When I joined the Department of Finance in Ottawa in 1966, the government budget was run off on a Gestetner duplicating machine in a large room not far from my office.
George was in charge; not many copies were printed. Budget secrecy was a big deal. The budget itself, not so much — but the 1967 budget included financial planning for the debut of medicare.
Budget day 2017 is a huge media and public relations event, as it has been for many years. In the run up, opinion formation is a priority for big accounting and law firms, banks, and corporate lobby groups who aim to intimidate policymakers.
The current federal budget process is a guide to how the world works today — it’s a textbook example of the propaganda model, with the media playing its assigned role.
On budget day, a nonsense detector comes in handy. Here is mine.
1. When you hear the word “deficit” or “debt” as a reproach, this is a roundabout way of calling for less government. It has little to do with the financial health of Canada. UBC economist (and Liberal adviser) Kevin Milligan has shown that Canadian government has been shrinking in size for the last 25 years.
2. A classic con game has been at work in budget making. Reduce income taxes (Mulroney, 1987); yell about the resulting deficits and cut spending (Chrétien, 1995); reduce income taxes (Chrétien, 2000); reduce taxes and GST (Harper, 2007-08); watch government continue to shrink while unmet needs grow.
3. As with medicare, fulfilling future needs requires planned spending today, not cutbacks and restrictions. Who in their right mind would say we need to spend less on hospital care? Is it so drivers with tax breaks have more money for car repairs instead? What is the point of less money for public transit? Is it so banks can write more car loans? Yet, that is what smaller government arguments amount to: less money being spent on basic human needs and more money for those who already have enough, to increase their personal consumption, bank loans or savings.
4. Government spending needs to be examined. Does it make sense to first buy fighter jets? No. Should we have universal child care now? Yes. Budget day focuses on tax changes instead.
5. Taxes forgiven are also expenditures. Companies can write off investment costs plus interest charges against taxes they owe. The financial impact is the same as if those companies received a cheque from the rest of us. These tax expenditures should be voted upon every year in Parliament, not slipped by us as recurring items.
6. Tax expenditures favour richer individuals. Saving for retirement? You get to shelter income every year from taxes. RRSP contributions provide tax-free compounding of income on investment instruments inside the plan. Contribution limits expand regularly — the maximum allowed in 2015 was just under $25,000.
7. More budgetary benefits are available to the wealthy than to those in need. Welfare rates in B.C. have been the same for the last nine years: $610 per month for a single person. Such injustices are facilitated by a budget process which keeps income disparity and poverty out of sight.
8. Arguments for abolishing regulations that protect the environment, provide security against financial fraud, protect us from dangerous drugs, contaminated food, and potentially lethal toys for sale to children make no sense and should never be take seriously. However, by saying deregulation is needed for “productivity,” attention gets diverted away from health, security and other pressing needs. Deregulation follows.
9. “We need to improve productivity” is an all-purpose excuse for cutting government spending, negotiating trade deals and privatizing public assets. Numbers generated for productivity assume the existing distribution of income is the right one. In fact, inequality — poor income distribution — is a problem that needs to be fixed, not accepted as a given. Productivity measurements assume that those who control production have the public interest at heart. In reality, absentee landlords, speculators and hedge funds make very poor owners, and new forms of social ownership are very much needed.
10. There is an Alternative Budget full of sensible policies. It’s been produced by the Canadian Centre for Policy Alternatives for 20 years. Alternative Budget 2017 shows how parents could have child care, poverty could be reduced, drugs costs could fall and be covered by public insurance, and quality of life in a host of areas such as recreation, the arts, and education improved. Download it, form a community group to discuss it, and invite your MP to a public meeting to answer for parliamentary inaction on the issues facing Canadians.
Duncan Cameron is former president of rabble.ca and writes a weekly column on politics and current affairs.
Photo: KMR Photography/flickr