10th Alternative Federal Budget targets corporate cronyism, rebuilds Canada's foundations

March 16, 2004

OTTAWA--The 10th annual Alternative Federal Budget cuts to the heart of federal funding scandals - not with more tax cuts and spending restraints but with hard measures of accountability to clean up federal corporate cronyism.

The AFB's emphasis on accountability includes: no more P3 deals, no more federal-provincial cash transfers that come without strings attached, no more Barbados tax havens, and no more patronage appointments.

Released today by the Canadian Centre for Policy Alternatives, the AFB beefs up federal and corporate accountability, cleaning up tax havens and avoiding federal schemes such as public-private partnerships (P3s) that shift spending "off book" and out of public view.

"The AFB is going after the real issues that give rise to things like the sponsorship scandal," says CCPA economist Ellen Russell. "The federal government's response to funding scandals is to do more of the same: spending restraints, sitting on surpluses, and handing out tax cuts like they're candy - but 10 years of that agenda didn't protect Canadians from the sponsorship scandal and it's not the solution now.

"We are making sure public investments stay on the books for public scrutiny so we know where our money is going and that it's buying real change."

As an antidote to P3 financing, the AFB creates an innovative debt-financing instrument, the Canadian Infrastructure Financing Authority (CIFA), to invest $5 billion a year to rebuild our cities and towns. It creates public-public partnerships between the federal and other levels of government.

"With interest rates at an all-time low and public skepticism about government money laundering at an all-time high, it's time to rule out P3 partnerships as a viable option," says economist Armine Yalnizyan. "P3 deals are more expensive. It's cheaper for government to borrow and build publicly.

"But P3s are also a slippery slope for money laundering schemes because they move public funds out of public view and into the pockets of private corporations who aren't accountable. We need more accountability, not less."

The AFB also keeps corporate tax revenue in Canada by starting to shut down tax havens -- a key source of the funds required to rebuild Canada. The AFB first made its debut in 1995, the same year Paul Martin delivered the biggest program spending cuts in Canada's history.

The AFB balances the books every year, and allocates $56.5 billion over the next three years to fund urgent priorities, such as:

  • Rebuilding Canada: Invest $3.8 billion a year toward early childhood education and care; dedicate $1 billion a year to create 75,000 new affordable housing units; and restore the fair federal share of provincial and territorial of public health care expenditures by raising the federal cash transfer to 25 per cent.
  • Training the next generation: Introduce a labour force innovation program that would include training insurance for all workers, and implement improvements to the EI system; create a $1.85 billion Emergency Training and Adjustment Fund to help reposition the labour market to meet the challenges of an aging baby boomer generation; and create a new $1.85 billion National Student Needs-based Grants Fund for post-secondary students.
  • Position Canada as a leader in sustaining the future of our planet: Earmark a portion of the gas tax to a green transportation fund; invest in sustainable energy and farming practices; and revitalize Canada's role in international development and peace building.

"We're addressing 10 years of erosion, reinvesting in Canadians while maintaining a balanced budget, decreasing the debt burden, and toughening up accountability measures for public spending," says Russell. "It provides a real alternative to a decade of Paul Martin budget cuts."