The Federal Budget - Part III
(This is the third of a
series of articles analyzing the first budget of the Harper Conservative
government.)
New Spending Initiatives
The 2006 budget of the Conservative government
of Stephen Harper states that it is
"committed to reducing growth in spending to a rate that is
sustainable". It has set a target to reduce spending as a percentage
of the Gross Domestic Product (GDP) from
13.7 percent in 2004-05 to 13.0 percent in 2007-08. It considers this to be a sustainable rate of
spending. To put this in perspective, federal spending rose from 16.4 percent
of the GDP in 1964-65 to a high of 24 percent in 1984-85. It declined sharply
in 1995-96 when federal spending on health, education and social assistance was
significantly reduced. The Harper government has set its spending target based
on the assumption that the Canadian economy will continue to expand.
The budget confirmed some of the Liberal
government's spending commitments and abandoned others. For example, the budget
confirmed the federal-provincial Ten-Year Plan to Strengthen Health Care, and
most of the commitments to post-secondary education, housing and public transit
laid out in Bill C-48, the so-called Liberal-NDP deal. On the other hand, the
Conservative budget rolled back the commitment to Aboriginal communities which
were negotiated as part of the Kelowna Accord in
November 2005. It is also cancelled the five-year, $5 billion plan for direct
funding of child care spaces and replaced it with a Universal Child Care
Benefit (UCCB) for parents with young children. To help pay for the UCCB, the
government will phase out the existing Early Learning and Child Care (ELCC)
agreements with the provinces.
Security and Defence
The federal government's spending on infrastructure,
security and defence will be increased significantly.
In terms of new spending initiatives, excluding the payments for child care
benefits, the government will devote 31 percent of its new spending initiatives
towards security and defence and 21 percent towards
infrastructure. For example, the federal government announced a $17 billion
plan to modernize and beef up the air, land and sea equipment of the Canadian
Forces and a plan to add 13,000 regular forces and 10,000 reserve forces. The
build-up of the military is a response to the U.S. demand that its allies like
Canada contribute more money, manpower and equipment to U.S.-led wars of
aggression around the world. The Conservative government describes this as
"strengthening Canada's role in the world". These large investments
in military equipment will bring super profits to companies such as Boeing.
Infrastructure
The federal government has also devoted $11.1
billion in new spending for infrastructure
renewal over the next five years through the Highways and Border Infrastructure
Fund, Border Infrastructure Fund, Pacific Gateway Initiative, Canada Strategic
Infrastructure Fund and Municipal Rural Infrastructure Fund. Large
infrastructure investments were made in the 1950s and 1960s for highways,
seaways, airports, railways, hydro-electric dams, nuclear generating stations,
water and sewage systems, urban transit, and other infrastructure but these
investments have declined over the last three decades. The government is now
concerned that the deteriorating quality and insufficient capacity of the
infrastructure is interfering with the economic competitiveness of Canadian
business and that "a world-class transportation network is required for
businesses to bring goods to market both within Canada and abroad". The
biggest part of the infrastructure renewal is devoted towards expanding and
upgrading the "gateways" to the United States, which is Canada's
largest trading partner. In 2003, 63 percent of Canada-United States trade in
goods was moved by truck which illustrates the importance of the national
highway system and border crossings for Canadian business.
Social Services
There is a significant difference between the
government's approach towards spending on infrastructure and its attitude
towards social services. In the 1950s
and 1960s the government took out loans and plundered the public treasury to
provide infrastructure for the monopolies. This is how the federal government
originally incurred its huge federal debt. Later, the government sold off these
assets to private companies for next to nothing while the Canadian people were
left with the debt. Once again the federal government is planning to pay for
the construction and maintenance of improved infrastructure on behalf of the
monopolies. At the same time, little or nothing will be done to improve the
water and sewage systems in rural communities and on First Nations reserves as
well as other infrastructure deficiencies unless it can directly benefit the
monopolies.
It would be ridiculous for the government to
give out $100 to every Canadian family and tell them to take care of their own
needs for electricity, water, sewage, highways and bridges in any way they
choose. The infrastructure needs of Canadian society are beyond what any family
could provide on its own. These services require the pooling of resources of
the entire society. The same logic applies when it comes to health care,
education and social services. However, the federal government puts the onus on
individuals and families rather than the society when it comes to providing
these services. For example, instead of investing in the creation of child care
spaces, the main thrust of the budget is to put the onus on parents. Through
the new Universal Child Care Benefit the government will give parents a direct
payment of $100 per month for each under 6-year old child. The government says
that this is an "action to refocus federal efforts on supporting families
with children by providing Canadians with greater choice in child care through
direct transfers to families with children." It argues that: "Parents
will be able to choose the child care option that best suits their family needs
- whether that means formal child care, informal child care through neighbours or relatives, or a parent staying at home."
The government fails to point out that the child care benefit is taxable and
that GST credits will also be reduced in accordance with the increase in family
income, so many low income and single income families will actually end up
losing more than the $100 per child they receive under the new program. In
fact, it appears that the program will only benefit middle and upper income
families where one spouse does not work.
(To be continued)