Canada is moving in the wrong direction and must address its extreme and growing income inequality, according to a new discussion paper from the Broadbent Institute.
The paper, released to Postmedia News on Monday, argues that developing a comprehensive policy agenda - which could include affordable housing, improvements to Employment Insurance, "fair" taxes and a national prescription drug program - is needed to address the problem.
What's concerning is that inequality is getting worse instead of better, and while Canada has the financial means to turn this around, those steps aren't being taken, said former NDP leader Ed Broadbent, the founder of the left-leaning institute.
"We've had this policy of slashing taxes, and particularly disproportionately, slashing the taxes of the rich. It's time we reverse this," Broadbent said.
"It's not as if we don't have the wealth, but it's the distribution of the wealth that really matters."
Income inequality, sometimes known as the shrinking of the middle class, occurs when there is a large polarization between the top and the bottom of society in terms of their share of economic resources, according the institute.
The Conference Board of Canada and the Organization for Economic Co-operation and Development have both recently pointed out that Canada is becoming more unequal, more quickly than most other countries in the OECD, Broadbent said.
For instance, the Conference Board of Canada reported in 2011 that, from the mid-1990s to the late 2000s, Canada had the fourth-largest increase in income inequality out of 17 peer countries.
Canada was ranked 12th out of those countries, a slip to "below the average."
One of the effects of this is that there's less upward mobility, Broadbent said, adding that there's "overwhelming" evidence that an unequal society decreases the opportunity for climbing.
"Most Canadians grew up with the expectations that their son or daughter could be whatever they want to be, whether it's a hockey player or a brain surgeon ... now the reality is, if you want to live the 'American dream', you should move to Sweden," Broadbent said.
And beyond economic indicators, income inequality affects everything from health to political participation to crime rates, Broadbent said. And what people need to understand is that this affects everybody in the population - not just the poor, he said.
Several recent studies have found that more "equal countries," such as Germany and Sweden, do better overall than "unequal countries" such as Canada and the United States when it comes to indicators such as life expectancy, the incidence of mental illness, obesity and homicide rates, the institute's paper noted.
"Yes, the poor suffer. And we know that, and we have too high a level of poverty, but the really serious thing that we should be aware of is that, with this degree of inequality, everybody suffers," Broadbent said.
There is no "single magic bullet," to achieve greater equality, the paper said, and urged that a comprehensive policy agenda must become a core political commitment. And while a commitment to equality must come from all levels of government, leadership must come from the federal government, the paper said.
The report, Towards a More Equal Canada, is part of the Broadbent Institute's Equality Project, which was launched earlier in 2012.
OTTAWA—Launching the next phase of its Equality Project, the Broadbent Institute has released a new discussion paper, “Towards a More Equal Canada”, which analyses the causes of, and proposes solutions to, income inequality. The paper follows the springtime publication of a Broadbent Institute-commissioned Environics poll on income inequality that shows Canadians overwhelmingly support taking action to alleviate our growing inequality problem.
“What kind of Canada do we want to live in? What kind of Canada do we want to leave to the next generation?” asked Broadbent Institute founder Ed Broadbent. “The current rise of extreme income inequality must now be reversed. Canadians need to take action, and demand that their governments take action on income inequality.”
The Environics poll conducted earlier this year shows that Canadians are ready to challenge income inequality: 77% believe that income inequality is a major problem for Canada, and a clear majority – including a majority of Conservative voters – are willing to protect our social programs, even if it means paying higher taxes. 9 out of 10 respondents agreed that reducing income inequality should be a priority for the federal government.
“Drafted in consultation with some of Canada’s leading thinkers and policy experts, I hope that this paper will stimulate a serious national discussion on extreme income inequality, and what to do about it,” added Broadbent. “We are facing a serious and growing inequality problem, and the time is now to re-balance our priorities.”
In the coming weeks, the Broadbent Institute will release a series of responses to this paper written by a number of prominent Canadians from across the political spectrum.
Canada is careering “strongly and wrongly” toward increasing inequality, Ed Broadbent told a crowd last Thursday night at the Steelworkers Hall in Toronto. With social implications that will be felt across the economic strata, we all ought to be concerned – even the one per cent.
The former NDP leader was tapped to talk by Economic Inequality, a group formed in response to the growing income gap in Canada.
Broadbent outlined four broad prescriptions for bridging this gap, and ultimately, for creating a fairer society: investing in good jobs, strengthening income supports, increasing access to public services and reforming the tax regime to make it more progressive.
He wasn’t short on specifics either. Concrete actions toward these goals might include funding skills development in such sectors as early childhood education; introducing a minimum guaranteed income modeled on the system we have for seniors; expanding affordable housing and creating a national child care program; and cracking down on tax evasion and closing “boutique” tax loopholes.
The biggest obstacle, most attendees agreed, is persuading the masses to pay higher taxes. Since slaying the deficit dragon of the 1990s, service cuts have become standard and taxes taboo.
Broadbent, however, borrowed a line from Stanley Knowles, who was fond of saying “taxes are the prices of civility.”
Investing in social services produces better outcomes for most indicators of a country’s well being, including lower crime and poverty rates, as well as stronger economic performance.
Although the discussion seemed to pick up where the Occupy Movement left off, the more than 100 attendees were more grey-haired than youthful like the face of last year’s protests. This may point to a burgeoning crop of ageing baby boomers concerned about making ends meet in retirement.
The growing income gap in Canada over the past few decades has been well documented, particularly by the progressive think tank Canadian Centre for Policy Alternatives (CCPA.) In a December 2010 report entitled The Rise of the Richest 1%, the CCPA found that Canada’s top one per cent had seen its share of income double since the late 1970s.
It was not until the most recent recession that Canada has seen so public a backlash against this increasing inequality.
“It’s long overdue that the top one per cent paid their fair share,” Broadbent said.