Delivering the Good: Twenty Years of Alternative Budgets

Budgets are documents that clarify our values – they say where our hearts really lie (they may also show how we “lie” if we do not walk the talk!) Politicians (just like faith communities, perhaps) may profess in speech to believe in the greater good. Where and how we spend money, and from where and how we collect it, often communicates even more than what we say.

CPJ has a long history of encouraging governments to budget from where our higher values lie. Our work to eliminate poverty, defend refugee rights, and care for creation therefore recommends certain economic options and policies over others. In free market capitalism, success is often framed as the predominance of individual gain.

Using the frame of public justice, the economic system we construct should be designed to better all God’s creatures. If we started, as Psalm 24 reminds us, with the belief that “All that’s in the world is the Lord’s,” we might start to perceive the common good of societal and ecological changes we now only dream of.

AFB2015 In 1994, a Manitoba-based social justice coalition called CHO!CES teamed up with the Canadian Centre for Policy Alternatives in Ottawa to develop an “alternative federal budget.” The design engaged a wide variety of groups: participants came from unions, churches, and the women’s equality movement, from environmental, an­ti-poverty, and international develop­ment organizations. Students, teach­ers, and farmers were represented, as were Aboriginal voices, policy think-tanks, and others. An important and salient feature of this AFB process was the creation of its own independently validat­ed economic and fiscal framework. This allowed the setting of realistic macro­economic constraints – the numbers had to add up! The process called for compromise and consensus among these many and varied par­ticipants on a fiscal policy agenda that was demonstrably responsible.

CPJ has found it useful to participate with other groups in developing the AFB in two key areas of our work: poverty elimination and environmental justice.

Here’s a brief description of what the twentieth AFB, released on March 19, 2015 and titled, “Delivering the Good,” proposes in these areas:

Environment and Climate Change

“Given increasing risks of dangerous climate change, an over-reliance on fossil fuels, pressure for new pipelines to facilitate increased production from the tar sands for export, threats to biodiversity, and cuts to environmental protection laws and funding, Canada needs to take major fiscal, regulatory, and diplomatic actions to preserve a healthy environment and a stable climate for all.”

The AFB quotes the best climate science, indicating that in order to have a chance of keeping global warming from exceeding dangerous levels, greenhouse gas (GHG) pollution from rich, industrialized countries such as Canada must be virtually eliminated in the next 40 years. Tackling climate change will involve an ongoing switch away from using fossil fuels such as coal, oil, and natural gas, and towards the efficient use of clean, renewable energy. This switch has to begin now and be unrelenting for the next three to four decades in order for Canada’s resulting GHG pollution to be reduced virtually to zero by 2050.

The AFB proposes the most useful policy lever available for environmental justice, one with which CPJ is in complete agreement: establishing a carbon price based on the “polluter pays principle.”

The intent is to develop fiscal policies that favour natural resources whose life-cycle and human health impacts are more positive. This includes ending subsidies for energy sources that are non-renewable, or whose development or use is significantly environmentally damaging. The AFB preference is for a National Harmonized Carbon Tax (HCT), initially established at $30 per tonne, but that would include measures to protect low-income Canadians, Indigenous people, and trade sensitive industries. More than half of HCT revenue would fund a progressive annual green tax benefit of $300 per adult and $150 per child, and the other half of the remaining HCT revenues would be transferred to the provinces and territories to fund further climate change abatement measures, including a national green transportation strategy.

The federal government, in its 2008 Speech from the Throne, set a goal of generating 90% of Canada’s electricity from non-emitting sources by 2020. The AFB wants to see this happen by supporting home energy efficiency retrofits with an investment of $250 million per year for five years (to be matched by provinces and territories), with the inclusion of grants for low-income Canadians to participate, as well.

The AFB would also create and fund an Ombudsman’s Office for Extractive Industries, mandated to investigate accusations of abuses, and to make recommendations to the government and the mining companies involved. This is something international development agencies and Canada’s major churches have advocated for years.

Poverty and Inequality

This year’s AFB includes analysis of the distribu­tional impacts of its program spending — a first for the AFB, and a new tool for analys­ing budgets by any Canadian government. In other words, the AFB takes income inequality seriously, measures the effect budgets will have on inequality, and asks governments to do the same analysis.

In the past, inequality trends were driven by what happened to people at the bottom of the income spectrum. More recently, it has been shaped by what happens at the top. So the AFB proposes a new tax bracket for individuals earning over $250,000, cancelling income splitting, and the full inclusion of capital gains for tax purposes. It is therefore estimated that the richest 5% of Canadian families would pay 5% more tax than they do now (but their incomes already average $380,000 and have increased by 70% since 1990.)

The AFB recognizes “unbalanced growth” in our current economic structure. Income inequality in Canada is also highly racialized and gendered. Women are also over-represented among low-wage earners—making up 59% of all minimum wage workers in Canada. Average wage growth has fallen to a standstill, and is below inflation in many jurisdictions. The rate of growth of temporary and part-time jobs has outpaced the growth in permanent, full-time jobs since the recovery began in 2009. While the depth of poverty is primarily a story of inadequate provincial social assistance, the breadth of poverty is primarily a low-wage story. Market pressures are one reason, but another is the federal government’s massive expansion of the Temporary Foreign Workers Program.

International research reveals an important link: the higher the rate of inequality among people, the higher the rate of poverty that is tolerated. So while year’s AFB benefits 70% of the population, there is something for all groups in AFB programs.

The AFB calls for a federal plan to reduce Canada’s poverty rate by 25% by 2020, and by 75% within a decade. Its two pages of recommendations (beyond making the tax regime more progressive as described above) include calls for a national early child care system and a $2 billion transfer to the provinces for spending on their anti-poverty efforts (as recommended by a 2010 Parliamentary Committee.)

The twentieth AFB “delivers the good” on a wide range of issues, with the goal of “inoculating” Canada against insecurity by improving the social and environmental security of citizens. It remains to be seen whether the federal government’s budget, due next April, will measure up to such lofty goals.

Joe Gunn serves as Executive Director at CPJ.

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