FINA Committee Report
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NDP SUPPLEMENTARY REPORT
- Thomas Mulcair, MP, NDP Finance Critic
This year’s pre-budget consultations saw, once again, over 300 organizations and individuals provide the Standing Committee on Finance with informative submissions and advice on how the country’s finances should be managed in order to best meet the needs of Canadians today and into the future. The intended theme of the 2007 consultations was: “the tax system needed by Canada for a prosperous future.”
Recognizing the striking impact of the surging Canadian dollar – whose value rose by over 30% relative to the US dollar between April and November 2007 – on the Canadian economy and on Canadians’ everyday lives, the committee also decided to seek advice on how to approach this very important challenge.
Despite receiving over 300 submissions from across the country, the Committee chose this year to restrict its travel to only one week of hearings outside of Ottawa: in Halifax, Montreal, Calgary and Victoria. While the NDP welcomes the opportunity offered to people, businesses and organizations in those cities to offer their input, we continue to feel that the process should be broadened to ensure that Canadians are engaged in it.
The predominant message we heard was that Canadians want a fiscal regime that works in a balanced way for all Canadians and that takes leadership in building the sustainable economy that will ensure Canada’s success for future generations. In short, they want their government to help working people participate fully in an economy that works for them and not the other way around.
While the NDP successfully managed to negotiate the inclusion of some important recommendations in this regard, the main report fails to reflect broadly what we heard: that the fiscal priorities of the government should be forward-looking, balanced, and suited to current and future economic realities; that they should embrace rather than resist the twin challenges of sustainable development and an aging population; and that Canadians from all walks of life and from all regions deserve fairness and the opportunity to participate fully in our economy. Unlocking Canada’s economic potential means tapping the capacity that resides in communities, strategic sectors and key segments of the Canadian population that have been left behind by overly passive approaches to economic development. It means making the strategic and foundational decisions to transition Canada so that it is a leader in the new energy economy of the future.
BRIDGING THE INRASTRUCTURE GAP
The Committee heard that Canada’s infrastructure is in great need of repair. There is broad agreement on this point, but how to address the problem remains contentious. A recent report by the Federation of Canadian Municipalities calculates our communities are facing a $123 billion infrastructure deficit. Unfortunately, the main report fails to call for decisive investment to repair crumbling bridges and roads that are in disrepair. The evidence is already in: lack of investment in Canada’s infrastructure is an obstacle to economic growth and a barrier to Canada’s competitiveness in the world.
But, it is not only physical infrastructure that is in desperate need of improvement. We need not look too far into history to recognize that Canada’s post-war economic growth was built by strategic investments in both physical and social infrastructure. A healthy, educated and skilled workforce are strategic economic assets that Canada cannot afford to squander. It is reckless to believe that health care privatization and the growing shortages of doctors and nurses won’t have important negative impacts on the Canadian economy.
The NDP therefore renews its calls for the federal government, in partnership with provinces, territories and municipalities, to make a priority of investments in Canada’s social infrastructure, starting with heath care, as well as education, housing, and public transportation.
CORPORATE TAX CUTS VS. INVESTING IN PEOPLE
The Committee heard that Canada’s manufacturing sector has shed over 300 000 jobs since 2002. That’s more than one in ten manufacturing sector workers whose livelihood has been lost to layoffs, plant closures, and the non-replacement of retiring workers. At the same time, the forestry sector, beset by the flawed softwood lumber agreement as well as an epidemic pine-beetle infestation, has suffered major setbacks across the board. And, without careful planning, the road ahead promises more challenges, with the full effect of Canada’s high dollar projected only to be felt in another 18 to 24 months.
The Committee’s main report recommends increased support for older workers who face employment disruption. The NDP has fought hard for a program of this sort and is pleased that a majority of the Committee’s members support this essential piece of the puzzle.
But it’s not nearly enough. While recognizing the need for government action to soften the current crisis, the main report fails to recommend the array of concrete measures that could ensure all Canadians benefit from economic growth now and in the future. Canadian companies have a woeful record of investing in research and development, putting Canada far behind OECD countries including the US. Therefore, there needs to be an appropriate stimulus to research and development in these and other sectors. The NDP calls for the government to invest in manufacturing and forestry through a reimbursable tax credit for the purchase of new machinery and equipment. This type of targeted measure, which would boost real investment in key industries, is far more desirable than the reckless corporate tax cuts of 2007 that disproportionately benefited the already booming non-renewable energy sector and the banks. The NDP also seeks more government support for communities in need to help them turn the corner.
The current crises in sectors such as manufacturing and forestry have meant devastation for hard-working Canadians and their families. Incomes continue to grow fastest at the top of the scale while everyone else falls further behind. The transformation of good, stable jobs – often in distant regions across the country – into low-paid, uncertain and often part-time work – often in Canada’s largest the cities – has devastated many Canadian communities, and pressured families into making difficult and heart-wrenching decisions about their future. The rosy employment picture and GDP growth projections that the government likes to cite do not reflect the reality that will be felt in the years to come. That’s why it is offensive and unrealistic for this government – like the Liberals governments that preceded – to write these significant shifts off as minor “structural adjustments.”
We also learned that the non-renewable resource extraction sector – tar sands development being a prime example – is expanding in an unsustainable manner. That expansion is by all accounts uncontrolled and environmentally unsustainable. Furthermore, our continued reliance on resource-based exports to fuel growth has stymied longstanding efforts to diversify the Canadian economy and has exacerbated monetary instability and driven the loonie still higher in the short term. Which once again puts further pressure on manufacturing and forestry.
Still, the Spring 2007 Conservative budget promised to implement the largest corporate tax giveaway in our history, followed by a fall fiscal update which went still further. The NDP recommends that planned corporate tax cuts be reviewed in favour of targeted measures that will restore balance to our economy.
BUILDING FOR A SUSTAINABLE FUTURE
The Committee also heard that Canadians want their government to abandon the false dichotomy that pits the environment against the economy. They hope to see their country be a global leader in the new energy economy. They want Canada to invest in sustainable development. The main report makes some welcome recommendations in this regard. Most notable among these is that Canada internalize the environmental and human-health costs of polluting through a cap-and-trade system for carbon emissions and that we take aggressive action to reduce greenhouse gas emissions. These are important initiatives goals that the NDP has long supported.
But the main report should have gone much farther. While the committee was ensconced in pre-Budget consultations in December, we marked, in sadness, the 10th anniversary of Canada signing onto the Kyoto Protocol and our embarrassing record of being some 30% over our reduction targets. At the same time, leading nations are not giving up hope in the fight against climate change and, in Bali, Indonesia, launched a process for a post-2012 framework for international action with even more ambitious targets for deep reductions. Canada needs to quickly position itself to catch up to leading countries that are already retooling for the new energy economy that will be the terrain for competitiveness in the future.
The NDP calls on the government to invest in this overdue transformation of the Canadian economy. Serious investments in people and skills will provide Canada with a workforce built for the future – a workforce of environmentally advanced jobs that are applicable to every sector and every community. That means investing in renewable energy, in alternative cars and fuels, in high-performance buildings and infrastructure. It means addressing the growing infrastructure gap that has a stranglehold on the finances of Canadian municipalities, holding them back from taking innovative action on everything from public urban transit to healthier water delivery systems.
It also means an environmentally sustainable national housing strategy, including significant stable funding for affordable housing across the country. We recommend implementing improved targeted support for housing retrofits, especially to lower income Canadians least able to finance needed improvements to their homes and who are, at the same time, the hardest hit by rising energy prices. We also recommend that existing incentives to new home buyers be adjusted to encourage environmentally responsible design.
FURTHER RECOMMENDATIONS
In other areas, we also recommend that the government:
- remove limitations on funding for research and advocacy activities in the revised terms and conditions of the Women’s Program at Status of Women Canada.
- roll the expiring Millennium Scholarship Foundation into a comprehensive, public system of upfront grants for all students with assessed need and substantially reduce the student loan interest rate
- invest in habitat protection and enforcement to ensure a healthy and stable fishery for generations to come.
- increase the residence portion of the Northern Residents Tax Deduction that this portion of the tax deduction be indexed in order to keep pace with inflation based upon a Northern inflation measurement.
- improve assistance to farmers, targeting that aid to support family farms.
- fully reimburse Canadian seniors whose pension incomes have been negatively affected as a result of an error in calculating the rate of inflation. While the government has acknowledged the error it made it has so far refused to take any remedial action.
- remove the two percent limit on social program spending in the Department of Indian and Northern affairs so programs can be funded according to need and population growth
- that the government amend the Income Tax Act to enable income-averaging for artists in order to offset the negative effects of changing incomes in the cultural sector.
- implement the five recommendations of the veterans’ first motion as approved by Parliament, notably by eliminating the unfair reduction of Service Income Security Insurance Plan long term disability benefits from medically released members of the Canadian Forces
- funding be made available to reduce wait times inflicted by a huge back log of 850,000 applicants in the Immigration system
- establish long term permanent bridging, mentorship and settlement programs that assist new immigrants in finding good and meaningful employment.
- move toward a full, universal, cost-effective, regulated, not-for-profit child care program available to all parents across the country
- raise the federal minimum wage to $10 per hour
MAKING THE ECONOMY WORK FOR CANADIANS
In conclusion, the NDP would once again like to thank all those individuals and organizations who have offered their invaluable insights on Canada’s finances. Their advice was invaluable in helping all committee members, and through the Committee all Members of Parliament, better understand the priorities Canadians would like to see their elected representatives set for our country. We continue to work to make sure that their input is heeded by the government in preparation for the 2008 budget.