SUPPLEMENTARY OPINION OF THE
LIBERAL PARTY OF CANADA
Thank
you to the hundreds of individuals and groups who shared their insights with
the Committee. We heard from many witnesses, and received a large number of written briefs, calling for bold
changes in Budget 2015 to address the big challenges facing Canada. Despite
these valiant efforts, the Committee has instead endorsed the status quo and
called on the government to “continue” or “maintain” existing policies. For
this reason the majority report represents a missed opportunity for the
Committee to provide the government with meaningful guidance on the upcoming federal
budget.
STRENGTHENING THE ECONOMY
The
Committee heard from numerous witnesses who identified slow economic growth as
a significant threat to Canada’s prosperity. Former Parliamentary
Budget Officer Kevin Page called the Canadian economy “relatively weak” and
recommended that “economic growth should be a priority going forward.” The Conference Board of
Canada said that “growth should become the core theme of budget making on a going
forward basis.” Former Deputy
Minister of Finance Scott Clark emphasized that “we can’t depend on a global
economy to grow the Canadian economy. We need a domestically created policy to
generate growth in Canada right now.”
Real GDP Growth Projections for Canada
Source: Finance Canada, Update of Economic
and Fiscal Projections, 12 November 2014, Table 2.1 and Table A.1.
Infrastructure
In
order to generate growth, many witnesses – including Kevin Page, Federation of
Canadian Municipalities, Large Urban Mayors’
Caucus of Ontario, KPMG, Union of Quebec
Municipalities, Canadian Life and
Health Insurance Association Inc., Mowat Centre, Canadian Chamber of
Commerce,
and Canadian Labour
Congress – called for increases in economic infrastructure investments. Some witnesses called
on the government to prioritize transportation infrastructure in order to end
gridlock and get the economy moving. The Committee also heard calls for social
infrastructure that reduces financial pressures on Canadians and improves
skills training, innovation and productivity. More generally, Scott Clark recommended that
Canada’s domestic growth strategy be “built on infrastructure spending.” The Conference
Board of Canada said that “infrastructure
spending deserves higher priority” and that “Canada has
systematically underinvested in infrastructure for probably 25 or 30 years now,
so it's time to catch up.” In the words of the Canadian Council
for Public-Private Partnerships, “sound modern infrastructure is key to
Canada's productivity and economic growth and ultimately central to a more
prosperous and globally competitive Canada.”
Instead
of increasing its investments, the federal government cut planned new federal spending
on the Building Canada Fund, a key federal infrastructure program for provinces
and municipalities. The government cut planned new spending in this area by
almost 90 percent between 2013-14 and 2014-15, and decided to back-end load new
funding rather than support stronger growth in the near term.
Planned New Federal Spending on the Building
Canada Fund, 2011-12 to 2018-19
Sources: Finance Canada, Budget 2007 (Table 5.3) and Budget 2013 (Table 3.3.1)
Recommendation:
- That the federal
government provide significant new investments in economic and social
infrastructure in order to increase economic growth and create well-paying jobs.
Taxes
The
Committee heard from a number of witnesses who recommended against proceeding
with recently announced tax measures that are expensive and do nothing to increase
economic growth.
Witnesses
such as the YWCA Canada, the Mowat Centre, Mike Moffatt, and Professor Jennifer
Robson opposed the government’s income splitting scheme as it excludes single parents
and mainly benefits wealthier families. In the words of Dr. Frances Woolley, “if the federal
government does wish to deliver tax relief, it should look to increasing
efficiency, or equity, or both. Income splitting does neither.”
The
Committee also heard that the government’s Small Business Job Credit includes a
design flaw that perversely encourages employers to reduce hours and even fire
workers. The Office of the Parliamentary
Budget Officer told the Committee that this tax credit would cost the government $550 million and
create only 800 jobs over two years. Meanwhile, Finance Minister Joe
Oliver admitted to the Committee that the government did not do any analysis before introducing
this measure. Mike Moffatt identified some
advantages of an EI holiday for employers who create new jobs over the Small
Business Job Credit.
The
Retail Council of Canada reminded the Committee about $333 million in tariff
increases in Budget 2013 that come into effect in January 2015 and “will almost certainly
result in higher prices for Canadian consumers”. Mr. Moffatt called for the
elimination of tariffs with low effect tax rates as they impose a significant
regulatory burden for Canadian businesses while generating “almost no revenue”
for the government.
Recommendations:
- That
the federal government replace its income-splitting scheme with measures that
support jobs and growth and benefit a greater number of Canadians.
- That
the federal government replace the Small Business Job Credit with an EI holiday
for employers who create new jobs.
- That the federal
government cancel its planned tariff increases and work toward eliminating
tariffs on goods that are not manufactured in Canada.
- That the federal
government recognize the importance of evidence-based decision-making and
perform an economic impact analysis before introducing new tax expenditures.
INVESTING IN CANADIANS
Veterans
The
Committee heard from Canadians who called on the government to increase its
support for Canadian veterans, particularly injured veterans. The 2014 Fall Report of
the Auditor General of Canada showed that the government is denying
injured veterans timely access to the mental health services they need. Meanwhile,
the federal government is continuing to cut the number of employees at Veterans
Affairs who serve our veterans by 32 percent – from 4,039 FTEs in 2008-09 to 2,755
FTEs in 2015-16 – while it argues in court that it does not have a sacred
obligation to care for injured veterans.
Full-Time Equivalents (FTEs) at Veterans
Affairs Canada, 2008-09 to 2015-16
Source: Veterans Affairs Canada, Departmental
Performance Reports (2009-10 to 2013-14)
and the Report on Plans and
Priorities (2014-15)
We believe that
Canadian Armed Forces and veterans should have nothing less than the best of
care and support from a grateful nation.
Recommendation:
- That the federal
government reverse its cuts to Veterans Affairs and recognize its sacred
obligation to both those who serve in the Canadian Armed Forces and their
families.
Indigenous Communities
Once again, the
Committee heard about the serious need to stop underfunding education for
indigenous Canadians. The federal government has both a moral obligation and an
economic imperative to significantly increase investments in this area.
Recommendation:
- That the federal
government recognize the economic potential of young Indigenous Canadians and
work in partnership with Indigenous communities on a plan to ensure that every Indigenous
student has access to a high-quality education. As part of this plan, the
federal government should eliminate the funding gap for First Nations-led K-12
education, increase financial support for Indigenous language and culture
education, and remove the 2 percent funding cap on the Post-Secondary Student
Support Program.
Other
recommendations:
- That
the federal government amend the Canada Labour Code to provide both
clarity around unpaid internships and greater protection for vulnerable
Canadians who are being pressured into taking unpaid work, and direct
Statistics Canada to collect data on unpaid internships.
- That
the federal government reverse its funding cuts to the Youth Employment
Strategy as well as its cuts to the number of young Canadians employed
through the Canada Summer Jobs Program, Federal Student Work Experience
Program, and Co-operative Education and Internship Program.
- That the federal
government support Canadian seniors by reversing its decision to raise the age
of eligibility for Old Age Security (OAS) and Guaranteed Income Supplement
(GIS) benefits.
- That
the federal government examine the feasibility of amending the Air
Travellers Security Charge Act to exempt Canadian registered charities from
the air travellers security charge when the charity is providing a free flight
to a low‐income Canadian who is
travelling to a required medical appointment.
- That
the federal government cease its undemocratic use of omnibus budget
legislation.