The perception of a growing generational divide seems to be taking hold among millennials and their baby boomer parents, as both groups now tend to believe that the economic future looks bleak for the younger generation, a new survey shows.
The survey, which was commissioned by the Broadbent Institute, found that millennials fear their working lives will be governed by precarious, short-term arrangements and that the gulf between rich and poor will grow. Their parents, meanwhile, worry that the younger generation will not produce enough income to support the social programs they’re counting on in old age.
“Parents across this country are fretting about the economic prospects of their kids. They’re worried their kids aren’t going to have the same economic opportunities as they did,” said Rick Smith, executive director of the Broadbent Institute, a left-wing think tank. “What really leaps out at me here is there’s a very high degree of angst.”
A feeling of anxiety about the economic prospects of a younger generation is not uncommon historically. What’s not clear is whether today’s fears are justified. Youth unemployment is at 13.6 per cent, unchanged over the last year and down from the peak of a recession that continues to send ripples through the global economy. This is also a period of significant technological change and it’s unclear what impact that will have over the long term. What’s clear is that a sense of pessimism, justified or not, is gaining momentum.
Baby boomers are more likely to say that their children face worse economic times than they did as young people. Just less than 50 per cent of the boomers surveyed said their children’s economic opportunities are worse than their own at that age, compared with 40 per cent that said they were better and 12 per cent that said they were the same, according to the online survey by Abacus. More than 55 per cent of boomers said they worried the younger generation won’t support social programs through taxes.
Millennials are expecting a different kind of working world from the one their parents entered. They expect to work a mixture of permanent and temporary jobs, compared with the more stable arrangements their parents had. They say lower rates of unionization will make good jobs harder to find and are more likely to say they don’t know anyone with an employer-provided pension, the survey said. Sixty per cent say the gap between rich and poor will increase over their lifetime, and only 16 per cent believe it will shrink.
Frances Woolley, an economist at Carleton University, said there’s no question today’s labour market is more unequal. This is a “winner take all” society, as some call it, where the greatest income gains go to those at the top of the spectrum and some, particularly those without a university education, will face a difficult job market. But one thing to consider is that the baby boomers had the good fortune to be born at the right time, an era of peace and prosperity, Prof. Woolley said.
“The older generation has had such a blessed life,” Prof. Woolley said. “Some generations are born in better times than others. That’s just the way it is.”
Matthew Cuthbert is a 27-year-old graduate of the University of Toronto. He has experienced the millennial’s anxiety. He has nearly $50,000 in student and credit-card debt and works at a community centre in customer service, earning $31,000 a year. He and many of his friends are the precariat, he said, a new class of precarious worker. It’s not what he was expecting, but after seven months unemployed, he’s grateful for the work.
“It’s frustrating to watch this break down. When I started school there was so much more optimism around the economy,” he said. “It’s far from the ideal situation that any of us anticipated.“
Canadians in the millennial and boomer generations disagree about much, but hold one thing in common: they’re deeply anxious about the economic future of young Canadians.
That was the key finding of a survey of Canadians between 20 and 30–the “millennial” generation–who are in the work force, and boomers, or those aged between 50 and 65, by the left-leaning Broadbent Institute.
“It puts [some numbers], for the first time, to the fact there’s deep angst, among both millennials and their parents, about the reduced economic opportunities available to young people, today,”Rick Smith, executive direction of the institute, told Canada Real Time.
“The scale of the angst certainly took us by surprise,” he said. “The strength of feeling here is really quite astonishing.”
The online survey, conducted last month, found that 41% of the millennials expect their working lives to comprise a mix of contract work and permanent jobs, with 39% anticipating a succession of permanent jobs.
That contrasts markedly with the experience of the boomers, 66% of whom reported working lives consisting of a string of permanent jobs and only 10% of whom experienced the combination of contracts and permanent positions expected by the millennials.
A near majority of 49% of the boomers said things are worse for their children today, while 40% believe their kids’ economic opportunities are better than theirs were when they were the same age. More millennials—56%–said they expected their opportunities to be the same as or worse than their parents’.
On the housing front, more than half of boomers are certain they’ll own their home at retirement, but only a third of millennials are as confident.
Mr. Smith said the relative pessimism about the prospects of working Canadians, both among millennials and boomers, reflects their “lived experiences” in the last few years.
The survey found that 92% of boomers know someone with a workplace pension, with 51% of them knowing some or many. That compares with only 30% of millennials who know at least some people who have a workplace pension, and 20% knowing no one with such a benefit.
A big majority of both millennials and boomers agreed free-trade agreements have made Canadian businesses more profitable by making it cheaper to make things in other countries. But a majority of these same respondents also said trade agreements have cost Canadians jobs and opportunities.
Overall, the survey pointed to concern about the prospects of younger Canadians now, but also into the future, Mr. Smith said.
“This concern is not only for economic prospects of youth currently, it’s also a realization of economic prospects for youth in the future are likely to be dimmed,” he said.
“People don’t view this as a blip. They’re not anticipating that things are going to bounce back, any time soon,” Mr. Smith said.
Posted by NationBuilder Support · March 07, 2014 7:42 AM
For many months the Conservative government has blatantly taken away by fiat the right to strike of union members within federal jurisdiction. They are now threatening to shut down environmental charities that are talking about climate change. And they are ramming through Parliament changes to the elections act that will almost certainly mean that many thousands of Canadians will not be able to vote.
Taken together these actions restrict freedom of association, limit freedom of speech and curtail a citizen’s right to vote. In short, there is a steady chipping away at the underpinnings of democracy.
Inspired by the voter suppression tactics used by the Republicans to disenfranchise marginalized groups in the U.S., the new election law would make it harder for certain groups to vote. The law would end the ability to “vouch” for the bona fides of a neighbour, a tool that allowed 120,000 voters — disproportionately aboriginal, youth and seniors — to cast ballots in the last election.
Conservatives claim that vouching allows for widespread fraud, a charge that experts deny.
The move is part of a broader sweep of changes that also serves to suppress the vote. For example, the new law will remove the ability of electors to use voter identification cards. Elections Canada had only in the last few years piloted the use of the cards to make it easier to cast a ballot at polling sites serving seniors’ residences, long-term care facilities, aboriginal reserves and on-campus student residences. The conclusion of this pilot project was that the “initiative made the voter identification process run more smoothly and reduced the need to ask the responsible authorities for letters of attestation of residence.”
In other words, voter identification cards had been successful in enfranchising these groups. Conservative MP Brad Butt, a member of the committee dealing with this measure, has been compelled to retract a completely fabricated story he had told in the House about this so-called fraud. Despite his apparent breach of parliamentary privilege, the Conservatives rejected an opposition bid to have a House committee look into Butt’s false claims that he saw voter identification cards stolen from recycling boxes to commit fraud.
Just as anti-democratic are changes that amount to a massive clawback to Elections Canada’s outreach mandate. This would severely restrict the agency’s public education and information programs, essentially prohibiting Elections Canada from encouraging people to vote. Gone would be its ability to support programs in our schools, like Student Vote’s mock elections, or the outreach work in aboriginal communities. To believe it’s accidental that these groups normally prefer the opposition parties is to believe in the tooth fairy.
The government’s bill also denies Elections Canada the kinds of powers it needs to investigate serious electoral wrongdoing, such as the robocalls fraud perpetrated by Conservatives in 2011 — the most important new powers requested by Elections Canada.
It is fitting, then, that the new law is being rammed through Parliament. Once more, Harper is using closure — a way to end debate early — to prevent people asking, for example, why school programs that teach kids how to vote are so bad. Why let MPs actually debate democracy when it’s not valuable enough to educate children about? The government has also voted down an opposition motion to have public hearings on a bill that will make such fundamental changes in our electoral system.
But such is the new normal in Ottawa, where sweeping bills that change dozens of laws are rammed through without debate. The government is also vowing to silence environmental charities because they engage in “political” activity. In Canada and other democracies such activist charities are widely seen as core institutions in a democratic civil society.
Canadian charities helped stop acid rain and smoking in restaurants. Their advocacy helped bring about mandatory seatbelts and led to tough drunk driving laws. Charities participating in public debate are helping the whole world understand how environmental degradation is threatening the planet.
While shutting down environmental charities would make it harder for Canadian voices to join others to tell the world what’s happening to the planet, it is also the case that the U.S. and Europe see the Canadian government’s indifference to the environment as a negative in reaching major decisions on trade in oil.
Having spent more than two decades in the House of Commons, I can think of no prime minister who has been so focused on undermining electoral participation and public debate.
We have a tradition of Conservatives, New Democrats and Liberals respecting everyone’s right to have a say. Past governments have avoided turning democratic process into a tool for one party’s advantage. Changes in electoral processes were always based on all-party consensus.
That Harper derides such all-party consensus is, sadly, no surprise. That his robotic backbench will unquestioningly obey is not news either. Except now, the victims of his disregard for debate aren’t only the people we elect. It’s those doing the electing as well.
Posted by NationBuilder Support · February 27, 2014 6:01 AM
Three economists on how the manufacturing sector can bounce back This article originally appeared in the Toronto Star.
Know your advantages
Manufacturing absolutely has a future in Canada, and in particular southwestern Ontario. The key to understanding the future of the industry is in knowing where our competitive advantages lie.
Low labour costs will never be a comparative advantage for Canadian manufacturing, but given those “costs” are largely wages, this should not be seen as a problem. Less obvious is how proximity to markets is no longer a comparative advantage for traditional manufacturing regions. The world’s economic centre of gravity is heading toward Asia, which places goods from southwestern Ontario at a geographic disadvantage compared to most other parts of North America. Even markets within North America are changing. In 1900, neighbouring cities such as Cleveland (7th), Buffalo (8th) and Detroit (13th) were among the biggest cities in the U.S. Now those cities are 48th, 73rd and 18th in population.
This disadvantage may pose less of a problem than it to appears at first glance. With supply chains becoming increasingly global, a smartphone assembled in China may have an operating system designed in Kitchener-Waterloo and Brantford, applications programmed in London and Windsor and use precision-crafted parts from St. Thomas and Sarnia.
The region maintains a number of advantages, including a financial sector that is familiar with the industry. We have one of the most well-educated workforces in the world, which gives us an advantage when it comes to precision manufacturing and products where high-quality control is important, such as food. Although our labour costs are high, there are significant cost advantages in other areas, such as access to land and clean water. Manufacturers that use these advantages are well-positioned for future growth.
— Mike Moffatt, assistant professor, Ivey Business School
Three ways to act now
Ontario manufacturing has had a rough ride over the last decade. A number of factors have been at play, including the rise of the dollar, the deep U.S. recession, and the growth of competition from emerging economies. However, we should not conclude that Ontario manufacturing is down for the count. Far from it.
In some research looking at leading Canadian firms done at Ivey’s Lawrence Centre, we find reasons for optimism. Firms such as Linamar, Magna and Shawcor are competing and winning at home and in global markets. Focusing on high value-added manufacturing, they are making the most of Canada’s skilled workforce and capacity for innovation to win new business around the globe.
Business and public-sector leaders convened with Ivey researchers in November to translate our research findings into action. They agreed on three recommendations for immediate action.
Leaders agreed that the primary responsibility for manufacturing success lies with the private sector. Therefore they aimed their first two recommendations at firms. Their first was to find a mentor: Firms seeking to expand into international markets need the counsel and advice of seasoned executives.
Their second recommendation was to form partnerships with local educational institutions. To attract the next generation of skilled workers and managers to manufacturing, firms need to connect directly with students by visiting classrooms and hosting plant tours. Linamar is a good example of a firm that is putting these ideas into practice.
Finally, leaders are looking for governments to raise their game, particularly in the area of attracting investment. Despite Canada’s many advantages, jurisdictions such as Mexico are winning the investment attraction game, even when wages are a small part of the total business proposition. Ottawa, provinces and municipalities need to work together to put our best case forward.
Ontario can compete and win at manufacturing. The leading firms we studied prove it. We need to stop focusing on our problems and start taking action on solutions.
— Paul Boothe, director of the Lawrence Centre at Ivey
How to work together
The recent depreciation of the Canadian dollar combined with recovery in the United States opens up a temporary window for recovery of Ontario’s hard-hit manufacturing sector. Those companies that have survived a brutal decade have the opportunity to grow. However, recovery will not happen automatically, and will require a major effort on the part of many players.
Support for new corporate investment is critical, but lowering the overall corporate tax rate has had little impact. Ontario’s corporate tax system should use enhanced tax credits to reward companies that invest heavily in new machinery and equipment, research and development, and worker skills.
Governments must also ensure access to the “patient” equity capital needed to finance investment that has a long-term payoff. Given the small scale of venture capital funds in Ontario and the focus of banks on short-term loans, we should establish an Ontario public investment bank focused exclusively on manufacturing. Such a body should operate at arms’ length from government, on the model of the federal Export Development Corporation.
Ontario has had a patchy record of fostering collaboration between the key players in a successful modern economy: government, companies, the post-secondary educational system; local governments; and unions. Drawing on past successes, Ontario should establish province-wide and local sector councils, bringing key players together to promote and deliver skills training and collaborative research programs. Community colleges can play a major role in rebuilding local manufacturing.
A revival of Ontario manufacturing will require active government leadership, and a spirit of partnership. It will certainly not come about if public institutions and unions are seen as the enemy.
— Andrew Jackson, Senior Policy Advisor, Broadbent Institute
Canadian families have become wealthier over the past several years, with net worth rising despite the well-documented growth in household debt and a setback from the recession, a new Statistics Canada study shows.
In a report that takes a long view on the state of Canadian finances, the agency finds that the 2012 median net worth among family units — of two or more persons and unattached individuals — has risen 44.5 per cent since 2005 to $243,800 and up almost 80 per cent since 1999.
Those family units have also accumulated more debt, a total of $1.34 trillion in 2012, up from $864.6 billion in 2005. Most of the debt — about $1 trillion — has been used to finance home purchases. All figures are in inflation-adjusted dollars.
The Conservative government said the report shows that Liberal criticism of their policies as not benefiting Canadians generally is wrong.
"That is a very significant increase ... after-tax disposable income has increased by 10 per cent across all income bracket," said Employment Minister Jason Kenney.
But while the overall picture of family finances was positive, the report also pointed to continuing disparities across regions, age groups and types of families.
The biggest single reason for the improvement in finances overall has been due to house prices reaching record levels, notes economist Andrew Jackson of the Broadbent Institute, and those prices are widely projected to moderate or even fall in the next few years.
"The big question is if and when we get a housing price correction, individuals will still be holding the debt and that is a cause for concern," he said.
Real estate prices have risen faster than mortgage debt and other assets, he notes, but if the trend reverses, some Canadian families may discover their wealth rests on "shifting sand."
For those who owned their homes, the median reported value of the residence was $300,000, up 46.6 per cent from 2005 and 83.2 per cent from 1999.
In terms of inequality, the report found that the wealthiest 20 per cent of family units accounted for 67.4 per cent of the total national net worth, although that was slightly lower than the 69.2 per cent the top quintile possessed in 2005.
Meanwhile, the top 40 per cent of families possessed 88.9 per cent of total net worth, leaving the bottom 60 per cent with a mere 11.1 per cent of the pie.
The lowest quintile — the poorest 20 per cent of families — had an overall negative net worth, meaning that as a group they had more debts than assets.
That segment of the population saw its family median net worth drop from about $1,300 in 1999 to $1,100 in 2012. By contrast, the top quintile saw its family median net worth rise from $981,400 in 2005 to $1.38 million in 2012.
Bank of Montreal chief economist Doug Porter said the data, while positive, still shows household debt remains a concern.
"The standout is the tremendous growth in net worth over the 13-year period. It works out to average annual increases of better than five per cent, which is quite impressive," he said.
But that doesn't mean household debt is a non-issue, he added, predicting that the biggest impact on the economy will be to act as a check on consumer spending going forward.
Overall, total family assets in Canada rose to $9.4 trillion in 2012, with the value of families' principle home representing one third of the total assets. Pension assets, including employer plans and private pension plans, made up 30 per cent of the total, while other real estate holdings — rental properties, cottages, timeshares and commercial properties — represent almost 10 per cent.
But the report confirms large disparities in net worth depending on age, the nature of the family unit and regions of the country.
For instance, median net worth was highest for families where the person with the highest income was 55 to 64 years old in 2012. For that group it came in at $533,600, more than double that of the overall population.
And lone parent families had the lowest median net worth — only $37,000.
Regionally, British Columbia reported the highest family median net worth at $344,000, followed by Saskatchewan ($271,400), Alberta ($267,500), and Ontario ($265,700). B.C. families had the biggest improvement since 1999, jumping from $150,700 when the province placed fourth.
At the bottom, family units in Newfoundland and Labrador and Prince Edward Island had a median net worth of $167,900 and $150,300 respectively.
If you divide Canadian families up into fifths in terms of net worth, the lowest quintile had net assets of about 1,300 Canadian dollars ($1,170) in 1999.
In 2012, it was actually below that; the overall worth of the lowest 20% of families declined 15.4% to C$1,100 by 2012, according to the “Survey of Financial Security” from Statistics Canada.
It’s a stark indication Canada is not immune the drift toward economic inequality in evidence in many other economies around the world.
“All in all, [the Statistics Canada report is] further disturbing evidence that economic inequality remains a serious concern,” said a blog posting from the left-leaning Broadbent Institute.
Income inequality is more frequently used as a metric when assessing economic inequality. But net worth, the wealth a family has when its debts are subtracted from its assets, also provides insight.
It’s important to note that, unlike the bottom 20%, Canadians in the four other quintiles did reasonably well in those 13 years.
The median net worth of Canadian families was C$243,800 in 2012, up 44.5% from 2005, and almost 80% more than the 1999 median of C$137,000, after adjusting for inflation.
Some analysts say the report undermines the idea Canada’s middle class is under siege, and that’s supported by the fact that the three middle quintiles all enjoyed gains of more than 75% since 1999.
But there is a catch. Much of the gain in wealth was driven by the increase in housing prices. If they drop, as many expect, that could erode much of the gains.
“Housing prices went up faster than any other form of wealth, including financial wealth, [and] housing wealth is more equally distributed,” said Andrew Jackson, senior policy adviser to the Broadbent Institute.
As in 1999 and 2005, the principal residence was the largest asset for Canadian households in 2012. Their median value was C$300,000, up 83.2% from 1999 and 46.6% more than in 2005.
Housing prices fluctuate, but debt is generally fixed. When the housing market collapsed in the U.S., many American households that had high net worth on paper watched it being eradicated as slumping housing prices left them with a sharply reduced asset position, or indebted overall.
“The experience of the U.S. tells us that housing values can fall, and housing debts will remain,” Mr. Jackson said.
If Canada’s housing market is subject to a sharp correction, as some analysts forecast, the value of Canadian families’ principal asset will decline without an offsetting decline in debt.
That fact points to the “fragility” of Canadians’ recent gains in wealth, Mr. Jackson said.
Posted by NationBuilder Support · February 16, 2014 12:46 PM
This week has been a watershed moment in the battle against income inequality in Canada.
The curious twist is that it was comments made by Jim Flaherty – who, as Finance Minister, has actually exacerbated income inequality – that illuminate a fundamental shift in Canada’s political imagination.
Sometimes, the world works in mysterious ways.
A lot of ink has already been spilled about Mr. Flaherty’s unexpected decision to publicly repudiate family income splitting, the day after tabling a budget that set up the Conservative government to deliver on precisely this tax cut. After all, it’s not every day that a finance minister chooses to oppose a key electoral promise of the prime minister.
Mr. Flaherty’s comments immediately split the Conservative caucus, forcing Prime Minister Stephen Harper to cast doubt publicly on what was expected to be the core goody in the Conservative’s re-election arsenal.
While the political questions surrounding Mr. Flaherty’s decision to speak out are intriguing, it is the precise words that Mr. Flaherty used to articulate his opposition to income splitting that matter most.
“It benefits some parts of the Canadian population a lot. And other parts of the Canadian population virtually not at all,” Mr. Flaherty said. Earlier, he had mused that the tax measure needed “a long, hard, analytical look” by experts “to see who it affects in this society and to what degree. Because [he wasn’t] sure that overall it benefits our society.”
Given this government’s clear track record of introducing boutique tax initiatives that favour the wealthy, this sudden concern with equity is striking.
Family income splitting would benefit only a small minority of families, giving a significant tax break to high-income traditional families with one earner and a stay-at-home spouse, while delivering little or nothing to middle- and lower-income families and nothing to single parents.
According to the Canadian Centre for Policy Alternatives, the top 5 per cent of all families would see more benefit from this tax change than the bottom 60 per cent – and 86 per cent of families would see no benefit at all. It would, in effect, actively make income inequality, not to mention gender inequality, worse.
But the Conservatives surely knew these troubling facts when they made the promise (emphatically and repeatedly) to introduce income splitting back in their election platform in 2011. So something changed in the world around Mr. Flaherty.
And that something, I believe, is the maturing of income inequality as an issue in the imagination of the Canadian public and, as a result, in the considerations of the politicians that serve us.
It is this maturing that allowed Mr. Flaherty not only to recognize that income inequality is a serious problem deserving of attention; but also to acknowledge that government – even Conservative governments – should not enact tax policy that deliberately makes the situation worse.
The story of how this change came about is yet to be told, but it no doubt has its roots in the tireless work and advocacy of citizen and civil society groups, academics, brave politicians and other equity-seeking voices. This change remains a tentative victory, as Conservative cabinet ministers continue to pop up this week to split with Mr. Flaherty and defend family income splitting and its genesis in the determined lobbying of social conservative pressure groups.
And the unfortunate reality is that we are still becoming ever more unequal, a trend due in large measure to political choices. Many countries have found ways to mitigate the growth of income inequality, while in Canada the policy response has tended to reinforce rather than offset the trend.
We know that since the mid-1990s, the social role of government has been dramatically cut back and its redistributive impact has faded. According to the OECD, government taxes and transfers lowered the gap between rich and poor most in Canada, Denmark, Finland, and Sweden in the late 1980s and the early 1990s. By the early 2000s, we joined Switzerland and the U.S. as the countries with the smallest redistributive impact.
That’s why I take caution not to overstate things here. But I do believe Mr. Flaherty’s remarks signal some hope that there is growing public support and political will to address income inequality. At the very least, important public policy will now be tested against a simple and compelling principle: Does this make income inequality better or worse?
When Jim Flaherty introduces his budget next week, he may trumpet a long-promised policy that would allow parents with children at home to split their income to reduce the amount of tax they pay.
Income splitting is a tax policy that would allow a higher-earning person to assign some of his or her income to a spouse, effectively lowering what tax bracket he or she is in. The policy brings the most benefit to a couple in which one spouse works while the other stays at home with the kids, and could cost the treasury a few billion dollars of lost tax revenue a year.
But the policy can also be seen as a tailored appeal to voters in the constituencies the Conservatives need to hold to keep their majority.
Family income splitting was first promised back in the 2011 election campaign, with the caveat that it wouldn’t be introduced until the budget was balanced. Three years later Mr. Flaherty is expected to announce that the government is on course to get out of the red by next year, just in time for an election-year budget.
The Broadbent Institute launched a campaign this week, calling the income-splitting proposal a $3-billion Mad Men giveaway. They describe it as a misguided policy that favours the wealthy and is based on an early 1960s concept of the traditional family. On the other side of the coin, University of Calgary economist Jack Mintz and lobby groups such as the REAL Women of Canada have long argued for such a measure, on the grounds that it would remove a tax penalty for those families that want to have a parent stay at home but struggle to make it work financially.
Kevin Milligan, an economist at the University of British Columbia, said the policy would benefit only a small subset of families. For one, single parent families are ruled out. They make up 16 per cent of all families. What’s more, nearly 14 per cent of the population aged 15 and over lives alone, a rate four times higher than it was in 1961. About one in five people did not live in a census family in Canada in 2011.
So having removed all those millions of people from eligibility, the policy would also be of little or no benefit to those families where each parent earns roughly the same amount, or even those cases where they’re in the same tax bracket. It would be of most benefit to those families with a very-high earning breadwinner and a spouse who stays at home and earns nothing. That’s a relatively small group.
“Imagine it was your goal to transfer resources to families that choose to have a stay-at-home spouse and are struggling with their finances, then this is an odd policy to hit those people,” Prof. Milligan said. “If I had a couple billion to spend on remedying the inequities in our society, spending it on lowering the taxes of a $200,000 and $0 [incomes] couple is not where I would spend it.”
So why pursue it? It represents a marriage of ideological and strategic goals. One clue comes from the accidentally leaked Conservative strategy document about the ethnic vote in the last campaign. It said of certain ethnic groups “they live where we need to win.” The same is true of families with children. The key seats that are vulnerable to a Liberal resurgence are those suburban ridings around big cities, primarily in the Greater Toronto Area. The Conservatives need to hold on to them and they are rich with families with young children.
Take, for example, Brampton West, a Conservative gain in 2011. Roughly 54 per cent of families in that riding have children at home, much higher than the Canadian average of 36 per cent. The same is true for many other similar ridings, such as Mississauga-Brampton-South, Ajax-Pickering and Pickering Scarborough-East, which have above-average numbers of families with children at home.
The Conservatives will still have to work hard to get them to the polls though. A StatsCan study of the 2011 election found that “the presence of children was negatively associated with 2011 voting in all family types.” Single parents with kids under five had the lowest turnout figures at 36 per cent. Couples with children under five voted at a 60 per cent rate, very close to average.
From deepening income inequality to rising unemployment, Canada faces a wide range of pressing economic challenges that ought to be addressed in next week’s federal budget. Yet little is expected in the way of, for instance, sorely needed measures to address our jobs crisis. Instead, the Conservative government is focused on balancing the budget so it can deliver on its highly political and expensive promise of a pre-election tax break.
According to the C.D. Howe Institute and the Canadian Centre for Policy Alternatives, the Conservative plan to introduce family income splitting will mean some $3 billion per year in lost federal revenues, and some $5 billion per year if the provinces follow suit.
What services and programs will be cut to finance this?
The ongoing slashing in Ottawa holds unsettling clues. Federal cuts to science and our social safety net, as well as the squeeze on transfers to the provinces that support programs like health care, are bound only to get worse. And all this in order to balance the budget for what amounts to a tax gift for the affluent.
Family income splitting would benefit only a small minority of families, giving a big tax break to high-income traditional families with one earner and a stay-at-home spouse, while delivering little or nothing to other families.
The move would allow couples with children under 18 to share up to $50,000 for tax purposes. That translates into a tax cut of more than $6,000 per year for a couple with one person in the top tax bracket. In the case of someone earning more than about $185,000 per year, income-splitting would allow the full amount of $50,000 to be shifted from the top to the bottom tax bracket, thus cutting the tax rate on that money nearly in half.
Single-parent families, already more vulnerable, account for more than one in four children, yet would receive nothing from the tax break. Nor would there be a benefit for working couples with children in which neither parent earns more than about $45,000. That is because both earners are already in the lowest tax bracket.
The math of income-splitting is such that there would be only small savings, if any, where both parents earn between about $45,000 and $135,000. In fact, according to the Canadian Centre for Policy Alternatives, the top 5 per cent of all families would see more benefit than the bottom 60 per cent — and 86 per cent of families would see no benefit at all.
This tax measure will be sold as a way to support families who choose to have one parent (usually the mother) stay at home to care for children.
If the Harper government really wanted to expand choices for families with young children in a fair way, it could improve maternity and parental benefits under employment insurance. This program allows for up to one year’s paid leave from work, but benefits are so small — on average, just over $400 per week — that many families have to cut the leave short.
Alternatively, the government could increase child benefits for lower-income families so that families choosing to work fewer hours, and thus to earn less, get more support through higher child tax credits.
The $3 billion that income splitting will drain from federal coffers would be enough to increase federal spending on child tax credits by more than 25 per cent. Or to double current spending on maternity and parental leave benefits. Or to make a significant contribution toward enhanced access to quality child-care programs.
But none of those policies would achieve what the family income splitting proposal is designed achieve: to prop up the traditional family model by encouraging one parent to stay home. Call it Harper’s $3-billion Mad Men giveaway.
No wonder the policy has been actively promoted by social and religious conservative organizations such as REAL Women and Focus on the Family Canada, which have opposed public child care and are strong believers in the traditional single-earner family.
While income splitting will be advertised as a boon to the middle class, it is in fact a gift to the well-off and a surreptitious sop to the socially conservative. It will benefit almost no one else.
It is a sad statement that the No. 1 priority of the government’s upcoming budget is to lay the groundwork to introduce a tax measure that will further increase income inequality while failing to meet the needs of the vast majority of families with young children.