The government is saying the right things in this budget about our economic and social challenges, but it has little fiscal room to take aggressive action.
I’m going to borrow from some of the buzzwordy language in vogue with the government right now as a metaphor for Budget 2017 – it’s like an automated car that is probably going down the right road, but its electric battery is only partly charged.
Finance Minister Bill Morneau concedes as much in his speech to the Commons: “Now we realize that there is much work ahead of us than behind us. But I remain inspired that we’re on the right path.”
The budget document suggests the government’s policy thinkers are focused on the challenges the country is facing, in terms of the rapidly changing nature of work, the productivity gap, climate change (including its direct consequences on people in Canada), and the fact that some groups do not benefit from economic growth as much as others (for example, newcomers and Indigenous people). There are very loud echoes here from the recommendations made by the Finance Department’s Advisory Council on Economic Growth, led by international management consultant Dominic Barton.
But while the thinking outlined in the budget is ambitious, the actions are modest and the details are vague on the bigger projects. For example, while it was billed around town as the innovation budget, the plan for improving Canadian productivity and competitiveness was only partly fleshed out.
In considering this budget, it’s important to think back to Budget 2016, which gets nearly as much space in this year’s document as the fresh material does. Last year, the Liberals stretched spending as far as they thought their political capital would allow, allocating $50 billion over five years, including the successful Canadian Child Benefit. This sent the federal deficit to around $30 billion, and forced the government to promise that, at least, the debt-to-GDP ratio would not be much more than 31 percent.
Given those self-imposed constraints, it’s not surprising that this year’s forecast new spending is only a fraction of what it was a year ago.
Let’s look at just two areas of earnest, yet modest action.
Women in the workforce
The government’s economic growth council recently underlined the importance of encouraging women’s participation in the labour market. This is not just a nice idea — women have been identified as a major driver of growth. But there are major barriers to women’s labour market participation. Chief among them is the lack of affordable child care, particularly at the toddler and infant stage. The number of working women has flatlined in recent years. (The Globe and Mail’s Doug Saunders wrote an excellent article about what Germany is doing to get women back to work after having children).
There are two main tools in this year’s budget to address this – changes to the parental leave policy, and a new child-care strategy. These are modest gestures.
Parents will be able to take leave over an 18-month period, rather than 12 months, which should help some moms cover the difficult and expensive child-care period when babies are 12-18 months old. The EI premiums would be spread more thinly out over the 18 months.
But as Carleton University’s Jennifer Robson has noted, lower income families might not be able to afford to live with the lower premiums over 18 months. As well, the new measure doesn’t address the fact that just two-thirds of new moms qualify for benefits, due to the types of jobs they held before giving birth.
New child-care funding of $7 billion over 10 years is welcome, and this is the kind of long-term strategy that advocates have called for. But the amount doesn’t match what Ottawa was prepared to spend more than a decade ago, when the previous Liberal government came up with a national child care plan that would see $5 billion spent over 5 years. (This plan was promptly shelved by Stephen Harper’s Conservatives). The 2017 plan will also include early learning and child care services on and off reserves – we don’t know what proportion of the $7 billion will be earmarked for Indigenous people.
Also, agreements with the provinces on the child-care strategy are only in their infancy, which is why the government is careful to say the money could create 40,000 spaces.
It’s good to see the government’s gender-based analysis included in the budget, for the first time. To make it meaningful, however, the analysis needs to be accompanied by specific goals for improving the status of women in Canada. For example, what is the plan for reducing the gender wage gap, or increasing women’s participation in the workforce?
It needs to be said, however, that it’s encouraging to see issues that are important to women and their agency gaining more traction in the mainstream discussion around the budget, not just relegated to a sidebar. (For a walk down memory lane of how these critical issues are dismissed as business irritants, see the discussion after the budget around parental leave on CBC’s On The Money, at around the minute 34:00 mark.)
Preparing for the changing nature of work
It’s some comfort that the government appears to be focused on the prospect of millions of Canadians finding themselves out of work in the not-so-distant-future because of disruptive new technologies, including artificial intelligence and automation. (On this topic, see the recent Policy Options’ articles by David Ticoll and Sunil Johal and Jordann Thirgood). There’s also the matter of precarious work — more and more workers have to stitch together a living with a bunch of different contracts and projects, without the benefits or protections of stable employment.
The response to the problem of precarious work is in a number of initiatives, such as those that help Canadians keep their EI benefits if they take training courses, or help part-time students and students with dependents access federal grants; the provision of more money for work-integrated learning projects; and support for Pathways to Education Canada, that helps low-income youth complete their studies.
Some of the ideas are only embryonic, such as a pilot project to make adult students eligible for student loans, or a new organization that will supposedly help support skills development.
More ambitious programs or strategies for helping workers in specific sectors that are at risk of job loss (like the trucking industry) are not addressed. And where is the kind of on-the-job, lifetime skills training that is de rigueur in some European countries (where organized labour, the state and the private sector work together)? We’re just not there yet.
And there is no attempt in this budget to broach the complicated issue of the overall state of the social safety net, and whether it is strong enough to cope with the large scale unemployment on the horizon (on this the provinces are further ahead, with their work on minimum basic income).
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A small postscript – Someone in the government appears to be paying attention to the 1 million Canadian children whose parents don’t take advantage of the free dollars the government offers for post-secondary education through the Canada Learning Bond, an issue that Andrew Parkin drew attention to in October 2016. The budget earmarks $12.5 million for a pilot project to figure out how to increase awareness of the bond.
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