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CAUT Bulletin Archives

March 2014

Alternative budget reflects alternative politics

By Wayne Peters
Just prior to the 2014 federal budget, the Canadian Centre for Policy Alternatives unveiled its own alternative federal budget. For almost 20 years, CCPA has been producing an annual fiscal strategy to show what could be done if the federal government chose to deal with Canada’s biggest social, economic and environmental issues. Consistent with its theme, Striking a Better Balance, this year’s alternative budget proposes major infrastructure investments, a sectoral approach to developing more sustainable industry, and significant spending on agriculture, the arts, child care, health care and First Nations communities, and demonstrates that budgeting is indeed about political choices.

In a previous column (“A budget of politics disguised as economics,” Bulletin, May 2012), I wrote about the political choices made by business-minded governments — like the governing Conservatives — when setting budget priorities. These choices are largely influenced by an overarching ideology that espouses a free-market approach, the privatization of public services, government deregulation, the elimination of social support programs, and an overall de­crease in the role of government in everyday society.

Fundamentally, though, their ideology is really about transferring responsibility for improving society and peoples’ lives from the government to individuals and the private sector. It relies on the elimination of the collective public good in favour of in­di­vidual responsibility as the key to individual advancement. It presumes that what is good for business is also good for society; wealth will always trickle down.

In practice, the story unfolds as follows. Forego tax revenues, especially any from taxing the wealthy and businesses. Com­bined with spending, this will inevitably land government in a deficit situation. Use the deficit crisis to validate tough austerity measures designed to drastically slash government costs and spending. Argue that tax increases are not an option as businesses would be hindered from creating jobs and growing the economy. Instead, demonize, devalue and defund the public sector and its social support programs as necessary to reduce spending and to eliminate the deficit. In the process, government is reduced, so­cial programs are privatized and market-rule is strengthened.

The 2014 Alternative Budget adopts a different set of political choices in managing the country’s finances. Fundamentally, it eschews the basic neoliberal tenets that favour the wealthy and business elite over the public good. It also bucks the trend to focus on deficit reduction at all costs.

Instead, it proposes a more balanced ap­proach to resource allocation that reduces poverty for seniors and children, reduces income inequality, lowers unemployment, boosts the economy, strengthens public services like education and health, and still balances the budget by 2016–2017 (one year later than the federal government). This is accomplished, in part, by raising corporate income tax rates, introducing a new tax bracket for high income earners, and closing a number of tax loopholes.

Income supports made possible by the additional tax revenue generated would allow, on average, an increase in the incomes of the bottom 60 per cent of families across the country. This would have the dual effect of moving one in five low-income families (855,000 of Canadians) above the poverty line and of reducing the income gap between the highest and lowest earners in this country. The greatest impact of this would be for seniors and children who would see a 46 per cent and 26 per cent reduction in their pov­erty rates, respectively.

The CCPA plan would also see a reduction in the unemployment rate to 5.4 per cent with the creation of almost 900,000 jobs over the next three years, almost double the projected growth rate in employment. Additionally, it would increase support for core infrastructure, public transit and housing; it would expand access to early childhood and post-secondary education, especially for First Nations peoples; it would protect the environment and public health and safety, in part by ensuring policy decisions are based on evidence; it would decrease a growing inequality gap which subjects women, Aboriginal peoples, new immigrants and racializ­ed communities to greater levels of poverty and access to fewer support structures; it would assure clean water for everyone; and it would work to broaden access to an affordable health care plan.

If the CCPA’s blueprint for Canada were possible, as it asserts, then why is it not a reality? Is it simply too good to be true? No, but we are guilty of ceding to neoliberal hegemony the authority to dictate the shape of society and its public policy. The CCPA’s budget is proof that things can be done differently. Different political choices can be made, which lead to very different and more beneficial outcomes for a greater number of Canadians and for Canadian society.

For the present, though, we find ourselves subject to the belt-tightening, stay-the-course economic calculus of the current government’s 2014 federal budget. As predicted, it lacks any real direction on how to stop the growing economic inequality in this country, how to create jobs and how to stimulate the economy.

It fails to take advantage of the country’s current fiscal situation and, instead, continues to focus on austerity measures to eliminate the deficit, projecting a slight shortfall for the coming year and promising a $6.4 billion surplus just in time for the next federal election in 2015. What is most disconcerting, though, is that it balances the budget in large part on the backs of public services and the workers who provide them — not by reason of fiscal necessity but rather, as the story goes, by neo­liberal design.

On the post-secondary education front, the 2014 federal budget barely keeps up with inflation in its support for the grant­ing councils, but targets significantly more money to a new Ca­nada First Research Excellence Fund (to be spent in the decade after 2016) and to selected research centres. Most disappointingly, the budget has no money to address student debt, no new funding for graduate students, and no new money for Aboriginal post-secon­dary education.

The CCPA’s plan is a strong reminder to all of us that budgets are political documents that reflect political choices, not absolute statements of necessary fiscal measures. We would do well to remember that the power to influence the choices rests with each of us.