Alternative Federal Budget 2016: It’s Time to Move On!

For the last 21 years, social policy analysts and union leaders, accompanied by economists at the Canadian Centre for Policy Alternatives have jointly produced an Alternative Federal Budget. Released at least a week before the official federal budget, the AFB has allowed civil society to present progressive demands, cost out the implications of spending choices, and collaborate on developing a budget worthy of a forward-looking and just society.

AFB 2016, released today, is no different.

This year’s document calls for “structured spending” that would increase federal government spending to $37.9 billion, or almost $9 billion more than the new Liberal government must spend to meet its own election promises. As well, “The Alternative Federal Budget raises the bar on trans­parency by providing an accounting of the distribu­tional impacts on Canadian families of all proposed changes in taxation, transfers, and program spend­ing—something no government budget, federal or provincial, has ever undertaken.”

Here is an outline of what AFB 2016 proposes in the three areas CPJ works on:

Income Inequality and Poverty

AFB 2016 argues that by following its prescriptions, the federal government could lift 1.1 million Canadians out of poverty, create 520,000 new jobs and bring the unemployment rate down to 6%.

The authors are pleased that the new Liberal government has made important promises in the anti-poverty struggle: to develop a national poverty reduction plan, to introduce a generous Canadian Child Benefit that could lower the child poverty rate by 25%, to increase the Guaranteed Income Supplement for low income seniors by 10% (lowering poverty among seniors by 20%.) As well, the AFB (like the Liberals) would scrap policies of the previous government that would not help lower inequality, like the Universal Child Care Benefit and income splitting for families with kids – all in favour of reallocating resources toward lower income households.

The AFB would go further, however, promising to honour the recommendation of a 2010 Parliamentary Committee to grant $4 billion annually to the provinces to support their anti-poverty efforts, and thus use this “carrot” to bring back national standards for provincial income assistance. A publicly-funded, universal daycare program would be initiated. At a cost of $5.1 billion, the GST refundable credit would be doubled.

The AFB also points to omissions in the Liberal plan – which does not adequately address the pre-distribution of income. The AFB would like to see the federal minimum wage raised to $15 an hour, unionization boosted, temporary foreign worker programs reduced or reformed to at least quickly allow for permanent residency, as well as major investments in social housing.

Environmental Justice

Although supportive of the new federal interest in climate change, the AFB is not completely aligned with current federal moves on this important file. For its part, on January 1, 2017 the AFB would implement a national carbon price, collected by the federal government, and “harmonized” with the provinces and territories. Their carbon tax would start at $30 a tonne, and increase by $5 per year. There would be no exemptions for any industrial sector (as there are in several provincial plans currently.) A portion of this income would be distributed to low income families, to assist them in the transition to a low carbon future. The AFB would also grant $1 billion each year to assist developing countries to address the negative effects of climate change. (Environmental groups have suggested Canada’s share is closer to $4 billion if global commitments are to be met.)

The AFB would remove federal subsidies for fossil fuel production, thus saving $1.3 billion per annum. $1.25 billion of this would be re-invested in clean technology schemes, such as energy storage and clean generation activities. The Export Development Corporation’s financing for fossil fuel projects, estimated at $2.9 billion each year, would be reviewed, and any Canadian financing of fossil fuel projects in the portfolios of the international financial institutions, phased out.

The AFB recognizes that energy efficiency is the cheapest way to reduce Canada’s greenhouse gas emissions. Thus, expansion of the electricity grid would be financed, renewables encouraged, and $1.4 billion over 4 years invested in home energy efficiency grants.

Immigration

The AFB suggests that the Prime Minister’s mandate letter to his Minister was “silent” on the troubling issue of underemployment of skilled immigrants in Canada and the correlation between racialization and the growing wage gap in the labour market.

The AFB would abolish the Designated Country of Origin scheme (as discriminatory), end the granting of transportation loans to refugees (already Syrian refugees have been exempted) and reverse the minimum residency requirement provisions that the previous government slipped into their omnibus budget (Bill C-43).

Other reforms to assist immigrants and refugees would include the elimination of the minimum income requirement for family class sponsorships, and allow youth under 22 (not 19 as recently decided) to be included in family sponsorships. Importantly, the AFB would reinstitute the $53 million in immigration settlement services that was cut by the previous government.

In summary, CPJ is glad to participate in the AFB drafting exercise each year, as the AFB offers, describes in detail, and costs out many policy areas of keen interest to Canadians. It provides a useful comparison to the federal budget, which Canadians anxiously await to receive on March 22nd this year.

Time to move on

Joe Gunn serves as Executive Director at CPJ.

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