With the global economy mired in slow growth and right-wing, nationalist populism in the ascendant in many of the advanced industrial countries, one might have hoped that the G20 summit in Hangzhou, China would have come up with a real plan to promote a sustainable, shared recovery.
If so, one would be very disappointed since the final communique consisted mainly of empty rhetoric and evaded the key issues of competitive fiscal austerity and increasing income inequality.
When the federal and provincial finance ministers meet on June 20-21, they will have to decide whether or not to enhance the Canada Pension Plan (CPP) as promised by the Liberals in the last federal election. This will require the support of at least seven provinces with a combined two-thirds of the population and, effectively, a broad public consensus.
In that context, it is encouraging that the leading business organizations of all provinces but Alberta endorsed a modest expansion of the CPP in a letter sent to finance ministers on June 1.
The newly elected Progressive Conservative government in Manitoba has moved quickly to cement its anti-worker bona fides with the radical right-wing by making it more difficult for non-union workers to join a union, and by opening up bidding on large scale public construction projects to non-union companies. Changes in these areas were announced in the Pallister government’s Speech from the Throne on May 16.
Under the current system in Manitoba, a union can be automatically certified by the Labour Board if 65% of the workers in a proposed bargaining unit indicate their support by signing membership cards. As in other jurisdictions with a “card check” system, signed membership cards are subject to independent scrutiny.
It is now often said, with reason, that the environment and the economy are not in conflict. But it is even more true to say that seriously addressing the crisis of global climate change could revive a moribund global economy.
The World Economic Outlook (WEO) released by the International Monetary Fund in April of this year once again forecast very slow growth, and argued that economic stagnation is likely to be self-sustaining. This is due to very low levels of business investment, combined with high levels of household and public debt which constrain household and government spending.
The Liberal election platform promised to “make the Parliamentary Budget Officer (PBO) truly independent” of the government and to make sure that the office is properly funded. The platform also promised to make government accounting “consistent and clear.”
It was, then, a bit surprising that the PBO had to make a formal request for information normally provided in the federal budge, and was forced to provide its own estimates for the missing numbers in its report to Parliament on April 6. The Department of Finance finally released the requested information only on April 8, more than two weeks after the budget was delivered in the House of Commons (on March 22nd.)
As expected, the federal budget delivered on the Liberal promise to leave the age of eligibility for Old Age Security (OAS) and Guaranteed Income Supplement (GIS) retirement benefits at age sixty five. The Harper government had previously decided to phase in an increase to age sixty seven.
Many pundits have argued that the eligibility age should rise in line with longer life expectancy. They say that a higher retirement age would reduce the growing cost of the OAS/GIS program, and will boost the economy by pushing seniors to work longer.
The new Canada Child Benefit (CCB) unveiled in the 2016 federal Budget has been widely supported by progressives and anti poverty activists who have long favoured the expansion of income tested child tax credits. By contrast to the so called middle-class tax cut which favours the more affluent, the CCB will have a positive impact upon the lamentably high rate of child poverty in Canada (which stood at 16.5% in 2013), and will promote greater income equality among families with children.
Somewhat ironically, the new program is an unintended consequence of the regressive policies of the Harper government which opened up the needed fiscal room for progressive change.
The Budget reinvests significantly and appropriately in many important government programs broadly in line with the promises made in the Liberal platform. However, it falls short in some important areas, and the biggest failure is to restore federal fiscal capacity to support improved social programs and public services over the long term.
The bottom line is that the Budget increases federal government program spending from 13.6% of GDP in 2015-16, the last year of the Conservative government, to 14.6% of GDP in each of the next two fiscal years. This represents a significant increase in spending of about $20 Billion in the coming year, 2016-17. Program spending is, however, forecast to gradually decline as a share of GDP back to the 2015-16 level after the next two years.
The idea of a basic income guarantee for all Canadians has again moved to the front burner with the House of Commons Finance Committee and the Ontario government supporting further study and experimentation. This could be an important step forward, but incremental reform towards an income tested guarantee for working age Canadians delivered through the tax system will be the best path forward as opposed to more visionary “big bang” solutions.
The concept of a basic income has won support from both the political right and left. For the former, it promises to simplify complex income security programs and to replace most if not all welfare state programs with a single cash payment which would allow individuals to meet their needs in the market. For the latter, it is a means to free people from dependence upon the job market, a tool for social solidarity amidst a rapidly changing world of work, and a means to abolish poverty.