Budget once again fails on long-term planning and vision

The  post-election budget, as expected, tracks with the pre-election budget with only  two significant changes – $2.2 Billion for Quebec to harmonize sales taxes, and  the phase-out of one part of public financing for federal political  parties.

The Green Party of Canada remains concerned  by the Harper Government’s approach.  It has no long-term vision  and this budget has not provided for long term fiscal planning.  As  departing Auditor General Sheila Fraser noted in her final speech as AG (May 25,  Ottawa Canadian Club), without long term planning it is impossible to see how  the government can respond to pressing issues.  Fraser noted three  key areas of persistent failure identified through AG audits: the plight of  First Nations communities, the threat from crumbling infrastructure federally  and throughout all governmental sectors, and the crisis posed by a rapidly  changing climate.   None of these threats are properly addressed in  the budget, although some token measures are included in each  category.

Ironically, in several places in the budget,  climate impacts are mentioned as threats to global economic recovery, without  mentioning the connection to climate change. Food prices are linked to “weather-driven supply constraints” at page 37. Meanwhile, Canadian  infrastructure and compensation due to extreme weather events requiring spending  in the 2011 budget is also driven by climate change. These include: melting of  permafrost has compromised arctic ice roads leading to the need for $150 million  for the Inuvik to Tuktoyaktuk highway (page 102), $470 million to farmers  following extraordinary spring floods, and $72 million to repair small craft  harbours damaged through storm surges (page 105). These amounts are the tip of a  very large iceberg, as the former Auditor General has warned. In contrast, the  three areas identified by the former Auditor General were core elements of the  2011 Green Party Platform.

There are also threats to the relatively  rosy fiscal picture presented by the government.  The federal  government has benefitted from relatively low interest rates on Canada’s debt,  due to the US Federal Reserve’s tendency to keep interest rates low in times of  crisis.  The interest rates may not remain low.  As  well, the questionable strength of the US economy leaves room for concern about  on-going growth and health in the Canadian economy.

The current government approach has not left  room for resilience in the face of any nasty shocks in the international  picture.  It also does not anticipate the threats of climate  impacts and of collapsing infrastructure.

The sole focus of the budget is deficit  reduction while maintaining tax cuts for corporations.  The  accelerated cuts to the deficit remain to be revealed following Strategic and  Operating Review in next year’s budget.

“Our approach would differ.  We  agree that Canada needs to eliminate the deficit, but we do not agree Canada  needs to increase tax cuts to corporations.  Given global  uncertainties, we think Canada needs to rebalance its position in the OECD to be  closer to the middle of the pack in terms of government tax revenue and focus  less on program cuts.  Overall, we need to think beyond 2015 to see  how we can best strengthen our economy while eliminating the deficit and having  some flexibility to cushion unexpected shocks,” noted Elizabeth May, MP for  Saanich Gulf Islands and leader of the Green Party.  “This budget  and fiscal plan only works if nothing goes wrong.  Prudent planning  would build in a longer-term view and a margin for error.”