CPJ’s Response to the Federal Budget
“Look at someone’s budget, and you’ll see their values,” Paul Dewar told CPJ in February, when we were meeting with MPs to talk about poverty reduction strategies. “People spend according to their commitments.”
Budgets are presented as numbers and policies, but they’re also about the values that drive policies and determine commitments. Budgets reveal priorities and the government’s vision for our country.
Citizens for Public Justice believes that governments should promote public justice, seek the common good in public policy, and pay special attention to the needs of the marginalized and those suffering from injustice . And by these standards, we’re disappointed with the values and priorities of Budget 2008.
While the budget was billed as “Responsible Leadership,” the budget offers no leadership in key areas of poverty and environmental stewardship. Similarly, while the budget speech claimed to present a plan that was “focused on preparing Canada and Canadians for the challenges ahead,” this government’s vision of the future doesn’t seem to consider the growing income gap and the number of Canadians facing housing insecurity to be significant challenges.
Budget 2008 reflected government priorities and values that do not include a federal poverty reduction strategy, a commitment to affordable housing, or significant action to combat environmental degradation and climate change. Instead, Budget 2008 offered limited investments in the environment, homelessness and mental illness, crime and security. These initiatives addressed symptoms of many challenges Canadians confront without addressing the problems themselves. It also introduced a new tax shelter that offers greater opportunity to higher income Canadians than to lower income Canadians who are fighting just to get by.
Looking at Budget 2008 in context
To fully understand the values that underlie Budget 2008, we need to step back and look at the context of this budget – the Federal Economic Statement of last October , which cut $60 billion in tax revenues over the next five years. It also committed the expected surplus of $10 billion to debt reduction. The result was a loss of $70 billion in potential government investments, programs and services over the next five years.
So while this budget has been called restrained, it needed to be: the government had already tied its hands by severely curbing government revenue. Imagine how even a small portion of that money could make a difference if it was invested in people, instead of debt reduction and tax cuts for the wealthy. While taken by itself debt reduction is not a bad thing, in this context it was a bit like paying off a mortgage at the price of having no money left for food and clothing. By cutting taxes and committing the surplus to debt reduction, the government chose not to invest in programs and services that could help Canadians in poverty, provide greater income security to working families, and take genuine action on the environment. This was already a significant statement of values and priorities.
These choices were also indicative of this government’s understanding of the role of government – smaller is better, and collective action is not the answer to the challenges of the future. By speaking only of tax cuts, however, the government is refusing to have a legitimate debate over what the role of government is and should be. Many citizens who believe that government should play a greater role in responding to our collective challenges are being kept out of the policy dialogue.
CPJ believes that all sectors of society, including businesses, unions, volunteer organizations, faith communities, families and individuals need to work together for the common good and contribute to our country’s future. However, government has a leadership responsibility to fulfill. After all, government is not divorced from us and our lives; government is citizens, acting collectively. Government has the power to express our collective will, changing structures that perpetuate injustices and allowing citizens – together and individually – to do their part.
If the government were to take a responsible leadership role in creating conditions of public justice and offering policies that seek the common good, its policies and commitments would look quite different than those offered by Budget 2008:
- No investment in poor Canadians
Budget 2008 made no significant investment in the most vulnerable Canadians. There is no commitment to a poverty reduction strategy, despite the fact that 10.8% of Canadians live below the poverty line. The growing income gap between the richest and the poorest Canadians is not addressed. Growing inequality and persistent poverty are bad for our collective well-being: poverty and inequality are social determinates of health. Society also pays the costs of poverty in policing and judicial costs, as crime increases while trust and community life decline. Families suffer stress, anxiety over the future, and lost time together as the strain on the social fabric grows. Not investing in our well-being by acting on poverty is an expensive option for Canada’s future. And as the Nordic countries have demonstrated, strong social development can actually generate economic vitality, creating internationally competitive economies.
The government did well to raise the guaranteed income supplement for seniors, but it ignored the vast majority of poor Canadians who are not yet of retirement age. The Budget could have taken one simple step to invest in the lives of poor Canadians by increasing the Working Income Tax Benefit (WITB). Many Canadians living in poverty have paid employment. However, the cap on eligibility for the WITB is set so low that in most parts of the country, someone working full-time, year-round at minimum wage does not qualify. Furthermore, the benefit level of $500 for single individuals and $1000 for parents and couples is set so low that it hardly makes a dent in the needs of Canadians living in poverty.
As well, while the government has promised to establish a new crown corporation to oversee Employment Insurance (EI), this new body’s mandate does not include revisiting eligibility rules for EI. This means the thousands of Canadians who pay EI premiums but do not qualify for payments will not receive justice. The government has also left the existing EI surplus outside of the corporation’s control, redirecting money that was collected to give working Canadians greater security to other causes.
- No investment in affordable housing
In 2004, 1 in 7 Canadian households experienced housing affordability issues. Yet Budget 2008 did not announce funding to renew the national housing and homelessness programs due to expire this year, let alone greater investments to respond to the significant housing need. The Budget did commit $110 million to the Mental Health Commission to study best practices for confronting mental health and homelessness challenges. Yet while understanding the challenges and committing to best practices are important, there is no funding offered for safe and supportive housing for those who are homeless now. Furthermore, there is no investment in adequate and affordable housing for those Canadians who are not yet homeless but experiencing housing insecurity. CPJ encourages the government to solve this problem before these vulnerable people end up on the street.
- No real investment in the environment
Budget 2008 commits $669 million over three years to “Ensuring a Cleaner, Healthier Environment.” But $300 million of this figure is allocated to nuclear energy. That does not constitute action on climate change or environmental degradation. The rest is handfuls to various studies, regulatory bodies, demonstration projects and national parks. None of this will encourage Canadians or industries to radically change their behaviour and adopt more environmentally sustainable practices. Care for the environment needs to be integrated with our economic pursuits. Climate change is integrally linked to our entire way of life and built into our economic choices and our core values about economic growth. A shared and sustainable prosperity requires integrating economic and environmental policy. The government should have considered a comprehensive approach, combining regulations, fiscal measures and financial incentives for innovation, or Ecological Fiscal Reforms.
- Tax shelters don’t help low income Canadians
The Tax-Free Savings Account was announced as a new initiative to help Canadians to save, meant to be “like an RRSP for everything else in your life.” It allows Canadians to save up to $5000 a year in a special account without paying tax on the interest accumulated over time or on withdrawals. While such a venture sounds even-handed in theory, it is really aimed at those who have money to save, and who can therefore afford to contribute more in taxes. Lower income Canadians, already forced to make hard economic choices between food, shelter and other basic necessities, won’t be able to scrape money together to put aside. Those Canadians who can afford to invest in these accounts will see more money accumulate, tax-free, thereby increasing the gap between lower income and wealthier Canadians.
While the cost in lost federal revenues will be small initially, over time the amount is calculated to reach $3 billion annually. This is money that would do more to promote economic security for Canadians in hard times if it were invested in programs that help all Canadians, including lower income Canadians and newcomers.
- Crime expenditures target symptoms
Budget 2008 devotes $554 million to policing, prosecution and prisons, and a mere $30 million per year to prevention. Obviously, it is more expensive to deal with people through the legal system and then lock them up, but all the more reason to focus on crime prevention. By ignoring social problems and the role that poverty, inequality, homelessness and social strain play in generating crime, the government focuses on the symptoms of the problem rather than the real challenges confronting Canada’s communities. Collective well-being plays a role in collective security.
Budget 2008 fails to offer responsible leadership
Budget 2008 includes more initiatives than we’ve touched on here, but none of them respond to the many significant challenges confronting Canadians. Public justice calls governments to address issues of poverty and income security, affordable housing and the environment. Instead, there was little – if any – investment in these areas, with the government demonstrating they are not priorities and failing to take up responsibility for these issues. Confronting these challenges will determine our future together; Canadians have a right to expect more from our government. Public justice demands more from our government. Responsible leadership would have offered more.
