Mulcair, Trudeau are far from boxed in by Harper’s budget agenda

Posted on April 27, 2015 in Governance Debates – Opinion/Editorials – Tom Mulcair’s New Democrats and Justin Trudeau’s Liberals have plenty of fiscal room to challenge the Conservative agenda and offer Canadians a more ambitious, more progressive government.
Apr 26 2015.   Editorial

Have Prime Minister Stephen Harper’s Conservatives burned through the federal kitty with their “cash for everyone” budget? Well, they’ve tried.

As pundits far and wide have noted, they would like nothing more than to leave the opposition New Democrats and Liberals feeling squeezed going into an election, caught in the awkward bind of having to raise taxes, cancel popular giveaways or drown in red ink if they promise the voters anything different.

But despite the Tories’ best efforts the coffers have not been drained. Nor have the options been exhausted. Not by a long shot.

There’s ample room for Thomas Mulcair’s New Democrats and Justin Trudeau’s Liberals to challenge the Conservative agenda and offer Canadians a more ambitious, more progressive government, one that is focused on generating growth and spreading the benefits more equitably. As the Star’s Thomas Walkom has noted, the opposition parties are far from boxed in.

Despite the slump in oil revenues, Ottawa still expects to rack up a cumulative surplus of $13 billion over the next five years and to raise $8 billion more in so-called contingency set-asides. That’s $21 billion in elbow room. It’s all set out in Finance Minister Joe Oliver’s budget documents.

Moreover, there’s an additional $12 billion-plus in savings to be found by cancelling the Family Tax Cut, the income-splitting program that will disproportionately benefit the wealthiest. Both opposition parties have promised to scrub it.

That gives Trudeau and Mulcair $33 billion over five years to reinvest in more progressive programs ranging from jobs for young people to affordable daycare, job-boosting infrastructure, higher education and health care.
Measured against federal spending of nearly $300 billion, that’s not a lot. Even so, it’s nearly three times the $12 billion in new small-potato spending, tax cuts and other measures that Oliver announced in last week’s budget, spread over the same time frame.

And raising Canada’s low corporate taxes to the industrial-nation average, as the New Democrats are considering, would bring in $35 billion or so over five years. That too could be reinvested.

That leaves the opposition with a credible case for reconfiguring some $70 billion in spending spread across the next electoral cycle — without raising personal taxes for most people, breaking the most popular Tory promises, or running back into deficit. And that doesn’t begin to exhaust the options.

The progressive Canadian Centre for Policy Alternatives and its Alternative Federal Budget proposes investing more than $30 billion a year in infrastructure, poverty reduction, higher education, child care, health and pharmacare, affordable housing and other priorities. It would raise the money chiefly by cancelling the child care benefit and income-splitting, treating capital gains as regular income, reinstating corporate taxes at 2006 levels, taxing financial transactions and raising taxes on the wealthiest. That’s far more radical than anything the opposition is contemplating.

But some thinking outside the box is overdue. The Harper Conservatives and their serial tax giveaways have reduced federal revenue to its lowest point in 50 years, measured against the size of the economy. This has enfeebled the central government at a time when national leadership is sorely needed. Millions are feeling the pinch.

Now that Canadians know what the Conservatives are putting in the window they will want to see what the competing parties have to offer. As the Star has written before, people worry that the country is getting less fair as the income gap widens. Economic growth is sluggish, business investment has been subpar and unmet social needs are growing. The percentage of working-age people who actually have jobs is at record low levels, and unemployment among the young is painfully high. Increasingly, jobs are precarious.

So far Mulcair has sketched out plans for $15-a-day child care, more infrastructure and generous health transfers, funded in part by higher corporate taxes and scrapping income-splitting. Trudeau, too, has promised investments in infrastructure, education, job training and innovation.

Both approaches are better attuned to public concerns than income-splitting schemes that favour the most privileged, or payments to families that don’t begin to cover child care costs. But both parties, the Liberals especially, have plenty of room to up their game.

With a $2-trillion economy, Canada has the wealth to fund better policies for everyone, not just the lucky few. That’s what the coming election should be about.

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