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.”