more in 2019 than the federal government’s current plan. While at first glance Too small to make a difference this may seem like a lot of money, federal Federal expenditures as a share of the econ- expenditures would remain near the bot- omy are close to all-time lows, as shown in tom of their historical range. In fact, the Figure 3. Under the federal government’s AFB plan is thriftier, in relative terms, than plan they will hit a new record low of 14% any federal budget between 1970 and 1996. by 2019. To put that number in perspective, Despite the massive changes brought in by by the time Canadians go to the polls again the AFB, with many programs designed to government spending will be lower than at expand over time, the net result is a falling any time since 1939, despite federal respon- expenditure-to-GDP ratio, as new growth sibilities — for old age security and universal more than offsets new expenditures. health care, to name just two examples — be-

High Stakes, Clear Choices: Alternative Federal Budget 2017 13 Figure 4 Federal revenue as a share of GDP and AFB impact

30%

25%

20% AFB Plan

15%

Federal Government 10% Plan

0% 1931 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2019

Source Statistics Canada catalogue 11-516-X, Fiscal reference tables, Update of Economic and Fiscal Projections (November 2016), and author’s calculations.

On the other side of the ledger, federal our tax reform plan is focused on the high- revenues are also near all-time lows rela- est earners, who have seen massive wage tive to GDP. The current plan proposes no increases in the past 20 years. Despite this change on this front. Despite the federal improvement to the distribution system, government introducing some measures federal revenues as a share of GDP will sit to raise tax revenue, such as the new top in the middle of their historical range, and tax bracket, that money was spent to lower be nowhere near as high as they were in the taxes mostly for individuals making more 1970s or 1980s. than $89,000 a year. The corporate tax cuts The federal government’s current plan of the late 1990s and early 2000s substan- of holding deficits at 1% of GDP over the tially reduced tax revenues, which never re- next three years is modest by historical stan- covered. The present federal plan is to keep dards. Even though the 2009 deficit of 3.5% tax revenues at a level not seen since 1949. of GDP was considered extraordinary at the The AFB boosts revenues by $55.5 billion time, it was quite ordinary compared to any a year by 2019-20. A sixth of that amount is year between 1975 and 1995. Likewise, the due to more Canadians working, and there- AFB increases both revenues and expendi- fore paying taxes, as opposed to tax changes tures by billions of dollars, but both would per se (see Table 3 and the Taxation chap- sit at the low end of their historic ranges. As ter). Improved revenue recovery through a result, the AFB deficit of $43.0 billion in

14 Canadian Centre for Policy Alternatives Figure 5 Federal deficit as a share of GDP and AFB impact

10%

5% AFB Plan 0%

Federal -5% Government Plan -10%

-15%

-20%

-25%

-30% 1931 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2019

Source Statistics Canada catalogue 11-516-X, Fiscal reference tables, Update of Economic and Fiscal Projections (November 2016), and author’s calculations.

2017-18, or 2% of GDP, is also small by his- ment spending based on who is most likely torical standards, and compared to the size to use specific programs and where those Canada’s economy it is little changed from people sit on the income spectrum. Much the current plan. of the tax/transfer distributional modelling (and costing) is performed using Statistics Canada’s tax modelling software, the So- Who gains and who pays cial Policy Simulation Database and Mod- The AFB has been striving for some time to el (SPSD/M).4 Our program distribution em- better understand and measure the distri- ploys proxies for benefit and distributes butional implications of federal budgets. If expenditures accordingly. our small group can perform these types of Under our plan, the bottom half of Can- analyses, much larger federal departments adian families — those making under $63,000 with more resources can as well. Publishing a year before taxes — see higher transfers the gender, income, and poverty distribu- net of taxes. They are better off from a pure tion of budgets makes them more transpar- income perspective. Families with gross ent and easier to understand for Canadians. incomes between $63,000 and $126,000 The distribution of AFB impacts includes (deciles six through eight) do pay more in not only cash changes due to the tax/trans- taxes net of transfers, but it amounts to less fer system, but also the benefits of govern- than $1,000 per family. The top 5% of fam-

High Stakes, Clear Choices: Alternative Federal Budget 2017 15 Figure 6 Distribution of AFB impacts (2017)

$6,000

$4,000

$2,000

$-2,000

$-4,000

$-6,000

$-8,000 Tax/Transfer ($ Per Family) Program Spending ($ Per Family) Total Impact ($ Per Family) $-10,000

$-12,000 1 2 3 4 5 6 7 8 9 9.5 10 Income Deciles

Source Deciles are based on economic family total income (before taxes but after transfers), SPSDM 22.3 glass box, and author’s calculations.5

ilies — those with incomes over $218,000 — see The income group that benefits the most their taxes net of transfers rise by an average from the AFB is the lowest-earning 10% of of $11,300 per family. This distribution can Canadian families. New transfers, such as be contrasted with federal programs such the GST top-up of $1,800 per person and as family income splitting, which provided boosting the Guaranteed Income Supple- the largest net gains to the richest families. ment to $1,000 per senior, are targeted to Despite paying slightly more in taxes this group, as are our improvements to so- most families are better off under the AFB cial assistance. Changes in the tax code, in plan. The services and programs they would particular closing loopholes for the rich, receive are worth more than the increase predictably cost the richest 5% of families in their tax bills. For example, our plan the most in net tax/transfer changes. to eliminate university tuition fees, make On the programs side, free tuition and child care more available and affordable, help for the homeless aid Canada’s low- and introduce national pharmacare, among est income decile. However, the benefits of other programs, will provide a net benefit new programs are not restricted to the low- for 90% of Canadian families (those mak- est earners. Many of the middle and upper ing under $170,000 a year), as shown by the income deciles gain substantially from new green line in Figure 6. AFB programs, especially free tuition, national pharmacare, and improved health

16 Canadian Centre for Policy Alternatives Table 1 AFB poverty impact (2017 LIM-AT)

Number in Poverty (000s) Number In Poverty After AFB (000s) Lifted out of Poverty by AFB (000s) Children (<18 yrs) 753 476 277 Adults (18–64 yrs) 2,615 2,222 393 Seniors (≥65 yrs) 830 490 340 All 4,198 3,189 1,010

Source Poverty rate defined by LIM-AT, SPSDM 22.3 glass box, and author’s calculations.7 Note Totals may not add up due to rounding.

Figure 7 AFB impact on poverty rates (2017)8

20%

10%

-10%

-20% Children (<18 Years) Seniors (=>65 Years) -30% Adults (18–64 Years) All -40%

-50% Pre-AFB Poverty Rate Post-AFB Poverty Rate Poverty Rate Change

Source Poverty rate defined by LIM-AT, SPSDM 22.3 glass box, and author’s calculations.9

care, as shown by the program spending The fully implemented AFB would lift just bars of Figure 6. over one million Canadians out of poverty, as The AFB illustrates what a transparent shown in Table 1. This breaks down to 277,000 poverty analysis would look like when ap- children, 393,000 adults, and 340,000 sen- plied to federal budget measures. The fed- iors. Two-thirds of all seniors in this scen- eral government has made some initial ario are women, reducing the poverty rate attempts to do the same, but they have ex- among that group from 15.6% to 8.8%. aggerated the impacts.6

High Stakes, Clear Choices: Alternative Federal Budget 2017 17 Figure 8 AFB impact on depth of poverty (2017)

With Kids, With Kids, With Elderly, With Elderly, Other, Other, Single parent 2+ Adult 1 Adult 2+ Adult 1 Adult 2+ Adult All $0

$-2,000

$-4,000

$-6,000

$-8,000

$-10,000

$-12,000 Pre-AFB Average Depth of Poverty Post-AFB Average Depth of Poverty $-14,000

Source Poverty rate defined by LIM-AT, SPSDM 22.3 glass box and author’s calculations10

The largest drop in poverty is experi- The AFB has a substantial impact on enced by children and seniors, which both low incomes, even for families that are not see their poverty rates fall by two-fifths. This lifted completely out of poverty, as shown is due primarily to the new GST top-up of up in Figure 8. For example, our plan reduces to $1,800 per person and GIS improvements the depth of poverty for single-parent fam- of up to $1,000 per senior (see the Poverty ilies from $8,890 to $6,460, an improve- and Inequality and the Seniors and Retire- ment of $2,430 a family. The average depth ment chapters). The aggregate effect of the of poverty for two-parent families and other AFB is to reduce the poverty rate from 11.6% households with more than one adult is re- to 8.8%. duced by $1,440 and $1,010 respectively. For An equally important measure of poverty elderly families with more than one adult the is the average amount by which a family is average depth of poverty worsens, but this below the poverty line. For instance, a sin- is because so many seniors near the poverty gle additional dollar of income (from em- line are lifted above it, thereby eliminating ployment or government transfers) could this offsetting effect on the average. move a family from below the poverty line The federal government has committed to above it, but it would make no practical to conducting a gender-based analysis of difference in their lives. its 2017 budget.11 The AFB presents a model for how this could look. Figure 9 illustrates

18 Canadian Centre for Policy Alternatives Figure 9 Gender distribution of AFB tax and transfer measures

Transfers GST top up Male Social Assistance Female GIS changes

CCB

All Transfers Tax Impact RRSP cap Cancel Tuition tax credit Cancel stock option deduction Make capital gains taxable Cancel public transit tax credit Cancel ﬂow through shares deduction Cancel third bracket rate change All Tax changes 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Source SPSDM 22.3 glass box and author’s calculations.12

the breakdown by gender of who benefits top-up, which is paid to the lower earner, and who pays for the AFB’s major tax and low-income single adult men would benefit transfer changes. more, as there are almost no other income Most of the AFB’s transfer changes bene- supports for this group. Across all transfers fit women more than men. The Canada Child women benefit slightly more, but the split Benefit (CCB) indexation in particular almost is surprisingly even. exclusively benefits women. This is because Since men are heavily overrepresented the CCB is paid to the lower earner in the among high earners they pay more in taxes family, which is almost always a woman in a under the AFB plan. Our lowering of the heterosexual couple. The GIS improvements RRSP cap, cancellation of stock option de- go disproportionately to women, since sen- ductions, full inclusion of capital gains, the ior women are much more likely to live in cancellation of the middle tax bracket change poverty in the first place. and cancellation of the flow-through shares On the other hand, the new GST top- deduction are particularly skewed toward up of up to $1,800 per person is relatively high-income men, who are far more likely evenly shared. While women would bene- to use these tax breaks. Cancellation of tu- fit from the children’s portion of the GST ition and public transit deductions affect

High Stakes, Clear Choices: Alternative Federal Budget 2017 19 men and women roughly evenly, although Notes

women are slightly more affected. 1 Cansim 378-0121 up to Q3 2016. Loans including households and non-profit institutions serving households.

Conclusion 2 Bill Curry. “Morneau vows prudent budget as Can- ada awaits U.S. policy changes.” Globe and Mail, Janu- ary 13, 2017. This analysis has shown how the measures proposed by the AFB would substantial- 3 Debt is “Core Debt” as defined by the Bank of Inter- national Settlements (http://www.bis.org/statistics/ ly strengthen employment and economic totcredit.htm) including debt obligations beyond just growth, reduce poverty, and improve equal- the accumulated deficit generally contained in govern- ity within a reasonable fiscal framework. ment debt-to-GDP figures, as presented in Tables 2 and 3. GDP growth and employment growth in par- 4 This analysis is based on Statistics Canada’s Social Policy Simulation Database Model 22.3. The assump- ticular would be much larger in our scenar- tions and calculations underlying the simulation results io than in the federal government’s current were prepared by David Macdonald and the responsibil- plan. And these macroeconomic changes ity for the use and interpretation of these data is entirely that of the authors. do not even begin to describe the dramatic improvements in programs as outlined in 5 See endnote 4. the AFB’s 22 chapters and summarized in 6 Jordan Press. “Liberal government oversold child benefit’s impact on poverty rates, documents suggest.” Table 4 below. The Canadian Press, December 23, 2016. The AFB also provides a template for 7 See endnote 4. federal and provincial governments in- 8 The LIM-AT line was estimated for 2017 such that the terested in determining the distributional aggregate poverty rate in 2017 matches the 2014 rate if impact of their proposals. Our analyses of the GIS and CCB changes between 2014 and 2017 were the effects of budget measures on poverty, included in the 2014 year. gender, and income distribution are almost 9 See endnote 4.

entirely absent from present government 10 See endnote 4.

budgets, despite the much greater resour- 11 Finance Canada. A Plan for middle class progress: ces at their disposal. fall economic statement 2016. November 2016, p. 37.

In short, the AFB presents a detailed and 12 See endnote 4.

eminently affordable plan for how the fed- 13 Finance Canada. Update of Economic and Fiscal Pro- eral government could deliver on its prom- jections. November 2015. ise of improving the lives of all Canadians and ensuring the national wealth is shared more equally.

20 Canadian Centre for Policy Alternatives Table 2 Base Case (Finance Canada)

Macroeconomic Indicators (mil) 2016 2017 2018 2019 Nominal GDP $2,027,000 $2,114,000 $2,192,000 $2,280,000 Real GDP growth 1.4% 2.0% 1.8% 1.8% GDP inflation 0.6% 2.2% 1.8% 2.1% Nominal GDP growth 2.0% 4.3% 3.7% 4.0% Participation rate 65.8% 65.8% 66.2% 66.5% Labour force 19,566 19,750 20,069 20,361 Employed (000s) 18,224 18,387 18,704 18,997 Employment rate 61.3% 61.3% 61.7% 62.0% Unemployed (000s) 1,342 1,363 1,365 1,364 Unemployment rate 6.9% 6.9% 6.8% 6.7%

Budgetary Transactions (mil) 2016-17 2017-18 2018-19 2019-20 Revenues $291,100 $303,300 $313,200 $326,200 Program spending $291,300 $306,500 $313,200 $317,200 Debt service $24,900 $24,600 $25,900 $28,200 Budget balance (surplus/deficit) -$25,100 -$27,800 -$25,900 -$19,200 Closing debt (accumulated deficit) $642,000 $669,800 $695,700 $714,900

Budgetary Indicators as a Percentage of GDP Revenues/GDP 14.4% 14.3% 14.3% 14.3% Program spending/GDP 14.4% 14.5% 14.3% 13.9% Budgetary balance/GDP -1.2% -1.3% -1.2% -0.8% Debt/GDP 31.7% 31.7% 31.7% 31.4%

High Stakes, Clear Choices: Alternative Federal Budget 2017 21 Table 3 AFB Case

2016-17 2017-18 2018-19 2019-20 Nominal GDP $2,027,000 $2,136,000 $2,236,000 $2,329,000 Nominal GDP growth 2.0% 5.4% 4.7% 4.2%

Revenues (mil) Base case $291,100 $303,300 $313,200 $326,200 Net AFB revenue measures $41,400 $43,600 $45,900 Additional tax revenue due to higher GDP $3,200 $7,200 $9,600 Total $291,100 $347,900 $364,000 $381,700

Program Spending (mil) Base Case $291,300 $306,500 $313,200 $317,200 Net AFB program measures $59,600 $65,300 $69,800 Total $291,300 $366,100 $378,500 $387,000

Debt service $24,900 $24,800 $26,300 $28,800 Budget balance (surplus/deficit) -$25,100 -$43,000 -$40,800 -$34,100 Closing debt (accumulated deficit) $642,000 $685,000 $725,800 $759,900

Budgetary Indicators as Percentage of GDP Revenue/GDP 14.4% 16.3% 16.3% 16.4% Program spending/GDP 14.4% 17.1% 16.9% 16.6% Budgetary balance/GDP -1.2% -2.0% -1.8% -1.5% Debt/GDP 31.7% 32.1% 32.5% 32.6%

AFB Employment Impact 2016 2017 2018 2019 AFB jobs created (000s) 277 450 460 Population (000s) 29,718 30,015 30,315 30,618 Participation rate 65.8% 66.7% 67.6% 67.9% Labour force (000s) 19,566 20,020 20,493 20,790 Employed (000s) 18,224 18,664 19,154 19,457 Employment rate 61.3% 62.2% 63.2% 63.5% Unemployed (000s) 1,342 1,356 1,339 1,333 Unemployment rate 6.9% 6.8% 6.5% 6.4%

Note The AFB merely modifies the base case as presented in the most recent economic update in the fall of 2016; it does not start from different macroeconomic assumptions. As such, assumptions of GDP, employment, and expenditure and revenue growth are identical between the base case and the AFB, except where these are explicitly changed by the AFB. The AFB case includes all costed items in the AFB that impact federal finances as laid out in summary in Table 4.

22 Canadian Centre for Policy Alternatives Table 4 AFB Actions ($mil)

2017-2018 2018-19 2019-20 Agriculture Support farmers in climate change adjustments 250 250 250 Restore Canadian Grain Commission funding 20 20 19 Rebuild government research capacity 100 100 100

Arts & Culture Increase and extend Canada Cultural Spaces Fund 188 188 Showcasing Canada Program 25 25

Childcare Indigenous community child care development 100 Provincial child care framework development 500 Expand affordable child care 1,600 2,600

Defense International peacekeeping training centre 5 5 5 Cancel purchase of F-35s in place of Super Hornets (400) (400) (400)

Employment Insurance Keep EI premiums at $1.88 per $100 of insurable earnings (3,500) (3,500) (3,500) Additional eight weeks of leave for non-birthing parents 600 600 600 Low-income supplement 900 900 900 Establish uniform EI entry of 360 hours 2,000 2,000 2,000

Environment and Climate Change Remove federal fossil fuel subsidies (1,500) (1,500) (1,500) Global climate financing 1,000 1,000 1,000 Renew funding for the Clean Energy Fund 1,000 1,000 1,000 Re-establish home energy efficiency retrofit program 400 400 400 Terrestrial protected areas 145 95 95 Working landscapes 123 119 146 Ocean conservation 146 146 146

First Nations Language revitalization 154 154 154 Invest in First Nations child and family services 155 155 155 Invest in First Nations housing, water, and infrastructure 1,900 1,900 1,900 Investments in K-12 on-reserve schools 653 653 653 Investments in PSSSP for post-secondary students 142 142 142 Health Accord for First Nations 1,581 1,203 1,208

High Stakes, Clear Choices: Alternative Federal Budget 2017 23 Gender Equality National plan to address violence against women 500 500 500 Increase funding for Status of Women Canada 100 100 100 Implement equal pay in federal government 10 10 10

Health Care Health Accord with 6% annual escalator 632 1,561 2,458 National pharmacare 3,390 3,831 4,597 New long-term and residential care spaces 2,300 2,300 2,300 Train 3,500 new mental health professionals 100 100 150

Housing and Neighbourhoods Preserve existing social housing stock 1,000 1,000 1,000 Investment in affordable housing funding 1,000 1,000 1,000 Investment in supportive housing 1,000 1,000 1,000

Immigration Foreign credential recognition and training 100 100 100 Improve support for refugees 50 50 50

Infrastructure and Cities Community infrastructure transfer 5,400 5,400 5,400 Support for non-profit business models 10 10 10 Support community economic development investment funds 15 15 15 Neighbourhood revitalization program 100 100 100

International Development Boost development funding toward 0.7% of GNI 760 1,642 2,664

Post-Secondary Education Eliminate the federal tuition tax credit (1,195) (1,195) (1,195) Cancel the Canada Job Grant (300) (300) (300) Cancel RESP (140) (140) (140) Eliminate the student loan interest tax credit (45) (45) (45) Reduce the scientific research and experimental development credit by 0.8% (25) (25) (25) Core funding for post-secondary education 5,480 5,480 5,480 Eliminate tuition fees for all students 3,590 3,590 3,590 Improve labour market Information 15 15 15 Create national labour market partners forum 5 5 5 Training for unemployed Canadians who do not qualify for EI 300 300 300 Improve union-based apprenticeship training 125 125 125

24 Canadian Centre for Policy Alternatives Harmonize provincial-territorial apprenticeship training 15 15 15 Eliminate interest on student loans 283 283 283 Funding for PSE research and scholarships 146 146 146 English as an additional language (EAL) training 53 53 53

Poverty Poverty reduction transfer to provinces 4,000 4,000 4,000 Create a GST top-up 5,400 5,400 5,400 Index CCB to inflation 730 1,460 2,190

Public Services Assess the budget cut impacts and restore programs where needed 500 2,000 2,000

Sectoral Development Policy Sectoral development councils 50 50 50 Enhance value-added production in key sectors 450 450 450

Seniors and Retirement Security Index OAS to average industrial wage growth 60 66 70 Limit RRSP contributions to $20,000/year (950) (950) (950) Cancel pension income splitting (1,280) (1,344) (1,411) Increase GIS top-up for coupled and single seniors 1,990 1,990 1,990

Taxation Eliminate stock option deduction (670) (670) (670) Stop abuse of small business tax rate (500) (500) (500) Equalize capital gains treatment (personal) (5,000) (5,000) (5,000) Equalize capital gains treatment (corporate) (5,000) (5,000) (5,000) Lifetime cap on TFSA contributions at $50,000 (100) (100) (100) Cancel boutique tax credits (200) (200) (200) Eliminate flow-through mineral exploration credit (125) (125) (125) Eliminate corporate meals and entertainment expense (400) (400) (400) Limit CEO pay deductions to $1 million/person (150) (175) (200) Increase corporate income taxes from 15% to 21% (6,000) (7,500) (9,000) Small business tax rate to 15% (1,180) (1,770) (2,360) Economic substance test for offshore subsidiaries (400) (400) (400) Capping interest payments to offshore subsidiaries (200) (200) (200) Tax havens withholding tax (2,000) (2,000) (2,000) Taxing foreign e-commerce corporate profits (600) (600) (600) End GST/HST exemption for foreign e-commerce companies (400) (400) (400) Financial activities tax (5,000) (5,100) (5,202)

High Stakes, Clear Choices: Alternative Federal Budget 2017 25 Inheritance tax on $5-million (and up) estates (2,000) (2,000) (2,000) Cancel second income tax bracket change (20.5% to 22%) (2,800) (2,800) (2,800)

Water National public water and wastewater fund 6,500 6,500 6,500 Implementation of wastewater systems effluent regulations 1,000 1,000 1,000 Water infrastructure aid for small municipalities 100 100 100 Water operator training, public sector certification and conservation programs 75 75 75 Assess environmental impact of energy, tar sands, mining developments 50 50 50 Reinstate cut water programs at Environment 50 50 50 and Climate Change Canada and Fisheries and Oceans Canada Protect Canada’s Great Lakes and freshwater supply 500 950 950 Establish water quality and quantity monitoring frameworks 109 109 109 Groundwater protection plan 3 3 3 Review of virtual water exports 1 1 1

Youth Youth labour market planning board 30 30 30 Renewal of federal-funded internships 300 300 300 Statistics Canada tracking of unpaid internships and NEET 2 2 2 Proactive Labour Code enforcement 10 10 10

Total AFB Expenditure Changes 59,562 65,281 69,782 Total AFB Revenue Changes (41,360) (43,639) (45,923)

26 Canadian Centre for Policy Alternatives Taxation

ALTERNATIVE FEDERAL BUDGET TAXATION 2017

¢ Our tax system has become overly complex and ¢ Eliminate regressive and ineffective tax riddled with loopholes and provisions that worsen loopholes. inequalities. ¢ ¢ Canada’s last comprehensive tax review (the End corporate tax dodging and make Carter commission) happened 51 years ago. corporations pay their fair share. ¢ Our tax system needs to be made more ¢ Tax foreign e-commerce companies to level the HIGH STAKES HIGH equitable. playing field. CLEAR CHOICES ¢ Tax havens have become a common way for ¢ corporations to avoid paying their fair share. Increase taxes on banks and finance. ¢ Our corporate tax structure does not fairly ¢ Introduce wealth/inheritance taxes and make address foreign companies. income taxes more progressive.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background loopholes and increased the capacity of the Canada Revenue Agency to go after high- The Liberal government has taken sever- income individuals evading taxes through al positive steps, all of them promoted in offshore tax havens. past Alternative Federal Budgets, to make While these actions are a good start, the federal tax system fairer. It has added much more needs to be done to reform our another top tax bracket of 33% on incomes tax system. Not only will the measures pro- above $200,000. It replaced the Universal posed below make taxes fairer in Canada, Child Care Benefit with a more progressive they will allow the government to fund the Canada Child Benefit, which should reduce social, economic, and environmental servi- child poverty by 14%, according to AFB esti- ces and investments Canadians deserve, and mates. It cancelled family income splitting help pay for other promises the government and the previous government’s planned has made but not yet delivered on. The last doubling of the annual tax-free savings ac- time Canada conducted a comprehensive tax count contribution limit, both highly re- review (the Diefenbaker-appointed Carter gressive tax measures that benefited main- commission) was 51 years ago. Since then, ly Canada’s well-off. It has closed some tax our tax system has become overly complex

High Stakes, Clear Choices: Alternative Federal Budget 2017 27 and riddled with loopholes that worsen in- us pay on our working income. Not only is equalities. The system does not address our the deduction highly regressive, with over current challenges, nor does it fairly tax new 90% of the benefit going to the top 1% of business structures. tax filers (who make more than $250,000 annually), it is also bad for the economy, as it encourages CEOs to inflate short-term AFB Actions stock prices through share buybacks instead of investing in the economy.3 There are a number of straightforward tax measures that could generate significant 2. End the abuse of the small business revenue for public services, broaden our tax tax rate (savings: about $500 million a base, make the tax system fairer, reduce in- year) equalities, and promote economic and pro- Tax laws allow accountants, dentists, doc- ductivity growth. tors, and small business operators to provide their services through Canadian-controlled Action: Eliminate regressive private corporations (CCPCs) rather than as and ineffective tax loopholes employees. These individuals then pay tax and simplify the tax system on income held within these businesses at (savings: $16 billion a year). the much lower small business rate of 11% on their first $500,000 of income instead of Recent analysis by the Canadian Centre for at federal personal income tax rates of up Policy Alternatives exposes how over 90% of to 33%. Individuals may also split person- federal personal tax expenditures provide al income among family members to avoid greater benefits to higher-income earners.1 paying taxes.4 It is clear proof of how Canada’s tax system disproportionately benefits the wealthy 3. Tax income from capital gains and at a great cost to the public. The fed- and investments at the same rate as eral government has initiated a review of employment income (savings: $10 its tax expenditures, hoping to generate $3 billion a year) billion in annual savings. But this is a very Individuals who profit from the sale of in- modest target.2 The government could save vestments or assets pay tax at half the rate at least $16 billion through the following 10 of tax on income from employment thanks simple tax reforms. to the partial inclusion of capital gains. Over 90% of the benefit of this loophole on the 1. Eliminate the stock option deduction personal income tax side goes to the richest (savings: $670 million a year) 10% of income earners and 87% goes to the This loophole allows corporate executives top 1%.5 Corporations also pay tax on half to pay tax on their stock option compensa- of their capital gains. This provision was tion at half the statutory rate that the rest of supposedly introduced to encourage sav-

28 Canadian Centre for Policy Alternatives ings and investment, but since it was ex- 5. Reduce the annual RRSP panded business investment as a share of contribution limit to $20,000 and the economy has declined. Under our plan cancel pension income splitting the government would tax capital gains The AFB would enhance public retirement for individuals and businesses at the same programs instead, including the Canada rate as employment and other income, but Pension Plan, Old Age Security, and the would allow an adjustment for inflation. This Guaranteed Income Supplement (see the would encourage longer-term productive in- Seniors and Retirement Security chapter). vestments rather than short-term speculation. There are also generous lifetime cap- 6. Review and replace ineffective ital gains exemptions for farming, fishing, boutique tax credits (savings: $200 and small business that our plan preserves million a year) in the interest of maintaining family busi- Canada’s tax system is riddled with so-called nesses. We further maintain the capital gains boutique tax credits for public transit, trades exemption for principal residences, as the tools, search and rescue, volunteer firefight- family home is one of the few significant ers, etc. Navigating these credits makes fill- assets most Canadians have. ing out annual tax forms much more com- plicated. Furthermore, they have generally 4. Put a lifetime limit on tax-free not been effective in their intended object- savings accounts (savings: $100 ives and are more likely to be used by high- million, increasing to the billions of er-income families.6 dollars in the future) Tax-free savings accounts (TFSAs) were ori- 7. Eliminate flow-through share ginally justified on the basis they would pro- (FTS) deductions and the mineral vide low-income individuals with a more exploration tax credit (savings: $125 tax-effective way to save for retirement than million a year) RRSPs. However, the benefits of TSFAs pri- These tax incentives are supposed to help marily go to people making higher incomes boost exploration in the resource and energy and their cost, in terms of foregone govern- industries, but there is little evidence they ment revenues, will escalate to many billions are working.7 Nearly 80% of FTS investors of dollars annually unless total contribu- are in the highest marginal tax bracket.8 tions are capped. The cumulative amount individuals can contribute to TFSAs was 8. Cancel the corporate meals and $46,500 in 2016. The AFB would put a life- entertainment expense deduction time cap of $50,000 on TFSAs to avoid a rev- (savings: $400 million a year) enue sinkhole in the future and to ensure Businesses are allowed to deduct half their benefits aren’t further concentrated among meal and entertainment expenses, includ- high-incomes earners. ing the cost of season’s tickets and private boxes at sports events. These loopholes are

High Stakes, Clear Choices: Alternative Federal Budget 2017 29 widely abused, according to one study of ate taxes or labour costs. There is a lot more similar measures in the U.S.9 The meal ex- economic activity in countries with quality pense for long-distance truckers would be public services and higher corporate taxes maintained. than in countries with low corporate taxes and low-quality public services. 9. Limit deductions for executive Canada has some of the lowest corpor- compensation (savings: $150 million a ate tax rates among peer competitor coun- year) tries, which has contributed to driving these Canadian corporations can deduct CEO and rates down elsewhere.12 Federal corporate tax other executive compensation from their ex- rates were slashed almost in half between penses. The average compensation of the top 2000 and 2008 — from 29.1% to 15% — and 100 Canadian CEOs was $9.5 million in 2015, yet business investment as a share of the 193 times what the average worker made economy declined instead of increasing that year.10 The AFB adopts the U.S. mod- as it was supposed to. Over that time, cor- el, where the deduction is limited to $1 mil- porations created few new jobs and made lion each for the CEO and other executives. ever-higher record profits, amassing over $700 billion in surpluses and excess cash.13 10. End fossil fuel subsidies (savings: While corporate profits take up record as much as $1.5 billion a year) shares of the national income, there has been While some fossil fuel subsidies are being little increase in the share companies con- phased out, new ones have been introduced tribute through corporate income taxes. In and extended. Federal tax subsidies to the addition, business taxes have been reduced fossil fuel industries averaged $1.5 billion a and shifted onto households in other ways, year between 2013 and 2015.11 (For more on with the elimination of most corporate cap- subsidies, see the Environment and Climate ital taxes, a shift to value-added taxes, and Change chapter.) reductions in business property taxes. Large corporations and investors have also benefited from weak tax rules and lax enforce- Action: End corporate tax dodging ment by shifting profits to tax havens and and make corporations pay their fair paying less tax. share (revenue: $13.6 billion a year). Analysis commissioned by Canadians Corporations rely heavily on public servi- for Tax Fairness has found that 56 of the ces for their operations. These can include TSX 60’s largest publicly traded companies transportation infrastructure, utilities, edu- in Canada had a total of 973 subsidiaries in cation, training, health care, social services, recognized tax havens. Tax avoidance and law enforcement, and the justice system. evasion has been even more damaging for High-quality public services are more im- lower-income and developing countries in portant contributors to corporate produc- Africa and Asia, which desperately need rev- tivity and competitiveness than low corpor- enues to provide better health, education,

30 Canadian Centre for Policy Alternatives and other public services. The main way nomic purpose aside from reducing taxes multinational corporations are able to legal- owed. Private member’s bill C-621, intro- ly avoid taxes is through “transfer pricing” duced in the last Parliament by Murray and “profit shifting” — applying artificially Rankin, provides a good legislative ex- high or low prices for goods or services be- ample of how this could be done.14 We tween affiliated companies so their profits estimate this measure would raise $400 are concentrated in countries where they million a year. pay zero or negligible taxes. • Reinstate the restriction on how much The AFB increases the corporate feder- corporations can deduct in interest pay- al tax rate from 15% to 21% and increases ments to offshore subsidiaries for tax the small business rate to 15% to preserve purposes, as the OECD recently recom- proportionality between small and general mended through the Base Erosion and corporate tax rates. This also maintains the Profit Shifting (BEPS) action plan. We rec- tax rate’s consistency with the lower rate ommend limiting the deductibility of in- on personal income, and tackles the abuse terest to the entity’s share of the group’s of the CCPC regime by individual profes- consolidated net interest expense, ap- sionals, as described above. This measure, portioned by earnings (EBITDA), com- which would net the government $11 bil- bined with a fixed cap of 10%.15 This lion a year in new tax revenue, would leave measure should raise at least $200 mil- the general federal corporate tax rate lower lion annually in tax revenue. than it was in 2006 and considerably lower than the 34–35% statutory federal corpor- • Apply a 1% withholding tax on Canadian ate rate in the United States. assets held in tax havens. Investment by In order to stop businesses and invest- Canadian corporations in their top 10 ors from simply moving more of their money favourite tax havens increased to a re- into tax shelters, the AFB replaces Canada’s ported $270 billion in 2015, amounting difficult-to-enforce “arms-length rule” with to over a quarter of all Canadian direct a unitary taxation regime that would appor- investment abroad. Applying a 1% with- tion tax payments by multinational com- holding tax on Canadian assets held in panies to different governments according tax havens would generate over $2 bil- to the amount of business they do in each lion a year. jurisdiction. This is similar to how business revenue is apportioned between dif- Action: Tax foreign e-commerce ferent provinces in Canada. More immedi- companies to level the playing ately, the following measures would have a field (revenue: $1 billion a year). significant effect on curbing tax avoidance: E-commerce-based companies such as Net- • Require corporations to prove their off- flix, Facebook, Amazon Prime, Google (You- shore transactions have substantial eco- Tube), Amazon, Uber, and Airbnb, among

High Stakes, Clear Choices: Alternative Federal Budget 2017 31 others, are capturing a growing share of the from products or services sold or rented in Canadian market but pay little or no HST/ Canada, whether or not the company has GST or corporate income taxes. Because these a physical presence here. This would raise firms have no physical presence in Canada $600 million a year. Second, the AFB can- they are not considered to be “carrying on cels the GST/HST tax exemption for e-com- business” here.16 This policy needs to be up- merce service companies that sell to Can- dated to reflect changing business realities. adians. We estimate this would raise $400 The foreign-owned e-commerce sector million a year. now has revenues of more than $30 billion a year. Google and Facebook together capture Action: Introduce a stronger 64% of all Internet advertising dollars spent and more progressive carbon in Canada (over $2.4 billion annually) but tax (revenue neutral). pay little or no taxes here. Meanwhile, domestic broadcasters and media producers, The Trudeau government says it wants to including newspapers, have seen their ad- see a nationwide minimum national car- vertising revenues plummet, leading to mass bon price of $10 per tonne in 2018 increas- layoffs and an erosion of avenues for broad ing to $50 per tonne by 2022. This is simi- public discourse.17Companies like Netflix lar to the national harmonized carbon tax and other “over-the-top” media services are proposed by the AFB, but it is too modest. also not required to produce, broadcast, or The government’s plan also does not man- contribute to Canadian content, contribute date that the revenues should be used for to the Canadian Media Fund, or levy taxes progressive investments in complementary on their services. environmental measures or to support vul- The European Union, New Zealand, Aus- nerable people, industries, and commun- tralia, Norway, South Korea, Japan, Switz- ities affected by these changes. erland, and South Africa have modernized The AFB plan introduces a national har- tax laws to respond to a changing e-com- monized $30-per-tonne carbon tax start- merce reality.18 The OECD, in its BEPS ac- ing July 1, 2017, but increasing by $10 per tion plan, “Addressing the Tax Challenges tonne a year until it reaches $50 per tonne of the Digital Economy,” has recommended in 2019. Where provinces do not have a ways governments can collect value-added broad-based carbon price in place at these taxes where a product is purchased to help levels, the federal government would apply level the playing field between foreign and one. Revenues generated through the car- domestic suppliers.19 bon tax would be spent on a “green” tax re- The AFB will level the playing field in fund — an annual cheque equivalent to $10 two ways. First, it makes sure all e-com- for every adult and $5 per child for every $1 merce companies with Canadian income per tonne in carbon tax (e.g., $300 per adult above $500,000 (the small business thresh- for a carbon tax of $30 per tonne). The re- old) pay corporate income tax on profits mainder of the revenues would go to com-

32 Canadian Centre for Policy Alternatives plementary investments in climate change special tax on remuneration in the financial mitigation and adaptation, green infrastruc- industry. The AFB would either introduce ture, and to just transition measures to as- a FTT in collaboration with the provinces, sist affected workers, communities, and in- which have jurisdiction over securities regu- dustries. The AFB would also apply border lation, or a FAT rate of 5% on profits and re- tax adjustments to ensure our industries muneration in the financial sector. are not at a competitive disadvantage, and to put pressure on other countries to intro- Action: Introduce wealth/ duce similar measures (with exemptions for inheritance taxes and make impoverished nations). income taxes more progressive (revenue: $4.8 billion a year). Action: Increase taxes on banks and Canada should have broader-based and finance (revenue: $5 billion a year). more progressive wealth and inheritance Many experts consider the financial sector taxes to combat persistent inequalities. The to have grown too big for the good of the only wealth we tax now is property, which economy. This has led to greater speculative is regressive, since a home is usually the activity, economic instability and crises, in- only asset of significant value for middle- creased inequality, and poor allocation of income families. The IMF has estimated resources. The financial sector also benefits Canada could generate $12 billion annual- from a preferential tax regime (e.g., exemp- ly from a tax of just 1% on the net wealth of tion of most services from value-added taxes the top 10% of households. Introducing a like the GST/HST), the relative ease with broad-based wealth tax like this would in- which companies can exploit tax havens, volve co-ordinated action. and guarantees of solvency in the event of a In the interim the AFB introduces a min- crisis through government bailouts of firms imum inheritance tax of 45% on estates val- considered “too big to fail.” ued above $5 million, similar to the estate After many years, momentum is build- tax in the U.S., which would net an estimat- ing again in Europe for broad-based finan- ed $2 billion annually in new revenues. The cial transaction taxes (FTT). Such measures AFB also reverses the income tax cut intro- have existed for centuries in different forms duced for the middle tax bracket (i.e., re- and in different countries. For example, FTTs turns the rate to 22%), since the maximum are actively adjusted in China and Taiwan to benefits from this cut actually go to those cool real estate or stock markets. The Inter- with taxable incomes over $90,000 a year, national Monetary Fund has also proposed which would produce revenues of $2.8 bil- a financial activities tax (FAT) on profits and lion per year. remuneration in the financial industry as a way to apply a value-added tax to this sector. Quebec has had a version of a FAT in its

High Stakes, Clear Choices: Alternative Federal Budget 2017 33 Notes 11 “Unpacking Canada’s Fossil Fuel Subsidies,” a joint project of IISD and Global Subsidies Initiative: http:// 1 David Macdonald. (2016). Out of the Shadows: Shin- www.iisd.org/faq/ffs/canada/ ing a light on Canada’s unequal distribution of federal 12 “Competitive Alternatives: KPMG’s guide to inter- tax expenditures. Ottawa: Canadian Centre for Policy national business costs, 2016 edition”: https://www. Alternatives. competitivealternatives.com/reports/compalt2016_ 2 Liberal Party of Canada. (2015). A New Plan for a Strong execsum_en.pdf Middle Class, election platform, p. 80. 13 Jordan Brennan. (2015). Do Corporate Income tax Rate 3 Many of the revenue estimates are taken from Fi- Reductions Accelerate Growth. Ottawa: CCPA. nance Canada’s Report on Federal Tax Expenditures 14 Rankin describes his private member’s bill here: - Concepts, Estimates and Evaluations 2016: http:// https://openparliament.ca/bills/41-2/C-621/ www.fin.gc.ca/taxexp-depfisc/2016/taxexp1602-eng. asp#_Toc442180630. 15 For details on this issue see the G20 submission to the U.K. parliament on behalf of the BEPS Mon- 4 Herbert J. Schuetze. (2016). “Income splitting among itoring Group: https://bepsmonitoringgroup.files. the self-employed.” Canadian Journal of Economics, wordpress.com/2016/01/bmg-submission-to-uk-all- Vol. 39, No. 4. party-parliamentary-group.pdf 5 Brian Murphy, Mike Veall, and Michael Wolfson. 16 Canada Revenue Agency. Carrying on business in (2015). “Top-End Progressivity and Federal Tax Prefer- Canada, GST/HST Policy Statement P- 051R2, Date of Re- ences in Canada: Estimates from Personal Income Tax vision. April 29, 2005. This policy statement cancels P- Data.” Canadian Tax Journal, Vol. 63, No. 3. 051R1, dated March 8, 1999: http://www.cra-arc.gc.ca/E/ 6 Neil Brooks. (2016). “The Case Against Boutique Tax pub/gl/p-051r2/p-051r2-e.html Credits and Similar Tax Expenditures.” Canadian Tax 17 John Anderson. (2016). Over the Top Exemption. Ot- Journal, Vol. 65, No. 1. pp. 65–134. tawa: CCPA, p. 11. 7 Lindsay Tedds, “Why the mineral exploration tax 18 Ibid., pp. 18–21. credit is such a bad idea,” Maclean’s, September 2, 2015. 19 OECD. (2015). Addressing the Tax Challenges of the 8 Department of Finance Canada. Tax Expenditures Digital Economy, Action 1 - 2015 Final Report: http:// and Evaluations 2013, Part 2. www.oecd.org/tax/addressing-the-tax-challenges- 9 Richard Schmalbeck and Jay A. Soled. (2009). “Elim- of-the-digital-economy-action-1-2015-final-report- ination of the Deduction for Business Entertainment Ex- 9789264241046-en.htm penses.” Tax Notes, May 11, 2009.

10 Hugh Mackenzie. (2017). Throwing money at the problem. Ottawa: Canadian Centre for Policy Alternatives.

34 Canadian Centre for Policy Alternatives Agriculture

ALTERNATIVE FEDERAL BUDGET AGRICULTURE 2017

¢ Climate change is having serious impacts on ¢ Create a national agricultural climate change farmers. Droughts, floods, early frosts, new diseases, mitigation program to help farmers reduce and pests bring increasing uncertainty. emissions and make their farms more resilient. ¢ Canada’s farmers are now carrying over $92 billion in debt. Corporate concentration means farmers keep ¢ Make farm incomes less precarious by rebuilding less and less of the wealth they create. Many farmers or repairing the institutions that give farmers more

HIGH STAKES HIGH need to work off-farm jobs to subsidize farm incomes. power in the marketplace.

¢ The average age of farmers is creeping upward as CLEAR CHOICES ¢ Create a new set of mechanisms and training farmers live longer and delay retirement. If young programs to facilitate land transfer to new farmers farmers can’t take over, Canada risks having its without requiring them to take on crippling debt. agriculture entirely in the hands of corporations and absentee landlords.

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Background Climate Change

Farmers are a minority within the Canadian Farmers depend upon a predictable climate population, yet everyone in Canada relies on and favourable weather conditions to pro- them for the food they eat every day. The cen- duce and earn a livelihood. Climate stabil- trality of food in our lives means that farming ity is required to successfully produce crops, and agriculture are critical to Canada’s future. raise livestock, and maintain healthy agro- The foundation of Canada’s rural economy ecosytems. Because agriculture currently is the farmer’s net income. The downward contributes a significant amount of Canada’s spiral of rural decline and depopulation can greenhouse gas emissions, the agricultural be turned around by implementing measures sector also presents an opportunity to sig- to ensure that farmers obtain a fair share of nificantly reduce carbon emissions through the wealth produced on the land. Farm in- changing farming practices. Fiscal and pro- come, climate change, farm debt, and the gram support for both adaptation and miti- successful transition of the younger genera- gation are required so that agriculture can tion into farming are crucial challenges that play its part in preventing catastrophic cli- the Alternative Federal Budget will address. mate change while maintaining adequate

High Stakes, Clear Choices: Alternative Federal Budget 2017 35 food production and decent livelihoods for digestion of feedstuffs that are allocated to farmers in increasingly uncertain times. agriculture under the Intergovernmental Unstable climate and unusual weather Panel on Climate Change’s greenhouse gas had a negative impact on farm incomes in accounting system. A comprehensive life- many areas of Canada in 2016, for example: cycle analysis of greenhouse gas emissions from agriculture will provide numerous op- • The prairies experienced erratic precipi- portunities for reductions, many of which tation patterns, including a month of wet will also reduce costs for farmers. snow in October before the completion Climate change means uncertainty for the of harvest, a prolonged dry spell follow- agricultural sector. It is therefore essential ing seeding, and reduced yields and/or that farms become more resilient. Diversifi- spoilage caused by intense rain. Addi- cation of production and soil improvement tional costs were incurred to dry crops are key strategies. For example, practices that were harvested in wet conditions. that sequester atmospheric carbon in soils • In British Columbia, Quebec, and On- increase their ability to hold water, which tario drought hampered crop develop- helps farms better withstand both droughts ment, impaired pasture quality, and re- and excessive moisture conditions. Diversifi- duced hay yields. Access to water for stock cation is an effective risk management strat- watering and irrigation was restricted. egy that lessens the impact of price volatility, Lower yields and lower prices reduced crop failures, diseases, and pest problems. farm incomes, while higher feed prices and grazing fees added to the costs of Farm Debt livestock production. Farm debt continues to grow at an unsustain- • Parts of Atlantic Canada experienced able rate. By 2015 Canada’s total outstand- severe drought. For example, Yarmouth ing farm debt had risen to over $92 billion.1 County had its driest summer since 1880. Total realized net farm income is less than Lower yields of hay, potatoes, vegetables, one-tenth of this debt load. This means that fruit, and blueberries combined with more farmers have little capacity to absorb higher expensive feed reduced farm incomes. costs. Even a small increase in interest rates When all emissions from agriculture are would have a devastating effect, as many accounted for, it becomes clear that energy- farmers would be unable to continue servi- intensive inputs such as nitrogen fertilizer cing their debts. Climate change continues produced from natural gas, manufactured to increase risks and expenses, making in- herbicides, pesticides, transportation, farm comes more precarious and debt more oner- fuels, and electricity are all significant. In ous. Yet farmers do produce immense wealth addition, there are the emissions caused by every year. Most of that wealth is captured by off-gassing of nitrogen fertilizers from soils powerful corporations that are able to con- and methane from livestock manure and trol the prices of inputs such as seed, fer-

36 Canadian Centre for Policy Alternatives tilizer, farm chemicals, fuel, and rail trans- trade deal), the federal government weak- portation. Prices paid for farm products are ened our supply management system by in- also controlled by a few large buyers: global creasing the European Union’s share of our grain companies, meat packers, and retail- cheese market by 18,500 tonnes,2 reducing ers. Meanwhile, land prices are increasingly the size of Canada’s domestic dairy market influenced by farmland investment compan- by an amount that could have supported ies that collect high rents while speculating 400 new entrant farmers. on land values. Farmers as individuals have Canada’s agriculture research institutions very little power in the marketplace. Because have also suffered severe funding cutbacks of this, much of total farm debt is not due to and numerous closures in the past decade. investment in productive capacity but rath- The previous government eliminated over 500 er represents persistently insufficient mar- agriculture research positions between 2012 gins due to others taking more than their and 2015. Valuable research institutions and fair share of the wealth farmers produce. field research stations were closed in every re- To address farm debt it is necessary to gion, impairing Canada’s ability to respond to reinvest in the institutional structures that emerging challenges. Public assets and roles protect farmers’ interests by countering were irresponsibly transferred to the private the monopolistic power of global agribusi- sector. The task of restoring Canada’s public ness and food corporations. The Canadian interest in scientific and technical capacity in Grain Commission (CGC) has been stripped agriculture is both large and urgent, and will of important roles and funding during the require significant resources. last decade. This needs to be reversed. The railways have reduced service and failed to The Next Generation of Farmers properly invest in the grain transportation system in spite of being entitled to healthy The average age of Canadian farmers is ris- profits through the Maximum Revenue En- ing. Older farmers are delaying retirement, titlement (a revenue cap). The Canadian while younger people who want to farm are Wheat Board, the farmer-directed single- facing barriers that are increasingly difficult desk selling agency for Prairie wheat and to overcome, such as precarious farm income barley, was dismantled under the direction prospects and a fraying rural social fabric. of the previous federal government in 2012, We are in the midst of a crisis in inter-gen- resulting in billions of dollars leaving Can- erational transfer. Land is being acquired ada’s farm economy annually since then. by farmland investment companies, con- In 2016, the previously privatized Port of solidated into large holdings, and farmed Churchill was closed. This will hit farmers by tenant farmers and hired labour instead in northern Manitoba and Saskatchewan of being transferred to younger farm fam- particularly hard because it will cost them ilies and new entrants. There is an urgent more to transport their grain to southern need for measures to assist young people ports. By ratifying CETA (the Canada-EU to begin and continue farming successfully.

High Stakes, Clear Choices: Alternative Federal Budget 2017 37 Measures to promote sustainable in- Result: Agriculture practices will be altered comes for all farmers are needed to help to reduce total life-cycle emissions and to young people choose farming as an eco- increase farms’ resilience to climate uncer- nomically viable career. Investment in rural tainty while maintaining viable farmer live- community infrastructure is needed to sup- lihoods and needed food production. This port the quality of life of new farm families. will help to reduce emissions from livestock Farmers who are starting out require men- production and nitrogen fertilizer use, and torship and training as well as assistance in will promote the adoption of low-input pro- gaining access to land — particularly options duction methods, the use of effective meth- for secure land tenure that do not involve ods to enhance soil carbon production, and crippling debts. Supply-managed sectors on-farm energy conservation practices. need to embrace the diversity of production Action: The AFB will create additional pro- methods that consumers want and young- grams to assist farms facing long-term prob- er farmers support by transferring quota to lems related to climate change. new entrants in ways that will help them Result: Investing in greenhouse gas miti- become established. Canada has lost a lot gation and climate adaptation strategies of its fruit and vegetable production as a will reduce future demands on safety-net result of trade agreements that give advan- programs. For example, farms that experi- tages to processors using low-cost labour in ence repeated flooding may need assistance other countries, yet climate change and pol- to relocate buildings and corrals to higher itical situations abroad are also making our ground so they can continue farming and supply of fruit and vegetables more precar- contributing to Canada’s food system. The ious. We could mitigate these risks by sup- AFB’s extension programs will help farms porting young farmers who are eager to pro- become more resilient over the long term. duce more food for their urban neighbours.

Restore and rebuild the Canadian AFB Actions Grain Commission’s capacity to fulfil its mandate: “in the interests of Invest in research and extension the grain producers, establish and to create an economically viable, maintain standards of quality for resilient, climate-friendly farm Canadian grain and regulate grain sector ($250 million/year). handling in Canada, to ensure a Action: The AFB will establish an effect- dependable commodity for domestic ive national agriculture extension program and export markets” ($20 million). to ensure Canada’s farmers have the tools Action: The AFB will restore the CGC’s fund- they need to meet greenhouse gas reducing to pre-2012 levels and provide additional tion targets. funds to support its ability to provide bet-

38 Canadian Centre for Policy Alternatives ter oversight of the grain trade in the inter- Change the mandate of Farm Credit ests of farmers, with particular attention to Canada to ensure its lending grading and bond security. activities support the development Result: Grain companies will be disciplined of a diversified, climate-friendly to provide fair grades and prompt, full pay- agriculture sector and avoid ment to farmers. Canada’s reputation in ex- contributing to land grabbing. port markets for high-quality grain, along Action: The AFB will direct Farm Credit Can- with corresponding higher prices, will be ada to give priority to small- and medium- recovered. A greater share of the value pro- sized farms that produce food for domestic duced on Canadian farms will be returned consumption, prohibit lending to farmland to farmers, where it will support economic investment companies, and restrict its lend- activity in their communities. ing to farm-related businesses that are majority farmer-owned. Rebuild Agriculture and Agri- Result: The FCC’s lending activities will sup- Food Canada’s scientific, technical port successful intergenerational transfer and support staff capacity, of farms by providing needed credit to new which has been eroded as a entrants investing to develop a larger range result of retirements, lay offs, of enterprises using diverse farming practi- and lack of new hiring over the ces and avoiding contradictory support for past decade ($100 million). non-farmer-owned competing businesses.

Action: The AFB will remedy the shortage of seasonal and permanent technical staff Notes that is hampering progress at many AAFC facilities. The AFB will provide 100% pub- 1 Statistics Canada, CANSIM Table 002-0008 - Farm debt outstanding, classified by lender,http://www5.statcan.gc.ca/ lic funding to the AAFC and universities to 2 Text of the Comprehensive Economic and Trade Agree- advance the non-commercial agronomic ment — Annex 2-A: Tariff elimination research and plant breeding needed to address climate change mitigation and adaptation in agriculture. Result: Non-commercial research will no longer be starved of funds, and important non-commercial questions will be investigated so that innovations can be developed and applied through shared knowledge rather than purchased inputs.

High Stakes, Clear Choices: Alternative Federal Budget 2017 39 Arts and Culture

ALTERNATIVE FEDERAL BUDGET ARTS AND 2017 CULTURE

¢ Although the government made good on its ¢ Maintain the doubling of the Canada Council commitment to invest more in the arts with its 2016 for the Arts funding. budget, these investments are merely bringing funding levels back to what they were prior to cuts ¢ Extend the Showcasing Canada Program made in recent years. beyond 2017 with annual installments of $25 million and invest a total of $1.5 billion over eight ¢ After years of underfunding, many arts facilities in years in cultural infrastructure.

HIGH STAKES HIGH Canada are showing their age, and new arts spaces that can deliver the type of programming and ¢ Promote inclusion and equitable treatment of activities that Canadians want are lacking. CLEAR CHOICES artists throughout the Digital Culture consultations. ¢ Canadian society is more diverse than ever and the government must ensure fair and equitable access for all Canadians.

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Background al industries, non-profit arts organizations, and arts entrepreneurs comprise 3.5% of For generations, the arts and culture sector Canada’s work force. This is two-and-a-half has allowed inspiration, national pride, and times larger than the labour force in real es- Canadian identity to flourish. Artists and arts tate (254,200), about double of that of the organizations advance critical conversations farming sector (339,400), and only slight- about a wide range of topics, including so- ly smaller than the trades (733,500).2 More- cietal, environmental, and political issues. over, the arts and culture sector contribut- Canada’s artists and cultural workers have ed $55 billion to Canada’s gross domestic advanced Canadian artistic production and product (GDP) in 2014.3 practice, which has been recognized on na- For the first time in years, the federal gov- tional and international stages. ernment is seeing the cultural industries as The arts sector plays a key role in the engines of economic growth both at home prosperity of Canadian communities by and abroad, and is prioritizing the growth creating jobs in many sectors. It is a signifi- of the sector. The new government elected cant employer, with roughly 630,000 work- in 2015 made refreshing commitments to ers in 2014.1 For-profit creative and cultur- the arts and culture sector. The prime min-

40 Canadian Centre for Policy Alternatives ister’s public letter to the minister of Can- calls for new and unique infrastructure in- adian Heritage identified a range of prior- vestments by the federal government. ities.4 The 2016 budget followed through on Inclusivity must continue to be at the many of these objectives with a commitment core of how the arts sector operates. Can- of an additional $1.9 billion for the sector ada’s cultural community, in reflection of over the next five years. However, it should our national population, is very diverse, in- be noted that some of these investments are cluding Indigenous and racialized peoples, merely bringing funding levels back to what people of all abilities, official language min- they were prior to cuts in recent years. It is orities, and those who have been historically imperative that the sector continues to advo- marginalized. Given these changes in Can- cate for and hold the government account- adian communities, many presenters, art- able to their commitments for Budget 2017. ists, and audiences have noted the import- The federal government also announced ance of understanding and engaging with a $120-billion infrastructure plan in its 2016 all of these communities. The unpreced- budget. Now that culture is acknowledged ented demographic change Canadian so- as the fourth pillar of sustainable develop- ciety has experienced also offers a unique ment (along with economic, environmental, opportunity to enhance the way Canadians and social sustainability5), full integration will contribute to Canada’s socioeconom- of arts and culture into the infrastructure ic growth. In 2010, Statistics Canada pre- plan makes sense. Many arts facilities in dicted that in 2017, racialized peoples will Canada were built as Centennial projects or comprise 19%–23% of the Canadian popu- during the boom of the 1970s and are show- lation, and Indigenous peoples will coming their age. If they are to continue serving prise 4%. By 2021, racialized peoples will Canadians, some centres are in dire need comprise 29%–32% of the Canadian popu- of renovations, accessibility adaptations, lation, or between 11 and 14 million people. retrofits to increase their energy efficiency, This population will also have more youth and equipment upgrades to keep up with under the age of 15 (36%). The Indigenous Canada’s innovative artists. Moreover, the population is growing more quickly than the kind of programming expected of cultural rest of the population; it is also much young- organizations today is different than when er, and Indigenous youth will form a major older infrastructures were built. Canadians part of Canada’s future workforce. Finally, now expect cultural facilities that can de- those whose first language is neither Eng- liver a wide array of programming beyond lish nor French will increase to 29%–32% presentation/exhibition, including a range by 2031, up from 10% in 1981.6 of community engagement initiatives such as Some 92% of Canadians believe that arts cafés, education programming, and public experiences are a valuable way of bringing rental space. Many of today’s arts and cul- together people from different languages ture spaces must transform into commun- and cultural traditions, and 87% of Can- ity hubs in order to thrive. This needed shift adians believe that arts and culture help

High Stakes, Clear Choices: Alternative Federal Budget 2017 41 us express and define what it means to be munities across Canada through a highly Canadian.7 The government’s approach to competitive peer review process.8 the arts and cultural sector to date is posi- In addition, the need for investment tive, supported with substantial reinvest- in arts infrastructure is felt by Canadians. ments and new investments in the sector. A 2012 survey commissioned by Canadian Targeted investment in the 2017 budget will Heritage found a significant gap between enable arts organizations to respond to the Canadians’ appreciation of arts infrastruc- opportunities and challenges presented by ture and their perception of the quality of Canada’s changing demographics and ad- arts centres.9 The Canada Cultural Spaces vancements in technology. Fund, created in 2001 with an envelope of $30 million, has a proven track record in supporting small and mid-size arts infra- Sustaining Artists, Arts structure projects such as lighting upgrades, Organizations, and Cultural environmental control systems upgrades, Infrastructure accessibility improvements, and other cap- Jobs in the profit arts sector are created and ital improvements needed by arts organiz- sustained by three revenue streams: earned ations to remain relevant. The 2016 budget revenues (from admissions, product sales, reasserted the essential role of the Canada fees, or royalties), contributed revenues (from Cultural Spaces Fund and allocated $168.2 individuals, corporations, or foundations), million in additional funding to the program and government funding. While the ratios over two years. This will enable the program vary between artistic practices and regions, to support larger scale projects. However, the federal government’s cultural policy considering the preparations necessary for and spending priorities have a significant mid-to large-scale capital projects, the short influence, for example, by developing new two-year timeline will significantly limit the markets and venues, providing incentives eligibility to only shovel-ready projects in for donations and sponsorships through the 2016. This would leave out many valuable tax system or contribution-matching pro- and innovative development projects. grams, or subsidizing particular aspects of cultural production. Strengthening Canada’s Ties The federal government’s primary vehicle and Cultural Image Across the Globe for sustaining the work of artists and arts organizations is the Canada Council for the Artists and arts organizations are effective Arts. This arm’s-length agency has a 55-year cultural ambassadors for Canada on the track record of fostering the arts across the world stage, embodying Canada’s divers- country. In 2014-15, the council awarded ity, innovation, and accomplishments. The $155.1 million in grants and payments to federal government recognizes this, and artists and arts organizations in 1,953 com- has made a commitment to celebrate Can- ada’s cultural stories with the world,10 most

42 Canadian Centre for Policy Alternatives recently with a commitment of $25 million Providing Digital Access to the Showcasing Canada’s Cultural Indus- to Canadian Cultural Content tries to the World program.11 The immense Since the end of the Canadian Culture On- diversity of Canada’s artistic efforts will un- line initiative a decade ago, Canada has doubtedly connect us to the world as a re- only widened a cultural trade gap that sees markable mirror of our global population. far more foreign cultural content flowing Cultural promotion abroad has the poten- in than going out. Foreign content can tial to result in diversified revenue streams, now be accessed online through the Inter- jobs here at home, and growth and stabil- net, in movie theatres, as well as through ity. Canadian artists, arts organizations, new unregulated and ubiquitous service and trade and tourism sectors will benefit providers who are exempt from Canadian directly from these work opportunities and content regulations and contributions. increased activity. In April 2016, the minister of Canadian Herit- It is essential that the federal govern- age launched the first phase of a conversa- ment, through the Department of Global tion on how to strengthen the creation, dis- Affairs Canada, support our global cultur- covery, and export of Canadian content in al presence through promotion in embas- a digital world.12 These digital culture con- sies, trade and business development, and sultations are an essential process between international circulation of artists and their government, industry, and artists. Canadian works. While the new Showcasing Canada’s artists such as YouTuber Lilly Singh, ballet Cultural Industries to the World program ad- dancer Guillaume Côté, singer Tanya Tagaq, dresses a long-standing request of the Can- film director Deepa Mehta, artist Rober Ra- adian Arts Coalition, strong support for cine, and composer Mychael Danna are all Canada’s pluralistic cultural community’s digital content creators. But technologies presence and engagement abroad is need- must be made fully accessible to all, included. It must include equity-seeking or mar- ing artists with impairments who are dispro- ginalized artists in order to truly reflect the portionately affected by the digital divide. demographics of the nation. Further, this Artists must be a part of the conversation program needs to be extended and sus- and discussion of digital technologies, and tained beyond two years to build lasting artists and arts organizations must be con- relationships with international promot- sulted regularly. ers, presenters, and curators; to secure exhibits and tours abroad; and to penetrate foreign markets. AFB Actions

The AFB will support the federal government’s initiatives with four prioritized areas for 2017.

High Stakes, Clear Choices: Alternative Federal Budget 2017 43 Action: Maintain the updated Canada Coun- ed using a product perspective. It considers the jobs related to the production of culture goods and/or services cil for the Arts funding announced in the across the economy regardless of the producing indus- 2016 federal budget. try, including non-cultural industries.

Result: The Canada Council for the Arts’ 2 Hill Strategies Research Inc. (2014) Statistical Pro- operating budget will double to $362 mil- file of Artists and Cultural Workers in Canada, based on the 2011 National Household Survey and the Labour lion by 2021, a total new investment of $550 Force Survey, p.13 million between 2016 and 2021. 3 Statistics Canada, Provincial and Territorial Culture Action: Extend the federal government’s Indicators, 2010 to 2014, 2016.This figure ($54.6 billion, more precisely) was estimated using a product perspec- investment in the Showcasing Canada Pro- tive. It considers the production of culture goods and/ gram to annual installments of $25 million or services across the economy regardless of the produ- from 2017 to 2021. cing industry, including non-cultural industries. This Culture GDP is lower than the GDP of culture industries Result: Artists and arts organizations across (GDP of both culture and non-culture goods and servi- Canada can begin to build lasting relation- ces) which is $61.7 billion.

ships with international promoters, pre- 4 Government of Canada. “Minister of Canadian Herit- senters, and curators, secure exhibits and age Mandate Letter.” Prime Minister of Canada, Justin Trudeau. November 2015. http://pm.gc.ca/eng/minister- tours abroad, and penetrate foreign markets. canadian-heritage-mandate-letter#sthash.NeItxzzj.dpuf

Action: Increase and extend investments in 5 Agenda 21 for Culture was adopted in 2004 by the world cultural infrastructure to a total of $1.5 bil- association of United Cities and Local Governments. It promotes policies and actions by cities and local gov- lion over eight years, via the Cultural Spaces ernments for cultural development, and it posits culture Canada Fund and the bilateral agreements. as the fourth pillar of sustainable development. In Can- Result: Sustainable and accessible Canadian ada, the federal External Advisory Committee on Cities and Communities, led by former B.C. Premier Mike Har- cultural spaces will allow for improved art- court came to similar conclusions. In 2006, the report istic programming and community engage- From Restless Communities to Resilient Places: Building ment that includes large-scale and innova- a Stronger Future for All Canadians states that “cultural sustainability ties together the other three dimensions, tive in-depth projects. and is essential to community success.”

Action: Promote inclusion and equitable 6 Statistics Canada. (2010). Projections of the Diversity of the Canadian Population, 2006 to 2031, pp. 1–2. See treatment of artists throughout the digital also Jocelyn Harvey. (2003). Creative Management in the culture consultations. Arts and Heritage: Sustaining and Renewing Profession- Result: Artists with varying backgrounds, al Management for the 21st Century — A Proposed Action Plan for Creating Winning Conditions, p. 17. disciplines, and abilities will be represented in consultations alongside government and 7 Canadian Heritage. The Arts and Heritage in Can- ada — Access and Availability 2012, prepared by Phoe- industry leaders. nix Strategic Perspectives.

8 Canada Council for the Arts. Annual Report 2014- 2015, p. 12.

Notes 9 Phoenix Strategic Perspectives, The Arts and Heritage 1 Statistics Canada, Provincial and Territorial Culture in Canada — Access and Availability 2012. Only half of the Indicators, 2010 to 2014, 2016. This figure was estimat- participants surveyed (53%) rated the quality of arts and

44 Canadian Centre for Policy Alternatives culture facilities as positive and only 43% said the num- 11 Budget 2016, Growing the Middle Class, p.184. ber of facilities in their community is good or very good. 12 Canadian Content in a Digital World: Focusing the 10 Government of Canada. “Minister of Canadian Herit- Conversation: Consultation Paper. The Government of age Mandate Letter.” Prime Minister of Canada, Justin Canada, September 2016. Trudeau. November 2015. http://pm.gc.ca/eng/minister- canadian-heritage-mandate-letter#sthash.NeItxzzj.dpuf

High Stakes, Clear Choices: Alternative Federal Budget 2017 45 Child Care

B ALTERNATIVE A C FEDERAL BUDGET CHILD 2017 CARE

¢ Child care is treated as a commodity, sold on a child care ¢ Build a comprehensive system of public and non-profit market, rather than provided as a public service. child care services available to all children and families everywhere in Canada. ¢ Child care fees are already high and are rising faster than inflation. ¢ Make parent fees affordable. ¢ There are only enough regulated child care spaces for 25% ¢ Provide spaces for all, respecting families’ diverse needs, of children aged 0–5. and fully include children with disabilities. ¢ HIGH STAKES HIGH Ensure consistently high-quality programs led by ¢ Child care is marred by inconsistent quality, high turnover, well-qualified, well-compensated, and respected educators. and poor pay for staff. CLEAR CHOICES ¢ Develop robust public policy and planning with ¢ There is a lack of federal government leadership in substantial public funding. planning, standard setting, and funding. ¢ Take pride in building a child care system with a choice of ¢ Canada ranks last among economically advanced countries affordable, quality options for all children whose families on child care. choose it.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background and care (ECEC) benchmarks.3 The federal government had just cancelled the planned “For Canadian families, high-quality, af- national child care program, with its sub- fordable child care is more than a conven- stantial cash transfers to provinces and ience — it’s a necessity.”1 These words, from territories, and withdrawn from any role in the 2016 federal budget, followed the Lib- improving child care provision across the eral party’s 2015 election pledge to work country. It is disturbing but not surprising with “provinces, territories and Indigen- that, despite some promising initiatives in a ous peoples to establish a National Frame- number of provinces, child care across Can- work on Early Learning and Child Care… ada remains unaffordable, unavailable, and that meets the needs of Canadian families, inconsistent in quality. wherever they live.”2 They suggest the gov- A robust body of research confirms the ernment is committed to the kind of broad- superiority of a universal versus a targeted based — or universal — approach to child care approach to child care, as detailed in an Canadians have been missing for too long. accompanying AFB technical paper, Child In 2008, Canada ranked last among peer care for all of us: Universal child care for nations on 10 early childhood education Canadians by 2020.4

46 Canadian Centre for Policy Alternatives First, vulnerable children can be found recognizing the key roles of provinces, terri- across all socioeconomic groups, so an ap- tories, and Indigenous communities in devel- proach that targets children based on family oping and implementing services that meet incomes (typical in Canada) misses the local needs. It affirms that “while there are smaller proportion, “but often larger abso- many points of commonality in our shared lute number,” of vulnerable children in mid- vision, we recognize that Indigenous com- dle- and upper-income groups.5 A second re- munities may choose unique approaches lated bonus of universal approaches is that and content.” they prevent social exclusion, and socio- The Canadian child care movement de- economically “mixed” programs are more fines universal child care as available, ap- beneficial for vulnerable children than tar- propriate and affordable for all, inclusive, geted programs. non-compulsory, varied, and not (neces- Third, universal services “usually com- sarily) free.9 The Child Care Advocacy As- mand broader and more sustainable public sociation of Canada (CCAAC) states: “At a support and engender greater public concern minimum, universal systems provide ac- for quality,” according to a 2008 UNICEF re- cess for all without discrimination based on port card. “Too often, services for the poor income or other criteria. Effective universal have meant poor services.”6 systems also work to eliminate a range of Furthermore, access to child care is at social, ability-based, cultural, geographic, least as much about parents’ labour force and other barriers to equitable access and participation and women’s equality as it is participation.”10 about child development. The need and de- While calling on governments to play sire for quality child care is not confined to an important role in planning and policy, a low-income families or even to those with comprehensive approach to ECEC envisions vulnerable children, but is “critical to the a variety of services delivered by public and economic security of families and, in par- non-profit providers, in various locations ticular, to the economic security of women.”7 (centres, private homes, schools), over various time periods (e.g., part-day, full-day, and extended/non-standard hours).11 Well- A Shared Framework remunerated, well-trained, and well-sup- for Early Education and Care ported early childhood educators are key Early in 2016, the Canadian child care com- to achieving quality service.12 munity developed a Shared Framework for Finally, a comprehensive system of uni- Building an Early Childhood Education and versal, high-quality ECEC must be integrated Care System for All. 8 Essentially it is a blue- with broader family policy improvements, print for building the universal, high-qual- such as enhanced parental leave and income ity, and comprehensive child care system support for parents, in order to meet the di- we need. The framework calls for federal versity of families’ and children’s needs at leadership and funding for child care, while the local level.

High Stakes, Clear Choices: Alternative Federal Budget 2017 47 Underpinning the principles of univer- ing the [federal] government’s key object- sality, high quality and comprensiveness ives for families in all regions (accessibility, are three interrelared “understandings” affordability, quality, inclusiveness) will re- that are essential to achieving an evidence- quire an overarching national approach” based national framework. that nonetheless recognizes provincial-ter- First, Canada needs to move away from ritorial jurisdiction over ECEC.17 its current market-based approach to child In the absence of federal leadership, the care in which governments take limited re- provinces and territories have developed sponsibility for service development and unique ECEC systems that share much in public funding is primarily provided to common. Despite exemplary features in parents through individual fee subsidies some of those systems, most are generally or tax breaks. Canada’s weak showing on less than effective. developed country ECEC ratings is large- For example, all provincial-territorial ly explained by our lack of a publicly man- ECEC systems provide publicly funded and aged system.13 delivered kindergarten, as well as a combin- Second, building a comprehensive ECEC ation of centre-based and home-based ser- system requires a clear long-term vision, vices, with both full-time and part-time op- matched by sustained, adequate public fund- tions and family resource programs. Almost ing, as the foundation on which public ac- all jurisdictions rely largely on market-driv- countability can be built. The international en for-profit and non-profit services, with minimum funding benchmark for countries limited public base funding, and disburse striving to establish effective ECEC systems most child care funding in the form of fee is 1% of GDP for children aged 0–5 years.14 subsidies targeted to lower-income families. Canada needs to substantially ramp up its All child care services except those in funding throughout the system-building Quebec rely heavily on parent fees as the process (which may take a decade) to meet main source of revenue. These costs, which even this low-end goal.15 are often higher than university tuition fees, Third, the federal government needs to are increasing at rates that outpace infla- confirm its leadership role, and the respect- tion.18 All child care services across Canada ive roles of the provinces and territories, in rely on a poorly remunerated, almost en- achieving a universal, high-quality, compre- tirely female workforce and have education hensive system. In their election platform, and training requirements that are gener- the Liberals stated they “will not impose ally lower than international benchmarks. predetermined costs or models on other These structural similarities mean that, orders of government but work collabora- in practice, the challenges experienced by tively with each of them on funding agree- families on a daily basis are remarkably ments.”16 This is consistent with the shared similar wherever they live. Child care is framework developed by child care advo- frequently not available where and when cates, which takes the position that “meet- parents need it, and is affordable only for

48 Canadian Centre for Policy Alternatives a minority of families. The quality of care, $1 billion over each of the subsequent five when parents do find a space, is often so years to achieve the minimum established low that it cannot reliably give children the benchmark of 1% of GDP. The program will best start in life. be fine-tuned after five years. And in all regions of Canada some Action: Consistent with the shared frame- groups — such as infants, children with dis- work on a Canadian ECEC program, new abilities, newcomers, rural communities, par- funding will come with certain conditions. ents working nonstandard or part-time hours, The government will provide $100 million and especially Indigenous families — are rou- to empower and resource Indigenous com- tinely left out of ECEC. Culturally appropri- munities to begin to design, deliver, and ate early childhood services for Indigenous govern ECEC systems and services that meet children on- and off-reserve are woefully their needs and aspirations. It will also pro- underfunded and underdeveloped across vide $500 million to provinces and terri- Canada. It is thus not surprising that the tories that have committed to developing Truth and Reconciliation Commission called their own ECEC policy frameworks based for culturally appropriate Indigenous early on principles of universality, high quality, childhood education as part of the healing and comprehensiveness, and include the and reconciliation process. following elements:

• Public plans for developing integrat- AFB Actions ed systems of ECEC that meet the care and early education needs of children The AFB begins to move Canada from its and parents; failed market-based approach to ECEC toward a comprehensive, publicly managed • Public management of the expansion of system of high-quality, universal care. Child public and not-for-profit services under care funding is currently part of an undiffer- public authorities through public plan- entiated, 11-year, $21.9-billion Social Infra- ning processes, including integration of structure Fund that includes housing, sen- existing community services into pub- iors’ facilities, and cultural resources. A licly managed systems; dedicated and sustained funding stream • Public funding delivered directly to is needed to promote transparency and ac- ECEC services and systems rather than countability and to monitor progress. through individual parent-payment meas- Action: Commit $600 million to a dedicat- ures (this will ensure high-quality, ac- ed and sustained federal funding stream. cessible services through predictable, While ECEC spending in year one is rela- sustained, dedicated funding); tively modest, to allow time for effective • Public reporting in federal, provin- federal-provincial-territorial-Indigenous cial, and territorial legislatures on qual- planning and preparation, it will grow by

High Stakes, Clear Choices: Alternative Federal Budget 2017 49 ity, access, and other elements in the 6 UNICEF. (2008). The child care transition: A league table of early childhood education and care in econom- ECEC system. ically advanced countries. Innocenti Report Card 8. Flor- ence, Italy: UNICEF Innocenti Research Centre, p. 17. Action: Review and develop a plan for 7 Liberal Party of Canada. (2015). “Greater economic se- strengthening the federal-provincial-terri- curity for middle class families.” Backgrounder. Liber- torial approach to maternity/parental leave al Party of Canada. Online retrieved December 23, 2016 with respect to eligibility, flexibility, ad- https://www.liberal.ca/files/2015/09/Greater-economic- security-for-Canadian-families.pdf equacy of benefits, special considerations (including children with disabilities), adop- 8 Child Care Advocacy Association of Canada, Can- adian Child Care Federation, Childcare Resource and tion and multiple births, and earmarked Research Unit and Campaign 2000. (2015). Shared leave for a parent who is not the birth par- Framework for building an early childhood education ent in a couple. and care system for all. Online retrieved December 23, 2016 https://ccaacacpsge.files.wordpress.com/2016/01/ sharedframework_jan2016.pdf

9 In early childhood programs the term “inclusion” is Notes usually defined as fully welcoming and supporting children with disabilities together with all children. How- 1 Department of Finance. (2016). Federal budget. Grow- ever, the term “social inclusion” is sometimes used more ing the middle class. Ottawa: Government of Canada. generally to mean the process of improving the terms Online retrieved November 14 2016 http://www.budget. for individuals and groups to take part in society. The gc.ca/2016/docs/plan/budget2016-en.pdf, p. 101 Canadian child care community envisions an inclusive 2 Liberal Party of Canada. (2015). “Greater economic se- system that welcomes, nurtures, and respects families curity for middle class families.” Backgrounder. Liber- in all their diversities. al Party of Canada. Online retrieved December 23, 2016 10 Child Care Advocacy Association of Canada. (2004). https://www.liberal.ca/files/2015/09/Greater-economic- From patchwork to framework. A child care strategy for security-for-Canadian-families.pdf and http://www. Canada. Ottawa, ON: Author liberal.ca/realchange/child-care/; The terms “early learning and child care” and “early childhood educa- 11 With regard to for-profit provision the prevailing tion and care (ECEC)” include centre-based child care, position of the child care movement, based on the best regulated home child care, preschools/nursery schools, available evidence, is that existing for-profit centres can and kindergarten. Here we use the terms child care, continue to operate within a publicly funded system, early learning and child care, and ECEC interchange- provided they (along with other private providers such ably, although we tend to describe our system-building as non-profit and family child care services) meet pub- aspirations as ECEC. lic accountability requirements. However, for-profit services will not continue to expand because new public 3 UNICEF. (2008). The child care transition: A league funds should be used to increase access to high-qual- table of early childhood education and care in econom- ity, affordable, public- and community-owned services, ically advanced countries. Innocenti Report Card 8. Flor- not private profits. ence, Italy: UNICEF Innocenti Research Centre. 12 Bennett, J. (2008). Review of the literature and current 4 Key aspects of this Technical Paper are incorpor- policy in the early childhood field. UNICEF Innocenti Re- ated into this chapter. Available online at https:// search Centre Working Paper. Online retrieved Novem- www.policyalternatives.ca/sites/default/files/uploads/ ber 14, 2016 https://www.unicef-irc.org/publications/ publications/National%20Office/2016/12/Child_Care_ pdf/iwp_2008_01_final.pdf AFB2017_technical_paper.pdf 13 Ferns, C. and Beach, J. (2015). From child care mar- 5 UNICEF. (2008). The child care transition: A league ket to child care system. In Our schools, ourselves, Spe- table of early childhood education and care in econom- cial Issue, Summer 2015. Moving beyond baby steps: A ically advanced countries. Innocenti Report Card 8. Flor- child care plan for Canada. Online retrieved November ence, Italy: UNICEF Innocenti Research Centre, p. 18.

50 Canadian Centre for Policy Alternatives 14, 2016 https://www.policyalternatives.ca/sites/default/ 17 Child Care Advocacy Association of Canada, Can- files/uploads/publications/National%20Office/2015/09/ adian Child Care Federation, Childcare Resource and OS120_Summer2015_Child_Care_Market_to_Child_ Research Unit and Campaign 2000 (2015). Shared Frame- Care_System.pdf work for building an early childhood education and care system for all. Online retrieved December 23, 2016 14 UNICEF. (2008). The child care transition: A league https://ccaacacpsge.files.wordpress.com/2016/01/ table of early childhood education and care in econom- sharedframework_jan2016.pdf ically advanced countries. Innocenti Report Card 8. Flor- ence, Italy: UNICEF Innocenti Research Centre. 18 Macdonald, D. and Friendly, M. (2016). A Growing Concern: 2016 Child Care Fees in Canada’s Big Cities. 15 Child Care Briefing Note. (2006).Early learning and Canadian Centre for Policy Alternatives. Online retried child care: How does Canada measure up?International December 23, 2016 https://www.policyalternatives.ca/ comparisons using data from Starting Strong II (Organi- sites/default/files/uploads/publications/National%20 sation for Economic Co-operation and Development, Office/2016/12/A_Growing_Concern.pdf 2006). Childcare Resource and Research Unit.

16 Liberal Party of Canada. (2015). “Greater economic security for middle class families.” Backgrounder. Lib- eral Party of Canada. Online retrieved December 23, 2016 https://www.liberal.ca/files/2015/09/Greater-economic- security-for-Canadian-families.pdf

High Stakes, Clear Choices: Alternative Federal Budget 2017 51 Defence

ALTERNATIVE FEDERAL BUDGET DEFENCE 2017

¢ Canada lacks an up-to-date foreign policy framework to guide ¢ Make UN peacekeeping and sustainable peace a Canadian defence policy. defence priority. ¢ Despite being the sixth largest military spender among the 28 member nations of NATO, Canada has about $40 billion worth of ¢ Reject Canadian participation in costly, unproven weapons unfunded commitments for military equipment. systems like the F-35 fighter jet and U.S. ballistic missile defence. ¢ The government’s pledge to re-engage in UN peacekeeping and ¢ training lacks the necessary institutional and experiential Invest $5 million per year in in a world class international peace underpinnings, given Canada’s virtual absence in this field over the operations training centre for military, police, and civilians from HIGH STAKES HIGH last 10 years. Canada and around the world.

¢ There are serious gaps in the Canadian regulation of armaments, CLEAR CHOICES ¢ Ensure that sales of Canadian-made weapons are consistent making it difficult for Canada to meet treaty and other obligations with the Arms Trade Treaty and Canada’s own export control under international law. policy. ¢ NATO’s reliance on nuclear weapons conflicts with Canada’s nuclear disarmament obligations under the Nuclear ¢ Lead an initiative within NATO with the ultimate objective of Non-proliferation Treaty. ending the organization’s reliance on nuclear weapons.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background1 deferred purchases of defence equipment amounted to over $40 billion in acquisition 2016 Defence Policy Review costs.2 Eighteen months later that figure is A defence policy review should be guided by largely unchanged. Given the size of the pro- the priorities established by the Canadian curement funding deficit, it is hard to over- government for its foreign policy and offi- state the urgency of setting defence equip- cial development assistance (ODA) frame- ment priorities. However, Canada’s modest work. The failure of the Liberal government national defence requirements — given the to conduct such an overarching review, and lack of any direct threat to Canadian terri- the opaqueness of the public consultative tory, and shared defence of North America dimension, raises serious questions about with the United States — makes this an emi- the utility of the review and its outputs. nently “doable” task.

Procurement Abyss UN Peacekeeping

Authorized DND spending is $19.3 billion in As of July 31, 2016, Canada ranks 67th among 2016-17, as shown in Figure 10. As of June 2015, contributors of uniformed personnel (po-

52 Canadian Centre for Policy Alternatives Figure 10 Canadian military spending (2000–16, $2016)

15 $ Billions 10

0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Source Compiled by author from Public Accounts, and, for the current year, the Main and Supplementary Estimates

lice and military) to UN peace operations.3 plexities of modern peace operations require This represents a slight increase from an all- in-depth training and education. With UN time low ranking of 74th in March 2016, and peace operations at an all-time high, and contrasts sharply with Canada’s past role the Canadian contribution dismally low, as frequently the single largest contributor Canada is currently lagging far behind other to UN peace operations.4 The Canadian de- nations in its readiness to train for and sup- cline took place as UN peacekeeping mush- port UN operations. roomed in size and complexity, now compris- In August 2016, Canada signalled its in- ing a total of 100,851 uniformed personnel tention to commit up to 600 soldiers to a UN and an additional 16,471 civilians.5 peacekeeping mission.7 In September, they There are now less than a quarter of the announced at the UN that Canada would training activities there were a decade ago host the 2017 United Nations peacekeep- for UN peace operations.6 Included in the ing conference, which is expected to bring training cuts was the closure, in November together representatives from more than 2013, of the Pearson Peacekeeping Centre 30 countries. By mid-January 2017, despite (PPC), a world class peacekeeping facility “fact finding missions” to Africa and much funded by the federal government for inter- media speculation, no specific mission had disciplinary training of military, police, and been identified. civilians from around the world. The com-

High Stakes, Clear Choices: Alternative Federal Budget 2017 53 Weapons Systems approved the bulk of the export permits and International Law in 2016, despite compelling evidence of gross human rights violations by the It is essential that Canada’s weapons choices Saudi regime, at home and abroad. This and exports reflect binding international situation underscores the urgent need humanitarian and human rights law and for a tightening of, and greater scrutiny the principles of the Geneva conventions. over, Canada’s arms export control policy. Canada must vigorously support the international control of weapons and a ban on “problem weapons groups” that cause indis- NATO and Nuclear Weapons criminate or disproportionate harm to civil- Canada is a non-nuclear-weapons state party ians. The following priorities in this respect to the Nuclear Non-proliferation Treaty (NPT) should be key to Canadian defence policy. and therefore is obligated under its Article • Cluster munitions: Although Canada VI to pursue good faith negotiations with is a party to the treaty banning cluster the goal of nuclear disarmament. At the munitions, its domestic implementation same time, Canada is a member of a collect- legislation created a loophole that could ive defence alliance, NATO, with a strategic see Canadian Forces personnel assisting doctrine of reliance on nuclear weapons for allies currently outside the treaty (e.g., their alleged “deterrence” value. U.S. nucle- the U.S.) in their use of such weapons. ar weapons modernization plans include This would be contrary to both the let- upgraded “tactical” or “battlefield” nucle- ter and the spirit of the treaty. ar weapons for NATO.8 With tensions high and rising between Russia and NATO, and a • Lethal autonomous robotic weapons: U.S. president talking about a new nuclear “Killer Robots” lack the human judgment arms race, some experts believe the threat and ability to understand context that is of nuclear catastrophe is greater now than necessary for the use of force in accord- even during the Cold War.9 ance with international law, namely, the principles of proportionality, precaution, and distinction. AFB Actions • Armed drones: There is currently no By prioritizing UN-led peace and security international control regime for armed operations, and working to curb and pro- unmanned aerial vehicles and other hibit destabilizing weapons systems, Can- armed drones. ada can enhance its sovereignty and secur- • Arms export control policy: The pre- ity while contributing responsibly to global vious Conservative government signed peacebuilding. a $15-billion arms deal with Saudi Ara- Action: Restore and expand the emphasis bia in 2014. But the Liberal government on war prevention and peaceful conflict

54 Canadian Centre for Policy Alternatives resolution, and give priority to strength- age Canadian expertise in artificial intelli- ening the UN’s rapid response capacities. gence, robotics, engineering, internation- Result: Such a foreign policy focus will al- al law, and other relevant areas to lead an low for a reorientation of Canadian defence international initiative to bring about a ban policy to one of sustainable peace and com- on this technology. The federal government mon security. will also mandate a broad public review of military export policy to ensure that sales Action: Base military equipment choices of Canadian-made weapons abroad are con- on Canada’s modest national requirements sistent with the Arms Trade Treaty and Can- and specialization in UN peace operations. ada’s own arms export policy. Costly, unproven systems with no compel- Result: Canadian military procurement and ling Canadian need will be eschewed. Ac- arms export policies will more fully reflect cordingly, the F-35 fighter jet will be rejected, stated Canadian policy and values and help saving at least $400 million a year, and Can- expand the reach of, and respect for, inter- ada will not seek participation in the U.S. national humanitarian and human rights strategic ballistic missile defence system.10 law and the Geneva conventions. Result: Canada will begin to reduce its massive defence procurement deficit while also Action: Mandate Canada to re-enter and re- contributing to strengthening UN peace vitalize the debate within NATO on the role operations and providing value at home for of nuclear weapons with a view to agreeing Canadian taxpayers. their removal from Europe as a first step toward NATO adopting a deterrent posture Action: Invest $5 million per year in a world that excludes nuclear weapons. class international peace operations training Result: Canada will tangibly contribute to centre for military, police, and civilian per- moving the world back from the nuclear sonnel from Canada and around the world. brink and begin a meaningful, comprehen- Result: Canada will begin to rebuild its in- sive negotiation for nuclear disarmament. stitutional knowledge of modern UN peace operations, prepare Canadian forces for UN deployments, and contribute to international Notes capacity-building for UN peace operations. 1 This Chapter is based on a joint civil society submis- Action: Commit to closing the loophole in sion to the federal government’s defence policy review, Canada’s domestic implementation legisla- entitled “A Shift to Sustainable Peace and Common Se- curity,” co-published in 2016 by the Rideau Institute and tion for the Cluster Munitions Treaty, to cat- Group of 78: http://www.rideauinstitute.ca/2016/11/24/ egorically prohibit any form of aid or assist- a-shift-to-sustainable-peace-and-common-security/ ance in the use of these banned weapons. 2 Michael Byers. (2015). Smart Defence: Rebuilding Can- Canada will declare a moratorium on the de- ada’s Military. Ottawa: Rideau Institute and Canadian Centre for Policy Alternatives. p. 11. velopment and deployment of lethal, fully autonomous weapons systems and lever-

High Stakes, Clear Choices: Alternative Federal Budget 2017 55 3 World Federalist Movement factsheet, July 2016: http:// 7 Althia Raj, “Harjit Sajjan Got ‘Ahead Of Government’ www.wfmcanada.org/wp-content/uploads/2016/10/ Revealing Africa Peacekeeping Details: Staffer,” Huff- peacekeeping-fact-sheet-2016-eversion1.pdf ington Post Canada, November 11, 2016.

4 A. Walter Dorn and Joshua Libben. (2016). Unpre- 8 See, for example, the December 2016 factsheet of the pared for Peace? The Decline of Canadian Peacekeep- Arms Control Association: https://www.armscontrol. ing Training (and what to do about it), Ottawa: Rideau org/factsheets/USNuclearModernization. Institute and CCPA, p. 32. 9 Perry William J. (2005). My Journey at the Nuclear 5 United Nations peacekeeping factsheet, December 31, Brink. Stanford University Press. 2016: http://www.un.org/en/peacekeeping/resources/ 10 Byers, op cit., p. 31. Where he recommends the pur- statistics/factsheet.shtml chase of the F/A Super Hornets instead. The Liberal gov- 6 Dorn and Libben, op cit., p. 6. ernment has announced its intention to purchase 18 Super Hornets for an undisclosed cost as a “stop-gap” measure pending a final decision on which plane to choose.

56 Canadian Centre for Policy Alternatives Employment Insurance

ALTERNATIVE FEDERAL BUDGET EMPLOYMENT 2017 INSURANCE

¢ 20% of jobs are part time and roughly ¢ Establish a uniform national eligibility 14% are contract or seasonal; it is hard for requirement of 360 hours for regular these workers to qualify for EI. benefits, and 300 hours for special benefits. ¢ The EI benefit rate is low — just 55% of ¢ Add a low-income supplement so that earnings averaged over the previous six no regular or special benefits fall below HIGH STAKES HIGH months. $300/week. ¢ Nearly three-quarters of working fathers CLEAR CHOICES took paid parental leave in Quebec, ¢ Add eight weeks of leave that can only compared to only 13% of working fathers be taken by a non-birthing parent. outside Quebec.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background per year in revenue for the EI fund over the next seven years. Employment insurance (EI) is a vital part of Canada’s social safety net. Successive federal governments have made the program Regular Benefits: Addressing less equitable and harder to access, at the Precarious Work and Inequality same time as our labour market has under- EI is not keeping up with the realities of to- gone major changes. A social insurance pro- day’s job market, in which 20% of jobs are gram should dampen the effects of labour part-time and roughly 14% are contract or market inequality, but the current design of seasonal. A key disadvantage of temporary EI actually amplifies inequality. and part-time employment is that when the EI could be used to address precarious job ends, workers are unlikely to qualify for employment, support a just transition, or EI. In the event they do qualify, it can be for reduce inequality. Instead of doing any of as few as 14 weeks of benefits. Because of these things, the federal government will variations in hours worked from week to be reducing premiums from 1.88% to 1.63%. week, benefit rates can also be lower for This works out to a loss of about $4 billion

High Stakes, Clear Choices: Alternative Federal Budget 2017 57 Figure 11 EI Premium Rate, 1997–2017

3.5%

3.0%

2.5%

2.0%

1.5% $ Per $100 Earnings $ Per 1.0%

0.5%

0% 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

Source Canada Revenue Agency, http://www.cra-arc.gc.ca/tx/bsnss/tpcs/pyrll/clcltng/ei/cnt-chrt-pf-eng.html

precarious workers — this is one way that EI four months of full-time work — to qualify amplifies labour market inequalities. for EI. They are eligible for between 17 and We know that racialized and Indigen- 40 weeks of benefits depending on how ous workers, workers with disabilities, and long they’ve worked over the previous year. LGBTQ workers are all disproportionately This rule implies that the local unemploy- represented in low-wage precarious work. ment rate is the most important factor for EI should help level the playing field for determining how hard it is for workers to these workers. find a new job. While that may have been mostly true at one time, it is no longer the Access to Benefits: Hours Worked case for precarious workers in urban areas. Workers qualify for regular benefits based on A pan-Canadian entrance requirement of the number of hours they have worked over 360 hours would level the playing field for the previous year and the local unemploy- precarious workers. ment rate. Fewer hours are needed to qualify We want to acknowledge that a growing in regions with high unemployment rates, number of unemployed workers haven’t con- and claimants in those regions receive bene- tributed to EI over the past 12 months — they fits for more weeks. In an average EI region may be students, previously self-employed, with an unemployment rate of 7% to 8%, unpaid interns, or returning from parental workers need at least 630 hours — about leave. These workers need to be able to ac-

58 Canadian Centre for Policy Alternatives cess training through labour market agree- ents or does anything to improve access to ments, which are funded through general benefits for parents who don’t qualify under revenue and not EI premiums. current rules, nor do they improve access to child care for parents who need it. Benefit Levels As it stands, the basic parameters of Can- Access to Benefits: ada’s EI system are insufficient. The bene- Hours Worked and Benefit Levels fit rate is low — just 55% of earnings aver- Workers need 600 hours of insurable em- aged over the previous six months. Women ployment in the past year to access mater- still face a significant earnings gap in Can- nity, parental, and adoption benefits in most ada, and so their EI benefits are also lower. of Canada. Quebec has its own provincial Between 2006 and 2015, women’s average plan and provides benefits to workers with weekly benefits were consistently about $60 more than $2,000 in labour market earn- lower than men’s.1 ings — equivalent to about 186 hours of work One way to address this inequality is to at Quebec’s current minimum wage of $10.75. set a minimum floor for benefits. While EI Many new parents are surprised to find has a supplement for low-income families out that they don’t qualify for these bene- with children under 18, there is no supple- fits, especially recent graduates, self-em- ment for those without children. EI has had ployed workers, and part-time workers. As higher replacement rates for lower-income well, the low replacement rate makes tak- workers in the past; it would not be out of ing parental leave unaffordable for low-in- place for a social insurance system to im- come families. plement this kind of policy to lessen labour Prior to the 1997 changes to unemploy- market inequalities. ment insurance, parents needed the equivalent of 300 insurable hours of work to qualify for maternity or parental benefits. Lowering Parental Benefits: the entrance requirement to 300 hours and Addressing Inequality instituting a minimum benefit level would Child care and parental leave were hot topics give new parents better access to benefits during the 2015 election. In response, the and make taking parental leave more af- Liberals promised to introduce more flex- fordable for families. ible parental benefits if they were elected. Their proposal had two options: parents Addressing Gender Inequality could take the existing 35 weeks in smaller Looking at Quebec’s experience gives us chunks over an 18-month period, or they some clues about how to improve EI par- could take leaves of up to 18 months with ental benefits. Research shows that Quebec a lower weekly benefit level. fathers are far more likely to take parental Neither of these options increases the leaves than fathers in the rest of Canada. In total value of the benefits available to par- 2010, nearly three-quarters (72.5%) of work-

High Stakes, Clear Choices: Alternative Federal Budget 2017 59 ing fathers took paid parental leave in Que- Just Transition: Training bec, compared to only 13% of working fath- for a Green Industrial Revolution ers outside Quebec.2 We have a major opportunity to move un- A study found that an increase in the employed, underemployed, and low-paid number of Quebec fathers taking leave had workers into better jobs as a part of a stra- lasting effects on the division of unpaid labour tegic response to meeting our climate change within the home, resulting in more balance targets. We can expand access to EI training between unpaid and paid work responsibil- programs with a focus on labour adjustment ities for opposite sex spouses.3 Fathers who and transition. That way, Canadian workers took parental leave spent more time doing could benefit from the transition to a green unpaid work and their spouses spent more economy by accessing new, green jobs cre- time in paid work. ated by public investment programs and sector strategies. Fairness for Migrant Workers The labour market development agree- In 2012, Canada changed its regulations to ments (LMDAs) between the federal govern- expressly limit EI parental benefits only to ment and the provinces and territories will those individuals who were authorized to be crucial in accomplishing this goal. The remain in Canada at that time.4 This meant LMDAs transfer funds from the EI account that migrant workers (such as seasonal agri- to the provinces and territories for training cultural workers) who left Canada but were programs for people who are EI contributors. likely to return at the beginning of the next The current LMDAs transfer $1.95 billion in growing season no longer had access to par- funding annually to the provinces and ter- ental benefits. ritories for EI training programs. During the All other Canadian workers are eligible last federal election, the Liberals said they to receive parental benefits even if they would increase the LMDA transfer by $500 leave the country. Only migrant workers million per year. The AFB strongly supports are treated differently. This change was re- this commitment. gressive — parental benefits were the only type of EI benefit that many migrant workers were able to access. As a result, most Access to a Fair Appeals Process migrant workers are no longer eligible for In the 2012 budget, the federal government any employment insurance benefits, even made profound changes to the appeal pro- though they pay into the program with each cess for employment insurance claims, paycheque. The AFB will reverse this mean- abolishing the Board of Referees and insti- spirited change. tuting the Social Security Tribunal (SST). Previously, appeals were heard by local EI boards of referees, which had three part- time members: one appointed from each

60 Canadian Centre for Policy Alternatives of labour and business by the respective Result: Increased revenue of approximate- EI commissioners, and a neutral chair ap- ly $3.5 billion in 2017 for the EI Operating pointed by the government. The EI board Account. members were knowledgeable about local Action: Establish a uniform national eligi- labour conditions as well as EI legislation bility requirement of 360 hours for regular and regulations, and delivered timely deci- benefits, and 300 hours for special benefits sions, usually within 28 days. (returning to pre-1990 levels) and restore mi- The changes in 2012 were made with no grant workers’ access to parental benefits. consultation or notice to stakeholders. The (Cost: $2 billion/year) result was a process that takes longer than Result: An additional 250,000 workers will ever, that is at odds with basic principles receive regular and special benefits. of procedural fairness, and that stacks the odds against unemployed workers. Action: Add eight weeks of leave that can The structure of the new SST appeal pro- only be taken by a non-birthing parent. This cess is highly unusual, and deviates from leave is additional to maternity leave and accepted legal norms. Workers are required parental leave, and would be available to to submit all of their evidence and legal sub- adoptive parents and same-sex couples as missions at the first stage of the process, be- well. (Cost: $600 million/year) fore they have even been informed of the Result: An additional 155,000 parents could case against them or given full disclosure of take parental leave. their file. Normally a person would have the Action: Add a low-income supplement so chance to see the evidence against them so that no regular or special benefits fall below that they can respond in an informed way. $300/week. (Cost: $900 million /year) It also takes considerably longer to com- Result: Reduced inequality for low-income plete an appeal than it did under the former workers. system. The SST’s service standard is to deliver final decisions in 85% of cases within Action: Restore the Board of Referees ap- 90 days of the appeal being filed. This is on peal system for EI. The Social Security Tri- top of the time it took to get the original de- bunal introduced in the 2012 budget isn’t cision plus the time for reconsideration of working for workers, and has proven to be the decision from the EI commission. costly and inefficient. Result: More justice for unemployed workers.

AFB Actions Notes Action: Leave premiums at $1.88 per $100 of earnings, up to the 2017 maximum insur- 1 2012 and 2014/2015 EI Monitoring and Assessment Reports, Annex 2.2, found online: www.esdc.gc.ca/en/ able earnings of $51,300. reports/ei/index.page

High Stakes, Clear Choices: Alternative Federal Budget 2017 61 2 Findlay, L.C. and D.E. Kohen. (2012). “Leave practi- 4 Employment Insurance Regulations, SOR/96-332, s. ces of parents after the birth or adoption of young chil- 55(4) retrieved on 2016-01-26; dren,” in Canadian Social Trends, Statistics Canada. New Release (December 6, 2012), at http://news.gc.ca/ web/article-en.do?nid=711069 3 Patnaik, A. (2016). Reserving Time for Daddy: The Short and Long-Run Consequences of Fathers’ Quotas Available at SSRN: http://ssrn.com/abstract=2475970

62 Canadian Centre for Policy Alternatives Environment and Climate Change

ALTERNATIVE FEDERAL BUDGET ENVIRONMENT AND 2017 CLIMATE CHANGE

¢ Climate change threatens the prosperity and ¢ Remove all direct and indirect subsidies for well-being of all Canadians. fossil fuel exploration, development, and transportation. ¢ The climate policy ambition of Canada’s federal and provincial governments does not ¢ Enforce a stringent national carbon pricing match the ambition of their climate targets. standard. HIGH STAKES HIGH ¢ Clean energy presents an opportunity to reduce emissions while growing the economy. CLEAR CHOICES ¢ Contribute Canada’s fair share of global climate financing. ¢ The international community has committed to ambitious climate action, although each ¢ Finance new renewable energy generation country must do more to pull its weight. and energy efficiency improvements.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background by the government in December, is an un- precedented step forward insofar as it com- Reducing the amount of greenhouse gases mits the federal and (most) provincial gov- (GHGs) we emit into the atmosphere is cen- ernments to a unified climate strategy for the tral to mitigating the worst effects of climate first time. However, the policies outlined in change. Canada has committed to deep GHG the framework do not put Canada on a path emission reductions in principle, but with- to meeting its medium-term GHG emission out ambitious domestic policy action Canada reduction target of 30% below 2005 levels will continue to miss these targets. Canada by 2030. To make matters worse, that mod- must commit to implementing a comprehen- est target — a hangover from the previous sive domestic climate action plan commen- Conservative government — does not reduce surate with its global ambitions for climate Canada’s emissions as far as climate scien- change mitigation and adaptation. tists say we must in order to do our part in The Pan-Canadian Framework on Clean avoiding catastrophic global climate change. Growth and Climate Change, announced

High Stakes, Clear Choices: Alternative Federal Budget 2017 63 Meeting our GHG emission reduction tries respond to climate change. Canada’s commitments is a significant challenge, but contribution to global climate finance is it is also an opportunity. Among other major critical not only to support developing coun- initiatives, achieving Canada’s full renew- tries’ mitigation and adaptation efforts, but able energy generation potential will sig- also to show leadership and build trust in nificantly reduce emissions while spurring its international negotiations. economic growth. Recent research demon- Climate change is a global collective ac- strates that renewable energy will be the lar- tion problem, so international trust and co- gest source of new power generation cap- operation is essential for long-term success. acity worldwide over the next five years, in It is promising that world leaders recognize part because the cost of renewable energy the need for ambitious climate action. The is now competitive with fossil fuels. The Paris Agreement aspires to a global warm- rapidly declining cost of clean technology ing target of just 1.5 degrees Celsius above means more wind turbines and solar pan- pre-industrial levels (with a firm target of els on the ground. Any federal investment two degrees), which would give the world a in renewable energy infrastructure will gen- reasonable chance of avoiding catastrophic erate far more megawatts per dollar than it climate change. would have just a few years ago. However, missing from the Paris Agree- Canada has an abundance of diverse ment is a coherent framework that clearly energy resources and more than enough states a peak year for emissions, a target clean energy potential to not only meet our date for a 100% renewable economy, or a needs but also to export clean power to an carbon budget (i.e., a total amount of car- increasingly energy-hungry world. The shift bon we can “safely” use before exceeding to a resilient, decarbonized Canadian econ- the 1.5 degree threshold). Taken together, omy must be accelerated in 2017 to make up the GHG emission reduction targets submit- for lost ground. The AFB transitions toward ted by each country, if met, would put the a zero-carbon economy by supporting those world on track for a temperature increase energy resources that maintain a healthy of three degrees Celsius or more by the end environment, a stable climate, and a strong of the century. economy. In addition to ensuring the future prosperity and well-being of Canadians, the fed- AFB Actions eral government has an international re- The AFB plan puts Canada on course to sponsibility to act on climate change. Under 100% renewable energy generation within the December 2009 Copenhagen Accord, de- 35 years (by 2050), which will help ensure veloped countries promised to provide three Canada meets its national greenhouse gas years of “fast start” climate financing with reduction targets. the end goal of mobilizing US$100 billion per year by 2020 to help developing coun-

64 Canadian Centre for Policy Alternatives Action: Remove all federal government Action: Enforce a strong, harmonized car- direct spending and production subsidies bon price in all Canadian jurisdictions. on carbon. A broad, economy-wide carbon price will Over five years, all remaining federal tax help drive GHG emission reductions at the credits, production subsidies, direct feder- lowest cost. Although it is not, on its own, al spending, and public financing provid- sufficient to meet Canada’s climate goals, ed for fossil fuels will be eliminated. This carbon pricing is the most efficient policy will save the government $1.5 billion annu- tool for reducing GHG emissions. Carbon ally by phasing-out the following measures: pricing regimes are currently in place in Brit- ish Columbia (since 2008), Quebec (2013), • The Accelerated Capital Cost Allowance Ontario (2017), and Alberta (2017), with sev- (ACCA) provided to liquefied natural gas eral other provinces promising to implement projects ($9 million per year); their own policies this year. • Flow-through share deductions available The new pan-Canadian climate frame- to investors in coal, oil, and gas projects work includes a minimum national carbon ($133 million per year); price, which means all jurisdictions must implement a carbon tax or cap-and-trade sys- • Exploration limited partnerships (amount tem by 2018. This is certainly progress, but unknown); there are elements of the plan that should • Canadian Exploration Expenses (CEE) be stronger and others that require great- for coal mining ($148 million a year); er clarity — issues the AFB plan addresses. First, a $10/tonne carbon price starting • Canadian Development Expenses (CDE) in 2018 means it will take many years before for oil and gas well or mining develop- the carbon price starts to create significant ment ($1.018 billion per year); emission reductions. Second, the carbon • Canadian oil and gas property expens- price floor ramps up by $10/tonne per year es (COPGE), which allow companies but only until 2022. In the absence of a plan to claim 10% of the costs of acquiring to increase the carbon tax until 2030 or be- oil and gas wells and rights ($36 mil- yond, the federal government will have to lion a year); be very aggressive with complementary policies — regulations, standards, and spending • Duty exemptions for imports of mobile programs — to fill the gap and meet or beat offshore drilling units in the Atlantic the existing 2030 target. and Arctic; and In the AFB plan, the government cre- • The Foreign Resource Expense (FRE) ates a stronger national carbon pricing stan- and Foreign Exploration and Develop- dard that enforces a common set of princi- ment Expense (FEDE). ples across provincial and territorial carbon pricing regimes. First, the new standard will require a stringent carbon price of $30/tonne

High Stakes, Clear Choices: Alternative Federal Budget 2017 65 by January 1, 2018, increasing by $10/tonne ada has committed to providing a total of per year until 2030. The price must be ap- $2.65 billion in climate financing by 2021, plied broadly with no industrial sector ex- but that does not go far enough to support empt. Second, all carbon pricing revenues adaptation and mitigation activities in de- will be returned to provinces and territor- veloping countries. The AFB raises that fi- ies, as in the current framework, but a por- nancing commitment to $1 billion per year. tion of revenues from all carbon pricing re- This will help less developed countries regimes is redistributed to those most affected duce their dependence on fossil fuels while by the transition off fossil fuels. A portion building climate resilience. Reductions in of all carbon revenues will be allocated to GHG emissions are often much more effi- help low-income families affected by energy ciently accomplished in developing coun- poverty; to provide just transition plans and tries on a dollar-for-dollar basis compared retraining for workers in the industries be- to more developed economies, as GHG re- ing phased-out; and to invest in clean tech- ductions are often possible with less technologies, energy efficiency programs, and nology and at a lower cost. adaptation measures. Action: Achieve Canada’s full renewable A harmonized carbon price of at least energy generation potential and improve $50/tonne of CO e (carbon dioxide equiva- 2 energy efficiency for Canadian homes. lent) by 2020 will be enforced in all Canadian The AFB renews funding of $1 billion jurisdictions, thus providing all Canadian annually to Natural Resources Canada for households and businesses in all sectors the Clean Energy Fund to finance renewable of the economy with the same incentive to energy demonstration projects and fund re- reduce GHG emissions and switch to low- newable energy research, deployment, and carbon energy sources (see the AFB Taxa- transmission across the country. Funding for tion chapter for more details). To address clean electricity generation, interconnection the potential competitiveness impacts on of provincial electricity grids, energy stor- emissions-intensive and trade-exposed in- age, the electrification of end uses, and com- dustries (e.g., steel, cement), the feasibil- munity-scale renewable energy projects will ity of border carbon adjustments, or other grow the middle class, provide meaningful measures to level the playing field with outcomes to benefit First Nation commun- international competitors not subject to a ities, strengthen Canada’s economy, and carbon price, will be studied. make significant progress toward achieving Action: Contribute Canada’s fair share of Canada’s GHG emission reduction targets. global climate financing. The AFB plan seizes the opportunity to Developing countries face significant fund research organizations and initiatives challenges to reducing their emissions and across the country to make optimal use of are already suffering the greatest losses Canada’s diverse and abundant clean energy and damages due to climate change. Can- resources. These investments could sup-

66 Canadian Centre for Policy Alternatives port, among other possibilities, the study porters. Building and maintaining the infra- of solar power in Alberta, energy storage structure needed to support this exchange in Saskatchewan, and geothermal energy of electricity would create jobs, expand util- in British Columbia. Investing in renewable ities’ access to diverse energy markets, and energy at the local level would not only help enhance the security and sustainability of reduce Canada’s greenhouse gas emissions, Canada’s energy supply. but also provide jobs and investment oppor- In addition to expanding the clean energy tunities for Canadians in remote areas, and supply, the AFB helps reduce domestic energy assist in the phase-out of fossil fuel–based demand through efficiency initiatives, allo- electricity generation. cating $400 million per year to re-establish The AFB supports community-scale re- an energy efficiency home retrofit program newable energy projects by expanding ac- (modelled on the former ecoENERGY retro- cess to federal grants for demonstration fit program). The program will initially pri- projects. The City of Vancouver’s Neigh- oritize northern communities and low-in- bourhood Energy Utility provides a posi- come housing and then expand to include tive example and a useful model for feder- multi-unit buildings and older structures. al-supported community energy initiatives. Re-establishing such a program will create Low-carbon district energy in dense urban jobs, reduce GHG emissions, and put money areas is just one area with great potential back into the pockets of Canadians — both for emissions reductions paired with inclu- at the time of reimbursement for renova- sive growth. In instances where funds can tions and for years to come as they reduce be directed to off-grid communities, renew- their energy consumption. able energy can reduce GHG emissions by Action: Finance strategic, nationwide, multi- significantly reducing the need to regularly year conservation efforts in the following burn diesel for power. three areas:1 To complement small-scale renewable energy projects and leverage the growth of • Terrestrial protected areas, by expand- renewable energy in Canada, the AFB also ing and better protecting our terrestrial invests in enhancing the interconnection protected areas system (cost: $145 mil- of provincial electricity grids. Allowing re- lion in 2017-18 and declining); sponsibly developed hydropower resources • Working landscapes, by expanding meas- in British Columbia and Manitoba to sup- ures to conserve unique and ecological- port a transition away from coal power in ly significant wildlife habitat and to en- Alberta and Saskatchewan, for example, sure ecological connectivity (cost: $123 would accelerate the reduction of Canada’s million in 2017-18); and total GHG emissions, enhance economic productivity in the exporting provinces, and • Oceans and fisheries, by fulfilling Can- provide substantial public health and en- ada’s commitments to reach and exceed vironmental benefits for hydroelectricity im- international marine protection targets,

High Stakes, Clear Choices: Alternative Federal Budget 2017 67 and to ensure ocean health and sustain- Notes

able fisheries (cost: $146 million a year). 1 See the Green Budget Coalition’s Recommendations for Budget 2017, pages 24–36, for more details: http:// greenbudget.ca/wp-content/uploads/2016/11/Green- Budget-Coalitions-final-Recommendations-for-Budget- 2017-November-7-2016.pdf

68 Canadian Centre for Policy Alternatives First Nations

ALTERNATIVE FEDERAL BUDGET FIRST 2017 NATIONS

¢ Over 10,000 First Nations high school graduates ¢ Invest $141.6 million in post-secondary education can’t access post-secondary education and children for First Nations students and $653.2 million in K–12 receive inferior education because of a long-standing education to lift schools to comparable provincial funding cap. standards. ¢ First Nations child and family services are not up to ¢ Bring financial support to First Nations child and provincial standards because they don’t receive family services to fulfil all orders from the Canadian

HIGH STAKES HIGH adequate funding. Human Rights Tribunal.

¢ Inferior housing, unsafe drinking water, and poor CLEAR CHOICES infrastructure are forcing First Nations people out of ¢ Invest $1.9 billion in housing, water, and their own communities. infrastructure in First Nations. ¢ 58 Indigenous languages are threatened with ¢ Invest $153.4 million a year to support Indigenous extinction. language revitalization.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background calculates that the 2% cap, which has been in place since 1996, has resulted in a cumu- The Federal Government has committed to lative loss against inflation and population implementing the United Nations Declara- growth of $30 billion. tion on the Rights of Indigenous Peoples and Over the course of 2016-17, Indigenous all 94 Calls to Action of the Truth and Rec- and Northern Affairs Canada did increase onciliation Commission. While the 2016-17 funding on K–12 education by 4.5% and on federal budget provided welcome invest- child and family services by just over 3%, ments of $8.4 billion over five years, the finally exceeding the 2% cap in those areas. funding that supports First Nations gov- However, increases to support for the governments in providing core programs and ernance and administration of First Nations, services remains affected by historic under- operations and maintenance on capital funding. The prime minister’s commitment projects, and income assistance all remain to eliminate the 2% cap on annual funding under 2% in this fiscal year. increases for core First Nations programs After decades of inaction and neglect, and services clearly requires ongoing in- the investments outlined in the following vestments. The Assembly of First Nations areas will go some of the way toward re-

High Stakes, Clear Choices: Alternative Federal Budget 2017 69 pairing the damage done, though it will not oritized child welfare, and in a landmark meet the entirety of that need. Nonetheless, ruling the Canadian Human Rights Tribu- these investments would go a long way to nal (CHRT) has made several orders regard- demonstrate the government’s willingness ing improvements to be made to services in to truly reset the relationship between Can- this area. The federal government has com- ada and First Nations. mitted to implementing the Calls to Action and is legally obliged to follow the orders of the CHRT. Education Although the 2016 federal budget prom- First Nations education received significant ised $634.8 million over five years, the $71 funding in the 2015-16 federal budget, but re- million invested in 2016-17 did not meet the mains at a disadvantage compared to prov- levels of investment needed, nor will the incial systems. The average annual growth commitment of $99 million meet that need, rate in education funding provincially has which is estimated at well over $200 million been 5%, which means that First Nations per year by Cindy Blackstock, executive dir- education had not been able to keep up ector of the First Nations Child and Family with inflation and population growth for Caring Society. In November of 2016, Parlia- the past 20 years. A stable funding formu- ment unanimously passed a motion for the la is needed in the longer term. Also need- federal government to invest an additional ed are immediate investments to help catch $155 million in First Nations child and family up, to establish a new national, honour- services, but this has yet to occur and legal able partnership process between the gov- battles continue. ernment and First Nations, to develop new High-priority issues such as an enhanced, education systems, and to provide language prevention-focused approach for child and and cultural programming. family services will require additional invest- Post-secondary education was left out ments to close the gap in services between of the 2015-16 budget and requires immedi- provincially funded child welfare systems ate funding to address the existing backlog and those provided by First Nations through of 10,000 First Nations graduates who are federal funding. ready to move on to post-secondary stud- First Nations also welcome the govern- ies but who lack access to funding to do so. ment’s willingness to engage in dialogue toward transforming child and family services on a more fundamental level, addressing the Child and Family Services issue of jurisdiction, and making progress First Nations child and family services have in reducing the number of children taken become a national priority. Youth suicide, into care while increasing the security and frequently linked to treatment in foster care, safety of all First Nations children. continues to be a crisis. The Truth and Rec- onciliation Commission’s 2015 report pri-

70 Canadian Centre for Policy Alternatives Housing serves within five years of its election, and the 2016 budget committed $1.8 billion over Adequate housing is a basic human right five years to support clean drinking water and the foundation for success. First Nations and the treatment of wastewater on reserves. scholastic achievement, employment, and In 2011, a government study estimated health are negatively affected by overcrowd- the needs for First Nations water and waste- ing, mold, and other housing deficiencies. water facilities in 10 years at $4.7 billion, Without adequate funding, communities plus a projected operating and maintenance are unable to meet demand for new hous- budget of $419 million per year. Additional ing, causing people to move to urban areas. costs relate to water distribution and waste- This out-migration increases homelessness, water collection systems. Even with the sig- the loss of language, substance abuse, and nificant investment in the 2016 budget, it is family breakdown. There remains a signifi- estimated that additional funding of $300 cant need for new construction and renova- million annually will be required. tion to relieve overcrowding, address deficiencies, and provide services. A study commissioned by Indigenous Other Infrastructure and Northern Affairs Canada estimated that, Other community infrastructure includes between 2012 and 2036, there will be a hous- the following: elementary and secondary ing shortfall of 99,581 units, an additional educational facilities; roads and bridges; 5,836 replacement units required, and ap- fire halls and other fire protection facilities proximately 12,492 units requiring major re- and equipment; electrical power generation pairs. Taking into account the investments and distribution; fuel systems; community made in the 2016 budget, the additional an- and recreation facilities; band offices; flood nual investment to meet these needs is $523 and erosion protection; remediation of con- million in 2017-18 and $800 million annu- taminated sites; and internet connectivity. ally afterward. The federal government is developing a 10- year infrastructure plan. First Nations are Water at the greatest disadvantage, both historically and currently, and require a share of Access to clean drinking water is a univer- that investment that is proportional to their sal human right, recently affirmed by the infrastructure need. This need is estimated United Nations, and Canada has a respon- at just over $1.1 billion annually. sibility to ensure clean drinking water is accessible to all First Nations communities. However, First Nations water quality con- Languages tinues to be a national concern. The 2016 budget invested $5 million in the The federal government committed to Aboriginal Languages Initiative and prom- eradicating all boil-water advisories on re- ised that the government would work with

High Stakes, Clear Choices: Alternative Federal Budget 2017 71 Indigenous peoples to identify how best to to better meet communities’ needs based on proceed in future years. The AFB submits wholistic and culturally-based worldviews. that, in addition to the school-based im- The renegotiation of the Health Accord, pro- mersion programs being discussed with vides an opportunity for provinces, territor- the minister of Indigenous and Northern ies and the federal government to advance Affairs, investment is needed in commun- First Nations health with First Nations as full ity language revitalization, adult language partners. The structure of the investments revitalization, and language maintenance should be accountable to First Nations and and dissemination. This investment is ur- must move away from siloed and short-term gently needed due to the crisis facing In- funding and towards sustainable and long- digenous languages in Canada. term funding that is responsive to and that Language defines nationhood and every is based on First Nations needs and prior- language matters. Languages are integral to ities. (for more information on the Health the cultural continuity that has been identi- Accords with the provinces see the Health fied as a key factor in preventing youth sui- Care chapter) cide.1 It is unacceptable that there are an estimated 58 First Nations languages threatened with extinction. Without supports for AFB Actions Indigenous languages, entire nations and Action: Invest $795 million annually in First cultures are at risk. An investment of $153.3 Nations education, including $653.2 million million annually is needed. for K–12 schools and $141.6 million for post- secondary students. Health Accords and First Nations Result: Funding for First Nations schools will be comparable to that provided to other The health and wellness of many First Na- students in Canada, and 10,000 First Nation tions peoples and communities in Canada is students will be able to enter post-second- in profound crisis. The data that does exist ary studies. paints a shameful picture. In comparison to the general Canadian population, First Action: Invest $155 million annually in First Nations peoples: face higher rates of chron- Nations child and family services. ic and communicable diseases; have more Result: First Nations child welfare services limited access to healthy foods and employ- will be brought closer to providing compar- ment opportunities; experience 5–7 year able levels of service to those of provincial lower life expectancy; have an infant mor- child welfare systems. tality rate that is about 1.5 times higher; and Action: Invest $1.9 billion annually in hous- have a 5–6 times higher rate of suicides. ing, water, and other infrastructure for First Despite chronically inadequate resour- Nation communities. ces, First Nations communities are transforming their systems of health and wellness

72 Canadian Centre for Policy Alternatives Result: Thousands of houses will be built, Notes clean drinking water will be provided to 1 Chandler, M.J. & Lalonde, C.E., “Cultural continuity more people, and roads will link First Na- as a moderator of suicide risk among Canada’s First Na- tions to the rest of Canada. tions.” In Kirmayer, L. & Valaskakis, G. (Eds.), Healing Traditions: The Mental Health of Aboriginal Peoples in Action: Invest $154 million annually in re- Canada (pp 221–248), University of British Columbia Press. vitalization of First Nations languages. Result: The extinction of 58 Indigenous languages will be prevented and fluency will increase in communities across the country.

Action: Invest $1.58 bil to support First Na- tions health systems. This investment will address the current health infrastructure backlog, provide new health services for children, expand the National Native Al- cohol and Drug Abuse Program, and support First Nations health governance capacity all while building out community care, mental health and providing health care on a needs basis. Result: First Nations people have access to the best health programs and services available in Canada.

High Stakes, Clear Choices: Alternative Federal Budget 2017 73 Gender Equality

ALTERNATIVE FEDERAL BUDGET GENDER 2017 EQUALITY

¢ Women make up 47% of the paid workforce in ¢ Develop a job creation strategy that invests equally Canada, are more likely to have post-secondary training, in the sectors where men and women work. and earn on average 30% less than men. ¢ Women perform more hours of unpaid work in the ¢ Close the gender wage gap by promoting home and work more total hours (paid and unpaid) than transparency and tracking in salaries and wages, men, make up 92% of those taking parental leave, and are increasing wages in predominantly female-dominated 21 times more likely than men to cite caring for children sectors (e.g., care work), and raising the minimum HIGH STAKES HIGH as the reason they are in part-time work. wage. CLEAR CHOICES ¢ Women are now more likely than men to be a victim of ¢ Invest in a national action plan to end violence a violent crime. Spousal violence and sexual assault costs against women and make this investment proportionate the economy an estimated $12.2 billion per year. The to the cost and consequences of sexual and domestic federal government spends about 1.6% of this amount violence. ($189 million) to counter violence against women.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background earnings make an essential contribution to their own economic security and to that of Why is the International Monetary Fund ask- their families. For many households those ing about child care?1 Because economists earnings are the difference between keeping have begun to understand that women’s up with the bills or going further into debt. labour, paid and unpaid, is essential to eco- As a result of investments in higher edu- nomic growth. More than that, after decades cation by provincial and federal govern- of inequality, Canadians need growth they ments, both men and women in the labour can share in — growth that comes with an force are far more likely to have completed increase in jobs and wages. Women’s em- post-secondary education today than they ployment is an essential part of making the were 30 years ago. Women in the labour shift to a more equal society. force are now slightly more likely to have a Over the past three decades women have university degree than their male counter- entered the Canadian labour force in ever- parts.3 In spite of this, employment rates growing numbers.2 During the same period for women lag behind those for men. Near- male wages have struggled to keep pace with ly a million women working part time do so the cost of living. Women’s employment involuntarily, reporting a lack of full-time

74 Canadian Centre for Policy Alternatives Figure 12 Women’s earnings as a percetage of men’s

100%

Public Sector Private Sector

78% 80% 75% 72% 66% 66%

60% 56%

40%

20%

0% Non-Aboriginal, non-Minority Aboriginal Visible Minority

work and the need to care for children and women’s employment has increased year their family as the reason.4 on year over the past decade.7 In contrast, The current job stimulus efforts of the women make up only a fraction of those em- federal government are focused on pre- ployed in the sectors that will benefit from dominantly male employment sectors. There the government’s infrastructure projects, is no question that Canada’s aging physic- and they actually lost jobs in the construc- al infrastructure needs to be repaired and tion sector in 2015 (while men made gains).8 upgraded (and men need jobs). However, The federal government is promising that investment needs to be paired with a a $3-billion investment in home care (over parallel investment in predominantly fe- four years), which will certainly yield jobs male sectors to ensure the sustained growth for women. However, it is also committed and productivity of our economy. The OECD to the previous Conservative government’s projects that narrowing the gap between 3% cap on annual increases to provincial men’s and women’s employment in Canada health transfers.9 This cap will likely limit could contribute an additional $160 billion job creation in the sector where women are to GDP by 2030.5 most likely to be employed. While addition- More than one out of every five women al support for home care will be welcome, working today works in health and social many of the jobs created by that invest- services.6 It is one of the only sectors where ment would be low-paying without addi-

High Stakes, Clear Choices: Alternative Federal Budget 2017 75 Figure 13 Time Use (Average Hours Per Day Over a Seven Day Week)

8 Men Women 7

Hours per day 3

0 Paid Work Unpaid Work Total Work

Source General Social Survey: Time Use. Ottawa, Statistics Canada, 2010.

tional government intervention on wages. gaps in income and employment. Women The median take-home pay for a home care now outnumber men among university worker ($18,942 per year) falls below the graduates, yet the gender gap in earnings poverty line.10 persists among university-educated workers. The sectors in which women work con- Addressing the gender wage gap is an tinue to pay less on average than the sec- important tool in stimulating wage growth tors in which men work, with some excep- across the labour market and creating more tions such as nursing. Even when men and inclusive economic growth that meaning- women work in the same sector, in relative- fully improves the lives of Canadians. The ly equal numbers, women are paid less on federal government recently announced its average than men.11 The wage gap in Canada intention to table proactive pay equity legis- actually widened in the years following the lation as recommended by a special parlia- 2009 recession. Moreover, the gap in wages mentary committee studying the issue. As and employment expands for women with important as this legislation would be, there disabilities, Aboriginal women, racialized are other complementary policy tools that women, and immigrant women. will help close the gender gap in wages. Simply increasing education and train- Affordable and available child care has ing levels would not be sufficient to close the had a positive effect on women’s employ-

76 Canadian Centre for Policy Alternatives ment levels and on reducing the wage gap value of care work, triggering raises in the in similar high-income countries.12 Parent- wages of child care and home care workers. al leave of less than a year has a similarly positive effect on women’s attachment to Social Policies the labour force and their earnings. How- ever, longer parental leaves have a nega- Women in Canada continue to face gender- tive impact on women’s participation in the specific challenges to their safety and well- paid workforce, particularly for highly edu- being. Women are now more likely to be cated women.13 victims of violent crime than men. Rates of Proactive wage-setting policies, includ- sexual assault against women are largely un- ing collective bargaining, are another im- changed over the past two decades, while portant tool in closing the gender wage the incidence of other violent crimes has gap. Women make up nearly two-thirds of decreased. A million women report having all minimum-wage workers.14 The occupa- experienced sexual or domestic violence in tions in which women are most likely to work the past five years.19 On any given day, more include some of the lowest-paying jobs in than 4,000 women and over 2,000 children Canada. For example, the median income will reside in a domestic violence shelter.20 of an early childhood educator ($17,703) or More than 500 women and children are a home care worker ($18,942) falls below turned away from shelters on a typical day, the poverty line.15 A good example of pro- with overcrowding the primary reason.21 active wage-setting policy is the decision Rates of gender-based violence are sig- by the Government of Ontario to increase nificantly higher for Aboriginal women and wages for early childhood educators, 97% girls. Aboriginal women in Canada experi- of whom are women.16 ence three times the level of violent victimiz- The wage and employment gaps also de- ation as non-Aboriginal women, and young rive from the extra burden of unpaid care Aboriginal women make up 63% of those performed by women, who continue to do who report experiencing violent victimiza- nearly four hours a day of extra home and tion.22 The murder and disappearance of Ab- child care work on top of their paid work.17 original women and girls, an endemic prob- This burden has been exacerbated by post- lem in Canada, has received international recession austerity measures, in particular attention and condemnation. cuts to care services. The current government is moving to form As a result of Quebec’s supplementary an inquiry into missing and murdered Ab- parental leave for fathers, introduced by the original women and girls. It will not be the government in 2005, over 76% of men in the first. The government must learn from the province take parental leave, compared to mistakes of past inquiries; for example, by 26% of men in the rest of Canada.18 The re- ensuring that Aboriginal families and com- balancing of child care work in the home has munities are supported, both socially and fi- the potential to lead employers to see the nancially, so they can meaningfully partici-

High Stakes, Clear Choices: Alternative Federal Budget 2017 77 pate in, and indeed lead, the quest to find and/or failure of current programs and poli- justice, and put an end to the violence ex- cies where they are being enacted. perienced by Aboriginal women and girls. Existing federal policy on violence against women is largely gender neutral, in spite of AFB Actions a surfeit of evidence concerning the need to Action: The AFB will invest in a nation- address these forms of violence as based on al action plan to address violence against gender. The grant program administered by women (cost: $500 million a year), based Status of Women Canada is a rare excep- on the Blueprint for a National Action Plan, tion. The federal department disperses be- that includes the following components: tween $14 and $15 million per year in grants and contributions to non-profit organiza- • Funding for annual, detailed nation- tions to deliver a variety of services ranging al surveys on violence against women; from shelters to public education.23 But the • Support for an office to provide federal total budget for Status of Women Canada co-ordination; has averaged just $28–$33 million annually over the past decade. Recent reports by • Increased funding for prevention pro- Justice Canada estimate the economic im- grams; pact of violence against women at $12.2 bil- • Increased funding for victim services, lion annually.24 including long-term housing; and The current government has committed to putting in place a much-needed na- • Funding to support uniform access to tional strategy to address violence against specialized social, legal, and health women in Canada. A broad coalition of services, including domestic violence women’s organizations, service provid- courts, sexual assault nurse examiners, ers, and researchers has produced a Blue- and crisis centres. print for a National Action Plan on Violence Result: Levels of violence experienced by Against Women, based on the best avail- women will begin to decline and survivors able research, the experience of service or- of violence will receive adequate support. ganizations and survivors, and similar action plans in countries like Australia.25 The Action: The AFB will increase funding for federal government must ensure the plan, Status of Women Canada and restore its to be effective, addresses both prevention mandate to fund women’s groups to con- and response. The government must also duct independent policy research (cost: adequately fund the collection of data on $100 million a year). rates of violence at the provincial and mu- Result: Federal government policies will nicipal level (something that does not cur- benefit women and men more equally; de- rently occur) so we can assess the success cisions about funding for women’s services will be based on research; and the organ-

78 Canadian Centre for Policy Alternatives izations and communities who respond to insurance program (see the AFB Employ- the needs of women on a daily basis will be ment Insurance chapter). empowered to share their insights on pro- Result: More equal levels of unpaid work grams and policies that work. will enable women to access full-time work more easily, and reduce their overrepresen- Action: The AFB will put in place a clear tation in low-paying shift work. mechanism to ensure equal pay for work of equal value by repealing the Public Ser- vice Equitable Compensation Act, estab- Notes lishing proactive pay equity legislation, and implementing the recommendations of the 1 IMF Country Report No. 16/146: Canada. Washington D.C.: International Monetary Fund, 2016. 2004 Pay Equity Task Force (cost: $10 mil- 2 “CANSIM Table 282-0002: Labour force survey esti- lion a year). mates (LFS), by sex and detailed age group, annual.” Result: The gender wage gap will narrow, Ottawa: Statistics Canada. increasing women’s economic security and 3 “CAN SIM Table 282-0004: Labour force survey esti- providing increased economic activity as a mates (LFS), by educational attainment, sex and age result of higher wages. group, annual (persons unless otherwise noted).” Ot- tawa: Statistics Canada.

Action: The AFB will put in place a job growth 4 “CAN SIM Table 282-0014: Labour force survey esti- policy in sectors where women work, as mates (LFS), part-time employment by reason for part- time work, sex and age group, annual (persons).” Ot- well as in sectors where men work. This will tawa: Statistics Canada. mean investments in education, and health 5 OECD (2012). “Table I.A3.1. Projected average annual and social services, in keeping with invest- growth rate in GDP and GDP per capita in USD 2005 PPP, ments in physical infrastructure projects. percentage, 2011–30.” Closing the Gender Gap: Act Now. Result: A more balanced sectoral strategy Paris: OECD Publishing. that ensures families and communities are 6 “CANSIM Table 282-0012: Labour force survey estimates (LFS), employment by class of worker, North less vulnerable to sectoral downturns, and American Industry Classification System (NAICS) and increased economic security for women, in- sex, annual.” Ottawa: Statistics Canada. cluding those otherwise most vulnerable 7 “CANSIM Table 282-0012: Labour force survey es- to poverty. timates (LFS), employment by class of worker, North American Industry Classification System (NAICS) and Action: The AFB will ensure that family poli- sex, annual.” Ottawa: Statistics Canada. cies address the unequal burden of unpaid 8 Women made up 11.5% of constructions workers in care work performed by women. It will make 2015, down from 11.9% in 2014. “CANSIM Table 282- 0012: Labour force survey estimates (LFS), employment child care outside the home more readily af- by class of worker, North American Industry Classifica- fordable and available (see the AFB Child tion System (NAICS) and sex, annual.” Ottawa: Statis- Care chapter) and institute a supplement- tics Canada. ary paternity leave allowance of eight weeks 9 Harris, Kathleen and Peter Zimonjic. “Health min- on the same terms as the Quebec parental isters wrap tense talks with no agreement on federal health funding.” CBC News, Oct 18, 2016.

High Stakes, Clear Choices: Alternative Federal Budget 2017 79 10 National Household Survey 2011. Ottawa: Statis- 18 Leanne C. Findlay and Dafna E. Kohen (2012). “Leave tics Canada. practices of parents after the birth or adoption of young children.” Ottawa: Statistics Canada. 11 See, for example, a recent study of the wage gap in the retail sector in Ontario: Coulter, Kendra et al (2016). 19 General Social Survey: Victimization, 2014. Ottawa: The Gender Wage Gap in Ontario’s Retail Sector: Devalu- Statistics Canada. ing Women’s Work and Women Workers. 20 Shelter Voices. Ottawa: Canadian Network of Women’s 12 Plantenga, J. and C. Remery eds. (2006). The Gender Shelters and Transition Houses, 2014. Pay Gap: Origins and Policy Responses: A comparative 21 Hutchins, Hope and Sara Beattie (2015). Shelters for study of 30 European countries. European Commission, Abused Women 2014. Ottawa: Statistics Canada. Directorate. 22 Brennan, Shannon (2011). Violent victimization of 13 Mandel, Hadas (2012). “Winners and Losers: The Con- Aboriginal women in the Canadian provinces, 2009. Ot- sequences of Welfare State Policies for Gender Wage In- tawa: Statistics Canada. equality.” European Sociological Review, vol. 28.2: 241–262. 23 Status of Women Canada Departmental Performance 14 Galarneau, Diane and Eric Fecteau (2014). “The ups Reports. Ottawa: Status of Women Canada. and downs of minimum wage.” Ottawa: Statistics Canada. 24 Hoddenbagh, Josh, Ting Zhang, and Susan Mcdon- 15 Median incomes from the National Household Sur- ald (2014). An Estimation Of The Economic Impact Of vey 2011. Low income measure after tax for 2011 used Violent Victimization In Canada, 2009. Ottawa: Justice ($20,912); source: “CANSIM Table 206-0091: Low income Canada. Zhang, Ting et al. An Estimation of the Eco- measures (LIMs) by income source and household size.” nomic Impact of Spousal Violence in Canada, 2009. Ot- Ottawa: Statistics Canada. tawa: Justice Canada. 16 “Backgrounder: 2016 Wage Enhancement for Early 25 A Blueprint for Canada’s National Action Plan (NAP) Childhood Educators.” Toronto: Government of Ontario, on Violence Against Women and Girls. http://endvaw.ca/ Ministry of Education, January 22, 2016. our-work/blueprint-for-canadas-national-action-plan- 17 General Social Survey: Time Use. Ottawa: Statis- on-violence-against-women tics Canada.

80 Canadian Centre for Policy Alternatives Health Care

ALTERNATIVE FEDERAL BUDGET HEALTH 2017 CARE

¢ The federal government is negotiating one-off ¢ Ensure that all health care in Canada is consistent with agreements on health care funding with the provinces. the principles of the Canada Health Act ¢ Our current fee-for-service payment model is ¢ Create a health accord that delivers stable, susceptible to billing abuse and drives the “one problem predictable, realistic, and long-term funding. per visit” policies of many family doctors. ¢ Expand primary health care teams paid to keep ¢ Your postal code or socioeconomic status determines patients well.

HIGH STAKES HIGH whether you receive necessary medication. ¢ Implement a universal, national pharmacare plan. ¢ Provincial governments have been discharging CLEAR CHOICES patients from hospitals to long-term care to save money. ¢ Cover home and long-term care under the Canada Health Act. ¢ One in five Canadians experience a mental health issue a year, which costs the economy more than of $50 ¢ Create a national mental health strategy and program billion annually. linked to the Canada Health Act.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background costs to people who are ill, continues without substantial change. In a public opinion poll conducted just before At 15.1% of GDP, overall federal spend- the 2016 federal budget, Canadians picked ing is at one of its lowest rates in the past 65 “spending more on health care” as their top years, and only slightly higher than 2014-15’s priority for the new government.1 The Lib- all-time low level of 14.2%.2 Still, the gov- erals had promised during the 2015 election ernment indicated in the budget it would be campaign to make improvements to home maintaining the previous government’s re- care, palliative care, prescription drugs, the duction in the Canada Health Transfer (CHT) Canada Health Transfer, and the Health Ac- to the provinces. “Starting in 2017-18,” it said, cord. The budget itself, however, made no “the CHT will grow in line with a three-year real commitment to strengthening the public moving average of nominal GDP growth, health care system, containing only a scat- with funding guaranteed to increase by at tered collection of smaller funding initia- least 3.0% year.”3 The 2004 Health Accord tives. The decline in federal leadership on included a fixed 6% escalator to compen- public healthcare, and the downloading of sate for drastic cuts to federal health transfers in the 1990s.

High Stakes, Clear Choices: Alternative Federal Budget 2017 81 The Parliamentary Budget Officer (PBO) basket of public health services, according and the Council of the Federation have stat- to the province’s Financial Accountability ed the cut to the CHT will amount to at least Office — in exchange for provincial commit- $36 billion in 10 years, or the equivalent of ments to spend on mutual priorities, and the entire CHT in 2016.4 Other estimates put walked away from the negotiations. the shortfall from GDP-based increases to Over a year into their first term as gov- health transfers at $43.5 billion over the first ernment, the Liberal party has done little eight years alone.5 The provincial and ter- to change the overall course of health care ritorial governments believe the loss could funding from that of the preceding govern- be as high as $60 billion over the next dec- ment. In 2016, Fall Economic Statement by ade.6 Under any scenario, the sustainability the Liberal minister of finance, healthcare of public health care is threatened. Nearly was disturbingly absent from any mean- 40% of most provincial budgets go to health ingful discussion in the document. What is spending. And while half of this would at clear is that the impasse between the differ- one time have come from the federal gov- ent levels of government mirrors historical ernment, today federal transfers make up a debates regarding the federal government’s fifth of provincial spending.7 While provin- role in vertical and horizontal fiscal imbal- cial and territorial governments have con- ances. Jurisdictional and financial respon- tained costs in recent years by deferring sibilities are a tenuous relationship in our capital investments, this is unsustainable federation, but they are responsibilities that in the long-term and will lead to increased should fundamentally guided by improving expenditures in the future at the cost of re- the health of the Canadians. duced operating expenses.8 Since then, the government has pur- A 3% increase to the CHT, as planned, sued a divide-and-conquer strategy, sign- would shift an increasing burden of nearly ing bilateral health agreements with New $1.1 billion annually onto the provinces.9 In Brunswick, Newfoundland and Labrador, late 2016, provincial and territorial finance Nova Scotia, Prince Edward Island, Sas- and health ministers declined a federal of- katchewan, Yukon, Northwest Territories, fer of a CHT escalator of 3.5% and about Nunavut, British Columbia, and Saskatch- $11.5 billion over 10 years for home care and ewan. These provinces and territories will mental health, which would decrease the receive the CHT on a 3% escalator, or the federal share of health funding from 23% rate of growth in nominal GDP (the Harper today to 20% in the future.10 (For compari- government’s proposal), but with additional son, the federal government wants to spend money for home care and mental health. If $186 billion on infrastructure over the next another province is able to negotiate a bet- 11 years.) The federal government refused ter deal it will be applied in other jurisdic- to accept a counteroffer from the provinces tions as well. If nothing changes, the fed- of a 5.2% escalator — the minimum needed eral government will impose a similar 3% for Ontario to continue to offer its current CHT to the remaining jurisdiction on April 1,

82 Canadian Centre for Policy Alternatives 2017, and may or may not provide the addi- Pre–2017 budget discussions about the tion mental health and home care funding. future of medicare remain inundated with New Brunswick will receive a $230 mil- buzzwords like “health transformation,” lion deal that included funding dedicated “less bureaucracy,” “efficiency,” “innova- to home care and mental health, but this tion,” and other empty signifiers. Further- side deal is around $649 million less than more, the government has presented a false what would have been transferred if the 6% dichotomy between external economic forces CHT escalator was maintained. Nova Scotia and the health of Canadians that reinforces will receive $157 million for home care and an artificial and deterministic narrative about $130.8 million for mental health. Newfound- universal health care being unsustainable. land will receive $87.7 million for home care This spurious framing leads to distorted and $73 million for mental health.11 Prince trade-offs between the universality of well- Edward Island will receive $24.6 million for being and cost containment when, in fact, home care and $20.5 for mental health in- the publicly funded portion of health care itiatives. Saskatchewan will receive $190.3 has remained stable as a percentage of GDP million for home care and $158.5 million for for over 30 years. The costs that are out of mental health services, the province stated control are outside the medicare umbrella: it has received a special agreement for one or pharmaceutical drugs, home care, physio- two year in regards to its private MRI clinics therapy costs, etc. The problem of cost con- which violate the CHA.12 The federal position tainment is therefore political, not economic. is it has not put its position aside regarding private user-pay MRI clinics but is willing to work with the province to insure the CHA is AFB Actions upheld.13 Regardless of the secret agreement A Robust Health Accord on MRIs, the federal government should be proactively enforcing the CHA and stopping The federal share of national (provincial violations and not cutting side deals that al- and territorial) health expenditures remains low illegal activities to continue. The three below the funding floor of 25% called for by territories will get an additional $36.1 million the Romanow commission. With the cur- in new financial funding for mental health rent funding formula, this share of federal and home care over the next 10 years, begin- funding will be reduced to 14.3% by 2037.15 ning in the 2017-18 fiscal year. British Colum- In Canada, lagging behind most countries bia will receive an additional $1.4 billion over in Europe, only 71% of health expenditures 10 years home care and mental health care are financed under the public system.16 Con- initiatives.14 While these bilateral deals are versely, the private health sector in Canada significant, it is worth remembering that the has now grown to nearly a third (29%) of four provinces holding out for a more suffi- total health expenditures.17 cient deal represent the vast majority of Can- ada’s population (more than 70%).

High Stakes, Clear Choices: Alternative Federal Budget 2017 83 Action: Renegotiate a 10-year Health Accord and chronic conditions are managed through with a minimum 6% escalator to increase working with community-based teams of the federal share of health spending while health professionals. Effective PHC is also enforcing the CHA. needed to develop long-term strategies to Result: Increased funding will open the improve health outcomes at the individual policy door to expand medicare to include and population levels.19 pharmacare, home care, long-term care, As PHC reform promotes interdisciplin- mental health, dental care, and rehabilita- ary team-based care to improve accessibil- tion services. A more solid Health Accord ity and comprehensiveness of care, it will will also reinforce health promotion/pre- change the way physicians are reimbursed.20 vention and other public health programs Our current fee-for-service payment model that require federal and provincial leader- is susceptible to billing abuse and arguably ship. We need less political gamesmanship drives the “one problem per visit” policies regarding issues like homecare and mental adopted by a number of family doctors.21 health; these two issues are indeed import- There are now more than 82,000 physicians ant, and for that reason should not be pro- in Canada; total payments to physicians posed with ‘sunset funding’ but should be increased by 4% from the previous year to included in the Health Accord. It is intellec- reach $25 billion in 2014–15.22 tually dishonest to pit health accord fund- Action: Direct part of the new Health Ac- ing against funding for these initiatives, and cord funding to continue the transition will be detrimental to the overall health of to PHC, as opposed to piecemeal bilateral the nation. At the same time, the provinces agreements, building on best practices from and territories need to be amenable to areas the 2007 Primary Health Transition Fund.23 where more accountability can be achieved and stop turning a blind eye to violations of the CHA. The federal government is within Pharmacare their right to demand accountability, and at- Among countries with a universal national tach strings to funding. But, these strings public health care plan, Canada is the only needs to be negotiated and in place to in- one whose plan does not include prescrip- clude public delivery of care for the best out- tion drug coverage. As a result, Canadians comes of all patients — not political promises. spent over $30 billion in 2016 to fill over 600 million prescriptions.24 No other compon- Primary Health Care ent of Canadian health care has increased in cost as quickly as drug costs.25 In 2015, Investing and advancing the use of primary patented drugs accounted for 61.8% of total health care (PHC) is critical to ensuring con- drug sales in Canada, earning $15.2 billion tinuity of care across the health care sys- for the brand-name pharmaceutical sector.26 tem.18 As a first point of contact, PHC ensures short-term health issues are resolved

84 Canadian Centre for Policy Alternatives In our fragmented and inefficient system there provincial governments have been discharging are 19 publicly funded drug plans (10 prov- patients from acute-care in hospitals (which incial, three territorial, six federal).27 Eligibil- are covered under the Act) to save money. Pa- ity, coverage, and benefit payment schemes tients are transferred to unorganized, private- vary in each of these programs. Your juris- ly-funded, for-profit providers. While the Lib- diction of residence or socioeconomic status eral government has pledged to invest about should not dictate if you receive necessary $11.5 billion over 10 years for home care and medication. Of all other OECD countries, only mental health, there have been no commit- the United States and Poland have a lower ments to guarantee these services would be percentage of drug costs paid for by public included under the Act and that an overarch- programs, and Canada is second only to the ing national strategy would be implemented. U.S. in the use of private drug insurance.28 Further, details remain missing on if the ear- Approximately 3.5 million Canadians marked billion for home care infrastructure lack even basic drug coverage.29 Around one would entail public or private investments. in four Canadian families fail to take need- The AFB would amend the CHA to in- ed medication as prescribed due to high clude both home care and long-term care. costs.30 It is believed that 6.5% of hospital Provinces will need to comply with the cri- admissions in Canada are the result of non- teria of the Act in order to receive new feder- adherence to medications, which itself adds al funding transfers for these services. Fur- an estimated $7–9 billion per year to health ther, the AFB aims for a total expenditure care costs.31 Canada has wasted $62 billion for home care at 2% of GDP. This would put dollars over the last 10 years by not imple- Canada in line with northern European coun- menting a universal pharmacare program.32 tries. Provinces that participate in a national home care program will see federal contribu- Action: Allocate $2 billion, plus 10% of pri- tions of up to 40% to jurisdictions in compli- vate expenditures on prescription drugs ance with the CHA. The AFB will invest $2.3 ($1.39 billion), in 2017-18 toward a national billion in long-term and residential care to pharmacare plan (total expenditure: $3.39 enable hospitals to move Alternate Level of billion). In 2018-19, the AFB will increase the Care (ALC) patients currently in acute care allocation by 13% for a total expenditure of beds to a more appropriate setting.34 $3.83 billion. In 2019-20, this amount will increase by 20% to $4.59 billion. Future savings will offset the program’s startup costs.33 Mental Health

From medicare’s beginnings an inequity be- Home Care and Long-term Care tween physical and mental health coverage has ignored the important links between The Romanow commission pointed out nearly psychological, social, and biological health. 15 years ago that it made no sense to exclude As a result, we know that one in five people home care from medicare. Still outside the Act, in Canada (close to seven million people) ex-

High Stakes, Clear Choices: Alternative Federal Budget 2017 85 perience a mental health problem or illness, dren to seniors).41 Dedicated mental health costing the economy more than $50 billion funding needs to be part of the enhanced (more than 2% of GDP) annually.35 Spending Health Accord proposed by the AFB (cost: on mental health makes up only 7% of all pub- $350 million over three years).42,43 lic spending on health in Canada, below the 10–13% reached by similar countries includ- Notes ing the U.K. and New Zealand.36 It is estimated that 9% of GDP (close to $800 million in 1 Andrew Russell. “What are the top priorities of Canadians ahead of the federal budget.” Global News, March 21, 2016. Canada’s case) is the minimum level of pub- 2 Armine Yalnizyan. “What regime change means in lic investment required to improve access to Budget 2016,” Behind the Numbers blog post: http:// a range of mental health programs and servi- behindthenumbers.ca/2016/03/22/what-regime-change- ces, and get better health outcomes.37 means-in-budget-2016/ The federal government has historical- 3 budget documents ly avoided responsibility for mental health, 4 Canadian Health Coalition brief on the Health Accord: leading to major gaps in public coverage http://www.healthcoalition.ca/health-accord-brief/ and inequalities in access to services. Treat- 5 Hugh Mackenzie. (2015). The Canada Health Transfer Disconnect: An aging population, rising health care costs ment received is largely decided based on and a shrinking federal role in funding. Ottawa: Canadian employment benefits (often capped or limit- Federation of Nurses Unions.

ed in range) or income levels, not evidence- 6 Gregory Marchildon. (2016). “Bilateral Health Agree- based best practices.38 Furthermore, men- ments between the Federal and Provincial/ Territorial Governments in Canada.” IRPP Insight: http://irpp.org/ tal health problems are even greater than wp-content/uploads/2016/12/insight-no13.pdf physical health problems for people at lower 7 Canadian Institute for Health Information. (2015). Na- 39 income levels. Our current fee-for-service tional Health Expenditure Trends, 1975 to 2015.

model of medicare generally covers hospital 8 Institute of Fiscal Studies and Democracy, “CHT Con- stays, specialists, or doctors, but excludes undrum: Ontario Case Study”, Winter 2017. psychologists, counselling, other therapists, 9 Bill Curry. “Provinces irate over health funding talks and community non-profit agency support. with Morneau.” Globe and Mail, December 18, 2016. Provincial and territorial coverage is gener- 10 The Canadian Press. “Provinces take aim at health care ‘ultimatum’.” December 18, 2017. ally limited and haphazard. 11 “Health accord side deals bad for Canada, say doctors.” Action: Implement a mental health program CMAJ. January 5, 2017. http://cmajnews.com/2017/01/05/ health-accord-side-deals-bad-for-canada-say-doctors- based on the widely hailed U.K. initiative, cmaj-109-5381/ which trained 3,500 new mental health pro- 12 A Wherry, and Susan Lunn, “Saskatchewan and fessionals, and incorporated into the CHA federal government reach deal on health care: Separ- accountability process.40 Mental health pro- ate agreement made on province’s private MRI clinics.” motion and the treatment of mental illness- January 17, 2017. http://www.cbc.ca/news/politics/ saskatchewan-health-care-mris-1.3939611 es must be timely, continuous, collabora- 13 Fraser, D.C. “Feds say they aren’t putting MRI issue tive, culturally safe and appropriate, and aside for a year as province suggests.” January 18, 2017. integrated across the life cycle (from chil-

86 Canadian Centre for Policy Alternatives http://leaderpost.com/storyline/feds-say-they-arent- 28 Elizabeth Church. “Canada among Top Pharma- putting-mri-issue-aside-for-a-year-as-province-suggests ceutical Spenders on OECD List.” The Globe and Mail. November 4, 2015. 14 Andrea Woo, “British Columbia reaches 10 year health-care funding deal”, The Globe and Mail, Feb- 29 Julie White. (2016). A National Public Drug Plan For ruary 17th, 2017. All. Ottawa: Canadian Health Coalition.

15 Stéphane Levert. (2013). Sustainability of the Can- 30 Angus Reid Institute. (2015). “Prescription Drug Ac- adian Health Care System and Impact of the 2014 Re- cess and Affordability an Issue for Nearly a Quarter of vision to the Canada Health Transfer. Canadian Insti- All Canadian Households.” tute of Actuaries; Society of Actuaries. 31 Monika Dutt. (2016). Parliamentary submission to 16 Alex Hemingway. “The biggest source of waste in Can- HESA on pharmacare. Canadian Doctors for Medicare. adian health care? The private, for-profit sector.” Policy 32 Hugh Mackenzie. (2016). Down the Drain: How Canada Note blog post, November 21, 2016: http://www.policynote. Has Wasted $62 Billion Health Care Dollars without Pharma- ca/the-biggest-source-of-waste-in-canadian-health-care- care. Ottawa: Canadian Federation of Nurses Unions. the-private-for-profit-sector/#.WDeeEbtm_GC.twitter 33 Marc-André Gagnon. (2014). A roadmap to a ration- 17 Canadian Institute for Health Information. (2015). al pharmacare policy in Canada. Ottawa: The Canadian National Health Expenditure Trends, 1975 to 2015. Federation of Nurses Union. 18 Health Council of Canada. (2005). Primary Health 34 Canadian Centre for Policy Alternatives. (2016). Al- Care: A background paper to accompany Health Care ternative Federal Budget: It’s Time to Move On. Ottawa. Renewal In Canada: Accelerating Change. 35 P. Smetanin, D. Stiff, C. Briante, C. Adair, S. Ahmad, 19 David Price, Elizabeth Baker, Brian Golden, and and M. Khan. (2011). The life and economic impact of major Rosemary Hannam. (2015). Patient Care Groups: A new mental illnesses in Canada: 2011 to 2041. RiskAnalytica, model of population based primary care for Ontario. A on behalf of the Mental Health Commission of Canada. report on behalf of the Primary Health Care Expert Ad- visory Committee. 36 Bruce Doern and Christopher Stoney, eds. (2016). How Ottawa Spends: The Trudeau Liberals in Power. 20 Canadian Foundation for Healthcare Improvement Ottawa: Carleton University’s School of Public Policy factsheet, January 1, 2010: http://www.cfhi-fcass.ca/ and Administration. SearchResultsNews/10-01-01/13b5e8bb-e7c2-4544-8da5- b1aa5d9e38db.aspx#ii 37 Canadian Alliance on Mental Illness and Mental Health. (2016). Mental Health Now! Advancing the Men- 21 Ibid. tal Health of Canadians: The Federal Role. 22 Canadian Institute for Health Information. “More 38 E. Anderssen. “We have the evidence...Why aren’t doctors, but average payments to physicians virtual- we providing evidence-based care?” The Globe and ly unchanged,” a factsheet: https://www.cihi.ca/en/ Mail. May 22, 2015. spending-and-health-workforce/health-workforce/more- doctors-but-average-payments-to-physicians 39 Statistics Canada. (2013). Canadian Community Health Survey, 2012: Annual Component. Ottawa. 23 Health Canada. (2007). Primary Health Transition Fund: Summary of Initiatives: Final Edition. 40 Keith Dobson. (2016). Clinical Psychology in Can- ada: Challenges and Opportunities. Canadian Psychol- 24 Canadian Pharmacists Association. (2016). “Phar- ogy, Vol. 57, No.3. macy in Canada.” 41 Canadian Alliance on Mental Illness and Mental 25 S.G. Morgan, D. Martin, M.A. Gagnon, B. Mintzes, Health. (2016). Mental Health Now! Advancing the Men- and J. Lexchin. (2016). Pharmacare 2020: The Future of tal Health of Canadians: The Federal Role. Drug Coverage in Canada. Pharmaceutical Policy Re- search Collaboration. 42 Canadian Mental Health Association. Open letter on the Health Accord. November 10, 2016: http://www.cmha.ca/ 26 Patented Medicine Price Review Board. (2015). An- news/open-letter-mental-health-accord/#.WHRJtVMrLIV nual Report 2014. 43 Keith Dobson. (2016)., Clinical Psychology in Can- 27 Michael Butler. A Prescription for Better Medicine: ada: Challenges and Opportunities., Canadian Psych- Why Canadians Need a National Pharmacare Program. ology August 2016, Vol., 57, No. (3.) Ottawa: Council of Canadians.

High Stakes, Clear Choices: Alternative Federal Budget 2017 87 Housing and Neighbourhoods

ALTERNATIVE FEDERAL BUDGET HOUSING AND 2017 NEIGHBOURHOODS

¢ Over the past 25 years, the federal government has ¢ Invest $1 billion annually to preserve existing played an increasingly limited role in creating affordable social housing units. housing, and Canada’s current proportion of social housing units is far below the OECD average. ¢ Permanently increase funding for the Investment ¢ Hundreds of thousands of low-income families are in Affordable Housing program by an additional on waiting lists for subsidized housing. Some become $1 billion annually.

HIGH STAKES HIGH homeless while they wait. ¢ Provide $1 billion annually for supportive housing,

¢ Vulnerable subpopulations are at risk because they CLEAR CHOICES focusing on the most vulnerable sections of the lack supportive housing. population. ¢ Indigenous people who are in core housing need or homeless are overrepresented compared to the rest of ¢ Invest in on-reserve housing. Canada.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background operate housing, as non-profit ownership keeps rent levels down over the long term A strong federal government role in creat- and creates public assets in the process.1 ing affordable housing is vital for multiple Finally, when it comes to vulnerable sub- reasons. First, low-income households (par- populations (including persons with mental ticularly households relying on social assist- health problems, persons living with HIV/ ance) simply can’t afford the monthly rent AIDS, and seniors), non-profit entities are required of most types of housing on the effective at creating buildings that can fos- private market. Second, high-growth areas ter community development. of cities (especially new suburbs) can’t rely From the 1960s until the late 1980s, Can- on private developers to create apartment ada’s federal government played a very ac- units needed by workers (who in turn are tive role in creating housing for both low- needed by those same communities, espe- income and middle-income households.2 cially in the service sector). Third, it’s im- Always in partnership with the private sector, portant that non-profit entities own and the federal government typically cost-shared

88 Canadian Centre for Policy Alternatives the development of new housing units with those with a lived experience of poverty is provincial and territorial governments. Ten- also critical. ants were in turn charged an amount they In the current federal government’s first were deemed able to afford — typically 30% budget, housing made a comeback — al- of their gross monthly income. As a result, though a modest one compared to the 1970s as many as 25,000 new subsidized hous- and 1980s. The Trudeau government an- ing units were created across Canada each nounced $1.3 billion in new federal fund- year. Low-income households who sought ing for housing for 2016-17, and $956 mil- subsidized housing often received it with- lion for 2017-18. That’s an average of just in months, and very few individuals were over $1 billion in new federal funding per homeless compared to today.3 year over a two-year period. Although this In the early 1990s, with the onset of neo- is a respectable start, this year’s’ AFB will liberalism,4 the government withdrew from go well beyond the current federal govern- housing (with the exception of on-reserve ment’s spending levels for housing. It will housing). Although the government got spend $3 billion on new funding, creating back into the housing game in 2001 when jobs in the process and making those invest- it started to build some subsidized units ments permanent annual funding. While $3 through the Affordable Housing Initiative billion in new spending may sound ambi- (now known as the Investment in Afford- tious to some, it would merely bring us back able Housing program), its role in creat- to the levels of housing creation we had in ing new subsidized housing units remains the early 1980s. In relation to the rest of the much less pronounced today than it was in OECD, Canada would move from being a lag- the 1970s and 1980s. gard to a leader. In recent years real estate speculation and the growing drive for investment has How a Shortage of Affordable driven a perception, within both the public Housing Affects Canadians and government, that housing is a commodity. Today, wait lists for subsidized housing Research on affordable housing and home- are growing and thousands of Canadians lessness tell us four important things. First, spend each night in emergency shelters.5 inadequate housing has a profound impact There is a strong push to base the Na- on the lives of children: a considerable num- tional Housing Strategy on Canada’s inter- ber of babies are born to women experien- national human rights obligations through cing homelessness in Canada each year6 which the federal government will provide and a family’s housing situation has a major leadership on the right to housing. The Na- impact on whether children are taken into tional Housing Strategy should have specif- the care of child welfare officials.7 Second, ic targets, timelines, and reporting mechan- people experiencing homelessness have isms to ensure accountability. Input from considerably more physical and mental health problems than the general popula-

High Stakes, Clear Choices: Alternative Federal Budget 2017 89 tion.8 Third, it is typically cheaper for gov- viable — the ongoing costs to operate them ernments to keep a person in subsidized will be more than the rent that tenants cur- housing than it is for that person to remain rently residing in them are able to pay. While homeless.9 Fourth, most homeless people, the issue of expiring operating agreements once provided with adequate housing, will is a concern for Canada’s social housing sec- remain housed.10 tor in general, it is an especially serious concern for units created under the Urban Na- tive program because these units typically Housing for Indigenous Peoples house lower-income tenants (and therefore The Department of Indian and Northern Af- require a deeper ongoing subsidy).15 fairs Canada11 first developed its on-reserve As of 2011, 19% of Indigenous house- housing subsidy program in the 1960s, pro- holds living off-reserve and almost 34% viding capital grants for both the construction of Inuit households were in what is called of new units and the renovation of existing “core housing need”.16 In contrast, the figure units. However, it provided no funding for for Canada as a whole was just over 12%.17 maintenance once new units were built. In When it comes to absolute homelessness the 1970s, the Canada Mortgage and Hous- (i.e., people staying either in emergency ing Corporation initiated a new on-reserve shelters or outside), Indigenous peoples are housing program called the Non-Profit Rent- vastly overrepresented in Canada’s cities.18 al Housing Program, which provided band councils with loan financing and subsidies to build and operate housing.12 AFB Actions Most of the units designated as off-re- Preserve existing social serve housing for Indigenous households housing stock. were built via one of two programs between 1973 and 1993.13 Housing in communities of Action: The AFB will provide $1 billion to fewer than 2,500 fell under the Rural and provinces and territories to help maintain Native Housing Program,14 while housing in existing social housing units. communities of more than 2,500 fell under Result: On average, $100,000 will preserve the Urban Native Non-Profit Housing Pro- an existing unit over a 25-year period. Put gram. The former was not exclusively tar- differently, this investment will preserve geted to Indigenous peoples, while the latter 10,000 units and give them 25 years of addi- was. The federal funding provided under the tional life. Three types of units are especial- Urban Native program is to help operate the ly vulnerable to expiring agreements: units units each year and to help pay mortgages. created under the Urban Native program, Most of the funding agreements spanned public housing units, and units in northern between 25 and 50 years. When the funding areas of Canada. We assume no cost-match- agreements end (some have already started ing from provincial/territorial governments. to expire), most of these units will be non-

90 Canadian Centre for Policy Alternatives Expand and redesign the Investment disabilities, and seniors. Provincial and ter- in Affordable Housing Program. ritorial governments would be expected to pay for ongoing professional support staff. Action: The AFB will invest $1 billion in the IAH program, over and above current spending levels. The program will be redesigned Renew investment so that all units created under it remain af- in on-reserve housing. fordable over at least a 25-year period (rath- Action: The AFB will make substantial in- er than the current 10-year requirement). vestments in on-reserve housing and will Result: Between 10,000 and 15,000 new direct Indigenous Affairs and Northern De- units of housing will be created annually. A velopment Canada to consult on a nation- $100,000 capital grant from the federal gov- to-nation basis in discussing the details. ernment combined with $100,000 in match- Strong emphasis will be placed on cultur- ing funds from the provincial/territorial gov- al appropriateness and environmental sus- ernment will create one unit of affordable tainability. See the First Nations chapter for housing for a very low-income person. Some further details. of the housing created in this program will involve “income mix” (i.e., housing for both low- and mid-income households in the same Notes building). A unit for a mid-income household would require just a $50,000 capital 1 Falvo, N. (2016, November 5). The privatization of social housing [web log post]. Retrieved from Progressive subsidy from the federal government (as- Economics Forum website: http://www.progressive- suming a matching provincial/territorial economics.ca/2011/11/05/the-privatization-of-social- contribution). Priority will be given to north- housing/ ern regions of Canada, especially Nunavut, 2 Pomeroy, S., & Falvo, N. (2013). Housing policy in Canada under the Harper regime. Retrieved from Focus where building costs are higher. Consulting website: http://www.focus-consult.com/ wp-content/uploads/2014/07/PomeroyFalvoThe-Harper- Years-ENHR-with-table.pdf Invest in supportive housing. 3 Falvo, N. (2009). Homelessness, program responses and Action: The AFB will invest $1 billion in new an assessment of Toronto’s Streets to Homes program. Retrieved from Canadian Policy Research Network’s spending specifically on supportive hous- website: http://www.cprn.org/doc.cfm?l=en&doc=1979 ing (including professional support staff) 4 Stanford, J. (2014). Canada’s transformation under neo- for vulnerable populations. liberalism. Retrieved from Canadian Dimension website: Result: 5,000 new units of housing will be https://canadiandimension.com/articles/view/canadas created annually. The federal government 5 Adamo, A., Klodawsky, F., Aubry, T., & Hwang, S. would provide capital grants of $200,000 per (2016). Ending homelessness in Canada: A study of 10- year plans in 4 Canadian cities. Retrieved from St. Mi- unit. A strong focus should be placed on In- chael’s Hospital website: http://www.stmichaelshospital. digenous peoples living off-reserve, women, com/pdf/news/20161010.pdf LGBTQ2S populations, people with physical

High Stakes, Clear Choices: Alternative Federal Budget 2017 91 6 Bernstein, J. (2013). Creating a system to record the strategy (pp. 343–356). Toronto: Centre for Urban and number of children born to under-housed mothers in Community Studies, University of Toronto. Toronto. Retrieved from Homeless Hub website: http:// 13 National Aboriginal Housing Association. (2009). www.homelesshub.ca/resource/creating-system-record- A time for action: A national plan to address aboriginal number-children-born-under-housed-mothers-toronto?_ housing. Retrieved from National Aboriginal Housing ga=1.32319800.766122723.1470164260 Association website: http://www.aboriginalhousing.org 7 Chau, S., Fitzpatrick, A., Hulchanski, J. D., Leslie, B., 14 Approximately two-thirds of units created under & and Schatia, D. (2009). Chapter 1.3: One in five...Hous- the Rural and Native Housing Program are now home ing as a factor in the admission of children to care. In ownership units (National Aboriginal Housing Associ- J. David Hulchanski, Philippa Campsie, Shirley Chau, ation. [2009]. A time for action: A national plan to ad- Stephen Hwang and Emily Paradis (eds.) Finding Home: dress aboriginal housing. Retrieved from National Ab- Policy Options for Addressing Homelessness in Canada. original Housing Association website: http://www. Toronto: Cities Centre, University of Toronto. aboriginalhousing.org). 8 Khandor, E., Mason, K., & Cowan, L. (2007). The 15 National Aboriginal Housing Association. (2009). A street health report 2007. Retrieved from Street Health time for action: A national plan to address aboriginal website: http://www.streethealth.ca/downloads/the- housing. Retrieved from National Aboriginal Housing street-health-report-2007.pdf Association website: http://www.aboriginalhousing.org 9 Gaetz, S. (2012). The real cost of homelessness: Can 16 A household is said to be in “core housing need” in we save money by doing the right thing? Retrieved from Canada when it is either forced to pay more than 30% Homeless Hub website: http://homelesshub.ca/sites/ of income on housing, lives in housing requiring ma- default/files/costofhomelessness_paper21092012.pdf jor repairs, or lives in housing with too few bedrooms 10 Falvo, N. (2014, April 24). 10 ‘take aways’ from the given the size of the household. final report of the At Home/Chez Soi study [Web log 17 Canada Mortgage and Housing Corporation. (2014). post]. Retrieved from Homeless Hub website: http:// Canadian housing observer 2014. Retrieved from http:// www.homelesshub.ca/blog/10-%E2%80%98take- www.cmhc-schl.gc.ca/en/corp/about/cahoob/ aways%E2%80%99-final-report-homechez-soi-study 18 Belanger, Y. D., Head, G. W., & Awosoga, O. (2012). As- 11 This department has gone through multiple name sessing urban aboriginal housing and homelessness in Can- changes in the past several decades. Today, it is known ada. Retrieved from Homeless Hub website: http://www. as Indigenous and Northern Affairs Canada. homelesshub.ca/library/assessing-urban-aboriginal- 12 Devine, G. (2004). Chapter 23: Aboriginal Housing in housing-and-homelessness-in-canada-54375.aspx Canada. In J. D. Hulchanski, & M. Shapcott (Eds.), Find- ing room: Policy options for a Canadian rental housing

92 Canadian Centre for Policy Alternatives Immigration

ALTERNATIVE FEDERAL BUDGET IMMIGRATION 2017

¢ The 2009 unemployment rate for established ¢ Invest in foreign credential recognition programs. immigrants rose 7.9% compared with a 6.4% increase for ¢ End transportation loans for refugees, restore health people born in Canada. coverage for refugee claimants, and abolish the ¢ Racialized immigrant women earn only 48.7% of what Designated Countries of Origin. non-racialized immigrant men earn; racialized women as a ¢ Eliminate the minimum income requirement for all whole earn 56.5% of what white men earn. family-class sponsorships.

HIGH STAKES HIGH ¢ Citizenship fees increased from $100 to $530 in ¢ Reduce citizenship fees and ensure swift 2014/15.

CLEAR CHOICES implementation of Bill C-6. ¢ An average of 450–500 people are in immigration ¢ Give all migrant workers currently in Canada access to detention at any given time. permanent residence. ¢ Fourteen immigration detainees have died while in ¢ Place a moratorium on all removals until reforms are Canada Border Services Agency care since 2000. in place.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background Persistent, Growing Disparities

Given Canada’s declining birth rate and ag- The labour market experience of immi- ing population, immigrants will make up grants, particularly racialized immigrants, nearly all new entrants into the labour mar- is worse than that of Canadian-born work- ket and will soon be the key driving force ers.3 Racialized Canadians and immigrants of Canada’s economy. A significant propor- are over-represented in low-paid and precar- tion of immigrants are racialized, and the ious employment. The situation has grown majority of Canada’s racialized population worse over the last decade and systemic in- was born outside of Canada.1 Based on cur- equalities have become deeply entrenched.4 rent demographic trends, by 2031 29–32% of The chronic underemployment of skilled Canadians will belong to a visible minority.2 immigrants in Canada and strong correla- Statistics show a strong correlation be- tion between racialization and the grow- tween racialization and poorer outcomes in ing wage gap in the labour market is well income, employment, housing, and health, documented.5 Initiatives such as Bridging as well as the intersection between race and Training and the Foreign Credentials Loan immigration status. program that support re-training, re-quali-

High Stakes, Clear Choices: Alternative Federal Budget 2017 93 fying, and licensing in Canada can bring limited income. Some have used the child some benefits to individual program par- tax benefit for repayment.10 The govern- ticipants.6 However, addressing the system- ment waived transportation costs for only ic barriers that prevent immigrants from ac- the 25,000 Syrian refugees who arrived in cessing jobs and employment income at a Canada between November 2015 and Feb- level that is consistent with their skills, edu- ruary 2016. All refugees should be exempt.11 cation, and experience will require targeted A change to the Canada Social Trans- policy measures, such as full and consistent fer in December 2014 allows provinces and implementation of employment equity, in- territories to impose minimum residency cluding through instruments such as com- requirements on certain groups of individ- munity benefits agreements. uals based on their immigration or refugee status, such as refugee claimants. The government should swiftly reverse this change.12 Refugees

In July 2015 the Federal Court ruled that deny- Family Sponsorship ing applicants from designated countries of origin (DCO) the right to appeal violated Restrictions on the sponsorship of parents their rights under the Canadian Charter of and grandparents (PGP) were introduced in Rights and Freedoms.7 The current govern- 2014, including the following: a sponsoring ment has said that it will give claimants the family must have income at least 30% above right to appeal and have an expert human the poverty line; doubling the sponsorship rights panel determine the DCO list. But the period to 20 years; and capping applications DCO scheme problematically creates a two- at 5,000 a year.13 Although the new govern- tier refugee determination system that dis- ment doubled the cap to 10,000, demand criminates between refugee claimants based continues to exceed the quota. The govern- on their nationality (i.e., their country of ori- ment has said that the persistent backlog and gin).8 DCO claimants face more restrictions processing delays are due to limited resour- and get fewer benefits, making it more dif- ces. Since all prospective immigrants must ficult to have their claim recognized. Most pay an application fee (which is essentially vulnerable are refugee claimants fleeing a user fee), all collected funds should be al- persecution based on their gender, gender located for the use of the applicants by ap- identity, and sexual orientation. plying them to processing costs. At the time Canada charges government and pri- of writing, the government announced a vately sponsored refugees transportation lottery for PGP sponsorship, 17 days before and medical costs in the form of a loan for new applications are due. PGP is now the up to $10,000 per family plus interest, and only category of immigration that is subject is the only resettlement country that does to this process. this.9 Repayment must begin 30 days after arrival, a period when many refugees have

94 Canadian Centre for Policy Alternatives Citizenship ers and instead recruits these workers in large numbers through the TFWP, which Citizenship fees increased in 2014-15 from has grown exponentially over the last dec- $100 to $530, creating a significant barrier ade to become an ongoing source of cheap to citizenship for low-income immigrants. labour. The TFWP’s main source countries Government data shows a subsequent sharp are in the global south, and workers are pre- decline in citizenship application numbers.14 dominantly racialized. The current government has not reversed Lack of job mobility and little or no ac- the fee increase. cess to permanent residence has left workers The previous government increased the highly vulnerable to abuse and exploitation. residency requirement to qualify for cit- They are among the lowest paid, similar to izenship and significantly expanded the workers in the Seasonal Agricultural Work- group of individuals who must meet lan- ers Program and Live-in Caregiver Program. guage and knowledge requirements.15 Ap- Changes to the TFWP that were introduced by plicants were required to declare intent to the previous government in 2014 have made reside in Canada after becoming a citizen things even worse for workers. Enforcement and the government was empowered to re- of employer compliance has been poor, and voke citizenship on the basis of misrepre- the present complaints-driven system has sentation should they leave Canada. Most left exploited workers with little recourse. critically, this change created two-tier cit- Recommendations from a 2016 Parlia- izenship by giving new powers to the Min- mentary Standing Committee review of ister to strip citizenship from dual citizens the TFWP primarily reinforced the tempor- in cases of ‘treason” or “terrorism,” includ- ary nature of the program and strongly fa- ing for convictions outside of Canada. The voured employers. Some of the encouraging law can be applied retroactively, and al- recommendations from the review include lows the government to revoke citizenship open work permits (with some limitations), even if convictions were given by countries multiple-entry work visas, and an end to the with questionable legitimacy. The current “four-in-four-out” rule, which stops work- government plans to reverse some of these ers from staying beyond four years and pro- changes through Bill C-6, which at the time hibits their return for another four. The lat- of writing was near the final stages of be- ter has now been implemented. coming law.

Live-In Caregiver Program (LCP) Migrant Workers Most LCP workers are racialized women from the global south. Changes to the LCP Temporary Foreign Workers implemented by the previous government Program (TFWP) in 2014 removed the guaranteed pathway Canada’s economic immigration policy ex- to permanent residence while introducing cludes low-skilled and semi-skilled work- higher language requirements, a cap on the

High Stakes, Clear Choices: Alternative Federal Budget 2017 95 number of permanent residence applica- total of 14 detainees have died in CBSA care tions, and new Labour Market Impact As- since 2000, yet CBSA has released very few sessment (LMIA) requirements for employ- details about the deaths.19 ers as well as a new fee. Between January In its 2015 review of Canada’s compliance and March 2015, 90% of employer LMIA ap- with the International Convention on Civil plications were rejected, reducing the num- and Political Rights, the UN Human Rights ber of available caregiver jobs.16 Committee expressed grave concerns about In addition to these new barriers there indefinite detention for migrants, manda- remain long-standing concerns about the tory detention of those who enter Canada program, primarily the isolation of workers through “irregular” means, and insufficient and their vulnerability to abuse and exploit- medical support for detainees with mental ation. The backlog in processing caregiver health conditions held in provincial jails.20 applications for permanent residence has In August 2016 the government an- persisted for many years and has grown, nounced a $138 million fund to upgrade causing lengthy separation and consider- immigration detention centres across Can- able hardship and distress for workers and ada and hold stakeholder consultations, with their families.17 the goal of making detention a last resort. Between January 2014 and June 2016 the No reform proposals have been released at Canada Border Services Agency pursued 40 the time of writing. investigations under “Project Guardian,” an initiative that collected tips and complaints Removals about alleged program infractions by LCP Thousands of people (including hundreds workers. The investigations led to a number of children) are removed from Canada every of workers being detained and deported.18 year on the grounds that they are irregular Workers’ concerns about their vulnerabil- migrants or failed refugees. Tens of thousands ity and abuse and exploitation by employ- of others are on CBSA’s removal watch-list, ers and recruiters have not been addressed. many of them from the global south. The top The government must allow all migrant five countries of removal between 2015 and workers currently in Canada access to perma- 2016 were the United States, China, Hun- nent residence, and allow future workers to gary, Mexico, and India. gain permanent residence on arrival. There is an urgent need to review and reform the detention and removals system. A flawed refugee determination system and Enforcement an inhumane immigration system have led Detention to the removal from Canada of people who According to the Canada Border Services risk persecution and other forms of hardship Agency (CBSA), an average 450–500 people in their country of origin. The creation of the are detained at any given time under the DCO refugee class along with the restrictions Immigration and Refugee Protection Act. A on many claimants’ access to Pre-Removal

96 Canadian Centre for Policy Alternatives Risk Assessment and the Humanitarian and requirements; end transportation loans Compassionate application process have for all refugees; immediately restore In- only made the situation worse. Also at risk terim Federal Health coverage for refugee are migrant workers who have become out- claimants awaiting their eligibility hear- of-status for a variety of reasons, including ing; and abolish the Designated Coun- workplace injuries. tries of Origin. (Cost: $50 million/year)

• Eliminate the 30% above the poverty Immigrant Settlement Services line minimum income requirement for all family class sponsorship. Federal funding for immigrant and refugee settlement services was cut over the last few • Reduce citizenship fees; ensure swift years as part of the previous government’s passage and implementation of Bill C-6. austerity measures. Provincial/territorial • Reform the immigrant settlement fund- funding allocation is determined by a three- ing formula that uses only a three-year year rolling average of immigrant arrivals. rolling average of landings to determine Regions that saw a drop in arrivals experi- regional funding allocation annually. enced a further cut. The current federal government provided • Give all migrant workers currently in $325 million over six years for Syrian refu- Canada access to permanent residence, gee resettlement. However, this new fund- and allow future workers to gain perma- ing served only to offset previous funding nent residence on arrival; increase pro- cuts in many regions, leaving them with gram monitoring and enforcement of em- service loads that are increasing faster than ployer compliance in all migrant worker federal resources. programs; and bar CBSA from targeting migrant workers for enforcement action based on allegations of infractions from AFB Actions employers and recruiters.

• Invest in foreign credentials recognition • Place a moratorium on all removals until support programs and provincially driv- reforms to the refugee determination sys- en initiatives such as bridging training; tem and the immigration system are in ensure full and consistent implementa- place; review and reform the detention tion of employment equity to include system, including ending all child de- racialized immigrants, including com- tentions, ending indefinite detention, munity benefits agreements. (Cost: $100 and finding alternatives to detention. million/year)

• Reverse changes to the Canada Social Transfer so that provinces and territories cannot impose minimum residency

High Stakes, Clear Choices: Alternative Federal Budget 2017 97 Notes 10 http://www.theglobeandmail.com/news/british- columbia/canada-alone-in-charging-interest-to-refugees- 1 Immigration and Ethnocultural Diversity in Canada. on-travel-loans/article26345150/ Statistics Canada. https://www12.statcan.gc.ca/nhs- 11 Canadian Council for Refugees. End the burden of trans- enm/2011/as-sa/99-010-x/99-010-x2011001-eng.cfm portation loans. http://ccrweb.ca/en/transportation-loans 2 Canada Year Book 2011. Statistics Canada. http:// 12 Statutes of Canada 2014 — Chapter 39. December 2014. www.statcan.gc.ca/pub/11-402-x/2011000/chap/imm/ http://www.parl.gc.ca/HousePublications/Publication. imm-eng.htm aspx?Language=E&Mode=1&DocId=6836481&File=9 3 Block, Sheila, Grace-Edward Galabuzi and Alexan- 13 http://news.gc.ca/web/article-en.do?nid=813369 dra Weiss (2014). The Colour Coded Labour Market By the Numbers: A National Household Survey Analysis. 14 Griffith, Andrew. “The impact of citizenship fees on Toronto: Wellesley Institute naturalization” in Policy Options. October 12, 2016. IRPP.

4 Statistics Canada (2014). Study: Difference in earnings 15 http://www.parl.gc.ca/HousePublications/ between the less and more highly educated immigrants Publication.aspx?DocId=6684615 entering Canada, 1984 to 2007. http://www.statcan.gc.ca/ 16 http://www.thestar.com/news/immigration/ daily-quotidien/140529/dq140529c-eng.htm 2015/05/16/low-acceptance-and-backlog-stifles-foreign- 5 Block, Sheila, and Grace-Edward Galabuzi. (2011). Can- nanny-program.html ada’s Colour Coded Labour Market: The Gap for Racial- 17 Submissions to the temporary foreign workers ized Workers. Toronto: Wellesley Institute. review. June 2016. Caregivers Action Centre. http:// 6 Parkouda, Michelle, Beeksma, Janneka and Kwansah, caregiversactioncentre.org/wp-content/uploads/2016/06/ Janet. Measuring Returns: Valuing Investments in Inter- Caregivers-Brief-to-HUMA.pdf nationally Educated Nurses. Conference Board of Can- 18 http://rabble.ca/news/2016/03/project-guardian- ada, September 9, 2015. raids-on-caregivers-leads-to-calls-immigration-reform 7 The Constitution Act, 1982, Schedule B to the Canada 19 http://www.cbc.ca/radio/thecurrent/the-current- Act 1982 (UK), 1982, c 11 for-march-21-2016-1.3500358/deaths-in-cbsa-custody- 8 http://www.carl-acaadr.ca/our-work/issues/ renew-calls-for-immigration-detention-reform-1.3500441 DCO#Primer 20 United Nations Human Rights Committee’s Conclud- 9 http://www.ctvnews.ca/canada/canada-only- ing Observations on the Sixth Periodic Report of Can- country-to-charge-refugees-interest-on-travel-loans- ada, CCPR/C/CAN?CO/6, August 13, 2015 advocates-1.2559686

98 Canadian Centre for Policy Alternatives Infrastructure and Cities

ALTERNATIVE FEDERAL BUDGET INFRASTRUCTURE 2017 AND CITIES

¢ Replacing Canada’s aged infrastructure will cost an ¢ Create a stable, sufficient, and long-term local estimated $171.8 billion. infrastructure transfer of $5.4 billion a year to be administered by a new National Community Development ¢ Between the 1990s and 2000s, federal and provincial Agency. transfers to municipal governments shrank from 26% of ¢ Develop a federal Community Economic Development city revenues to only 16%. (CED) policy framework to promote inclusive, sustainable, and resilient Canadian communities in partnership with

HIGH STAKES HIGH ¢ The recently announced Canada Infrastructure Bank non-profits, co-operatives and other social enterprises. could burden cities with an additional $6.2 billion in CLEAR CHOICES ¢ Establish a federal Neighbourhood Revitalization financing costs on new and replacement infrastructure, Program, and Neighbourhood Renewal Corporations, that and tie municipal governments to a failed P3 model that can manage the impacts of local development on emphasizes private profit over community benefits. employment, training, education, safety, crime prevention, housing, physical improvements, recreation, and other factors.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background be $171.8 billion — deplete municipal resources, making it even harder for cities to meet The backbone of Canada’s current munici- the day-to-day needs of their residents.1 pal infrastructure system was built between At the same time, Canadian municipal- 1950 and 1980, but cities have been starved ities are restricted in how they raise revenues. of cash ever since. Cuts in federal and prov- Unlike in other countries, local governments incial transfers and the downloading of re- here cannot levy income or sales taxes but sponsibilities to local governments have led rely mostly on property taxes and user fees to decay. Less money for cities means less instead. As regressive forms of revenue gen- money for services such as public transit, eration these measures disproportionately police and fire departments, libraries, water affect vulnerable populations.2 Property tax and sanitation services, and community cen- rates in some provinces, for example, are ters. The added costs associated with aging among the highest in the world.3 In contrast, infrastructure — the total national replace- most major U.S. cities levy income and/or ment cost of infrastructure is estimated to sales taxes, and many European cities rely

High Stakes, Clear Choices: Alternative Federal Budget 2017 99 heavily on income taxes. Municipalities in structure itself. Grants were still approved other countries also receive more reasonable using a non-transparent, application-based transfers from upper levels of government. process that discourages a co-ordinated ap- In the early 1990s, transfers from Canada’s proach, leads to accusations of unfairness, federal and provincial governments provided and emphasizes high-profile projects over 26% of local government revenues. By 2000, functionality. cuts to both sources of revenue had reduced The much bigger problem with recent that amount to only 16%. During this period federal funding changes is that the govern- of low investment the population of Can- ment missed an opportunity to put in place adian cities grew by almost three million.4 more efficient low-carbon infrastructure Local governments, especially in Ontario, in- such as public transit. Instead, we got a lot creased property taxes, user fees, and service of spending on roads and bridges that per- charges while reducing public services, and petuate carbon-intensive activities. delaying investment in and maintenance of infrastructure. Community organizations and community-based projects had trouble main- Current Issues taining existing levels of support. Transfers Investment Welcome, to municipalities continued to shrink even but the Pace Is too Slow though federal and provincial governments ran surpluses and cut taxes to businesses Infrastructure investment was a key Liberal and higher-income earners. policy plank during the 2015 election cam- Federal and provincial governments paign and remains a top priority for the Lib- have increased the money they give to local eral government. The 2016 federal budget governments in recent years in response to and subsequent fall economic statement pressure from civil society, the recession, and laid out plans to invest $95 billion in infra- some major structural issues related to vital structure projects before 2028. This is a rea- bridges and roads. At the federal level, the sonable objective with symbolic bonuses: 2007 Building Canada Plan and the 2013 New the investment entrenches the importance Building Canada Plan offered municipalities of greater infrastructure spending, even if stable, long-term revenue not enjoyed since the government incurs a deficit, as a long- transfers were cut in the mid-1990s. These term federal priority whose gains will far funds were an improvement, but they did outweigh small debt financing costs. not fully remedy long-standing problems. But it’s important to recognize we are Promises were back-loaded and ultim- coming out of an extended period of neglect. ately inadequate. And even with new spend- As the proverb says, the best time to plant a ing commitments expenditures as a percent- tree was 20 years ago; the second best time age of GDP were scheduled to start dropping is now. Much of the announced investment again. Additionally, the federal government is intangible because it set to take place out- failed to address the flaws in the funding side of the government’s current four-year

100 Canadian Centre for Policy Alternatives mandate. The economy in underperforming length entity and identify lucrative infra- now, interest rates are at historically low lev- structure projects to be paid for by govern- els now, and it takes time to reap rewards ment in partnership with large private in- from investments made today. The urgency stitutional investors. The optics are great, is even greater when you factor in the extra since most of the money will come from the effort required to move away from the cur- private sector while the government can take rent fossil-fuelled paradigm to a greener, credit for getting the projects built. By call- more climate-friendly economy. As such, in ing the vessel a bank, and partnering with the interest of getting the most value out of the private sector, it also gives the appear- significant federal investment, more of the ance of efficiency and prudent stewardship committed funds should be spent over the of public money. next three years. In reality, the initiative is a thinly veiled repackaging of old ideas that have repeat- edly failed — public-private partnerships Flawed Funding Formula (P3s) by a different name. Higher costs, The government has chosen to attach specific higher user fees, lower wages, comprom- levels of funding to categories of infrastructure ised worker rights, and higher executive including public transit, green infrastructure, compensation are recurring features of the social infrastructure, and trade and transpor- P3 model. It turns public services into pri- tation. While these are all valid national private profits in a way that is completely un- orities, the criteria for project selection, and fair to taxpayers, who are ultimately on the subsidization levels per project, are opaque hook for any mistakes or miscalculations, and thus potentially politicized, adding an while profiteers are insulated from any real unnecessary layer of complexity and under- risk. A 2014 report by the Ontario auditor mining the predictability of the application general claims the provincial government process. The government’s funding formula is spending billions of dollars more than it could work against the long-term co-ordina- needs to on infrastructure because of high tion of infrastructure projects, discourage cit- financing costs on P3 projects. ies from advancing projects that fit best with Likewise, municipal projects financed their own priorities, and ultimately result in with help from the new federal infrastruc- less overall value for the public. ture bank will be significantly more expensive, since private institutional investors will be seeking returns in the range of 7–9%. The The Canadian Infrastructure federal government, on the other hand, can Bank: Failure by Design borrow money at a current rate of about 1.9%. The Canadian Infrastructure Bank was an- Instead of extending this low preferential nounced in late 2016 as a pillar of the gov- rate to municipalities, the government’s in- ernment’s infrastructure investment strat- vestment bank could saddle municipalities egy. The new bank will operate as an arm’s with an additional $6.2 billion in financing

High Stakes, Clear Choices: Alternative Federal Budget 2017 101 costs — the result of having to pay back the ity Development Agency made up of rep- $20 billion private portion of available infra- resentatives from all levels of government structure money at a 7–9% rate of return. Ul- and tasked with removing obstacles to the timately the public will be accountable for smooth transmission of public resources, these additional costs, either in the form of including through the following measures: higher taxes or user fees. • Developing mutually agreed upon, streamlined project approval criteria Community Economic Development incorporating transparency, new reporting mechanisms, and independent Community leaders understand that un- fund-specific auditing; employment, urban and rural decline, income inequality, poverty, social exclusion, • Identifying common goals across prov- and environmental degradation can only inces and providing specialized servi- be effectively addressed by community-led ces to municipalities; strategies that take a multifaceted and inte- • Developing and co-ordinating a National grated approach. The Community Economic Transit Strategy and a National Sustain- Development (CED) model creates economic able Municipal Asset Management Plan; opportunities while enhancing social and environmental conditions. Through social • Creating an ongoing outreach strategy to enterprises, co-operatives, and other com- promote codevelopment of public policy munity organizations, Canadians are work- with all levels of government, stakehold- ing together to strengthen local economies ers, and civil society partners; while providing access to child care servi- • Developing and co-ordinating a National ces, housing, local food, training, skill de- Brownfield Redevelopment Strategy to velopment opportunities, and much needed bring former industrial sites back to services in a way that empowers marginal- productive community and economic ized groups. Governments have an import- use; and ant role to play in supporting CED given the significant resources, capacities, and policy • Assisting municipalities in the develop- levers at their disposal. ment and implementation of Commun- ity Climate Change Strategies.

AFB Actions Result: Greater co-operation on local issues through a National Community Develop- Community Infrastructure Transfer ment Agency, and increased funding in a Community Infrastructure Transfer, will Action: Create a stable, sufficient and long- finally address the systemic shortcomings term local infrastructure transfer worth of today’s funding formula, which relies on $5.4 billion a year. The transfer will be administered by a new National Commun-

102 Canadian Centre for Policy Alternatives annual allowances and the approval of pro- services the authority to require an assess- jects based on short-term political goals. ment of community benefits from bidders on federal contracts.

Supporting Community Enterprise b) Access to existing business support a) Social purchasing Action: Expand the capacity of and access Action: Adopt a social procurement policy to existing SME services through the Can- including the implementation of social value adian Business Network and other federal weighting in all federal requests for propos- business development programs. This should als and contracts. be coupled with education about the pro- Result: Community enterprises operated by grams for government officials to ensure a non-profits, co-operatives, and micro-en- level playing field for alternative forms of terprises dedicated to engaging vulnerable incorporation. (Cost: $10 million per year populations in the workforce create wealth for five years.) and respond to the needs of rural and urban Result: Although more than 90% of federal communities. Contrary to popular miscon- SME support programs can, under legisla- ceptions, community enterprises have a tion and regulations, serve non-profits and higher survival rate than traditional small- hybrid business models (e.g., social enter- to medium-sized enterprises (SMEs) while prises), access to those programs is typ- offering an unparalleled financial and so- ically limited by current practices, culture, cial return on investment. Better accounting and mandates. All forms of incorporation, for the social, environmental, and econom- including not-for-profit, social enterprise, ic impact of government spending, through and co-operatives, should have equal ac- social value weighting, will increase benefits cess to existing government-supported busi- to vulnerable communities and individuals, ness development tools, including business creating accessible education and job op- skills capacity building opportunities and portunities for communities traditionally at advisory services, appropriate grant fund- the margins or excluded from the economy. ing, and a full range of capital tools.

Action: Include community benefit agree- c. Access to capital ments in federal development projects, as Action: Provide a tax credit of 30% on Com- proposed in Bill C-227, a private member’s munity Economic Development Investment bill currently before the House of Commons. Funds (CEDIFs) to accelerate their develop- Result: Community benefits agreements are ment across Canada. (Cost: $15 million per another practical tool for engaging with com- year for five years.) munity enterprises on development projects Result: Canadians often want to invest in while generating local social and econom- small, locally owned businesses because of ic opportunities. Bill C-227 gives the feder- the positive social and environmental (in al minister of public works and government addition to financial) returns. Billions of

High Stakes, Clear Choices: Alternative Federal Budget 2017 103 dollars invested in RRSPs, however, send port a CED approach in targeted urban and most Canadians’ retirement savings out of rural communities in need of physical, so- their province, providing no benefit to the cial, economic, and cultural revitalization. local economy. CEDIFs create an affordable (Cost: $100 million per year for five years.) way for people to invest in their own com- Result: Modelled on Manitoba’s Neighbour- munities, and for local small business to hoods Alive!, the federal revitalization pro- access capital. Nova Scotia led the way in gram and fund will consider the impacts of 1999 and, as a result, has seen the establish- local development on employment, training, ment of 48 CEDIFs, the mobilization of 7,500 education, safety, crime prevention, hous- investors, and a contribution of more than ing, physical improvements, recreation, and $56 million in assets. Similar funds exist in more. Locally governed democratic Neigh- Manitoba, Prince Edward Island, and New bourhood Renewal Corporations in targeted Brunswick, but federal tax incentives could communities will co-ordinate ongoing revital- see them spread to all provinces. ization efforts. Flexible funding programs will enable community-based organizations to leverage additional non-government re- CED Policy Framework and Lens sources for innovative initiatives that take Action: Develop and implement a federal a CED approach to addressing community- CED policy framework to be modelled on prioritized challenges. NRCs will help local the one introduced by the Manitoba gov- community organizations develop propos- ernment. The framework will include a CED als and apply for funding to support pro- lens — a series of questions to help depart- jects consistent with the neighbourhood’s ments assess the degree to which they are five-year revitalization plan. incorporating CED principles into government initiatives. Result: CED principles, such as local skills Notes

development and local employment, will be 1 Federation of Canadian Municipalities. (2012). Can- incorporated into government initiatives to adian Infrastructure Report Card.

better respond to the economic, social, and 2 Lower-income households pay a much higher share environmental needs of communities. A fed- of their income on increased user fees for public services, or property taxes on owned or rented property. eral CED policy framework will promote inclusive, sustainable, and resilient Canadian 3 Kyle Pomerleau and Andrew Lundeen (2014). Inter- national Tax Competitiveness Index. Washington: Tax communities. Foundation.

4 Statistics Canada. 2011 National Census. “Population, Neighbourhood Revitalization urban and rural, by province and territory.” Program and Fund

Action: Establish a federal Neighbourhood Revitalization Program and Fund to sup-

104 Canadian Centre for Policy Alternatives International Development

ALTERNATIVE FEDERAL BUDGET INTERNATIONAL 2017 DEVELOPMENT

¢ Achieving the United Nations’ Sustainable ¢ Launch a funded plan to align government policies Development Goals demands that Canada transform with the Sustainable Development Goals, both in its approach to global development co-operation. Canada and abroad. ¢ In 2016-17, Canada invested about 0.27% of gross ¢ Gradually increase our international development national income in international development assistance to 0.41% of gross national income by assistance — below average and far from the 0.7% goal. 2021-22, and aim for 0.7 % within a decade.

HIGH STAKES HIGH ¢ The multidimensional nature of poverty and ¢ Target Canada’s international aid to the poorest

inequality means that Canadian aid must be CLEAR CHOICES and most vulnerable, particularly for women and girls. implemented in more integrated and complex ways. ¢ Establish a new development effectiveness action ¢ Canada’s last aid effectiveness action plan plan with targets in line with those set out in the concluded in 2011, with no new plan adopted to Busan Partnership for Effective Development succeed it. Co-operation.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background The year 2015 also marked the advance- ment of global action on climate change, fol- A Changing Global Context lowing on the adoption of the Paris Agree- The adoption of the United Nations’ 2030 ment2 (see the Environment and Climate Agenda for Sustainable Development (Agen- Change chapter3). da 2030) and Sustainable Development The World Humanitarian Summit in May Goals (SDGs) in 2015 represented a landmark 2016 drew global attention to the urgent achievement in establishing a truly global need for collective action to address grow- approach to sustainable development.1 These ing humanitarian need. We are in the midst new goals are universal in nature, applying of the greatest displacement crisis ever re- to all countries. Countries like Canada will corded, with some 65 million people hav- be required to examine their own sustaining been forced from their homes in recent able development challenges — domestic- years.4 Over 218 million people each year ally as well as internationally. are affected by disasters, costing the global economy more than $300 billion annually.5

High Stakes, Clear Choices: Alternative Federal Budget 2017 105 A recent UN report showed a $15 billion gap The longstanding international target of between available financing for humani- reaching 0.7% of GNI dedicated to official tarian assistance and global human need.6 development assistance (ODA) is Canadian- made, originally advanced by former prime minister Lester B. Pearson. Parliament has The Need for a National Vision reiterated this target commitment sever- The government’s International Assistance al times over the last 15 years, under both Review (IAR) represents a timely opportun- Conservative and Liberal governments. It ity for a fresh take on global development has been endorsed by three different par- cooperation, as Canada aligns its actions liamentary committees and by the House of with Agenda 2030. Civil society’s strengths Commons as a whole.11 It’s time for Canada in program delivery, policy, advocacy, and to make good on its word and begin mov- public engagement will complement the ing gradually and consistently toward the political will and resources that the feder- 0.7% target. al government can invest in the right mix of policies and programs. Government, civil so- Time for Strategic Focus ciety organizations, and other stakeholders must engage in a long-term partnership to Some degree of focus is necessary for de- implement a comprehensive human rights velopment assistance to have a significant framework to guide Canadian development impact, especially for a country with a mod- cooperation over the next five years and est ODA budget. Countries of focus, of which enhance Canada’s contribution to a fairer, Canada currently has 25, are one means of safer, and more sustainable world.7 allocating international assistance. How- This vision for a strong development and ever, the geography of poverty has shifted in humanitarian assistance policy requires a recent years. The increasingly multidimen- strong financial commitment. Canada will sional nature of poverty and inequality, need to reverse the trend of recent years across and within national borders, means that has seen its international assistance that Canadian development assistance must budget decline to historically low levels.8 be focused in more complex ways as well.12 Right now, Canada allocates about 0.27% of Tackling poverty now requires us to its gross national income (GNI) to develop- not just address extreme poverty but to ad- ment cooperation and humanitarian assist- dress the needs of all those living below ance,9 falling below the average of its peer national poverty lines. Many experts esti- group in the G7, Organization for Economic mate that three-quarters of the world’s poor Cooperation and Development (OECD), and live in middle-income countries.13 Further- other western liberal democracies.10 Without more, inequality is getting worse between substantial increases, this government risks and within countries.14 Above all, Canada’s having the worst record in Canadian hist- focus should be on poor people, not on poor ory in international assistance investment. countries. The principal purposes of Can-

106 Canadian Centre for Policy Alternatives ada’s ODA, as defined by theODA Account- in-country partnerships that Canadian civil ability Act,15 are to reduce poverty, promote society organizations have with predictable international human rights, and respond to and responsive funding, the Canadian gov- the voices of the poor. We should therefore ernment can maintain Canadian access, ex- be seeking to assist those living in poverty pertise, and relationships in countries be- and the most vulnerable regardless of where yond its official countries of focus. Such they live: women and girls; people with dis- partnerships allow for greater adaptability abilities; Indigenous peoples; the urban and when geopolitical realities change. A di- rural poor; and people who are discriminat- versified portfolio of tools and approaches ed against because of their caste, religion, will make our international assistance ef- ethnicity, or age. This focus is consistent forts more effective. Accordingly, Canada’s with the minister’s mandate to focus on re- work with civil society partners should aim ducing poverty and inequality,16 and with to be as flexible and responsive as possible, the newly created Office of Human Rights, in keeping with the government’s civil so- Freedoms and Inclusion.17 It is also in line ciety partnership policy.19 with the core goal of Agenda 2030: to leave no one behind. Canadian ODA should also be aligned AFB Actions with the priorities of our partners in devel- Launch a comprehensive alignment oping countries. Alignment with develop- of government policy with Canada’s ing country priorities, democratic owner- expressed priorities and plan ship of these priorities, and harmonization for realizing the Sustainable of efforts among donors have been recog- Development Goals (SDGs). nized over the past 15 years as key deter- minants of effective aid delivery.18 In 2012, Actions: Canada allowed its aid effectiveness action • The prime minister will establish an plan to conclude without developing a new inter-ministerial committee to realize one. We need a new action plan with clear Canada’s plan for its SDG priorities, in- targets in line with those set out in the Bu- cluding measuring progress; it will re- san Partnership for Effective Development port directly to him, coordinated by the Cooperation and in subsequent outcomes of Privy Council Office. the High Level Meetings of the Global Part- nership for Effective Development Cooper- • The government will establish a multi- ation in Mexico and Nairobi. stakeholder national commission to fos- Finally, a focus on specific countries or ter a whole-of-society approach to im- themes should not be to the exclusion of plementing Canada’s plan for realizing evolving human needs. There should al- the SDGs. The commission will engage ways be some flexibility to account for the with all three levels of government, in- unanticipated. By supporting the existing

High Stakes, Clear Choices: Alternative Federal Budget 2017 107 digenous authorities, civil society, the ively and in accordance with their own private sector, and Canadians. priorities. This additional funding will be accompanied by new, flexible, di- • The above committee and national com- verse and responsive funding mechan- mission will work together to generate isms to support the government’s work a comprehensive Canadian SDG action with a variety of civil society partners. plan and funding framework, drawing inspiration from the Federal Sustainable Result: More predictable funding over the Development Strategy and the Inter- coming years that matches Canada’s pol- national Assistance Review. itical ambitions for global development cooperation with a longer-term financial Result: A clear and coherent whole-of-gov- framework for reaching the international ernment policy and funding framework for target of 0.7% of GNI. meeting and measuring Canada’s SDG commitments at home and abroad. Establish a new development effectiveness action plan. Create a 10-year timetable for gradually and predictably increasing Action: The AFB will establish a new plan the International Assistance with clear targets in line with Busan Part- Envelope towards the target of 0.7% nership for Effective Development Cooper- of Gross National Income (GNI). ation and its accompanying monitoring framework. Actions: Result: Funds for development cooperation • The AFB will set a timetable to predict- will be used more effectively and will there- ably grow the IAE to 0.7% of GNI within fore have more impact. 10 years by increasing Canada’s IAE by 16% annually, from $4.8 billion in 2016- Set clear additional targets to focus 17 to $5.5 billion in 2017-18; $6.4 billion Canada’s international assistance in 2018-19; and $7.4 billion in 2019-20.20 on the poorest and most vulnerable, This represents new spending of $760 in particular women and girls, million, $1.6 billion and $2.7 billion in situated within clearly articulated the first three years. This “fiscal escal- national plans and strategies ator” will put Canada back on track by that are developed in a manner generating predictable annual increases consistent with democratic country in the aid budget, doubling the aid en- ownership and reflect country velope to put Canada above the OECD priorities, needs, and context. donor country average performance ratio (0.41%) by 2021-22, and allowing partner Actions: countries to absorb the increases effect-

108 Canadian Centre for Policy Alternatives • As of 2017-18, 50% of Canada’s aid envel- Result: The baseline humanitarian budget ope will be dedicated to least developed will be brought into line with its typical year- and low-income countries (LDCs and end proportion within the IAE, and allow LICs) and fragile states. In the next four more long-term, timely, predictable, and years, or by 2021, 0.15% of GNI will be effective funding for humanitarian action. dedicated to development cooperation for LDCs.21 The AFB will also initiate a process of making Canada one of the top Notes

three bilateral donors in at least half of 1 United Nations. (2015). Transforming our world: the Canada’s countries of focus by the end 2030 Agenda for Sustainable Development. New York: of this government’s first mandate.22 United Nations. 2 United Nations. (2015). Adoption of the Paris Agree- • As part of a comprehensive feminist ap- ment. New York: United Nations.

proach, we will quadruple our invest- 3 AFB 2017 confirms that the government’s international ment in women’s rights organizations climate financing initiatives will be new climate fund- by 2020 — from $5.2 million to $20.8 mil- ing, additional to the existing aid budget. lion. We will invest in a full range of sex- 4 UNHCR. “Figures at a Glance,” UNHCR. 2016. http:// www.unhcr.org/figures-at-a-glance.html. ual and reproductive health and rights services, and ensure that 20% of all aid 5 ReliefWeb. “The human cost of natural disasters 2015: a global perspective.” Report summary, March 2015. investments have a principal focus on http://reliefweb.int/report/world/human-cost-natural- advancing gender equality and women’s disasters-2015-global-perspective. 23 empowerment. 6 ReliefWeb. “High-Level Panel on Humanitarian Fi- nancing Report to the Secretary-General: Too important Result: By focusing on the people most in to fail — addressing the humanitarian financing gap,” need, wherever they live, and responding http://reliefweb.int/report/world/high-level-panel- humanitarian-financing-report-secretary-general-too- to country-defined priorities, Canada will important-fail. help realize the Agenda 2030 ambition of 7 For further details on what this looks like, see CCIC. leaving no one behind. Cooperative Leadership: Canada’s contribution to a fairer, more sustainable, and safer world. July 2016. http:// www.ccic.ca/_files/en/what_we_do/2016_08-11_CCIC- Increase the baseline budget IAR_submission_EN.pdf. for humanitarian assistance. 8 CCIC. “Update on Canadian Official Development Assistance: Canada’s aid takes one step forward one Action: Canada’s response to humanitar- step back,” Issue Update. October 2016. http://www. ian crises is a crucial component of our ccic.ca/_files/en/what_we_do/2016_10_Brief_Update_ Canadian_ODA.pdf. international assistance. As the IAE grows under the AFB a larger proportion will be 9 Ibid. allocated to increasing the baseline budget 10 Greenhill, Robert and Megan Mcquillan. “Assessing Canada’s Global Engagement Gap.” Global Canada. Oc- for humanitarian assistance (prevention, re- tober 6, 2015. https://www.opencanada.org/features/ sponse, relief, and recovery). canadas-global-engagement-gap/.

High Stakes, Clear Choices: Alternative Federal Budget 2017 109 11 Paul, Jennifer and Marcus Pistor. (2009). In Brief: 18 See notably OECD. (2005). The Paris Declaration on Official Development Assistance Spending. Ottawa: Li- Aid Effectiveness;OECD . (2008). The Accra Agenda for brary of Parliament, PRB 07-10E, http://www.lop.parl. Action. OECD (2011). Busan Partnership for Effective gc.ca/content/lop/researchpublications/prb0710-e.pdf. Development Cooperation. http://www.oecd.org/dac/ effectiveness/34428351.pdf. 12 CCIC. “Focus with Purpose,” Submission to House of Commons Standing Committee on Foreign Affairs 19 Global Affairs Canada. “International Develop- and International Development Study on Countries of ment and Humanitarian Assistance Civil Society Part- Focus, May 31, 2016. http://www.ccic.ca/_files/en/what_ nership Policy.” 2015. http://www.international.gc.ca/ we_do/2016_05_31_Focus_with_Purpose_FAAE.pdf development-developpement/cs-policy-politique-sc. aspx?lang=eng. 13 See for instance: Andy Sumner. (2012). Where Do the World’s Poor Live? A New Update. IDS Working Paper 20 Reilly-King, Fraser and Aniket Bhushan. “Getting 393, Institute of Development Studies. to 0.7: Three Scenarios for Canada.” Canadian Inter- national Development Platform. October 18, 2016. http:// 14 See Hickel, Jason. ( Hickel, “Global inequality may cidpnsi.ca/getting-to-0-7-three-scenarios-for-canada/. be much worse than we think,” The Guardian, 8 April 2016, http://www.theguardian.com/global-development- 21 The Government of Canada currently allocates around professionals-network/2016/apr/08/global-inequality- 0.09% of GNI to LDCs. This transition can be achieved may-be-much-worse-than-we-think within the context of an expanded IAE as per above.

15 Global Affairs Canada. “The Official Development 22 OECD data indicate that an additional investment of Assistance Accountability Act.” 2015. http://www. $59 mn could make Canada a top-three donor in half international.gc.ca/development-developpement/ (13) of its countries of focus, based on 2014 contribu- partners-partenaires/bt-oa/odaaa-lrmado.aspx?lang=eng. tion levels. See CCIC. (2016). “Smart, Transparent, and Impactful Aid: Submission to Consultations on Budget 16 Prime Minister of Canada. “Minister of Internation- 2016.” February 2016, p. 3.http://www.ccic.ca/_files/ al Development and La Francophonie Mandate Let- en/what_we_do/2016_02_16_Brief_Budget_2016.pdf. ter.” 2015. http://pm.gc.ca/eng/minister-international- development-and-la-francophonie-mandate-letter. 23 Ibid.

17 Global Affairs Canada. “Reinvigorating Can- ada’s human rights agenda.” Press Release. May 17 2016. http://www.international.gc.ca/media/ aff/news-communiques/2016/05/17a.aspx?lang=eng &pedisable=true.

110 Canadian Centre for Policy Alternatives Post-Secondary Education

ALTERNATIVE FEDERAL BUDGET POST-SECONDARY 2017 EDUCATION

¢ Tuition revenue going to colleges and universities ¢ Restore federal funding for post-secondary has tripled since the massive cuts to federal spending education (PSE) and establish appropriate standards in 1996. through a federal PSE Act. ¢ Public student debt in Canada reached $28 billion ¢ Eliminate tuition fees for all PSE students in all in 2012 (its highest level ever), which does not PSE programs. account for private debt.

HIGH STAKES HIGH ¢ Despite Canada’s treaty obligations, over 10,000 ¢ Lift the cap on federal funding for Indigenous PSE learners and ensure existing waiting lists are Indigenous students are on a waiting list for CLEAR CHOICES post-secondary training. emptied. ¢ Public spending on training and skilled trades ¢ Invest in skilled trades apprenticeships and adult apprenticeships in Canada sits at the bottom of the education, and help unemployed Canadians who are industrialized world. ineligible for employment insurance.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background versity degree — is a requirement in 70% of job openings. For the precariously employed, There was a time in Canada when tuition fees vying for the remaining 30% of jobs, PSE were modest or fully subsidized, when cam- offers a pathway to a better future.2 That’s pus workers — cleaners, food service work- why we must treat PSE as an essential ser- ers, maintenance and skilled trades, support vice accessible to all, regardless of one’s staff, and academic workers — enjoyed de- ability to pay. cent wages and access to full-time jobs. That Building on proposals from last year, era ended in the 1990s when tax cuts and the 2017 Alternative Federal Budget sets a austerity took precedence over the delivery new approach in federal PSE policy. To re- of quality public services like education.1 verse decades of neglect, it creates a Post- Today post-secondary education (PSE) of Secondary Education Renewal Transfer that some kind — whether continuing/adult edu- will, among other things, eliminate PSE tu- cation, a skilled trade certification through ition fees, increase funding for training and apprenticeship, a college diploma, or a uni- apprenticeships, and ease the burden of

High Stakes, Clear Choices: Alternative Federal Budget 2017 111 Figure 14 Public student loan debt (federal and provincial), 1999–2012

$28 Billion

$1.87 Billion

$23 Billion $ Billions

20 $20 Billion

15 1999 2005 2012

Source Statistics Canada, Survey of Financial Security, 2014.

paying down student loans. The AFB also international students and those enrolled re-establishes national standards in PSE in professional programs (see Table 1). through legislation modelled on the Can- These numbers understate the conse- ada Health Act. quences of high tuition fees and student debt for marginalized groups such as students with disabilities, racialized students, Current Issues queer or trans students, or Indigenous students, who are more likely to come from Tuition Fees, Student Aid, and Debt low-income households.3 The data also do Canadian colleges and universities have not capture debt from private student loans doubled or tripled tuition fee revenues since or lines of credit, which many turn to for 2001, saddling graduates with unprecedent- help, given inadequate student financial ed levels of debt (see Figure 5). The catalyst aid. Heavily marketed (and tax-sponsored) came in 1996, when the Chrétien govern- registered education savings plans (RESPs) ment made historic cuts to federal PSE trans- are used primarily by upper-income earn- fers worth $2.29 billion (an 18% reduction), ers and are therefore of little general use.4 which facilitated dramatic tuition increases Almost 60% of public student financial over the next two decades, particularly for aid comes from the Canada Student Loans Program (CSLP) while the balance is deliv-

112 Canadian Centre for Policy Alternatives Table 1 Tuition fees at various PSE institutions (2016-17)

Institution Domestic Tuition International Tuition Dalhousie University — Dentistry $22,700 $48,080 Seneca College — Aviation Technology $18,214 $71,723 University of Ottawa — Common Law $26,560 $68,200 McMaster University — Medicine $27,532 $95,955 University of Manitoba — Asper MBA $29,602 $42,524 University of British Columbia — B.Ed. $11,332 48,958.20

Source Tuition fee schedules from named institutions.

ered through employment insurance (for ap- modest RAP support, borrowers must earn prenticeship training), provincial programs, less than $25,000 a year — a poverty-level and bursaries or scholarships available at income that makes it difficult to repay debt. PSE institutions. The bulk of student aid is Still, as a policy tool for debt reduction, the loan-based, which discriminates against RAP should be expanded given the scope of those unable to pay for PSE costs up front. unemployment and underemployment, par- In 2013-14, the last year for which data ticularly among young workers. is available, the CSLP provided loans to As a final note, it is inexcusable that the 491,444 students, and modest grants to CSLP earned over $580 million in interest 410,184 low- and middle-income students.5 on student loans in 2013-14.8 The CSLP must This represented about 28% of enrolled stu- follow the lead of provinces that have elim- dents in 2013-14, leaving the vast majority inated interest fees on student loans, and with unmet financial needs.6 Of particular shift to a grant-based system that allows concern, graduate students who do not qual- students to focus on their studies without ify for the CSLP’s Canada Student Grants, having to work one or more part-time jobs.9 and international students on travel visas, are not eligible for either public or private Indigenous Students financial aid. The CSLP also has a Repayment Assist- Free access to post-secondary education is ance Program (RAP) that was used by over a treaty right for Indigenous people in Can- 234,000 CSLP debtholders in 2013-14 (almost ada; the federal government has a moral and a third of all debtholders that year). The RAP legal responsibility to uphold this commit- absorbs interest payments on CSLP debt, ment. The Post-Secondary Student Support and even reduces principal for borrowers on Program (PSSSP) is the primary mechan- RAP for 60 consecutive months or 10 years ism by which status First Nations and Inuit after graduation. At 15 years after gradua- students receive financial support from the tion, CSLP debt is forgiven.7 To qualify for federal government. In 2016, the Assembly

High Stakes, Clear Choices: Alternative Federal Budget 2017 113 of First Nations (AFN) estimated there was an additional language (EAL) in PSE insti- a backlog of 10,000 Indigenous students tutions, and tuition fees are now assessed waiting for PSSSP funding.10 During the 2015 for EAL programs that were once available election campaign, future prime minister without up-front cost.15 Justin Trudeau promised to lift the 2% cap on federal transfers to the PSSP and invest Precarious Work and Executive an additional $50 million in the program. Compensation in PSE The government must follow through on this crucial promise, and ideally meet the Canada’s 400,000+ PSE workers are being more realistic target of $424.8 million set by asked to do more with less. Studies indicate the AFN to address the backlog. a third of undergraduate teaching is done by contract instructors, many of them surviving on subsistence wages.16 Maintenance and Apprenticeships, Skills-based skilled trades workers also report a sharp Training, and Continuing Education rise in temporary, contracted-out employ- Canada spends less on skills training and ment, and the same is true for cleaners and active labour market measures than most of food service workers.17 A recent study put the the industrialized world.11 (The 2016 federal cost of deferred maintenance on university budget began to address this by increasing campuses at $8.4 billion in 2014.18 Mean- funding to provincial and territorial labour while, austerity is never applied at the top, market development agreements and the to the salaries of campus executives, who Canada Job Fund agreements, and making typically make double or sometimes quad- new investments in apprenticeship train- ruple the salaries of provincial premiers. ing.) Likewise, according to the OECD, 40% of employed Canadians do not have the lit- PSE Research and Scholarships eracy and essential skills to do their jobs properly or succeed in today’s knowledge- The federal government’s current innova- and technology-rich economy.12 Low literacy tion agenda suggests PSE research will con- levels are contributing to Canada’s dismal tinue to be informed by the short-term in- innovation record, preventing many people terests of the private sector and, as a result, from accessing decent jobs.13 prioritize commercializable research.19 The In the past, Citizenship and Immigration private sector is also increasingly relying on Canada made important contributions to public PSE infrastructure for research and literacy and essential skills training. How- development. According to the World Eco- ever, federal austerity has undermined this nomic Forum’s 2014 annual report, Canada commitment to adult education, notably in has fallen from 22nd to 27th in the world for language and literacy programs, starting private sector spending on research in the with a $53-million cut in 2010.14 As a result, last five years.20 provinces have cut funding for English as

114 Canadian Centre for Policy Alternatives In 2014, of the 4,535 doctoral students • The existence or extent of reserve funds that applied for SSHRC funding, only 580 and/or sizeable investments held by PSE were successful.21 More investment in Can- institutions, and whether these are in ada Graduate Scholarships is needed to sup- compliance with the AFB’s proposed port graduate-level research that is instru- PSE Act (see below); mental in driving innovation and building a • The feasibility of an employer training foundation for economic and social develop- levy modelled on what exists in Quebec, ment. For faculty researchers, less than one where employers with payrolls in excess in four SSHRC applicants received funding of $1,000,000 are required to invest a in 2014 despite another 40% of them being minimum of 1% of operating revenues in deemed eligible by peer review.22 training for workers (or remit the same amount to a third party managed by an AFB Actions entity empowered by the state). Result: The PSE-RT will allow the govern- The AFB establishes a new policy framework ment to make the following improvements for PSE that expands access to high-quality, to the affordability and accessibility of PSE: publicly funded training and education. The framework addresses decades of neglect by • Federal PSE transfers to provinces and introducing two new public policy instru- territories will be restored to 1996 levels ments: the PSE Renewal Transfer (PSE-RT) accounting for enrolment growth and and the Canada PSE Act. inflation. PSE-RT funding will be sep- arated from the existing Canada Social Action: Eliminate the federal tuition tax Transfer and available for provinces, ter- credit, Canada Job Grant, RESP tax credit, ritories, and PSE institutions in compli- and student loan interest tax credit, and ance with our proposed PSE Act (cost: reduce the scientific research and experi- $5.48 billion). mental development tax credit, to help fund a new PSE Renewal Transfer (cost: $10.06 • Tuition fees for all PSE students, in all billion). The government will also appoint programs, will be eliminated through an a parliamentary task force to investigate ongoing transfer based on 1996 (pre– the following: budget cuts) funding levels. The federal government bears responsibility for • Introducing a “decent work” standard a 50% share of the cost; to qualify for that PSE institutions must meet to qual- these funds, provincial or territorial au- ify for PSE-RT funding; the standard thorities must commit to matching their will include a $15 minimum wage, and share of this cost and observing the PSE a maximum wage tied to the income of Act (cost: $3.59 billion). the provincial or territorial premier where a PSE institution is based;

High Stakes, Clear Choices: Alternative Federal Budget 2017 115 • New money for apprenticeships and • Citizenship and Immigration Canada skilled trades will improve labour mar- will restore training for EAL to be con- ket information (cost: $15 million), cre- tinued in perpetuity as a dedicated PSE- ate a federal Labour Market Partners RT item in compliance with the PSE Act. Forum (cost: $50 million over 10 years), This funding will be linked to the Con- help unemployed Canadians who do not sumer Price Index going forward (cost: qualify for EI access training programs $53 million). (cost: $300 million), strengthen union- Action: Introduce a Canada PSE Act, mod- based apprenticeship training (cost: $125 elled on the Canada Health Act, to ensure million), and harmonize provincial-ter- the provinces and territories comply with ritorial apprenticeship training and cer- following core principles: tification requirements (cost: $15 million). The federal government will also • Universality: Prospective students establish a mandatory apprenticeship should have a full range of PSE options ratio for all federal infrastructure pro- and our system must strive for parity of jects and maintenance contracts (total esteem between all forms of PSE learning. cost: $505 million). • Accessibility: All components of our • Interest on loans through the CSLP will PSE system must be available to learn- be eliminated, and the provision of Stage ers without up-front cost. Our PSE sys- 2 assistance extended for all CSLP bor- tem must be financed through progres- rowers five years after graduation. Part- sive taxation, not arbitrary fees. In this time students (like full-time students) context, student financial assistance will not be required to pay back CSLP must strive to eliminate all barriers to debt until six months after they gradu- learning (not just tuition fees) so that ate. Graduate students will also be able students can focus on their studies. to qualify for grants available through • Comprehensiveness: Canada should be the CSLP (cost: $283 million). able to offer high-quality learning in all • Tri-council granting agencies for PSE re- geographic regions. To ensure appropri- search will have their budgets restored ate use of PSE funding, provinces and to 2007-08 levels, but funds will be dis- territories must also observe a decent tributed evenly across the tri-council work standard for all campus workers. funding agencies (SSHRC, NSERC, and • Public administration: To receive pub- CIHR). An additional 1,250 students will lic funding PSE institutions must be be eligible for Canada Graduate Schol- operated by a public authority on a not- arships at a value of $20,000 per schol- for-profit basis. They must also practice arship (cost: $146 million). democratic governance with adequate voting rights for all campus stakeholders.

116 Canadian Centre for Policy Alternatives • Freedom of expression: To receive PSE- 8 Ibid., p. 22. RT funding PSE institutions must up- 9 CFS. “Student Employment: Eroding Academic Suc- cess,” fall 2013. hold the right to freedom of expression at all levels subject to reasonable limits 10 Assembly of First Nations. 2017 Pre-Budget Submission. established by human rights codes and 11 OECD. “Public Expenditure and Participant Stocks on Labour Market Programs.” (Online Comparative Data- related statutes. Publicly funded PSE re- base), July 7, 2016. search must also be driven by curiosity 12 Janet Lane and T. Scott Murray. “Smarten Up: It’s and analytical skill, not outside interests Time to Build Essential Skills.” Canada West Founda- attempting to leverage the use of public tion. Calgary: June 2015.

resources for private benefit. 13 Statistics Canada. “Skills in Canada: First Results from the Programme for the International Assessment of Adult Competencies.” Catalogue no. 89-555-X. Ottawa: Councils of Ministers of Education, 2013. Notes 14 CBC News. “Immigrant Settlement Funds Cut for 1 See: Richard Swift, ed., The Great Revenue Robbery: Ontario,” December 23, 2010. How to Stop the Tax Cut Scam and Save Canada (To- 15 Federation of Post-Secondary Educators of British ronto: Between the Lines, 2013); Canadian Federation Columbia. “FPSE Calls for a Renewed Funding Commit- of Students (CFS), Time to Think BIG: The Case For Free ment to English as an Additional Language Programs,” Tuition (Ottawa: October 2016). November 18, 2015; Suzanne Smythe and Shauna Butter- 2 Darcy Hango and Sébastien Larochelle-Côté. “Over- wick. “Cuts to Basic Adult Education Would Make it qualification, Skills, and Job Satisfaction.” Ottawa: Sta- Harder to Escape Poverty.” Vancouver: CCPA, February tistics Canada, September 14, 2016; Association of Can- 25, 2015; CBC News. “Yukon College Cuts Enhanced Lan- adian Colleges. Canada’s Demographic and Advanced guage Training Program,” December 13, 2015. Skills Crisis: People Without Jobs, Jobs Without People, 16 Cynthia Field and Glen A. Jones. “A Survey of Ses- August 2010, p.1. sional Faculty in Ontario Publicly-Funded Universities.” 3 Canadian Federation of Students. Time to Think Centre for the Study of Canadian and International High- BIG, pp. 5–6. er Education, April 2016; Ira Basen. “Most University Students Now Taught by Poorly Paid Part-Timers.” CBC 4 Kevin Milligan. “The RESP is Bad Tax Policy and Even News, September 7, 2014; Mary Wiens. “More Contract Worse Education Policy.” The Globe and Mail, March 11, Work in Post-Secondary Education - A Former Bastion 2008; “Tax Preferences for RESP Saving: Are RESPs Ef- of Secure Work.” CBC News, March 5, 2015. fective?” C.D. Howe Institute, November 2002. 17 CUPE National (Research Department). “Sector Pro- 5 Figures cited from: Employment and Social Develop- file: Post-Secondary,” June 11, 2015. ment Canada (ESDC). “Canada Student Loans Program: Annual Report, 2013-2014.” Ottawa: 2016. While Canada 18 Canadian Association of University Business Offi- Student Grant amounts were increased by 50% in the cers. “Deferred Maintenance at Canadian Universities: 2016 federal budget (a good measure), this still repre- An Update,” May 2014. sents a minor portion of available CSLP assistance rela- 19 Industry Canada, “Positioning Canada to Lead: An tive to loans. Inclusive Innovation Agenda” (June 2016). 6 Statistics Canada. CANSIM 477-0019, November 2015. 20 World Economic Forum, “Global Competitiveness 7 ESDC. “Canada Student Loans Program: Annual Re- Report, 2013-2014” (2013). port, 2013-2014,” pp. 14–16. It is also worth noting that 21 NGC, “2017 Pre-Budget Submission”. the RAP was introduced after considerable pressure from the CFS, which made an effective public case to 22 CCR, “2017 Pre-Budget Submission”. support student debt holders at a time of financial crisis.

High Stakes, Clear Choices: Alternative Federal Budget 2017 117 Poverty

ALTERNATIVE FEDERAL BUDGET POVERTY 2017

¢ The national poverty rate in 2014 was 13%, based on ¢ Reduce Canada’s poverty rate by 50% within four the low-income measure after tax (LIM-AT), and 11.3%, years and by 75% within a decade. based on the market basket measure (MBM), or the equivalent of between 3.9 and 4.5 million Canadians. ¢ Introduce a $4-billion-a-year transfer to the provinces and territories to boost social assistance benefits and ¢ An estimated 863,492 Canadians relied on food banks achieve clear poverty reduction targets. in March 2016, 28% more than before the 2008 recession.

HIGH STAKES HIGH ¢ About 35,000 Canadians are homeless on any given ¢ Create a GST credit top-up focused on low-income Canadians to lift 560,000 people out of poverty, half of night, and over 235,000 experience some form of CLEAR CHOICES homelessness during the year. them children. ¢ There are gaps in the federal government’s discussion ¢ Re-establish a federal minimum wage of $15 per paper and consultation process to decide what policies a hour, indexed to inflation, covering all workers under Canada-wide poverty reduction plan should include. federal jurisdiction.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background In its first year, the new federal Liber- al government instituted two key poverty- Too often, the public feels resigned to the reducing policy changes recommended in presence of poverty and inequality in our past Alternative Federal Budgets: a new society. We have come to see poverty, home- Canada Child Benefit (CCB), which should lessness, and hunger as the new normal. But reduce child poverty by 14%, and a 10% there is nothing inevitable about poverty increase to the Guaranteed Income Sup- and homelessness in a society as wealthy plement (GIS) top-up for poor single sen- as ours. The policies needed to make a dra- iors, which we estimate will reduce seniors matic difference are known, and other coun- poverty by 5%. Other promised initiatives tries setting clear targets and timelines are are still to come, including more action on achieving results. Finland and Denmark, for Indigenous poverty and improvements to example, saw poverty rates fall below 5% af- employment insurance access and benefits. ter both pledging to eradicate child poverty. But it is good to see this government takes Canada’s child poverty rate is three-and-a- the issue of poverty more seriously than its half times higher.1 predecessors.

118 Canadian Centre for Policy Alternatives In October 2016, the minister of families, action on a much-needed national child care children and social development, Jean-Yves program. Additionally, the paper uses the Duclos, announced he would spend 2017 low-income cut-off (LICO) as its measure of consulting with Canadians on the develop- poverty. But, as discussed below, one would ment of a Canada-wide poverty reduction be hard-pressed to find an economist out- plan.2 A discussion paper released for the side of government who still recommends occasion displays a solid understanding of this as an accurate indicator. the scope, sources, dimensions and conse- The new government has also promised quences of poverty in Canada. The willing- to tackle inequality. But its tax measures to ness of the government to consult publicly date leave much to be desired. For example, on firm poverty reduction targets, and to be the new tax bracket on those making over accountable for meeting them, is welcome. $200,000 a year is welcome. But combined But several concerns remain with the pro- with a cut to the third federal tax bracket cess and the likelihood it will produce the the government has merely shuffled income policy change Canada needs. within the top 20% of earners.3 More fun- For example, will the government hear damentally, the new government seems not from low-income people themselves during to appreciate that to truly tackle income in- the consultations — and how long will the equality, policies are needed that address the process take? Many of the actions that will pre-distribution of income, i.e., how society quickly lower poverty rates are already well shares income prior to its modest redistri- known; they could be implemented in this bution through the tax and transfer system. year’s budget rather than wait until the end This will require federal action on the min- of a lengthy consultative process. On the sub- imum wage and measures to boost union- stance of the plan, while the federal govern- ization as means of increasing the relative ment has shown it is prepared to boost the bargaining power of workers.4 incomes of families with children and some While the depth of poverty is primarily seniors in poverty (via the CCB and GIS), by a story of inadequate provincial social as- reproducing a narrative of the “deserving” sistance, the breadth of poverty is equally and “undeserving” poor we risk leaving out a low-wage story. Most of the poor in Can- many people in need of assistance. ada are not on social assistance. Millions The government’s discussion paper of Canadians struggle with underemploy- recognizes that poverty is about more than ment and precarious work. Employment in- income. It acknowledges Canada will also surance benefits now reach fewer than four need to make improvements to other types in 10 unemployed workers, a level not seen of social support, like post-secondary edu- since 1944.5 The provincial social assistance cation and secure housing, that enhance system is a shadow of what it was during the affordability, quality of life, and economic early 1990s. The purchasing power of wel- security. However, the paper is short on de- fare benefit rates has plummeted and new tails. Noticeably absent is any meaningful rules have made assistance harder to get.6

High Stakes, Clear Choices: Alternative Federal Budget 2017 119 Those facing job loss, the loss of a spouse, and pan-Canadian cuts to welfare begin- the loss of good health, or old age find that ning in the 1980s.”10 the social safety net meant to catch them By any measure, there was a rise in has been shredded. poverty rates in Canada immediately fol- The good news is that every province lowing the onset of the 2008 recession. and territory in Canada except for British Whether or not these rates have returned to Columbia now has a poverty reduction plan pre-recession levels, however, depends on in place or in development.7 But cities, prov- the measure used. The low-income cut-off inces, and territories need a federal partner (LICO), for many years the most common- to effectively tackle poverty — as they do for ly used poverty line, has not been re-based child care, housing, health care and post- since 1992, making it an increasingly unreli- secondary education. The Government of able and inaccurate metric (e.g., the LICO Canada has lead responsibility for poverty has failed to keep up with the rising cost of among Indigenous people and seniors. It housing as a share of household budgets). is the primary jurisdiction that can reduce For this reason, our tracking of poverty rates disparities among poor children, recent im- henceforth relies upon the more accurate migrants, and people with disabilities. And low-income measure (LIM) and market bas- key income supports (the CCB, GIS, CPP, GST ket measure (MBM). credit, and EI) are in the hands of the fed- As shown in the chart below, the na- eral government. tional poverty rate in 2014 (the last year for which we have data) was 13%, based on the LIM, while it was 11.3% using the MBM. Poverty by the Numbers That translates to between 3.9 and 4.5 mil- An estimated 863,492 individuals relied on lion Canadians living in poverty. food banks across Canada in March 2016, According to the latest national Child 28% more people than before the recession Poverty Report Card, more than 1.3 million hit in 2008.8 Food insecurity has risen dra- children (18.5%) lived in poverty in 2014, matically since 2008 as well, with 12.5% of up from 15.8% in 1989, the year the House people in Canada experiencing some level of Commons passed its ill-fated resolution of food insecurity in 2013.9 Homelessness re- seeking to end child poverty by the year mains at crisis levels. Nearly one in five Can- 2000.11 A higher child poverty rate was ac- adian households experience severe hous- companied by a greater proportion of poor ing affordability problems, about 35,000 families with children that had at least one Canadians are homeless on any given night, parent working full time, all year (37% in and over 235,000 distinct individuals ex- 2011, compared to 33% in 1989).12 perience some form of homelessness dur- The situation is much worse for Indigen- ing the year, all of which can be attributed ous children. The poverty rate for status First to “the withdrawal of the federal govern- Nations children, for example, is a stagger- ment’s investment in affordable housing ing 51%, rising to 60% if restricted to chil-

120 Canadian Centre for Policy Alternatives Figure 15 Percentage of Persons in Low Income in Canada, 1976–2014

16%

15%

14%

13%

12%

11%

10% Low Income Measure After Tax Low Income Cut-Oﬀs After Tax, 1992 Base

9% Market Basket Measure, 2011 Base

8% 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

Source Statistics Canada, CANSIM Table 206-0041

dren on reserves.13 Poverty rates are also • Aboriginal identity: 25.3% (versus non- higher for recent immigrants, Indigenous Aboriginal identity: 14.5%) people generally, racialized people, senior • Men: 11.9% (versus women: 13.3%) women, single parents, and people with disabilities. We will have to wait until 2018 for • Men over 65: 9.1% (versus women over up-to-date census information on the ex- 65: 14.4%) perience of poverty by ethnicity or immi- • Lone-parent families: 34% (versus two- gration status. Based on the 2011 Nation- parent families with two earners: 5.1%; al Household Survey, however, and using and two-parent families with one earn- the LIM-AT as our measure of poverty, the er: 22.0%) following incidence of poverty emerges:14 • Adults with disabilities have rates 10% • Immigrants: 18.3% (versus non-immi- higher that those without. grants: 13.6%)

• Non-permanent residents: 38.1% AFB Actions • Visible minority: 21.5% (versus non-visible minority: 13.3%) On Canada’s 150th anniversary as a federation, it is appropriate for the federal govern-

High Stakes, Clear Choices: Alternative Federal Budget 2017 121 ment to reprise its historic role as partner, ability and reporting mechanisms, and with the provinces and territories, to develop input from those with a lived experi- and implement a comprehensive federal ac- ence of poverty. tion plan to end poverty for all Canadians • Introduce a new federal transfer pay- and significantly close the income gap. To- ment to the provinces and territories tied ward this end, the AFB adopts the following to helping them achieve their poverty indicators, targets, and timelines. reduction targets. This transfer will be • Reduce Canada’s poverty rate by 50% worth $4 billion a year over and above within four years, and by 75% within a the costs associated with the federal decade (based on the MBM and LIM). measures outlined below. The intent of the transfer is to ensure that the lion’s • Ensure the poverty rate for children and share of these funds helps provinces youth under 18, lone-parent households, improve social assistance and disabil- single senior women, Indigenous people, ity benefit rates and eligibility. There are people with disabilities, recent immi- no strings attached to the transfer in its grants, and racialized people also de- first year. In subsequent years, however, clines by 50% in four years, and by 75% only provinces and territories that in- in 10 years, in recognition that poverty is crease income assistance benefits and concentrated within these populations. show progress on a number of other out- • In two years, ensure every person in Can- come indicators will continue to receive ada has an income that reaches at least federal support. 75% of the poverty line. • Provide adequate and accessible income • Within 10 years, ensure there is suffi- support through the following measures: cient stock of quality, supported, and • Legislate minimum national stan- affordable housing for all Canadians. dards for provincial income assist- • Within two years, reduce by half the ance, tied to the Canada Social Trans- number of Canadians who report both fer, to ensure welfare is accessible hunger and food insecurity. and adequate.

To achieve these targets, the AFB takes • Index the new Canada Child Benefit action in the following key policy areas. (CCB) to inflation right away instead of waiting until 2020 (at a cost of $700 • Establish a human rights framework by million a year and rising). Ensure the which the federal government will pro- CCB fully reaches Indigenous chil- vide leadership on poverty and inequal- dren (the current requirement that ity issues. Any plan will be grounded recipient families fill out tax returns in legislation that includes targets and means the CCB is missing many First timetables to eradicate poverty, account- Nations children on reserves) and

122 Canadian Centre for Policy Alternatives the children of recent immigrants • Commit that federal government without regularized status. contracts will go only to Living Wage employers.18 • Increase the GIS top-up for low-income seniors by $1,000 a year for • Revise temporary foreign worker couples and singles (cost of $1.9 bil- programs so that migrant workers lion a year, see the Seniors and Re- can seek and obtain landed immi- tirement Security chapter). grant status, without nomination by employers, and assure all those • Increase the monthly benefit rates who come to Canada for work are for CPP disability, expand the def- granted full labour rights and pro- inition of disability, and loosen the tections upon arrival (see the Immi- contribution requirements (no dir- gration chapter). ect cost to the federal government).16 • Tackle homelessness and expand the • Create a GST credit top-up of $1,800 social and co-op housing stock (see the per adult and child targeted to those Housing and Neighbourhoods chapter). below the poverty line. The claw back will have a rate of 15% excluding • Provide universal, publicly funded child the first $2,500 of income. This new care, increasing the number of regu- top-up, costing $5.4 billion, repre- lated spaces and capping fees (see the sents the largest expenditure in our Early Childhood Education and Child poverty reduction action plan, and Care chapter). will go to all low-income people re- • Provide support for training and edu- gardless of family type. cation, and initiate a green infrastruc- • The combined impact of all AFB pro- ture and green jobs plan, with a special grams will be to cut child and sen- focus on apprenticeships for economic- iors’ poverty by a third and adult ally marginalized populations (see the poverty by 15%. A million Canadians Post-Secondary Education and Sectoral would be lifted out of poverty drop- Development chapters). ping the LIM-AT poverty rate from 13% to 10% in 2017.17 Notes • Improve the earnings and working conditions of those in the low-wage work- 1 Organization for Economic Co-operation and Develop- ment, OECD Family Data Base, Table C02.2 Child Poverty force through the following measures. (includes family poverty). Data up to 2013. See: http:// www.oecd.org/social/family/database.htm • Re-establish a federal minimum 2 In his mandate letter to Duclos of December 2015, wage of $15 per hour, indexed to in- Prime Minister Justin Trudeau asked the minister to flation, covering all workers under lead the development of an inter-ministerial federal federal jurisdiction. poverty reduction strategy that “will align with and

High Stakes, Clear Choices: Alternative Federal Budget 2017 123 support existing provincial and municipal poverty re- 12 Campaign 2000. (2013). Canada’s Real Economic Ac- duction strategies.” tion Plan Begins with Poverty Eradication: 2013 Report Card on Child and Family Poverty. Toronto: Family Ser- 3 David Macdonald. “Liberal election platform shifts vice Toronto. Campaign 2000 has not been able to up- the chips for the rich, takes a pass on the middle class,” date the data on the number of children with parents Behind the Numbers blog post, May 5, 2016. in the paid labour force due to discontinued surveys at 4 Florence Jaumotte and Carolina Osorio Buitron. (2015). Statistics Canada. The restoration of the long-form cen- Inequality and Labour Market Institutions. Internation- sus should rectify this soon. al Monetary Fund. 13 David Macdonald and Daniel Wilson. (2016). Shame- 5 Armine Yalnizyan. “Proportion of Unemployed ful Neglect: Indigenous Child Poverty in Canada. Ottawa: Canadians in Receipt of Jobless Benefits, 1942 to Canadian Centre for Policy Alternatives. July 2014” (https://twitter.com/ArmineYalnizyan/ 14 Statistics Canada. Table 202-0802 - Persons in low- status/512602190360633344), an update of her chart income families, annual, CANSIM (database); Statis- in 2009 report, Exposed: Revealing Truths About Can- tics Canada. Table 202-0804 - Persons in low-income, ada’s Recession, Ottawa: Canadian Centre for Policy by economic family type, annual, CANSIM (database). Alternatives. 15 Canadian Human Rights Commission, “Report on 6 For a full review of provincial social assistance rates Equality Rights of People with Disabilities”, (2012) pg 28-31 and eligibility rules, see: Anne Tweddle, Ken Battle, and Sherri Torjman. (2016). Canada Social Report: Welfare In 16 The CPP disability program could do much more Canada, 2015, Toronto: Caledon Institute of Social Policy. to reduce poverty among people with disabilities. As it stands, monthly benefit rates are too low (averaging $934 7 The Caledon Institute of Social Policy has produced per month), the definition of disability is too restrictive a helpful summary of all the poverty reduction plans (only 15–32% of those who self-identify as having a “se- in Canada along with their outcomes: http://www. vere” disability qualify — see Human Resources and Skills canadasocialreport.ca/PovertyReductionStrategies/ Development Canada [2011], Summative Evaluation of 8 Hungercount 2016. Toronto: Food Banks Canada. the Canada Pension Plan Disability Program: Final Re- port. pp. ii, 19), the contribution requirements are too 9 V. Tarasuk, A. Mitchell, and N. Dachner. (2015). House- onerous (given the rise of precarious work), and people hold food insecurity in Canada, 2013. Toronto: Research to who temporarily drop out of the labour market due to Identify Policy Options to Reduce Food Insecurity (PROOF). a disability (as with many women who take time out of Retrieved from: http://nutritionalsciences.lamp.utoronto. the labour market to raise their kids) risk being left out ca/wp-content/uploads/2015/10/foodinsecurity2013.pdf of the current expansion of CPP benefits. 10 Stephen Gaetz, Tanya Gulliver and Tim Richter. (2014). 17 See the Macroeconomics chapter. The State of Homelessness in Canada 2014. The Home- less Hub and Canadian Alliance to End Homelessness. 18 Employers who have been officially certified as -pay ing the living wage for families, as calculated by living 11 This is measured by the after-tax LIM using custom wage campaigns across Canada. For background, see T1FF (a different source than the Statistics Canada data Tim Richards, et al. (2008). Working for a Living Wage. we use for the charts above). See A Roadmap to End Child Vancouver: Canadian Centre for Policy Alternatives. Or and Family Poverty: 2016 Report Card on Child and Family visit: http://livingwagecanada.ca/ Poverty (2016). Toronto: Campaign 2000.

124 Canadian Centre for Policy Alternatives Public Services

ALTERNATIVE FEDERAL BUDGET PUBLIC 2017 SERVICES

¢ Canada’s population has increased by 43% since 1983, ¢ Hire a sufficient number of public service but federal public service employment has only employees to provide quality service and enforcement increased 3%. capacity. ¢ Some 24,000 jobs have been lost since public service cuts in 2010. Many of these lost jobs need to be ¢ Create more permanent employment opportunities recovered if service levels are to be improved. in the federal public service.

HIGH STAKES HIGH ¢ Full-time employment in the federal government is ¢ decreasing while term employment has increased by Create an infrastructure bank that is funded 9.3%, casual employment by 8.3%, and student CLEAR CHOICES through public borrowing, not P3s. employment by 6.0%. ¢ Every $20 billion of currently proposed P3 infrastructure bank funding would result in an additional $6.2 billion in interest costs.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background 2016 budget promised increased spending on the public service, it hasn’t kicked in yet. Reversing Public Service Cuts Fewer than 2,000 workers were hired be- The population of Canada grew from 25.3 tween April of 2015 and 2016. This number million in 1983 to 36.2 million in 2016, an is quite small compared to the 24,000 jobs increase of 43%. Meanwhile, the number cut since 2010 by the former government.2 of federal public servants increased from The current government has an ambi- 250,882 in 1983 to 258,979 in 2016, an in- tious program, but it will be impossible to crease of only 3.1%.1From 1983 to 2015, Can- implement without additional resources. ada’s real gross domestic product (GDP) This is evident in some key departments. For increased by 120.8%, while real federal pro- example, the government has made signifi- gram spending only increased by 52.6%. The cant commitments to defence, peacekeep- public service must grow if citizen demand ing, the environment, and employment. is going to be met. Treasury Board statistics show that, as of Over the last six years, the federal public April 2016, National Defence had only re- service workforce has been devastated by employed 343 workers, despite cuts that saw direct cuts and outsourcing. Although the 4,337 jobs eliminated since 2010. Environ-

High Stakes, Clear Choices: Alternative Federal Budget 2017 125 ment Climate Change Canada has elimin- system. The government conflated the re- ated 1,103 jobs since 2010, 120 of those jobs quirement for technological change with since 2015 alone. Despite the new Liberal opportunities to cut staff, with the former government’s commitment to do something government cutting over 1,000 compensa- about climate change, the department had tion advisor jobs before the new pay system not created any new jobs as of April of 2016. was even operational. When problems with Despite a stubborn unemployment rate the new system became too obvious to ig- that refuses to go much lower than 7% Em- nore, the government had to begin rehiring ployment and Social Development Canada the trained staff it had previously laid off had only restored about 605 of the 3,600 jobs to help fix the problems. The current gov- cut by the former government as of March ernment admits that the decision to create 2016. The 2016 budget instigated an Em- savings by cutting people was a mistake in ployment Insurance quality of services re- this instance.5 view, but the outcome of the review, which New technology is important and can recommended increased staffing, have yet help public service workers to do their jobs, to be seen. The government’s own discus- but it is not a replacement for the people sion document for this consultation shows who provide services. The 2016 budget an- that, in the 2005-06 fiscal year, 6.3 million nounced that the government planned to calls were answered by agents at Service consolidate human resources management, Canada call centres, 5 million callers were financial management, and information man- told to call back, and half a million callers agement platforms into one enterprise-wide hung up while waiting. Ten years later, the system called the “Back Office Transforma- statistics are much worse: only 3.4 million tion initiative.” In doing so it must improve calls answered by agents, 10.3 million call- services — not eliminate jobs. ers told to call back, and 1.1 million callers Overall, government compensation costs hung up after waiting too long.3 The govern- have declined by 1.3% or $120 million com- ment simply has not hired enough people pared to last year. This is partly because the to do the work. government is employing a precarious work- The same inertia is evident in regula- force. The number of full-time government tory enforcement. For example, the 2016 employees is decreasing. At the same time, budget provided $38.5 million over two term employment has increased 9.3%, cas- years to improve food inspection activities, ual employment by 8.3%, and student em- but inspector staffing has not increased. As ployment by 6.0%.6 The Public Service Com- of November 2016, in Western Canada only mission reports that in 2015-16 there were one meat-processing shift in a 24-hour per- 4,533 indeterminate workers hired overall, iod was scheduled for inspection.4 not counting departures and retirements. But the negative results of inadequate Over the same time there were 32,370 work- staffing can be most clearly observed in the ers hired to fill jobs on a term, casual, or problems associated with the Phoenix pay student basis.7

126 Canadian Centre for Policy Alternatives These statistics do not capture the grow- trarily restricts profit, but we must question ing use of contract employees who are hired why taxpayers should be asked to subsid- through temporary staffing agencies. The ize private profits. government doesn’t keep track of these num- The government’s fall 2016 Economic bers except at a macro level. The Profession- and Fiscal Update proposed the creation of al Services budget line in the estimates for an Infrastructure Development Bank that the 2016-17 fiscal year, which outlines this would invest $35 billion in public money to type of employment cost, was estimated at leverage private-sector funding to finance $10.9 billion. When departments were asked $200 billion for building new “revenue-gen- to report on their use of contract employees, erating” infrastructure. New infrastructure most departments advised Parliament that is required and will have a positive impact they “didn’t capture that information.”8 Pre- on GDP and job growth, and the concept of carious employment particularly impacts an infrastructure bank is sound. However, women and young people. the government’s plan would allow the private sector to propose the scope of the new projects — allowing it to finance and oper- Privatization and Outsourcing ate them too. This privatization scheme is Both the government’s Economic and Fis- also eerily similar to those in the UK, where cal Update and its Advisory Council on private, for-profit public service providers Economic Growth have recommended that have replaced much of the public sector public services be funded by private-sector and, like the big banks in 2008, have be- investors. The current government has also come too large to fail. maintained privatization proposals that the Recent Canadian government studies previous government initiated. have called for the privatization of exist- For example, National Defence’s “Sus- ing public infrastructure like airports.11 Al- tainment Initiative” plans to transfer the though this might be an easy way to in- support and maintenance of the military to crease government revenue, it is not in the the private sector. One of the goals for this public interest. For example, airport priva- privatization initiative, according to leaked tization would likely lead to regressive user documents, is to make the defence industry fees and tolls. more “profitable, innovative, and competi- A Canadian infrastructure bank should tive.”9 This initiative appears to be modelled be funded through government borrowing after UK Defence Private Funding Initiatives and tax dollars. Proposals for the Nation- (PFI), which are estimated to have cost that al Infrastructure Bank in the U.S.12 and the country £50 billion in annual public pay- European Investment Bank13 could serve ments over their lifetime, even though the as models. It would be funded from direct original capital value for these projects was federal borrowing and possibly contribu- only £9 billion.10 The current, publicly sup- tions from other levels of government, who ported system is criticized because it arbi- would also be bank shareholders. This in-

High Stakes, Clear Choices: Alternative Federal Budget 2017 127 itial pool of equity would provide the bank mandate is very limited, and whistleblowers with leverage to issue bonds and borrow still lack the necessary protections against from private sources. punitive retaliation. Review of the legisla- Infrastructure funding should not be de- tion is overdue. pendent on how much profit the private sec- The current government appears to be tor can accumulate from the public. Insti- reversing some of the overt politicization tutional investors are not providing money that occurred within the public service dur- for free. Most of them expect a 7–9% rate of ing the tenure of the former government. In return, whereas the government can cur- its latest fiscal update, the government an- rently borrow money over 30-year terms at nounced some measures to protect the in- a 1.9% rate.14 The government’s current plan dependence of Statistics Canada and the for a privately funded infrastructure bank Parliamentary Budget Office. However, to would cost an estimated $6.2 billion more date, the proposed measures do not go far for every $20 billion in capital than if it were enough. publicly funded.15 Auditor General reports in The former government eliminated Gov- many provinces have outlined the excessive ernment Consulting Services and Audit Ser- public costs and lack of accountability with vices Canada, preferring instead to resort private-sector infrastructure approaches.16 to more expensive private-sector alternatives for consulting and auditing services. These two organizations, which were more Accountability accountable to Canadians while remaining Accountable government is essential to profitable, should be reinstituted. democratic governance. A government isn’t Despite the change in government, the democratic simply because it is elected every internal structures that allowed the politi- four or five years — it must be judged by how cization of the public service during last and what it does during that time. several years remain in place. Phoenix and Employees must be able to alert the gov- similar problems in other jurisdictions are ernment and other parts of the public ser- exaggerated by what appears to be a reluc- vice about instances of mismanagement tance to speak truth to power. Persuasive and financial irregularity. The government arguments for a transparent, binding mor- recognizes this, but to date has done very al contract or a “Charter of Public Service” little to change its accountability structure. between the public service, ministers, and Countless systemic barriers remain in place parliament in support of the values of a pro- and whistleblowers are still punished even fessional, non-partisan public service must when they act in the public interest. The Of- be seriously considered.17 In addition, struc- fice of the Public Sector Integrity Commis- tures need to be created to allow public ser- sioner was created to investigate abuses vice employees and their representatives at in 2007. Although existing whistleblowing all levels to have a meaningful, construct- legislation is very good in some ways, its

128 Canadian Centre for Policy Alternatives ive, and alternative voice in work process- Action: Review the moral contract between es that impact the work they do. the government and public service employees at all levels with a view to ensuring long- term, honest, and informed dialogue within AFB Actions government departments and organizations that is rigorous enough to withstand chan- Action: Analyze all federal government ser- ges in government. vices to ensure that there are sufficient public servants in place to provide quality ser- Action: Review the Public Service Integrity vice and enforcement capacity to Canadians. Commission mandate and processes and identify measures to address white-collar Action: Encourage the creation of perma- crime involving government contracting. nent employment opportunities in the federal public service unless a strong case for casual employment can be otherwise dem- Notes onstrated. 1 Government of Canada Demographic profile of the fed- Action: Create a public infrastructure invest- eral public service 2015 http://www.tbs-sct.gc.ca/psm- ment bank funded through public borrow- fpfm/modernizing-modernisation/stats/demo15-eng.asp including authors calculations with updated numbers. ing, not public-private partnerships. Fund- 2 Government of Canada Demographic profile of the fed- ing currently directed to the P3 Canada fund eral public service 2015 http://www.tbs-sct.gc.ca/psm- and PPP Canada Inc. will be redirected to fpfm/modernizing-modernisation/stats/ssa-pop-eng.asp the infrastructure bank and other public or- 3 Employment Insurance Quality Review Discussion ganizations that support and provide exper- Paper p. 11. tise to other levels of government. 4 Johnson, Kelsey Philpott looking into meat inspection cutbacks, ipolitics, Nov 1, 2016 Action: Re-create internal public service 5 Aiello, Rachel. Phoenix We Have a Problem, The Hill organizations like Government Consulting Times Nov 7 16 Services and Audit Services Canada to pro- 6 Parliamentary Budget Officer Expenditure Monitor vide cost-effective, unbiased consulting and 2016-17 Q1 2.1 Operating pp 7–8 auditing services to the federal public ser- 7 Public Service Commission of Canada 2015-16 An- vice, eliminating wasteful contracting ex- nual report p.10 penditures. 8 ORDER/ADDRESS OF THE HOUSE OF COMMONS Q-89 by “Ms. Finley (Haldimand-Norfolk) April 7, 2016) Action: Create a binding structure for con- 9 Sustainment Initiative Communication Strategies, sulting with employees and their represent- KPMG, December 2015, p.15 atives on the details and operability of all 10 Dando, Chris, Privatization in UK Defence — A Trade workplace change initiatives. No significant Union Response, 2015 change will occur until the results of con- 11 The Canadian Transportation Act Review (commonly sultation with the workers who do the work known as the Emerson report) http://www.tc.gc.ca/eng/ are thoroughly investigated and considered. ctareview2014/canada-transportation-act-review.html see also Campion-Smith, Bruce Ottawa eyes airport sell-off to

High Stakes, Clear Choices: Alternative Federal Budget 2017 129 raise infrastructure cash Toronto Star July 3 2016 https:// 15 Macdonald, David Federal Infrastructure Bank www.thestar.com/news/canada/2016/07/03/ottawa- Loans will Come At a Higher Cost CCPA Nov 2016 http:// eyes-airport-sell-off-to-raise-infrastructure-cash.html behindthenumbers.ca/2016/11/02/federal-infrastructure- bank-loans-will-come-higher-cost/ 12 Galston, William A. and Davis Koron Setting Prior- ities, Meeting Needs : The Case for a National Infrastruc- 16 Sanger, Toby Ontario Audit Throws Cold Water on ture Bank, Brookings, Dec. 2012 https://www.brookings. Federal Provincial Love Affair with P3s,CCPA Feb 2015 edu/wp-content/uploads/2016/06/1213_infrastructure_ https://www.policyalternatives.ca/publications/monitor/ galston_davis.pdf ontario-audit-throws-cold-water-federal-provincial-love- affair-p3s#sthash.t1pZGKbD.dpuf 13 http://www.eib.org/index.htm 17 For a discussion on what this might look like, see 14 Sanger, Toby Banking on Privatization? Progressive Ralph Heintzman’s Renewal of the Federal Public Ser- Economics Forum Oct 31,2016 vice, Canada 2020, June 2014

130 Canadian Centre for Policy Alternatives Sector Development Policy

ALTERNATIVE FEDERAL BUDGET SECTOR DEVELOPMENT 2017 POLICY

¢ Recent economic development in Canada ¢ Enhance investment, job creation, and has focused on raw resource extraction with few output, and lower carbon emissions, in additional value-added jobs. strategic sectors. ¢ Establish a Green Development Bank that ¢ Key sectors of our economy, like will allocate credit to innovative projects in

HIGH STAKES HIGH manufacturing, have been devastated with little targeted sectors of the economy. active management to mitigate the losses CLEAR CHOICES ¢ Establish a system of sector development ¢ For workers and communities who rely on councils. fossil fuel industries, climate action could spell ¢ Establish a just transition program for the loss of well-paying jobs and key employers. workers affected by climate action.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background hancing growth does not necessarily occur spontaneously as a result of market forces. The goal of sector development policy is to Rather, it should be nurtured by active policy incentivize investment, job creation, produc- interventions. The toolbox used by these tion, and exports in strategically important other countries is diverse and creative, in- and carbon-sensitive sectors of the economy. cluding targeted subsidies, strategic trade This means fostering a more desirable sec- interventions, active industrial strategies in toral mix of output and employment, with high-tech industries, domestic procurement a stronger presence for industrially dynam- strategies, and even public ownership of key ic, high-wage, innovation-intensive, export- firms. These approaches have been more ef- oriented sectors. fective in promoting innovation, industrial The successful state-led industrializa- development, and export success than Can- tion experience of several Asian and Lat- ada’s laissez-faire approach. in American economies in recent decades While on one level the embrace of car- suggests that innovative, productivity-en- bon-mitigating public policy poses a threat

High Stakes, Clear Choices: Alternative Federal Budget 2017 131 to Canada’s industrial base it can also be AFB Actions viewed as an opportunity. The shift to a Establish a system of sector low-carbon economy will entail significant development councils new public and private sector investment, the development and diffusion of new tech- The federal government will work with other nologies and skill sets, and the expansion of stakeholders including provincial govern- clean technology industries and non-emit- ments, labour organizations, industry as- ting and renewable energy power sources. sociations, businesses, and universities To help ensure that carbon-mitigating and colleges to establish a network of sec- policies (see the Environment and Climate tor development councils. These councils Change chapter) are beneficial, the Alterna- will be established for goods- and services- tive Federal Budget incorporates the principle producing industries that demonstrate the of “just transition,” which is recognized by following characteristics: technological in- the International Labour Organization and novation, productivity growth, higher-than- is explicitly referenced in the Paris Agree- average incomes, export intensity, and cli- ment.1 Industrial restructuring can create mate-ecological impact. large-scale unemployment as well as in- The councils will identify opportunities creases in poverty and social dislocation. to stimulate investment and employment For workers and communities who rely on in Canada, develop and mobilize Canadian fossil fuel industries, climate action could technology (especially emergent clean tech- spell the loss of well-paying jobs and key nology developed in educational institutions employers. From the history of mill closures for broader commercial applications), invest in Canada we know the impact of restruc- in sustainable products and practices, and turing on families can be devastating, with expand exports. In this way the councils increases in addiction, domestic violence, would constitute the first step in rebuild- divorce, and loss of property values, and ing Canada’s broader national capacity for ripple effects through communities affect- sector development planning, including ing small businesses and other functions. skills training and workforce development. A just transition is meant to mitigate or Each council will come up with a medium- avoid these adverse consequences through range plan for developing its sector, including a variety of measures, including labour mar- the commitment to a low-carbon economy ket impact assessments, retraining, skills and just transition, with a list of actionable upgrading, income support, relocation as- items and targets. The sector development sistance, pension bridging, and employment council system will be supported with an insurance flexibility, among others. When annual operating budget of $50 million to developing a just transition strategy there is support the councils’ work, commission no one-size-fits-all approach to all sectors. research, and perform other infrastructur- al tasks. Actionable policy initiatives that arise from their recommendations would

132 Canadian Centre for Policy Alternatives be financed through other policy vehicles, ment’s balance sheet, hence the bank’s in- including those listed below. itial capitalization of $2 billion will be re- corded as an investment by government, not a current expense. With interest rates on Establish a Green very-long-run government bonds at record Development Bank (GDB) lows, this is an excellent moment to estab- To finance sector development strategies, lish the GDB. The stockpile of idle cash held including proposals developed by sector by Canadian corporations on their balance development councils, the federal govern- sheet is approaching $500 billion.2 GDB in- ment will capitalize a new publicly owned vestments will help address the continuing Green Development Bank (GDB). The bank failure of private enterprise to reinvest their will have the power to create credit and al- surplus cash flow in job-creating Canadian locate it to innovative projects in targeted projects, and provide credit at more afford- sectors of the economy. It will also be au- able rates or fund projects that otherwise thorized to take equity stakes in firms or won’t get private sector financing. projects with strategic value. The goal of the GDB is different from that of the infra- Enhance investment, job creation, structure bank envisioned in the AFB Pub- and output, and lower carbon lic Services chapter, which is to reduce bor- emission, in strategic sectors rowing costs and increase funding for cities that require loans for infrastructure projects. The sector development councils will begin The use of publicly owned develop- the medium-term task of developing com- ment banks has proven effective in sector prehensive strategies for strategic sectors. development initiatives elsewhere. Can- In some sectors immediate measures can ada’s GDB will be modelled on the public- be taken. The councils will also work to ly owned German bank KfW (Kreditanstalt insure that historically underrepresented für Wiederaufbau), which was founded in groups (women, Indigenous people, racial- 1948 and has been hailed by financial pro- ized people, etc.) are provided opportunities fessionals as one of the safest banks in the in these sectors. Measures will be funded world. The GDB would evaluate and fund through a $450-million annual budget al- potential projects on the basis of broader lotment supporting sector development in- criteria (e.g., an integrated social cost-bene- itiatives (as well as through debt and equity fit and environmental analysis) than would investments funded through the GDB). Sev- normally be considered by private investors. eral immediate initiatives will be pursued The GDB would have the mandate to in the following sectors. cover its cost of capital on a net break-even basis (across its portfolio of investments). National automotive strategy The fair value of those investments will be The federal government has already estab- reflected on the asset side of the govern- lished a $500-million five-year allotment

High Stakes, Clear Choices: Alternative Federal Budget 2017 133 to support investments in strategic auto- tor, and consolidated funding for Canadian motive manufacturing facilities. However, space and satellite programs. Government this money is not being spent because of will need to work more strategically and restrictive terms and the lack of an appro- in active partnership with Canadian aero- priate encompassing policy framework (in- space producers to identify and develop cluding supportive trade and procurement the key products and innovations neces- policies). In our plan, the government will sary to support high-skilled workers and a work with industry, provincial governments, low-carbon future. and Canada’s scientific and innovation stakeholders to implement a comprehen- Public transit equipment sive and consistent auto strategy, includ- Overdue investments in public transportation ing co-investments for major new projects systems are boosting the demand for buses, in auto assembly and auto parts. The focus subway cars, and other specialty transporta- of the strategy will be to foster an auto in- tion equipment. An integrated federal-prov- dustry geared toward electric vehicles (EV) incial strategy will be developed to maxi- and other high-fuel-economy technologies, mize the potential for new transit projects including by supporting innovation and (partly funded through federal programs) associated EV infrastructure. This will en- to utilize Canadian-made low-carbon trans- tail co-operation and synchronization with portation equipment. This will require the trades schools and labour unions to culti- preservation of domestic procurement au- vate a new generation of skilled workers. thority in international trade agreements. It will also involve co-ordination with the In the railway industry, booming traffic and broader infrastructure transfer outlined in strengthened safety standards will motiv- the AFB chapter on Cities and Communities. ate enormous investments in the next generation of accident-resistant rolling stock Aerospace in coming years. The federal government, Canada’s aerospace industry is a leading through its regulatory powers in transporta- spender on research and development and tion, can elicit commitments from railways more than carries its weight in terms of inter- for strong Canadian content in those new national trade, high-tech innovation (in- capital purchases. cluding more fuel-efficient airplanes and micro-robotics with neurosurgical applica- Oil and gas tions), and high-quality employment. Con- It would seem a contradiction to intention- tinued Canadian production and innovation ally develop an industry responsible for one- must be fostered and encouraged through quarter of Canada’s carbon emissions while strategic support for new technology and simultaneously trying to reduce emissions. product programs, procurement and offset However, there does not need to be a linear provisions relating to large government pur- relationship between oil and gas employ- chases in the aerospace and defense sec- ment and GDP, on the one hand, and oil and

134 Canadian Centre for Policy Alternatives gas–associated emissions, on the other. As bound as the Canadian dollar returns to part of a comprehensive climate strategy, historic levels and as the U.S. economy re- public investment in the power grid of ma- covers. Support for the industry’s sustain- jor energy-producing provinces such as Al- able recovery will be provided through a berta, Saskatchewan, and Newfoundland continuation and expansion of the Forest and Labrador will facilitate the shift away Industry Transformation Program. For ex- from coal-generated electricity in favour of ample, measures will be taken to enhance hydropower. By increasing the connectivity technology upgrades, encourage the proof Canada’s east-west grid for non-emitting duction of value-added forestry, wood, and power sources the emissions associated with paper products, pursue more energy con- oil and gas extraction, transformation, and servation, cogeneration and other sustain- transportation will be significantly reduced. able practices, and foster the new skills re- Targeted investments in new technologies quired for sustainable forestry and forestry to detect and monitor fugitive emissions products production. (at wellhead, at processing facilities, and in pipelines), and in newly mandated flar- Establish a just transition program ing techniques, will significantly reduce the methane emissions associated with oil and Just transition is an approach to environ- natural gas development. mental policy-making developed by the labour movement that aims to minimize the Green energy manufacturing impact of environmental policies on workers Current initiatives in energy policy hold great in affected industries and communities, and potential to stimulate the Canadian manu- to involve workers in decisions about their facture of components for solar, wind, and livelihoods. Underlying the concept of just other green energy systems. Federal policy transition is the principle that the costs of can complement and support these initia- environmental adjustments should be shared tives with a refundable investment tax credit across society rather than shouldered alone for new capital and tooling in green energy by those most impacted by them. manufacturing, and support for skills de- The resource sector includes both renew- velopment for new “green collar” jobs. able resources like forestry and non-renewable ones like mining and natural gas. There Forestry are key differences between these sectors, The forestry and wood/paper industries suf- and we should be careful not to use one- fered immense damage in recent years, due size-fits-all policy approaches. But in gen- partly to the effects of an overvalued curren- eral a just transition is framed by the fol- cy, the pine beetle infestation, and the se- lowing broad parameters. vere downturn in U.S. residential construction that followed the 2008 financial crisis. The industry is poised for a significant re-

High Stakes, Clear Choices: Alternative Federal Budget 2017 135 Just transition fund Income security A standalone fund in support of the meas- Workers transitioning from one workplace ures listed here will be created from rev- to another will require a secure source of in- enue from the forestry, mining, and oil and come for a certain period of time, whether gas industries and/or an enhanced carbon during unemployment or training. The Can- tax. Changes to royalty regimes for non-re- adian Labour Congress supports the call to newable resources could be an important protect income from one to four years, with source of finance as well. continued qualification for employment insurance and the Canada Pension Plan/Que- Advanced skills training programs bec Pension Plan (CPP/QPP), where employ- A process for long-range, collaborative plan- ment income is less than what it was in the ning for labour market adjustment must lost job or where there is no alternative work. meet both economic and environmental/ In addition, further improvements are need- climate needs. The financial responsibility ed to CPP to ensure that older workers can for training and the up-skilling of current retire with dignity and retire earlier with no workers should be shared between govern- significant loss of benefits (see Seniors and ment, labour, and employers. Stronger gov- Retirement Security chapter). ernment involvement in funding training programs, leading to a recognized creden- Worker and family support tial, is needed. A just transition strategy will need to look beyond narrow skills development to include Investing in apprenticeships things like counselling services. Since many Many industrialized countries have incor- families depend on dual incomes, just tran- porated some variation of a training levy sition should take into account the challen- coupled with an exemption for those em- ges faced when one person loses their job ployers who make a commitment to train- but the other does not. ing. Quebec is a notable example in the Canadian context, with a 1% training levy on payroll tax for companies who do not Notes

train employees at a level equal to 1% of 1 ILO. 2015. Guidelines for a Just Transition Towards En- their payroll. vironmentally Sustainable Economies and Societies for All. Geneva: International Labour Organization.

2 CANSIM 378-0121.

136 Canadian Centre for Policy Alternatives Seniors and Retirement Security

ALTERNATIVE $ FEDERAL BUDGET SENIORS AND 2017 RETIREMENT SECURITY

¢ Only 38% of workers belonged to a pension plan in 2015, ¢ Expand the Canada Pension Plan replacement rate down from 46% in 1977. In other words, 11.7 million working to 50%. Canadians had no workplace pension plan. ¢ Just one in four private sector workers has a pension plan. ¢ Boost annual incomes for the poorest senior singles and couples by $1,000 a year while extending ¢ In 2004, 71% of private sector pension plan holders had a the income exemption. defined benefit plan, the most dependable kind; in 2015, HIGH STAKES HIGH only 45% of pension holders were so lucky. ¢ Index OAS benefits to the average wage and

¢ Seniors’ poverty rates tripled between 1995 and 2014, CLEAR CHOICES salary. from 3.9% to 12.5%. ¢ Old age security (OAS) benefits are indexed to inflation, not wage growth (which rises faster), meaning they become relatively smaller over time.

POLICYALTERNATIVES.CA/AFB2017 #AFB2017

Background younger families fell. Since 1995, however, this gap has widened as income growth for Though opinions differ on the well-being of senior families slowed. Government trans- today’s seniors, there is considerable agree- fers have grown only slightly in this period ment that, after decades of improvement and market income (employment earnings in retirement security in Canada, growing and private retirement income) has become financial insecurity looms on the horizon. the main source of income gains for senior From 1976 to 1995, the median after-tax in- families. The percentage of persons aged come of senior families grew steadily as 65 and over with family income lower than transfers from the Canada Pension Plan half the adjusted median household income (CPP), old age security (OAS), and the guar- climbed from a historic low of 3.9% in 1995 anteed income supplement (GIS) increased.1 to 12.5% in 2014.2 During this period, seniors began to close While too many seniors today struggle the gap with non-senior families, main- to make ends meet, retirement insecurity ly because the median after-tax income of is likely to worsen in the future. The per-

High Stakes, Clear Choices: Alternative Federal Budget 2017 137 centage of paid workers in Canada with a fit some 900,000 vulnerable seniors across registered pension plan at work has fallen Canada.8 from 46% in 1977 to below 38% at the be- Last year’s budget also cancelled planned ginning of 2015.3 The increase in temporary, increases in the eligibility age for OAS, GIS, casual, and contract jobs with no benefits and allowance benefits, all imposed by the means that a growing number of workers previous Conservative government. These cannot expect to have a pension at work in programs are the foundation of Canada’s re- the future. For many Canadians without a tirement income system, providing a secure workplace pension plan, private retirement annual income to 95% of Canadian seniors savings are insufficient to prevent a sharp aged 65 and older.9 OAS and GIS benefits de- decline in living standards in retirement.4 pend on residency and income, rather than There is nearly $1 trillion worth of unused participation in paid employment, and are contribution room in registered retirement particularly important to women and low-in- savings plans (RRSPs), about $40,000 for come seniors. In fiscal year 2015-16, transfer each Canadian not currently maxing out payments through the OAS program totaled their contributions. Unused tax-free sav- $45.5 billion, an amount nearly equal to the ings account (TFSA) contribution room is Canada Health Transfer and Canada Social also growing.5 Transfer combined.10 Among the minority of workers covered The increase in OAS and GIS eligibility by a workplace pension plan the number be- from 65 to 67 would have negatively impact- longing to secure, predictable defined-bene- ed low-income seniors, especially women, fit (DB) plans has been in near continual de- who rely disproportionately on these bene- cline since 2005.6 Prolonged, exceptionally fits. Cancelling the increase in the eligi- low interest rates, uneven investment re- bility age for OAS will add about 1 million turns, and increasing longevity have raised more beneficiaries to the program by 2030, the cost and risk of such plans for employ- and about 185,000 more GIS and allowance ers, many of which, especially global firms, beneficiaries that same year. Both changes no longer sponsor them for employees. As a will increase total OAS program spending result of falling pension plan coverage and by $11.6 billion in 2030, a modest increase other forces, as many as half of middle-inequal to 0.33% of GDP.11 come baby-boomer households can expect Old age security is indexed to inflation, a significant drop in living standards in re- which means the benefits it pays out will like- tirement.7 Still, several positive pension rely lag behind earned incomes, as real wages forms were achieved in 2016. The 2016 fed- generally grow faster over time. OAS bene- eral budget increased the GIS top-up, paid fits are projected to fall from about 19% of to the lowest-income single seniors, by $947 the average wage in 1966 to as little as 7.5% per year, representing a 10% increase in the in 2076.12 The Liberal government’s prom- total GIS maximum benefit. This will bene- ise to index OAS benefits to a seniors’ index based on a basket of seniors’ consumption

138 Canadian Centre for Policy Alternatives goods, instead of the Consumer Price In- workers contributing at the increased rate dex, will not prevent this relative decline. for even a few years before retiring will see Canada’s compulsory earnings-based a slight improvement in their CPP benefits pension, the Canada Pension Plan (CPP), (see Figure 16). remains stably funded. The Chief Actuary Canadians with above-average employ- of Canada projects the combined employer- ment earnings will also benefit from the fact employee contribution rate of 9.9% is suffi- additional CPP contributions will be tax-de- cient to fund the plan at least through the ductible. Low-income earners will be able year 2090.13 Virtually all workers in Canada to take advantage of an enhanced Working participate in the CPP (or Quebec Pension Income Tax Benefit (WITB). The WITB is a Plan in that province): it is fully portable, refundable tax credit aimed at boosting the inexpensive, and delivers a secure, predict- earnings of low-income workers. In order able monthly benefit in retirement, protect- to reduce the impact of higher CPP contri- ed against inflation, for the remainder of butions on low-earners, the WITB phase- a retired worker’s life. The CPP is publicly in rate will increase slightly, the maximum administered on a not-for-profit basis, with benefit will rise, and the reduction rate will average annual costs that are a fraction of be reduced marginally so the benefit phas- the average cost of saving for retirement es out completely at a higher income. For through mutual funds (RRSPs, tax-free sav- workers with earnings under $20,000 a year ings accounts, and registered retirement in- the WITB enhancement will fully offset the come funds).14 additional CPP contributions.16 In June 2016, the federal finance min- In a significant drawback, the govern- ister and all provinces with the exception ment’s legislation expanding the CPP did of Quebec reached agreement on a modest not extend the child-rearing and disabil- enhancement of the Canada Pension Plan. ity dropout provisions contained in the ex- The CPP retirement benefit rate, frozen at isting CPP benefit to the enhanced benefit. 25% of average lifetime pensionable earn- In 1977, the Liberal government of Pierre ings throughout the 50-year history of the Trudeau allowed parents (predominant- plan, will gradually rise to 33.3% in 2023, ly women) leaving paid work to raise chil- beginning in 2019.15 In addition, over a two- dren under the age of seven to “drop out” year period beginning in 2024, the range of months of little or no income from the cal- earnings to which the new 33.3% benefit rate culation of their retirement benefit. At the will apply will rise by 14% (from $55,300 to same time, one could exclude years of CPP $63,000 in 2017 dollars). This enhancement disability benefits from the existing calcula- will have a noticeable albeit modest impact tion of overall CPP benefits. These dropouts on the CPP retirement benefit of workers were not included in the enhanced benefit, and the self-employed. Higher-income earn- which means, for instance, that the gap be- ers and workers aged 25 or younger in 2025 tween men’s and women’s average retirement will see the greatest benefit, although older

High Stakes, Clear Choices: Alternative Federal Budget 2017 139 Figure 16 Additional CPP Benefit by Age and Income of Contributor (2016 Dollars)

$12,000

$20,000 $40,000 $60,000 $80,000

$10,000

$8,000

$6,000

$4,000

$2,000

$0 25 Years Old in 2025 30 Years Old in 2025 40 Years Old in 2025 50 Years Old in 2025 60 Years Old in 2025 (40 Years Contributions) (35 Years Contributions) (25 Years Contributions) (15 Years Contributions) (5 Years Contributions)

Source Author’s calculations

benefits will persist longer into the future, income for couples. Many provincial in- and could conceivably increase. come top-ups and benefits and even muni- A second serious concern is that the GIS cipal seniors support programs are geared clawback will significantly reduce the in- to GIS eligibility, raising the spectre of fur- come gains of higher CPP benefits for low- ther losses if higher CPP income results in income workers. Currently, as income from disentitlement to GIS. CPP and other sources grows, the GIS claw- The federal and provincial finance minis- back imposes severe reductions in the GIS ters have committed to review the GIS claw- benefits of low- and modest-income seniors. back on CPP survivor benefits, a monthly From the first dollar of monthly income, benefit paid to the surviving spouse or com- the maximum GIS benefit is reduced by 50 mon-law partner and dependent children cents for every dollar of income from CPP, of a deceased contributor. Like all CPP in- private pensions, employment insurance, come, survivor benefits are included as in- rental income, and employment and self- come when calculating GIS benefits. employment income above $3,500. This is In 1997, the CPP death benefit amount- in addition to any reduction to the GIS top- ed to six months of retirement benefits, to up, which is reduced by 25 cents for every a maximum of $3,850, adjusted upward an- dollar of income in excess of $2,000 for GIS nually in line with wage growth. That year single recipients, and $4,000 of combined the death benefit was reduced by over 30%

140 Canadian Centre for Policy Alternatives to $2,500 and frozen so that its real value • Eliminate pension income splitting, the would diminish over time. benefits of which go overwhelmingly to In October 2016, the Liberal government the top 10% of income earners (savings also introduced legislation creating a frame- to government: $1.3 billion a year).17 work for single-employer target-benefit (TB) pension plans in the federal private sector Re-indexing old age security and for Crown corporations. As a sponsor of a DB plan an employer is legally obligat- • Index OAS to the average industrial wage ed to fund the benefits so that pensions can and salary instead of the CPI all-items be paid in retirement. Already-earned pen- index to ensure the flat retirement bene- sions from past service are legally protected fit keeps up with earned incomes (cost: and cannot be retroactively reduced. Under a $60 million in 2017-18, $65 million in TB plan arrangement the legal obligation on 2018-19, and $70 million in 2019-20).18 employers is removed, and past and future service benefits can be reduced, including retirees’ pensions. The Liberal government’s Increasing the GIS top-up new legislation would also allow the conversion of DB benefits to contingent TB bene- • Increase the incomes of the lowest-in- fits, including past service. This effectively come single seniors by $1,000 and sen- allows employers to renege on past pension ior couples by $1,000 a year by boost- promises and shifts pension risks — for both ing the GIS top-up. past and future service — entirely onto plan • Extend the GIS top-up income exemp- members both active and retired. tion by an additional $3,000 for single seniors and $3,000 for senior couples.

AFB Actions • Exempt CPP survivor benefits from the calculation of income for the purposes Revenue-enhancing measures of determining GIS eligibility, and sub- sequently review the GIS clawback in • Cancel legislation permitting retroactive order to moderate or eliminate the im- conversion of accrued DB pension bene- pact of the clawback on other sources fits to target-benefit pension benefits. of income (total cost for all three meas- • Cap RRSP contributions, which dispro- ures: $1.99 billion a year). portionately benefit high-income earners (at a federal cost of $16 billion), at Enhancing the Canada Pension Plan $20,000, a level that will affect only those making $110,000 or more a year (sav- • Convene discussions with provincial and ings to government: $1.0 billion a year). federal ministers aimed at increasing

High Stakes, Clear Choices: Alternative Federal Budget 2017 141 the CPP replacement rate from 33.3% to Public Policy study No. 17. Also see Richard Shilling- ton. (2016). An Analysis of the Economic Circumstances 50% of earnings up to 114% of the year’s of Canadian Seniors. Broadbent Institute. maximum pensionable earnings. 8 Government of Canada. (2016). Budget 2016: Growing the Middle Class. Ottawa: Queen’s Printer. • Extend the child-rearing and disability dropouts to this enhanced retire- 9 Statistics Canada, CANSIM table 111-0035. ment benefit. 10 Receiver General for Canada. (2016). Public Accounts of Canada, 2016: Volume 2. Ottawa: Minister of Public • Restore the CPP death benefit to the Services and Procurement. level it would have reached in 2017 had 11 Office of the Chief Actuary. (2016).Actuarial Report th it not been reduced and frozen in 1997, (13 ) Supplementing the Actuarial Report on the Old Age Security Program as at 31 December 2012. Ottawa: Office and re-index the benefit to growth in of the Superintendent of Financial Institutions Canada. average wages. 12 Vettese, op.cit.

13 Office of the Chief Actuary. (2016).Actuarial Report (27th) on the Canada Pension Plan as at 31 December Notes 2015. Ottawa: Office of the Superintendent of Financial Institutions Canada. 1 Statistics Canada. (2016). Seniors’ income from 1976 to 2014: Four decades, two stories. Canadian Megatrends. 14 Keith Ambachtsheer. (2015). “Yes, Public Pensions are Cheaper.” Benefits Canada. 2 Statistics Canada, CANSIM table 206-0041. 15 Department of Finance. (2016). Backgrounder: Can- 3 Statistics Canada, Pension Plans in Canada Survey. ada Pension Plan (CPP) Enhancement. 4 Richard Shillington. (2016). An Analysis of the Economic 16 Department of Finance analysis. Circumstances of Canadian Seniors. Broadbent Institute. 17 Department of Finance. (2016). Report on Federal 5 Statistics Canada, CANSIM table 111-0040; Jonathan Tax Expenditures: Concepts, Estimates, and Evalua- Rhys Kesselman. (2015). “Tax-Free Savings Accounts: tions. Ottawa: Department of Finance Canada; Macdon- Expanding, Restricting, or Refining?”Canadian Tax ald, David. (2016). Out of the Shadows: Shining a light Journal. 63:4. on Canada’s unequal distribution of federal tax expendi- 6 Statistics Canada, CANSIM table 280-0008. tures. Ottawa: Canadian Centre for Policy Alternatives.

7 Michael C. Wolfson. (2011). Projecting the Adequacy 18 Wage data from Statistics Canada CANSIM table 281- of Canadians’ Retirement Incomes: Current Prospects 0063 and CPI from CANSIM 326-0020. and Possible Reform Options. Institute for Research on

142 Canadian Centre for Policy Alternatives Trade: International Trade and Investment

ALTERNATIVE FEDERAL BUDGET TRADE 2017 POLICY

¢ Canada’s current model of trade and investment ¢ Establish a new trade mandate grounded in the liberalization has contributed to slow growth, rising inequality, principles of social, economic, and climate justice. and overdependence on the volatile resource sector. ¢ Reform the trade negotiation process so the public ¢ New trade and investment agreements under consideration interest is represented at every stage of negotiations. — notably with the European Union and, through the Trans-Pacific Partnership, with Asia-Pacific nations — would ¢ Reject the investor–state dispute settlement model that heighten these structural problems and offer very few new provides special rights to foreign investors to challenge HIGH STAKES HIGH economic opportunities for Canadian exporters. government regulations. ¢ Successful investor–state dispute settlement claims against CLEAR CHOICES Canada related to resource management and environmental policy continue to highlight the absurdity of giving foreign corporations extra-legal rights to challenge public interest decisions before unaccountable private tribunals.

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Background Despite these apparently impressive numbers, the post-NAFTA era of trade and In 2015, exports of goods and services (pri- investment liberalization has been character- marily to the United States) made up 31% of ized by slower economic growth, increased Canada’s GDP, and in total Canada’s trade wealth and income inequality, greater corpor- flows are valued at more than $1 trillion.1 ate concentration, and the entrenchment of Canada’s dependence on trade is no acci- Canada’s environmentally destructive fossil dent. For decades — and especially since fuel sector at the expense of manufacturing the 1990s — the federal government has and other industries.3 Canada now imports promoted international economic integra- more than it exports and sends more money tion through free trade agreements (FTAs) overseas than it receives in foreign invest- and foreign investor protection agreements ment. Canada’s current account deficit was (FIPAs) that are ostensibly intended to en- $65.7 billion in 2015. Put another way, trade courage cross-border commerce for the bene- and investment flows are actually acting as fit of Canadians.2

High Stakes, Clear Choices: Alternative Federal Budget 2017 143 a drag on the Canadian economy on the or- dissatisfaction with international agree- der of 3% of GDP. ments perceived to have benefited foreign To make matters worse, among Canada’s corporations and investors at the expense main exports are crude oil, metal ores, and of workers. Economists and journalists con- other raw or semi-processed commodities, fronted the reality that free trade has, in while Canada’s main imports are electron- fact, made many people worse off.5 Even ics and other value-added manufactured Prime Minister Trudeau, in a recent about- goods. Instead of leveraging our natural face, acknowledged “globalization doesn’t resource wealth to sustainable, inclusive seem to be working for the middle class, economic development, Canada remains for ordinary people.”6 In spite of this rhet- stubbornly entrenched in a resource-based oric, at the policy level Canada is ignoring economic model that does not protect good the warning signs and is holding the course jobs or create many new ones. Simultan- on free trade. eously, our deep dependence on fossil fuel President Trump has vowed to renegoti- exports and related investment undermines ate or withdraw from NAFTA, but the prac- Canada’s ability to meet our international tical outcome is unlikely to be a good one climate change commitments (see the En- for Canada or for workers in any of the three vironment chapter). countries. Congressional Republicans may Beyond these standard economic indi- seize the opportunity to push for the same cators, Canada’s trade agenda undermines harmful provisions contained in the way- the goal of shared prosperity in at least four ward Trans-Pacific Partnership. Despite ways.4 First, international economic nego- these risks, the Trudeau government has al- tiations are conducted in secret but with ready telegraphed its openness to a NAFTA close involvement from industry lobbyists. renegotiation, a move decried by opposition Second, trade and investment agreements politicians on both sides.7 increasingly spill into regulatory areas only loosely related to trade, such as intellectual Canada-European Union property rights and government procure- Comprehensive Economic ment. Third, these agreements typically and Trade Agreement give extraordinary rights to foreign corporations to sue governments for public interest After a decade of contentious negotiations, regulations that hurt private investments. and in the face of huge public protests, Can- Fourth, these agreements lack meaningful ada and the European Union signed the protections for workers, the environment, Comprehensive Economic and Trade Agree- or Indigenous rights. ment (CETA) on October 30, 2016. The final Global faith in the contemporary free 1,598-page text, which was first released in trade model waned noticeably in 2016. The February 2016, was supplemented by a Can- U.K. Brexit vote and the election of Donald ada–EU “joint interpretive declaration,” re- Trump in the U.S. highlighted widespread leased in mid-October, that clarified some

144 Canadian Centre for Policy Alternatives of the deal’s most contentious provisions One important element of CETA that without actually changing the terms of the will not be applied on a provisional basis agreement itself.8 is its Investment Court System (ICS), which Bill C-30, implementing legislation for includes some procedural reforms to trad- CETA in Canada, was, at the time of writing, itional investor–state dispute settlement being debated in the Senate. The European (ISDS) as found in NAFTA and other Can- Parliament voted to ratify CETA at a plen- adian agreements. Under NAFTA’s ISDS ary session in February. All 28 EU member system, Canada has been sued more times states must also ratify CETA in their nation- than either Mexico or the U.S. and has paid al parliaments before the full agreement can out hundreds of millions of dollars in com- come into force — which could take another pensation and legal fees. Canada recently two to five years, even if significant political lost two disturbing cases involving an en- opposition is overcome. In the meantime, vironmental assessment that turned down most of the agreement will enter into force a massive quarry in the ecologically sensi- on a provisional basis once it is passed in tive Bay of Fundy (the Bilcon case), and a the Canadian and European Parliaments. moratorium on offshore wind farms on the Among other issues, CETA precludes Great Lakes (the Windstream case). the use of local preferences (i.e., “buy lo- Though the ICS envisioned in CETA im- cal” rules) in government procurement con- poses stricter conflict-of-interest rules on tracts, including at the provincial and mu- arbitrators and provides for the future in- nicipal level. CETA’s so-called ratchet and clusion of an appeals process, the EU agree- standstill clauses for services and investment ment’s investment chapter still affords — and threaten to lock in liberalization, including even expands — fundamentally unbalanced privatization, in all sectors that have not rights to foreign investors, exposing a broad been explicitly carved out by negotiators. range of public interest measures to chal- CETA also extends pharmaceutical patent lenge and potential fines.11 terms, which will delay the availability of generic drugs in Canada at significant ex- The Trans-Pacific Partnership pense to consumers and the public health care system.9 The U.S.-led Trans-Pacific Partnership was These costs are unlikely to be offset by signed on February 4, 2016 and each of the newfound economic opportunities. New re- 12 participating countries has until Febru- search from the Global Development and ary 2018 to ratify the deal. However, U.S. Environment Institute at Tufts University President Donald Trump has withdrawn the projects that CETA will put downward pres- U.S. from the TPP. Since the TPP’s coming sure on wages, leading to reduced average into force is ultimately contingent on the incomes, increased unemployment, and United States, other parties to the agree- greater socioeconomic inequality in Can- ment, including Canada, have little incen- ada and the EU.10

High Stakes, Clear Choices: Alternative Federal Budget 2017 145 tive to push ahead. The TPP, in its current at all, as it contains no provisions for the form, appears to be dead. movement of goods. Instead, it is aimed at Canadians are better off without the radically deeper services liberalization and TPP. The deal would deepen and widen deregulation among the 23 governments (in- Canada’s exposure to investor–state dis- cluding the EU) negotiating the deal. pute settlement cases, extend and entrench Based on leaked drafts, TISA could go intellectual property rights that reduce ac- deeper than previous deals in areas such cess to medicines, restrict Internet freedom, as “regulatory co-operation,” a euphem- and stifle technological innovation in Can- ism for imposing corporate-friendly regu- ada. The TPP would create new challenges latory models on member countries.14 The for key Canadian industries, especially the secrecy, and undue corporate influence, automotive and dairy sectors, where tens surrounding the development of such bind- of thousands of jobs are put directly at risk. ing regulatory templates is a major concern Contractions in those sectors would be felt for public interest regulators. Under TISA, in related areas, such as the steel industry, Canadian governments may face additional which employs 22,000 people in Canada pressures to deregulate and liberalize sensi- and receives a third of its demand from the tive sectors such as energy, environmental, Canadian auto industry. Furthermore, the and financial services. agreement would expand corporate rights TISA negotiators missed a December to import migrant workers in a largely de- deadline to conclude the talks, in part be- regulated manner while failing to introduce cause of uncertainty related to the new U.S. strong, enforceable labour rights.12 administration. If and when the text is com- Like CETA, the supposed economic bene- pleted it must be signed by each of the 23 fits of TPP ratification are meagre and -un negotiating parties before it can proceed likely to be shared with most Canadians. to domestic ratification. The entire process At least one study predicts net job losses could take several more years. and reduced incomes in Canada as a result of the deal.13 In Canada, a House of Com- mons trade committee has been studying AFB Actions the TPP for more than a year but has yet to Action: Establish a new trade and invest- make any recommendations to Parliament. ment mandate for Global Affairs Canada based on the principles of social, econom- Trade in Services Agreement ic, and climate justice. Result: Trade policy will strive to stimulate Although less well known than CETA or the inclusive economic growth and the creation TPP, the Trade in Services Agreement (TISA) of good jobs while safeguarding govern- will likely be the next global battleground ments’ ability to regulate for environment- for trade and investment policy. Technic- al and consumer protection, among other ally, TISA is not a “free trade” agreement

146 Canadian Centre for Policy Alternatives public priorities. Trade agreements will raise Notes environmental and social standards to the 1 See Global Affairs Canada.Canada’s State of Trade: highest common denominator and be com- Trade and Investment Update — 2016. Minister of Public patible with Canada’s international climate Works and Government Services Canada, 2016. change commitments. 2 Global Affairs Canada. “Foreign Investment Promo- tion and Protection Agreements (FIPAs).” Government Action: Global Affairs Canada will develop of Canada. Last modified June 9, 2016. a new approach and process for negotiating 3 Jordan Brennan. Ascent of Giants: NAFTA, Corporate international trade and investment treaties Power and the Growing Income Gap, Canadian Centre for Policy Alternatives. February 2015. based on the principles of transparency, in- 4 These patterns are explored in more detail in the 2016 clusivity, and accountability. edition of the CCPA Alternative Federal Budget. For a Result: The input of corporate lobbyists and deeper critique of the global neoliberal trade and invest- other private sector actors will no longer ment framework, see Stephen Gill and A. Claire Cutler, eds. New Constitutionalism and World Order. Cambridge be valued above that from labour unions, University Press, 2014. environmental organizations, Indigenous 5 David H. Autor, David Dorn and Gordon H. Hanson. groups, and other public interest actors in “The China Shock: Learning from Labor Market Adjust- the determination of trade policy priorities. ment to Large Changes in Trade.” National Bureau of Eco- Parliament and the Canadian public will be nomic Research Working Paper No. 21906, January 2016. able to review draft texts and openly debate 6 Ashifa Kassam and Laurence Mathieu-Léger. “Jus- tin Trudeau: ‘Globalisation isn’t working for ordinary the merits of potential new agreements be- people’.” The Guardian, December 15, 2016. fore they are signed, ensuring a more bal- 7 Andrea Hopkins. “Canada opposition scorns PM anced outcome. move to negotiate trade with Trump.” Reuters, Nov- ember 16, 2016. Action: Remove investor–state dispute settle- 8 Scott Sinclair. “Flimsy CETA declaration leaves public ment mechanisms from existing trade and services, water policy vulnerable in Canada-EU deal.” investment treaties, including NAFTA, and Behind the Numbers, October 14, 2016. cease negotiating this provision, which inter- 9 For a complete breakdown of CETA’s potential im- feres with governments’ right to regulate in plications, see Scott Sinclair, Stuart Trew, and Hadrian the public interest, in all future trade deals. Mertins-Kirkwood, eds. Making Sense of the CETA: An analysis of the final text of the Canada–European Union Result: Foreign investors will no longer have Comprehensive Economic and Trade Agreement. Can- special rights — beyond those granted to adian Centre for Policy Alternatives, September 2014. individuals under Canadian law — to chal- 10 Pierre Kohler and Servaas Storm. “CETA Without lenge public interest policies, regulations, Blinders: How Cutting ‘Trade Costs and More’ Will Cause Unemployment, Inequality and Welfare Losses.” Global or other decisions that undermine their in- Development and Environment Institute Working Paper vestments in Canada. Canadian energy and 16-03. Tufts University, September 2016. mining firms will likewise lose the ability to 11 Pia Eberhardt. The zombie ISDS: Rebranded as ICS, bully or punish foreign governments when rights for corporations to sue states refuse to die. Corpor- controversial or environmentally dangerous ate Europe Observatory, March 2016. extractive projects are rejected. 12 For a thorough investigation of these and other concerns in the TPP, see Scott Sinclair and Stuart Trew, eds.

High Stakes, Clear Choices: Alternative Federal Budget 2017 147 The Trans-Pacific Partnership: A Citizen’s Guide. James ment.” Global Development and Environment Institute Lorimer & Company Ltd., 2016. Working Paper 16-01. Tufts University, January 2016.

13 Jeronim Capaldo, Alex Izurieta, and Jomo Kwame 14 Global Justice Now & Attac Norway. A blueprint for Sundaram. “Trading Down: Unemployment, Inequality global privatisation: Why we need to stop the Trade in and Other Risks of the Trans-Pacific Partnership Agree- Services Agreement. August 2016.

148 Canadian Centre for Policy Alternatives Water

ALTERNATIVE FEDERAL BUDGET WATER 2017

¢ There were 158 drinking water advisories in ¢ Strengthen water and wastewater First Nation communities in fall 2016. infrastructure in municipalities and First ¢ 99% of lakes and rivers in Canada are not Nations. protected by the Navigation Protection Act ¢ Fund robust environmental assessments from potentially harmful activities. and strong water science and research. HIGH STAKES HIGH ¢ The proposed Energy East pipeline alone, ¢ Safeguard the Great Lakes, groundwater, of several new pipeline projects under CLEAR CHOICES and other freshwater sources. consideration, puts 2,963 waterways at risk. ¢ Create a National Public Water and ¢ 205 billion litres of raw sewage was flushed Wastewater Fund to replace poor into waterways in Canada in 2015. infrastructure.

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Background munities’ reasonable use, and to make private use subservient to community rights. Canada needs to put water protection and Beginning in 2010, the United Nations water justice at the heart of all policies and passed several resolutions recognizing the practices affecting water sources and servi- human right to water and sanitation. These ces. The government could take a step in that intentions were asserted again in the 2015 direction by recognizing water as a human Sustainable Development Goals. The UN right, a shared commons, and a public trust. Human Rights Council has called on gov- The notion of the “commons” asserts that ernments to develop comprehensive plans water is a common heritage to be shared, and strategies for water management, as- protected, managed, and enjoyed by all. sess the implementation of these plans of A commons framework requires a shift in action, ensure affordable water services for water governance to prioritize the human everyone, and create accountability mech- right to water, Indigenous water rights, and anisms and legal remedies. public participation in the decision-making The Canadian government recognized process. Public trust principles require gov- the human right to water and sanitation at ernments to protect water sources for com- the 2012 UN Conference on Sustainable De-

High Stakes, Clear Choices: Alternative Federal Budget 2017 149 velopment, but it has yet to take action to of drinking water infrastructure is in fair to make these rights meaningful. If “Canada very poor condition.3 The total replacement is back” on the international stage, as the value of water, wastewater, and stormwater Prime Minister has stated, now is the time assets is $575 billion, according to the same to implement the human rights to water and report. The Federation of Canadian Munici- sanitation with federal legislation and ad- palities (FCM) estimates the cost of replacing equate funding. systems graded “poor” or “very poor” to be about $61 billion.4 The Liberal government committed $2 billion over four years for its Current Issues new Clean Water and Wastewater Fund. Over 205 billion litres of raw sewage was Drinking Water in flushed into waterways in Canada in 2015.5 Indigenous Communities The federal government has introduced Prime Minister Trudeau promised during the stricter wastewater standards, but again 2015 election campaign to end boil water ad- these did not come with adequate funds for visories on First Nations within five years of municipalities. The FCM calculates that the forming a Liberal government. There were regulations will cost at least $20 billion for 158 drinking water advisories on 111 First Na- plant upgrades alone. The federal govern- tions in fall 2016.1 There are routinely over ment should be working with provincial 100 water advisories in effect, with some governments to harmonize reporting re- communities having lived under advisories quirements, with the goal of reducing the for nearly 20 years.2 The Safe Drinking Water cost of administering regulations. for First Nations Act sets high standards for water quality but fails to allocate enough Sustaining Water Sources through funding to meet them. In 2011, a government Science, Research and Regulation study estimated that $889 million is needed every year for First Nations water and waste- The previous Conservative government water facilities including projected operat- clawed back much-needed legislation and ing and maintenance. (For further details funding for water and environmental pro- see the First Nations chapter.) tection during its nine years in power. For example, as a result of reforms to the Navig- able Waters Protection Act (now the Naviga- Public Water and Wastewater tion Protection Act), 99% of lakes and rivers Infrastructure are unprotected from activities that restrict According to the 2016 Canadian Infrastruc- their navigability. The Fisheries Act was also ture Report Card, one-third of Canada’s mu- gutted by the previous government in such nicipal infrastructure is at risk of rapid de- a way that it no longer protects fish and terioration, 36% of wastewater infrastructure fish habitat. The Canadian Environmental is rated in fair to poor condition, and 29% Assessment Act (CEAA) was weakened to

150 Canadian Centre for Policy Alternatives the point that 3,000 environmental assess- Protecting Watersheds From ments were cancelled in 2012, and many oil Extreme Energy Projects and gas and other projects no longer trigger Extreme energy projects are defined as such environmental assessments. because they require more water, energy, Last summer, six federal ministers whose and effort to realize, and are more destruc- mandates include water announced they tive to watersheds, the environment, and would review legislation that was substan- surrounding communities, than conven- tially weakened by the Conservative govern- tional energy development.6 The extrac- ment. The reviews focused on the National tion of extreme energy, such as fracked gas Energy Board, the CEAA, the Fisheries Act and tar sands oil, and their transportation and the Navigation Protection Act (NPA). via pipeline, rail and ships, leave munici- The government created two expert panels palities and Indigenous communities vul- to examine how the National Energy Board nerable to potentially high clean-up and and the federal environmental assessment health care costs. process approve projects, an effort that in- For fracking, these costs include drink- cluded public consultations on the CEAA. ing water contamination, poor air quality, Two standing committees — on transport, earthquakes, health risks, and increased infrastructure and communities, and on greenhouse gas emissions. Atlantic prov- fisheries and oceans — reviewed the NPA inces have placed moratoria on fracking, but and the Fisheries Act respectively. The expert governments in Western Canada continue panels and standing committees planned to to endorse the risky practice. There are up table their recommendations to the federal to 20 proposals to build liquefied fracked government in early 2017. gas (LFG) plants along the coast of British Starting in 2016-17, the federal govern- Columbia, which would see supertankers ment allocated $14.2 million over four years transport fracked gas for export. to the Canadian Environmental Assessment The Conservative government’s legisla- Agency, and $197.1 million over five years to tive changes to the NPA and CEAA eliminated Fisheries and Oceans Canada to increase and/or scaled back reviews of major pipeline ocean and freshwater science, monitoring, projects such as TransCanada’s Energy East and research activities. This money includ- pipeline, Kinder Morgan’s Trans Mountain ed $1.7 million over two years for the Experi- expansion in B.C., and Enbridge’s Line 9 re- mental Lakes Area. However, department- versal in Ontario and Quebec. These pipe- al reports on plans and priorities show the lines would transport tar sands bitumen or trend set by the Conservative government of fracked oil, exacerbating climate change and gutting funding for water programs at En- putting water, food, and public health at vironment and Climate Change Canada and risk. The Energy East pipeline crosses 2,963 at Fisheries and Oceans Canada, as well as waterways, but Transport Canada will not for Transport Canada’s Navigation Protection Program, will continue in 2017 and beyond.

High Stakes, Clear Choices: Alternative Federal Budget 2017 151 assess its impacts on navigable waterways Water Withdrawals, Bulk Water because the current NPA exempts pipelines. Exports and Trade Agreements Despite promising to protect freshwater Although Canada holds nearly 20% of the and oceans, the Liberal government has ap- world’s freshwater, only 1% of it is renewable proved extreme energy projects like the Site in that the water is replenished by rain or C dam in B.C., the Pacific NorthWest LFG snowfall. Each year Canada exports 59.9 Bm3 terminal, the NOVA Gas Transmission Ltd. of virtual water (the amount of water used fracked gas pipeline (owned by TransCan- to produce or process a good or a service). ada) and the Trans Mountain pipeline, sig- That amount would fill the Rogers Centre naling little change from the previous gov- in Toronto to the brim approximately 37.5 ernment’s extractivist policies. thousand times. Canada is the second high- There is a significant lack of independ- est net virtual water exporter in the world.8 ent scientific data on the consequences of Bottled water companies such as Nestlé diluted bitumen spills in water, including directly withdraw from freshwater supplies, how the oil reacts in waterways and the chal- including groundwater aquifers, which are lenges involved in cleaning it up. The gov- the main drinking water source for one-third ernment must fulfil its commitment to ban of Canadian communities. A 2015 study tankers on B.C.’s north coast as well as LFG published in Nature Geoscience found that tankers on the Pacific coast. Extreme energy only 6% of groundwater around the world projects like the Alberta Clipper pipeline, is renewable.9 Recent droughts in Ontario, owned by Enbridge, and unconventional oil British Columbia, and Alberta have finan- shipments in the Great Lakes–St. Lawrence cial impacts on farmers and the fishing in- River Basin must also be banned.7 dustry and provide strong incentive to pro- It is a myth that communities need tect local watersheds. to choose between water protection and In the past, right-wing think tanks in jobs — we can have both. Mining, oil and the United States and Canada have made gas, and logging sectors made up only 1.6% proposals to export bulk water from Mani- of jobs in Canada in 2015. Creating one mil- toba and Quebec. The federal government lion sustainable climate jobs and ensuring must ban all bulk water and bottled water a just transition for workers currently em- exports, as these projects are tremendously ployed in the extractive sectors would not costly, require vast amounts of energy, and only protect waterways, but also grow Can- pose serious threats to watersheds. ada’s economy in sustainable way for future Water in its natural state is excluded from generations. Canada’s existing trade agreements. How- ever, when water is commodified — when it is turned into a tradeable good or service — these agreements kick in, providing companies and individual investors with

152 Canadian Centre for Policy Alternatives strong tools to undermine policy affecting AFB Actions private water-related projects (e.g., waste- Strengthen public and community water treatment or bottled water plants). water and wastewater infrastructure For example, Lone Pine Resources is suing Canada, under the investor–state dispute • Create a National Public Water and Waste- process in NAFTA, in response to Quebec’s water Fund to replace poor infrastructure moratorium on fracking in the St. Law- (cost: $6.5 billion a year for six years, $2.5 rence River — a decision made, in part, to billion a year in year seven and beyond). protect water. • Implement the Wastewater Systems Ef- In 2011, Canada settled another NAFTA fluent Regulation (cost: $1 billion a year claim with AbitibiBowater (now Resolute over 20 years). Forest Products) in which the company a claimed proprietary right to the water used • Commit $100 million annually for water at its former paper mill in Newfoundland infrastructure in small municipalities. and Labrador. Provincial law only granted • Commit $75 million annually for ongoing water-taking rights to the company on the water operator training, public sector cer- condition they were used to operate the mill. tification, and conservation programs. When AbitibiBowater shut down the mill, those rights should have expired. In settling the NAFTA claim, however, the Canadian Support and fund environmental government may have implicitly recognized impact assessments the company’s private right to water. • Conduct assessments of all energy and By excluding water from trade agree- mining projects; include community con- ments, and eliminating this lopsided in- sultations and seek free, prior and investment protection system (see the AFB formed consent of Indigenous commun- Trade chapter), the government could avert ities in the process (cost: $50 million). threats to water sources in Canada and avoid costly NAFTA challenges. The government • Conduct an in-depth and independent must also protect the rights of municipal- study of the effects of tar sands develop- ities, provinces, and territories to regulate ment on the environment and health water takings, and create new public mon- (cost: $30 million). opolies for the delivery of water services and • Reinstate federal funding for water pro- sanitation, without having to worry about grams at the departments of Environ- trade and investment challenges.10 ment and Climate Change Canada, Fish- eries and Oceans, and Transport Canada (cost: $50 million).

High Stakes, Clear Choices: Alternative Federal Budget 2017 153 Ensure the safety and sustainability Notes

of freshwater in Canada 1 Health Canada. “Drinking Water and Wastewater.” Ottawa. Online at http://www.hc-sc.gc.ca/fniah-spnia/ • Implement a comprehensive action plan promotion/public-publique/water-eau-eng.php#adv; to protect the Great Lakes (cost: $500 First Nations Health Authority. “Drinking Water Ad- million in year one and $950 million a visories.” Online at http://www.fnha.ca/what-we-do/ environmental-health. year in each of the following four years). 2 Health Canada. “First Nations and Inuit Health: • Establish water quality and quantity Drinking Water and Waste Water.” Ottawa Online at http://www.hc-sc.gc.ca/fniah-spnia/promotion/public- monitoring frameworks; increase the publique/water-eau-eng.php#s2d number of monitoring stations, train 3 Informing the Future: 2016 Canadian Infrastructure staff in water monitoring, and create a Report Card. Canadian Infrastructure. http://www. new water minister position (cost: $327.5 canadainfrastructure.ca/en/index.html

million over three years). 4 Ibid.

• Commit $3 million toward a groundwater 5 Elizabeth Thompson. “Billions of litres of raw sewage, untreated waste water pouring into Canadian water- protection plan and $1 million to com- ways,” CBC, December 12, 2016. plete a review of virtual water exports 6 Informing the Future: 2016 Canadian Infrastructure from Canada. Report Card

7 Carol Linnitt. “Why is Trudeau Backtracking On B.C.’s Oil Tanker Ban? These 86 Meetings with Enbridge Might Help Explain.” DeSmog Canada, October 20, 2016.

8 Nabeela Rahman, Maude Barlow, and Meera Karunan- anthan. (2011). “Leaky Exports: A Portrait of the Virtual Water Trade in Canada.” Ottawa: Council of Canadians.

9 Emily Chung. “Most groundwater is effectively a non- renewable resource, study finds.”CBC News, Novem- ber 15, 2015.

10 Scott Sinclair. (2015). “NAFTA Chapter 11 Investor- State Disputes to January 1, 2015.” Ottawa: Canadian Centre for Policy Alternatives.

154 Canadian Centre for Policy Alternatives Youth

ALTERNATIVE FEDERAL BUDGET YOUTH 2017

¢ There are now more Canadians aged ¢ Create a Youth Labour Market 55–64 than those aged 15–24. Planning Board. ¢ The youth (aged 15–24) unemployment rate in December 2016 ¢ Ensure that federally funded public was 12.6%. works projects hire young workers. HIGH STAKES HIGH ¢ Unpaid internships not associated with degree completion are illegal in many parts CLEAR CHOICES ¢ Enforce federal regulations restricting of Canada, yet an estimated 100,000 to unpaid internships and create 20,000 300,000 young people are working at six-month paid internship positions with internships for no pay across the country. not-for-profit organizations.

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Background The economy and labour market young Canadians encounter when they begin look- Canada’s population is rapidly aging, with ing for work is one that demands “flexibil- the median age rising markedly from 27.1 ity” on the part of workers and — because it years in 1974 to 40.2 years in 2013.2 There relies increasingly on part-time, short-term, are more than seven million Canadians be- and even unpaid labour — offers workers lit- tween the ages of 15 and 29.3 In contrast, over tle long-term security in return.44 This shift- 9.5 million Canadians are 55 or older — a ing political economy of work in Canada is quarter of the population. Our social and an explicit choice made by government. It economic policy often fails to address the has affected young people’s ability to make complex needs, desires, and challenges of a living and engage in full civic participa- young people. In light of the ongoing shift in tion. This is having profound effects on our demographics, especially with the boomer social fabric. cohort retiring, now is the time to focus on Labour market regulation and policy youth employment and, most importantly, have not been updated to reflect the rise of income and economic security. precarious work targeting youth (i.e., contract jobs, unpaid internships, etc.), the

High Stakes, Clear Choices: Alternative Federal Budget 2017 155 erosion of employment security, or the re- cial, financial, political, and cultural capital trenchment of the social welfare system. to overcome barriers to employment, civic Social policy is also lagging. Family and participation, economic security, family and child care policy, for example, does not re- personal stability, and tertiary education. flect the changing lives and livelihoods of This diversity demands either a litany of young Canadians and their families, which targeted programs or one overarching and are increasingly characterized by “delayed very inclusive policy approach. The AFB’s transitions” and reliance on two earners. recommendations lean toward the latter. Many of those earners hold multiple jobs Too often, policy decisions are not taken and service student debts while also pay- with any recognition of how a policy’s im- ing for child care and housing.5 pact will play out across the age spectrum. With the average house costing $481,944 There is a lack of intergenerational equity in Canada in 2016,6 young adults are also in Canadian public policy right now, and a squeezed by dramatic increases in home degree of intergenerational fracturing ap- prices. They earn lower wages and have pears to be taking hold within the nation- higher debts than their parents did at the al discourse and official politics. The AFB same age, despite having more education. sees intergenerational equity as a necessary Yet government spending on supports for lens for analyzing policy decisions. This young families is a fraction of that on sup- approach presents an opportunity to craft ports for older Canadians.7 Most young Can- innovative solutions to pressing problems adians are unable to set aside an adequate such as housing, health care, and child care. portion of their earnings for retirement, The AFB takes the position that the most periods of unemployment, and other fu- pressing policy issue for young Canadians ture costs, but the policy that shapes pen- in 2017 is the ongoing erosion of income sions and social assistance fails to reflect and employment security arising from the these difficulties.8 growth of precarious work, uncertain eco- Further complicating the issue is the di- nomic conditions, and poor labour market versity of young people’s pathways, needs, prospects for young workers. This is a broad and challenges. Canadian society includes issue that encompasses the many more con- young people from rural areas and low-in- crete challenges that dominate policy dis- come families, those who leave school ear- cussions — primarily debt, unemployment, ly, Aboriginal youth, newcomer youths, underemployment, and non-participation young people with disabilities, young par- in the formal economy or labour market. ents, LGBTQ youth, racialized youth, home- Single young adults, couples, and young less youth, and unemployed youth. In our families alike are dealing with an untenable current economic structure, each of these mix of rising costs of living and decreasing groups faces different barriers to secure, or volatile long-term earnings. This combin- stable, and meaningful lives. Disproportion- ation impedes their ability to save money, ately marginalized, they often lack the so- participate fully in civic life, socially repro-

156 Canadian Centre for Policy Alternatives duce, find work in rewarding vocations, and Canada Employment Centres.11 While a care for others. Youth Employment Strategy with a similar Precarity in the labour market is much basic structure has survived, no significant more than an issue of young people’s abil- adjustments have been made to respond to ity to make ends meet; it is a strain on the the current rate of youth unemployment, social fabric that casts a direct burden on the rise of precarious work, and the effects our communities and government. Precar- of these shifts on young people’s security ious work has been linked to anger, anxiety, and wellbeing. Also lacking are national alienation, openness to antisocial currents, strategies focused on young workers from and a rise in mental health issues among marginalized and equity-seeking groups. youth.9 The policies recommended here are One continuing threat to young people’s intended to increase income and employ- economic security is the substantial rise ment security, fighting precarious and un- and spread of unpaid internships. Unpaid paid work by addressing the mismatch be- internships have been appearing in federal- tween the current Employment Insurance ly-regulated employers with alarming regu- (EI) program structure, active labour market larity and are often not connected to any fu- programs, and the lives of young workers. ture paid work with the same employer or Young Canadians are over-represented tertiary education program.12 Unpaid intern- in jobs lacking permanence, benefits, ships that are not associated with degree and stability. Moreover, recent declines completion are illegal in many parts of Can- in the youth unemployment rate have ada, as these jobs violate minimum-wage been traced to young people dropping rates and employment standards. The legal- out of the labour market rather than ity of unpaid internships notwithstanding, finding employment.10 This trend is espe- the morality of expanding opportunities for cially problematic given the fact that many unpaid work while actual paid opportun- critical and expensive moments in the life ities dwindle is questionable. Unpaid in- course — such as forming relationships, terns are still not adequately covered under starting a family, tertiary education, and the Canada Labour Code, which covers fed- home-buying — all typically occur in the erally-regulated employers, and often they early stages adulthood. do not receive the same benefits and secur- In the 1980s, during another high ity afforded to paid employees. The current point in youth unemployment (when it government has not taken any action to ad- surpassed 20%), the federal government equately protect interns under the Canada introduced several measures under the Labour Code or enact proper enforcement umbrella of a “youth employment in- strategies since coming in to power. itiative.” These included wage subsidies for employment-disadvantaged young people, funding for community projects with a youth focus, and youth units at

High Stakes, Clear Choices: Alternative Federal Budget 2017 157 AFB Actions the difference into the national fund for the Young Workers Initiative. The AFB will introduce a Young Workers In- Result: Businesses that invest in train- itiative. To acknowledge the protraction of ing their employees will be more likely to re- the so-called transition to adulthood, youth tain those employees on a full-time, perma- will be defined as people aged 15–34. The nent basis. Young Workers Initiative will include the following actions. Action: Create public works projects for young workers. All federally funded infra- Action: Create a Youth Labour Market structure projects will reserve, at minimum, (YLM) Planning Board. Working with rel- one-quarter of the jobs they create for young evant sectoral development councils (see workers. A minimum of one-tenth of the the Sectoral Development chapter), the YLM jobs these projects create will be reserved Planning Board will ensure that jobs have for young workers from historically margin- people and people have jobs, and that em- alized and equity-seeking groups. ployers take on more of the responsibility for training employees. It will coordinate Action: Renew federal-funded intern- via Statistics Canada and/or directly gather ships. The federal government will provide quantitative data on job openings, labour funding to not-for-profit organizations for market characteristics, unpaid internships, 20,000 six-month paid internships on an and placement rates of universities, and annual basis. (Cost: $300 million.) qualitative data on the labour market ex- Action: Direct Statistics Canada to begin periences of young people. A key compon- collecting data related to unpaid intern- ent of this activity will be providing addi- ships, unpaid labour, and volunteerism. tional federal funding to Statistics Canada (Cost: $1 million.) so that it can monitor unpaid internships on Result: Provide the government with a a monthly basis via additional questions in more accurate picture of how much unpaid the Labour Force Survey. labour is being provided within the econ- Result: With the causes identified, ap- omy and labour market. propriate responses to wage-suppression and precariousness in the Canadian labour mar- Action: Direct Statistics Canada to begin ket will be developed. (Cost: $30 million.) collecting data on the number of people not in education, employment, or training Action: Introduce a 1% training tax (“NEET”). (Cost: $1 million.) where all businesses with payrolls greater Result: The NEET category is of serious than $250,000 will be required to invest the concern and needs additional study. Monthly equivalent of 1% of their payroll in training tracking will provide the government with for young employees.13. Those who fail to data about the size, composition, and length meet that amount will be required to pay of stay in the NEET category.

158 Canadian Centre for Policy Alternatives Action: Implement reforms to the Can- an amended Canada Labour Code. It will ada Labour Code to protect young workers also establish regional units within the in precarious employment, including the Labour Program dedicated to proactive following (Cost: $10 million): inspections and enforcement of the Can- ada Labour Code. • Employment standards protections for students, trainees, and interns: the 2015 amendments related to unpaid intern- Notes ships under Part III of the Canada Labour Code passed by the previous government 1 Sagan, Aleksandra. (2013). “Unpaid Internships Exploit ‘Vulnerable Generation.’” CBC News. July 02, 2013. Online must be immediately undone. The Can- at: http://www.cbc.ca/news/canada/unpaidinternships- ada Labour Code should be amended to exploit-vulnerable-generation-1.1332839

specifically prohibit unpaid internships 2 “CANSIM Table 051-0001: Estimates Of Population, By and unpaid trainees, and to cover in- Age Group and Sex, Canada, Provinces and Territories, Annual.” Ottawa: Statistics Canada. terns, trainees, and students under all provisions granting protections related 3 “CANSIM Table 051-0042: Estimates Of Population, By Marital Status or Legal Marital Status, Age, and Sex to labour standards under Part III of the for July 1, Canada, provinces and territories” Ottawa: Canada Labour Code; Statistics Canada.

4 Vosko, Leah F. (2009). Managing the Margins: Gender, • Workers’ compensation coverage for stu- Citizenship, and the International Regulation of Pre- dents, trainees, and interns: Amend sec- carious Employment. Oxford: Oxford University Press.

tion 239.1 of the Canada Labour Code 5 Beaujot, Roderic. (2004). Delayed Life Transitions: so that federally regulated employers Trends and Implications. Ottawa: Vanier Institute of must provide students, interns, train- the Family; Clark, Wayne (2007). Delayed Transitions of Young Adults. Ottawa: Statistics Canada; See also the ees, or learners who are absent from Generation Squeeze campaign at www.gensqueeze.ca work due to work-related illness or in- for many fact sheets detailing the rising costs and de- jury with wage replacement, payable at clining incomes of young Canadians. an equivalent rate to that provided for 6 “National Average Price Map.” Ottawa: Canadian Real Estate Association. under the applicable worker’s compensation legislation in the worker’s province 7 Carrick, Rob. “2012 vs. 1984: Young adults really do have it harder today.” The Globe and Mail. May 7, 2012. of permanent residence. The equivalent See also: www.gensqueeze.ca. rate would be no less than the hourly 8 “80 Per Cent of Young Canadians Concerned About average industrial wage. Their Ability to Save for Retirement.” BMO Financial Group, 2013. • Proactive enforcement: The federal gov- 9 Standing, Guy (2012). The Precariat. New York: Blooms- ernment, in partnership with its provin- bury Press. cial counterparts, will develop proactive 10 Standing, 2012. Cf. Latouche, Serge. (2014). Farewell enforcement plans to identify employ- to Growth. London: Polity Press; Klein, Naomi (2014). ers that use unpaid interns and penal- This Changes Everything: Capitalism Vs. The Climate. Toronto: Random House. ize any practices that are illegal under

High Stakes, Clear Choices: Alternative Federal Budget 2017 159 11 On historical trends in youth unemployment, see evaluation/2007/sp_ah_211_05_04e/page01.shtml. On “Youth unemployment high, but lower than in most economic transformations in Canada and globally since of 1990s.” Labour Force Survey: 2011 Year-End Review. 1980, see Vosko, 2009. Ottawa: Statistics Canada. For the Youth Employment 12 Tomlinson, Kathy. (2013). “Bell accused of break- Strategy (YES), see http://actionplan.gc.ca/en/initiative/ ing labour law with unpaid interns.” CBC News. June enhancing-youth-employment-strategy. For an evalu- 24, 2013. Online at http://www.cbc.ca/news/canada/ ation of the YES program from 1997–2002, see Human british-columbia/bell-accused-of-breaking-labour- Resources and Skills Development Canada. (2004). lawwith-unpaid-interns-1.1356277 “Youth Employment Strategy (YES) 1997–2002: Sum- mary of Recent Summative Evaluation Results.” Online 13 See Zizys, Tom. (2014). Better Work: The Path to Good at http://www.hrsdc.gc.ca/eng/publications_resources/ Jobs is Through Employers. Toronto: Metcalf Foundation.

160 Canadian Centre for Policy Alternatives Acknowledgements

The AFB starts from a set of social justice Lynell Anderson (Child Care Advocacy As- values — human dignity and freedom, fair- sociation of Canada), Bilan Arte (Canadian ness, equality, environmental sustainability Federation of Students), Morna Ballantyne and the public good — embraced by repre- (Child Care Advocacy Association of Canada), sentatives of a broad spectrum of civil so- Gary R.S. Barron (Westman Centre for Real ciety organizations: labour, environment, Estate Studies, University of Calgary), Kirs- anti-poverty, legal clinics, faith-based, stu- ten Bernas (Canadian Community Economic dents, teachers, education and health care, Development Network), Michèle Biss (Can- arts, cultural, social development, child ada Without Poverty), Joe Boughner (As- development, international development, sociation of Canadian Financial Officers), women, disability, Indigenous. Lesley Bramhill (Canadian Arts Coalition), The AFB would like to acknowledge the Jordan Brennan (Unifor), Michael Butler very valuable financial assistance provided (Council of Canadians), Ryan Campbell by the Canadian Labour Congress, Unifor, (Professional Institute of the Public Service the Canadian Union of Public Employees, of Canada), Amy Casipullai (Ontario Coun- the National Union of Public and General cil of Agencies Serving Immigrants), Dan- Employees, and the Public Service Alliance iel Cayley-Daoust (Council of Canadians), of Canada. Gavin Charles (Canadian Council for Inter- This document was prepared thanks national Co-operation), Gerald Chipeur to the generous volunteer contributions of (Miller Thomson), Tony Clarke (The Polaris many people. Those contributions may or Institute), Eve-Lyne Couturier (l’Institut de may not reflect the views of their organiza- recherche et d’informations socio-économ- tions. They include: iques), Graham Cox (Canadian Union of Pub-

High Stakes, Clear Choices: Alternative Federal Budget 2017 161 lic Employees), Katie-Sue Derejko (Katrime Sarah McCue (Canadian Federation of Stu- Integrated Health), Roxanne Dubois (Com- dents), Bob McGahey (Canadian Teachers’ munication, Energy and Paperworkers Union Federation), Hilary Moore (National Farm- of Canada), Judy Duncan (Acorn Canada), ers Union), Anil Naidoo (Canadian Nurses Jackie Esmonde (Income Security Advo- Union), Michael Nicin (Canadian Associ- cacy Centre), Nick Falvo (Calgary Home- ation of Retired Persons), Emily Norgang less Foundation), Leilani Farha (Canada (Canadian Labour Congress), Tahnee Prior Without Poverty), Sid Frankel (Campaign Robert Ramsay (Canadian Union of Pub- 2000: End Child and Family Poverty in Can- lic Employees), Fraser Reilly-King (Can- ada), Martha Friendly (Childcare Resource adian Council for International Co-oper- and Research Unit), Colleen Fuller (Phar- ation), Chris Roberts (Canadian Labour maWatch), Avvy Go (Metro Toronto Chi- Congress), Bill Robinson (Rideau Institute), nese & Southeast Asian Legal Clinic), Tam David Robinson (Canadian Association of Goossen (Urban Alliance on Race Relations), University Teachers), Madeline Rodriguez Joe Gunn (Citizens for Public Justice), Liyu (Association of Canadian Financial Officers), Guo (Campaign 2000: End Child and Family Toby Sanger (Canadian Union of Public Poverty in Canada), Joel Harden (Canadian Employees), Paul Shaker (Civicplan), Jim Federation of Students), Guillaume Hébert Stanford (Unifor), Steven Staples (Public (l’Institut de recherche et d’informations Response), John Sylvestre (Centre for Re- socio-économiques), James Hicks (Coun- search on Educational and Community Ser- cil of Canadians with Disabilities), Cathy vices, University of Ottawa), Kaylie Tiessen Holtslander (National Farmers Union), (Unifor), Erin Tomkins (Assembly of First Megan Hooft (Canada Without Poverty), Nations), Brian Tomlinson (AidWatch Can- Dennis Howlett (Canadians for Tax Fair- ada), Pat Van Horne (United Steelwork- ness), Blanche Israel (Proscenium Transla- ers), Andrew Van Iterson (Green Budget tion), Andrew Jackson (Broadbent Institute), Coalition), Mariaye Vickery (Art Gallery of Shaker Jamal (United Steelworkers), Karin Greater Victoria), Howie West (Public Ser- Jordan (Canadian Union of Public Employ- vice Alliance of Canada), Dan Wilson (As- ees), Anita Khanna (Campaign 2000: End sembly of First Nations). Child and Family Poverty in Canada), Eliza- beth Kwan (Canadian Labour Congress), The dedicated staff, volunteers, and research Jennefer Laidley (Income Security Advo- associates at the Canadian Centre for Policy cacy Centre), Andrew Langille (Youth and Alternatives, as always, pull the AFB pro- Work), Keith Lowe (CCPA Manitoba), Mike ject together with no deficit of enthusiasm, Luff (Canadian Labour Congress), Emma generosity and good humour: Peter Bleyer, Lui (Council of Canadians), Angella Mac- Simon Enoch, Lynne Fernandez, Kerri-Anne Ewen (Canadian Labour Congress), Peggy Finn, Alex Hemingway, Trish Hennessy, Ig- Mason (The Rideau Institute), Jessica Mc- lika Ivanova, Kaley Kennedy, Seth Klein, Cormick (Canadian Federation of Students), Marc Lee, Katie Loftus, Molly McCracken,

162 Canadian Centre for Policy Alternatives David Macdonald, Mackenzie Macleod, Kate Special thanks to this year’s fall intern McInturff, Hadrian Mertins-Kirkwood, Tim Robin Shaban. Scarth, Erika Shaker, Scott Sinclair, Stuart Trew, Emily Turk, and Armine Yalnizyan.

High Stakes, Clear Choices: Alternative Federal Budget 2017 163 B A C

HIGH STAKES,, CLEAR $ CHOICES Alternative Federal Budget 2017