This federal election must be about building a better Canada after the pandemic. The Broadbent Institute has set out a social democratic perspective to influence the political debate.
The crisis we and the world continue to confront seriously affects public health and our social and economic well-being. The pandemic starkly revealed major cracks in the foundations of our society and economy, which must be seriously addressed. On top of the public health crisis, which is still very much with us, we have to contend with long-standing problems that COVID-19 not only made more visible but also exacerbated.
There will be no quick return to normal, nor should there be.
The rise of precarious jobs and growing economic and social inequality revealed that the high unemployment experienced during the shutdowns was unequally shared across the workforce and that unless we take significant action to rectify the root causes, the recovery will also be unequal. Any recovery plan would be short-sighted and ineffective if it did not repair the foundational inequities in our society and address the crisis of climate change. This is a moment for social democrats to fight for fundamental reform.
We must, in overlapping phases, defeat the virus and protect health; provide relief and support for as long as necessary; and develop a plan for long-term social and economic transformation based on the lessons we have learned from the pandemic.
The status quo has worked well for the top 1% of Canadians, who now receive almost 15% of all household income and own 25% of all wealth, and even more for the top 0.1%, who are Canada’s billionaires. But it was not working for the great majority of Canadians who have experienced stagnant wages and living standards, rising household debt, and increased economic insecurity due to less stable jobs combined with cuts to income support programs.
Those consigned to the growing ranks of low-wage and precarious workers are increasingly excluded from the social mainstream, and this gap is highly gendered and racialized. The health costs of the pandemic were heavily and disproportionately experienced by women and racialized workers in essential jobs involving close contact with the public, while many of the better-off could isolate themselves by not working or working at home.
Far too many Indigenous people remained and still remain on the margins of the economy and struggle for recognition of their fundamental rights and ownership of land and resources. At the same time, they are fighting the devastating impact of the pandemic in their communities.
“Normal” was not seriously tackling the climate crisis. Even in the midst of the pandemic, we saw nature out of control: almost unprecedented floods, droughts, hurricanes, extreme heat waves, and rising sea levels. The recent report from the Intergovernmental Panel on Climate Change has confirmed our worst fears that these events are now indeed normal and bound to become more common. Canada has formally committed to dealing with the climate crisis through the Paris Accord but has made pitiful real progress in terms of actually reducing greenhouse gas emissions and transitioning from the old to the green economy. Many irresponsible business and political “leaders” remain wedded to a carbon-intensive economic model while pretending that serious action can be further delayed.
The crisis has revealed huge gaps in our social programs. The lack of eligibility for existing income supports such as Employment Insurance (EI) for many of the newly unemployed left the government scrambling to come up with new programs on the fly. Crowded, understaffed, and under-regulated long-term care homes led to a wave of unnecessary deaths among seniors. The lack of paid sick leave for many resulted in workplace COVID outbreaks as workers felt obliged to go to work even when they were ill. Parents with young children faced impossible choices as schools closed and no options were available for affordable child care.
Our current crisis is the result of 40 years of extremist “neoliberalism”—the belief in so-called free markets and private control of almost all of the economy. Our failing economic system has entrenched economic inequality and racism, bred right-wing populism, and damaged democracy.
Publicly-led innovation for equitable social benefits
Our solutions lie in a mixed public/private/not-for-profit social economy with high levels of public provision to meet key needs, protection against poverty and insecurity, and effective public-interest driven regulation of banks and large corporations. The market and the private sector are important tools, but governments must shape the economy to secure fair and inclusive society.
We need to renew the capacity of governments to shape the economy in the national and public interest, to lead innovation toward a shared vision of the equitable future, to distribute resources in order to achieve more just outcomes, and to increase the bargaining power of workers vis-à-vis employers.
As in the aftermath of the Great Depression, now is the time for federal leadership. The federal government alone has the fiscal capacity to make major new investments in social programs, due to its relatively low debt, its access to all major sources of tax revenue, and its special relationship to the Bank of Canada. The times call for new national programs in health care, education, housing, and income support programs.
The immediate priorities should be child care and early learning and the expansion of public health care from physician and hospital care to long-term care, pharmacare, and mental health.
A green and just economy
The transition to a clean, green economy must be driven not only by taxes, but also through regulations (e.g., strict building codes, clean fuel standards, and a shift to zero-emission vehicles). In addition, major public investments need to be made in clean energy, greater energy efficiency, stripping out carbon from production and consumption, and building new infrastructure such as mass public transit and charging stations for electric vehicles. All of these will promote environmental remediation.
Rather than relying on private finance alone to support the new clean economy, these kinds of investments could be increased and scaled up by establishing a new Green Investment Bank mandated to fund clean, green investments at low cost, including through equity stakes and low-interest loans to enterprises.
A just transition is essential to ensure that workers will not suffer because of the economic restructuring that will be required. This would be possible, since the clean economy would be much more labour-intensive than the current highly capital-intensive, extractive economy.
Displaced workers should be guaranteed a comparable job or income compensation through wage tops, and they should be offered the opportunity to retrain.
Centering care and decent work in the economy
The caring economy, though rarely discussed until recently, has long been the backbone of our social and economic well-being. Not only is it a foundational aspect of a meaningful post-pandemic recovery; it also holds the keys of our future resilience in the face of crises to come. Health care, education, child and elder care, and social services are the key pillars of the caring economy. They meet a multitude of social needs while providing a great many jobs, especially for women and racialized Canadians, and they rely on leadership and investment from governments to work.
We need to start fixing the labour market through key changes to labour law and employment standards to promote more secure and better-paid jobs.
Governments should facilitate and encourage collective bargaining and enhance minimum wages to establish a wage floor that provides workers with a livable income. Sectoral, multi-employer bargaining in private and public services can set a decent floor of wages and standards without putting any one employer at a competitive disadvantage.
Canada's inadequate income-security safety net was unable to stand the test of the pandemic as many unemployed workers and independent workers found that they did not qualify for EI or social assistance and faced immediate destitution.
In the longer term, Canada should move toward a Basic Income Guarantee. We need a bold vision for income security reform but also a thoughtful plan to do better building on what exists and already works, as outlined in our paper Basic Income Guarantee: A Social Democratic Framework.
Making sure everyone pays their fair share
As noted in our report Paying for the Recovery We Want, expanding public and social services will have to be financed in medium and long-term through higher taxes. We cannot build a social democratic Canada without collectively paying for it, and that should be through a transparent tax system based on ability to pay. A precondition for political support of higher levels of public spending is public confidence that the costs are being fairly allocated.
Over the past few decades, the tax burden on the richest and highest-income Canadians has been cut by:
- The reduction of the corporate tax rate, which boosts after-tax returns to equity owners
- The increase or tolerance of special tax breaks being applied to income deriving from capital, such as capital gains and stock options
- The reduction of the progressivity of the personal income tax system
- A decrease in top income tax rates; and by tolerance of the growing use of offshore tax shelters by corporations and the wealthy.
The equalizing impact of progressive taxes has been eroded, compounding the growing inequality of market income and starving the public and social sectors of needed resources.
The aim of a progressive tax system is not just to finance social programs and public services that benefit all citizens, but also to reduce very large and growing inequalities of income and wealth.
Introducing a wealth tax, closing tax loopholes largely used to hoard wealth with little productive purpose, taxing excess profits made by large corporations during the pandemic are measures supported by 9 in 10 Canadians. There is also broad support on increasing corporate income taxes as well as those in the top tax bracket.
This election may very well be the most important of this century. The government that is elected will be charged with setting the ground for our post-pandemic era in Canada. This is a time to boldly restructure our economy and our society in order to overcome the deep inequality and climate change that threatens our world.
We live in perilous times. The pandemic reminds us of the need for collective action to achieve the common good. While it remains to be seen how well Canada will fare in comparison to other countries in terms of its management of the pandemic, the crisis has starkly spotlighted long-standing cracks in our social and economic foundations.