03) PROGRESSIVE ANALYSTS DISSECT FEDERAL BUDGET
PV Vancouver Bureau
Much of the budgetary damage inflicted by the Harper Tories came in 2012, when the government implemented long‑term spending and job cuts. But there was more in the budget introduced on March 21 by Finance Minister Jim Flaherty.
CUPE's Senior Economist, Toby Sanger, wrote that the 2013 Budget "involves essentially no additional funding and actually reduces overall spending in future years‑which means this budget will effectively do little or nothing to grow the economy."
This budget, noted Sanger, "actually cuts federal infrastructure funding for municipalities and provinces through the Building Canada Fund from presently allocated levels by $250 million per year and is back‑end loaded so there will be very little available for the next two years. This is far from the $2.5 billion increase in funding for infrastructure that the FCM and its allies called for. It also renews the P3 [privatisation] Canada Fund. Reduced funding under the BCF will force more communities to apply for funding that is only available for P3s."
The CUPE researcher adds that "the federal government has made a lot of noise about labour market and skills shortages, but the government's own projections show that the unemployment rate will remain high for foreseeable future, not declining to 6.4% until 2017."
Canadians for Tax Fairness (not to be confused with the right‑wing Canadian Taxpayers Federation!) says that despite closing some tax loopholes, little was done to tackle tax havens which cost the treasury billions in revenue.
The Dividend Tax Credit was made less generous, says the group, which could bring in more than $500 million a year starting in 2014. Several smaller loopholes were also addressed, but others were opened further: "For example, the Life Time Capital Gains Exemption was made more generous by $50,000 and will cost the government $15 million in 2014, rising to $35 million by 2017... The lucrative entertainment tax credit that pays for corporate boxes at sports events wasn't touched. That perk costs Canadian taxpayers $500 million a year. Eliminating the Stock Option Deduction would have brought in $760 million more a year. This is a tax break that mainly benefits the top 1% of Canadians."
The previous Liberal government boosted Canada Revenue Agency's capacity in its international compliance division by at least $30 million, an investment which increased revenues by $2.5 billion over four years. Instead, "the Budget reduced CRA budget by a further $60 million, in addition to the big cut they already were hit with last year. It is hard to imagine how we can take the government's new found interest in going after tax havens seriously."
More broadly, says the CTF, the government could have rolled back the corporate tax cuts that did not result in boosting corporate investment or creating more jobs, or introduced a surtax on high income taxpayers as several provinces have done recently, "but the Conservative government has ideological blinders when it comes to considering any revenue side solutions. They opted instead to cut government spending even further even though last year's austerity budget has been responsible for almost a 1% reduction in our anemic economic rate of growth. Even though cutbacks have undermined our weak economic recovery and lowered revenue, they seem intent on making a bad situation worse by implementing further cutbacks."
Campaign 2000 was urging a mix of social infrastructure and income supports to reduce Canada's 14.5% rate of child and family poverty. Instead, the budget is "silent on family income security and on early childhood education and care, in no way responding to Parliament's 2009 unanimous vote to develop an immediate plan to eradicate poverty for all. It also ignores several key facts. First, the poverty rates of Aboriginal families with children are much higher than those of non‑Aboriginal Canadian families. Second, poverty is a major contributor to poor health, mental health problems, violence and lack of educational attainment among Aboriginal Canadians. The budget makes modest investments in health services, income assistance and skill training for Aboriginal people, but they will have limited impact if poverty is not eradicated."
David Macdonald of the Canadian Centre for Policy Alternatives writes, "One of the most amazing things about this budget is that one of its three focuses is actually the opposite of what it's touting. You'll likely hear that $14 billion will be spent on infrastructure over the next 10 years... What you won't hear is that 75% of that money is going to be spent in or after 2020. In fact, there will be an effective $1 billion cut to infrastructure transfers to the cities in 2014‑15."
"Last year at this time," adds Macdonald, "the government estimated that the deficit in 2013‑14 would be only $10.2 billion. Now, the deficit estimate for 2013‑14 is almost twice that at $18.7 billion. This is the danger of slow growth. We keep expecting that three years out everything will be great again‑unemployment will be low, growth will be robust‑but once we get to three years from now, the economy is still stagnant. The continued revision of the deficit figures are a great example of this reversion to stagnation in action."
Budget 2013 is "not so pretty for women in Canada," says the CCPA's Kate McInturff. The budget's job creation strategy, she argues, is largely focused on sectors where women are significantly under‑represented: construction, manufacturing, and mining. Although the extractive sector anticipates increasing shortages of workers, only 14.6% of such companies have recruitment policies targeted at women. Several barriers make it more difficult for women, she says, including the lack of child care and flexible work practices, a "hostile work culture", and the lack of women in management positions.
Budget 2013's infrastructure spending, she adds, "creates jobs where women are not". There are 382,100 Canadians working in construction, but only 6% of those workers are women, thanks to similar employment barriers.
McInturff adds that the Budget continues to shift job creation to the private sector, while cutting jobs in the public sector, where women make $2000 more a year on average.
Investment in fields such as health care, child care, and education, she says, would create more jobs in sectors in which women are likely to be employed, and decrease the burden of unpaid work for both men and women.
(The above article is from the April 1-15, 2013, issue of People's Voice, Canada's leading communist newspaper. Articles can be reprinted free if the source is credited. Subscription rates in Canada: $30/year, or $15 low income rate; for U.S. readers - $45 US per year; other overseas readers - $45 US or $50 CDN per year. Send to People's Voice, c/o PV Business Manager, 706 Clark Drive, Vancouver, BC, V5L 3J1.)