Wednesday, February 4, 2009

Grading the Budget: Some Positive Short-Term Measures, but an Utter Failure to Invest in Our Future / Where Liberals Go From Here

This week has not allowed me any time to blog meaningfully up until now, but with the budget now passed first reading last night I thought it would be a good time to finally add my two cents and where we go from here. I had fully expected the budget to pass and it seems polls have validated the decision as something that enjoys widespread public support, particularly with the quarterly reports amendment. That said, given that we know there are many flaws in this budget, I would have much rather seen 50 Liberal MPs vote against it (and the rest stay home) and still let it pass than see any Liberal MPs stand up to support it (I just don't like the idea of Liberals voting for a Conservative budget, I took the same position under Dion, and I'm not sure Liberals have ever happened voted for a Conservative budget before). I also would rather have seen the caucus vote as one because I'm concerned about the precedent being set of allowing one province of MPs to vote different from another on a budget vote. But I can accept I may hold a minority view on those two fronts and I suspect the public really doesn't care (and may have very soon forgotten) about those latter two distinctions anyway. Above all it seems the public just wanted to see the stimulus money flow and Parliament to get back down to work.

So on to the budget itself...

1) Protecting the Most Vulnerable Canadians: Grade: C +

I had said I was hoping for significant investments in social housing, aboriginal communities and poverty reduction along with enhancements to EI.

On the first three in truth there was more there than I would have expected a few weeks ago from these guys, and while I would have liked to have seen more significant investments on these fronts (and I know the savings could have been found by eliminating funding for other less-pressing projects and subsidies of which there were many in this budget), it's a long overdue step in the right direction and Liberal must keep pushing them further.

However, where the budget really does fail on protecting the vulnerable is with EI. Harper himself says this could be the worst downturn since the depression and he doesn't think that warrants extra help for the unemployed? He doesn't think they deserve to get their first cheque sooner when layoffs are increasing dramatically? It was positive to see him extend the length people could be on EI, but it was not enough.

I also have huge reservations over their revival of the pay equity attack from the fall fiscal update which seems like a slap in the face from a party that claims to be more conciliatory now, but since that I believe would be dealt with in separate legislation I won't get overly hung up about it, but when such legislation comes Liberals must vote against it.

2) Protecting Canadians’ jobs, today and in every region of the country: Grade: B-

I had said I was hoping for dedicated aid to the manufacturing sector and other hard hit industries to protect jobs in those areas, that there must be significant investments in job re-training, investments in infrastructure, the culture industry and new actions taken to address the credit crisis. I think the Conservatives did a reasonable/passable job on these fronts.

However, I'm not impressed with the scatter gun way it seems the infrastructure money will be distributed or that it will be need be matched by municipalities that may not be able to afford it.

3) Creating the jobs of tomorrow, and enhanced our competitiveness and productivity without leaving debt and deficit behind for future generations.
Grade: F

I said the budget should take major steps to begin greening our economy (though major investments in alternative energy and green infrastructure), provide greater aid for home retrofits, increase investments in early learning and child care (to invest in our children's future) and post-secondary education, and have a clearly mapped out plan to get us back to surplus that does not involve asset sales or ideological social program cuts.

With the exception of some money for home retrofits (that I believe only starts if you have $1000 to spend) the budget failed on all of these fronts. The investments in green infrastructure and the environment in general were paltry especially in comparison to what other countries are doing or even what past Liberal budgets have done. There was NO attempt to green the economy as our neighbours to the South it seems will be doing anyway in our absence.

There were no meaningfully investments in post-secondary education aside from helping build infrastructure on campus. Universities need much more than that to compete with the funding they get in the U.S. and to adapt to the reality of a growing percentage of the population seeking college and bachelor's degrees.

There were essentially no investments in early learning child care despite that fact that countries with national child care networks are greatly outperforming us economically right now and we were rated DEAD LAST in the western world in our investments on this issue.

The budget also inexplicably cuts funding for research councils and provided ZERO funding for the Genome Project (which Canada may now to have pull out of as an international partner) and other key medical research programs. That is a complete travesty and has to be addressed at the Finance committee. How do you justify taking away significant funding from key projects in the biggest spending budget ever?

And the plan to return to surplus was extremely brief, based on surely faulty estimates and did involve questionable asset sales. I have no faith in said plan to return to balanced budgets whatsoever. I do believe deficits were inevitable given the global economic downturn but the Cons terrible management of the public finances with reckless spending and their GST cuts (that few people have really noticed and haven't helped economic productivity) have made the deficit far worse than it ever had to be and it's appalling that they really seem to have no idea of how to get us out of it.

I'd love to hear a sound argument from anyone as to how this budget really helps "create the jobs of the future" or doesn't saddle future generations with debt. The budget is an monumental disappointment on that front.

Overall Grade: C-

This budget lacked any clear focus and was just so all over the map that they lose points for that because Canadians deserve so much better in these tough times. There's also many subsidies in there for people to do things they would already be doing and others will be out reach to those at the lower income spectrum. To boot there are modest middle income tax cuts financed by deficit spending (which never makes sense for funding tax cuts) that won't stimulate the economy and will make it more difficult to get back to surplus (much better as economic stimulus while also helping the poor would have been to increase the GST rebate). At the same time, the Conservatives went a lot farther on some progressive issues that I had thought they would so the budget wasn't a complete disaster. But given that I agreed with Michael Ignatieff's statement before the budget that the most important criteria to consider was "will it create the jobs of tomorrow?" I can't help but give that the biggest weight in the big picture of how good this budget is for Canada. It's for that reason I cringe where I hear this being called a "Liberal budget" as the Liberals would never have produced something so shoddy. While I'm sure the Conservatives really could care less what a lowly Liberal blogger thinks or how she grades their budget (or how Calgary Grit or economists grade it for that matter), we can't forget where this budget fails badly and have to keep reminding Canadians why they deserve better.

So given that the budget badly underperforms in key areas, but Canadians badly seem to want to see a budget passed ASAP that provides economic stimulus I hope we propose sensible, reasoned, amendments in committee after second reading (which is what I suggested as well before the budget was tabled). Committee votes aren't votes of confidence and there is no threat of bringing the government down there. The opposition has a majority and should set aside differences to get meaningful results and if the Conservative obstruct reasonable proposals and delay their own budget they will be the ones looking worse for it. If the other opposition parties refuse to support progressive committee amendments that's just as unforgivable.

We obviously can't overhaul the budget but we can fix many holes. For instance, funding can surely be found for the Genome Project it would be travesty not to when so many other projects were funded. The budgets of the Tri-Councils (SSHRC, CIHR, NSERC) for research should also not be cut. We could also remove the two week waiting period for EI and remove the need for matching funding from municipalities for infrastructure funds to be doled out. We could attach greater strings to ensure infrastructure money goes to more green projects to make up the budget's major shortfall on the environment. As well, I honestly believe the home renovation rebates should only be for green home renovations that increase energy efficiency and not for things like paving your driveway. That would SAVE the government tons of money to free up elsewhere while also being better for the environment. Those are just a few possibilities (though I know the last won't happen because there would outcries from people who had already gone ahead with plans for non-eco related renovations, but it would be far better public policy).

But regardless of what pans out with this budget, a very sad political reality remains: time and again, it seems is that to be successful politically means placing priority on the "here and now" well above any considerations of the long-term. I believe that is a major reason why a carbon tax, amongst other sensible policies (e.g., large investments in Green infrastructure projects), have been difficult to sell. And I believe it's why this budget that does reasonably well on the here and now front is popular, despite its failure to look beyond the horizon. But until we get a Prime Minister that has his/her eyes on the next decade ahead, and not just the next election, our country will remain in deep trouble.

So where do we go from here? If we are honest with ourselves we have to admit that with the passage of this budget (regardless of any amendments in committee) we return to a 1993 financial situation (I believe the deficit numbers will turn out much worse than the budget currently predicts: Bob Rae provided some good reasons why here). It took Liberals at least 5 years to be able to start making any major social investments again once we took power and it required very painful decisions in order to bring us back to that situation of being able to make such investments. The passage of this budget (and of course the economic realities that have decimated federal coffers apart from the budget) means our platform in the next election will likely only be able to promise a fraction over the next 4 years of what we promised last fall. So within that reality we need a long-term vision badly (and not one based on vagaries with specific ideas for the future and that won't be drop after just one election), but we also need the short-term ideas that win elections. People mocked the 10 year $70 billion infrastructure plan because of sticker shock but in reality 10 year plans are what the country needs, but it's a big job to convince the public of that, though it's not one we should shy away from.

So I hope the Liberal Party can find the right balance between short-term political gains and long-term policy goals in the months ahead, because Canada desperately needs it to. This government doesn't get it, they won't get it, and with each year they remain in power the further the rest of the Western world will be leaving us in the dust.

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BeyondGreen said...

We need to do everything in our power to reduce our dependence on foreign oil.We have so much available to use such as wind and solar as well as technologies to reduce our dependence on fossil fuels. There could be no better investment in than to invest in energy independence. Create clean cheap energy,create millions of BADLY needed new green jobs, and reduce our dependence on foreign oil.The high cost of fuel this past year did serious damage to our society and economy. Record numbers of jobs and homes have been lost due to the direct impact on our economy.Oil is finite.We are using it globally at the rate of 2 X faster than new oil is being discovered. Added to the strain on our supplies foreign countries are bursting in populations and becoming modern.China and India alone are expected to add another 3 million vehicles to their highways in the next 2 decades. I just read a fantastic book called The Manhattan Project of 2009 Energy Independence Now by Jeff Wilson.Great Book!