Missing In Action: Federal Budget 2014

Here’s the first section of the budget summary and analysis I’ve prepared for CUPE. The full version is on-line on CUPE’s website together with our press release .

Missing In Action: Federal Budget 2014  CUPE Federal Budget 2014 Summary and Response  

Conservatives ignore pressing economic needs with a Do-little budget

Using more of their doublespeak, the Harper government calls the 2014 federal budget “The Road to Balance: Creating Jobs and Opportunities.” Little could be further from the truth.  Instead it’s a budget that glosses over the problems facing Canadian workers and continues to kill jobs and stifle economic growth. ‘Missing in Action’ are significant positive measures needed to improve the lives of Canadians by increasing good job opportunities, improving public services or ensuring decent retirement incomes

Instead this budget further reduces and re-aligns spending and increases tobacco taxes and revenues in some areas.  These will bring the deficit down to a projected $2.9 billion this coming year with a $6.4 billion surplus expected in 2015/16.   The deficit for this year is small enough to be below the $3 billion cushion for risk, which means the federal government will probably declare a surprise surplus so they have more money available to promise tax cuts and other expensive goodies in next year’s budget before the 2015 election.

It’s a clear sign this government has nothing left to offer Canadians in terms of positive measures to improve the economy.

At a time when our economy is faltering, more than 1.3 million remain officially unemployed and millions more have given up looking for work or are struggling in precarious and underpaid jobs to make ends meet, Canadians needed clear positive direction to improve the economy.

CUPE called for:

• An expansion of better quality and accessible affordable public services, including in health care, education, childcare, affordable housing, public transit and social services;

• More decent and rewarding job opportunities, particularly for youth and equity-seeking groups;

• The assurance of a decent income in retirement for all Canadians;

• Scrapping the cuts to Employment Insurance;

• Protection for the environment, of our water and food, and healthy and safe environments in our workplaces and communities;

• Reductions in poverty and inequality, protection for human rights and fair and equitable treatment of all Canadians;

• Adequate funding to meet our obligations to Aboriginal peoples;

• Progressive and fair taxes.

Instead, what we got in this budget was little more than a grab-bag of recycled and renewed measures from the Conservative’s bag of inadequate and failed economic policies.

The budget expects very little improvement in Canada’s unemployment rate, averaging 6.9% this year and 6.7% in 2015—and that seems to be fine with the Harper government.  According to a special jobs report that accompanies the budget, Canada’s labour market is in very good shape and just needs some minor tinkering to work better.

The first initiative announced in the budget press release is about the Canada Job Grant, which was announced in last year’s budget and has already been rejected by provincial Premiers and experts as being inappropriate, particularly if it takes money away from existing programs for vulnerable and unemployed workers.  The federal government says now they will go it alone with this program and deliver it themselves with provinces that they can’t come to agreements with.

There’s funding for First Nations education, which was already announced, a new Canada Apprentice Loan and support for employment of workers with disabilities and autism.  But the main new measure on jobs in this budget are $70 million over two years to support up to 4,000 internships for youth in high demand fields and for small to medium sized enterprises. Internships can be a much-abused way of paying youth low wages for their work and this will do little to reduce unemployment for the close to 400,000 youth who remain out of work.

Other measures include an enhanced national Job Matching Service and additional funding to better control the Temporary Foreign Worker Program.  Besides the loan program for apprentices, the only measure to help students with costs of education is the announcement that they won’t include the value of their cars in applications for Canada Student Loans.

The significant new expenditure initiatives are renewed funding for programs that already exist, or funding that has already been announced.  New initiatives are small and will do little or nothing to help millions of unemployed, underemployed and underpaid Canadians.

Overall new spending initiatives for “supporting jobs and growth” amount to only $1.6 billion a year and about half that after accounting for lower spending in other areas.  That’s less than 0.1% of Canada’s GDP and less than 1% of federal government spending.     These new measures are also exceeded by the money the federal government will take out of the economy by reducing compensation for public servants and by increasing taxes and revenues in other areas.

This demonstrates the government shows no sign of changing its austerity-first economic policies, and instead is reducing and realigning federal spending and increasing taxes in some areas so they could run a small surplus this coming fiscal year and have close to $10 billion in surplus for 2015/16 so they can promise tax cuts just before the next federal election.  The government crows that 75% of its annual savings has come from departmental cuts, rather than measures to increase revenues.

In terms of new investments to strengthen the economy, the big ticket items are $500 million over two years for the Automobile Innovation Fund, which was announced before Christmas, and additional funding for the Champlain bridge and other bridges in the Montreal area, as well as further funding for Atlantic ferries.  The federal government has insisted that the Champlain Bridge proceed as a P3, which is a sign that costs for it are increasing.

Other investments are largely focused on “responsible resource development” and supporting offshore oil and gas development.   Additional funding is included for various smaller innovation projects and for the federal research granting councils, but new funding of this form is provided every year.   Despite these smaller measures, this federal government remains narrowly focused on oil and gas and resource development as an economic strategy, largely ignoring the needs of other sectors of the economy.

Major cuts or savings in this budget come from reducing compensation costs for federal public servants, including reducing sick leave and federal government contributions to health care plans for retired federal employees.  It also includes raising the retirement age for new hires for all federal crown corporations to 65, which can include the CBC and Radio Canada.

The government is also banking on revenues from privatizing and selling federal government assets and continuing with use of public-private partnerships and social impact bonds, but the budget doesn’t include other new major privatization measures.

Instead the budget focuses its attention more on measures for consumers, but even these are modest, such as introducing legislation to cap wireless roaming fees and legislation to prohibit unjustified cross-border price discrimination.  The $300 million over five years to improve access to broadband internet connection in northern and rural communities replaces a program that the Harper government cancelled two years ago.

Not only is there very little in this budget to protect and improve the environment, but there’s also nothing to help families with their energy costs by improving energy efficiency through programs such as the eco-Energy retrofit program.   These measures will do little to reduce Canadians cost of living

On the tax side, the major new measure is an increase in tax on cigarettes by 24% and then indexing it to inflation every five years.   The budget also includes a number of measures to reduce tax avoidance both domestically and internationally through tax havens, but doesn’t eliminate major tax loopholes that allow affluent and corporations to pay lower rates of tax than working Canadians.     Other tax measures include exempting acupuncturists’ and naturopathic doctors’ professional services from the Goods and Services Tax/Harmonized Sales Tax, creating a new Search and Rescue Volunteers Tax Credit and extending the Mineral Exploration Tax Credit for flow-through share investors.

A concern for labour unions may be an announcement that they will consult about the income tax exemption available for various non profit organizations is properly targeted.   This may extend to labour unions and non-taxation of strike funds.

There’s nothing in this budget to address to help improve the retirement incomes for Canadian workers. The federal government has rejected all proposals to improve the Canada Pension Plan and do so again in this budget.  The only measure in this budget to improve retirement incomes is limited to amateur athletes.  While elsewhere the budget boasts about how well Canada’s economy is performing, when it comes to improving the Canada Pension Plan, they say now is not the time to increase premiums because of the “fragility” of the economic recovery.

On Employment Insurance, the only new measures are an extension of the Targeted Initiative for Older Workers, and enhancing access to sickness benefits for claimants who receive Parents of Critically Ill Children and Compassionate Care benefits.

The Harper government has squandered another opportunity to improve the lives of Canadians with this Missing in Action budget of 2014. Instead they are being highly cynical and politically opportunistic by stashing away cash from cuts to public services so they can try and bribe Canadians with expensive election goodies next year.   These are expected to include $3 billion annually for “income splitting” and other tax measures that will help the rich get richer and provide little or nothing for the vast majority of Canadians.

Harper’s dismal economic record

No matter how much they try and embellish them, the facts show that Canada’s economy is struggling and Canadians are suffering—and the Harper government’s austerity measures are making it worse, not better.

• For the first time in over five years—since before the financial crisis and recession of 2008—Canada now has a higher unemployment rate, at 7.0% with over 1.3 million Canadians officially counted as unemployed in January 2014 compared to an unemployment rate of 6.6% in the United States.

• There are 280,000 more Canadians unemployed now than before the 2008 recession and 174,000 more than when Harper first came to power eight years.  With higher rates of unemployment, another 400,000 have left the labour market.

• The unemployment rate for youth is still particularly high: almost 14% compared to 11% before the recession, and there are 260,000 fewer jobs for youth than before the recession.

• A majority of the jobs created in 2010 and 2011 were filled by employers hiring temporary foreign workers, a group that is often exploited and abused.

• More and more jobs are part-time, temporary or otherwise precarious, and women, racialized workers and recent immigrants are more likely to be stuck in those jobs.  Employment rates are lower for women, Aboriginal and racialized workers and persons with disabilities.