It Doesn’t have to be This Way

Sorry for the longish post but I wanted to think about the latest Federal Budget before I started talking too much about it. Now that my head really hurts I offer my one cents worth before it is too late.

There was no real economic reason to bring in an austerity budget. And no matter how much the Conservatives keep saying that this is a “moderate” budget it can only be considered that if you choose to compare it to the Paul Martin/Jean Chretien budget of the 1990’s. Any budget that slashes five and a half billion dollars and results in the direct loss of twenty thousand jobs is austere, harsh, and draconian. And it doesn’t have to be this way. Yes, Jimmy, there are alternatives.

Mario Seccaraccia, an economics professor at the University of Ottawa whom I have no reason to believe is anything but impartial told the Ottawa Citizen that this federal budget “is more ideologically driven”. He went on to say that our fiscal position is the envy of the world. “Our debt-to-GDP ratio is around 30 per cent. Japan’s is 230 per cent. The United States is over 100 per cent.”

The fact is that we are in a deficit position, not because of an overspending problem, except on the war in Afghanistanand gazebos in Huntsville for Tony Clement’s G-20 garden parties. We have a public revenue problem brought about by “reckless” (I love describing the Tories as reckless) tax cuts to the rich and powerful like the neverending corporate tax cuts and an ill-thought out cut to the GST which saved all of us a few pennies on purchases but drove the treasury into debt.

So that’s how we got there. How do we get out? The solution proposed by the Conservatives is outlined in their budget which promises more cuts to jobs and the unemployed and an increase in the retirement age. It is a reverse Robin Hood approach to public finances: make the poor and working class pay for the rich. It also proposes an unfettered approach, way beyond laissez-faire to business by removing taxes, regulations, and environmental rules and guidelines. So we will not just get poorer but our environment will go down the toilet faster too.

The good news is that there are many, many smart people in Canada who have had a look at this situation and have other ideas to propose. Here are just some of them.

Pull the Band-Aid Off Slowly

There’s no real reason to have massive spending cuts or to lay off thousands of people. Our deficit is quite reasonable in comparison to any other country in the world and instead of trying to pay our bills off over three years we could take six years and reduce and maybe even eliminate the pain. Or we could just yank it off right now. Which would you prefer?

Invest in Public Infrastructure

Our crumbling roads and bridges and municipal water and sewage systems need a lot of work and neither provinces nor cities have this money. The federal government could have used the budget to announce a major, multi-year, public investment program that could have included roads, sewers, and basic municipal infrastructure; health and educational facilities; mass transit; passenger rail and affordable housing. Yes this would have cost money but almost everyone (even the Department of Finance) accepts that these kinds of investments create five times as many jobs per dollar spent as corporate tax cuts. So we could have had more jobs and get our infrastructure repaired too.

Invest in the Environment

This budget goes in almost completely the wrong direction to protect our environment. So the first step would be to end subsidies for non-renewable energy sources and focus on fiscal policies that actually support the environment. One of these policies will have to be some form of carbon pricing. There really is no other way to keep our planet sustainable. So unless you are planning to join Richard Branson’s trip to the moon we will need a carbon tax. It can be revenue neutral and shared amongst provinces and municipalities but there must be one. And without taking up too much carbon in talking about it there are hundreds of good ecologically sound ideas that not only cost little but actually generate more green jobs and “green” money. Check out your favourite eco organization for more info and vocally support the ones you like.

Focus on Tax Fairness

Our taxation systems at every levels are basically f*&$ed. There really is no other way to talk about it. The good news is that we can have a fair and equitable tax system inCanadathat still encourages sustainable economic growth and individual and collective advancement. I will not go through the reasons and rationale. Rather for those of you who are interested I direct your attention to the Canadian Centre for Policy Alternatives website and the Alternative Federal Budget in particular. You can and should read the whole thing but if you only have time for one section then read the Fair Taxation section beginning on Page 23.

http://www.policyalternatives.ca/sites/default/files/uploads/publications/National%20Office/2012/03/AFB2012%20Budget%20Document.pdf

Look at the Revenue Side of the Ledger

To balance any budget we need to reduce expenditures and increase revenues. The latest budget does a lot of one but none of the other. To rectify that they could have reversed recent corporate tax cuts, ensured that the wealthiest Canadians pay their fair share, close tax loopholes and introduce a financial transactions tax. All of these measures are practical, reasonable and doable. Why don’t we have them? Because we have a government that believes in the power of business and protects their interests against ours. Their approach is at the molasses slow end of the trickle down economic model. These modest changes on the revenue side could wipe out our deficit and have the government thinking about lowering and not raising the retirement age!!

Thanks to the CCPA, the CLC and NUPGE for some of the info contained in this post.