Today, the Canadian Centre for Policy Alternatives (CCPA) released the annual Alternative Federal Budget (AFB) 2013 in advance of the federal budget expected in late March. This year’s AFB, entitled, “Doing Better Together” proposes a financial plan that focuses on the public good as opposed to austerity measures that undermine growth and hurt low-income Canadians the most.
For the last 19 years, a diverse range of organizations – anti-poverty groups, environmental organizations, unions, social justice, international development, peace organizations and academics – have gathered in the AFB process. Civil society groups propose solutions from direct expertise in their various sectors, educate each other concerning possible solutions, and then cost out alternative policies within a responsibly disciplined economic framework. For those looking at realizable alternative policies, the 170 page long AFB is a valuable resource.
Both Canada Without Poverty and Citizens for Public Justice, co-leaders of Dignity for All: the campaign for a poverty-free Canada submitted pre-budget recommendations to the Finance Committee in August 2012, along with several other campaign members. In doing so, we called for a balanced budget that invests in people while creating sustainable economic growth. While the AFB spans a wide range of issues, what follow are some highlights from the chapters on poverty, taxation, and housing.
Poverty and Inequality
Addressing poverty and inequality is critical to ensuring that ‘Doing Better Together’ truly includes all of us. Across Canada, low-income families are seeing their incomes stagnate as job growth slows and precarious employment increases. Meanwhile, the rising cost of living, especially for food and housing, is making it incredibly difficult to make ends meet. The AFB sets clear targets for poverty reduction, aiming to reduce Canada’s poverty rate by 25% within five years and 75% within a decade. Recommendations to accomplish this feat include:
Federal action on poverty. The AFB establishes a legal framework for the federal government to work in concert with provincial, territorial and Aboriginal governments to extend the Canada Social Transfer. Dignity for All encourages the federal government to go one step further by establishing a Poverty Elimination Strategy.
Poverty reduction transfers. The AFB introduces new and innovative transfer payments of $2 billion from the federal government to provincial and territorial governments to help them achieve their poverty-reduction goals. A results-based incentive system will work to ensure that most of these funds go to improving social assistance and disability benefits.
Income and earnings. The AFB proposes several measures that provide direct support for low-income Canadians by doubling the refundable GST credit. It would also establish a minimum wage of $12 and have the federal government lead the way by becoming a Living Wage employer.
Child care. The AFB reduces the burden of expensive child care in Canada. It would increase the maximum Canada Child Tax Benefit to $5,400/child while phasing-in a universal publically funded child care program.
Training and Education. Currently at 14%, the youth unemployment rate in Canada is twice the national rate of 7%. The AFB increases the availability of post-secondary grants for low-income students to make university and college education more affordable and accessible. It also creates a Green Jobs apprenticeship program to provide unemployed and marginalized people with higher paying, high demand jobs.
Labour relations. An increasing percentage of employment in Canada is precarious, part-time or contract work that does not include health benefits or pensions. One important step that the AFB proposes is for the federal government to support collective bargaining and enforce and enhance the employment standards of vulnerable workers. This would go a long way in easing some of the pressure on Canada’s working poor.
Taxation
The Alternative Federal Budget also outlines significant changes to Canada’s tax structure. By more effectively enforcing our tax laws, the federal government will be able to establish a fairer system while raising necessary revenues.
New Federal Tax Bracket. For the past three decades, federal income tax rates for the richest Canadians have fallen from 43% to 29%. Meanwhile, the gap between the rich and poor continues to grow. The AFB creates a new federal tax bracket of 35% for incomes over $250,000. This alone would lead $2.7 billion in additional revenue each year.
Corporate Tax Rates. Corporate tax rates in Canada have declined by almost half, from 29.1% in 2000 to 15% in 2011. Benefits of these cuts go to wealthy corporations and have failed to trickle down to poor Canadians in the form of more jobs or better wages. The AFB would re-establish the 2007 corporate tax rate of 21% which is expected to generate $8 billion in revenue.
Eliminate Tax Loopholes. Canada’s tax system has become increasingly wasteful with the rise in tax breaks and loopholes. In most instances, direct funding and grants for programs that help Canadians are more effective than tax breaks. The AFB simplifies the tax system and eliminates up to six loopholes, which is estimated to bring in up to $10 billion.
Housing
The AFB’s Housing Chapter takes direct aim at the housing crisis in Canada. Some of the major problems across the country include: ownership and rental markets that are out-of-reach for many Canadians, a lack of new affordable homes, declining conditions of existing affordable housing stock, and persistent homelessness. As Canadians are left with limited housing options, waiting-lists for affordable housing continue to grow. Housing is critical to getting Canadians out of poverty because it provides a foundation for full participation in community and economic life.
National Housing Strategy. In 2009, the UN’s Universal Periodic Review reprimanded Canada for its lack of action on the right to housing. The AFB diagnoses the problem well, “Canada, unlike other major countries, doesn’t have a national housing framework to allow for the quick and orderly flow of capital and operating funding from governments to the affordable housing sector.” While not explicitly called for in the AFB, the Dignity for All campaign has called for Canada to adopt a National Housing Strategy.
Federal Investments. As part of its post-recession economic stimulus spending, the federal government made significant investments in affordable housing in Canada through the Affordable Housing Initiative, the Homelessness Partnering Strategy, and the Residential Rehabilitation Assistance Program. Sadly, these investments have been declining rapidly since 2010 and some are set to expire in the next few years. The AFB would commit $2 billion per year to affordable housing in Canada.
As we look to the release of the federal budget in the coming weeks, it’s important to hold up the Alternative Federal Budget as a standard of what ‘could be.’ Across Europe, we’ve seen examples of how austerity measures fail to create economic growth and leave the most vulnerable citizens behind. Dignity for All will be watching closely in the coming weeks to see if Budget 2013 invests in Canadians.
Future web features will report on alternative options suggested in the AFB’s Environmental policy chapter.
