The Federal Budget – Part 1
(This is the first
of a series of articles analyzing the first budget of the Harper Conservative
government.)
The first budget of the Conservative Party
government of Stephen Harper passed its third and final reading in the House of
Commons on June 6. It passed by
unanimous consent with no recorded vote. The Liberals and NDP, who had stated
that they would vote against the budget, explained later that there was a
"mix-up" relating to the order of speakers. Consequently, they were
absent when the debate opened and closed for the third reading. The budget was
first presented on May 2 and the first reading was passed by a vote of 175 to
113 on May 11. The Conservatives and Bloc Quebecois voted in favour, while the Liberals and NDP voted against.
The theme and title of the budget is Focusing
on Priorities - Canada's New Government - Turning a New Leaf. The budgetary
measures are organized into five priorities - "accountability",
"opportunity", "families and communities",
"security" and "restoring the fiscal balance" - which are
the same priorities presented by the Conservatives during the last federal
election. The message is that the Conservative Party, in contrast to the
Liberal Party, is going to keep its promises. But this is not really the issue.
The issue is the content of the promises. The Harper government is promising
that this budget will deliver "real results for people" and will
"chart a new course for building a better Canada".
Accountability
The first priority of the Harper government is
to improve the accountability and transparency of government operations. This
appears as a response to the criticism of the Liberal governments of Jean Chretien and Paul Martin by the Gomery
Commission and Auditor-General of Canada. Accordingly, some measures relating
to the accountability of the government to the people would have been expected.
But the real focus of the accountability measures in the budget are to ensure
that the finance capitalists get their pound of flesh. Thus, the promise to reduce the federal debt
by $3 billion annually and advance by one year the goal of lowering the
debt-GDP ratio to 25 percent is included in the accountability measures. Also
included is the promise to restrain the government’s rate of spending growth
and identify "savings" on government programs of $1 billion in
2006-07 and 2007-08.
None of these measures, including the new
Accountability Act, addresses the lack of accountability of governments in
Canada to the electorate. There is an immediate need for reform of the
electoral process and constitution so that candidates for elected positions are
selected and elected by and accountable to the electorate and so that the
decisive say on all matters - economic, political, social and military -
resides with the electorate. The Conservative government, however, does not
have this kind of accountability on its agenda. On the contrary, it has already
demonstrated its preference for absolutist rule, rather than accountability
either to the electorate or to the House of Commons, by its handling of the
vote on the extension of Canada's military presence in Afghanistan. In addition
to the fact that the majority of Canadians are opposed to Canada's combat role
in Afghanistan, the Harper government displayed its utter disdain for the House
of Commons by giving six hours notice for the debate and by stating that it
would extend the Canadian military stay whatever the outcome of the vote.
Opportunity
The most publicized aspect of the budget is
the reduction of consumption, income, business and corporate taxes. These
measures fall under the priority called "opportunity" and they are
primarily opportunities for business. According to the federal government
Canadians and Canadian business are faced with tremendous opportunities and
major challenges as a result of the profound and ongoing restructuring of the
global economy. As the budget says: "The rapid emergence of China and
India as major economic powers, the development of global supply chains and the
continued integration of global capital markets are collectively creating both
tremendous opportunities and major challenges for Canadians and Canadian
business."
In order to take advantage of the
opportunities and face the challenges,
the Harper government has decided on several measures "to build a
more competitive, productive Canada". In fact, the improvement of Canada's
productivity and competitiveness in the global market is the central focus of the entire budget.
The budget falsely claims that higher productivity will raise the standard of
living of Canadians and will help governments to invest in health care, education
and other areas. This would be true if the added value created by higher
productivity were invested in these areas. However, the added value will be taken out of the
economy in the form of profits and invested for the purpose of making even more
profits rather than for the purpose of improving the standard of living of the
people.
The government's entire economic policy is
oriented towards creating an environment for the capitalists to make maximum
profit rather than to improve the living and working conditions of the people.
For example, in this budget the federal government is creating a more
competitive environment for Canadian businesses to compete against American
businesses by accelerating the elimination of the federal capital tax, reducing
the general corporate income tax rate to 19 percent from 21 percent, and
eliminating the corporate surtax. This will give Canadian businesses a statutory
tax advantage over American businesses and lower the taxes on investments in
Canada by foreign companies. These measures may result in the creation of more
jobs, or they may lead to the elimination of jobs through the introduction of
newer technology. The point is that the creation of jobs is only incidental to
the aim of making of maximum profits. It would be a mistake to believe that the
government or the capitalist system has the aim of creating jobs.
The same is true of the budgetary measures
related to education and training which are also part of the
"opportunity". The federal budget includes measures to increase
support for education and training, to support foreign credential recognition,
and to reduce personal taxes. The natural resource sector, particularly oil and
gas, is going through a "boom" in Alberta and Saskatchewan and is
short of skilled labour. A similar situation exists
in the high technology sector in the Ottawa region in the so-called
"Silicon Valley North". The severe cutbacks in public spending in the
1990's also drove many Canadian doctors, nurses and teachers to the United
States in search of jobs and higher salaries. The monopoly capitalists are
competing internationally to keep Canadian skilled labour
in Canada and to attract foreign skilled labour. The
budgetary measures are designed to assist them on this front. These measures
are not intended to improve the quality of the educational system or its
accessibility. (To be continued.)