An editorial in The Globe and Mail refers to it as a “tawdry deal with Jack Layton’s New Democrats.” A national columnist (John Ibbitson, The Globe and Mail) refers to the Liberals selling “their souls and their budget to the NDPâe¦” Another columnist (Andrew Coyne, National Post) writes “The spending discipline that was promised in February was stuffed in a $4.6-billion envelope and passed to the NDP.” So is Jack Layton taking that money home with him or is it public money that will be used to provide programs that many Canadians want?
That same editorial goes on to say, scornfully, “Thanks to last night’s vote, the NDP will get its wish list fulfilled, and the public purse will be $4.6-billion lighter.”
But there are other opinions about this budget.
“It’s not perfect, but it is the best federal budget we have seen in the last thirty years,” said Andrew Jackson, National Director of Social and Economic Policy for the Canadian Labour Congress. “The significant increases in social investment will promote a more equal, prosperous and sustainable society and must survive partisan positioning.”
Notable improvements include smarter investment in child care, urban and environmental infrastructure and labour training, said Jackson, adding that the overall revised budget more accurately reflects the priorities of working families.
The Alternative Federal Budget (AFB) economists say that the revised budget, including the changes negotiated with the NDP, goes further to meet real social needs than the budgets of recent years.
“While the revised budget falls short of major prescriptions advanced in the Alternative Federal Budget, it is both affordable and a substantial improvement over past budgets,” said Ellen Russell, senior economist with the Canadian Centre for Policy Alternatives (CCPA).
Russell said that the government would have sufficient resources to pay for all of the new spending outlined in the governmentâe(TM)s original budget, as well as the $4.6 billion in new measures, with room left over. The analyses of all of the independent forecasters engaged by the House of Commons Finance Committee indicate that this additional spending could be accommodated without incurring a deficit.
Combined with larger federal surpluses in reality than what the government predicts in theory adds up to an affordable, improved budget. Russell noted that the AFB has been correct in pointing out that federal fiscal resources are greater than Canadians have been led to understand. For the last seven budgets, AFB forecasted surpluses have been more accurate than those of the Department of Finance.
The AFB assessment also acknowledged the revised budget’s shortcomings, not least that it provides funding commitments for only two years instead of ensuring ongoing support.
“Stable and predictable public funding is key to the long-term success of all policy goals, and this budget doesn’t provide that,” said John Anderson, Vice-President of Strategic Partnerships for the Canadian Council on Social Development (CCSD). He also noted that many pressing needs received scant attention in the revised budget.
“We can do this — and more,” said Russell. “In the meantime, Parliament should act on Canadians’ real priorities and pass this revised budget.”
Here are some of the details of the Liberal/NDP agreements on the amendments to the 2005 Budget Implementation Act (BIA):
Corporate Tax Cuts:
- The General Corporate Income Tax Rate reduction from 21 per cent to 19 per cent between 2008 and 2010 will be removed from the BIA.
- Measures to eliminate the Corporate Deficit Surtax will be removed from the BIA, with the exception of those that apply to small and medium sized businesses, which will be retained.
- The Capital Cost Allowance changes proposed in the Budget will proceed.
Investment in programs:
Parliamentary approval will be sought for additional investments over the two fiscal years 2005-06 and 2006-07 totalling $4.5 billion in the following areas: education and training; affordable housing; foreign aid; and the environment.
These investments, with other budget expenditures, will not have the effect of creating an annual deficit, or of preventing the Government of Canada from paying down the federal debt by a minimum of $2 billion, in each of these years:
- $1.6 billion for affordable housing, with no obligation for provincial matching funds and will include housing for Aboriginal Canadians.
- $1.5 billion in total for measures in two areas: to enhance access to post-secondary education, particularly aimed at assisting students through tuition reduction or other measures as appropriate; as well as money to support training programs, with no obligation for provincial matching funds. Both measures will include Aboriginal Canadians.
- $900 million for the environment, specifically a one-cent increase over the next two years of the currently envisaged gas tax transfer (to be used primarily for public transit and consistent with the national framework for the gas tax transfer), and an energy efficiency retrofit program for low income housing.
- $500 million as an increase to foreign aid, consistent with Canada’s commitment to accelerate progress towards the international target of 0.7 per cent of the Gross National Income being invested in overseas development assistance.
The Liberals and the NDP have agreed to work to expedite the budget through to Royal Assent, with the NDP agreeing to vote against any non-confidence vote, or similar measure during this period.
In addition, the parties agree to invest $100M, from within the fiscal framework, for the protection of workers’ earnings in the event of their employers’ bankruptcy.