December 2003: The Alternative Federal Budget

AFB shows how a better budget would lead to a better world
December 1, 2003

CCPA staff, research associates, economists and NGO activists are busily at work drafting our Alternative Federal Budget (AFB) for 2004. It will be unveiled shortly before federal Finance Minister John Manley tables his official budget in February.

The AFB has been a “signature” exercise for the Centre since 1994--an annual project that, more than any other, defines the CCPA and displays its research capability.

We don’t claim to have originated the idea. The concept of the alternative budget was first implemented at the provincial level in Canada by the Winnipeg-based social justice coalition CHO!CES, which produced its first alternative “Budget of CHO!CE” for Manitoba in 1991. A few years later, CHO!CES joined with the CCPA to create the first alternative federal budget, which has continued to be produced annually since 1994 (with the exception of 2001 when the Chrétien government failed to bring down a budget, leaving us with nothing to offer an alternative to).

The alternative budget scheme is so effective that it has since been developed in several other provinces and is gaining popularity in other countries, with the “participatory budgets” of Porto Alegre in Brazil being the most well-known example.

The attraction of this exercise is obvious. When a government--at any level--introduces a budget, it is announcing its spending, taxing, and cost-cutting plans for the ensuing year. In so doing, it is setting its priorities. It is declaring what issues and programs it is going to deal with, what policies it will implement, and what individuals or groups it will financially reward or punish. But these are the ways the government is choosing to dispense the tax revenues it collects. As much as the finance minister may argue that he had no alternative, that economic circumstances compelled him to make these decisions, the fact is that there were alternatives--more equitable and more generally beneficial ones--that he rejected.

The alternative budget, as its name implies, outlines these progressive alternatives and shows (in great detail) how they would move the country closer to becoming a model of economic and social equity.

Prior to the AFB and its provincial counterparts, the CCPA and other left-of-centre critics of government budgets had their alternative proposals ridiculed as unrealistic and utopian. We were dismissed as impractical dreamers, ignorant of fiscal and economic realities. What the AFB did was to give our proposed alternatives a solid credibility.

Why? Because we started with the same figures and projections the federal Finance Department did--but then we showed how the tax revenue could be more fairly allocated, how the budget could better boost our social programs, stimulate the economy, and generally benefit the majority of Canadians rather than a privileged élite. In short, we proved that the government could not only bring down a more enlightened budget, but that it could be done with existing resources and without any ruinous repercussions.

Anyone wishing to learn more about the whole AFB process can do so by reading John Loxley’s recent book, Alternative Budgets: Budgeting As If People Mattered, a joint publication of the CCPA and Fernwood Publishing. Loxley, a professor of economics at the University of Manitoba, is superbly qualified to write such a book, having been at the forefront of the alternative budget movement in Canada from its inception, and spearheading the production of the annual AFB for several years.

“The AFB was a remarkable innovation in Canadian political debate,” says Loxley. “It laid bare the differences in viewpoint between those who held power and those whose lives were affected by the decisions of the powerful. It gave a voice to the hitherto powerless in a detailed programmatic way, with the fiscal implications being carefully measured.”

Among the innovations introduced by the AFB were:

• the involvement of economists and financial experts who were just as skilled in preparing budgets as were the bureaucrats and technicians in the Finance Department;

• the participation of a broad range of social, economic, environmental, and other groups; and

• the deployment of the AFB as a tool for educating and mobilizing political activists.

“Unlike the federal budget, which is prepared in secret,

the AFB is developed openly through consultations and discussions across the country,” Loxley points out. “The values and priorities of the economic advisors to the AFB differ from those of the federal government’s advisors, who are bent on implementing the agenda of the business and financial élites. They want to cut [or privatize] social programs, and cut taxes [on the wealthy], whereas the AFB advisors seek to strengthen social services and make the tax system fair for everyone.”

To make the AFB a credible document requires long and careful attention to detail. It is a demanding task that takes several months to complete. As Loxley explains, its preparation “requires clarity of position on broad fiscal parameters, such as levels of spending and the growth of taxation.” When priorities that differ from the government’s are set, they have to be soundly justified.

These and other technical aspects of budgeting tend to deter many people from getting involved or trying to understand how budgets work. This is unfortunate because, contrary to the élitist attitude of governments and their bureaucrats (who insist that budgets are beyond the grasp of ordinary Canadians), most people can figure them out, with a little effort. “The basic technical concepts and relationships are not beyond the reach of the average person,” Loxley asserts. “Canadians don’t have to be experts to critically examine government budgets and pose plausible alternatives.”

The participatory budgeting effort is eminently worthwhile, because a budget is essentially a political document in which a government sets out its real agenda--its actual plans for governing, which are often widely divergent from its election promises. To challenge a government’s policies and priorities effectively, it is essential to be able to cut through the technical bafflegab used in the budget to hide or misrepresent them.

This is what the growing number of activists engaged in alternative budgeting, federally and provincially, have been doing over the past ten years.

“The budget has become a prime area of political struggle,” says Loxley, “and the left has come to understand that fighting back requires more than a purely defensive posture. It demands no less than a rebuttal of right-wing arguments and the generation, with broad popular input, of progressive economic and social policies within a coherent and responsible fiscal framework. This is why alternative budgets are as much tools of political empowerment as they are blueprints for a more progressive political outlook--and these two elements should not be separated.”

Here at the CCPA, we have reason to be proud of our role in pioneering and preparing alternative federal budgets, and in helping to encourage many individual Canadians and groups to participate in the AFB process. It would be misleading, however, to imply that the success of the AFB is universally recognized on the left--if success is measured by the extent to which our alternative budget proposals have influenced government policy. Obviously, our principal alternatives, no matter how firmly based and argued, have not been adopted by the government. But what the AFB has done is to enlighten and activate many citizens and voters, by marshalling facts and figures to strengthen our case against neoliberalism and our call for a more just society. Even though we continue to be ignored by the right-wing political, corporate and media ideologues, our ability to use the government’s own data to arrive at quite different conclusions means we can no longer be credibly scorned as naïve and uninformed dreamers. And because we can now back up our alternative policies with hard and objective computations, we are slowly building a strong opposition to corporate rule across the country. It may take a while yet to manifest itself politically, but the foundation is being laid and many of the bricks are coming from the AFB process.

“Alternative budgets enhance economic literacy,” says Loxley. “As people gain access to new information and new insights, levels of public awareness and public debate are lifted, putting limits on state activity and moderating its adverse effects. As the great German fiscal sociologist Rudolph Goldscheid noted in 1925, ‘one must do violence to the facts in order to do violence to the people.’ Alternative budgets in Canada can be seen as a constructive response to the violence of fiscal neo-conservatism.”

Loxley devotes a chapter of his book to the AFB’s impact on government policy, which he admits is difficult to gauge. The federal government did abandon its proposed regressive Seniors’ Benefit, settled its multi-billion-dollar pay equity dispute with PSAC, doubled the duration of maternity and parental leave under UI, established a Health Services Research Fund, increased health transfers to the provinces, and restored full indexing of the income tax system--all of which were called for in various AFBs--but there’s no way of knowing whether or to what extent the AFB could take credit for any of these positive federal budget moves.

Even if we could claim the AFB influenced these and a few other favourable federal initiatives, it is undeniable that the main thrust of the federal budgets has continued to implement the neoliberal agenda: cut taxes for business and the rich; slash and underfund social programs; deregulate and privatize public services and assets; retain and extend harmful free trade agreements; permit unlimited U.S. takeovers of Canadian firms; give a low priority to protecting the environment.

The corporations, in short, are still in control of the political system in Canada, and thus in control of the government’s budgets. So there is still very little, beyond occasional concessions, that the AFB is going to wrest from the federal government, regardless of how technically strong our analysis, no matter how unassailable our reasoning.

It might be an interesting exercise--if it could be done--to describe in detail what kind of society would now exist in Canada if the AFB had been adopted at some point by the federal government and put into effect. It would certainly be a more equitable society, with far less unemployment and poverty, with sturdier health care and education systems, with a cleaner environment, and a far greater degree of national sovereignty.

This presupposes, of course, the election of a political party that would embrace and implement the AFB proposals.

“In the long run,” says Loxley, “alternative budgets need a firm political base. Current debates about the future of progressive politics in this country hopefully will produce a left-wing organization that is capable of assuming political power. When that happens, alternative budgets are likely to be integral to its platform.”

While we’re waiting for that happy day, however, we have to keep presenting the AFB to a government that shares none of our chief concerns or priorities. We have to be content with the AFB’s educational and inspirational effects on the Canadian public--but these are not inconsiderable. I would go so far as to say that, if the 2004 AFB converts even one more Canadian to our side of the political divide, all the work that goes into it will have been justified.


(Ed Finn is the CCPA’s Senior Editor. He can be reached at [email protected]. John Loxley’s book is available from the CCPA or Fernwood, and can be obtained at many major bookstores.)