FINA Committee Report

Pre-Budget Consultations

Minority Report of the Official Opposition

“Don’t let them tell you it can’t be done”

Jack Layton (1950-2011)

The New Democratic Party is pleased that the Standing Committee on Finance conducted broad and extensive pre-budget consultations that engaged Canadians on fiscal policy priorities. The text of the report of the majority provides an account of the key issues brought forth by a broad spectrum of witnesses but does not adequately or clearly reflect the contribution of many witnesses. Further, the NDP is disappointed that recommendations imposed by the Government ignore many views of witnesses, resulting in a failure to address many of the real issues confronting the Canadian economy: rising poverty, inequality, unemployment and indebtedness that Canadian families, workers, students and seniors are experiencing in their daily lives. The Conservative government’s response to these structural problems has been leading Canada in the wrong direction: indiscriminate corporate tax cuts and wrongheaded fiscal policy which reduce living standards and increase inequality. New Democrats are releasing this Minority Report to present an alternative to the flawed fiscal policies of the Conservative government.

NDP Proposals for Budget 2012

Making the Economy work for all Canadian Families

“Cancelling the corporate income tax cut scheduled to take place January 1, 2012 and investing the $3 billion in revenue that would be lost to a tax cut in affordable housing instead could increase GDP by $4.5 billion, create more than 47,000 new jobs and create 155,550 new affordable housing units and 200,000 repaired existing homes over the next ten years.” (Citizens for Public Justice)

Fix the Tax System: Tax breaks and subsidies for profitable oil companies are misguided. The Official Opposition recommends cancelling the corporate income tax cut scheduled to take place January 1^st 2012 and returning the corporate income tax to 19.5%. The NDP prefers tax breaks in return for performance - for corporations that invest in such things as new technology, expansion, R&D, training, energy conservation or development of green technologies and green jobs. 

Indiscriminate corporate tax breaks haven’t stimulated investment:

“Despite a  36% drop in corporate taxes (both federal and provincial) in the last decade, and record profits for much of that time, business spending on machinery and equipment has declined as a share of  GDP, and total business investment spending has declined as a percentage of corporate cash flow.” (Statistics Canada and Finance Canada)

Establish Efficient Jobs & Training Programs: Investment in much needed job creation & training should be a priority. The federal government should include in its 2012 Budget the following pro-employment measures:

• reduce the Small Business Tax Rate from 11 per cent to nine per cent to support SMEs and a sector of our economy that creates nearly half of all new jobs in Canada;
• introduce a Job Creation Tax Credit that will provide up to $4,500 per new hire. Employers will receive a rebate on the employer contributions for the Canadian Pension Plan and Employment Insurance premium for new employees hired;
• extend the Accelerated Capital Cost Allowance for eligible machinery and equipment acquired before 2016;
• fast track qualification for skilled workers, especially immigrants;
• spearhead the creation of an Investment fund for displaced workers of the asbestos industry.

Reform Canada’s Failed Research and Development Policy: Strong Research & Development directly and indirectly supports the creation of highly skilled, high added value jobs that are the backbone of a strong modern economy. Weak business investment in real capital and in innovation has been endemic in Canada. R&D funding is broken and needs fixing.

We must redirect millions of dollars allocated to SR&ED (Scientific Research and Experimental Development) to proven and effective programs such as IRAP (Industrial Research Assistance Program) and SDTC (Sustainable Development Technology Canada) that are highly regarded by industry and investors. Canada must focus on helping companies that have the proper expertise.

• The Canadian government should use its procurement and purchasing power to stimulate innovative     Canadian businesses and act as a first customer.
• Continue to increase funding to the federal research granting agencies to support innovation.
• Encourage cross‐sector mobilization of knowledge and research to enhance understanding of our world, create new processes, products and services, and improve our well‐being.
• Invest in graduate and postdoctoral training through scholarships and internships to develop the next generation of Canadian employees, leaders, innovators and citizens.

Ensure that Canadians can retire with dignity: Only one in four Canadians can afford to purchase RRSPs each year. 250,000 seniors live in poverty in Canada.   12 million Canadians lack a workplace pension plan. The Conservative government recently tabled Bill C-25 to create Pooled Registered Pension Plans.  This does absolutely nothing to address the needs of the millions of workers who cannot afford to purchase RRSPs: In 2010, 1 in 4 workers were in a low wage job with wages of $13.32 an hour or less.

“The Canada Pension Plan (CPP) delivers a defined benefit, fully indexed to inflation, and operates at much lower cost than the proposed “pooled registered pension plans” which will generate large fees for the financial sector, and produce a variable and uncertain return.” (Canadian Labour of Congress)

The NDP would:

• expand the guaranteed Canada/Quebec Pension Plan by phasing in, over a seven year period, an affordable doubling of benefits from 25% to 50% of a retiree’s pensionable earnings;
• gradually increase the Guaranteed Income Supplement as well as ensure automatic enrolment;
• invest in home care as part of the public health care system. Invest in long-term care for the elderly.

Protect Canadian Consumers from Predatory Finance:  Household debt is at an all-time high in Canada of $1.5 trillion. The federal government should work with the provinces and territories to identify, regulate or ban excessive interest rates on credit cards, pay day loans, store cards and other forms of predatory consumer credit.

Freeze Employment Insurance Premiums: Employment Insurance benefits should be available when Canadians need them. The federal government should establish an eligibility threshold of 360 hours for all regions with benefits calculated based on the 12 best weeks of work. The government should also ensure that new parents who have taken maternity and parental leave are not penalized in terms of their EI eligibility once they return to work.

Empower the Green Economy:

“Preserving the federal government’s existing capacity for environmental science, policy and programs is crucial for maintaining this prosperity.”  (Green Budget Coalition)

“Make Clean technology a cornerstone of Canada’s policy for economic productivity, energy, innovation, exports and the environment.” (Canadian Clean Technology Industry)

• Implement a well-designed, transparent, and environmentally rigorous carbon Cap &Trade system.
• Invest in green technologies, business and household energy conservation, public transit, the development of renewable energy and workers’ transition to the green economy.
• Work with the provinces and territories to reinstate and/or enhance federal financial & tax incentives for clean power and support community-owned renewable energy facilities.
• Introduce a Green Bond Fund to support the adoption of green energy (solar etc…) in Canadian households, small businesses and communities and federal loan guarantees for green energy development.

Invest in Critical Infrastructure: Work to address the lack of high speed broadband access in rural areas the need for smart grid systems and major renewable energy infrastructures. Fix the $123 billion municipal infrastructure deficit by:

• pursuing funding commitments for federal infrastructures (such as those under the Building Canada Fund) and establish a specific timetable for allocating federal funds for key infrastructures, such as the Champlain Bridge, QC, Inuvik-Tuktoyaktuk link, Mackenzie Valley Highway and  improving the Trans-Canada Highway between Malakwa and Golden, BC;

“Canada is the only G8 nation not to have a national policy on public transport, and if anything, such a policy is more necessary than ever.” (Agence métropolitaine de transports, 2011 brief)

• increasing the gasoline tax transfer by one cent to sustain investment in urban public transit and fund a “National Public Transit Strategy” which would help meet federal and provincial government’s targets.

Any delays will only add to the cost and exacerbate the deteriorating quality of life in our communities. 

Invest in our Children’s Early Education:  The gap between the number of regulated child care spaces and the number of children with mothers in the labour force is 2.8 million. 750,000 children live in substandard and/or overcrowded housing. The federal government should work with the provinces to establish a national, high quality, not for-profit child care and early learning program, modelled on the success of the child care system in Quebec.

Quality Post-Secondary Education: Lifelong Learning for Lifelong Earning: 

• Make post-secondary education more affordable by directly attacking skyrocketing tuition costs with a designated $800 million transfer to the provinces and territories to lower tuition fees, as per the NDP’s Post Secondary Education Act.
• Increase funding for the Canada Student Grants Program by $200 million a year, targeting Aboriginal, disabled and low-income students in particular.
• Increase the education tax credit from $4,800 a year to $5,760 to help offset rising education costs.

Build Self-Reliance in Rural Canada through Community Economic Development: The NDP support a Co-operative Investment Plan.  Many SMEs and agricultural producers are member-owned co-operatives.  Particularly in rural areas, co-operatives are a potential solution to the challenges of SME/agricultural succession planning given rural depopulation. The proposed federal co-operative investment plan is expected to generate $130 million per year in new investments.

Make Poverty History: There has been a general lack of progress on eliminating poverty in Canada over the past two decades.  The NDP recommends the introduction of a federal anti-poverty strategy developed in consultation with the provinces which would:

• re-introduce the federal minimum wage law to set a national standard of earning for those who make the lowest wages in our workforce;
• combine existing supports like the Child Tax Benefit to create a non-taxable Child Benefit and increase the support steadily by up to $700 per child over the next four years, while maintaining the current UCCB (Universal Child Care Benefit).

“Strategic investment in education is critical to building healthy, prosperous, and safe communities. Education is widely recognized as the most powerful method for bringing about improvements in all social and economic domains. A considerable gap in educational achievement and inputs exists with respect to First Nation education.” (Assembly of First Nations, 2011 brief)

• Table legislation that will set goals and targets for poverty reduction in consultation with the provincial, territorial, municipal and Aboriginal governments and with non-governmental organizations.
• Work with the provinces and territories to establish and fund a Canada-wide child care and early learning program, enshrined in law, which will create 25,000 new child care spaces per year for the next four years, improve community infrastructure and create integrated, community-based, child-centered early learning and education centres.
• Implement automatic enrollment in the Old Age Security (OAS) for seniors.

Building up Healthcare: Witnesses stressed the importance of strengthening this sector through an active federal investment policy. There is no doubt that programs such as our public health system are an asset for Canadian businesses, as KPMG stated in its report on competitiveness. On average, Canadian companies have a competitive advantage of $3,000 per employee over their U.S. counterparts. Companies benefit from a better market when Canadian families have good incomes and good purchasing power. We should:

• negotiate a new ten-year health accord with the provinces and territories. The accord will guarantee a continued strong federal contribution – including the 6 percent escalator - to Canada’s public health care system – in return for a clear, monitored and enforced commitment to respect the principles of the Canada Health Act and to the to the integrity and modernization of health care;
• work with provinces and territories to expand coverage to out-of-hospital services like home care and long-term care;
• work with the provinces and territories to address the shortage of doctors, nurses and other health care professionals;
• in collaboration with the provinces, establish programs aimed at recruiting and supporting low‑income, rural and Aboriginal medical students.

Taking Steps to Provide Safer and More Affordable Prescription Drugs:

• Improving assessment to ensure the quality, safety, cost and health effectiveness of prescription drugs;
• Cutting administrative costs through public administration.
• Using bargaining power in pharmaceutical purchases.
• Establishing science-based formularies and clinical guidelines to advance evidence-based practice by physicians.

Uphold our Commitment to the International Community: Commit to a timetable to increase Canadian Official Development Assistance (ODA) to reach the UN aid target of 0.7% of Canada Gross National Income (GNI), a goal endorsed in June 2005 by all parties in the Canadian Parliament.

Recognize the Sacrifice of Public Safety Officers and their Families:

“Until a national PSOC benefit is established in Canada, the families of the nation’s professional fire fighters stand to endure financial hardship in addition to the grief of losing a loved one. It is time for the federal government to act on the need for this benefit.” (International Association of Fire Fighters, IAFF)

• Establish a Hero’s Benefit to recognize the contributions of firefighters and police officers who die in the line of duty. The fund will pay a benefit of $300,000 to the families of fallen firefighters and officers.
• Continue supporting front-line policing as part of its law and order agenda and commit to renew funding and stop downloading.

Strengthen Arts and Culture: According to the Conference Board of Canada, for every $1 of real value-added GDP produced by Canada’s cultural industries, roughly $1.84 is added to the overall real GDP. The Federal government should establish a tax credit program to stimulate production of the arts and maintain funding of CBC/Radio-Canada at the 2010 level (1.1 billion) and index it annually to inflation.

Forge a New Relationship with Aboriginal People in Canada:

• Foster economic opportunity and lasting prosperity, beginning with increasing access to capital for Aboriginal business development, improving physical infrastructure, removing the punitive 2% funding cap, and addressing the education deficit with a $1 billion per year investment over the next four years.
• Tackle the problem of social housing and establish a long-term program to build 85,000 new housing units.
• Expand mental health programs.
• Give First Nations authorities the freedom to manage their own lands.
• Guarantee access to higher education for all First Nations students and ensure that they are no longer discouraged from attending university rather than a vocational school.
• Rework budgets so that funds are used to deliver services, not oversee expenditures.

Military Procurement and Aerospace:

• Improve our search and rescue capability to international standards within the current budgetary framework.
• Implement a fair and open procurement process which would be part of a strategy that would ensure Canadians get the best value, the military gets what it needs and Canadian industries get the best spin-offs. The purchasing of military material should be legislated to ensure better accountability and to protect major projects from partisan intervention and vested interests.
• Establish a non-repayable fund for demonstration projects in the amount of $140 million over four years.

Build a strategy for International Fair Trade: Historically, Canada has been known as a great trading nation. Today, the country suffers under a serious balance of payments deficit, as poorly designed fiscal policies have undermined investment and competitiveness in our leading manufacturing industries. An uncritical attitude to foreign investment and foreign takeovers, and the failure to identify, support and promote Canadian global winners, has seriously hurt our trade performance. In the absence of an industrial vision for the country, the proportion of unprocessed exports is growing, and the country is returning to its unenviable role as “a hewer of wood and drawer of water”.  Canada needs a smart, sensible and sophisticated approach to trade. Canada needs to build trade agreements that ensure good paying jobs for Canadians. We should promote Canadian performance with a vision for our industrial structure and global competitiveness in value-added goods and tradable services, and use Canada’s investment as a driver of poverty eradication, employment, and sustainable development in both trading nations.  Our trade agreements must increase the quality of life for Canadians and our international counterparts.

Charitable Donations: Create a Stretch Tax Credit that would increase the federal charitable tax credit on giving that exceeds a donor’s previous highest giving level.

Ottawa, December 12, 2011

Peter Julian, MP                                   Hoang Mai, MP

Burnaby – New Westminster              Brossard – La Prairie

Wayne Marston, MP                             Alain Giguère, MP

Hamilton – Stoney Creek                     Marc-Aurèle Fortin