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CHO ICES u d g e t 2 0 1 7
era l B
Alternative Fed
ISBN 978-1-77125-329-1

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5 Introduction
10 Macroeconomic Policy
27 Taxation
35 Agriculture
40 Arts and Culture
46 Child Care
52 Defence
57 Employment Insurance
63 Environment and Climate Change
69 First Nations
74 Gender Equality
81 Health Care
88 Housing and Neighbourhoods
93 Immigration
99 Infrastructure and Cities
105 International Development
111 Post-Secondary Education
118 Poverty
125 Public Services
131 Sector Development Policy
137 Seniors and Retirement Security
143 Trade: International Trade and Investment
149 Water
155 Youth
161 Acknowledgements

We are at a pivotal moment in Canadian High stakes

politics. In 2015, a new Liberal government
Canadians are giving a lot to the economy,
was elected on a wave of public desire for
but it is not giving back as much as it could.
more: more empathy, more investment, more
The median income in Canada was
acknowledgement that we can and must
$32,800 a year in 2014. Albertans did bet-
do better for each other and especially for
ter with $41,000 a year while in PEI the medi-
the most vulnerable. Some positive steps
an income was a low $25,200.1 Lower on the
have been taken in this direction. But much
spectrum, more than 1 million people in
more needs to be done to address Canadas
Canada worked for minimum wage in 2015.2
persistent inequalities and to get the econ-
At current rates, if they were lucky enough
omy moving.
to work 40 hours a week, a minimum-wage
This would be a very bad time to re-
worker would have brought home a low of
treat into the rhetoric of fairness while fall-
$22,152 a year in New Brunswick and as
ing short on implementing the policies that
much as $28,288 in Alberta.3 Miss one week
would take us there. Better than nothingor
of work at $10.65/hour, however, and you
better than Trumpis not good enough.
are officially living below the poverty line.
We must be clearheaded and unapologetic
The average house price in Canada is
in our vision for change or be ready to face
closing in on half a million dollarsdouble
the backlash from half-measures or broken
that if you live in Vancouver.4 A loaf of fac-
promises. More than ever Canadians need
tory bread will put you out nearly $5 if you
to see action on inequality, climate change,
live in Nunavut.5 The cost of enlisting your
poverty, and jobs.

High Stakes, Clear Choices: Alternative Federal Budget 2017 5

two-year-old in child care in Toronto now sistently provides greater benefits to high-
tops $16,000 a year. 6
income earners.18
More than 4.5 million Canadians lived For example, over 90% of the benefit of
below the poverty line in 2014, 991,000 of the capital gains tax break goes to the top
them children. Poverty rates are higher for
10% of income earners; 87% of the benefit
women, racialized people, and immigrants, goes to the top 1%.19 Over 10 years, federal
and they skyrocket for people living with corporate tax rates have been cut by nearly
disabilities, single mothers, and Aborigin- 50%, while those same corporations amassed
al people. More than half of all First Nation over $500 billion in excess cash.20
children live in poverty.8 In 2016, the federal government took
One in eight Canadians regularly experi- steps toward narrowing this income and
ence food insecurity and more than 800,000 wealth gap. It made significant investments
people visit a food bank each month. Near-9
in housing and clean water for First Na-
ly 100 First Nation communities continue to tion communities, for example, and im-
go without clean drinking water. 10
plemented the Canada Child Benefit (CCB),
More than a third of Inuit households which should reduce child poverty in Can-
live in overcrowded or unsafe housing. 11
ada by 14%. The government also introduced
And 3.5 million Canadians lack basic drug a 10% increase to the Guaranteed Income
coverage, leading many to simply go with- Supplement (GIS) top-up for poor single sen-
out important prescription medication. 12
iors, which we estimate will reduce poverty
Canada is on track to miss its green- among seniors by 5%.
house gas emissions target by a mile, leav- While these are positive measures, all of
ing future generations to foot the bill of cli- them advocated in past Alternative Feder-
mate change. al Budgets, they do not get us nearly close
Canadian household debt exceeded the enough to the goal of more equally shared
size of our economy (GDP) for the first time prosperity.
last year. The average Canadian owes $21,348 Economists and financial institutions
in consumer debt (not including mortgage around the world have recognized the detri-
debt). Canadas farmers are now carrying
mental effects of inequality on social co-
over $92 billion in total debt. Public stu-
hesion, health, and tolerance for ever-higher
dent debt in Canada had reached $28 bil- levels of poverty. This years AFB demon-
lion at last count. 15
strates that the money and tools are there
On the other side of the divide, the two to transform Canadas economy so that it is
richest Canadians hold the same amount working for everyone.
of wealth as the poorest 30% of the popu-
lation.16 The 100 highest-earning CEOs in
Clear choices
Canada took home an average of $9.5 mil-
lion each in 2015.17 And our tax system con- The AFB would establish a federal minimum
wage of $15 an hour, indexed to inflation, so

6 Canadian Centre for Policy Alternatives

that no full-time worker finds themselves liv- ous people living off reserve, people with
ing in poverty at the end of a 40-hour week. physical disabilities, and seniors).
By lowering the eligibility requirement for The AFB would increase access to pri-
employment insurance, our plan would pro- mary health care and mental health care
tect an additional 250,000 workers in pre- while introducing a national pharmacare
carious, contract, and part-time jobs from program. This would allow more than 3.5
downturns in the economy. million Canadians to fill prescriptions that
The AFB recognizes the diversity of Can- they would not otherwise be able to afford.
adas workforce and would rebalance invest- The AFB would support struggling fam-
ments across different sectors of the econ- ilies by providing access to affordable child
omy. Young workers would receive support care and home care, and ensuring the people
through the creation of paid internships and who provide those services are paid a living
greater access to apprenticeships. wage. It would eliminate tuition for post-
Investments in physical infrastructure secondary education and improve funding
would be dramatically larger and immedi- for First Nations students.
ately implemented. This money would be Parents would no longer need to trade
more responsive to community needs and in their own financial security to provide for
create jobs in predominantly male employ- their childrens education. New graduates
ment sectors, while investments in care ser- would no longer enter the workforce with
vices would create jobs in predominantly crippling debt. The 10,000 First Nations
female employment sectors. students on waiting lists for post-second-
Investments in Farm Credit Canada will ary education would be able to start school.
allow a new generation of farmers to con- Some of the money for these commit-
tinue without unmanageable debt loads. ments will come from ending the special
The AFB would direct funds raised tax treatment Canada gives to domestic and
through carbon taxes to low-income house- foreign corporations. For example, the AFB
holds, and to training for those affected by would tax capital gains at the same rate as
the shift to a greener economy. It would in- we tax employment income or profits, creat-
vest in making existing industries more sus- ing an additional $10 billion in government
tainable, and in supporting new industries, revenue. It would apply a 1% withholding
creating green-collar jobs and ensuring a tax on Canadian assets held in tax havens,
just transition for workers and their families. generating over $2 billion a year.
The AFB would ensure the federal gov- The AFB would eliminate provisions
ernment helps shoulder the burden of the in trade agreements that allow foreign in-
rising cost of living by increasing investments vestors to sue the Canadian government for
in basic necessities. It would build 10,000 lost business revenues that result from pub-
new units of affordable housing each year, lic interest regulation and other democrat-
with an additional 5,000 units for popula- ic decisions. This could be a key Canadian
tions with high housing needs (e.g, Indigen- demand in looming NAFTA renegotiations.

High Stakes, Clear Choices: Alternative Federal Budget 2017 7

Finally, governments need to do a better Notes
job of explaining who benefits from public 1 Statistics Canada. Table 206-0053 - Distribution of em-
spending. Growth in the economy is mean- ployment income of individuals by sex and work activ-
ity, Canada, provinces and selected census metropolitan
ingless if it is enjoyed only by a lucky few.
areas, annual, CANSIM.
The AFB demonstrates how its measures
2 Diane Galarneau and Eric Fecteau. (2014). The Ups
would impact households across the in-
and Downs of Minimum Wage. Ottawa: Statistics Canada.
come spectrum.
3 Government of Canada. Hourly Minimum Wages in
The bottom 90% of families (the vast ma- Canada for Adult Workers. Online:
jority who make less than $170,000 a year)

will be better off under our plan. Families 4 Canadian Real Estate Associtaion. National Aver-
making between $63,000 and $170,000 a age Price Map. Online:
year will pay slightly more taxes but receive
5 Nunavut Bureau of Statistics. Nunavut Food Price Survey.
new and better services like pharmacare,
free tuition, and affordable child care. The prices.aspx
AFB will lift one million Canadians out of
6 David Macdonald and Martha Friendly. (2016). A
poverty, reducing the overall poverty rate Growing Concern: 2016 Child Care Fees in Canadas Big
from 12% to 9%. Cities. Ottawa: Canadian Centre for Policy Alternatives.

Our country is diverse and the challen- 7 Statistics Canada. Table 206-0041 - Low income statis-
tics by age, sex and economic family type, Canada, prov-
ges we face are complex. The solutions to
inces and selected census metropolitan areas (CMAs),
our problems dont fit in a tweet. However, a annual, CANSIM (database). The low-income measure
more equal and sustainable society, a more after tax is used as the poverty line.

shared prosperity, is within our reach. 8 David Macdonald and Daniel Wilson. (2016). Shame-
If 2016 taught us anything it is that people ful Neglect: Indigenous Child Poverty in Canada. Ottawa:
Canadian Centre for Policy Alternatives.
are not happy with the status quo. The con-
9 V. Tarasuk, A. Mitchell, and N. Dachner. (2015). House-
sequences of not taking action now to fix
hold food insecurity in Canada, 2013. Toronto: Research to
Canadas inequalitiesthrough a fairer Identify Policy Options to Reduce Food Insecurity (PROOF).
tax system, renewed physical and social Online:
infrastructure, and enhanced public servi-
ceswill be severe. 10 Health Canada. Drinking Water Advisories in First
Nations Communities. Ottawa. Online: http://www.
The rhetoric of fairness has never been
enough. As recent events have shown us, water-dwa-eau-aqep-eng.php
the decision to cling to words rather than 11 Statistics Canada. National Household Survey 2011.
action to address inequality can have un- Ottawa.

tenable consequences. The stakes are high, 12 Julie White. (2016). A National Public Drug Plan For
but the choices are clear. All. Ottawa: Canadian Health Coalition.

13 Trans Union of Canada. TransUnion Q3 2016 Indus-

try Insights Report. Burlington.

14 Statistics Canada. CANSIM Table 002-0008 - Farm

debt outstanding, classified by lender.

8 Canadian Centre for Policy Alternatives

15 Statistics Canada. Survey of Financial Security, 2014. 19 Brian Murphy, Mike Veall, and Michael Wolfson.
(2015). Top-End Progressivity and Federal Tax Prefer-
16 Oxfam Canada. (2017). An economy for the 99 per-
ences in Canada: Estimates from Personal Income Tax
cent. Online:
Data. Canadian Tax Journal 63, no. 3.
20 Statistics Canada. CANSIM Table 378-0121: National
17 Hugh Mackenzie. (2017). Throwing Money at the Prob-
Balance Sheet Accounts, quarterly (dollars). See also:
lem: 10 Years of Executive Compensation. Ottawa: Can-
Jordan Brennan. (2015). Do Corporate Income tax Rate
adian Centre for Policy Alternatives.
Reductions Accelerate Growth. Ottawa: Canadian Cen-
18 David Macdonald. (2016). Out of the Shadows: Shin- tre for Policy Alternatives.
ing a light on Canadas unequal distribution of federal tax
expenditures, Canadian Centre for Policy Alternatives.

High Stakes, Clear Choices: Alternative Federal Budget 2017 9

Macroeconomic Policy

Slow growth is a choice, a bad one before tapering off in the following years
(see Table 2).
Slow growth continued through 2016. The
The Alternative Federal Budget (AFB)
second quarter of 2016 actually saw negative
chooses to do more. Our basic assumption
growth due to the Alberta wildfires. Thank-
is that employing people is good for eco-
fully, we avoided another recession. But as
nomic growth. The AFB therefore focus-
disruptions in the Canadian economy are to
es spending in areas with the highest job
be expected, and slow growth forecasted for
growth potential, including physical infra-
at least the short term (economists expect
structure, health care, and child care. The
real GDP growth of 2% in 2017, see Table 2),
investments we make would lift nominal
recession is not out of the question.
GDP growth back up to pre-recession levels
That said, slow growth is a choice for Can-
of 5.4% and 4.7% respectively in years one
ada, not an economic necessity. There are
and twothe result of creating hundreds
things the government can do to speed up a
of thousands of jobs (see Table 3).
full recovery and the longer we wait, the lar-
ger the cost will be in terms of employment
and wage growth. The Liberal government A dangerous way
has shown an interest in using fiscal policy to balance the books
to spur growth. However, its expansionary
What little growth Canada has experienced
instincts have been fairly muted. Expected
since the 2008 recession has been financed
deficits never go higher than $27.8 billion
by rapidly expanding private debt. The ex-
(in 2017-18) in Finance Canadas base case

10 Canadian Centre for Policy Alternatives

Figure 1Debt-to-GDP by sector3


Non-Financial Corporations


Households and Non-Profits

Federal Government
Provincial Governments Government

Local Governments
1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020

SourceCansim 378-0121, 385-0032, 380-0063, Update of Economic and Fiscal Projections (November 2016), and authors calculations.

pansion of that debt makes those sectors could have beenbut wasntused to make
of the economy much more vulnerable to productive investments in machinery and
interest rate fluctuations as well as asset equipment. Instead, this corporate money
price changes. Households are way outside was mostly consumed by non-productive
of their historical debt range: total mortgage mergers and acquisitions.
and consumer credit surpassed Canadas The provinces are also hitting all-time
GDP in 2016 for the first time. For compari- high debt levels worth 43% of national GDP,
son, the household debt-to-GDP ratio was which is just outside the historic range. Since
54% in 1990 (see Figure 1). 2015, the provinces have held more debt
There are no signs of this expansion than the federal government, a situation
stopping. If anything, the trend seems to that does not appear to be reversing itself.
have accelerated since the 20102015 pla- Historically, the provinces have held much
teau. In the last 12 months alone households less debt than the federal government. In
expanded their debt load by $77.1 billion. 1
fact, the federal government is at the low
Likewise, non-financial corporations end of its historical debt-to-GDP range, sit-
hold total debt worth 120% of GDP after a ting currently at 39%. That includes all debt,
substantial two-year borrowing binge. This not just accumulated deficits as presented in
is well above their historical debt-to-GDP budgets. Municipalities have little debt and
range of 80% to 100%. And it is debt that

High Stakes, Clear Choices: Alternative Federal Budget 2017 11

Figure 2Employment rate and AFB impact

AFB Plan



Employment Rate
61% Government Plan


2001 2003 2005 2007 2009 2011 2013 2015 2017 2019

SourceCansim 282-0087, Update of Economic and Fiscal Projections (November 2016), and authors calculations.

operate mostly on a cash basis, as they gen- However, since the 2009 recession, the op-
erally cannot run operating budget deficits. posite has occurred. The unemployment
The federal governments current plan rate has fallen, but relatively fewer people
is essentially to maintain the present fed- are looking for work. It is more helpful in
eral debt-to-GDP level for the next three this context to study the employment rate,
years. The AFB also maintains that level for since it will show the proportion of work-
the foreseeable future, as shown in Table 3. ing-age Canadians who have a job irrespec-
We can do this while running higher defi- tive of who is and isnt looking.
cits thanks to higher growth in the econ- The employment rate is lower today than
omy under our plan. The result is a stable it was at the worst point of the Great Reces-
ratio similar to what bank economists have sion, as shown in Figure 2. The federal gov-
endorsed. 2
ernments current plan has this rate remain-
ing at its present all-time low for another
year and then slowly climbing to where em-
Weak GDP growth hides
ployment sat in 2012. There appears to be
a weaker job market
no plan to get anywhere near the employ-
Intuitively, as the unemployment rate falls, ment levels of the mid-2000s.
more Canadians decide to enter the job mar- The AFB, on the other hand, would sub-
ket presuming jobs will be easier to find. stantially boost the employment rate over

12 Canadian Centre for Policy Alternatives

Figure 3Federal total expenditures as a share of GDP and AFB impact





AFB Plan

10% Government

1931 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2019

SourceStatistics Canada catalogue 11-516-X, Fiscal reference tables, Update of Economic and Fiscal Projections (November 2016), and authors calculations.

several years, as shown in Figure 2 and Table ing much larger than they were then. One
3. Actually, we improve on the federal base of the reasons the federal government has
case by 460,000 jobs by year three. The un- had a limited impact on economic and job
employment rate hits 6.4% under our plan, growth is that it is simply too small, by his-
not because people have giving up look- torical standards, for the task.
ing for work, but because they found a job. In comparison, the AFB spends $69.8
billion more in 2019 than the federal gov-
ernments current plan. While at first glance
Too small to make a difference
this may seem like a lot of money, federal
Federal expenditures as a share of the econ- expenditures would remain near the bot-
omy are close to all-time lows, as shown in tom of their historical range. In fact, the
Figure 3. Under the federal governments AFB plan is thriftier, in relative terms, than
plan they will hit a new record low of 14% any federal budget between 1970 and 1996.
by 2019. To put that number in perspective, Despite the massive changes brought in by
by the time Canadians go to the polls again the AFB, with many programs designed to
government spending will be lower than at expand over time, the net result is a falling
any time since 1939, despite federal respon- expenditure-to-GDP ratio, as new growth
sibilitiesfor old age security and universal more than offsets new expenditures.
health care, to name just two examplesbe-

High Stakes, Clear Choices: Alternative Federal Budget 2017 13

Figure 4Federal revenue as a share of GDP and AFB impact



AFB Plan


10% Plan


1931 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2019

SourceStatistics Canada catalogue 11-516-X, Fiscal reference tables, Update of Economic and Fiscal Projections (November 2016), and authors calculations.

On the other side of the ledger, federal our tax reform plan is focused on the high-
revenues are also near all-time lows rela- est earners, who have seen massive wage
tive to GDP. The current plan proposes no increases in the past 20 years. Despite this
change on this front. Despite the federal improvement to the distribution system,
government introducing some measures federal revenues as a share of GDP will sit
to raise tax revenue, such as the new top in the middle of their historical range, and
tax bracket, that money was spent to lower be nowhere near as high as they were in the
taxes mostly for individuals making more 1970s or 1980s.
than $89,000 a year. The corporate tax cuts The federal governments current plan
of the late 1990s and early 2000s substan- of holding deficits at 1% of GDP over the
tially reduced tax revenues, which never re- next three years is modest by historical stan-
covered. The present federal plan is to keep dards. Even though the 2009 deficit of 3.5%
tax revenues at a level not seen since 1949. of GDP was considered extraordinary at the
The AFB boosts revenues by $55.5 billion time, it was quite ordinary compared to any
a year by 2019-20. A sixth of that amount is year between 1975 and 1995. Likewise, the
due to more Canadians working, and there- AFB increases both revenues and expendi-
fore paying taxes, as opposed to tax changes tures by billions of dollars, but both would
per se (see Table 3 and the Taxation chap- sit at the low end of their historic ranges. As
ter). Improved revenue recovery through a result, the AFB deficit of $43.0 billion in

14 Canadian Centre for Policy Alternatives

Figure 5Federal deficit as a share of GDP and AFB impact


AFB Plan

-5% Government




1931 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2019

SourceStatistics Canada catalogue 11-516-X, Fiscal reference tables, Update of Economic and Fiscal Projections (November 2016), and authors calculations.

2017-18, or 2% of GDP, is also small by his- ment spending based on who is most likely
torical standards, and compared to the size to use specific programs and where those
Canadas economy it is little changed from people sit on the income spectrum. Much
the current plan. of the tax/transfer distributional modelling
(and costing) is performed using Statistics
Canadas tax modelling software, the So-
Who gains and who pays
cial Policy Simulation Database and Mod-
The AFB has been striving for some time to el (SPSD/M).4 Our program distribution em-
better understand and measure the distri- ploys proxies for benefit and distributes
butional implications of federal budgets. If expenditures accordingly.
our small group can perform these types of Under our plan, the bottom half of Can-
analyses, much larger federal departments adian familiesthose making under $63,000
with more resources can as well. Publishing a year before taxessee higher transfers
the gender, income, and poverty distribu- net of taxes. They are better off from a pure
tion of budgets makes them more transpar- income perspective. Families with gross
ent and easier to understand for Canadians. incomes between $63,000 and $126,000
The distribution of AFB impacts includes (deciles six through eight) do pay more in
not only cash changes due to the tax/trans- taxes net of transfers, but it amounts to less
fer system, but also the benefits of govern- than $1,000 per family. The top 5% of fam-

High Stakes, Clear Choices: Alternative Federal Budget 2017 15

Figure 6Distribution of AFB impacts (2017)








Tax/Transfer ($ Per Family) Program Spending ($ Per Family) Total Impact ($ Per Family)

1 2 3 4 5 6 7 8 9 9.5 10
Income Deciles

SourceDeciles are based on economic family total income (before taxes but after transfers), SPSDM 22.3 glass box, and authors calculations.5

iliesthose with incomes over $218,000see The income group that benefits the most
their taxes net of transfers rise by an average from the AFB is the lowest-earning 10% of
of $11,300 per family. This distribution can Canadian families. New transfers, such as
be contrasted with federal programs such the GST top-up of $1,800 per person and
as family income splitting, which provided boosting the Guaranteed Income Supple-
the largest net gains to the richest families. ment to $1,000 per senior, are targeted to
Despite paying slightly more in taxes this group, as are our improvements to so-
most families are better off under the AFB cial assistance. Changes in the tax code, in
plan. The services and programs they would particular closing loopholes for the rich,
receive are worth more than the increase predictably cost the richest 5% of families
in their tax bills. For example, our plan the most in net tax/transfer changes.
to eliminate university tuition fees, make On the programs side, free tuition and
child care more available and affordable, help for the homeless aid Canadas low-
and introduce national pharmacare, among est income decile. However, the benefits of
other programs, will provide a net benefit new programs are not restricted to the low-
for 90% of Canadian families (those mak- est earners. Many of the middle and upper
ing under $170,000 a year), as shown by the income deciles gain substantially from new
green line in Figure 6. AFB programs, especially free tuition, na-
tional pharmacare, and improved health

16 Canadian Centre for Policy Alternatives

Table 1AFB poverty impact (2017 LIM-AT)

Number in Poverty (000s) Number In Poverty After AFB (000s) Lifted out of Poverty by AFB (000s)
Children (<18 yrs) 753 476 277
Adults (1864 yrs) 2,615 2,222 393
Seniors (65 yrs) 830 490 340
All 4,198 3,189 1,010

SourcePoverty rate defined by LIM-AT, SPSDM 22.3 glass box, and authors calculations.7
NoteTotals may not add up due to rounding.

Figure 7AFB impact on poverty rates (2017)8





Children (<18 Years) Seniors (=>65 Years)
Adults (1864 Years) All

Pre-AFB Poverty Rate Post-AFB Poverty Rate Poverty Rate Change

SourcePoverty rate defined by LIM-AT, SPSDM 22.3 glass box, and authors calculations.9

care, as shown by the program spending The fully implemented AFB would lift just
bars of Figure 6. over one million Canadians out of poverty, as
The AFB illustrates what a transparent shown in Table 1. This breaks down to 277,000
poverty analysis would look like when ap- children, 393,000 adults, and 340,000 sen-
plied to federal budget measures. The fed- iors. Two-thirds of all seniors in this scen-
eral government has made some initial ario are women, reducing the poverty rate
attempts to do the same, but they have ex- among that group from 15.6% to 8.8%.
aggerated the impacts. 6

High Stakes, Clear Choices: Alternative Federal Budget 2017 17

Figure 8AFB impact on depth of poverty (2017)

With Kids, With Kids, With Elderly, With Elderly, Other, Other,
Single parent 2+ Adult 1 Adult 2+ Adult 1 Adult 2+ Adult All






Pre-AFB Average Depth of Poverty Post-AFB Average Depth of Poverty

SourcePoverty rate defined by LIM-AT, SPSDM 22.3 glass box and authors calculations10

The largest drop in poverty is experi- The AFB has a substantial impact on
enced by children and seniors, which both low incomes, even for families that are not
see their poverty rates fall by two-fifths. This lifted completely out of poverty, as shown
is due primarily to the new GST top-up of up in Figure 8. For example, our plan reduces
to $1,800 per person and GIS improvements the depth of poverty for single-parent fam-
of up to $1,000 per senior (see the Poverty ilies from $8,890 to $6,460, an improve-
and Inequality and the Seniors and Retire- ment of $2,430 a family. The average depth
ment chapters). The aggregate effect of the of poverty for two-parent families and other
AFB is to reduce the poverty rate from 11.6% households with more than one adult is re-
to 8.8%. duced by $1,440 and $1,010 respectively. For
An equally important measure of poverty elderly families with more than one adult the
is the average amount by which a family is average depth of poverty worsens, but this
below the poverty line. For instance, a sin- is because so many seniors near the poverty
gle additional dollar of income (from em- line are lifted above it, thereby eliminating
ployment or government transfers) could this offsetting effect on the average.
move a family from below the poverty line The federal government has committed
to above it, but it would make no practical to conducting a gender-based analysis of
difference in their lives. its 2017 budget.11 The AFB presents a model
for how this could look. Figure 9 illustrates

18 Canadian Centre for Policy Alternatives

Figure 9Gender distribution of AFB tax and transfer measures

GST top up
Social Assistance Female
GIS changes


All Transfers
Tax Impact
RRSP cap
Cancel Tuition
tax credit
Cancel stock
option deduction
Make capital
gains taxable
Cancel public
transit tax credit
Cancel flow through
shares deduction
Cancel third bracket
rate change
All Tax changes
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

SourceSPSDM 22.3 glass box and authors calculations.12

the breakdown by gender of who benefits top-up, which is paid to the lower earner,
and who pays for the AFBs major tax and low-income single adult men would benefit
transfer changes. more, as there are almost no other income
Most of the AFBs transfer changes bene- supports for this group. Across all transfers
fit women more than men. The Canada Child women benefit slightly more, but the split
Benefit (CCB) indexation in particular almost is surprisingly even.
exclusively benefits women. This is because Since men are heavily overrepresented
the CCB is paid to the lower earner in the among high earners they pay more in taxes
family, which is almost always a woman in a under the AFB plan. Our lowering of the
heterosexual couple. The GIS improvements RRSP cap, cancellation of stock option de-
go disproportionately to women, since sen- ductions, full inclusion of capital gains, the
ior women are much more likely to live in cancellation of the middle tax bracket change
poverty in the first place. and cancellation of the flow-through shares
On the other hand, the new GST top- deduction are particularly skewed toward
up of up to $1,800 per person is relatively high-income men, who are far more likely
evenly shared. While women would bene- to use these tax breaks. Cancellation of tu-
fit from the childrens portion of the GST ition and public transit deductions affect

High Stakes, Clear Choices: Alternative Federal Budget 2017 19

men and women roughly evenly, although Notes
women are slightly more affected. 1 Cansim 378-0121 up to Q3 2016. Loans including house-
holds and non-profit institutions serving households.

2 Bill Curry. Morneau vows prudent budget as Can-

Conclusion ada awaits U.S. policy changes. Globe and Mail, Janu-
ary 13, 2017.
This analysis has shown how the measures
3 Debt is Core Debt as defined by the Bank of Inter-
proposed by the AFB would substantial-
national Settlements (
ly strengthen employment and economic totcredit.htm) including debt obligations beyond just
growth, reduce poverty, and improve equal- the accumulated deficit generally contained in govern-
ment debt-to-GDP figures, as presented in Tables 2 and 3.
ity within a reasonable fiscal framework.
GDP growth and employment growth in par- 4 This analysis is based on Statistics Canadas Social
Policy Simulation Database Model 22.3. The assump-
ticular would be much larger in our scenar-
tions and calculations underlying the simulation results
io than in the federal governments current were prepared by David Macdonald and the responsibil-
plan. And these macroeconomic changes ity for the use and interpretation of these data is entire-
ly that of the authors.
do not even begin to describe the dramatic
5 See endnote 4.
improvements in programs as outlined in
the AFBs 22 chapters and summarized in 6 Jordan Press. Liberal government oversold child
benefits impact on poverty rates, documents suggest.
Table 4 below.
The Canadian Press, December 23, 2016.
The AFB also provides a template for
7 See endnote 4.
federal and provincial governments in-
8The LIM-AT line was estimated for 2017 such that the
terested in determining the distributional
aggregate poverty rate in 2017 matches the 2014 rate if
impact of their proposals. Our analyses of the GIS and CCB changes between 2014 and 2017 were
the effects of budget measures on poverty, included in the 2014 year.

gender, and income distribution are almost 9 See endnote 4.

entirely absent from present government 10 See endnote 4.

budgets, despite the much greater resour- 11 Finance Canada. A Plan for middle class progress:
ces at their disposal. fall economic statement 2016. November 2016, p. 37.

In short, the AFB presents a detailed and 12 See endnote 4.

eminently affordable plan for how the fed- 13 Finance Canada. Update of Economic and Fiscal Pro-
eral government could deliver on its prom- jections. November 2015.

ise of improving the lives of all Canadians

and ensuring the national wealth is shared
more equally.

20 Canadian Centre for Policy Alternatives

Table 2Base Case (Finance Canada)

Macroeconomic Indicators (mil) 2016 2017 2018 2019

Nominal GDP $2,027,000 $2,114,000 $2,192,000 $2,280,000
Real GDP growth 1.4% 2.0% 1.8% 1.8%
GDP inflation 0.6% 2.2% 1.8% 2.1%
Nominal GDP growth 2.0% 4.3% 3.7% 4.0%
Participation rate 65.8% 65.8% 66.2% 66.5%
Labour force 19,566 19,750 20,069 20,361
Employed (000s) 18,224 18,387 18,704 18,997
Employment rate 61.3% 61.3% 61.7% 62.0%
Unemployed (000s) 1,342 1,363 1,365 1,364
Unemployment rate 6.9% 6.9% 6.8% 6.7%

Budgetary Transactions (mil) 2016-17 2017-18 2018-19 2019-20

Revenues $291,100 $303,300 $313,200 $326,200
Program spending $291,300 $306,500 $313,200 $317,200
Debt service $24,900 $24,600 $25,900 $28,200
Budget balance (surplus/deficit) -$25,100 -$27,800 -$25,900 -$19,200
Closing debt (accumulated deficit) $642,000 $669,800 $695,700 $714,900

Budgetary Indicators as a Percentage of GDP

Revenues/GDP 14.4% 14.3% 14.3% 14.3%
Program spending/GDP 14.4% 14.5% 14.3% 13.9%
Budgetary balance/GDP -1.2% -1.3% -1.2% -0.8%
Debt/GDP 31.7% 31.7% 31.7% 31.4%

High Stakes, Clear Choices: Alternative Federal Budget 2017 21

Table 3AFB Case

2016-17 2017-18 2018-19 2019-20

Nominal GDP $2,027,000 $2,136,000 $2,236,000 $2,329,000
Nominal GDP growth 2.0% 5.4% 4.7% 4.2%

Revenues (mil)
Base case $291,100 $303,300 $313,200 $326,200
Net AFB revenue measures $41,400 $43,600 $45,900
Additional tax revenue due to higher GDP $3,200 $7,200 $9,600
Total $291,100 $347,900 $364,000 $381,700

Program Spending (mil)

Base Case $291,300 $306,500 $313,200 $317,200
Net AFB program measures $59,600 $65,300 $69,800
Total $291,300 $366,100 $378,500 $387,000

Debt service $24,900 $24,800 $26,300 $28,800

Budget balance (surplus/deficit) -$25,100 -$43,000 -$40,800 -$34,100
Closing debt (accumulated deficit) $642,000 $685,000 $725,800 $759,900

Budgetary Indicators as Percentage of GDP

Revenue/GDP 14.4% 16.3% 16.3% 16.4%
Program spending/GDP 14.4% 17.1% 16.9% 16.6%
Budgetary balance/GDP -1.2% -2.0% -1.8% -1.5%
Debt/GDP 31.7% 32.1% 32.5% 32.6%

AFB Employment Impact 2016 2017 2018 2019

AFB jobs created (000s) 277 450 460
Population (000s) 29,718 30,015 30,315 30,618
Participation rate 65.8% 66.7% 67.6% 67.9%
Labour force (000s) 19,566 20,020 20,493 20,790
Employed (000s) 18,224 18,664 19,154 19,457
Employment rate 61.3% 62.2% 63.2% 63.5%
Unemployed (000s) 1,342 1,356 1,339 1,333
Unemployment rate 6.9% 6.8% 6.5% 6.4%

NoteThe AFB merely modifies the base case as presented in the most recent economic update in the fall of 2016; it does not start from different macroeconomic assumptions.
As such, assumptions of GDP, employment, and expenditure and revenue growth are identical between the base case and the AFB, except where these are explicitly changed
by the AFB. The AFB case includes all costed items in the AFB that impact federal finances as laid out in summary in Table 4.

22 Canadian Centre for Policy Alternatives

Table 4AFB Actions ($mil)
2017-2018 2018-19 2019-20
Support farmers in climate change adjustments 250 250 250
Restore Canadian Grain Commission funding 20 20 19
Rebuild government research capacity 100 100 100

Arts & Culture

Increase and extend Canada Cultural Spaces Fund 188 188
Showcasing Canada Program 25 25

Indigenous community child care development 100
Provincial child care framework development 500
Expand affordable child care 1,600 2,600

International peacekeeping training centre 5 5 5
Cancel purchase of F-35s in place of Super Hornets (400) (400) (400)

Employment Insurance
Keep EI premiums at $1.88 per $100 of insurable earnings (3,500) (3,500) (3,500)
Additional eight weeks of leave for non-birthing parents 600 600 600
Low-income supplement 900 900 900
Establish uniform EI entry of 360 hours 2,000 2,000 2,000

Environment and Climate Change

Remove federal fossil fuel subsidies (1,500) (1,500) (1,500)
Global climate financing 1,000 1,000 1,000
Renew funding for the Clean Energy Fund 1,000 1,000 1,000
Re-establish home energy efficiency retrofit program 400 400 400
Terrestrial protected areas 145 95 95
Working landscapes 123 119 146
Ocean conservation 146 146 146

First Nations
Language revitalization 154 154 154
Invest in First Nations child and family services 155 155 155
Invest in First Nations housing, water, and infrastructure 1,900 1,900 1,900
Investments in K-12 on-reserve schools 653 653 653
Investments in PSSSP for post-secondary students 142 142 142
Health Accord for First Nations 1,581 1,203 1,208

High Stakes, Clear Choices: Alternative Federal Budget 2017 23

Gender Equality
National plan to address violence against women 500 500 500
Increase funding for Status of Women Canada 100 100 100
Implement equal pay in federal government 10 10 10

Health Care
Health Accord with 6% annual escalator 632 1,561 2,458
National pharmacare 3,390 3,831 4,597
New long-term and residential care spaces 2,300 2,300 2,300
Train 3,500 new mental health professionals 100 100 150

Housing and Neighbourhoods

Preserve existing social housing stock 1,000 1,000 1,000
Investment in affordable housing funding 1,000 1,000 1,000
Investment in supportive housing 1,000 1,000 1,000

Foreign credential recognition and training 100 100 100
Improve support for refugees 50 50 50

Infrastructure and Cities

Community infrastructure transfer 5,400 5,400 5,400
Support for non-profit business models 10 10 10
Support community economic development investment funds 15 15 15
Neighbourhood revitalization program 100 100 100

International Development
Boost development funding toward 0.7% of GNI 760 1,642 2,664

Post-Secondary Education
Eliminate the federal tuition tax credit (1,195) (1,195) (1,195)
Cancel the Canada Job Grant (300) (300) (300)
Cancel RESP (140) (140) (140)
Eliminate the student loan interest tax credit (45) (45) (45)
Reduce the scientific research and experimental development credit by 0.8% (25) (25) (25)
Core funding for post-secondary education 5,480 5,480 5,480
Eliminate tuition fees for all students 3,590 3,590 3,590
Improve labour market Information 15 15 15
Create national labour market partners forum 5 5 5
Training for unemployed Canadians who do not qualify for EI 300 300 300
Improve union-based apprenticeship training 125 125 125

24 Canadian Centre for Policy Alternatives

Harmonize provincial-territorial apprenticeship training 15 15 15
Eliminate interest on student loans 283 283 283
Funding for PSE research and scholarships 146 146 146
English as an additional language (EAL) training 53 53 53

Poverty reduction transfer to provinces 4,000 4,000 4,000
Create a GST top-up 5,400 5,400 5,400
Index CCB to inflation 730 1,460 2,190

Public Services
Assess the budget cut impacts and restore programs where needed 500 2,000 2,000

Sectoral Development Policy

Sectoral development councils 50 50 50
Enhance value-added production in key sectors 450 450 450

Seniors and Retirement Security

Index OAS to average industrial wage growth 60 66 70
Limit RRSP contributions to $20,000/year (950) (950) (950)
Cancel pension income splitting (1,280) (1,344) (1,411)
Increase GIS top-up for coupled and single seniors 1,990 1,990 1,990

Eliminate stock option deduction (670) (670) (670)
Stop abuse of small business tax rate (500) (500) (500)
Equalize capital gains treatment (personal) (5,000) (5,000) (5,000)
Equalize capital gains treatment (corporate) (5,000) (5,000) (5,000)
Lifetime cap on TFSA contributions at $50,000 (100) (100) (100)
Cancel boutique tax credits (200) (200) (200)
Eliminate flow-through mineral exploration credit (125) (125) (125)
Eliminate corporate meals and entertainment expense (400) (400) (400)
Limit CEO pay deductions to $1 million/person (150) (175) (200)
Increase corporate income taxes from 15% to 21% (6,000) (7,500) (9,000)
Small business tax rate to 15% (1,180) (1,770) (2,360)
Economic substance test for offshore subsidiaries (400) (400) (400)
Capping interest payments to offshore subsidiaries (200) (200) (200)
Tax havens withholding tax (2,000) (2,000) (2,000)
Taxing foreign e-commerce corporate profits (600) (600) (600)
End GST/HST exemption for foreign e-commerce companies (400) (400) (400)
Financial activities tax (5,000) (5,100) (5,202)

High Stakes, Clear Choices: Alternative Federal Budget 2017 25

Inheritance tax on $5-million (and up) estates (2,000) (2,000) (2,000)
Cancel second income tax bracket change (20.5% to 22%) (2,800) (2,800) (2,800)

National public water and wastewater fund 6,500 6,500 6,500
Implementation of wastewater systems effluent regulations 1,000 1,000 1,000
Water infrastructure aid for small municipalities 100 100 100
Water operator training, public sector certification and conservation programs 75 75 75
Assess environmental impact of energy, tar sands, mining developments 50 50 50
Reinstate cut water programs at Environment 50 50 50
and Climate Change Canada and Fisheries and Oceans Canada
Protect Canadas Great Lakes and freshwater supply 500 950 950
Establish water quality and quantity monitoring frameworks 109 109 109
Groundwater protection plan 3 3 3
Review of virtual water exports 1 1 1

Youth labour market planning board 30 30 30
Renewal of federal-funded internships 300 300 300
Statistics Canada tracking of unpaid internships and NEET 2 2 2
Proactive Labour Code enforcement 10 10 10

Total AFB Expenditure Changes 59,562 65,281 69,782

Total AFB Revenue Changes (41,360) (43,639) (45,923)

26 Canadian Centre for Policy Alternatives


Our tax system has become overly complex and Eliminate regressive and ineffective tax

riddled with loopholes and provisions that worsen loopholes.
Canadas last comprehensive tax review (the End corporate tax dodging and make
Carter commission) happened 51 years ago. corporations pay their fair share.
Our tax system needs to be made more Tax foreign e-commerce companies to level the
equitable. playing field.
Tax havens have become a common way for Increase taxes on banks and finance.
corporations to avoid paying their fair share.
Our corporate tax structure does not fairly Introduce wealth/inheritance taxes and make
address foreign companies. income taxes more progressive.

Background loopholes and increased the capacity of the

Canada Revenue Agency to go after high-
The Liberal government has taken sever-
income individuals evading taxes through
al positive steps, all of them promoted in
offshore tax havens.
past Alternative Federal Budgets, to make
While these actions are a good start,
the federal tax system fairer. It has added
much more needs to be done to reform our
another top tax bracket of 33% on incomes
tax system. Not only will the measures pro-
above $200,000. It replaced the Universal
posed below make taxes fairer in Canada,
Child Care Benefit with a more progressive
they will allow the government to fund the
Canada Child Benefit, which should reduce
social, economic, and environmental servi-
child poverty by 14%, according to AFB esti-
ces and investments Canadians deserve, and
mates. It cancelled family income splitting
help pay for other promises the government
and the previous governments planned
has made but not yet delivered on. The last
doubling of the annual tax-free savings ac-
time Canada conducted a comprehensive tax
count contribution limit, both highly re-
review (the Diefenbaker-appointed Carter
gressive tax measures that benefited main-
commission) was 51 years ago. Since then,
ly Canadas well-off. It has closed some tax
our tax system has become overly complex

High Stakes, Clear Choices: Alternative Federal Budget 2017 27

and riddled with loopholes that worsen in- us pay on our working income. Not only is
equalities. The system does not address our the deduction highly regressive, with over
current challenges, nor does it fairly tax new 90% of the benefit going to the top 1% of
business structures. tax filers (who make more than $250,000
annually), it is also bad for the economy,
as it encourages CEOs to inflate short-term
AFB Actions stock prices through share buybacks instead
of investing in the economy.3
There are a number of straightforward tax
measures that could generate significant
2. End the abuse of the small business
revenue for public services, broaden our tax
tax rate (savings: about $500 million a
base, make the tax system fairer, reduce in-
equalities, and promote economic and pro-
Tax laws allow accountants, dentists, doc-
ductivity growth.
tors, and small business operators to provide
their services through Canadian-controlled
Action: Eliminate regressive private corporations (CCPCs) rather than as
and ineffective tax loopholes employees. These individuals then pay tax
and simplify the tax system on income held within these businesses at
(savings: $16 billion a year). the much lower small business rate of 11%
on their first $500,000 of income instead of
Recent analysis by the Canadian Centre for
at federal personal income tax rates of up
Policy Alternatives exposes how over 90% of
to 33%. Individuals may also split person-
federal personal tax expenditures provide
al income among family members to avoid
greater benefits to higher-income earners.1
paying taxes.4
It is clear proof of how Canadas tax sys-
tem disproportionately benefits the wealthy
3. Tax income from capital gains
and at a great cost to the public. The fed-
and investments at the same rate as
eral government has initiated a review of
employment income (savings: $10
its tax expenditures, hoping to generate $3
billion a year)
billion in annual savings. But this is a very
Individuals who profit from the sale of in-
modest target.2 The government could save
vestments or assets pay tax at half the rate
at least $16 billion through the following 10
of tax on income from employment thanks
simple tax reforms.
to the partial inclusion of capital gains. Over
90% of the benefit of this loophole on the
1. Eliminate the stock option deduction
personal income tax side goes to the richest
(savings: $670 million a year)
10% of income earners and 87% goes to the
This loophole allows corporate executives
top 1%.5 Corporations also pay tax on half
to pay tax on their stock option compensa-
of their capital gains. This provision was
tion at half the statutory rate that the rest of
supposedly introduced to encourage sav-

28 Canadian Centre for Policy Alternatives

ings and investment, but since it was ex- 5. Reduce the annual RRSP
panded business investment as a share of contribution limit to $20,000 and
the economy has declined. Under our plan cancel pension income splitting
the government would tax capital gains The AFB would enhance public retirement
for individuals and businesses at the same programs instead, including the Canada
rate as employment and other income, but Pension Plan, Old Age Security, and the
would allow an adjustment for inflation. This Guaranteed Income Supplement (see the
would encourage longer-term productive in- Seniors and Retirement Security chapter).
vestments rather than short-term specula-
tion. There are also generous lifetime cap- 6. Review and replace ineffective
ital gains exemptions for farming, fishing, boutique tax credits (savings: $200
and small business that our plan preserves million a year)
in the interest of maintaining family busi- Canadas tax system is riddled with so-called
nesses. We further maintain the capital gains boutique tax credits for public transit, trades
exemption for principal residences, as the tools, search and rescue, volunteer firefight-
family home is one of the few significant ers, etc. Navigating these credits makes fill-
assets most Canadians have. ing out annual tax forms much more com-
plicated. Furthermore, they have generally
4. Put a lifetime limit on tax-free not been effective in their intended object-
savings accounts (savings: $100 ives and are more likely to be used by high-
million, increasing to the billions of er-income families.6
dollars in the future)
Tax-free savings accounts (TFSAs) were ori- 7. Eliminate flow-through share
ginally justified on the basis they would pro- (FTS) deductions and the mineral
vide low-income individuals with a more exploration tax credit (savings: $125
tax-effective way to save for retirement than million a year)
RRSPs. However, the benefits of TSFAs pri- These tax incentives are supposed to help
marily go to people making higher incomes boost exploration in the resource and energy
and their cost, in terms of foregone govern- industries, but there is little evidence they
ment revenues, will escalate to many billions are working.7 Nearly 80% of FTS investors
of dollars annually unless total contribu- are in the highest marginal tax bracket.8
tions are capped. The cumulative amount
individuals can contribute to TFSAs was 8. Cancel the corporate meals and
$46,500 in 2016. The AFB would put a life- entertainment expense deduction
time cap of $50,000 on TFSAs to avoid a rev- (savings: $400 million a year)
enue sinkhole in the future and to ensure Businesses are allowed to deduct half their
benefits arent further concentrated among meal and entertainment expenses, includ-
high-incomes earners. ing the cost of seasons tickets and private
boxes at sports events. These loopholes are

High Stakes, Clear Choices: Alternative Federal Budget 2017 29

widely abused, according to one study of ate taxes or labour costs. There is a lot more
similar measures in the U.S. The meal ex-
economic activity in countries with quality
pense for long-distance truckers would be public services and higher corporate taxes
maintained. than in countries with low corporate taxes
and low-quality public services.
9. Limit deductions for executive Canada has some of the lowest corpor-
compensation (savings: $150 million a ate tax rates among peer competitor coun-
year) tries, which has contributed to driving these
Canadian corporations can deduct CEO and rates down elsewhere.12 Federal corporate tax
other executive compensation from their ex- rates were slashed almost in half between
penses. The average compensation of the top 2000 and 2008from 29.1% to 15%and
100 Canadian CEOs was $9.5 million in 2015, yet business investment as a share of the
193 times what the average worker made economy declined instead of increasing
that year. The AFB adopts the U.S. mod-
as it was supposed to. Over that time, cor-
el, where the deduction is limited to $1 mil- porations created few new jobs and made
lion each for the CEO and other executives. ever-higher record profits, amassing over
$700 billion in surpluses and excess cash.13
10. End fossil fuel subsidies (savings: While corporate profits take up record
as much as $1.5 billion a year) shares of the national income, there has been
While some fossil fuel subsidies are being little increase in the share companies con-
phased out, new ones have been introduced tribute through corporate income taxes. In
and extended. Federal tax subsidies to the addition, business taxes have been reduced
fossil fuel industries averaged $1.5 billion a and shifted onto households in other ways,
year between 2013 and 2015. (For more on
with the elimination of most corporate cap-
subsidies, see the Environment and Climate ital taxes, a shift to value-added taxes, and
Change chapter.) reductions in business property taxes. Large
corporations and investors have also bene-
fited from weak tax rules and lax enforce-
Action: End corporate tax dodging
ment by shifting profits to tax havens and
and make corporations pay their fair
paying less tax.
share (revenue: $13.6 billion a year).
Analysis commissioned by Canadians
Corporations rely heavily on public servi- for Tax Fairness has found that 56 of the
ces for their operations. These can include TSX 60s largest publicly traded companies
transportation infrastructure, utilities, edu- in Canada had a total of 973 subsidiaries in
cation, training, health care, social services, recognized tax havens. Tax avoidance and
law enforcement, and the justice system. evasion has been even more damaging for
High-quality public services are more im- lower-income and developing countries in
portant contributors to corporate produc- Africa and Asia, which desperately need rev-
tivity and competitiveness than low corpor- enues to provide better health, education,

30 Canadian Centre for Policy Alternatives

and other public services. The main way nomic purpose aside from reducing taxes
multinational corporations are able to legal- owed. Private members bill C-621, intro-
ly avoid taxes is through transfer pricing duced in the last Parliament by Murray
and profit shiftingapplying artificially Rankin, provides a good legislative ex-
high or low prices for goods or services be- ample of how this could be done.14 We
tween affiliated companies so their profits estimate this measure would raise $400
are concentrated in countries where they million a year.
pay zero or negligible taxes.
Reinstate the restriction on how much
The AFB increases the corporate feder-
corporations can deduct in interest pay-
al tax rate from 15% to 21% and increases
ments to offshore subsidiaries for tax
the small business rate to 15% to preserve
purposes, as the OECD recently recom-
proportionality between small and general
mended through the Base Erosion and
corporate tax rates. This also maintains the
Profit Shifting (BEPS) action plan. We rec-
tax rates consistency with the lower rate
ommend limiting the deductibility of in-
on personal income, and tackles the abuse
terest to the entitys share of the groups
of the CCPC regime by individual profes-
consolidated net interest expense, ap-
sionals, as described above. This measure,
portioned by earnings (EBITDA), com-
which would net the government $11 bil-
bined with a fixed cap of 10%.15 This
lion a year in new tax revenue, would leave
measure should raise at least $200 mil-
the general federal corporate tax rate lower
lion annually in tax revenue.
than it was in 2006 and considerably lower
than the 3435% statutory federal corpor- Apply a 1% withholding tax on Canadian
ate rate in the United States. assets held in tax havens. Investment by
In order to stop businesses and invest- Canadian corporations in their top 10
ors from simply moving more of their money favourite tax havens increased to a re-
into tax shelters, the AFB replaces Canadas ported $270 billion in 2015, amounting
difficult-to-enforce arms-length rule with to over a quarter of all Canadian direct
a unitary taxation regime that would appor- investment abroad. Applying a 1% with-
tion tax payments by multinational com- holding tax on Canadian assets held in
panies to different governments according tax havens would generate over $2 bil-
to the amount of business they do in each lion a year.
jurisdiction. This is similar to how busi-
ness revenue is apportioned between dif-
Action: Tax foreign e-commerce
ferent provinces in Canada. More immedi-
companies to level the playing
ately, the following measures would have a
field (revenue: $1 billion a year).
significant effect on curbing tax avoidance:
E-commerce-based companies such as Net-
Require corporations to prove their off-
flix, Facebook, Amazon Prime, Google (You-
shore transactions have substantial eco-
Tube), Amazon, Uber, and Airbnb, among

High Stakes, Clear Choices: Alternative Federal Budget 2017 31

others, are capturing a growing share of the from products or services sold or rented in
Canadian market but pay little or no HST/ Canada, whether or not the company has
GST or corporate income taxes. Because these a physical presence here. This would raise
firms have no physical presence in Canada $600 million a year. Second, the AFB can-
they are not considered to be carrying on cels the GST/HST tax exemption for e-com-
business here. This policy needs to be up-
merce service companies that sell to Can-
dated to reflect changing business realities. adians. We estimate this would raise $400
The foreign-owned e-commerce sector million a year.
now has revenues of more than $30 billion a
year. Google and Facebook together capture
Action: Introduce a stronger
64% of all Internet advertising dollars spent
and more progressive carbon
in Canada (over $2.4 billion annually) but
tax (revenue neutral).
pay little or no taxes here. Meanwhile, do-
mestic broadcasters and media producers, The Trudeau government says it wants to
including newspapers, have seen their ad- see a nationwide minimum national car-
vertising revenues plummet, leading to mass bon price of $10 per tonne in 2018 increas-
layoffs and an erosion of avenues for broad ing to $50 per tonne by 2022. This is simi-
public discourse. Companies like Netflix
lar to the national harmonized carbon tax
and other over-the-top media services are proposed by the AFB, but it is too modest.
also not required to produce, broadcast, or The governments plan also does not man-
contribute to Canadian content, contribute date that the revenues should be used for
to the Canadian Media Fund, or levy taxes progressive investments in complementary
on their services. environmental measures or to support vul-
The European Union, New Zealand, Aus- nerable people, industries, and commun-
tralia, Norway, South Korea, Japan, Switz- ities affected by these changes.
erland, and South Africa have modernized The AFB plan introduces a national har-
tax laws to respond to a changing e-com- monized $30-per-tonne carbon tax start-
merce reality. The OECD, in its BEPS ac-
ing July 1, 2017, but increasing by $10 per
tion plan, Addressing the Tax Challenges tonne a year until it reaches $50 per tonne
of the Digital Economy, has recommended in 2019. Where provinces do not have a
ways governments can collect value-added broad-based carbon price in place at these
taxes where a product is purchased to help levels, the federal government would apply
level the playing field between foreign and one. Revenues generated through the car-
domestic suppliers. 19
bon tax would be spent on a green tax re-
The AFB will level the playing field in fundan annual cheque equivalent to $10
two ways. First, it makes sure all e-com- for every adult and $5 per child for every $1
merce companies with Canadian income per tonne in carbon tax (e.g., $300 per adult
above $500,000 (the small business thresh- for a carbon tax of $30 per tonne). The re-
old) pay corporate income tax on profits mainder of the revenues would go to com-

32 Canadian Centre for Policy Alternatives

plementary investments in climate change special tax on remuneration in the financial
mitigation and adaptation, green infrastruc- industry. The AFB would either introduce
ture, and to just transition measures to as- a FTT in collaboration with the provinces,
sist affected workers, communities, and in- which have jurisdiction over securities regu-
dustries. The AFB would also apply border lation, or a FAT rate of 5% on profits and re-
tax adjustments to ensure our industries muneration in the financial sector.
are not at a competitive disadvantage, and
to put pressure on other countries to intro-
Action: Introduce wealth/
duce similar measures (with exemptions for
inheritance taxes and make
impoverished nations).
income taxes more progressive
(revenue: $4.8 billion a year).
Action: Increase taxes on banks and
Canada should have broader-based and
finance (revenue: $5 billion a year).
more progressive wealth and inheritance
Many experts consider the financial sector taxes to combat persistent inequalities. The
to have grown too big for the good of the only wealth we tax now is property, which
economy. This has led to greater speculative is regressive, since a home is usually the
activity, economic instability and crises, in- only asset of significant value for middle-
creased inequality, and poor allocation of income families. The IMF has estimated
resources. The financial sector also benefits Canada could generate $12 billion annual-
from a preferential tax regime (e.g., exemp- ly from a tax of just 1% on the net wealth of
tion of most services from value-added taxes the top 10% of households. Introducing a
like the GST/HST), the relative ease with broad-based wealth tax like this would in-
which companies can exploit tax havens, volve co-ordinated action.
and guarantees of solvency in the event of a In the interim the AFB introduces a min-
crisis through government bailouts of firms imum inheritance tax of 45% on estates val-
considered too big to fail. ued above $5 million, similar to the estate
After many years, momentum is build- tax in the U.S., which would net an estimat-
ing again in Europe for broad-based finan- ed $2 billion annually in new revenues. The
cial transaction taxes (FTT). Such measures AFB also reverses the income tax cut intro-
have existed for centuries in different forms duced for the middle tax bracket (i.e., re-
and in different countries. For example, FTTs turns the rate to 22%), since the maximum
are actively adjusted in China and Taiwan to benefits from this cut actually go to those
cool real estate or stock markets. The Inter- with taxable incomes over $90,000 a year,
national Monetary Fund has also proposed which would produce revenues of $2.8 bil-
a financial activities tax (FAT) on profits and lion per year.
remuneration in the financial industry as a
way to apply a value-added tax to this sec-
tor. Quebec has had a version of a FAT in its

High Stakes, Clear Choices: Alternative Federal Budget 2017 33

Notes 11 Unpacking Canadas Fossil Fuel Subsidies, a joint
project of IISD and Global Subsidies Initiative: http://
1 David Macdonald. (2016). Out of the Shadows: Shin-
ing a light on Canadas unequal distribution of federal
12 Competitive Alternatives: KPMGs guide to inter-
tax expenditures. Ottawa: Canadian Centre for Policy
national business costs, 2016 edition: https://www.
2 Liberal Party of Canada. (2015). A New Plan for a Strong execsum_en.pdf
Middle Class, election platform, p. 80.
13 Jordan Brennan. (2015). Do Corporate Income tax Rate
3 Many of the revenue estimates are taken from Fi- Reductions Accelerate Growth. Ottawa: CCPA.
nance Canadas Report on Federal Tax Expenditures
14 Rankin describes his private members bill here:
- Concepts, Estimates and Evaluations 2016: http://
asp#_Toc442180630. 15 For details on this issue see the G20 submission
to the U.K. parliament on behalf of the BEPS Mon-
4 Herbert J. Schuetze. (2016). Income splitting among
itoring Group: https://bepsmonitoringgroup.files.
the self-employed. Canadian Journal of Economics,
Vol. 39, No. 4.
5 Brian Murphy, Mike Veall, and Michael Wolfson.
16 Canada Revenue Agency. Carrying on business in
(2015). Top-End Progressivity and Federal Tax Prefer-
Canada, GST/HST Policy Statement P- 051R2, Date of Re-
ences in Canada: Estimates from Personal Income Tax
vision. April 29, 2005. This policy statement cancels P-
Data. Canadian Tax Journal, Vol. 63, No. 3.
051R1, dated March 8, 1999:
6 Neil Brooks. (2016). The Case Against Boutique Tax pub/gl/p-051r2/p-051r2-e.html
Credits and Similar Tax Expenditures. Canadian Tax
17 John Anderson. (2016). Over the Top Exemption. Ot-
Journal, Vol. 65, No. 1. pp. 65134.
tawa: CCPA, p. 11.
7 Lindsay Tedds, Why the mineral exploration tax
18 Ibid., pp. 1821.
credit is such a bad idea, Macleans, September 2, 2015.
19 OECD. (2015). Addressing the Tax Challenges of the
8 Department of Finance Canada. Tax Expenditures
Digital Economy, Action 1 - 2015 Final Report: http://
and Evaluations 2013, Part 2.
9 Richard Schmalbeck and Jay A. Soled. (2009). Elim- of-the-digital-economy-action-1-2015-final-report-
ination of the Deduction for Business Entertainment Ex- 9789264241046-en.htm
penses. Tax Notes, May 11, 2009.

10 Hugh Mackenzie. (2017). Throwing money at the prob-

lem. Ottawa: Canadian Centre for Policy Alternatives.

34 Canadian Centre for Policy Alternatives


Climate change is having serious impacts on Create a national agricultural climate change

farmers. Droughts, floods, early frosts, new diseases, mitigation program to help farmers reduce
and pests bring increasing uncertainty. emissions and make their farms more resilient.
Canadas farmers are now carrying over $92 billion
in debt. Corporate concentration means farmers keep Make farm incomes less precarious by rebuilding
less and less of the wealth they create. Many farmers or repairing the institutions that give farmers more
need to work off-farm jobs to subsidize farm incomes. power in the marketplace.
The average age of farmers is creeping upward as Create a new set of mechanisms and training
farmers live longer and delay retirement. If young programs to facilitate land transfer to new farmers
farmers cant take over, Canada risks having its without requiring them to take on crippling debt.
agriculture entirely in the hands of corporations and
absentee landlords.

Background Climate Change

Farmers are a minority within the Canadian Farmers depend upon a predictable climate
population, yet everyone in Canada relies on and favourable weather conditions to pro-
them for the food they eat every day. The cen- duce and earn a livelihood. Climate stabil-
trality of food in our lives means that farming ity is required to successfully produce crops,
and agriculture are critical to Canadas future. raise livestock, and maintain healthy agro-
The foundation of Canadas rural economy ecosytems. Because agriculture currently
is the farmers net income. The downward contributes a significant amount of Canadas
spiral of rural decline and depopulation can greenhouse gas emissions, the agricultural
be turned around by implementing measures sector also presents an opportunity to sig-
to ensure that farmers obtain a fair share of nificantly reduce carbon emissions through
the wealth produced on the land. Farm in- changing farming practices. Fiscal and pro-
come, climate change, farm debt, and the gram support for both adaptation and miti-
successful transition of the younger genera- gation are required so that agriculture can
tion into farming are crucial challenges that play its part in preventing catastrophic cli-
the Alternative Federal Budget will address. mate change while maintaining adequate

High Stakes, Clear Choices: Alternative Federal Budget 2017 35

food production and decent livelihoods for digestion of feedstuffs that are allocated to
farmers in increasingly uncertain times. agriculture under the Intergovernmental
Unstable climate and unusual weather Panel on Climate Changes greenhouse gas
had a negative impact on farm incomes in accounting system. A comprehensive life-
many areas of Canada in 2016, for example: cycle analysis of greenhouse gas emissions
from agriculture will provide numerous op-
The prairies experienced erratic precipi-
portunities for reductions, many of which
tation patterns, including a month of wet
will also reduce costs for farmers.
snow in October before the completion
Climate change means uncertainty for the
of harvest, a prolonged dry spell follow-
agricultural sector. It is therefore essential
ing seeding, and reduced yields and/or
that farms become more resilient. Diversifi-
spoilage caused by intense rain. Addi-
cation of production and soil improvement
tional costs were incurred to dry crops
are key strategies. For example, practices
that were harvested in wet conditions.
that sequester atmospheric carbon in soils
In British Columbia, Quebec, and On- increase their ability to hold water, which
tario drought hampered crop develop- helps farms better withstand both droughts
ment, impaired pasture quality, and re- and excessive moisture conditions. Diversifi-
duced hay yields. Access to water for stock cation is an effective risk management strat-
watering and irrigation was restricted. egy that lessens the impact of price volatility,
Lower yields and lower prices reduced crop failures, diseases, and pest problems.
farm incomes, while higher feed prices
and grazing fees added to the costs of
Farm Debt
livestock production.
Farm debt continues to grow at an unsustain-
Parts of Atlantic Canada experienced
able rate. By 2015 Canadas total outstand-
severe drought. For example, Yarmouth
ing farm debt had risen to over $92 billion.1
County had its driest summer since 1880.
Total realized net farm income is less than
Lower yields of hay, potatoes, vegetables,
one-tenth of this debt load. This means that
fruit, and blueberries combined with more
farmers have little capacity to absorb higher
expensive feed reduced farm incomes.
costs. Even a small increase in interest rates
When all emissions from agriculture are would have a devastating effect, as many
accounted for, it becomes clear that energy- farmers would be unable to continue servi-
intensive inputs such as nitrogen fertilizer cing their debts. Climate change continues
produced from natural gas, manufactured to increase risks and expenses, making in-
herbicides, pesticides, transportation, farm comes more precarious and debt more oner-
fuels, and electricity are all significant. In ous. Yet farmers do produce immense wealth
addition, there are the emissions caused by every year. Most of that wealth is captured by
off-gassing of nitrogen fertilizers from soils powerful corporations that are able to con-
and methane from livestock manure and trol the prices of inputs such as seed, fer-

36 Canadian Centre for Policy Alternatives

tilizer, farm chemicals, fuel, and rail trans- trade deal), the federal government weak-
portation. Prices paid for farm products are ened our supply management system by in-
also controlled by a few large buyers: global creasing the European Unions share of our
grain companies, meat packers, and retail- cheese market by 18,500 tonnes,2 reducing
ers. Meanwhile, land prices are increasingly the size of Canadas domestic dairy market
influenced by farmland investment compan- by an amount that could have supported
ies that collect high rents while speculating 400 new entrant farmers.
on land values. Farmers as individuals have Canadas agriculture research institutions
very little power in the marketplace. Because have also suffered severe funding cutbacks
of this, much of total farm debt is not due to and numerous closures in the past decade.
investment in productive capacity but rath- The previous government eliminated over 500
er represents persistently insufficient mar- agriculture research positions between 2012
gins due to others taking more than their and 2015. Valuable research institutions and
fair share of the wealth farmers produce. field research stations were closed in every re-
To address farm debt it is necessary to gion, impairing Canadas ability to respond to
reinvest in the institutional structures that emerging challenges. Public assets and roles
protect farmers interests by countering were irresponsibly transferred to the private
the monopolistic power of global agribusi- sector. The task of restoring Canadas public
ness and food corporations. The Canadian interest in scientific and technical capacity in
Grain Commission (CGC) has been stripped agriculture is both large and urgent, and will
of important roles and funding during the require significant resources.
last decade. This needs to be reversed. The
railways have reduced service and failed to
The Next Generation of Farmers
properly invest in the grain transportation
system in spite of being entitled to healthy The average age of Canadian farmers is ris-
profits through the Maximum Revenue En- ing. Older farmers are delaying retirement,
titlement (a revenue cap). The Canadian while younger people who want to farm are
Wheat Board, the farmer-directed single- facing barriers that are increasingly difficult
desk selling agency for Prairie wheat and to overcome, such as precarious farm income
barley, was dismantled under the direction prospects and a fraying rural social fabric.
of the previous federal government in 2012, We are in the midst of a crisis in inter-gen-
resulting in billions of dollars leaving Can- erational transfer. Land is being acquired
adas farm economy annually since then. by farmland investment companies, con-
In 2016, the previously privatized Port of solidated into large holdings, and farmed
Churchill was closed. This will hit farmers by tenant farmers and hired labour instead
in northern Manitoba and Saskatchewan of being transferred to younger farm fam-
particularly hard because it will cost them ilies and new entrants. There is an urgent
more to transport their grain to southern need for measures to assist young people
ports. By ratifying CETA (the Canada-EU to begin and continue farming successfully.

High Stakes, Clear Choices: Alternative Federal Budget 2017 37

Measures to promote sustainable in- Result: Agriculture practices will be altered
comes for all farmers are needed to help to reduce total life-cycle emissions and to
young people choose farming as an eco- increase farms resilience to climate uncer-
nomically viable career. Investment in rural tainty while maintaining viable farmer live-
community infrastructure is needed to sup- lihoods and needed food production. This
port the quality of life of new farm families. will help to reduce emissions from livestock
Farmers who are starting out require men- production and nitrogen fertilizer use, and
torship and training as well as assistance in will promote the adoption of low-input pro-
gaining access to landparticularly options duction methods, the use of effective meth-
for secure land tenure that do not involve ods to enhance soil carbon production, and
crippling debts. Supply-managed sectors on-farm energy conservation practices.
need to embrace the diversity of production
Action: The AFB will create additional pro-
methods that consumers want and young-
grams to assist farms facing long-term prob-
er farmers support by transferring quota to
lems related to climate change.
new entrants in ways that will help them
Result: Investing in greenhouse gas miti-
become established. Canada has lost a lot
gation and climate adaptation strategies
of its fruit and vegetable production as a
will reduce future demands on safety-net
result of trade agreements that give advan-
programs. For example, farms that experi-
tages to processors using low-cost labour in
ence repeated flooding may need assistance
other countries, yet climate change and pol-
to relocate buildings and corrals to higher
itical situations abroad are also making our
ground so they can continue farming and
supply of fruit and vegetables more precar-
contributing to Canadas food system. The
ious. We could mitigate these risks by sup-
AFBs extension programs will help farms
porting young farmers who are eager to pro-
become more resilient over the long term.
duce more food for their urban neighbours.

Restore and rebuild the Canadian

AFB Actions Grain Commissions capacity to fulfil
its mandate: in the interests of
Invest in research and extension
the grain producers, establish and
to create an economically viable,
maintain standards of quality for
resilient, climate-friendly farm
Canadian grain and regulate grain
sector ($250 million/year).
handling in Canada, to ensure a
Action: The AFB will establish an effect- dependable commodity for domestic
ive national agriculture extension program and export markets ($20 million).
to ensure Canadas farmers have the tools
Action: The AFB will restore the CGCs fund-
they need to meet greenhouse gas reduc-
ing to pre-2012 levels and provide additional
tion targets.
funds to support its ability to provide bet-

38 Canadian Centre for Policy Alternatives

ter oversight of the grain trade in the inter- Change the mandate of Farm Credit
ests of farmers, with particular attention to Canada to ensure its lending
grading and bond security. activities support the development
Result: Grain companies will be disciplined of a diversified, climate-friendly
to provide fair grades and prompt, full pay- agriculture sector and avoid
ment to farmers. Canadas reputation in ex- contributing to land grabbing.
port markets for high-quality grain, along
Action: The AFB will direct Farm Credit Can-
with corresponding higher prices, will be
ada to give priority to small- and medium-
recovered. A greater share of the value pro-
sized farms that produce food for domestic
duced on Canadian farms will be returned
consumption, prohibit lending to farmland
to farmers, where it will support economic
investment companies, and restrict its lend-
activity in their communities.
ing to farm-related businesses that are ma-
jority farmer-owned.
Rebuild Agriculture and Agri- Result: The FCCs lending activities will sup-
Food Canadas scientific, technical port successful intergenerational transfer
and support staff capacity, of farms by providing needed credit to new
which has been eroded as a entrants investing to develop a larger range
result of retirements, lay offs, of enterprises using diverse farming practi-
and lack of new hiring over the ces and avoiding contradictory support for
past decade ($100 million). non-farmer-owned competing businesses.

Action: The AFB will remedy the shortage

of seasonal and permanent technical staff
that is hampering progress at many AAFC
1 Statistics Canada, CANSIM Table 002-0008 - Farm debt out-
facilities. The AFB will provide 100% pub-
standing, classified by lender,
lic funding to the AAFC and universities to
2 Text of the Comprehensive Economic and Trade Agree-
advance the non-commercial agronomic
mentAnnex 2-A: Tariff elimination
research and plant breeding needed to ad-
dress climate change mitigation and adap-
tation in agriculture.
Result: Non-commercial research will no
longer be starved of funds, and important
non-commercial questions will be investi-
gated so that innovations can be developed
and applied through shared knowledge rath-
er than purchased inputs.

High Stakes, Clear Choices: Alternative Federal Budget 2017 39

Arts and Culture
Although the government made good on its Maintain the doubling of the Canada Council

commitment to invest more in the arts with its 2016 for the Arts funding.
budget, these investments are merely bringing
funding levels back to what they were prior to cuts Extend the Showcasing Canada Program
made in recent years. beyond 2017 with annual installments of $25
million and invest a total of $1.5 billion over eight
After years of underfunding, many arts facilities in years in cultural infrastructure.
Canada are showing their age, and new arts spaces
that can deliver the type of programming and Promote inclusion and equitable treatment of
activities that Canadians want are lacking. artists throughout the Digital Culture
Canadian society is more diverse than ever and the
government must ensure fair and equitable access for
all Canadians.

Background al industries, non-profit arts organizations,

and arts entrepreneurs comprise 3.5% of
For generations, the arts and culture sector
Canadas work force. This is two-and-a-half
has allowed inspiration, national pride, and
times larger than the labour force in real es-
Canadian identity to flourish. Artists and arts
tate (254,200), about double of that of the
organizations advance critical conversations
farming sector (339,400), and only slight-
about a wide range of topics, including so-
ly smaller than the trades (733,500).2 More-
cietal, environmental, and political issues.
over, the arts and culture sector contribut-
Canadas artists and cultural workers have
ed $55 billion to Canadas gross domestic
advanced Canadian artistic production and
product (GDP) in 2014.3
practice, which has been recognized on na-
For the first time in years, the federal gov-
tional and international stages.
ernment is seeing the cultural industries as
The arts sector plays a key role in the
engines of economic growth both at home
prosperity of Canadian communities by
and abroad, and is prioritizing the growth
creating jobs in many sectors. It is a signifi-
of the sector. The new government elected
cant employer, with roughly 630,000 work-
in 2015 made refreshing commitments to
ers in 2014.1 For-profit creative and cultur-
the arts and culture sector. The prime min-

40 Canadian Centre for Policy Alternatives

isters public letter to the minister of Can- calls for new and unique infrastructure in-
adian Heritage identified a range of prior- vestments by the federal government.
ities. The 2016 budget followed through on
Inclusivity must continue to be at the
many of these objectives with a commitment core of how the arts sector operates. Can-
of an additional $1.9 billion for the sector adas cultural community, in reflection of
over the next five years. However, it should our national population, is very diverse, in-
be noted that some of these investments are cluding Indigenous and racialized peoples,
merely bringing funding levels back to what people of all abilities, official language min-
they were prior to cuts in recent years. It is orities, and those who have been historically
imperative that the sector continues to advo- marginalized. Given these changes in Can-
cate for and hold the government account- adian communities, many presenters, art-
able to their commitments for Budget 2017. ists, and audiences have noted the import-
The federal government also announced ance of understanding and engaging with
a $120-billion infrastructure plan in its 2016 all of these communities. The unpreced-
budget. Now that culture is acknowledged ented demographic change Canadian so-
as the fourth pillar of sustainable develop- ciety has experienced also offers a unique
ment (along with economic, environmental, opportunity to enhance the way Canadians
and social sustainability ), full integration
will contribute to Canadas socioeconom-
of arts and culture into the infrastructure ic growth. In 2010, Statistics Canada pre-
plan makes sense. Many arts facilities in dicted that in 2017, racialized peoples will
Canada were built as Centennial projects or comprise 19%23% of the Canadian popu-
during the boom of the 1970s and are show- lation, and Indigenous peoples will com-
ing their age. If they are to continue serving prise 4%. By 2021, racialized peoples will
Canadians, some centres are in dire need comprise 29%32% of the Canadian popu-
of renovations, accessibility adaptations, lation, or between 11 and 14 million people.
retrofits to increase their energy efficiency, This population will also have more youth
and equipment upgrades to keep up with under the age of 15 (36%). The Indigenous
Canadas innovative artists. Moreover, the population is growing more quickly than the
kind of programming expected of cultural rest of the population; it is also much young-
organizations today is different than when er, and Indigenous youth will form a major
older infrastructures were built. Canadians part of Canadas future workforce. Finally,
now expect cultural facilities that can de- those whose first language is neither Eng-
liver a wide array of programming beyond lish nor French will increase to 29%32%
presentation/exhibition, including a range by 2031, up from 10% in 1981.6
of community engagement initiatives such as Some 92% of Canadians believe that arts
cafs, education programming, and public experiences are a valuable way of bringing
rental space. Many of todays arts and cul- together people from different languages
ture spaces must transform into commun- and cultural traditions, and 87% of Can-
ity hubs in order to thrive. This needed shift adians believe that arts and culture help

High Stakes, Clear Choices: Alternative Federal Budget 2017 41

us express and define what it means to be munities across Canada through a highly
Canadian. The governments approach to
competitive peer review process.8
the arts and cultural sector to date is posi- In addition, the need for investment
tive, supported with substantial reinvest- in arts infrastructure is felt by Canadians.
ments and new investments in the sector. A 2012 survey commissioned by Canadian
Targeted investment in the 2017 budget will Heritage found a significant gap between
enable arts organizations to respond to the Canadians appreciation of arts infrastruc-
opportunities and challenges presented by ture and their perception of the quality of
Canadas changing demographics and ad- arts centres.9 The Canada Cultural Spaces
vancements in technology. Fund, created in 2001 with an envelope of
$30 million, has a proven track record in
supporting small and mid-size arts infra-
Sustaining Artists, Arts
structure projects such as lighting upgrades,
Organizations, and Cultural
environmental control systems upgrades,
accessibility improvements, and other cap-
Jobs in the profit arts sector are created and ital improvements needed by arts organiz-
sustained by three revenue streams: earned ations to remain relevant. The 2016 budget
revenues (from admissions, product sales, reasserted the essential role of the Canada
fees, or royalties), contributed revenues (from Cultural Spaces Fund and allocated $168.2
individuals, corporations, or foundations), million in additional funding to the program
and government funding. While the ratios over two years. This will enable the program
vary between artistic practices and regions, to support larger scale projects. However,
the federal governments cultural policy considering the preparations necessary for
and spending priorities have a significant mid-to large-scale capital projects, the short
influence, for example, by developing new two-year timeline will significantly limit the
markets and venues, providing incentives eligibility to only shovel-ready projects in
for donations and sponsorships through the 2016. This would leave out many valuable
tax system or contribution-matching pro- and innovative development projects.
grams, or subsidizing particular aspects of
cultural production.
Strengthening Canadas Ties
The federal governments primary vehicle
and Cultural Image Across the Globe
for sustaining the work of artists and arts
organizations is the Canada Council for the Artists and arts organizations are effective
Arts. This arms-length agency has a 55-year cultural ambassadors for Canada on the
track record of fostering the arts across the world stage, embodying Canadas divers-
country. In 2014-15, the council awarded ity, innovation, and accomplishments. The
$155.1 million in grants and payments to federal government recognizes this, and
artists and arts organizations in 1,953 com- has made a commitment to celebrate Can-
adas cultural stories with the world,10 most

42 Canadian Centre for Policy Alternatives

recently with a commitment of $25 million Providing Digital Access
to the Showcasing Canadas Cultural Indus- to Canadian Cultural Content
tries to the World program.11 The immense
Since the end of the Canadian Culture On-
diversity of Canadas artistic efforts will un-
line initiative a decade ago, Canada has
doubtedly connect us to the world as a re-
only widened a cultural trade gap that sees
markable mirror of our global population.
far more foreign cultural content flowing
Cultural promotion abroad has the poten-
in than going out. Foreign content can
tial to result in diversified revenue streams,
now be accessed online through the Inter-
jobs here at home, and growth and stabil-
net, in movie theatres, as well as through
ity. Canadian artists, arts organizations,
new unregulated and ubiquitous service
and trade and tourism sectors will benefit
providers who are exempt from Canadian
directly from these work opportunities and
content regulations and contributions.
increased activity.
In April 2016, the minister of Canadian Herit-
It is essential that the federal govern-
age launched the first phase of a conversa-
ment, through the Department of Global
tion on how to strengthen the creation, dis-
Affairs Canada, support our global cultur-
covery, and export of Canadian content in
al presence through promotion in embas-
a digital world.12 These digital culture con-
sies, trade and business development, and
sultations are an essential process between
international circulation of artists and their
government, industry, and artists. Canadian
works. While the new Showcasing Canadas
artists such as YouTuber Lilly Singh, ballet
Cultural Industries to the World program ad-
dancer Guillaume Ct, singer Tanya Tagaq,
dresses a long-standing request of the Can-
film director Deepa Mehta, artist Rober Ra-
adian Arts Coalition, strong support for
cine, and composer Mychael Danna are all
Canadas pluralistic cultural communitys
digital content creators. But technologies
presence and engagement abroad is need-
must be made fully accessible to all, includ-
ed. It must include equity-seeking or mar-
ing artists with impairments who are dispro-
ginalized artists in order to truly reflect the
portionately affected by the digital divide.
demographics of the nation. Further, this
Artists must be a part of the conversation
program needs to be extended and sus-
and discussion of digital technologies, and
tained beyond two years to build lasting
artists and arts organizations must be con-
relationships with international promot-
sulted regularly.
ers, presenters, and curators; to secure ex-
hibits and tours abroad; and to penetrate
foreign markets.
AFB Actions
The AFB will support the federal govern-
ments initiatives with four prioritized areas
for 2017.

High Stakes, Clear Choices: Alternative Federal Budget 2017 43

ed using a product perspective. It considers the jobs re-
Action: Maintain the updated Canada Coun-
lated to the production of culture goods and/or services
cil for the Arts funding announced in the across the economy regardless of the producing indus-
2016 federal budget. try, including non-cultural industries.

Result: The Canada Council for the Arts 2 Hill Strategies Research Inc. (2014) Statistical Pro-
operating budget will double to $362 mil- file of Artists and Cultural Workers in Canada, based
on the 2011 National Household Survey and the Labour
lion by 2021, a total new investment of $550
Force Survey, p.13
million between 2016 and 2021.
3 Statistics Canada, Provincial and Territorial Culture
Indicators, 2010 to 2014, 2016.This figure ($54.6 billion,
Action: Extend the federal governments
more precisely) was estimated using a product perspec-
investment in the Showcasing Canada Pro- tive. It considers the production of culture goods and/
gram to annual installments of $25 million or services across the economy regardless of the produ-
cing industry, including non-cultural industries. This
from 2017 to 2021.
Culture GDP is lower than the GDP of culture industries
Result: Artists and arts organizations across (GDP of both culture and non-culture goods and servi-
Canada can begin to build lasting relation- ces) which is $61.7 billion.

ships with international promoters, pre- 4 Government of Canada. Minister of Canadian Herit-
senters, and curators, secure exhibits and age Mandate Letter. Prime Minister of Canada, Justin
Trudeau. November 2015.
tours abroad, and penetrate foreign markets.

Action: Increase and extend investments in 5 Agenda 21 for Culture was adopted in 2004 by the world
association of United Cities and Local Governments. It
cultural infrastructure to a total of $1.5 bil-
promotes policies and actions by cities and local gov-
lion over eight years, via the Cultural Spaces ernments for cultural development, and it posits culture
Canada Fund and the bilateral agreements. as the fourth pillar of sustainable development. In Can-
ada, the federal External Advisory Committee on Cities
Result: Sustainable and accessible Canadian
and Communities, led by former B.C. Premier Mike Har-
cultural spaces will allow for improved art- court came to similar conclusions. In 2006, the report
istic programming and community engage- From Restless Communities to Resilient Places: Building
a Stronger Future for All Canadians states that cultural
ment that includes large-scale and innova-
sustainability ties together the other three dimensions,
tive in-depth projects. and is essential to community success.

Action: Promote inclusion and equitable 6 Statistics Canada. (2010). Projections of the Diversity
of the Canadian Population, 2006 to 2031, pp. 12. See
treatment of artists throughout the digital
also Jocelyn Harvey. (2003). Creative Management in the
culture consultations. Arts and Heritage: Sustaining and Renewing Profession-
Result: Artists with varying backgrounds, al Management for the 21st CenturyA Proposed Action
Plan for Creating Winning Conditions, p. 17.
disciplines, and abilities will be represented
7 Canadian Heritage. The Arts and Heritage in Can-
in consultations alongside government and
adaAccess and Availability 2012, prepared by Phoe-
industry leaders. nix Strategic Perspectives.

8 Canada Council for the Arts. Annual Report 2014-

2015, p. 12.
Notes 9 Phoenix Strategic Perspectives, The Arts and Heritage
in CanadaAccess and Availability 2012. Only half of the
1 Statistics Canada, Provincial and Territorial Culture
participants surveyed (53%) rated the quality of arts and
Indicators, 2010 to 2014, 2016. This figure was estimat-

44 Canadian Centre for Policy Alternatives

culture facilities as positive and only 43% said the num- 11 Budget 2016, Growing the Middle Class, p.184.
ber of facilities in their community is good or very good.
12 Canadian Content in a Digital World: Focusing the
10 Government of Canada. Minister of Canadian Herit- Conversation: Consultation Paper. The Government of
age Mandate Letter. Prime Minister of Canada, Justin Canada, September 2016.
Trudeau. November 2015.

High Stakes, Clear Choices: Alternative Federal Budget 2017 45

Child Care
Child care is treated as a commodity, sold on a child care Build a comprehensive system of public and non-profit

market, rather than provided as a public service. child care services available to all children and families
everywhere in Canada.
Child care fees are already high and are rising faster than
inflation. Make parent fees affordable.
There are only enough regulated child care spaces for 25% Provide spaces for all, respecting families diverse needs,
of children aged 05. and fully include children with disabilities.
Ensure consistently high-quality programs led by
Child care is marred by inconsistent quality, high turnover, well-qualified, well-compensated, and respected educators.
and poor pay for staff.
Develop robust public policy and planning with
There is a lack of federal government leadership in substantial public funding.
planning, standard setting, and funding.
Take pride in building a child care system with a choice of
Canada ranks last among economically advanced countries affordable, quality options for all children whose families
on child care. choose it.


Background and care (ECEC) benchmarks.3 The federal

government had just cancelled the planned
For Canadian families, high-quality, af-
national child care program, with its sub-
fordable child care is more than a conven-
stantial cash transfers to provinces and
ienceits a necessity.1 These words, from
territories, and withdrawn from any role in
the 2016 federal budget, followed the Lib-
improving child care provision across the
eral partys 2015 election pledge to work
country. It is disturbing but not surprising
with provinces, territories and Indigen-
that, despite some promising initiatives in a
ous peoples to establish a National Frame-
number of provinces, child care across Can-
work on Early Learning and Child Care
ada remains unaffordable, unavailable, and
that meets the needs of Canadian families,
inconsistent in quality.
wherever they live.2 They suggest the gov-
A robust body of research confirms the
ernment is committed to the kind of broad-
superiority of a universal versus a targeted
basedor universalapproach to child care
approach to child care, as detailed in an
Canadians have been missing for too long.
accompanying AFB technical paper, Child
In 2008, Canada ranked last among peer
care for all of us: Universal child care for
nations on 10 early childhood education
Canadians by 2020.4

46 Canadian Centre for Policy Alternatives

First, vulnerable children can be found recognizing the key roles of provinces, terri-
across all socioeconomic groups, so an ap- tories, and Indigenous communities in devel-
proach that targets children based on family oping and implementing services that meet
incomes (typical in Canada) misses the local needs. It affirms that while there are
smaller proportion, but often larger abso- many points of commonality in our shared
lute number, of vulnerable children in mid- vision, we recognize that Indigenous com-
dle- and upper-income groups. A second re-
munities may choose unique approaches
lated bonus of universal approaches is that and content.
they prevent social exclusion, and socio- The Canadian child care movement de-
economically mixed programs are more fines universal child care as available, ap-
beneficial for vulnerable children than tar- propriate and affordable for all, inclusive,
geted programs. non-compulsory, varied, and not (neces-
Third, universal services usually com- sarily) free.9 The Child Care Advocacy As-
mand broader and more sustainable public sociation of Canada (CCAAC) states: At a
support and engender greater public concern minimum, universal systems provide ac-
for quality, according to a 2008 UNICEF re- cess for all without discrimination based on
port card. Too often, services for the poor income or other criteria. Effective universal
have meant poor services. 6
systems also work to eliminate a range of
Furthermore, access to child care is at social, ability-based, cultural, geographic,
least as much about parents labour force and other barriers to equitable access and
participation and womens equality as it is participation.10
about child development. The need and de- While calling on governments to play
sire for quality child care is not confined to an important role in planning and policy, a
low-income families or even to those with comprehensive approach to ECEC envisions
vulnerable children, but is critical to the a variety of services delivered by public and
economic security of families and, in par- non-profit providers, in various locations
ticular, to the economic security of women. 7
(centres, private homes, schools), over vari-
ous time periods (e.g., part-day, full-day,
and extended/non-standard hours).11 Well-
A Shared Framework
remunerated, well-trained, and well-sup-
for Early Education and Care
ported early childhood educators are key
Early in 2016, the Canadian child care com- to achieving quality service.12
munity developed a Shared Framework for Finally, a comprehensive system of uni-
Building an Early Childhood Education and versal, high-quality ECEC must be integrated
Care System for All. Essentially it is a blue-
with broader family policy improvements,
print for building the universal, high-qual- such as enhanced parental leave and income
ity, and comprehensive child care system support for parents, in order to meet the di-
we need. The framework calls for federal versity of families and childrens needs at
leadership and funding for child care, while the local level.

High Stakes, Clear Choices: Alternative Federal Budget 2017 47

Underpinning the principles of univer- ing the [federal] governments key object-
sality, high quality and comprensiveness ives for families in all regions (accessibility,
are three interrelared understandings affordability, quality, inclusiveness) will re-
that are essential to achieving an evidence- quire an overarching national approach
based national framework. that nonetheless recognizes provincial-ter-
First, Canada needs to move away from ritorial jurisdiction over ECEC.17
its current market-based approach to child In the absence of federal leadership, the
care in which governments take limited re- provinces and territories have developed
sponsibility for service development and unique ECEC systems that share much in
public funding is primarily provided to common. Despite exemplary features in
parents through individual fee subsidies some of those systems, most are generally
or tax breaks. Canadas weak showing on less than effective.
developed country ECEC ratings is large- For example, all provincial-territorial
ly explained by our lack of a publicly man- ECEC systems provide publicly funded and
aged system. 13
delivered kindergarten, as well as a combin-
Second, building a comprehensive ECEC ation of centre-based and home-based ser-
system requires a clear long-term vision, vices, with both full-time and part-time op-
matched by sustained, adequate public fund- tions and family resource programs. Almost
ing, as the foundation on which public ac- all jurisdictions rely largely on market-driv-
countability can be built. The international en for-profit and non-profit services, with
minimum funding benchmark for countries limited public base funding, and disburse
striving to establish effective ECEC systems most child care funding in the form of fee
is 1% of GDP for children aged 05 years. 14
subsidies targeted to lower-income families.
Canada needs to substantially ramp up its All child care services except those in
funding throughout the system-building Quebec rely heavily on parent fees as the
process (which may take a decade) to meet main source of revenue. These costs, which
even this low-end goal. 15
are often higher than university tuition fees,
Third, the federal government needs to are increasing at rates that outpace infla-
confirm its leadership role, and the respect- tion.18 All child care services across Canada
ive roles of the provinces and territories, in rely on a poorly remunerated, almost en-
achieving a universal, high-quality, compre- tirely female workforce and have education
hensive system. In their election platform, and training requirements that are gener-
the Liberals stated they will not impose ally lower than international benchmarks.
predetermined costs or models on other These structural similarities mean that,
orders of government but work collabora- in practice, the challenges experienced by
tively with each of them on funding agree- families on a daily basis are remarkably
ments. This is consistent with the shared
similar wherever they live. Child care is
framework developed by child care advo- frequently not available where and when
cates, which takes the position that meet- parents need it, and is affordable only for

48 Canadian Centre for Policy Alternatives

a minority of families. The quality of care, $1 billion over each of the subsequent five
when parents do find a space, is often so years to achieve the minimum established
low that it cannot reliably give children the benchmark of 1% of GDP. The program will
best start in life. be fine-tuned after five years.
And in all regions of Canada some
Action: Consistent with the shared frame-
groupssuch as infants, children with dis-
work on a Canadian ECEC program, new
abilities, newcomers, rural communities, par-
funding will come with certain conditions.
ents working nonstandard or part-time hours,
The government will provide $100 million
and especially Indigenous familiesare rou-
to empower and resource Indigenous com-
tinely left out of ECEC. Culturally appropri-
munities to begin to design, deliver, and
ate early childhood services for Indigenous
govern ECEC systems and services that meet
children on- and off-reserve are woefully
their needs and aspirations. It will also pro-
underfunded and underdeveloped across
vide $500 million to provinces and terri-
Canada. It is thus not surprising that the
tories that have committed to developing
Truth and Reconciliation Commission called
their own ECEC policy frameworks based
for culturally appropriate Indigenous early
on principles of universality, high quality,
childhood education as part of the healing
and comprehensiveness, and include the
and reconciliation process.
following elements:

Public plans for developing integrat-

AFB Actions ed systems of ECEC that meet the care
and early education needs of children
The AFB begins to move Canada from its
and parents;
failed market-based approach to ECEC to-
ward a comprehensive, publicly managed Public management of the expansion of
system of high-quality, universal care. Child public and not-for-profit services under
care funding is currently part of an undiffer- public authorities through public plan-
entiated, 11-year, $21.9-billion Social Infra- ning processes, including integration of
structure Fund that includes housing, sen- existing community services into pub-
iors facilities, and cultural resources. A licly managed systems;
dedicated and sustained funding stream
Public funding delivered directly to
is needed to promote transparency and ac-
ECEC services and systems rather than
countability and to monitor progress.
through individual parent-payment meas-
Action: Commit $600 million to a dedicat- ures (this will ensure high-quality, ac-
ed and sustained federal funding stream. cessible services through predictable,
While ECEC spending in year one is rela- sustained, dedicated funding);
tively modest, to allow time for effective
Public reporting in federal, provin-
cial, and territorial legislatures on qual-
planning and preparation, it will grow by

High Stakes, Clear Choices: Alternative Federal Budget 2017 49

6 UNICEF. (2008). The child care transition: A league
ity, access, and other elements in the
table of early childhood education and care in econom-
ECEC system. ically advanced countries. Innocenti Report Card 8. Flor-
ence, Italy: UNICEF Innocenti Research Centre, p. 17.
Action: Review and develop a plan for
7 Liberal Party of Canada. (2015). Greater economic se-
strengthening the federal-provincial-terri-
curity for middle class families. Backgrounder. Liber-
torial approach to maternity/parental leave al Party of Canada. Online retrieved December 23, 2016
with respect to eligibility, flexibility, ad-
equacy of benefits, special considerations
8 Child Care Advocacy Association of Canada, Can-
(including children with disabilities), adop-
adian Child Care Federation, Childcare Resource and
tion and multiple births, and earmarked Research Unit and Campaign 2000. (2015). Shared
leave for a parent who is not the birth par- Framework for building an early childhood education
and care system for all. Online retrieved December 23,
ent in a couple.

9 In early childhood programs the term inclusion is

Notes usually defined as fully welcoming and supporting chil-
dren with disabilities together with all children. How-
1 Department of Finance. (2016). Federal budget. Grow-
ever, the term social inclusion is sometimes used more
ing the middle class. Ottawa: Government of Canada.
generally to mean the process of improving the terms
Online retrieved November 14 2016 http://www.budget.
for individuals and groups to take part in society. The, p. 101
Canadian child care community envisions an inclusive
2 Liberal Party of Canada. (2015). Greater economic se- system that welcomes, nurtures, and respects families
curity for middle class families. Backgrounder. Liber- in all their diversities.
al Party of Canada. Online retrieved December 23, 2016
10 Child Care Advocacy Association of Canada. (2004).
From patchwork to framework. A child care strategy for
security-for-Canadian-families.pdf and http://www.
Canada. Ottawa, ON: Author; The terms early
learning and child care and early childhood educa- 11 With regard to for-profit provision the prevailing
tion and care (ECEC) include centre-based child care, position of the child care movement, based on the best
regulated home child care, preschools/nursery schools, available evidence, is that existing for-profit centres can
and kindergarten. Here we use the terms child care, continue to operate within a publicly funded system,
early learning and child care, and ECEC interchange- provided they (along with other private providers such
ably, although we tend to describe our system-building as non-profit and family child care services) meet pub-
aspirations as ECEC. lic accountability requirements. However, for-profit ser-
vices will not continue to expand because new public
3 UNICEF. (2008). The child care transition: A league
funds should be used to increase access to high-qual-
table of early childhood education and care in econom-
ity, affordable, public- and community-owned services,
ically advanced countries. Innocenti Report Card 8. Flor-
not private profits.
ence, Italy: UNICEF Innocenti Research Centre.
12 Bennett, J. (2008). Review of the literature and current
4 Key aspects of this Technical Paper are incorpor-
policy in the early childhood field. UNICEF Innocenti Re-
ated into this chapter. Available online at https://
search Centre Working Paper. Online retrieved Novem-
ber 14, 2016
13 Ferns, C. and Beach, J. (2015). From child care mar-
5 UNICEF. (2008). The child care transition: A league
ket to child care system. In Our schools, ourselves, Spe-
table of early childhood education and care in econom-
cial Issue, Summer 2015. Moving beyond baby steps: A
ically advanced countries. Innocenti Report Card 8. Flor-
child care plan for Canada. Online retrieved November
ence, Italy: UNICEF Innocenti Research Centre, p. 18.

50 Canadian Centre for Policy Alternatives

14, 2016 17 Child Care Advocacy Association of Canada, Can-
files/uploads/publications/National%20Office/2015/09/ adian Child Care Federation, Childcare Resource and
OS120_Summer2015_Child_Care_Market_to_Child_ Research Unit and Campaign 2000 (2015). Shared Frame-
Care_System.pdf work for building an early childhood education and
care system for all. Online retrieved December 23, 2016
14 UNICEF. (2008). The child care transition: A league
table of early childhood education and care in econom-
ically advanced countries. Innocenti Report Card 8. Flor-
ence, Italy: UNICEF Innocenti Research Centre. 18 Macdonald, D. and Friendly, M. (2016). A Growing
Concern: 2016 Child Care Fees in Canadas Big Cities.
15 Child Care Briefing Note. (2006). Early learning and
Canadian Centre for Policy Alternatives. Online retried
child care: How does Canada measure up?International
December 23, 2016
comparisons using data from Starting Strong II (Organi-
sation for Economic Co-operation and Development,
2006). Childcare Resource and Research Unit.

16 Liberal Party of Canada. (2015). Greater economic

security for middle class families. Backgrounder. Lib-
eral Party of Canada. Online retrieved December 23, 2016

High Stakes, Clear Choices: Alternative Federal Budget 2017 51

Canada lacks an up-to-date foreign policy framework to guide Make UN peacekeeping and sustainable peace a Canadian

defence policy. defence priority.
Despite being the sixth largest military spender among the 28
member nations of NATO, Canada has about $40 billion worth of Reject Canadian participation in costly, unproven weapons
unfunded commitments for military equipment. systems like the F-35 fighter jet and U.S. ballistic missile defence.
The governments pledge to re-engage in UN peacekeeping and Invest $5 million per year in in a world class international peace
training lacks the necessary institutional and experiential operations training centre for military, police, and civilians from
underpinnings, given Canadas virtual absence in this field over the Canada and around the world.
last 10 years.
There are serious gaps in the Canadian regulation of armaments, Ensure that sales of Canadian-made weapons are consistent
making it difficult for Canada to meet treaty and other obligations with the Arms Trade Treaty and Canadas own export control
under international law. policy.
NATOs reliance on nuclear weapons conflicts with Canadas
nuclear disarmament obligations under the Nuclear Lead an initiative within NATO with the ultimate objective of
Non-proliferation Treaty. ending the organizations reliance on nuclear weapons.


Background1 deferred purchases of defence equipment

amounted to over $40 billion in acquisition
2016 Defence Policy Review
costs.2 Eighteen months later that figure is
A defence policy review should be guided by largely unchanged. Given the size of the pro-
the priorities established by the Canadian curement funding deficit, it is hard to over-
government for its foreign policy and offi- state the urgency of setting defence equip-
cial development assistance (ODA) frame- ment priorities. However, Canadas modest
work. The failure of the Liberal government national defence requirementsgiven the
to conduct such an overarching review, and lack of any direct threat to Canadian terri-
the opaqueness of the public consultative tory, and shared defence of North America
dimension, raises serious questions about with the United Statesmakes this an emi-
the utility of the review and its outputs. nently doable task.

Procurement Abyss UN Peacekeeping

Authorized DND spending is $19.3 billion in As of July 31, 2016, Canada ranks 67th among
2016-17, as shown in Figure 10. As of June 2015, contributors of uniformed personnel (po-

52 Canadian Centre for Policy Alternatives

Figure 10Canadian military spending (200016, $2016)



$ Billions


2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

SourceCompiled by author from Public Accounts, and, for the current year, the Main and Supplementary Estimates

lice and military) to UN peace operations.3 plexities of modern peace operations require
This represents a slight increase from an all- in-depth training and education. With UN
time low ranking of 74 in March 2016, and
peace operations at an all-time high, and
contrasts sharply with Canadas past role the Canadian contribution dismally low,
as frequently the single largest contributor Canada is currently lagging far behind other
to UN peace operations. The Canadian de-
nations in its readiness to train for and sup-
cline took place as UN peacekeeping mush- port UN operations.
roomed in size and complexity, now compris- In August 2016, Canada signalled its in-
ing a total of 100,851 uniformed personnel tention to commit up to 600 soldiers to a UN
and an additional 16,471 civilians. 5
peacekeeping mission.7 In September, they
There are now less than a quarter of the announced at the UN that Canada would
training activities there were a decade ago host the 2017 United Nations peacekeep-
for UN peace operations. Included in the
ing conference, which is expected to bring
training cuts was the closure, in November together representatives from more than
2013, of the Pearson Peacekeeping Centre 30 countries. By mid-January 2017, despite
(PPC), a world class peacekeeping facility fact finding missions to Africa and much
funded by the federal government for inter- media speculation, no specific mission had
disciplinary training of military, police, and been identified.
civilians from around the world. The com-

High Stakes, Clear Choices: Alternative Federal Budget 2017 53

Weapons Systems approved the bulk of the export permits
and International Law in 2016, despite compelling evidence
of gross human rights violations by the
It is essential that Canadas weapons choices
Saudi regime, at home and abroad. This
and exports reflect binding international
situation underscores the urgent need
humanitarian and human rights law and
for a tightening of, and greater scrutiny
the principles of the Geneva conventions.
over, Canadas arms export control policy.
Canada must vigorously support the inter-
national control of weapons and a ban on
problem weapons groups that cause indis- NATO and Nuclear Weapons
criminate or disproportionate harm to civil-
Canada is a non-nuclear-weapons state party
ians. The following priorities in this respect
to the Nuclear Non-proliferation Treaty (NPT)
should be key to Canadian defence policy.
and therefore is obligated under its Article
Cluster munitions: Although Canada VI to pursue good faith negotiations with
is a party to the treaty banning cluster the goal of nuclear disarmament. At the
munitions, its domestic implementation same time, Canada is a member of a collect-
legislation created a loophole that could ive defence alliance, NATO, with a strategic
see Canadian Forces personnel assisting doctrine of reliance on nuclear weapons for
allies currently outside the treaty (e.g., their alleged deterrence value. U.S. nucle-
the U.S.) in their use of such weapons. ar weapons modernization plans include
This would be contrary to both the let- upgraded tactical or battlefield nucle-
ter and the spirit of the treaty. ar weapons for NATO.8 With tensions high
and rising between Russia and NATO, and a
Lethal autonomous robotic weapons:
U.S. president talking about a new nuclear
Killer Robots lack the human judgment
arms race, some experts believe the threat
and ability to understand context that is
of nuclear catastrophe is greater now than
necessary for the use of force in accord-
even during the Cold War.9
ance with international law, namely, the
principles of proportionality, precaution,
and distinction.
AFB Actions
Armed drones: There is currently no
By prioritizing UN-led peace and security
international control regime for armed
operations, and working to curb and pro-
unmanned aerial vehicles and other
hibit destabilizing weapons systems, Can-
armed drones.
ada can enhance its sovereignty and secur-
Arms export control policy: The pre- ity while contributing responsibly to global
vious Conservative government signed peacebuilding.
a $15-billion arms deal with Saudi Ara-
Action: Restore and expand the emphasis
bia in 2014. But the Liberal government
on war prevention and peaceful conflict

54 Canadian Centre for Policy Alternatives

resolution, and give priority to strength- age Canadian expertise in artificial intelli-
ening the UNs rapid response capacities. gence, robotics, engineering, internation-
Result: Such a foreign policy focus will al- al law, and other relevant areas to lead an
low for a reorientation of Canadian defence international initiative to bring about a ban
policy to one of sustainable peace and com- on this technology. The federal government
mon security. will also mandate a broad public review of
military export policy to ensure that sales
Action: Base military equipment choices
of Canadian-made weapons abroad are con-
on Canadas modest national requirements
sistent with the Arms Trade Treaty and Can-
and specialization in UN peace operations.
adas own arms export policy.
Costly, unproven systems with no compel-
Result: Canadian military procurement and
ling Canadian need will be eschewed. Ac-
arms export policies will more fully reflect
cordingly, the F-35 fighter jet will be rejected,
stated Canadian policy and values and help
saving at least $400 million a year, and Can-
expand the reach of, and respect for, inter-
ada will not seek participation in the U.S.
national humanitarian and human rights
strategic ballistic missile defence system.10
law and the Geneva conventions.
Result: Canada will begin to reduce its mas-
sive defence procurement deficit while also Action: Mandate Canada to re-enter and re-
contributing to strengthening UN peace vitalize the debate within NATO on the role
operations and providing value at home for of nuclear weapons with a view to agreeing
Canadian taxpayers. their removal from Europe as a first step to-
ward NATO adopting a deterrent posture
Action: Invest $5 million per year in a world
that excludes nuclear weapons.
class international peace operations training
Result: Canada will tangibly contribute to
centre for military, police, and civilian per-
moving the world back from the nuclear
sonnel from Canada and around the world.
brink and begin a meaningful, comprehen-
Result: Canada will begin to rebuild its in-
sive negotiation for nuclear disarmament.
stitutional knowledge of modern UN peace
operations, prepare Canadian forces for UN
deployments, and contribute to international
capacity-building for UN peace operations.
1 This Chapter is based on a joint civil society submis-
Action: Commit to closing the loophole in sion to the federal governments defence policy review,
entitled A Shift to Sustainable Peace and Common Se-
Canadas domestic implementation legisla-
curity, co-published in 2016 by the Rideau Institute and
tion for the Cluster Munitions Treaty, to cat- Group of 78:
egorically prohibit any form of aid or assist- a-shift-to-sustainable-peace-and-common-security/

ance in the use of these banned weapons. 2 Michael Byers. (2015). Smart Defence: Rebuilding Can-
Canada will declare a moratorium on the de- adas Military. Ottawa: Rideau Institute and Canadian
Centre for Policy Alternatives. p. 11.
velopment and deployment of lethal, fully
autonomous weapons systems and lever-

High Stakes, Clear Choices: Alternative Federal Budget 2017 55

3 World Federalist Movement factsheet, July 2016: http:// 7 Althia Raj, Harjit Sajjan Got Ahead Of Government Revealing Africa Peacekeeping Details: Staffer, Huff-
peacekeeping-fact-sheet-2016-eversion1.pdf ington Post Canada, November 11, 2016.

4 A. Walter Dorn and Joshua Libben. (2016). Unpre- 8 See, for example, the December 2016 factsheet of the
pared for Peace? The Decline of Canadian Peacekeep- Arms Control Association: https://www.armscontrol.
ing Training (and what to do about it), Ottawa: Rideau org/factsheets/USNuclearModernization.
Institute and CCPA, p. 32.
9 Perry William J. (2005). My Journey at the Nuclear
5 United Nations peacekeeping factsheet, December 31, Brink. Stanford University Press.
10Byers, op cit., p. 31. Where he recommends the pur-
chase of the F/A Super Hornets instead. The Liberal gov-
6 Dorn and Libben, op cit., p. 6. ernment has announced its intention to purchase 18 Super
Hornets for an undisclosed cost as a stop-gap meas-
ure pending a final decision on which plane to choose.

56 Canadian Centre for Policy Alternatives

Employment Insurance
20% of jobs are part time and roughly Establish a uniform national eligibility

14% are contract or seasonal; it is hard for requirement of 360 hours for regular
these workers to qualify for EI. benefits, and 300 hours for special benefits.
The EI benefit rate is low just 55% of Add a low-income supplement so that
earnings averaged over the previous six no regular or special benefits fall below
months. $300/week.
Nearly three-quarters of working fathers
took paid parental leave in Quebec, Add eight weeks of leave that can only
compared to only 13% of working fathers be taken by a non-birthing parent.
outside Quebec.

Background per year in revenue for the EI fund over the

next seven years.
Employment insurance (EI) is a vital part of
Canadas social safety net. Successive fed-
eral governments have made the program Regular Benefits: Addressing
less equitable and harder to access, at the Precarious Work and Inequality
same time as our labour market has under-
EI is not keeping up with the realities of to-
gone major changes. A social insurance pro-
days job market, in which 20% of jobs are
gram should dampen the effects of labour
part-time and roughly 14% are contract or
market inequality, but the current design of
seasonal. A key disadvantage of temporary
EI actually amplifies inequality.
and part-time employment is that when the
EI could be used to address precarious
job ends, workers are unlikely to qualify for
employment, support a just transition, or
EI. In the event they do qualify, it can be for
reduce inequality. Instead of doing any of
as few as 14 weeks of benefits. Because of
these things, the federal government will
variations in hours worked from week to
be reducing premiums from 1.88% to 1.63%.
week, benefit rates can also be lower for
This works out to a loss of about $4 billion

High Stakes, Clear Choices: Alternative Federal Budget 2017 57

Figure 11EI Premium Rate, 19972017



$ Per $100 Earnings





1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017

SourceCanada Revenue Agency,

precarious workersthis is one way that EI four months of full-time workto qualify
amplifies labour market inequalities. for EI. They are eligible for between 17 and
We know that racialized and Indigen- 40 weeks of benefits depending on how
ous workers, workers with disabilities, and long theyve worked over the previous year.
LGBTQ workers are all disproportionately This rule implies that the local unemploy-
represented in low-wage precarious work. ment rate is the most important factor for
EI should help level the playing field for determining how hard it is for workers to
these workers. find a new job. While that may have been
mostly true at one time, it is no longer the
Access to Benefits: Hours Worked case for precarious workers in urban areas.
Workers qualify for regular benefits based on A pan-Canadian entrance requirement of
the number of hours they have worked over 360 hours would level the playing field for
the previous year and the local unemploy- precarious workers.
ment rate. Fewer hours are needed to qualify We want to acknowledge that a growing
in regions with high unemployment rates, number of unemployed workers havent con-
and claimants in those regions receive bene- tributed to EI over the past 12 monthsthey
fits for more weeks. In an average EI region may be students, previously self-employed,
with an unemployment rate of 7% to 8%, unpaid interns, or returning from parental
workers need at least 630 hoursabout leave. These workers need to be able to ac-

58 Canadian Centre for Policy Alternatives

cess training through labour market agree- ents or does anything to improve access to
ments, which are funded through general benefits for parents who dont qualify under
revenue and not EI premiums. current rules, nor do they improve access to
child care for parents who need it.
Benefit Levels
As it stands, the basic parameters of Can- Access to Benefits:
adas EI system are insufficient. The bene- Hours Worked and Benefit Levels
fit rate is lowjust 55% of earnings aver- Workers need 600 hours of insurable em-
aged over the previous six months. Women ployment in the past year to access mater-
still face a significant earnings gap in Can- nity, parental, and adoption benefits in most
ada, and so their EI benefits are also lower. of Canada. Quebec has its own provincial
Between 2006 and 2015, womens average plan and provides benefits to workers with
weekly benefits were consistently about $60 more than $2,000 in labour market earn-
lower than mens. 1
ingsequivalent to about 186 hours of work
One way to address this inequality is to at Quebecs current minimum wage of $10.75.
set a minimum floor for benefits. While EI Many new parents are surprised to find
has a supplement for low-income families out that they dont qualify for these bene-
with children under 18, there is no supple- fits, especially recent graduates, self-em-
ment for those without children. EI has had ployed workers, and part-time workers. As
higher replacement rates for lower-income well, the low replacement rate makes tak-
workers in the past; it would not be out of ing parental leave unaffordable for low-in-
place for a social insurance system to im- come families.
plement this kind of policy to lessen labour Prior to the 1997 changes to unemploy-
market inequalities. ment insurance, parents needed the equiva-
lent of 300 insurable hours of work to qualify
for maternity or parental benefits. Lowering
Parental Benefits:
the entrance requirement to 300 hours and
Addressing Inequality
instituting a minimum benefit level would
Child care and parental leave were hot topics give new parents better access to benefits
during the 2015 election. In response, the and make taking parental leave more af-
Liberals promised to introduce more flex- fordable for families.
ible parental benefits if they were elected.
Their proposal had two options: parents Addressing Gender Inequality
could take the existing 35 weeks in smaller Looking at Quebecs experience gives us
chunks over an 18-month period, or they some clues about how to improve EI par-
could take leaves of up to 18 months with ental benefits. Research shows that Quebec
a lower weekly benefit level. fathers are far more likely to take parental
Neither of these options increases the leaves than fathers in the rest of Canada. In
total value of the benefits available to par- 2010, nearly three-quarters (72.5%) of work-

High Stakes, Clear Choices: Alternative Federal Budget 2017 59

ing fathers took paid parental leave in Que- Just Transition: Training
bec, compared to only 13% of working fath- for a Green Industrial Revolution
ers outside Quebec.2
We have a major opportunity to move un-
A study found that an increase in the
employed, underemployed, and low-paid
number of Quebec fathers taking leave had
workers into better jobs as a part of a stra-
lasting effects on the division of unpaid labour
tegic response to meeting our climate change
within the home, resulting in more balance
targets. We can expand access to EI training
between unpaid and paid work responsibil-
programs with a focus on labour adjustment
ities for opposite sex spouses.3 Fathers who
and transition. That way, Canadian workers
took parental leave spent more time doing
could benefit from the transition to a green
unpaid work and their spouses spent more
economy by accessing new, green jobs cre-
time in paid work.
ated by public investment programs and
sector strategies.
Fairness for Migrant Workers
The labour market development agree-
In 2012, Canada changed its regulations to
ments (LMDAs) between the federal govern-
expressly limit EI parental benefits only to
ment and the provinces and territories will
those individuals who were authorized to
be crucial in accomplishing this goal. The
remain in Canada at that time.4 This meant
LMDAs transfer funds from the EI account
that migrant workers (such as seasonal agri-
to the provinces and territories for training
cultural workers) who left Canada but were
programs for people who are EI contributors.
likely to return at the beginning of the next
The current LMDAs transfer $1.95 billion in
growing season no longer had access to par-
funding annually to the provinces and ter-
ental benefits.
ritories for EI training programs. During the
All other Canadian workers are eligible
last federal election, the Liberals said they
to receive parental benefits even if they
would increase the LMDA transfer by $500
leave the country. Only migrant workers
million per year. The AFB strongly supports
are treated differently. This change was re-
this commitment.
gressiveparental benefits were the only
type of EI benefit that many migrant work-
ers were able to access. As a result, most Access to a Fair Appeals Process
migrant workers are no longer eligible for
In the 2012 budget, the federal government
any employment insurance benefits, even
made profound changes to the appeal pro-
though they pay into the program with each
cess for employment insurance claims,
paycheque. The AFB will reverse this mean-
abolishing the Board of Referees and insti-
spirited change.
tuting the Social Security Tribunal (SST).
Previously, appeals were heard by local EI
boards of referees, which had three part-
time members: one appointed from each

60 Canadian Centre for Policy Alternatives

of labour and business by the respective Result: Increased revenue of approximate-
EI commissioners, and a neutral chair ap- ly $3.5 billion in 2017 for the EI Operating
pointed by the government. The EI board Account.
members were knowledgeable about local
Action: Establish a uniform national eligi-
labour conditions as well as EI legislation
bility requirement of 360 hours for regular
and regulations, and delivered timely deci-
benefits, and 300 hours for special benefits
sions, usually within 28 days.
(returning to pre-1990 levels) and restore mi-
The changes in 2012 were made with no
grant workers access to parental benefits.
consultation or notice to stakeholders. The
(Cost: $2 billion/year)
result was a process that takes longer than
Result: An additional 250,000 workers will
ever, that is at odds with basic principles
receive regular and special benefits.
of procedural fairness, and that stacks the
odds against unemployed workers. Action: Add eight weeks of leave that can
The structure of the new SST appeal pro- only be taken by a non-birthing parent. This
cess is highly unusual, and deviates from leave is additional to maternity leave and
accepted legal norms. Workers are required parental leave, and would be available to
to submit all of their evidence and legal sub- adoptive parents and same-sex couples as
missions at the first stage of the process, be- well. (Cost: $600 million/year)
fore they have even been informed of the Result: An additional 155,000 parents could
case against them or given full disclosure of take parental leave.
their file. Normally a person would have the
Action: Add a low-income supplement so
chance to see the evidence against them so
that no regular or special benefits fall below
that they can respond in an informed way.
$300/week. (Cost: $900 million /year)
It also takes considerably longer to com-
Result: Reduced inequality for low-income
plete an appeal than it did under the former
system. The SSTs service standard is to de-
liver final decisions in 85% of cases within Action: Restore the Board of Referees ap-
90 days of the appeal being filed. This is on peal system for EI. The Social Security Tri-
top of the time it took to get the original de- bunal introduced in the 2012 budget isnt
cision plus the time for reconsideration of working for workers, and has proven to be
the decision from the EI commission. costly and inefficient.
Result: More justice for unemployed workers.

AFB Actions
Action: Leave premiums at $1.88 per $100
1 2012 and 2014/2015 EI Monitoring and Assessment
of earnings, up to the 2017 maximum insur-
Reports, Annex 2.2, found online:
able earnings of $51,300. reports/ei/

High Stakes, Clear Choices: Alternative Federal Budget 2017 61

2 Findlay, L.C. and D.E. Kohen. (2012). Leave practi- 4 Employment Insurance Regulations, SOR/96-332, s.
ces of parents after the birth or adoption of young chil- 55(4) <> retrieved on 2016-01-26;
dren, in Canadian Social Trends, Statistics Canada. New Release (December 6, 2012), at
3 Patnaik, A. (2016). Reserving Time for Daddy: The
Short and Long-Run Consequences of Fathers Quotas
Available at SSRN:

62 Canadian Centre for Policy Alternatives

and Climate Change
Climate change threatens the prosperity and Remove all direct and indirect subsidies for

well-being of all Canadians. fossil fuel exploration, development, and
The climate policy ambition of Canadas
federal and provincial governments does not Enforce a stringent national carbon pricing
match the ambition of their climate targets. standard.
Clean energy presents an opportunity to
reduce emissions while growing the economy. Contribute Canadas fair share of global
climate financing.
The international community has committed
to ambitious climate action, although each Finance new renewable energy generation
country must do more to pull its weight. and energy efficiency improvements.

Background by the government in December, is an un-

precedented step forward insofar as it com-
Reducing the amount of greenhouse gases
mits the federal and (most) provincial gov-
(GHGs) we emit into the atmosphere is cen-
ernments to a unified climate strategy for the
tral to mitigating the worst effects of climate
first time. However, the policies outlined in
change. Canada has committed to deep GHG
the framework do not put Canada on a path
emission reductions in principle, but with-
to meeting its medium-term GHG emission
out ambitious domestic policy action Canada
reduction target of 30% below 2005 levels
will continue to miss these targets. Canada
by 2030. To make matters worse, that mod-
must commit to implementing a comprehen-
est targeta hangover from the previous
sive domestic climate action plan commen-
Conservative governmentdoes not reduce
surate with its global ambitions for climate
Canadas emissions as far as climate scien-
change mitigation and adaptation.
tists say we must in order to do our part in
The Pan-Canadian Framework on Clean
avoiding catastrophic global climate change.
Growth and Climate Change, announced

High Stakes, Clear Choices: Alternative Federal Budget 2017 63

Meeting our GHG emission reduction tries respond to climate change. Canadas
commitments is a significant challenge, but contribution to global climate finance is
it is also an opportunity. Among other major critical not only to support developing coun-
initiatives, achieving Canadas full renew- tries mitigation and adaptation efforts, but
able energy generation potential will sig- also to show leadership and build trust in
nificantly reduce emissions while spurring its international negotiations.
economic growth. Recent research demon- Climate change is a global collective ac-
strates that renewable energy will be the lar- tion problem, so international trust and co-
gest source of new power generation cap- operation is essential for long-term success.
acity worldwide over the next five years, in It is promising that world leaders recognize
part because the cost of renewable energy the need for ambitious climate action. The
is now competitive with fossil fuels. The Paris Agreement aspires to a global warm-
rapidly declining cost of clean technology ing target of just 1.5 degrees Celsius above
means more wind turbines and solar pan- pre-industrial levels (with a firm target of
els on the ground. Any federal investment two degrees), which would give the world a
in renewable energy infrastructure will gen- reasonable chance of avoiding catastrophic
erate far more megawatts per dollar than it climate change.
would have just a few years ago. However, missing from the Paris Agree-
Canada has an abundance of diverse ment is a coherent framework that clearly
energy resources and more than enough states a peak year for emissions, a target
clean energy potential to not only meet our date for a 100% renewable economy, or a
needs but also to export clean power to an carbon budget (i.e., a total amount of car-
increasingly energy-hungry world. The shift bon we can safely use before exceeding
to a resilient, decarbonized Canadian econ- the 1.5 degree threshold). Taken together,
omy must be accelerated in 2017 to make up the GHG emission reduction targets submit-
for lost ground. The AFB transitions toward ted by each country, if met, would put the
a zero-carbon economy by supporting those world on track for a temperature increase
energy resources that maintain a healthy of three degrees Celsius or more by the end
environment, a stable climate, and a strong of the century.
In addition to ensuring the future pros-
perity and well-being of Canadians, the fed- AFB Actions
eral government has an international re-
The AFB plan puts Canada on course to
sponsibility to act on climate change. Under
100% renewable energy generation within
the December 2009 Copenhagen Accord, de-
35 years (by 2050), which will help ensure
veloped countries promised to provide three
Canada meets its national greenhouse gas
years of fast start climate financing with
reduction targets.
the end goal of mobilizing US$100 billion
per year by 2020 to help developing coun-

64 Canadian Centre for Policy Alternatives

Action: Remove all federal government Action: Enforce a strong, harmonized car-
direct spending and production subsidies bon price in all Canadian jurisdictions.
on carbon. A broad, economy-wide carbon price will
Over five years, all remaining federal tax help drive GHG emission reductions at the
credits, production subsidies, direct feder- lowest cost. Although it is not, on its own,
al spending, and public financing provid- sufficient to meet Canadas climate goals,
ed for fossil fuels will be eliminated. This carbon pricing is the most efficient policy
will save the government $1.5 billion annu- tool for reducing GHG emissions. Carbon
ally by phasing-out the following measures: pricing regimes are currently in place in Brit-
ish Columbia (since 2008), Quebec (2013),
The Accelerated Capital Cost Allowance
Ontario (2017), and Alberta (2017), with sev-
(ACCA) provided to liquefied natural gas
eral other provinces promising to implement
projects ($9 million per year);
their own policies this year.
Flow-through share deductions available The new pan-Canadian climate frame-
to investors in coal, oil, and gas projects work includes a minimum national carbon
($133 million per year); price, which means all jurisdictions must im-
plement a carbon tax or cap-and-trade sys-
Exploration limited partnerships (amount
tem by 2018. This is certainly progress, but
there are elements of the plan that should
Canadian Exploration Expenses (CEE) be stronger and others that require great-
for coal mining ($148 million a year); er clarityissues the AFB plan addresses.
First, a $10/tonne carbon price starting
Canadian Development Expenses (CDE)
in 2018 means it will take many years before
for oil and gas well or mining develop-
the carbon price starts to create significant
ment ($1.018 billion per year);
emission reductions. Second, the carbon
Canadian oil and gas property expens- price floor ramps up by $10/tonne per year
es (COPGE), which allow companies but only until 2022. In the absence of a plan
to claim 10% of the costs of acquiring to increase the carbon tax until 2030 or be-
oil and gas wells and rights ($36 mil- yond, the federal government will have to
lion a year); be very aggressive with complementary poli-
ciesregulations, standards, and spending
Duty exemptions for imports of mobile
programsto fill the gap and meet or beat
offshore drilling units in the Atlantic
the existing 2030 target.
and Arctic; and
In the AFB plan, the government cre-
The Foreign Resource Expense (FRE) ates a stronger national carbon pricing stan-
and Foreign Exploration and Develop- dard that enforces a common set of princi-
ment Expense (FEDE). ples across provincial and territorial carbon
pricing regimes. First, the new standard will
require a stringent carbon price of $30/tonne

High Stakes, Clear Choices: Alternative Federal Budget 2017 65

by January 1, 2018, increasing by $10/tonne ada has committed to providing a total of
per year until 2030. The price must be ap- $2.65 billion in climate financing by 2021,
plied broadly with no industrial sector ex- but that does not go far enough to support
empt. Second, all carbon pricing revenues adaptation and mitigation activities in de-
will be returned to provinces and territor- veloping countries. The AFB raises that fi-
ies, as in the current framework, but a por- nancing commitment to $1 billion per year.
tion of revenues from all carbon pricing re- This will help less developed countries re-
gimes is redistributed to those most affected duce their dependence on fossil fuels while
by the transition off fossil fuels. A portion building climate resilience. Reductions in
of all carbon revenues will be allocated to GHG emissions are often much more effi-
help low-income families affected by energy ciently accomplished in developing coun-
poverty; to provide just transition plans and tries on a dollar-for-dollar basis compared
retraining for workers in the industries be- to more developed economies, as GHG re-
ing phased-out; and to invest in clean tech- ductions are often possible with less tech-
nologies, energy efficiency programs, and nology and at a lower cost.
adaptation measures.
Action: Achieve Canadas full renewable
A harmonized carbon price of at least
energy generation potential and improve
$50/tonne of CO2e (carbon dioxide equiva-
energy efficiency for Canadian homes.
lent) by 2020 will be enforced in all Canadian
The AFB renews funding of $1 billion
jurisdictions, thus providing all Canadian
annually to Natural Resources Canada for
households and businesses in all sectors
the Clean Energy Fund to finance renewable
of the economy with the same incentive to
energy demonstration projects and fund re-
reduce GHG emissions and switch to low-
newable energy research, deployment, and
carbon energy sources (see the AFB Taxa-
transmission across the country. Funding for
tion chapter for more details). To address
clean electricity generation, interconnection
the potential competitiveness impacts on
of provincial electricity grids, energy stor-
emissions-intensive and trade-exposed in-
age, the electrification of end uses, and com-
dustries (e.g., steel, cement), the feasibil-
munity-scale renewable energy projects will
ity of border carbon adjustments, or other
grow the middle class, provide meaningful
measures to level the playing field with
outcomes to benefit First Nation commun-
international competitors not subject to a
ities, strengthen Canadas economy, and
carbon price, will be studied.
make significant progress toward achieving
Action: Contribute Canadas fair share of Canadas GHG emission reduction targets.
global climate financing. The AFB plan seizes the opportunity to
Developing countries face significant fund research organizations and initiatives
challenges to reducing their emissions and across the country to make optimal use of
are already suffering the greatest losses Canadas diverse and abundant clean energy
and damages due to climate change. Can- resources. These investments could sup-

66 Canadian Centre for Policy Alternatives

port, among other possibilities, the study porters. Building and maintaining the infra-
of solar power in Alberta, energy storage structure needed to support this exchange
in Saskatchewan, and geothermal energy of electricity would create jobs, expand util-
in British Columbia. Investing in renewable ities access to diverse energy markets, and
energy at the local level would not only help enhance the security and sustainability of
reduce Canadas greenhouse gas emissions, Canadas energy supply.
but also provide jobs and investment oppor- In addition to expanding the clean energy
tunities for Canadians in remote areas, and supply, the AFB helps reduce domestic energy
assist in the phase-out of fossil fuelbased demand through efficiency initiatives, allo-
electricity generation. cating $400 million per year to re-establish
The AFB supports community-scale re- an energy efficiency home retrofit program
newable energy projects by expanding ac- (modelled on the former ecoENERGY retro-
cess to federal grants for demonstration fit program). The program will initially pri-
projects. The City of Vancouvers Neigh- oritize northern communities and low-in-
bourhood Energy Utility provides a posi- come housing and then expand to include
tive example and a useful model for feder- multi-unit buildings and older structures.
al-supported community energy initiatives. Re-establishing such a program will create
Low-carbon district energy in dense urban jobs, reduce GHG emissions, and put money
areas is just one area with great potential back into the pockets of Canadiansboth
for emissions reductions paired with inclu- at the time of reimbursement for renova-
sive growth. In instances where funds can tions and for years to come as they reduce
be directed to off-grid communities, renew- their energy consumption.
able energy can reduce GHG emissions by
Action: Finance strategic, nationwide, multi-
significantly reducing the need to regularly
year conservation efforts in the following
burn diesel for power.
three areas:1
To complement small-scale renewable
energy projects and leverage the growth of Terrestrial protected areas, by expand-
renewable energy in Canada, the AFB also ing and better protecting our terrestrial
invests in enhancing the interconnection protected areas system (cost: $145 mil-
of provincial electricity grids. Allowing re- lion in 2017-18 and declining);
sponsibly developed hydropower resources
Working landscapes, by expanding meas-
in British Columbia and Manitoba to sup-
ures to conserve unique and ecological-
port a transition away from coal power in
ly significant wildlife habitat and to en-
Alberta and Saskatchewan, for example,
sure ecological connectivity (cost: $123
would accelerate the reduction of Canadas
million in 2017-18); and
total GHG emissions, enhance economic pro-
ductivity in the exporting provinces, and Oceans and fisheries, by fulfilling Can-
provide substantial public health and en- adas commitments to reach and exceed
vironmental benefits for hydroelectricity im- international marine protection targets,

High Stakes, Clear Choices: Alternative Federal Budget 2017 67

and to ensure ocean health and sustain- Notes
able fisheries (cost: $146 million a year). 1 See the Green Budget Coalitions Recommendations
for Budget 2017, pages 2436, for more details: http://

68 Canadian Centre for Policy Alternatives

First Nations
Over 10,000 First Nations high school graduates Invest $141.6 million in post-secondary education

cant access post-secondary education and children for First Nations students and $653.2 million in K12
receive inferior education because of a long-standing education to lift schools to comparable provincial
funding cap. standards.
First Nations child and family services are not up to Bring financial support to First Nations child and
provincial standards because they dont receive family services to fulfil all orders from the Canadian
adequate funding. Human Rights Tribunal.
Inferior housing, unsafe drinking water, and poor
infrastructure are forcing First Nations people out of Invest $1.9 billion in housing, water, and
their own communities. infrastructure in First Nations.
58 Indigenous languages are threatened with Invest $153.4 million a year to support Indigenous
extinction. language revitalization.


Background calculates that the 2% cap, which has been

in place since 1996, has resulted in a cumu-
The Federal Government has committed to
lative loss against inflation and population
implementing the United Nations Declara-
growth of $30 billion.
tion on the Rights of Indigenous Peoples and
Over the course of 2016-17, Indigenous
all 94 Calls to Action of the Truth and Rec-
and Northern Affairs Canada did increase
onciliation Commission. While the 2016-17
funding on K12 education by 4.5% and on
federal budget provided welcome invest-
child and family services by just over 3%,
ments of $8.4 billion over five years, the
finally exceeding the 2% cap in those areas.
funding that supports First Nations gov-
However, increases to support for the gov-
ernments in providing core programs and
ernance and administration of First Nations,
services remains affected by historic under-
operations and maintenance on capital
funding. The prime ministers commitment
projects, and income assistance all remain
to eliminate the 2% cap on annual funding
under 2% in this fiscal year.
increases for core First Nations programs
After decades of inaction and neglect,
and services clearly requires ongoing in-
the investments outlined in the following
vestments. The Assembly of First Nations
areas will go some of the way toward re-

High Stakes, Clear Choices: Alternative Federal Budget 2017 69

pairing the damage done, though it will not oritized child welfare, and in a landmark
meet the entirety of that need. Nonetheless, ruling the Canadian Human Rights Tribu-
these investments would go a long way to nal (CHRT) has made several orders regard-
demonstrate the governments willingness ing improvements to be made to services in
to truly reset the relationship between Can- this area. The federal government has com-
ada and First Nations. mitted to implementing the Calls to Action
and is legally obliged to follow the orders
of the CHRT.
Although the 2016 federal budget prom-
First Nations education received significant ised $634.8 million over five years, the $71
funding in the 2015-16 federal budget, but re- million invested in 2016-17 did not meet the
mains at a disadvantage compared to prov- levels of investment needed, nor will the
incial systems. The average annual growth commitment of $99 million meet that need,
rate in education funding provincially has which is estimated at well over $200 million
been 5%, which means that First Nations per year by Cindy Blackstock, executive dir-
education had not been able to keep up ector of the First Nations Child and Family
with inflation and population growth for Caring Society. In November of 2016, Parlia-
the past 20 years. A stable funding formu- ment unanimously passed a motion for the
la is needed in the longer term. Also need- federal government to invest an additional
ed are immediate investments to help catch $155 million in First Nations child and family
up, to establish a new national, honour- services, but this has yet to occur and legal
able partnership process between the gov- battles continue.
ernment and First Nations, to develop new High-priority issues such as an enhanced,
education systems, and to provide language prevention-focused approach for child and
and cultural programming. family services will require additional invest-
Post-secondary education was left out ments to close the gap in services between
of the 2015-16 budget and requires immedi- provincially funded child welfare systems
ate funding to address the existing backlog and those provided by First Nations through
of 10,000 First Nations graduates who are federal funding.
ready to move on to post-secondary stud- First Nations also welcome the govern-
ies but who lack access to funding to do so. ments willingness to engage in dialogue to-
ward transforming child and family services
on a more fundamental level, addressing the
Child and Family Services
issue of jurisdiction, and making progress
First Nations child and family services have in reducing the number of children taken
become a national priority. Youth suicide, into care while increasing the security and
frequently linked to treatment in foster care, safety of all First Nations children.
continues to be a crisis. The Truth and Rec-
onciliation Commissions 2015 report pri-

70 Canadian Centre for Policy Alternatives

Housing serves within five years of its election, and
the 2016 budget committed $1.8 billion over
Adequate housing is a basic human right
five years to support clean drinking water
and the foundation for success. First Nations
and the treatment of wastewater on reserves.
scholastic achievement, employment, and
In 2011, a government study estimated
health are negatively affected by overcrowd-
the needs for First Nations water and waste-
ing, mold, and other housing deficiencies.
water facilities in 10 years at $4.7 billion,
Without adequate funding, communities
plus a projected operating and maintenance
are unable to meet demand for new hous-
budget of $419 million per year. Additional
ing, causing people to move to urban areas.
costs relate to water distribution and waste-
This out-migration increases homelessness,
water collection systems. Even with the sig-
the loss of language, substance abuse, and
nificant investment in the 2016 budget, it is
family breakdown. There remains a signifi-
estimated that additional funding of $300
cant need for new construction and renova-
million annually will be required.
tion to relieve overcrowding, address defi-
ciencies, and provide services.
A study commissioned by Indigenous Other Infrastructure
and Northern Affairs Canada estimated that,
Other community infrastructure includes
between 2012 and 2036, there will be a hous-
the following: elementary and secondary
ing shortfall of 99,581 units, an additional
educational facilities; roads and bridges;
5,836 replacement units required, and ap-
fire halls and other fire protection facilities
proximately 12,492 units requiring major re-
and equipment; electrical power generation
pairs. Taking into account the investments
and distribution; fuel systems; community
made in the 2016 budget, the additional an-
and recreation facilities; band offices; flood
nual investment to meet these needs is $523
and erosion protection; remediation of con-
million in 2017-18 and $800 million annu-
taminated sites; and internet connectivity.
ally afterward.
The federal government is developing a 10-
year infrastructure plan. First Nations are
Water at the greatest disadvantage, both histor-
ically and currently, and require a share of
Access to clean drinking water is a univer-
that investment that is proportional to their
sal human right, recently affirmed by the
infrastructure need. This need is estimated
United Nations, and Canada has a respon-
at just over $1.1 billion annually.
sibility to ensure clean drinking water is ac-
cessible to all First Nations communities.
However, First Nations water quality con- Languages
tinues to be a national concern.
The 2016 budget invested $5 million in the
The federal government committed to
Aboriginal Languages Initiative and prom-
eradicating all boil-water advisories on re-
ised that the government would work with

High Stakes, Clear Choices: Alternative Federal Budget 2017 71

Indigenous peoples to identify how best to to better meet communities needs based on
proceed in future years. The AFB submits wholistic and culturally-based worldviews.
that, in addition to the school-based im- The renegotiation of the Health Accord, pro-
mersion programs being discussed with vides an opportunity for provinces, territor-
the minister of Indigenous and Northern ies and the federal government to advance
Affairs, investment is needed in commun- First Nations health with First Nations as full
ity language revitalization, adult language partners. The structure of the investments
revitalization, and language maintenance should be accountable to First Nations and
and dissemination. This investment is ur- must move away from siloed and short-term
gently needed due to the crisis facing In- funding and towards sustainable and long-
digenous languages in Canada. term funding that is responsive to and that
Language defines nationhood and every is based on First Nations needs and prior-
language matters. Languages are integral to ities. (for more information on the Health
the cultural continuity that has been identi- Accords with the provinces see the Health
fied as a key factor in preventing youth sui- Care chapter)
cide. It is unacceptable that there are an

estimated 58 First Nations languages threat-

ened with extinction. Without supports for AFB Actions
Indigenous languages, entire nations and
Action: Invest $795 million annually in First
cultures are at risk. An investment of $153.3
Nations education, including $653.2 million
million annually is needed.
for K12 schools and $141.6 million for post-
secondary students.
Health Accords and First Nations Result: Funding for First Nations schools
will be comparable to that provided to other
The health and wellness of many First Na-
students in Canada, and 10,000 First Nation
tions peoples and communities in Canada is
students will be able to enter post-second-
in profound crisis. The data that does exist
ary studies.
paints a shameful picture. In comparison
to the general Canadian population, First Action: Invest $155 million annually in First
Nations peoples: face higher rates of chron- Nations child and family services.
ic and communicable diseases; have more Result: First Nations child welfare services
limited access to healthy foods and employ- will be brought closer to providing compar-
ment opportunities; experience 57 year able levels of service to those of provincial
lower life expectancy; have an infant mor- child welfare systems.
tality rate that is about 1.5 times higher; and
Action: Invest $1.9 billion annually in hous-
have a 56 times higher rate of suicides.
ing, water, and other infrastructure for First
Despite chronically inadequate resour-
Nation communities.
ces, First Nations communities are trans-
forming their systems of health and wellness

72 Canadian Centre for Policy Alternatives

Result: Thousands of houses will be built, Notes
clean drinking water will be provided to 1 Chandler, M.J. & Lalonde, C.E., Cultural continuity
more people, and roads will link First Na- as a moderator of suicide risk among Canadas First Na-
tions. In Kirmayer, L. & Valaskakis, G. (Eds.), Healing
tions to the rest of Canada.
Traditions: The Mental Health of Aboriginal Peoples in
Canada (pp 221248), University of British Columbia Press.
Action: Invest $154 million annually in re-
vitalization of First Nations languages.
Result: The extinction of 58 Indigenous lan-
guages will be prevented and fluency will
increase in communities across the country.

Action: Invest $1.58 bil to support First Na-

tions health systems. This investment will
address the current health infrastructure
backlog, provide new health services for
children, expand the National Native Al-
cohol and Drug Abuse Program, and sup-
port First Nations health governance cap-
acity all while building out community care,
mental health and providing health care on
a needs basis.
Result: First Nations people have access to
the best health programs and services avail-
able in Canada.

High Stakes, Clear Choices: Alternative Federal Budget 2017 73

Gender Equality
Women make up 47% of the paid workforce in Develop a job creation strategy that invests equally

Canada, are more likely to have post-secondary training, in the sectors where men and women work.
and earn on average 30% less than men.
Close the gender wage gap by promoting
Women perform more hours of unpaid work in the
home and work more total hours (paid and unpaid) than transparency and tracking in salaries and wages,
men, make up 92% of those taking parental leave, and are increasing wages in predominantly female-dominated
21 times more likely than men to cite caring for children sectors (e.g., care work), and raising the minimum
as the reason they are in part-time work. wage.

Women are now more likely than men to be a victim of Invest in a national action plan to end violence
a violent crime. Spousal violence and sexual assault costs against women and make this investment proportionate
the economy an estimated $12.2 billion per year. The to the cost and consequences of sexual and domestic
federal government spends about 1.6% of this amount violence.
($189 million) to counter violence against women.


Background earnings make an essential contribution to

their own economic security and to that of
Why is the International Monetary Fund ask-
their families. For many households those
ing about child care?1 Because economists
earnings are the difference between keeping
have begun to understand that womens
up with the bills or going further into debt.
labour, paid and unpaid, is essential to eco-
As a result of investments in higher edu-
nomic growth. More than that, after decades
cation by provincial and federal govern-
of inequality, Canadians need growth they
ments, both men and women in the labour
can share ingrowth that comes with an
force are far more likely to have completed
increase in jobs and wages. Womens em-
post-secondary education today than they
ployment is an essential part of making the
were 30 years ago. Women in the labour
shift to a more equal society.
force are now slightly more likely to have a
Over the past three decades women have
university degree than their male counter-
entered the Canadian labour force in ever-
parts.3 In spite of this, employment rates
growing numbers.2 During the same period
for women lag behind those for men. Near-
male wages have struggled to keep pace with
ly a million women working part time do so
the cost of living. Womens employment
involuntarily, reporting a lack of full-time

74 Canadian Centre for Policy Alternatives

Figure 12Womens earnings as a percetage of mens


Public Sector Private Sector

80% 78%
66% 66%

60% 56%



Non-Aboriginal, non-Minority Aboriginal Visible Minority

work and the need to care for children and womens employment has increased year
their family as the reason. 4
on year over the past decade.7 In contrast,
The current job stimulus efforts of the women make up only a fraction of those em-
federal government are focused on pre- ployed in the sectors that will benefit from
dominantly male employment sectors. There the governments infrastructure projects,
is no question that Canadas aging physic- and they actually lost jobs in the construc-
al infrastructure needs to be repaired and tion sector in 2015 (while men made gains).8
upgraded (and men need jobs). However, The federal government is promising
that investment needs to be paired with a a $3-billion investment in home care (over
parallel investment in predominantly fe- four years), which will certainly yield jobs
male sectors to ensure the sustained growth for women. However, it is also committed
and productivity of our economy. The OECD to the previous Conservative governments
projects that narrowing the gap between 3% cap on annual increases to provincial
mens and womens employment in Canada health transfers.9 This cap will likely limit
could contribute an additional $160 billion job creation in the sector where women are
to GDP by 2030. 5
most likely to be employed. While addition-
More than one out of every five women al support for home care will be welcome,
working today works in health and social many of the jobs created by that invest-
services. It is one of the only sectors where
ment would be low-paying without addi-

High Stakes, Clear Choices: Alternative Federal Budget 2017 75

Figure 13Time Use (Average Hours Per Day Over a Seven Day Week)

Men Women

Hours per day

Paid Work Unpaid Work Total Work

SourceGeneral Social Survey: Time Use. Ottawa, Statistics Canada, 2010.

tional government intervention on wages. gaps in income and employment. Women

The median take-home pay for a home care now outnumber men among university
worker ($18,942 per year) falls below the graduates, yet the gender gap in earnings
poverty line. 10
persists among university-educated workers.
The sectors in which women work con- Addressing the gender wage gap is an
tinue to pay less on average than the sec- important tool in stimulating wage growth
tors in which men work, with some excep- across the labour market and creating more
tions such as nursing. Even when men and inclusive economic growth that meaning-
women work in the same sector, in relative- fully improves the lives of Canadians. The
ly equal numbers, women are paid less on federal government recently announced its
average than men. The wage gap in Canada
intention to table proactive pay equity legis-
actually widened in the years following the lation as recommended by a special parlia-
2009 recession. Moreover, the gap in wages mentary committee studying the issue. As
and employment expands for women with important as this legislation would be, there
disabilities, Aboriginal women, racialized are other complementary policy tools that
women, and immigrant women. will help close the gender gap in wages.
Simply increasing education and train- Affordable and available child care has
ing levels would not be sufficient to close the had a positive effect on womens employ-

76 Canadian Centre for Policy Alternatives

ment levels and on reducing the wage gap value of care work, triggering raises in the
in similar high-income countries. Parent-
wages of child care and home care workers.
al leave of less than a year has a similarly
positive effect on womens attachment to
Social Policies
the labour force and their earnings. How-
ever, longer parental leaves have a nega- Women in Canada continue to face gender-
tive impact on womens participation in the specific challenges to their safety and well-
paid workforce, particularly for highly edu- being. Women are now more likely to be
cated women. 13
victims of violent crime than men. Rates of
Proactive wage-setting policies, includ- sexual assault against women are largely un-
ing collective bargaining, are another im- changed over the past two decades, while
portant tool in closing the gender wage the incidence of other violent crimes has
gap. Women make up nearly two-thirds of decreased. A million women report having
all minimum-wage workers. The occupa-
experienced sexual or domestic violence in
tions in which women are most likely to work the past five years.19 On any given day, more
include some of the lowest-paying jobs in than 4,000 women and over 2,000 children
Canada. For example, the median income will reside in a domestic violence shelter.20
of an early childhood educator ($17,703) or More than 500 women and children are
a home care worker ($18,942) falls below turned away from shelters on a typical day,
the poverty line. A good example of pro-
with overcrowding the primary reason.21
active wage-setting policy is the decision Rates of gender-based violence are sig-
by the Government of Ontario to increase nificantly higher for Aboriginal women and
wages for early childhood educators, 97% girls. Aboriginal women in Canada experi-
of whom are women. 16
ence three times the level of violent victimiz-
The wage and employment gaps also de- ation as non-Aboriginal women, and young
rive from the extra burden of unpaid care Aboriginal women make up 63% of those
performed by women, who continue to do who report experiencing violent victimiza-
nearly four hours a day of extra home and tion.22 The murder and disappearance of Ab-
child care work on top of their paid work.17 original women and girls, an endemic prob-
This burden has been exacerbated by post- lem in Canada, has received international
recession austerity measures, in particular attention and condemnation.
cuts to care services. The current government is moving to form
As a result of Quebecs supplementary an inquiry into missing and murdered Ab-
parental leave for fathers, introduced by the original women and girls. It will not be the
government in 2005, over 76% of men in the first. The government must learn from the
province take parental leave, compared to mistakes of past inquiries; for example, by
26% of men in the rest of Canada. The re-
ensuring that Aboriginal families and com-
balancing of child care work in the home has munities are supported, both socially and fi-
the potential to lead employers to see the nancially, so they can meaningfully partici-

High Stakes, Clear Choices: Alternative Federal Budget 2017 77

pate in, and indeed lead, the quest to find and/or failure of current programs and poli-
justice, and put an end to the violence ex- cies where they are being enacted.
perienced by Aboriginal women and girls.
Existing federal policy on violence against
women is largely gender neutral, in spite of AFB Actions
a surfeit of evidence concerning the need to
Action: The AFB will invest in a nation-
address these forms of violence as based on
al action plan to address violence against
gender. The grant program administered by
women (cost: $500 million a year), based
Status of Women Canada is a rare excep-
on the Blueprint for a National Action Plan,
tion. The federal department disperses be-
that includes the following components:
tween $14 and $15 million per year in grants
and contributions to non-profit organiza- Funding for annual, detailed nation-
tions to deliver a variety of services ranging al surveys on violence against women;
from shelters to public education. But the
Support for an office to provide federal
total budget for Status of Women Canada
has averaged just $28$33 million annual-
ly over the past decade. Recent reports by Increased funding for prevention pro-
Justice Canada estimate the economic im- grams;
pact of violence against women at $12.2 bil-
Increased funding for victim services,
lion annually.24
including long-term housing; and
The current government has commit-
ted to putting in place a much-needed na- Funding to support uniform access to
tional strategy to address violence against specialized social, legal, and health
women in Canada. A broad coalition of services, including domestic violence
womens organizations, service provid- courts, sexual assault nurse examiners,
ers, and researchers has produced a Blue- and crisis centres.
print for a National Action Plan on Violence
Result: Levels of violence experienced by
Against Women, based on the best avail-
women will begin to decline and survivors
able research, the experience of service or-
of violence will receive adequate support.
ganizations and survivors, and similar ac-
tion plans in countries like Australia.25 The Action: The AFB will increase funding for
federal government must ensure the plan, Status of Women Canada and restore its
to be effective, addresses both prevention mandate to fund womens groups to con-
and response. The government must also duct independent policy research (cost:
adequately fund the collection of data on $100 million a year).
rates of violence at the provincial and mu- Result: Federal government policies will
nicipal level (something that does not cur- benefit women and men more equally; de-
rently occur) so we can assess the success cisions about funding for womens services
will be based on research; and the organ-

78 Canadian Centre for Policy Alternatives

izations and communities who respond to insurance program (see the AFB Employ-
the needs of women on a daily basis will be ment Insurance chapter).
empowered to share their insights on pro- Result: More equal levels of unpaid work
grams and policies that work. will enable women to access full-time work
more easily, and reduce their overrepresen-
Action: The AFB will put in place a clear
tation in low-paying shift work.
mechanism to ensure equal pay for work
of equal value by repealing the Public Ser-
vice Equitable Compensation Act, estab-
lishing proactive pay equity legislation, and
1 IMF Country Report No. 16/146: Canada. Washington
implementing the recommendations of the
D.C.: International Monetary Fund, 2016.
2004 Pay Equity Task Force (cost: $10 mil-
2CANSIM Table 282-0002: Labour force survey esti-
lion a year).
mates (LFS), by sex and detailed age group, annual.
Result: The gender wage gap will narrow, Ottawa: Statistics Canada.
increasing womens economic security and 3CAN SIM Table 282-0004: Labour force survey esti-
providing increased economic activity as a mates (LFS), by educational attainment, sex and age
group, annual (persons unless otherwise noted). Ot-
result of higher wages.
tawa: Statistics Canada.

Action: The AFB will put in place a job growth 4CAN SIM Table 282-0014: Labour force survey esti-
policy in sectors where women work, as mates (LFS), part-time employment by reason for part-
time work, sex and age group, annual (persons). Ot-
well as in sectors where men work. This will
tawa: Statistics Canada.
mean investments in education, and health
5 OECD (2012). Table I.A3.1. Projected average annual
and social services, in keeping with invest- growth rate in GDP and GDP per capita in USD 2005 PPP,
ments in physical infrastructure projects. percentage, 201130. Closing the Gender Gap: Act Now.
Paris: OECD Publishing.
Result: A more balanced sectoral strategy
that ensures families and communities are 6CANSIM Table 282-0012: Labour force survey es-
timates (LFS), employment by class of worker, North
less vulnerable to sectoral downturns, and
American Industry Classification System (NAICS) and
increased economic security for women, in- sex, annual. Ottawa: Statistics Canada.
cluding those otherwise most vulnerable 7CANSIM Table 282-0012: Labour force survey es-
to poverty. timates (LFS), employment by class of worker, North
American Industry Classification System (NAICS) and
Action: The AFB will ensure that family poli- sex, annual. Ottawa: Statistics Canada.

cies address the unequal burden of unpaid 8 Women made up 11.5% of constructions workers in
care work performed by women. It will make 2015, down from 11.9% in 2014. CANSIM Table 282-
0012: Labour force survey estimates (LFS), employment
child care outside the home more readily af-
by class of worker, North American Industry Classifica-
fordable and available (see the AFB Child tion System (NAICS) and sex, annual. Ottawa: Statis-
Care chapter) and institute a supplement- tics Canada.

ary paternity leave allowance of eight weeks 9 Harris, Kathleen and Peter Zimonjic. Health min-
isters wrap tense talks with no agreement on federal
on the same terms as the Quebec parental
health funding. CBC News, Oct 18, 2016.

High Stakes, Clear Choices: Alternative Federal Budget 2017 79

10 National Household Survey 2011. Ottawa: Statis- 18 Leanne C. Findlay and Dafna E. Kohen (2012). Leave
tics Canada. practices of parents after the birth or adoption of young
children. Ottawa: Statistics Canada.
11 See, for example, a recent study of the wage gap in
the retail sector in Ontario: Coulter, Kendra et al (2016). 19 General Social Survey: Victimization, 2014. Ottawa:
The Gender Wage Gap in Ontarios Retail Sector: Devalu- Statistics Canada.
ing Womens Work and Women Workers.
20 Shelter Voices. Ottawa: Canadian Network of Womens
12 Plantenga, J. and C. Remery eds. (2006). The Gender Shelters and Transition Houses, 2014.
Pay Gap: Origins and Policy Responses: A comparative
21 Hutchins, Hope and Sara Beattie (2015). Shelters for
study of 30 European countries. European Commission,
Abused Women 2014. Ottawa: Statistics Canada.
22 Brennan, Shannon (2011). Violent victimization of
13 Mandel, Hadas (2012). Winners and Losers: The Con-
Aboriginal women in the Canadian provinces, 2009. Ot-
sequences of Welfare State Policies for Gender Wage In-
tawa: Statistics Canada.
equality. European Sociological Review, vol. 28.2: 241262.
23 Status of Women Canada Departmental Performance
14 Galarneau, Diane and Eric Fecteau (2014). The ups
Reports. Ottawa: Status of Women Canada.
and downs of minimum wage. Ottawa: Statistics Canada.
24 Hoddenbagh, Josh, Ting Zhang, and Susan Mcdon-
15 Median incomes from the National Household Sur-
ald (2014). An Estimation Of The Economic Impact Of
vey 2011. Low income measure after tax for 2011 used
Violent Victimization In Canada, 2009. Ottawa: Justice
($20,912); source: CANSIM Table 206-0091: Low income
Canada. Zhang, Ting et al. An Estimation of the Eco-
measures (LIMs) by income source and household size.
nomic Impact of Spousal Violence in Canada, 2009. Ot-
Ottawa: Statistics Canada.
tawa: Justice Canada.
16 Backgrounder: 2016 Wage Enhancement for Early
25 A Blueprint for Canadas National Action Plan (NAP)
Childhood Educators. Toronto: Government of Ontario,
on Violence Against Women and Girls.
Ministry of Education, January 22, 2016.
17 General Social Survey: Time Use. Ottawa: Statis- on-violence-against-women
tics Canada.

80 Canadian Centre for Policy Alternatives

Health Care
2017 CARE
The federal government is negotiating one-off Ensure that all health care in Canada is consistent with

agreements on health care funding with the provinces. the principles of the Canada Health Act
Our current fee-for-service payment model is Create a health accord that delivers stable,
susceptible to billing abuse and drives the one problem predictable, realistic, and long-term funding.
per visit policies of many family doctors.
Expand primary health care teams paid to keep
Your postal code or socioeconomic status determines patients well.
whether you receive necessary medication.
Implement a universal, national pharmacare plan.
Provincial governments have been discharging
patients from hospitals to long-term care to save money. Cover home and long-term care under the Canada
Health Act.
One in five Canadians experience a mental health
issue a year, which costs the economy more than of $50 Create a national mental health strategy and program
billion annually. linked to the Canada Health Act.


Background costs to people who are ill, continues with-

out substantial change.
In a public opinion poll conducted just before
At 15.1% of GDP, overall federal spend-
the 2016 federal budget, Canadians picked
ing is at one of its lowest rates in the past 65
spending more on health care as their top
years, and only slightly higher than 2014-15s
priority for the new government.1 The Lib-
all-time low level of 14.2%.2 Still, the gov-
erals had promised during the 2015 election
ernment indicated in the budget it would be
campaign to make improvements to home
maintaining the previous governments re-
care, palliative care, prescription drugs, the
duction in the Canada Health Transfer (CHT)
Canada Health Transfer, and the Health Ac-
to the provinces. Starting in 2017-18, it said,
cord. The budget itself, however, made no
the CHT will grow in line with a three-year
real commitment to strengthening the public
moving average of nominal GDP growth,
health care system, containing only a scat-
with funding guaranteed to increase by at
tered collection of smaller funding initia-
least 3.0% year.3 The 2004 Health Accord
tives. The decline in federal leadership on
included a fixed 6% escalator to compen-
public healthcare, and the downloading of
sate for drastic cuts to federal health trans-
fers in the 1990s.

High Stakes, Clear Choices: Alternative Federal Budget 2017 81

The Parliamentary Budget Officer (PBO) basket of public health services, according
and the Council of the Federation have stat- to the provinces Financial Accountability
ed the cut to the CHT will amount to at least Officein exchange for provincial commit-
$36 billion in 10 years, or the equivalent of ments to spend on mutual priorities, and
the entire CHT in 2016. Other estimates put
walked away from the negotiations.
the shortfall from GDP-based increases to Over a year into their first term as gov-
health transfers at $43.5 billion over the first ernment, the Liberal party has done little
eight years alone. The provincial and ter-
to change the overall course of health care
ritorial governments believe the loss could funding from that of the preceding govern-
be as high as $60 billion over the next dec- ment. In 2016, Fall Economic Statement by
ade. Under any scenario, the sustainability
the Liberal minister of finance, healthcare
of public health care is threatened. Nearly was disturbingly absent from any mean-
40% of most provincial budgets go to health ingful discussion in the document. What is
spending. And while half of this would at clear is that the impasse between the differ-
one time have come from the federal gov- ent levels of government mirrors historical
ernment, today federal transfers make up a debates regarding the federal governments
fifth of provincial spending. While provin-
role in vertical and horizontal fiscal imbal-
cial and territorial governments have con- ances. Jurisdictional and financial respon-
tained costs in recent years by deferring sibilities are a tenuous relationship in our
capital investments, this is unsustainable federation, but they are responsibilities that
in the long-term and will lead to increased should fundamentally guided by improving
expenditures in the future at the cost of re- the health of the Canadians.
duced operating expenses. 8
Since then, the government has pur-
A 3% increase to the CHT, as planned, sued a divide-and-conquer strategy, sign-
would shift an increasing burden of nearly ing bilateral health agreements with New
$1.1 billion annually onto the provinces. In9
Brunswick, Newfoundland and Labrador,
late 2016, provincial and territorial finance Nova Scotia, Prince Edward Island, Sas-
and health ministers declined a federal of- katchewan, Yukon, Northwest Territories,
fer of a CHT escalator of 3.5% and about Nunavut, British Columbia, and Saskatch-
$11.5 billion over 10 years for home care and ewan. These provinces and territories will
mental health, which would decrease the receive the CHT on a 3% escalator, or the
federal share of health funding from 23% rate of growth in nominal GDP (the Harper
today to 20% in the future. (For compari-
governments proposal), but with additional
son, the federal government wants to spend money for home care and mental health. If
$186 billion on infrastructure over the next another province is able to negotiate a bet-
11 years.) The federal government refused ter deal it will be applied in other jurisdic-
to accept a counteroffer from the provinces tions as well. If nothing changes, the fed-
of a 5.2% escalatorthe minimum needed eral government will impose a similar 3%
for Ontario to continue to offer its current CHT to the remaining jurisdiction on April 1,

82 Canadian Centre for Policy Alternatives

2017, and may or may not provide the addi- Pre2017 budget discussions about the
tion mental health and home care funding. future of medicare remain inundated with
New Brunswick will receive a $230 mil- buzzwords like health transformation,
lion deal that included funding dedicated less bureaucracy, efficiency, innova-
to home care and mental health, but this tion, and other empty signifiers. Further-
side deal is around $649 million less than more, the government has presented a false
what would have been transferred if the 6% dichotomy between external economic forces
CHT escalator was maintained. Nova Scotia and the health of Canadians that reinforces
will receive $157 million for home care and an artificial and deterministic narrative about
$130.8 million for mental health. Newfound- universal health care being unsustainable.
land will receive $87.7 million for home care This spurious framing leads to distorted
and $73 million for mental health. Prince
trade-offs between the universality of well-
Edward Island will receive $24.6 million for being and cost containment when, in fact,
home care and $20.5 for mental health in- the publicly funded portion of health care
itiatives. Saskatchewan will receive $190.3 has remained stable as a percentage of GDP
million for home care and $158.5 million for for over 30 years. The costs that are out of
mental health services, the province stated control are outside the medicare umbrella:
it has received a special agreement for one or pharmaceutical drugs, home care, physio-
two year in regards to its private MRI clinics therapy costs, etc. The problem of cost con-
which violate the CHA. The federal position
tainment is therefore political, not economic.
is it has not put its position aside regarding
private user-pay MRI clinics but is willing to
work with the province to insure the CHA is AFB Actions
upheld. Regardless of the secret agreement
A Robust Health Accord
on MRIs, the federal government should be
proactively enforcing the CHA and stopping The federal share of national (provincial
violations and not cutting side deals that al- and territorial) health expenditures remains
low illegal activities to continue. The three below the funding floor of 25% called for by
territories will get an additional $36.1 million the Romanow commission. With the cur-
in new financial funding for mental health rent funding formula, this share of federal
and home care over the next 10 years, begin- funding will be reduced to 14.3% by 2037.15
ning in the 2017-18 fiscal year. British Colum- In Canada, lagging behind most countries
bia will receive an additional $1.4 billion over in Europe, only 71% of health expenditures
10 years home care and mental health care are financed under the public system.16 Con-
initiatives.14 While these bilateral deals are versely, the private health sector in Canada
significant, it is worth remembering that the has now grown to nearly a third (29%) of
four provinces holding out for a more suffi- total health expenditures.17
cient deal represent the vast majority of Can-
adas population (more than 70%).

High Stakes, Clear Choices: Alternative Federal Budget 2017 83

Action: Renegotiate a 10-year Health Accord and chronic conditions are managed through
with a minimum 6% escalator to increase working with community-based teams of
the federal share of health spending while health professionals. Effective PHC is also
enforcing the CHA. needed to develop long-term strategies to
Result: Increased funding will open the improve health outcomes at the individual
policy door to expand medicare to include and population levels.19
pharmacare, home care, long-term care, As PHC reform promotes interdisciplin-
mental health, dental care, and rehabilita- ary team-based care to improve accessibil-
tion services. A more solid Health Accord ity and comprehensiveness of care, it will
will also reinforce health promotion/pre- change the way physicians are reimbursed.20
vention and other public health programs Our current fee-for-service payment model
that require federal and provincial leader- is susceptible to billing abuse and arguably
ship. We need less political gamesmanship drives the one problem per visit policies
regarding issues like homecare and mental adopted by a number of family doctors.21
health; these two issues are indeed import- There are now more than 82,000 physicians
ant, and for that reason should not be pro- in Canada; total payments to physicians
posed with sunset funding but should be increased by 4% from the previous year to
included in the Health Accord. It is intellec- reach $25 billion in 201415.22
tually dishonest to pit health accord fund-
Action: Direct part of the new Health Ac-
ing against funding for these initiatives, and
cord funding to continue the transition
will be detrimental to the overall health of
to PHC, as opposed to piecemeal bilateral
the nation. At the same time, the provinces
agreements, building on best practices from
and territories need to be amenable to areas
the 2007 Primary Health Transition Fund.23
where more accountability can be achieved
and stop turning a blind eye to violations of
the CHA. The federal government is within Pharmacare
their right to demand accountability, and at-
Among countries with a universal national
tach strings to funding. But, these strings
public health care plan, Canada is the only
needs to be negotiated and in place to in-
one whose plan does not include prescrip-
clude public delivery of care for the best out-
tion drug coverage. As a result, Canadians
comes of all patientsnot political promises.
spent over $30 billion in 2016 to fill over 600
million prescriptions.24 No other compon-
Primary Health Care ent of Canadian health care has increased
in cost as quickly as drug costs.25 In 2015,
Investing and advancing the use of primary
patented drugs accounted for 61.8% of total
health care (PHC) is critical to ensuring con-
drug sales in Canada, earning $15.2 billion
tinuity of care across the health care sys-
for the brand-name pharmaceutical sector.26
tem.18 As a first point of contact, PHC en-
sures short-term health issues are resolved

84 Canadian Centre for Policy Alternatives

In our fragmented and inefficient system there provincial governments have been discharging
are 19 publicly funded drug plans (10 prov- patients from acute-care in hospitals (which
incial, three territorial, six federal). Eligibil-
are covered under the Act) to save money. Pa-
ity, coverage, and benefit payment schemes tients are transferred to unorganized, private-
vary in each of these programs. Your juris- ly-funded, for-profit providers. While the Lib-
diction of residence or socioeconomic status eral government has pledged to invest about
should not dictate if you receive necessary $11.5 billion over 10 years for home care and
medication. Of all other OECD countries, only mental health, there have been no commit-
the United States and Poland have a lower ments to guarantee these services would be
percentage of drug costs paid for by public included under the Act and that an overarch-
programs, and Canada is second only to the ing national strategy would be implemented.
U.S. in the use of private drug insurance. 28
Further, details remain missing on if the ear-
Approximately 3.5 million Canadians marked billion for home care infrastructure
lack even basic drug coverage. Around one
would entail public or private investments.
in four Canadian families fail to take need- The AFB would amend the CHA to in-
ed medication as prescribed due to high clude both home care and long-term care.
costs. It is believed that 6.5% of hospital
Provinces will need to comply with the cri-
admissions in Canada are the result of non- teria of the Act in order to receive new feder-
adherence to medications, which itself adds al funding transfers for these services. Fur-
an estimated $79 billion per year to health ther, the AFB aims for a total expenditure
care costs. Canada has wasted $62 billion
for home care at 2% of GDP. This would put
dollars over the last 10 years by not imple- Canada in line with northern European coun-
menting a universal pharmacare program. 32
tries. Provinces that participate in a national
home care program will see federal contribu-
Action: Allocate $2 billion, plus 10% of pri-
tions of up to 40% to jurisdictions in compli-
vate expenditures on prescription drugs
ance with the CHA. The AFB will invest $2.3
($1.39 billion), in 2017-18 toward a national
billion in long-term and residential care to
pharmacare plan (total expenditure: $3.39
enable hospitals to move Alternate Level of
billion). In 2018-19, the AFB will increase the
Care (ALC) patients currently in acute care
allocation by 13% for a total expenditure of
beds to a more appropriate setting.34
$3.83 billion. In 2019-20, this amount will in-
crease by 20% to $4.59 billion. Future sav-
ings will offset the programs startup costs.33 Mental Health

From medicares beginnings an inequity be-

Home Care and Long-term Care tween physical and mental health coverage
has ignored the important links between
The Romanow commission pointed out nearly
psychological, social, and biological health.
15 years ago that it made no sense to exclude
As a result, we know that one in five people
home care from medicare. Still outside the Act,
in Canada (close to seven million people) ex-

High Stakes, Clear Choices: Alternative Federal Budget 2017 85

perience a mental health problem or illness, dren to seniors).41 Dedicated mental health
costing the economy more than $50 billion funding needs to be part of the enhanced
(more than 2% of GDP) annually. Spending
Health Accord proposed by the AFB (cost:
on mental health makes up only 7% of all pub- $350 million over three years).42,43
lic spending on health in Canada, below the
1013% reached by similar countries includ-
ing the U.K. and New Zealand.36 It is estimat-
1 Andrew Russell. What are the top priorities of Canadians
ed that 9% of GDP (close to $800 million in
ahead of the federal budget. Global News, March 21, 2016.
Canadas case) is the minimum level of pub-
2 Armine Yalnizyan. What regime change means in
lic investment required to improve access to Budget 2016, Behind the Numbers blog post: http://
a range of mental health programs and servi-
ces, and get better health outcomes.37 means-in-budget-2016/

The federal government has historical- 3 budget documents

ly avoided responsibility for mental health, 4 Canadian Health Coalition brief on the Health Accord:
leading to major gaps in public coverage
5 Hugh Mackenzie. (2015). The Canada Health Transfer
and inequalities in access to services. Treat-
Disconnect: An aging population, rising health care costs
ment received is largely decided based on and a shrinking federal role in funding. Ottawa: Canadian
employment benefits (often capped or limit- Federation of Nurses Unions.

ed in range) or income levels, not evidence- 6 Gregory Marchildon. (2016). Bilateral Health Agree-
based best practices. Furthermore, men-
38 ments between the Federal and Provincial/ Territorial
Governments in Canada. IRPP Insight:
tal health problems are even greater than wp-content/uploads/2016/12/insight-no13.pdf
physical health problems for people at lower
7 Canadian Institute for Health Information. (2015). Na-
income levels.39 Our current fee-for-service tional Health Expenditure Trends, 1975 to 2015.
model of medicare generally covers hospital 8 Institute of Fiscal Studies and Democracy, CHT Con-
stays, specialists, or doctors, but excludes undrum: Ontario Case Study, Winter 2017.

psychologists, counselling, other therapists, 9 Bill Curry. Provinces irate over health funding talks
with Morneau. Globe and Mail, December 18, 2016.
and community non-profit agency support.
Provincial and territorial coverage is gener- 10 The Canadian Press. Provinces take aim at health
care ultimatum. December 18, 2017.
ally limited and haphazard.
11 Health accord side deals bad for Canada, say doctors.
Action: Implement a mental health program CMAJ. January 5, 2017.
based on the widely hailed U.K. initiative,
which trained 3,500 new mental health pro-
12 A Wherry, and Susan Lunn, Saskatchewan and
fessionals, and incorporated into the CHA federal government reach deal on health care: Separ-
accountability process.40 Mental health pro- ate agreement made on provinces private MRI clinics.
January 17, 2017.
motion and the treatment of mental illness-
es must be timely, continuous, collabora-
13 Fraser, D.C. Feds say they arent putting MRI issue
tive, culturally safe and appropriate, and aside for a year as province suggests. January 18, 2017.
integrated across the life cycle (from chil-

86 Canadian Centre for Policy Alternatives 28 Elizabeth Church. Canada among Top Pharma-
putting-mri-issue-aside-for-a-year-as-province-suggests ceutical Spenders on OECD List. The Globe and Mail.
November 4, 2015.
14 Andrea Woo, British Columbia reaches 10 year
health-care funding deal, The Globe and Mail, Feb- 29 Julie White. (2016). A National Public Drug Plan For
ruary 17th, 2017. All. Ottawa: Canadian Health Coalition.

15 Stphane Levert. (2013). Sustainability of the Can- 30 Angus Reid Institute. (2015). Prescription Drug Ac-
adian Health Care System and Impact of the 2014 Re- cess and Affordability an Issue for Nearly a Quarter of
vision to the Canada Health Transfer. Canadian Insti- All Canadian Households.
tute of Actuaries; Society of Actuaries.
31 Monika Dutt. (2016). Parliamentary submission to
16 Alex Hemingway. The biggest source of waste in Can- HESA on pharmacare. Canadian Doctors for Medicare.
adian health care? The private, for-profit sector. Policy
32 Hugh Mackenzie. (2016). Down the Drain: How Canada
Note blog post, November 21, 2016: http://www.policynote.
Has Wasted $62 Billion Health Care Dollars without Pharma-
care. Ottawa: Canadian Federation of Nurses Unions.
33 Marc-Andr Gagnon. (2014). A roadmap to a ration-
17 Canadian Institute for Health Information. (2015).
al pharmacare policy in Canada. Ottawa: The Canadian
National Health Expenditure Trends, 1975 to 2015.
Federation of Nurses Union.
18 Health Council of Canada. (2005). Primary Health
34 Canadian Centre for Policy Alternatives. (2016). Al-
Care: A background paper to accompany Health Care
ternative Federal Budget: Its Time to Move On. Ottawa.
Renewal In Canada: Accelerating Change.
35 P. Smetanin, D. Stiff, C. Briante, C. Adair, S. Ahmad,
19 David Price, Elizabeth Baker, Brian Golden, and
and M. Khan. (2011). The life and economic impact of major
Rosemary Hannam. (2015). Patient Care Groups: A new
mental illnesses in Canada: 2011 to 2041. RiskAnalytica,
model of population based primary care for Ontario. A
on behalf of the Mental Health Commission of Canada.
report on behalf of the Primary Health Care Expert Ad-
visory Committee. 36 Bruce Doern and Christopher Stoney, eds. (2016).
How Ottawa Spends: The Trudeau Liberals in Power.
20 Canadian Foundation for Healthcare Improvement
Ottawa: Carleton Universitys School of Public Policy
factsheet, January 1, 2010:
and Administration.
b1aa5d9e38db.aspx#ii 37 Canadian Alliance on Mental Illness and Mental
Health. (2016). Mental Health Now! Advancing the Men-
tal Health of Canadians: The Federal Role.
22 Canadian Institute for Health Information. More
38 E. Anderssen. We have the evidence...Why arent
doctors, but average payments to physicians virtual-
we providing evidence-based care? The Globe and
ly unchanged, a factsheet:
Mail. May 22, 2015.
doctors-but-average-payments-to-physicians 39 Statistics Canada. (2013). Canadian Community Health
Survey, 2012: Annual Component. Ottawa.
23 Health Canada. (2007). Primary Health Transition
Fund: Summary of Initiatives: Final Edition. 40 Keith Dobson. (2016). Clinical Psychology in Can-
ada: Challenges and Opportunities. Canadian Psychol-
24 Canadian Pharmacists Association. (2016). Phar-
ogy, Vol. 57, No.3.
macy in Canada.
41 Canadian Alliance on Mental Illness and Mental
25 S.G. Morgan, D. Martin, M.A. Gagnon, B. Mintzes,
Health. (2016). Mental Health Now! Advancing the Men-
and J. Lexchin. (2016). Pharmacare 2020: The Future of
tal Health of Canadians: The Federal Role.
Drug Coverage in Canada. Pharmaceutical Policy Re-
search Collaboration. 42 Canadian Mental Health Association. Open letter on the
Health Accord. November 10, 2016:
26 Patented Medicine Price Review Board. (2015). An-
nual Report 2014.
43 Keith Dobson. (2016)., Clinical Psychology in Can-
27 Michael Butler. A Prescription for Better Medicine:
ada: Challenges and Opportunities., Canadian Psych-
Why Canadians Need a National Pharmacare Program.
ology August 2016, Vol., 57, No. (3.)
Ottawa: Council of Canadians.

High Stakes, Clear Choices: Alternative Federal Budget 2017 87

Housing and
Over the past 25 years, the federal government has Invest $1 billion annually to preserve existing

played an increasingly limited role in creating affordable social housing units.
housing, and Canadas current proportion of social
housing units is far below the OECD average. Permanently increase funding for the Investment
Hundreds of thousands of low-income families are in Affordable Housing program by an additional
on waiting lists for subsidized housing. Some become $1 billion annually.
homeless while they wait.
Provide $1 billion annually for supportive housing,
Vulnerable subpopulations are at risk because they focusing on the most vulnerable sections of the
lack supportive housing. population.
Indigenous people who are in core housing need or
homeless are overrepresented compared to the rest of Invest in on-reserve housing.


Background operate housing, as non-profit ownership

keeps rent levels down over the long term
A strong federal government role in creat-
and creates public assets in the process.1
ing affordable housing is vital for multiple
Finally, when it comes to vulnerable sub-
reasons. First, low-income households (par-
populations (including persons with mental
ticularly households relying on social assist-
health problems, persons living with HIV/
ance) simply cant afford the monthly rent
AIDS, and seniors), non-profit entities are
required of most types of housing on the
effective at creating buildings that can fos-
private market. Second, high-growth areas
ter community development.
of cities (especially new suburbs) cant rely
From the 1960s until the late 1980s, Can-
on private developers to create apartment
adas federal government played a very ac-
units needed by workers (who in turn are
tive role in creating housing for both low-
needed by those same communities, espe-
income and middle-income households.2
cially in the service sector). Third, its im-
Always in partnership with the private sector,
portant that non-profit entities own and
the federal government typically cost-shared

88 Canadian Centre for Policy Alternatives

the development of new housing units with those with a lived experience of poverty is
provincial and territorial governments. Ten- also critical.
ants were in turn charged an amount they In the current federal governments first
were deemed able to affordtypically 30% budget, housing made a comebackal-
of their gross monthly income. As a result, though a modest one compared to the 1970s
as many as 25,000 new subsidized hous- and 1980s. The Trudeau government an-
ing units were created across Canada each nounced $1.3 billion in new federal fund-
year. Low-income households who sought ing for housing for 2016-17, and $956 mil-
subsidized housing often received it with- lion for 2017-18. Thats an average of just
in months, and very few individuals were over $1 billion in new federal funding per
homeless compared to today. 3
year over a two-year period. Although this
In the early 1990s, with the onset of neo- is a respectable start, this years AFB will
liberalism, the government withdrew from
go well beyond the current federal govern-
housing (with the exception of on-reserve ments spending levels for housing. It will
housing). Although the government got spend $3 billion on new funding, creating
back into the housing game in 2001 when jobs in the process and making those invest-
it started to build some subsidized units ments permanent annual funding. While $3
through the Affordable Housing Initiative billion in new spending may sound ambi-
(now known as the Investment in Afford- tious to some, it would merely bring us back
able Housing program), its role in creat- to the levels of housing creation we had in
ing new subsidized housing units remains the early 1980s. In relation to the rest of the
much less pronounced today than it was in OECD, Canada would move from being a lag-
the 1970s and 1980s. gard to a leader.
In recent years real estate speculation
and the growing drive for investment has
How a Shortage of Affordable
driven a perception, within both the public
Housing Affects Canadians
and government, that housing is a commod-
ity. Today, wait lists for subsidized housing Research on affordable housing and home-
are growing and thousands of Canadians lessness tell us four important things. First,
spend each night in emergency shelters. 5
inadequate housing has a profound impact
There is a strong push to base the Na- on the lives of children: a considerable num-
tional Housing Strategy on Canadas inter- ber of babies are born to women experien-
national human rights obligations through cing homelessness in Canada each year6
which the federal government will provide and a familys housing situation has a major
leadership on the right to housing. The Na- impact on whether children are taken into
tional Housing Strategy should have specif- the care of child welfare officials.7 Second,
ic targets, timelines, and reporting mechan- people experiencing homelessness have
isms to ensure accountability. Input from considerably more physical and mental
health problems than the general popula-

High Stakes, Clear Choices: Alternative Federal Budget 2017 89

tion.8 Third, it is typically cheaper for gov- viablethe ongoing costs to operate them
ernments to keep a person in subsidized will be more than the rent that tenants cur-
housing than it is for that person to remain rently residing in them are able to pay. While
homeless. Fourth, most homeless people,
the issue of expiring operating agreements
once provided with adequate housing, will is a concern for Canadas social housing sec-
remain housed. 10
tor in general, it is an especially serious con-
cern for units created under the Urban Na-
tive program because these units typically
Housing for Indigenous Peoples
house lower-income tenants (and therefore
The Department of Indian and Northern Af- require a deeper ongoing subsidy).15
fairs Canada11 first developed its on-reserve As of 2011, 19% of Indigenous house-
housing subsidy program in the 1960s, pro- holds living off-reserve and almost 34%
viding capital grants for both the construction of Inuit households were in what is called
of new units and the renovation of existing core housing need.16 In contrast, the figure
units. However, it provided no funding for for Canada as a whole was just over 12%.17
maintenance once new units were built. In When it comes to absolute homelessness
the 1970s, the Canada Mortgage and Hous- (i.e., people staying either in emergency
ing Corporation initiated a new on-reserve shelters or outside), Indigenous peoples are
housing program called the Non-Profit Rent- vastly overrepresented in Canadas cities.18
al Housing Program, which provided band
councils with loan financing and subsidies
to build and operate housing.12 AFB Actions
Most of the units designated as off-re-
Preserve existing social
serve housing for Indigenous households
housing stock.
were built via one of two programs between
1973 and 1993.13 Housing in communities of Action: The AFB will provide $1 billion to
fewer than 2,500 fell under the Rural and provinces and territories to help maintain
Native Housing Program, while housing in
existing social housing units.
communities of more than 2,500 fell under Result: On average, $100,000 will preserve
the Urban Native Non-Profit Housing Pro- an existing unit over a 25-year period. Put
gram. The former was not exclusively tar- differently, this investment will preserve
geted to Indigenous peoples, while the latter 10,000 units and give them 25 years of addi-
was. The federal funding provided under the tional life. Three types of units are especial-
Urban Native program is to help operate the ly vulnerable to expiring agreements: units
units each year and to help pay mortgages. created under the Urban Native program,
Most of the funding agreements spanned public housing units, and units in northern
between 25 and 50 years. When the funding areas of Canada. We assume no cost-match-
agreements end (some have already started ing from provincial/territorial governments.
to expire), most of these units will be non-

90 Canadian Centre for Policy Alternatives

Expand and redesign the Investment disabilities, and seniors. Provincial and ter-
in Affordable Housing Program. ritorial governments would be expected to
pay for ongoing professional support staff.
Action: The AFB will invest $1 billion in the
IAH program, over and above current spend-
ing levels. The program will be redesigned Renew investment
so that all units created under it remain af- in on-reserve housing.
fordable over at least a 25-year period (rath-
Action: The AFB will make substantial in-
er than the current 10-year requirement).
vestments in on-reserve housing and will
Result: Between 10,000 and 15,000 new
direct Indigenous Affairs and Northern De-
units of housing will be created annually. A
velopment Canada to consult on a nation-
$100,000 capital grant from the federal gov-
to-nation basis in discussing the details.
ernment combined with $100,000 in match-
Strong emphasis will be placed on cultur-
ing funds from the provincial/territorial gov-
al appropriateness and environmental sus-
ernment will create one unit of affordable
tainability. See the First Nations chapter for
housing for a very low-income person. Some
further details.
of the housing created in this program will
involve income mix (i.e., housing for both
low- and mid-income households in the same
building). A unit for a mid-income house-
1 Falvo, N. (2016, November 5). The privatization of so-
hold would require just a $50,000 capital
cial housing [web log post]. Retrieved from Progressive
subsidy from the federal government (as- Economics Forum website:
suming a matching provincial/territorial
contribution). Priority will be given to north-
ern regions of Canada, especially Nunavut, 2 Pomeroy, S., & Falvo, N. (2013). Housing policy in
Canada under the Harper regime. Retrieved from Focus
where building costs are higher.
Consulting website:
Invest in supportive housing.
3 Falvo, N. (2009). Homelessness, program responses and
an assessment of Torontos Streets to Homes program.
Action: The AFB will invest $1 billion in new
Retrieved from Canadian Policy Research Networks
spending specifically on supportive hous- website:
ing (including professional support staff)
4 Stanford, J. (2014). Canadas transformation under neo-
for vulnerable populations. liberalism. Retrieved from Canadian Dimension website:
Result: 5,000 new units of housing will be

created annually. The federal government 5 Adamo, A., Klodawsky, F., Aubry, T., & Hwang, S.
(2016). Ending homelessness in Canada: A study of 10-
would provide capital grants of $200,000 per
year plans in 4 Canadian cities. Retrieved from St. Mi-
unit. A strong focus should be placed on In- chaels Hospital website: http://www.stmichaelshospital.
digenous peoples living off-reserve, women, com/pdf/news/20161010.pdf

LGBTQ2S populations, people with physical

High Stakes, Clear Choices: Alternative Federal Budget 2017 91

6 Bernstein, J. (2013). Creating a system to record the strategy (pp. 343356). Toronto: Centre for Urban and
number of children born to under-housed mothers in Community Studies, University of Toronto.
Toronto. Retrieved from Homeless Hub website: http://
13 National Aboriginal Housing Association. (2009).
A time for action: A national plan to address aboriginal
housing. Retrieved from National Aboriginal Housing
Association website:
7 Chau, S., Fitzpatrick, A., Hulchanski, J. D., Leslie, B.,
14 Approximately two-thirds of units created under
& and Schatia, D. (2009). Chapter 1.3: One in five...Hous-
the Rural and Native Housing Program are now home
ing as a factor in the admission of children to care. In
ownership units (National Aboriginal Housing Associ-
J. David Hulchanski, Philippa Campsie, Shirley Chau,
ation. [2009]. A time for action: A national plan to ad-
Stephen Hwang and Emily Paradis (eds.) Finding Home:
dress aboriginal housing. Retrieved from National Ab-
Policy Options for Addressing Homelessness in Canada.
original Housing Association website: http://www.
Toronto: Cities Centre, University of Toronto.
8 Khandor, E., Mason, K., & Cowan, L. (2007). The
15 National Aboriginal Housing Association. (2009). A
street health report 2007. Retrieved from Street Health
time for action: A national plan to address aboriginal
housing. Retrieved from National Aboriginal Housing
Association website:
9 Gaetz, S. (2012). The real cost of homelessness: Can
16 A household is said to be in core housing need in
we save money by doing the right thing? Retrieved from
Canada when it is either forced to pay more than 30%
Homeless Hub website:
of income on housing, lives in housing requiring ma-
jor repairs, or lives in housing with too few bedrooms
10 Falvo, N. (2014, April 24). 10 take aways from the given the size of the household.
final report of the At Home/Chez Soi study [Web log
17 Canada Mortgage and Housing Corporation. (2014).
post]. Retrieved from Homeless Hub website: http://
Canadian housing observer 2014. Retrieved from http://
18 Belanger, Y. D., Head, G. W., & Awosoga, O. (2012). As-
11 This department has gone through multiple name
sessing urban aboriginal housing and homelessness in Can-
changes in the past several decades. Today, it is known
ada. Retrieved from Homeless Hub website: http://www.
as Indigenous and Northern Affairs Canada.
12 Devine, G. (2004). Chapter 23: Aboriginal Housing in housing-and-homelessness-in-canada-54375.aspx
Canada. In J. D. Hulchanski, & M. Shapcott (Eds.), Find-
ing room: Policy options for a Canadian rental housing

92 Canadian Centre for Policy Alternatives

The 2009 unemployment rate for established Invest in foreign credential recognition programs.

immigrants rose 7.9% compared with a 6.4% increase for End transportation loans for refugees, restore health
people born in Canada. coverage for refugee claimants, and abolish the
Racialized immigrant women earn only 48.7% of what Designated Countries of Origin.
non-racialized immigrant men earn; racialized women as a Eliminate the minimum income requirement for all
whole earn 56.5% of what white men earn. family-class sponsorships.
Citizenship fees increased from $100 to $530 in Reduce citizenship fees and ensure swift
2014/15. implementation of Bill C-6.
An average of 450500 people are in immigration Give all migrant workers currently in Canada access to
detention at any given time. permanent residence.
Fourteen immigration detainees have died while in Place a moratorium on all removals until reforms are
Canada Border Services Agency care since 2000. in place.


Background Persistent, Growing Disparities

Given Canadas declining birth rate and ag- The labour market experience of immi-
ing population, immigrants will make up grants, particularly racialized immigrants,
nearly all new entrants into the labour mar- is worse than that of Canadian-born work-
ket and will soon be the key driving force ers.3 Racialized Canadians and immigrants
of Canadas economy. A significant propor- are over-represented in low-paid and precar-
tion of immigrants are racialized, and the ious employment. The situation has grown
majority of Canadas racialized population worse over the last decade and systemic in-
was born outside of Canada. Based on cur-
equalities have become deeply entrenched.4
rent demographic trends, by 2031 2932% of The chronic underemployment of skilled
Canadians will belong to a visible minority. 2
immigrants in Canada and strong correla-
Statistics show a strong correlation be- tion between racialization and the grow-
tween racialization and poorer outcomes in ing wage gap in the labour market is well
income, employment, housing, and health, documented.5 Initiatives such as Bridging
as well as the intersection between race and Training and the Foreign Credentials Loan
immigration status. program that support re-training, re-quali-

High Stakes, Clear Choices: Alternative Federal Budget 2017 93

fying, and licensing in Canada can bring limited income. Some have used the child
some benefits to individual program par- tax benefit for repayment.10 The govern-
ticipants.6 However, addressing the system- ment waived transportation costs for only
ic barriers that prevent immigrants from ac- the 25,000 Syrian refugees who arrived in
cessing jobs and employment income at a Canada between November 2015 and Feb-
level that is consistent with their skills, edu- ruary 2016. All refugees should be exempt.11
cation, and experience will require targeted A change to the Canada Social Trans-
policy measures, such as full and consistent fer in December 2014 allows provinces and
implementation of employment equity, in- territories to impose minimum residency
cluding through instruments such as com- requirements on certain groups of individ-
munity benefits agreements. uals based on their immigration or refugee
status, such as refugee claimants. The gov-
ernment should swiftly reverse this change.12

In July 2015 the Federal Court ruled that deny-

Family Sponsorship
ing applicants from designated countries
of origin (DCO) the right to appeal violated Restrictions on the sponsorship of parents
their rights under the Canadian Charter of and grandparents (PGP) were introduced in
Rights and Freedoms. The current govern-
2014, including the following: a sponsoring
ment has said that it will give claimants the family must have income at least 30% above
right to appeal and have an expert human the poverty line; doubling the sponsorship
rights panel determine the DCO list. But the period to 20 years; and capping applications
DCO scheme problematically creates a two- at 5,000 a year.13 Although the new govern-
tier refugee determination system that dis- ment doubled the cap to 10,000, demand
criminates between refugee claimants based continues to exceed the quota. The govern-
on their nationality (i.e., their country of ori- ment has said that the persistent backlog and
gin). DCO claimants face more restrictions
processing delays are due to limited resour-
and get fewer benefits, making it more dif- ces. Since all prospective immigrants must
ficult to have their claim recognized. Most pay an application fee (which is essentially
vulnerable are refugee claimants fleeing a user fee), all collected funds should be al-
persecution based on their gender, gender located for the use of the applicants by ap-
identity, and sexual orientation. plying them to processing costs. At the time
Canada charges government and pri- of writing, the government announced a
vately sponsored refugees transportation lottery for PGP sponsorship, 17 days before
and medical costs in the form of a loan for new applications are due. PGP is now the
up to $10,000 per family plus interest, and only category of immigration that is subject
is the only resettlement country that does to this process.
this. Repayment must begin 30 days after

arrival, a period when many refugees have

94 Canadian Centre for Policy Alternatives

Citizenship ers and instead recruits these workers in
large numbers through the TFWP, which
Citizenship fees increased in 2014-15 from
has grown exponentially over the last dec-
$100 to $530, creating a significant barrier
ade to become an ongoing source of cheap
to citizenship for low-income immigrants.
labour. The TFWPs main source countries
Government data shows a subsequent sharp
are in the global south, and workers are pre-
decline in citizenship application numbers.14
dominantly racialized.
The current government has not reversed
Lack of job mobility and little or no ac-
the fee increase.
cess to permanent residence has left workers
The previous government increased the
highly vulnerable to abuse and exploitation.
residency requirement to qualify for cit-
They are among the lowest paid, similar to
izenship and significantly expanded the
workers in the Seasonal Agricultural Work-
group of individuals who must meet lan-
ers Program and Live-in Caregiver Program.
guage and knowledge requirements.15 Ap-
Changes to the TFWP that were introduced by
plicants were required to declare intent to
the previous government in 2014 have made
reside in Canada after becoming a citizen
things even worse for workers. Enforcement
and the government was empowered to re-
of employer compliance has been poor, and
voke citizenship on the basis of misrepre-
the present complaints-driven system has
sentation should they leave Canada. Most
left exploited workers with little recourse.
critically, this change created two-tier cit-
Recommendations from a 2016 Parlia-
izenship by giving new powers to the Min-
mentary Standing Committee review of
ister to strip citizenship from dual citizens
the TFWP primarily reinforced the tempor-
in cases of treason or terrorism, includ-
ary nature of the program and strongly fa-
ing for convictions outside of Canada. The
voured employers. Some of the encouraging
law can be applied retroactively, and al-
recommendations from the review include
lows the government to revoke citizenship
open work permits (with some limitations),
even if convictions were given by countries
multiple-entry work visas, and an end to the
with questionable legitimacy. The current
four-in-four-out rule, which stops work-
government plans to reverse some of these
ers from staying beyond four years and pro-
changes through Bill C-6, which at the time
hibits their return for another four. The lat-
of writing was near the final stages of be-
ter has now been implemented.
coming law.

Live-In Caregiver Program (LCP)

Migrant Workers Most LCP workers are racialized women
from the global south. Changes to the LCP
Temporary Foreign Workers
implemented by the previous government
Program (TFWP)
in 2014 removed the guaranteed pathway
Canadas economic immigration policy ex-
to permanent residence while introducing
cludes low-skilled and semi-skilled work-
higher language requirements, a cap on the

High Stakes, Clear Choices: Alternative Federal Budget 2017 95

number of permanent residence applica- total of 14 detainees have died in CBSA care
tions, and new Labour Market Impact As- since 2000, yet CBSA has released very few
sessment (LMIA) requirements for employ- details about the deaths.19
ers as well as a new fee. Between January In its 2015 review of Canadas compliance
and March 2015, 90% of employer LMIA ap- with the International Convention on Civil
plications were rejected, reducing the num- and Political Rights, the UN Human Rights
ber of available caregiver jobs.16
Committee expressed grave concerns about
In addition to these new barriers there indefinite detention for migrants, manda-
remain long-standing concerns about the tory detention of those who enter Canada
program, primarily the isolation of workers through irregular means, and insufficient
and their vulnerability to abuse and exploit- medical support for detainees with mental
ation. The backlog in processing caregiver health conditions held in provincial jails.20
applications for permanent residence has In August 2016 the government an-
persisted for many years and has grown, nounced a $138 million fund to upgrade
causing lengthy separation and consider- immigration detention centres across Can-
able hardship and distress for workers and ada and hold stakeholder consultations, with
their families.
the goal of making detention a last resort.
Between January 2014 and June 2016 the No reform proposals have been released at
Canada Border Services Agency pursued 40 the time of writing.
investigations under Project Guardian, an
initiative that collected tips and complaints Removals
about alleged program infractions by LCP Thousands of people (including hundreds
workers. The investigations led to a number of children) are removed from Canada every
of workers being detained and deported. 18
year on the grounds that they are irregular
Workers concerns about their vulnerabil- migrants or failed refugees. Tens of thousands
ity and abuse and exploitation by employ- of others are on CBSAs removal watch-list,
ers and recruiters have not been addressed. many of them from the global south. The top
The government must allow all migrant five countries of removal between 2015 and
workers currently in Canada access to perma- 2016 were the United States, China, Hun-
nent residence, and allow future workers to gary, Mexico, and India.
gain permanent residence on arrival. There is an urgent need to review and
reform the detention and removals system.
A flawed refugee determination system and
an inhumane immigration system have led
Detention to the removal from Canada of people who
According to the Canada Border Services risk persecution and other forms of hardship
Agency (CBSA), an average 450500 people in their country of origin. The creation of the
are detained at any given time under the DCO refugee class along with the restrictions
Immigration and Refugee Protection Act. A on many claimants access to Pre-Removal

96 Canadian Centre for Policy Alternatives

Risk Assessment and the Humanitarian and requirements; end transportation loans
Compassionate application process have for all refugees; immediately restore In-
only made the situation worse. Also at risk terim Federal Health coverage for refugee
are migrant workers who have become out- claimants awaiting their eligibility hear-
of-status for a variety of reasons, including ing; and abolish the Designated Coun-
workplace injuries. tries of Origin. (Cost: $50 million/year)

Eliminate the 30% above the poverty

Immigrant Settlement Services line minimum income requirement for
all family class sponsorship.
Federal funding for immigrant and refugee
settlement services was cut over the last few Reduce citizenship fees; ensure swift
years as part of the previous governments passage and implementation of Bill C-6.
austerity measures. Provincial/territorial
Reform the immigrant settlement fund-
funding allocation is determined by a three-
ing formula that uses only a three-year
year rolling average of immigrant arrivals.
rolling average of landings to determine
Regions that saw a drop in arrivals experi-
regional funding allocation annually.
enced a further cut.
The current federal government provided Give all migrant workers currently in
$325 million over six years for Syrian refu- Canada access to permanent residence,
gee resettlement. However, this new fund- and allow future workers to gain perma-
ing served only to offset previous funding nent residence on arrival; increase pro-
cuts in many regions, leaving them with gram monitoring and enforcement of em-
service loads that are increasing faster than ployer compliance in all migrant worker
federal resources. programs; and bar CBSA from targeting
migrant workers for enforcement action
based on allegations of infractions from
AFB Actions employers and recruiters.

Invest in foreign credentials recognition Place a moratorium on all removals until

support programs and provincially driv- reforms to the refugee determination sys-
en initiatives such as bridging training; tem and the immigration system are in
ensure full and consistent implementa- place; review and reform the detention
tion of employment equity to include system, including ending all child de-
racialized immigrants, including com- tentions, ending indefinite detention,
munity benefits agreements. (Cost: $100 and finding alternatives to detention.

Reverse changes to the Canada Social

Transfer so that provinces and territor-
ies cannot impose minimum residency

High Stakes, Clear Choices: Alternative Federal Budget 2017 97

Notes 10
1 Immigration and Ethnocultural Diversity in Canada. on-travel-loans/article26345150/
Statistics Canada.
11 Canadian Council for Refugees. End the burden of trans-
portation loans.
2 Canada Year Book 2011. Statistics Canada. http://
12 Statutes of Canada 2014Chapter 39. December 2014.
3 Block, Sheila, Grace-Edward Galabuzi and Alexan-
dra Weiss (2014). The Colour Coded Labour Market By
the Numbers: A National Household Survey Analysis. 14 Griffith, Andrew. The impact of citizenship fees on
Toronto: Wellesley Institute naturalization in Policy Options. October 12, 2016. IRPP.

4 Statistics Canada (2014). Study: Difference in earnings 15

between the less and more highly educated immigrants Publication.aspx?DocId=6684615
entering Canada, 1984 to 2007.
5 Block, Sheila, and Grace-Edward Galabuzi. (2011). Can- nanny-program.html
adas Colour Coded Labour Market: The Gap for Racial-
17 Submissions to the temporary foreign workers
ized Workers. Toronto: Wellesley Institute.
review. June 2016. Caregivers Action Centre. http://
6 Parkouda, Michelle, Beeksma, Janneka and Kwansah,
Janet. Measuring Returns: Valuing Investments in Inter- Caregivers-Brief-to-HUMA.pdf
nationally Educated Nurses. Conference Board of Can-
ada, September 9, 2015.
7 The Constitution Act, 1982, Schedule B to the Canada
Act 1982 (UK), 1982, c 11
8 renew-calls-for-immigration-detention-reform-1.3500441
20 United Nations Human Rights Committees Conclud-
9 ing Observations on the Sixth Periodic Report of Can-
country-to-charge-refugees-interest-on-travel-loans- ada, CCPR/C/CAN?CO/6, August 13, 2015

98 Canadian Centre for Policy Alternatives

and Cities
Replacing Canadas aged infrastructure will cost an Create a stable, sufficient, and long-term local

estimated $171.8 billion. infrastructure transfer of $5.4 billion a year to be
administered by a new National Community Development
Between the 1990s and 2000s, federal and provincial Agency.
transfers to municipal governments shrank from 26% of Develop a federal Community Economic Development
city revenues to only 16%. (CED) policy framework to promote inclusive, sustainable,
and resilient Canadian communities in partnership with
The recently announced Canada Infrastructure Bank non-profits, co-operatives and other social enterprises.
could burden cities with an additional $6.2 billion in Establish a federal Neighbourhood Revitalization
financing costs on new and replacement infrastructure, Program, and Neighbourhood Renewal Corporations, that
and tie municipal governments to a failed P3 model that can manage the impacts of local development on
emphasizes private profit over community benefits. employment, training, education, safety, crime prevention,
housing, physical improvements, recreation, and other


Background be $171.8 billiondeplete municipal resour-

ces, making it even harder for cities to meet
The backbone of Canadas current munici-
the day-to-day needs of their residents.1
pal infrastructure system was built between
At the same time, Canadian municipal-
1950 and 1980, but cities have been starved
ities are restricted in how they raise revenues.
of cash ever since. Cuts in federal and prov-
Unlike in other countries, local governments
incial transfers and the downloading of re-
here cannot levy income or sales taxes but
sponsibilities to local governments have led
rely mostly on property taxes and user fees
to decay. Less money for cities means less
instead. As regressive forms of revenue gen-
money for services such as public transit,
eration these measures disproportionately
police and fire departments, libraries, water
affect vulnerable populations.2 Property tax
and sanitation services, and community cen-
rates in some provinces, for example, are
ters. The added costs associated with aging
among the highest in the world.3 In contrast,
infrastructurethe total national replace-
most major U.S. cities levy income and/or
ment cost of infrastructure is estimated to
sales taxes, and many European cities rely

High Stakes, Clear Choices: Alternative Federal Budget 2017 99

heavily on income taxes. Municipalities in structure itself. Grants were still approved
other countries also receive more reasonable using a non-transparent, application-based
transfers from upper levels of government. process that discourages a co-ordinated ap-
In the early 1990s, transfers from Canadas proach, leads to accusations of unfairness,
federal and provincial governments provided and emphasizes high-profile projects over
26% of local government revenues. By 2000, functionality.
cuts to both sources of revenue had reduced The much bigger problem with recent
that amount to only 16%. During this period federal funding changes is that the govern-
of low investment the population of Can- ment missed an opportunity to put in place
adian cities grew by almost three million. 4
more efficient low-carbon infrastructure
Local governments, especially in Ontario, in- such as public transit. Instead, we got a lot
creased property taxes, user fees, and service of spending on roads and bridges that per-
charges while reducing public services, and petuate carbon-intensive activities.
delaying investment in and maintenance of
infrastructure. Community organizations and
community-based projects had trouble main- Current Issues
taining existing levels of support. Transfers
Investment Welcome,
to municipalities continued to shrink even
but the Pace Is too Slow
though federal and provincial governments
ran surpluses and cut taxes to businesses Infrastructure investment was a key Liberal
and higher-income earners. policy plank during the 2015 election cam-
Federal and provincial governments paign and remains a top priority for the Lib-
have increased the money they give to local eral government. The 2016 federal budget
governments in recent years in response to and subsequent fall economic statement
pressure from civil society, the recession, and laid out plans to invest $95 billion in infra-
some major structural issues related to vital structure projects before 2028. This is a rea-
bridges and roads. At the federal level, the sonable objective with symbolic bonuses:
2007 Building Canada Plan and the 2013 New the investment entrenches the importance
Building Canada Plan offered municipalities of greater infrastructure spending, even if
stable, long-term revenue not enjoyed since the government incurs a deficit, as a long-
transfers were cut in the mid-1990s. These term federal priority whose gains will far
funds were an improvement, but they did outweigh small debt financing costs.
not fully remedy long-standing problems. But its important to recognize we are
Promises were back-loaded and ultim- coming out of an extended period of neglect.
ately inadequate. And even with new spend- As the proverb says, the best time to plant a
ing commitments expenditures as a percent- tree was 20 years ago; the second best time
age of GDP were scheduled to start dropping is now. Much of the announced investment
again. Additionally, the federal government is intangible because it set to take place out-
failed to address the flaws in the funding side of the governments current four-year

100 Canadian Centre for Policy Alternatives

mandate. The economy in underperforming length entity and identify lucrative infra-
now, interest rates are at historically low lev- structure projects to be paid for by govern-
els now, and it takes time to reap rewards ment in partnership with large private in-
from investments made today. The urgency stitutional investors. The optics are great,
is even greater when you factor in the extra since most of the money will come from the
effort required to move away from the cur- private sector while the government can take
rent fossil-fuelled paradigm to a greener, credit for getting the projects built. By call-
more climate-friendly economy. As such, in ing the vessel a bank, and partnering with
the interest of getting the most value out of the private sector, it also gives the appear-
significant federal investment, more of the ance of efficiency and prudent stewardship
committed funds should be spent over the of public money.
next three years. In reality, the initiative is a thinly veiled
repackaging of old ideas that have repeat-
edly failedpublic-private partnerships
Flawed Funding Formula
(P3s) by a different name. Higher costs,
The government has chosen to attach specific higher user fees, lower wages, comprom-
levels of funding to categories of infrastructure ised worker rights, and higher executive
including public transit, green infrastructure, compensation are recurring features of the
social infrastructure, and trade and transpor- P3 model. It turns public services into pri-
tation. While these are all valid national pri- vate profits in a way that is completely un-
orities, the criteria for project selection, and fair to taxpayers, who are ultimately on the
subsidization levels per project, are opaque hook for any mistakes or miscalculations,
and thus potentially politicized, adding an while profiteers are insulated from any real
unnecessary layer of complexity and under- risk. A 2014 report by the Ontario auditor
mining the predictability of the application general claims the provincial government
process. The governments funding formula is spending billions of dollars more than it
could work against the long-term co-ordina- needs to on infrastructure because of high
tion of infrastructure projects, discourage cit- financing costs on P3 projects.
ies from advancing projects that fit best with Likewise, municipal projects financed
their own priorities, and ultimately result in with help from the new federal infrastruc-
less overall value for the public. ture bank will be significantly more expen-
sive, since private institutional investors will
be seeking returns in the range of 79%. The
The Canadian Infrastructure
federal government, on the other hand, can
Bank: Failure by Design
borrow money at a current rate of about 1.9%.
The Canadian Infrastructure Bank was an- Instead of extending this low preferential
nounced in late 2016 as a pillar of the gov- rate to municipalities, the governments in-
ernments infrastructure investment strat- vestment bank could saddle municipalities
egy. The new bank will operate as an arms with an additional $6.2 billion in financing

High Stakes, Clear Choices: Alternative Federal Budget 2017 101

coststhe result of having to pay back the ity Development Agency made up of rep-
$20 billion private portion of available infra- resentatives from all levels of government
structure money at a 79% rate of return. Ul- and tasked with removing obstacles to the
timately the public will be accountable for smooth transmission of public resources,
these additional costs, either in the form of including through the following measures:
higher taxes or user fees.
Developing mutually agreed upon,
streamlined project approval criteria
Community Economic Development incorporating transparency, new re-
porting mechanisms, and independent
Community leaders understand that un-
fund-specific auditing;
employment, urban and rural decline, in-
come inequality, poverty, social exclusion, Identifying common goals across prov-
and environmental degradation can only inces and providing specialized servi-
be effectively addressed by community-led ces to municipalities;
strategies that take a multifaceted and inte-
Developing and co-ordinating a National
grated approach. The Community Economic
Transit Strategy and a National Sustain-
Development (CED) model creates economic
able Municipal Asset Management Plan;
opportunities while enhancing social and
environmental conditions. Through social Creating an ongoing outreach strategy to
enterprises, co-operatives, and other com- promote codevelopment of public policy
munity organizations, Canadians are work- with all levels of government, stakehold-
ing together to strengthen local economies ers, and civil society partners;
while providing access to child care servi-
Developing and co-ordinating a National
ces, housing, local food, training, skill de-
Brownfield Redevelopment Strategy to
velopment opportunities, and much needed
bring former industrial sites back to
services in a way that empowers marginal-
productive community and economic
ized groups. Governments have an import-
use; and
ant role to play in supporting CED given the
significant resources, capacities, and policy Assisting municipalities in the develop-
levers at their disposal. ment and implementation of Commun-
ity Climate Change Strategies.

Result: Greater co-operation on local issues

AFB Actions
through a National Community Develop-
Community Infrastructure Transfer ment Agency, and increased funding in a
Community Infrastructure Transfer, will
Action: Create a stable, sufficient and long-
finally address the systemic shortcomings
term local infrastructure transfer worth
of todays funding formula, which relies on
$5.4 billion a year. The transfer will be ad-
ministered by a new National Commun-

102 Canadian Centre for Policy Alternatives

annual allowances and the approval of pro- services the authority to require an assess-
jects based on short-term political goals. ment of community benefits from bidders
on federal contracts.

Supporting Community Enterprise

b) Access to existing business support
a) Social purchasing Action: Expand the capacity of and access
Action: Adopt a social procurement policy to existing SME services through the Can-
including the implementation of social value adian Business Network and other federal
weighting in all federal requests for propos- business development programs. This should
als and contracts. be coupled with education about the pro-
Result: Community enterprises operated by grams for government officials to ensure a
non-profits, co-operatives, and micro-en- level playing field for alternative forms of
terprises dedicated to engaging vulnerable incorporation. (Cost: $10 million per year
populations in the workforce create wealth for five years.)
and respond to the needs of rural and urban Result: Although more than 90% of federal
communities. Contrary to popular miscon- SME support programs can, under legisla-
ceptions, community enterprises have a tion and regulations, serve non-profits and
higher survival rate than traditional small- hybrid business models (e.g., social enter-
to medium-sized enterprises (SMEs) while prises), access to those programs is typ-
offering an unparalleled financial and so- ically limited by current practices, culture,
cial return on investment. Better accounting and mandates. All forms of incorporation,
for the social, environmental, and econom- including not-for-profit, social enterprise,
ic impact of government spending, through and co-operatives, should have equal ac-
social value weighting, will increase benefits cess to existing government-supported busi-
to vulnerable communities and individuals, ness development tools, including business
creating accessible education and job op- skills capacity building opportunities and
portunities for communities traditionally at advisory services, appropriate grant fund-
the margins or excluded from the economy. ing, and a full range of capital tools.

Action: Include community benefit agree-

c. Access to capital
ments in federal development projects, as
Action: Provide a tax credit of 30% on Com-
proposed in Bill C-227, a private members
munity Economic Development Investment
bill currently before the House of Commons.
Funds (CEDIFs) to accelerate their develop-
Result: Community benefits agreements are
ment across Canada. (Cost: $15 million per
another practical tool for engaging with com-
year for five years.)
munity enterprises on development projects
Result: Canadians often want to invest in
while generating local social and econom-
small, locally owned businesses because of
ic opportunities. Bill C-227 gives the feder-
the positive social and environmental (in
al minister of public works and government
addition to financial) returns. Billions of

High Stakes, Clear Choices: Alternative Federal Budget 2017 103

dollars invested in RRSPs, however, send port a CED approach in targeted urban and
most Canadians retirement savings out of rural communities in need of physical, so-
their province, providing no benefit to the cial, economic, and cultural revitalization.
local economy. CEDIFs create an affordable (Cost: $100 million per year for five years.)
way for people to invest in their own com- Result: Modelled on Manitobas Neighbour-
munities, and for local small business to hoods Alive!, the federal revitalization pro-
access capital. Nova Scotia led the way in gram and fund will consider the impacts of
1999 and, as a result, has seen the establish- local development on employment, training,
ment of 48 CEDIFs, the mobilization of 7,500 education, safety, crime prevention, hous-
investors, and a contribution of more than ing, physical improvements, recreation, and
$56 million in assets. Similar funds exist in more. Locally governed democratic Neigh-
Manitoba, Prince Edward Island, and New bourhood Renewal Corporations in targeted
Brunswick, but federal tax incentives could communities will co-ordinate ongoing revital-
see them spread to all provinces. ization efforts. Flexible funding programs
will enable community-based organizations
to leverage additional non-government re-
CED Policy Framework and Lens
sources for innovative initiatives that take
Action: Develop and implement a federal a CED approach to addressing community-
CED policy framework to be modelled on prioritized challenges. NRCs will help local
the one introduced by the Manitoba gov- community organizations develop propos-
ernment. The framework will include a CED als and apply for funding to support pro-
lensa series of questions to help depart- jects consistent with the neighbourhoods
ments assess the degree to which they are five-year revitalization plan.
incorporating CED principles into govern-
ment initiatives.
Result: CED principles, such as local skills Notes
development and local employment, will be 1 Federation of Canadian Municipalities. (2012). Can-
incorporated into government initiatives to adian Infrastructure Report Card.

better respond to the economic, social, and 2 Lower-income households pay a much higher share
environmental needs of communities. A fed- of their income on increased user fees for public ser-
vices, or property taxes on owned or rented property.
eral CED policy framework will promote in-
3 Kyle Pomerleau and Andrew Lundeen (2014). Inter-
clusive, sustainable, and resilient Canadian
national Tax Competitiveness Index. Washington: Tax
communities. Foundation.

4 Statistics Canada. 2011 National Census. Population,

urban and rural, by province and territory.
Neighbourhood Revitalization
Program and Fund

Action: Establish a federal Neighbourhood

Revitalization Program and Fund to sup-

104 Canadian Centre for Policy Alternatives

Achieving the United Nations Sustainable Launch a funded plan to align government policies

Development Goals demands that Canada transform with the Sustainable Development Goals, both in
its approach to global development co-operation. Canada and abroad.
In 2016-17, Canada invested about 0.27% of gross Gradually increase our international development
national income in international development assistance to 0.41% of gross national income by
assistance below average and far from the 0.7% goal. 2021-22, and aim for 0.7 % within a decade.
The multidimensional nature of poverty and Target Canadas international aid to the poorest
inequality means that Canadian aid must be and most vulnerable, particularly for women and girls.
implemented in more integrated and complex ways. Establish a new development effectiveness action
Canadas last aid effectiveness action plan plan with targets in line with those set out in the
concluded in 2011, with no new plan adopted to Busan Partnership for Effective Development
succeed it. Co-operation.


Background The year 2015 also marked the advance-

ment of global action on climate change, fol-
A Changing Global Context
lowing on the adoption of the Paris Agree-
The adoption of the United Nations 2030 ment2 (see the Environment and Climate
Agenda for Sustainable Development (Agen- Change chapter3).
da 2030) and Sustainable Development The World Humanitarian Summit in May
Goals (SDGs) in 2015 represented a landmark 2016 drew global attention to the urgent
achievement in establishing a truly global need for collective action to address grow-
approach to sustainable development. These
ing humanitarian need. We are in the midst
new goals are universal in nature, applying of the greatest displacement crisis ever re-
to all countries. Countries like Canada will corded, with some 65 million people hav-
be required to examine their own sustain- ing been forced from their homes in recent
able development challengesdomestic- years.4 Over 218 million people each year
ally as well as internationally. are affected by disasters, costing the global
economy more than $300 billion annually.5

High Stakes, Clear Choices: Alternative Federal Budget 2017 105

A recent UN report showed a $15 billion gap The longstanding international target of
between available financing for humani- reaching 0.7% of GNI dedicated to official
tarian assistance and global human need. 6
development assistance (ODA) is Canadian-
made, originally advanced by former prime
minister Lester B. Pearson. Parliament has
The Need for a National Vision
reiterated this target commitment sever-
The governments International Assistance al times over the last 15 years, under both
Review (IAR) represents a timely opportun- Conservative and Liberal governments. It
ity for a fresh take on global development has been endorsed by three different par-
cooperation, as Canada aligns its actions liamentary committees and by the House of
with Agenda 2030. Civil societys strengths Commons as a whole.11 Its time for Canada
in program delivery, policy, advocacy, and to make good on its word and begin mov-
public engagement will complement the ing gradually and consistently toward the
political will and resources that the feder- 0.7% target.
al government can invest in the right mix of
policies and programs. Government, civil so-
Time for Strategic Focus
ciety organizations, and other stakeholders
must engage in a long-term partnership to Some degree of focus is necessary for de-
implement a comprehensive human rights velopment assistance to have a significant
framework to guide Canadian development impact, especially for a country with a mod-
cooperation over the next five years and est ODA budget. Countries of focus, of which
enhance Canadas contribution to a fairer, Canada currently has 25, are one means of
safer, and more sustainable world. 7
allocating international assistance. How-
This vision for a strong development and ever, the geography of poverty has shifted in
humanitarian assistance policy requires a recent years. The increasingly multidimen-
strong financial commitment. Canada will sional nature of poverty and inequality,
need to reverse the trend of recent years across and within national borders, means
that has seen its international assistance that Canadian development assistance must
budget decline to historically low levels. 8
be focused in more complex ways as well.12
Right now, Canada allocates about 0.27% of Tackling poverty now requires us to
its gross national income (GNI) to develop- not just address extreme poverty but to ad-
ment cooperation and humanitarian assist- dress the needs of all those living below
ance, falling below the average of its peer
national poverty lines. Many experts esti-
group in the G7, Organization for Economic mate that three-quarters of the worlds poor
Cooperation and Development (OECD), and live in middle-income countries.13 Further-
other western liberal democracies.10 Without more, inequality is getting worse between
substantial increases, this government risks and within countries.14 Above all, Canadas
having the worst record in Canadian hist- focus should be on poor people, not on poor
ory in international assistance investment. countries. The principal purposes of Can-

106 Canadian Centre for Policy Alternatives

adas ODA, as defined by the ODA Account- in-country partnerships that Canadian civil
ability Act, are to reduce poverty, promote
society organizations have with predictable
international human rights, and respond to and responsive funding, the Canadian gov-
the voices of the poor. We should therefore ernment can maintain Canadian access, ex-
be seeking to assist those living in poverty pertise, and relationships in countries be-
and the most vulnerable regardless of where yond its official countries of focus. Such
they live: women and girls; people with dis- partnerships allow for greater adaptability
abilities; Indigenous peoples; the urban and when geopolitical realities change. A di-
rural poor; and people who are discriminat- versified portfolio of tools and approaches
ed against because of their caste, religion, will make our international assistance ef-
ethnicity, or age. This focus is consistent forts more effective. Accordingly, Canadas
with the ministers mandate to focus on re- work with civil society partners should aim
ducing poverty and inequality, and with
to be as flexible and responsive as possible,
the newly created Office of Human Rights, in keeping with the governments civil so-
Freedoms and Inclusion. It is also in line
ciety partnership policy.19
with the core goal of Agenda 2030: to leave
no one behind.
Canadian ODA should also be aligned AFB Actions
with the priorities of our partners in devel-
Launch a comprehensive alignment
oping countries. Alignment with develop-
of government policy with Canadas
ing country priorities, democratic owner-
expressed priorities and plan
ship of these priorities, and harmonization
for realizing the Sustainable
of efforts among donors have been recog-
Development Goals (SDGs).
nized over the past 15 years as key deter-
minants of effective aid delivery.18 In 2012, Actions:
Canada allowed its aid effectiveness action
The prime minister will establish an
plan to conclude without developing a new
inter-ministerial committee to realize
one. We need a new action plan with clear
Canadas plan for its SDG priorities, in-
targets in line with those set out in the Bu-
cluding measuring progress; it will re-
san Partnership for Effective Development
port directly to him, coordinated by the
Cooperation and in subsequent outcomes of
Privy Council Office.
the High Level Meetings of the Global Part-
nership for Effective Development Cooper- The government will establish a multi-
ation in Mexico and Nairobi. stakeholder national commission to fos-
Finally, a focus on specific countries or ter a whole-of-society approach to im-
themes should not be to the exclusion of plementing Canadas plan for realizing
evolving human needs. There should al- the SDGs. The commission will engage
ways be some flexibility to account for the with all three levels of government, in-
unanticipated. By supporting the existing

High Stakes, Clear Choices: Alternative Federal Budget 2017 107

digenous authorities, civil society, the ively and in accordance with their own
private sector, and Canadians. priorities. This additional funding will
be accompanied by new, flexible, di-
The above committee and national com-
verse and responsive funding mechan-
mission will work together to generate
isms to support the governments work
a comprehensive Canadian SDG action
with a variety of civil society partners.
plan and funding framework, drawing
inspiration from the Federal Sustainable Result: More predictable funding over the
Development Strategy and the Inter- coming years that matches Canadas pol-
national Assistance Review. itical ambitions for global development
cooperation with a longer-term financial
Result: A clear and coherent whole-of-gov-
framework for reaching the international
ernment policy and funding framework for
target of 0.7% of GNI.
meeting and measuring Canadas SDG com-
mitments at home and abroad.
Establish a new development
effectiveness action plan.
Create a 10-year timetable for
gradually and predictably increasing Action: The AFB will establish a new plan
the International Assistance with clear targets in line with Busan Part-
Envelope towards the target of 0.7% nership for Effective Development Cooper-
of Gross National Income (GNI). ation and its accompanying monitoring
Result: Funds for development cooperation
The AFB will set a timetable to predict- will be used more effectively and will there-
ably grow the IAE to 0.7% of GNI within fore have more impact.
10 years by increasing Canadas IAE by
16% annually, from $4.8 billion in 2016-
Set clear additional targets to focus
17 to $5.5 billion in 2017-18; $6.4 billion
Canadas international assistance
in 2018-19; and $7.4 billion in 2019-20.20
on the poorest and most vulnerable,
This represents new spending of $760
in particular women and girls,
million, $1.6 billion and $2.7 billion in
situated within clearly articulated
the first three years. This fiscal escal-
national plans and strategies
ator will put Canada back on track by
that are developed in a manner
generating predictable annual increases
consistent with democratic country
in the aid budget, doubling the aid en-
ownership and reflect country
velope to put Canada above the OECD
priorities, needs, and context.
donor country average performance ratio
(0.41%) by 2021-22, and allowing partner Actions:
countries to absorb the increases effect-

108 Canadian Centre for Policy Alternatives

As of 2017-18, 50% of Canadas aid envel- Result: The baseline humanitarian budget
ope will be dedicated to least developed will be brought into line with its typical year-
and low-income countries (LDCs and end proportion within the IAE, and allow
LICs) and fragile states. In the next four more long-term, timely, predictable, and
years, or by 2021, 0.15% of GNI will be effective funding for humanitarian action.
dedicated to development cooperation
for LDCs.21 The AFB will also initiate a
process of making Canada one of the top Notes
three bilateral donors in at least half of 1 United Nations. (2015). Transforming our world: the
Canadas countries of focus by the end 2030 Agenda for Sustainable Development. New York:
United Nations.
of this governments first mandate.22
2 United Nations. (2015). Adoption of the Paris Agree-
As part of a comprehensive feminist ap- ment. New York: United Nations.
proach, we will quadruple our invest- 3 AFB 2017 confirms that the governments international
ment in womens rights organizations climate financing initiatives will be new climate fund-
ing, additional to the existing aid budget.
by 2020from $5.2 million to $20.8 mil-
lion. We will invest in a full range of sex- 4 UNHCR. Figures at a Glance, UNHCR. 2016. http://
ual and reproductive health and rights
5 ReliefWeb. The human cost of natural disasters 2015:
services, and ensure that 20% of all aid
a global perspective. Report summary, March 2015.
investments have a principal focus on
advancing gender equality and womens disasters-2015-global-perspective.

empowerment.23 6 ReliefWeb. High-Level Panel on Humanitarian Fi-

nancing Report to the Secretary-General: Too important
Result: By focusing on the people most in to failaddressing the humanitarian financing gap,
need, wherever they live, and responding
to country-defined priorities, Canada will
help realize the Agenda 2030 ambition of
7 For further details on what this looks like, see CCIC.
leaving no one behind. Cooperative Leadership: Canadas contribution to a fair-
er, more sustainable, and safer world. July 2016. http://
Increase the baseline budget IAR_submission_EN.pdf.

for humanitarian assistance. 8 CCIC. Update on Canadian Official Development

Assistance: Canadas aid takes one step forward one
Action: Canadas response to humanitar- step back, Issue Update. October 2016. http://www.
ian crises is a crucial component of our
international assistance. As the IAE grows
under the AFB a larger proportion will be
allocated to increasing the baseline budget 10 Greenhill, Robert and Megan Mcquillan. Assessing
Canadas Global Engagement Gap. Global Canada. Oc-
for humanitarian assistance (prevention, re-
tober 6, 2015.
sponse, relief, and recovery). canadas-global-engagement-gap/.

High Stakes, Clear Choices: Alternative Federal Budget 2017 109

11 Paul, Jennifer and Marcus Pistor. (2009). In Brief: 18 See notably OECD. (2005). The Paris Declaration on
Official Development Assistance Spending. Ottawa: Li- Aid Effectiveness; OECD. (2008). The Accra Agenda for
brary of Parliament, PRB 07-10E, http://www.lop.parl. Action. OECD (2011). Busan Partnership for Effective Development Cooperation.
12 CCIC. Focus with Purpose, Submission to House
of Commons Standing Committee on Foreign Affairs 19 Global Affairs Canada. International Develop-
and International Development Study on Countries of ment and Humanitarian Assistance Civil Society Part-
Focus, May 31, 2016. nership Policy. 2015.
we_do/2016_05_31_Focus_with_Purpose_FAAE.pdf development-developpement/cs-policy-politique-sc.
13 See for instance: Andy Sumner. (2012). Where Do the
Worlds Poor Live? A New Update. IDS Working Paper 20 Reilly-King, Fraser and Aniket Bhushan. Getting
393, Institute of Development Studies. to 0.7: Three Scenarios for Canada. Canadian Inter-
national Development Platform. October 18, 2016. http://
14 See Hickel, Jason. ( Hickel, Global inequality may
be much worse than we think, The Guardian, 8 April
2016, 21 The Government of Canada currently allocates around
professionals-network/2016/apr/08/global-inequality- 0.09% of GNI to LDCs. This transition can be achieved
may-be-much-worse-than-we-think within the context of an expanded IAE as per above.

15 Global Affairs Canada. The Official Development 22 OECD data indicate that an additional investment of
Assistance Accountability Act. 2015. http://www. $59 mn could make Canada a top-three donor in half (13) of its countries of focus, based on 2014 contribu-
partners-partenaires/bt-oa/odaaa-lrmado.aspx?lang=eng. tion levels. See CCIC. (2016). Smart, Transparent, and
Impactful Aid: Submission to Consultations on Budget
16 Prime Minister of Canada. Minister of Internation-
2016. February 2016, p. 3.
al Development and La Francophonie Mandate Let-
ter. 2015.
development-and-la-francophonie-mandate-letter. 23Ibid.

17 Global Affairs Canada. Reinvigorating Can-

adas human rights agenda. Press Release. May
17 2016.

110 Canadian Centre for Policy Alternatives

Tuition revenue going to colleges and universities Restore federal funding for post-secondary

has tripled since the massive cuts to federal spending education (PSE) and establish appropriate standards
in 1996. through a federal PSE Act.
Public student debt in Canada reached $28 billion Eliminate tuition fees for all PSE students in all
in 2012 (its highest level ever), which does not PSE programs.
account for private debt.
Despite Canadas treaty obligations, over 10,000 Lift the cap on federal funding for Indigenous
Indigenous students are on a waiting list for PSE learners and ensure existing waiting lists are
post-secondary training. emptied.
Public spending on training and skilled trades Invest in skilled trades apprenticeships and adult
apprenticeships in Canada sits at the bottom of the education, and help unemployed Canadians who are
industrialized world. ineligible for employment insurance.

Background versity degreeis a requirement in 70% of

job openings. For the precariously employed,
There was a time in Canada when tuition fees
vying for the remaining 30% of jobs, PSE
were modest or fully subsidized, when cam-
offers a pathway to a better future.2 Thats
pus workerscleaners, food service work-
why we must treat PSE as an essential ser-
ers, maintenance and skilled trades, support
vice accessible to all, regardless of ones
staff, and academic workersenjoyed de-
ability to pay.
cent wages and access to full-time jobs. That
Building on proposals from last year,
era ended in the 1990s when tax cuts and
the 2017 Alternative Federal Budget sets a
austerity took precedence over the delivery
new approach in federal PSE policy. To re-
of quality public services like education.1
verse decades of neglect, it creates a Post-
Today post-secondary education (PSE) of
Secondary Education Renewal Transfer that
some kindwhether continuing/adult edu-
will, among other things, eliminate PSE tu-
cation, a skilled trade certification through
ition fees, increase funding for training and
apprenticeship, a college diploma, or a uni-
apprenticeships, and ease the burden of

High Stakes, Clear Choices: Alternative Federal Budget 2017 111

Figure 14Public student loan debt (federal and provincial), 19992012


$28 Billion


$1.87 Billion
$ Billions

$23 Billion

$20 Billion

1999 2005 2012

SourceStatistics Canada, Survey of Financial Security, 2014.

paying down student loans. The AFB also international students and those enrolled
re-establishes national standards in PSE in professional programs (see Table 1).
through legislation modelled on the Can- These numbers understate the conse-
ada Health Act. quences of high tuition fees and student
debt for marginalized groups such as stu-
dents with disabilities, racialized students,
Current Issues queer or trans students, or Indigenous stu-
dents, who are more likely to come from
Tuition Fees, Student Aid, and Debt
low-income households.3 The data also do
Canadian colleges and universities have not capture debt from private student loans
doubled or tripled tuition fee revenues since or lines of credit, which many turn to for
2001, saddling graduates with unprecedent- help, given inadequate student financial
ed levels of debt (see Figure 5). The catalyst aid. Heavily marketed (and tax-sponsored)
came in 1996, when the Chrtien govern- registered education savings plans (RESPs)
ment made historic cuts to federal PSE trans- are used primarily by upper-income earn-
fers worth $2.29 billion (an 18% reduction), ers and are therefore of little general use.4
which facilitated dramatic tuition increases Almost 60% of public student financial
over the next two decades, particularly for aid comes from the Canada Student Loans
Program (CSLP) while the balance is deliv-

112 Canadian Centre for Policy Alternatives

Table 1Tuition fees at various PSE institutions (2016-17)

Institution Domestic Tuition International Tuition

Dalhousie UniversityDentistry $22,700 $48,080
Seneca CollegeAviation Technology $18,214 $71,723
University of OttawaCommon Law $26,560 $68,200
McMaster UniversityMedicine $27,532 $95,955
University of ManitobaAsper MBA $29,602 $42,524
University of British ColumbiaB.Ed. $11,332 48,958.20

SourceTuition fee schedules from named institutions.

ered through employment insurance (for ap- modest RAP support, borrowers must earn
prenticeship training), provincial programs, less than $25,000 a yeara poverty-level
and bursaries or scholarships available at income that makes it difficult to repay debt.
PSE institutions. The bulk of student aid is Still, as a policy tool for debt reduction, the
loan-based, which discriminates against RAP should be expanded given the scope of
those unable to pay for PSE costs up front. unemployment and underemployment, par-
In 2013-14, the last year for which data ticularly among young workers.
is available, the CSLP provided loans to As a final note, it is inexcusable that the
491,444 students, and modest grants to CSLP earned over $580 million in interest
410,184 low- and middle-income students. 5
on student loans in 2013-14.8 The CSLP must
This represented about 28% of enrolled stu- follow the lead of provinces that have elim-
dents in 2013-14, leaving the vast majority inated interest fees on student loans, and
with unmet financial needs. Of particular 6
shift to a grant-based system that allows
concern, graduate students who do not qual- students to focus on their studies without
ify for the CSLPs Canada Student Grants, having to work one or more part-time jobs.9
and international students on travel visas,
are not eligible for either public or private
Indigenous Students
financial aid.
The CSLP also has a Repayment Assist- Free access to post-secondary education is
ance Program (RAP) that was used by over a treaty right for Indigenous people in Can-
234,000 CSLP debtholders in 2013-14 (almost ada; the federal government has a moral and
a third of all debtholders that year). The RAP legal responsibility to uphold this commit-
absorbs interest payments on CSLP debt, ment. The Post-Secondary Student Support
and even reduces principal for borrowers on Program (PSSSP) is the primary mechan-
RAP for 60 consecutive months or 10 years ism by which status First Nations and Inuit
after graduation. At 15 years after gradua- students receive financial support from the
tion, CSLP debt is forgiven. To qualify for
federal government. In 2016, the Assembly

High Stakes, Clear Choices: Alternative Federal Budget 2017 113

of First Nations (AFN) estimated there was an additional language (EAL) in PSE insti-
a backlog of 10,000 Indigenous students tutions, and tuition fees are now assessed
waiting for PSSSP funding. During the 2015
for EAL programs that were once available
election campaign, future prime minister without up-front cost.15
Justin Trudeau promised to lift the 2% cap
on federal transfers to the PSSP and invest
Precarious Work and Executive
an additional $50 million in the program.
Compensation in PSE
The government must follow through on
this crucial promise, and ideally meet the Canadas 400,000+ PSE workers are being
more realistic target of $424.8 million set by asked to do more with less. Studies indicate
the AFN to address the backlog. a third of undergraduate teaching is done by
contract instructors, many of them surviving
on subsistence wages.16 Maintenance and
Apprenticeships, Skills-based
skilled trades workers also report a sharp
Training, and Continuing Education
rise in temporary, contracted-out employ-
Canada spends less on skills training and ment, and the same is true for cleaners and
active labour market measures than most of food service workers.17 A recent study put the
the industrialized world.11 (The 2016 federal cost of deferred maintenance on university
budget began to address this by increasing campuses at $8.4 billion in 2014.18 Mean-
funding to provincial and territorial labour while, austerity is never applied at the top,
market development agreements and the to the salaries of campus executives, who
Canada Job Fund agreements, and making typically make double or sometimes quad-
new investments in apprenticeship train- ruple the salaries of provincial premiers.
ing.) Likewise, according to the OECD, 40%
of employed Canadians do not have the lit-
PSE Research and Scholarships
eracy and essential skills to do their jobs
properly or succeed in todays knowledge- The federal governments current innova-
and technology-rich economy. Low literacy
tion agenda suggests PSE research will con-
levels are contributing to Canadas dismal tinue to be informed by the short-term in-
innovation record, preventing many people terests of the private sector and, as a result,
from accessing decent jobs. 13
prioritize commercializable research.19 The
In the past, Citizenship and Immigration private sector is also increasingly relying on
Canada made important contributions to public PSE infrastructure for research and
literacy and essential skills training. How- development. According to the World Eco-
ever, federal austerity has undermined this nomic Forums 2014 annual report, Canada
commitment to adult education, notably in has fallen from 22nd to 27th in the world for
language and literacy programs, starting private sector spending on research in the
with a $53-million cut in 2010. As a result,
last five years.20
provinces have cut funding for English as

114 Canadian Centre for Policy Alternatives

In 2014, of the 4,535 doctoral students The existence or extent of reserve funds
that applied for SSHRC funding, only 580 and/or sizeable investments held by PSE
were successful. More investment in Can-
institutions, and whether these are in
ada Graduate Scholarships is needed to sup- compliance with the AFBs proposed
port graduate-level research that is instru- PSE Act (see below);
mental in driving innovation and building a
The feasibility of an employer training
foundation for economic and social develop-
levy modelled on what exists in Quebec,
ment. For faculty researchers, less than one
where employers with payrolls in excess
in four SSHRC applicants received funding
of $1,000,000 are required to invest a
in 2014 despite another 40% of them being
minimum of 1% of operating revenues in
deemed eligible by peer review.22
training for workers (or remit the same
amount to a third party managed by an
entity empowered by the state).
AFB Actions
Result: The PSE-RT will allow the govern-
The AFB establishes a new policy framework
ment to make the following improvements
for PSE that expands access to high-quality,
to the affordability and accessibility of PSE:
publicly funded training and education. The
framework addresses decades of neglect by Federal PSE transfers to provinces and
introducing two new public policy instru- territories will be restored to 1996 levels
ments: the PSE Renewal Transfer (PSE-RT) accounting for enrolment growth and
and the Canada PSE Act. inflation. PSE-RT funding will be sep-
arated from the existing Canada Social
Action: Eliminate the federal tuition tax
Transfer and available for provinces, ter-
credit, Canada Job Grant, RESP tax credit,
ritories, and PSE institutions in compli-
and student loan interest tax credit, and
ance with our proposed PSE Act (cost:
reduce the scientific research and experi-
$5.48 billion).
mental development tax credit, to help fund
a new PSE Renewal Transfer (cost: $10.06 Tuition fees for all PSE students, in all
billion). The government will also appoint programs, will be eliminated through an
a parliamentary task force to investigate ongoing transfer based on 1996 (pre
the following: budget cuts) funding levels. The feder-
al government bears responsibility for
Introducing a decent work standard
a 50% share of the cost; to qualify for
that PSE institutions must meet to qual-
these funds, provincial or territorial au-
ify for PSE-RT funding; the standard
thorities must commit to matching their
will include a $15 minimum wage, and
share of this cost and observing the PSE
a maximum wage tied to the income of
Act (cost: $3.59 billion).
the provincial or territorial premier where
a PSE institution is based;

High Stakes, Clear Choices: Alternative Federal Budget 2017 115

New money for apprenticeships and Citizenship and Immigration Canada
skilled trades will improve labour mar- will restore training for EAL to be con-
ket information (cost: $15 million), cre- tinued in perpetuity as a dedicated PSE-
ate a federal Labour Market Partners RT item in compliance with the PSE Act.
Forum (cost: $50 million over 10 years), This funding will be linked to the Con-
help unemployed Canadians who do not sumer Price Index going forward (cost:
qualify for EI access training programs $53 million).
(cost: $300 million), strengthen union-
Action: Introduce a Canada PSE Act, mod-
based apprenticeship training (cost: $125
elled on the Canada Health Act, to ensure
million), and harmonize provincial-ter-
the provinces and territories comply with
ritorial apprenticeship training and cer-
following core principles:
tification requirements (cost: $15 mil-
lion). The federal government will also Universality: Prospective students
establish a mandatory apprenticeship should have a full range of PSE options
ratio for all federal infrastructure pro- and our system must strive for parity of
jects and maintenance contracts (total esteem between all forms of PSE learning.
cost: $505 million).
Accessibility: All components of our
Interest on loans through the CSLP will PSE system must be available to learn-
be eliminated, and the provision of Stage ers without up-front cost. Our PSE sys-
2 assistance extended for all CSLP bor- tem must be financed through progres-
rowers five years after graduation. Part- sive taxation, not arbitrary fees. In this
time students (like full-time students) context, student financial assistance
will not be required to pay back CSLP must strive to eliminate all barriers to
debt until six months after they gradu- learning (not just tuition fees) so that
ate. Graduate students will also be able students can focus on their studies.
to qualify for grants available through
Comprehensiveness: Canada should be
the CSLP (cost: $283 million).
able to offer high-quality learning in all
Tri-council granting agencies for PSE re- geographic regions. To ensure appropri-
search will have their budgets restored ate use of PSE funding, provinces and
to 2007-08 levels, but funds will be dis- territories must also observe a decent
tributed evenly across the tri-council work standard for all campus workers.
funding agencies (SSHRC, NSERC, and
Public administration: To receive pub-
CIHR). An additional 1,250 students will
lic funding PSE institutions must be
be eligible for Canada Graduate Schol-
operated by a public authority on a not-
arships at a value of $20,000 per schol-
for-profit basis. They must also practice
arship (cost: $146 million).
democratic governance with adequate
voting rights for all campus stakeholders.

116 Canadian Centre for Policy Alternatives

8 Ibid., p. 22.
Freedom of expression: To receive PSE-
RT funding PSE institutions must up- 9 CFS. Student Employment: Eroding Academic Suc-
cess, fall 2013.
hold the right to freedom of expression
10 Assembly of First Nations. 2017 Pre-Budget Submission.
at all levels subject to reasonable limits
established by human rights codes and 11 OECD. Public Expenditure and Participant Stocks on
Labour Market Programs. (Online Comparative Data-
related statutes. Publicly funded PSE re-
base), July 7, 2016.
search must also be driven by curiosity
12 Janet Lane and T. Scott Murray. Smarten Up: Its
and analytical skill, not outside interests Time to Build Essential Skills. Canada West Founda-
attempting to leverage the use of public tion. Calgary: June 2015.

resources for private benefit. 13 Statistics Canada. Skills in Canada: First Results
from the Programme for the International Assessment
of Adult Competencies. Catalogue no. 89-555-X. Ottawa:
Councils of Ministers of Education, 2013.
14 CBC News. Immigrant Settlement Funds Cut for
1 See: Richard Swift, ed., The Great Revenue Robbery: Ontario, December 23, 2010.
How to Stop the Tax Cut Scam and Save Canada (To-
15 Federation of Post-Secondary Educators of British
ronto: Between the Lines, 2013); Canadian Federation
Columbia. FPSE Calls for a Renewed Funding Commit-
of Students (CFS), Time to Think BIG: The Case For Free
ment to English as an Additional Language Programs,
Tuition (Ottawa: October 2016).
November 18, 2015; Suzanne Smythe and Shauna Butter-
2 Darcy Hango and Sbastien Larochelle-Ct. Over- wick. Cuts to Basic Adult Education Would Make it
qualification, Skills, and Job Satisfaction. Ottawa: Sta- Harder to Escape Poverty. Vancouver: CCPA, February
tistics Canada, September 14, 2016; Association of Can- 25, 2015; CBC News. Yukon College Cuts Enhanced Lan-
adian Colleges. Canadas Demographic and Advanced guage Training Program, December 13, 2015.
Skills Crisis: People Without Jobs, Jobs Without People,
16 Cynthia Field and Glen A. Jones. A Survey of Ses-
August 2010, p.1.
sional Faculty in Ontario Publicly-Funded Universities.
3 Canadian Federation of Students. Time to Think Centre for the Study of Canadian and International High-
BIG, pp. 56. er Education, April 2016; Ira Basen. Most University
Students Now Taught by Poorly Paid Part-Timers. CBC
4 Kevin Milligan. The RESP is Bad Tax Policy and Even
News, September 7, 2014; Mary Wiens. More Contract
Worse Education Policy. The Globe and Mail, March 11,
Work in Post-Secondary Education - A Former Bastion
2008; Tax Preferences for RESP Saving: Are RESPs Ef-
of Secure Work. CBC News, March 5, 2015.
fective? C.D. Howe Institute, November 2002.
17 CUPE National (Research Department). Sector Pro-
5 Figures cited from: Employment and Social Develop-
file: Post-Secondary, June 11, 2015.
ment Canada (ESDC). Canada Student Loans Program:
Annual Report, 2013-2014. Ottawa: 2016. While Canada 18 Canadian Association of University Business Offi-
Student Grant amounts were increased by 50% in the cers. Deferred Maintenance at Canadian Universities:
2016 federal budget (a good measure), this still repre- An Update, May 2014.
sents a minor portion of available CSLP assistance rela-
19 Industry Canada, Positioning Canada to Lead: An
tive to loans.
Inclusive Innovation Agenda (June 2016).
6 Statistics Canada. CANSIM 477-0019, November 2015.
20 World Economic Forum, Global Competitiveness
7 ESDC. Canada Student Loans Program: Annual Re- Report, 2013-2014 (2013).
port, 2013-2014, pp. 1416. It is also worth noting that
21 NGC, 2017 Pre-Budget Submission.
the RAP was introduced after considerable pressure
from the CFS, which made an effective public case to 22 CCR, 2017 Pre-Budget Submission.
support student debt holders at a time of financial crisis.

High Stakes, Clear Choices: Alternative Federal Budget 2017 117

The national poverty rate in 2014 was 13%, based on Reduce Canadas poverty rate by 50% within four

the low-income measure after tax (LIM-AT), and 11.3%, years and by 75% within a decade.
based on the market basket measure (MBM), or the
equivalent of between 3.9 and 4.5 million Canadians. Introduce a $4-billion-a-year transfer to the provinces
and territories to boost social assistance benefits and
An estimated 863,492 Canadians relied on food banks achieve clear poverty reduction targets.
in March 2016, 28% more than before the 2008 recession.
About 35,000 Canadians are homeless on any given Create a GST credit top-up focused on low-income
night, and over 235,000 experience some form of Canadians to lift 560,000 people out of poverty, half of
homelessness during the year. them children.
There are gaps in the federal governments discussion Re-establish a federal minimum wage of $15 per
paper and consultation process to decide what policies a hour, indexed to inflation, covering all workers under
Canada-wide poverty reduction plan should include. federal jurisdiction.


Background In its first year, the new federal Liber-

al government instituted two key poverty-
Too often, the public feels resigned to the
reducing policy changes recommended in
presence of poverty and inequality in our
past Alternative Federal Budgets: a new
society. We have come to see poverty, home-
Canada Child Benefit (CCB), which should
lessness, and hunger as the new normal. But
reduce child poverty by 14%, and a 10%
there is nothing inevitable about poverty
increase to the Guaranteed Income Sup-
and homelessness in a society as wealthy
plement (GIS) top-up for poor single sen-
as ours. The policies needed to make a dra-
iors, which we estimate will reduce seniors
matic difference are known, and other coun-
poverty by 5%. Other promised initiatives
tries setting clear targets and timelines are
are still to come, including more action on
achieving results. Finland and Denmark, for
Indigenous poverty and improvements to
example, saw poverty rates fall below 5% af-
employment insurance access and benefits.
ter both pledging to eradicate child poverty.
But it is good to see this government takes
Canadas child poverty rate is three-and-a-
the issue of poverty more seriously than its
half times higher.1

118 Canadian Centre for Policy Alternatives

In October 2016, the minister of families, action on a much-needed national child care
children and social development, Jean-Yves program. Additionally, the paper uses the
Duclos, announced he would spend 2017 low-income cut-off (LICO) as its measure of
consulting with Canadians on the develop- poverty. But, as discussed below, one would
ment of a Canada-wide poverty reduction be hard-pressed to find an economist out-
plan. A discussion paper released for the
side of government who still recommends
occasion displays a solid understanding of this as an accurate indicator.
the scope, sources, dimensions and conse- The new government has also promised
quences of poverty in Canada. The willing- to tackle inequality. But its tax measures to
ness of the government to consult publicly date leave much to be desired. For example,
on firm poverty reduction targets, and to be the new tax bracket on those making over
accountable for meeting them, is welcome. $200,000 a year is welcome. But combined
But several concerns remain with the pro- with a cut to the third federal tax bracket
cess and the likelihood it will produce the the government has merely shuffled income
policy change Canada needs. within the top 20% of earners.3 More fun-
For example, will the government hear damentally, the new government seems not
from low-income people themselves during to appreciate that to truly tackle income in-
the consultationsand how long will the equality, policies are needed that address the
process take? Many of the actions that will pre-distribution of income, i.e., how society
quickly lower poverty rates are already well shares income prior to its modest redistri-
known; they could be implemented in this bution through the tax and transfer system.
years budget rather than wait until the end This will require federal action on the min-
of a lengthy consultative process. On the sub- imum wage and measures to boost union-
stance of the plan, while the federal govern- ization as means of increasing the relative
ment has shown it is prepared to boost the bargaining power of workers.4
incomes of families with children and some While the depth of poverty is primarily
seniors in poverty (via the CCB and GIS), by a story of inadequate provincial social as-
reproducing a narrative of the deserving sistance, the breadth of poverty is equally
and undeserving poor we risk leaving out a low-wage story. Most of the poor in Can-
many people in need of assistance. ada are not on social assistance. Millions
The governments discussion paper of Canadians struggle with underemploy-
recognizes that poverty is about more than ment and precarious work. Employment in-
income. It acknowledges Canada will also surance benefits now reach fewer than four
need to make improvements to other types in 10 unemployed workers, a level not seen
of social support, like post-secondary edu- since 1944.5 The provincial social assistance
cation and secure housing, that enhance system is a shadow of what it was during the
affordability, quality of life, and economic early 1990s. The purchasing power of wel-
security. However, the paper is short on de- fare benefit rates has plummeted and new
tails. Noticeably absent is any meaningful rules have made assistance harder to get.6

High Stakes, Clear Choices: Alternative Federal Budget 2017 119

Those facing job loss, the loss of a spouse, and pan-Canadian cuts to welfare begin-
the loss of good health, or old age find that ning in the 1980s.10
the social safety net meant to catch them By any measure, there was a rise in
has been shredded. poverty rates in Canada immediately fol-
The good news is that every province lowing the onset of the 2008 recession.
and territory in Canada except for British Whether or not these rates have returned to
Columbia now has a poverty reduction plan pre-recession levels, however, depends on
in place or in development. But cities, prov-
the measure used. The low-income cut-off
inces, and territories need a federal partner (LICO), for many years the most common-
to effectively tackle povertyas they do for ly used poverty line, has not been re-based
child care, housing, health care and post- since 1992, making it an increasingly unreli-
secondary education. The Government of able and inaccurate metric (e.g., the LICO
Canada has lead responsibility for poverty has failed to keep up with the rising cost of
among Indigenous people and seniors. It housing as a share of household budgets).
is the primary jurisdiction that can reduce For this reason, our tracking of poverty rates
disparities among poor children, recent im- henceforth relies upon the more accurate
migrants, and people with disabilities. And low-income measure (LIM) and market bas-
key income supports (the CCB, GIS, CPP, GST ket measure (MBM).
credit, and EI) are in the hands of the fed- As shown in the chart below, the na-
eral government. tional poverty rate in 2014 (the last year
for which we have data) was 13%, based on
the LIM, while it was 11.3% using the MBM.
Poverty by the Numbers
That translates to between 3.9 and 4.5 mil-
An estimated 863,492 individuals relied on lion Canadians living in poverty.
food banks across Canada in March 2016, According to the latest national Child
28% more people than before the recession Poverty Report Card, more than 1.3 million
hit in 2008. Food insecurity has risen dra-
children (18.5%) lived in poverty in 2014,
matically since 2008 as well, with 12.5% of up from 15.8% in 1989, the year the House
people in Canada experiencing some level of Commons passed its ill-fated resolution
of food insecurity in 2013. Homelessness re-
seeking to end child poverty by the year
mains at crisis levels. Nearly one in five Can- 2000.11 A higher child poverty rate was ac-
adian households experience severe hous- companied by a greater proportion of poor
ing affordability problems, about 35,000 families with children that had at least one
Canadians are homeless on any given night, parent working full time, all year (37% in
and over 235,000 distinct individuals ex- 2011, compared to 33% in 1989).12
perience some form of homelessness dur- The situation is much worse for Indigen-
ing the year, all of which can be attributed ous children. The poverty rate for status First
to the withdrawal of the federal govern- Nations children, for example, is a stagger-
ments investment in affordable housing ing 51%, rising to 60% if restricted to chil-

120 Canadian Centre for Policy Alternatives

Figure 15Percentage of Persons in Low Income in Canada, 19762014







Low Income Measure After Tax Low Income Cut-Os After Tax, 1992 Base

Market Basket Measure, 2011 Base

1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014

SourceStatistics Canada, CANSIM Table 206-0041

dren on reserves.13 Poverty rates are also Aboriginal identity: 25.3% (versus non-
higher for recent immigrants, Indigenous Aboriginal identity: 14.5%)
people generally, racialized people, senior
Men: 11.9% (versus women: 13.3%)
women, single parents, and people with dis-
abilities. We will have to wait until 2018 for Men over 65: 9.1% (versus women over
up-to-date census information on the ex- 65: 14.4%)
perience of poverty by ethnicity or immi-
Lone-parent families: 34% (versus two-
gration status. Based on the 2011 Nation-
parent families with two earners: 5.1%;
al Household Survey, however, and using
and two-parent families with one earn-
the LIM-AT as our measure of poverty, the
er: 22.0%)
following incidence of poverty emerges:14
Adults with disabilities have rates 10%
Immigrants: 18.3% (versus non-immi-
higher that those without.
grants: 13.6%)

Non-permanent residents: 38.1%

AFB Actions
Visible minority: 21.5% (versus non-vis-
ible minority: 13.3%) On Canadas 150th anniversary as a federa-
tion, it is appropriate for the federal govern-

High Stakes, Clear Choices: Alternative Federal Budget 2017 121

ment to reprise its historic role as partner, ability and reporting mechanisms, and
with the provinces and territories, to develop input from those with a lived experi-
and implement a comprehensive federal ac- ence of poverty.
tion plan to end poverty for all Canadians
Introduce a new federal transfer pay-
and significantly close the income gap. To-
ment to the provinces and territories tied
ward this end, the AFB adopts the following
to helping them achieve their poverty
indicators, targets, and timelines.
reduction targets. This transfer will be
Reduce Canadas poverty rate by 50% worth $4 billion a year over and above
within four years, and by 75% within a the costs associated with the federal
decade (based on the MBM and LIM). measures outlined below. The intent of
the transfer is to ensure that the lions
Ensure the poverty rate for children and
share of these funds helps provinces
youth under 18, lone-parent households,
improve social assistance and disabil-
single senior women, Indigenous people,
ity benefit rates and eligibility. There are
people with disabilities, recent immi-
no strings attached to the transfer in its
grants, and racialized people also de-
first year. In subsequent years, however,
clines by 50% in four years, and by 75%
only provinces and territories that in-
in 10 years, in recognition that poverty is
crease income assistance benefits and
concentrated within these populations.
show progress on a number of other out-
In two years, ensure every person in Can- come indicators will continue to receive
ada has an income that reaches at least federal support.
75% of the poverty line.
Provide adequate and accessible income
Within 10 years, ensure there is suffi- support through the following measures:
cient stock of quality, supported, and
Legislate minimum national stan-
affordable housing for all Canadians.
dards for provincial income assist-
Within two years, reduce by half the ance, tied to the Canada Social Trans-
number of Canadians who report both fer, to ensure welfare is accessible
hunger and food insecurity. and adequate.

To achieve these targets, the AFB takes Index the new Canada Child Benefit
action in the following key policy areas. (CCB) to inflation right away instead
of waiting until 2020 (at a cost of $700
Establish a human rights framework by
million a year and rising). Ensure the
which the federal government will pro-
CCB fully reaches Indigenous chil-
vide leadership on poverty and inequal-
dren (the current requirement that
ity issues. Any plan will be grounded
recipient families fill out tax returns
in legislation that includes targets and
means the CCB is missing many First
timetables to eradicate poverty, account-
Nations children on reserves) and

122 Canadian Centre for Policy Alternatives

the children of recent immigrants Commit that federal government
without regularized status. contracts will go only to Living Wage
Increase the GIS top-up for low-in-
come seniors by $1,000 a year for Revise temporary foreign worker
couples and singles (cost of $1.9 bil- programs so that migrant workers
lion a year, see the Seniors and Re- can seek and obtain landed immi-
tirement Security chapter). grant status, without nomination
by employers, and assure all those
Increase the monthly benefit rates
who come to Canada for work are
for CPP disability, expand the def-
granted full labour rights and pro-
inition of disability, and loosen the
tections upon arrival (see the Immi-
contribution requirements (no dir-
gration chapter).
ect cost to the federal government).16
Tackle homelessness and expand the
Create a GST credit top-up of $1,800
social and co-op housing stock (see the
per adult and child targeted to those
Housing and Neighbourhoods chapter).
below the poverty line. The claw back
will have a rate of 15% excluding Provide universal, publicly funded child
the first $2,500 of income. This new care, increasing the number of regu-
top-up, costing $5.4 billion, repre- lated spaces and capping fees (see the
sents the largest expenditure in our Early Childhood Education and Child
poverty reduction action plan, and Care chapter).
will go to all low-income people re-
Provide support for training and edu-
gardless of family type.
cation, and initiate a green infrastruc-
The combined impact of all AFB pro- ture and green jobs plan, with a special
grams will be to cut child and sen- focus on apprenticeships for economic-
iors poverty by a third and adult ally marginalized populations (see the
poverty by 15%. A million Canadians Post-Secondary Education and Sectoral
would be lifted out of poverty drop- Development chapters).
ping the LIM-AT poverty rate from
13% to 10% in 2017.17
Improve the earnings and working con-
1 Organization for Economic Co-operation and Develop-
ditions of those in the low-wage work-
ment, OECD Family Data Base, Table C02.2 Child Poverty
force through the following measures. (includes family poverty). Data up to 2013. See: http://
Re-establish a federal minimum
2 In his mandate letter to Duclos of December 2015,
wage of $15 per hour, indexed to in-
Prime Minister Justin Trudeau asked the minister to
flation, covering all workers under lead the development of an inter-ministerial federal
federal jurisdiction. poverty reduction strategy that will align with and

High Stakes, Clear Choices: Alternative Federal Budget 2017 123

support existing provincial and municipal poverty re- 12 Campaign 2000. (2013). Canadas Real Economic Ac-
duction strategies. tion Plan Begins with Poverty Eradication: 2013 Report
Card on Child and Family Poverty. Toronto: Family Ser-
3 David Macdonald. Liberal election platform shifts
vice Toronto. Campaign 2000 has not been able to up-
the chips for the rich, takes a pass on the middle class,
date the data on the number of children with parents
Behind the Numbers blog post, May 5, 2016.
in the paid labour force due to discontinued surveys at
4 Florence Jaumotte and Carolina Osorio Buitron. (2015). Statistics Canada. The restoration of the long-form cen-
Inequality and Labour Market Institutions. Internation- sus should rectify this soon.
al Monetary Fund.
13 David Macdonald and Daniel Wilson. (2016). Shame-
5 Armine Yalnizyan. Proportion of Unemployed ful Neglect: Indigenous Child Poverty in Canada. Ottawa:
Canadians in Receipt of Jobless Benefits, 1942 to Canadian Centre for Policy Alternatives.
July 2014 (
14 Statistics Canada. Table 202-0802 - Persons in low-
status/512602190360633344), an update of her chart
income families, annual, CANSIM (database); Statis-
in 2009 report, Exposed: Revealing Truths About Can-
tics Canada. Table 202-0804 - Persons in low-income,
adas Recession, Ottawa: Canadian Centre for Policy
by economic family type, annual, CANSIM (database).
15 Canadian Human Rights Commission, Report on
6 For a full review of provincial social assistance rates
Equality Rights of People with Disabilities, (2012) pg 28-31
and eligibility rules, see: Anne Tweddle, Ken Battle, and
Sherri Torjman. (2016). Canada Social Report: Welfare In 16The CPP disability program could do much more
Canada, 2015, Toronto: Caledon Institute of Social Policy. to reduce poverty among people with disabilities. As it
stands, monthly benefit rates are too low (averaging $934
7 The Caledon Institute of Social Policy has produced
per month), the definition of disability is too restrictive
a helpful summary of all the poverty reduction plans
(only 1532% of those who self-identify as having a se-
in Canada along with their outcomes: http://www.
vere disability qualifysee Human Resources and Skills
Development Canada [2011], Summative Evaluation of
8 Hungercount 2016. Toronto: Food Banks Canada. the Canada Pension Plan Disability Program: Final Re-
port. pp. ii, 19), the contribution requirements are too
9 V. Tarasuk, A. Mitchell, and N. Dachner. (2015). House-
onerous (given the rise of precarious work), and people
hold food insecurity in Canada, 2013. Toronto: Research to
who temporarily drop out of the labour market due to
Identify Policy Options to Reduce Food Insecurity (PROOF).
a disability (as with many women who take time out of
Retrieved from: http://nutritionalsciences.lamp.utoronto.
the labour market to raise their kids) risk being left out
of the current expansion of CPP benefits.
10 Stephen Gaetz, Tanya Gulliver and Tim Richter. (2014).
17 See the Macroeconomics chapter.
The State of Homelessness in Canada 2014. The Home-
less Hub and Canadian Alliance to End Homelessness. 18 Employers who have been officially certified as pay-
ing the living wage for families, as calculated by living
11 This is measured by the after-tax LIM using custom
wage campaigns across Canada. For background, see
T1FF (a different source than the Statistics Canada data
Tim Richards, et al. (2008). Working for a Living Wage.
we use for the charts above). See A Roadmap to End Child
Vancouver: Canadian Centre for Policy Alternatives. Or
and Family Poverty: 2016 Report Card on Child and Family
Poverty (2016). Toronto: Campaign 2000.

124 Canadian Centre for Policy Alternatives

Public Services
Canadas population has increased by 43% since 1983, Hire a sufficient number of public service

but federal public service employment has only employees to provide quality service and enforcement
increased 3%. capacity.
Some 24,000 jobs have been lost since public service
cuts in 2010. Many of these lost jobs need to be Create more permanent employment opportunities
recovered if service levels are to be improved. in the federal public service.
Full-time employment in the federal government is
decreasing while term employment has increased by Create an infrastructure bank that is funded
9.3%, casual employment by 8.3%, and student through public borrowing, not P3s.
employment by 6.0%.
Every $20 billion of currently proposed P3
infrastructure bank funding would result in an additional
$6.2 billion in interest costs.


Background 2016 budget promised increased spending

on the public service, it hasnt kicked in yet.
Reversing Public Service Cuts
Fewer than 2,000 workers were hired be-
The population of Canada grew from 25.3 tween April of 2015 and 2016. This number
million in 1983 to 36.2 million in 2016, an is quite small compared to the 24,000 jobs
increase of 43% Meanwhile, the number
cut since 2010 by the former government.2
of federal public servants increased from The current government has an ambi-
250,882 in 1983 to 258,979 in 2016, an in- tious program, but it will be impossible to
crease of only 3.1%. From 1983 to 2015, Can-
implement without additional resources.
adas real gross domestic product (GDP) This is evident in some key departments. For
increased by 120.8%, while real federal pro- example, the government has made signifi-
gram spending only increased by 52.6%. The cant commitments to defence, peacekeep-
public service must grow if citizen demand ing, the environment, and employment.
is going to be met. Treasury Board statistics show that, as of
Over the last six years, the federal public April 2016, National Defence had only re-
service workforce has been devastated by employed 343 workers, despite cuts that saw
direct cuts and outsourcing. Although the 4,337 jobs eliminated since 2010. Environ-

High Stakes, Clear Choices: Alternative Federal Budget 2017 125

ment Climate Change Canada has elimin- system. The government conflated the re-
ated 1,103 jobs since 2010, 120 of those jobs quirement for technological change with
since 2015 alone. Despite the new Liberal opportunities to cut staff, with the former
governments commitment to do something government cutting over 1,000 compensa-
about climate change, the department had tion advisor jobs before the new pay system
not created any new jobs as of April of 2016. was even operational. When problems with
Despite a stubborn unemployment rate the new system became too obvious to ig-
that refuses to go much lower than 7% Em- nore, the government had to begin rehiring
ployment and Social Development Canada the trained staff it had previously laid off
had only restored about 605 of the 3,600 jobs to help fix the problems. The current gov-
cut by the former government as of March ernment admits that the decision to create
2016. The 2016 budget instigated an Em- savings by cutting people was a mistake in
ployment Insurance quality of services re- this instance.5
view, but the outcome of the review, which New technology is important and can
recommended increased staffing, have yet help public service workers to do their jobs,
to be seen. The governments own discus- but it is not a replacement for the people
sion document for this consultation shows who provide services. The 2016 budget an-
that, in the 2005-06 fiscal year, 6.3 million nounced that the government planned to
calls were answered by agents at Service consolidate human resources management,
Canada call centres, 5 million callers were financial management, and information man-
told to call back, and half a million callers agement platforms into one enterprise-wide
hung up while waiting. Ten years later, the system called the Back Office Transforma-
statistics are much worse: only 3.4 million tion initiative. In doing so it must improve
calls answered by agents, 10.3 million call- servicesnot eliminate jobs.
ers told to call back, and 1.1 million callers Overall, government compensation costs
hung up after waiting too long. The govern-
have declined by 1.3% or $120 million com-
ment simply has not hired enough people pared to last year. This is partly because the
to do the work. government is employing a precarious work-
The same inertia is evident in regula- force. The number of full-time government
tory enforcement. For example, the 2016 employees is decreasing. At the same time,
budget provided $38.5 million over two term employment has increased 9.3%, cas-
years to improve food inspection activities, ual employment by 8.3%, and student em-
but inspector staffing has not increased. As ployment by 6.0%.6 The Public Service Com-
of November 2016, in Western Canada only mission reports that in 2015-16 there were
one meat-processing shift in a 24-hour per- 4,533 indeterminate workers hired overall,
iod was scheduled for inspection. 4
not counting departures and retirements.
But the negative results of inadequate Over the same time there were 32,370 work-
staffing can be most clearly observed in the ers hired to fill jobs on a term, casual, or
problems associated with the Phoenix pay student basis.7

126 Canadian Centre for Policy Alternatives

These statistics do not capture the grow- trarily restricts profit, but we must question
ing use of contract employees who are hired why taxpayers should be asked to subsid-
through temporary staffing agencies. The ize private profits.
government doesnt keep track of these num- The governments fall 2016 Economic
bers except at a macro level. The Profession- and Fiscal Update proposed the creation of
al Services budget line in the estimates for an Infrastructure Development Bank that
the 2016-17 fiscal year, which outlines this would invest $35 billion in public money to
type of employment cost, was estimated at leverage private-sector funding to finance
$10.9 billion. When departments were asked $200 billion for building new revenue-gen-
to report on their use of contract employees, erating infrastructure. New infrastructure
most departments advised Parliament that is required and will have a positive impact
they didnt capture that information. Pre-
on GDP and job growth, and the concept of
carious employment particularly impacts an infrastructure bank is sound. However,
women and young people. the governments plan would allow the pri-
vate sector to propose the scope of the new
projectsallowing it to finance and oper-
Privatization and Outsourcing
ate them too. This privatization scheme is
Both the governments Economic and Fis- also eerily similar to those in the UK, where
cal Update and its Advisory Council on private, for-profit public service providers
Economic Growth have recommended that have replaced much of the public sector
public services be funded by private-sector and, like the big banks in 2008, have be-
investors. The current government has also come too large to fail.
maintained privatization proposals that the Recent Canadian government studies
previous government initiated. have called for the privatization of exist-
For example, National Defences Sus- ing public infrastructure like airports.11 Al-
tainment Initiative plans to transfer the though this might be an easy way to in-
support and maintenance of the military to crease government revenue, it is not in the
the private sector. One of the goals for this public interest. For example, airport priva-
privatization initiative, according to leaked tization would likely lead to regressive user
documents, is to make the defence industry fees and tolls.
more profitable, innovative, and competi- A Canadian infrastructure bank should
tive. This initiative appears to be modelled
be funded through government borrowing
after UK Defence Private Funding Initiatives and tax dollars. Proposals for the Nation-
(PFI), which are estimated to have cost that al Infrastructure Bank in the U.S.12 and the
country 50 billion in annual public pay- European Investment Bank13 could serve
ments over their lifetime, even though the as models. It would be funded from direct
original capital value for these projects was federal borrowing and possibly contribu-
only 9 billion. The current, publicly sup-
tions from other levels of government, who
ported system is criticized because it arbi- would also be bank shareholders. This in-

High Stakes, Clear Choices: Alternative Federal Budget 2017 127

itial pool of equity would provide the bank mandate is very limited, and whistleblowers
with leverage to issue bonds and borrow still lack the necessary protections against
from private sources. punitive retaliation. Review of the legisla-
Infrastructure funding should not be de- tion is overdue.
pendent on how much profit the private sec- The current government appears to be
tor can accumulate from the public. Insti- reversing some of the overt politicization
tutional investors are not providing money that occurred within the public service dur-
for free. Most of them expect a 79% rate of ing the tenure of the former government. In
return, whereas the government can cur- its latest fiscal update, the government an-
rently borrow money over 30-year terms at nounced some measures to protect the in-
a 1.9% rate. The governments current plan
dependence of Statistics Canada and the
for a privately funded infrastructure bank Parliamentary Budget Office. However, to
would cost an estimated $6.2 billion more date, the proposed measures do not go far
for every $20 billion in capital than if it were enough.
publicly funded. Auditor General reports in
The former government eliminated Gov-
many provinces have outlined the excessive ernment Consulting Services and Audit Ser-
public costs and lack of accountability with vices Canada, preferring instead to resort
private-sector infrastructure approaches. 16
to more expensive private-sector alterna-
tives for consulting and auditing services.
These two organizations, which were more
accountable to Canadians while remaining
Accountable government is essential to profitable, should be reinstituted.
democratic governance. A government isnt Despite the change in government, the
democratic simply because it is elected every internal structures that allowed the politi-
four or five yearsit must be judged by how cization of the public service during last
and what it does during that time. several years remain in place. Phoenix and
Employees must be able to alert the gov- similar problems in other jurisdictions are
ernment and other parts of the public ser- exaggerated by what appears to be a reluc-
vice about instances of mismanagement tance to speak truth to power. Persuasive
and financial irregularity. The government arguments for a transparent, binding mor-
recognizes this, but to date has done very al contract or a Charter of Public Service
little to change its accountability structure. between the public service, ministers, and
Countless systemic barriers remain in place parliament in support of the values of a pro-
and whistleblowers are still punished even fessional, non-partisan public service must
when they act in the public interest. The Of- be seriously considered.17 In addition, struc-
fice of the Public Sector Integrity Commis- tures need to be created to allow public ser-
sioner was created to investigate abuses vice employees and their representatives at
in 2007. Although existing whistleblowing all levels to have a meaningful, construct-
legislation is very good in some ways, its

128 Canadian Centre for Policy Alternatives

ive, and alternative voice in work process- Action: Review the moral contract between
es that impact the work they do. the government and public service employ-
ees at all levels with a view to ensuring long-
term, honest, and informed dialogue within
AFB Actions government departments and organizations
that is rigorous enough to withstand chan-
Action: Analyze all federal government ser-
ges in government.
vices to ensure that there are sufficient pub-
lic servants in place to provide quality ser- Action: Review the Public Service Integrity
vice and enforcement capacity to Canadians. Commission mandate and processes and
identify measures to address white-collar
Action: Encourage the creation of perma-
crime involving government contracting.
nent employment opportunities in the fed-
eral public service unless a strong case for
casual employment can be otherwise dem-
1 Government of Canada Demographic profile of the fed-
Action: Create a public infrastructure invest- eral public service 2015
ment bank funded through public borrow-
including authors calculations with updated numbers.
ing, not public-private partnerships. Fund-
2 Government of Canada Demographic profile of the fed-
ing currently directed to the P3 Canada fund
eral public service 2015
and PPP Canada Inc. will be redirected to fpfm/modernizing-modernisation/stats/ssa-pop-eng.asp
the infrastructure bank and other public or- 3 Employment Insurance Quality Review Discussion
ganizations that support and provide exper- Paper p. 11.

tise to other levels of government. 4 Johnson, Kelsey Philpott looking into meat inspec-
tion cutbacks, ipolitics, Nov 1, 2016
Action: Re-create internal public service
5 Aiello, Rachel. Phoenix We Have a Problem, The Hill
organizations like Government Consulting Times Nov 7 16
Services and Audit Services Canada to pro-
6 Parliamentary Budget Officer Expenditure Monitor
vide cost-effective, unbiased consulting and 2016-17 Q1 2.1 Operating pp 78
auditing services to the federal public ser- 7 Public Service Commission of Canada 2015-16 An-
vice, eliminating wasteful contracting ex- nual report p.10


Q-89 by Ms. Finley (Haldimand-Norfolk) April 7, 2016)
Action: Create a binding structure for con-
9 Sustainment Initiative Communication Strategies,
sulting with employees and their represent- KPMG, December 2015, p.15
atives on the details and operability of all
10 Dando, Chris, Privatization in UK DefenceA Trade
workplace change initiatives. No significant Union Response, 2015
change will occur until the results of con- 11 The Canadian Transportation Act Review (commonly
sultation with the workers who do the work known as the Emerson report)
ctareview2014/canada-transportation-act-review.html see
are thoroughly investigated and considered.
also Campion-Smith, Bruce Ottawa eyes airport sell-off to

High Stakes, Clear Choices: Alternative Federal Budget 2017 129

raise infrastructure cash Toronto Star July 3 2016 https:// 15 Macdonald, David Federal Infrastructure Bank Loans will Come At a Higher Cost CCPA Nov 2016 http://
12 Galston, William A. and Davis Koron Setting Prior-
ities, Meeting Needs : The Case for a National Infrastruc- 16 Sanger, Toby Ontario Audit Throws Cold Water on
ture Bank, Brookings, Dec. 2012 https://www.brookings. Federal Provincial Love Affair with P3s, CCPA Feb 2015
galston_davis.pdf ontario-audit-throws-cold-water-federal-provincial-love-
17 For a discussion on what this might look like, see
14 Sanger, Toby Banking on Privatization? Progressive
Ralph Heintzmans Renewal of the Federal Public Ser-
Economics Forum Oct 31,2016
vice, Canada 2020, June 2014

130 Canadian Centre for Policy Alternatives

Sector Development
Recent economic development in Canada Enhance investment, job creation, and

has focused on raw resource extraction with few output, and lower carbon emissions, in
additional value-added jobs. strategic sectors.
Establish a Green Development Bank that
Key sectors of our economy, like will allocate credit to innovative projects in
manufacturing, have been devastated with little targeted sectors of the economy.
active management to mitigate the losses
Establish a system of sector development
For workers and communities who rely on councils.
fossil fuel industries, climate action could spell Establish a just transition program for
the loss of well-paying jobs and key employers. workers affected by climate action.

Background hancing growth does not necessarily occur

spontaneously as a result of market forces.
The goal of sector development policy is to
Rather, it should be nurtured by active policy
incentivize investment, job creation, produc-
interventions. The toolbox used by these
tion, and exports in strategically important
other countries is diverse and creative, in-
and carbon-sensitive sectors of the economy.
cluding targeted subsidies, strategic trade
This means fostering a more desirable sec-
interventions, active industrial strategies in
toral mix of output and employment, with
high-tech industries, domestic procurement
a stronger presence for industrially dynam-
strategies, and even public ownership of key
ic, high-wage, innovation-intensive, export-
firms. These approaches have been more ef-
oriented sectors.
fective in promoting innovation, industrial
The successful state-led industrializa-
development, and export success than Can-
tion experience of several Asian and Lat-
adas laissez-faire approach.
in American economies in recent decades
While on one level the embrace of car-
suggests that innovative, productivity-en-
bon-mitigating public policy poses a threat

High Stakes, Clear Choices: Alternative Federal Budget 2017 131

to Canadas industrial base it can also be AFB Actions
viewed as an opportunity. The shift to a
Establish a system of sector
low-carbon economy will entail significant
development councils
new public and private sector investment,
the development and diffusion of new tech- The federal government will work with other
nologies and skill sets, and the expansion of stakeholders including provincial govern-
clean technology industries and non-emit- ments, labour organizations, industry as-
ting and renewable energy power sources. sociations, businesses, and universities
To help ensure that carbon-mitigating and colleges to establish a network of sec-
policies (see the Environment and Climate tor development councils. These councils
Change chapter) are beneficial, the Alterna- will be established for goods- and services-
tive Federal Budget incorporates the principle producing industries that demonstrate the
of just transition, which is recognized by following characteristics: technological in-
the International Labour Organization and novation, productivity growth, higher-than-
is explicitly referenced in the Paris Agree- average incomes, export intensity, and cli-
ment. Industrial restructuring can create
mate-ecological impact.
large-scale unemployment as well as in- The councils will identify opportunities
creases in poverty and social dislocation. to stimulate investment and employment
For workers and communities who rely on in Canada, develop and mobilize Canadian
fossil fuel industries, climate action could technology (especially emergent clean tech-
spell the loss of well-paying jobs and key nology developed in educational institutions
employers. From the history of mill closures for broader commercial applications), invest
in Canada we know the impact of restruc- in sustainable products and practices, and
turing on families can be devastating, with expand exports. In this way the councils
increases in addiction, domestic violence, would constitute the first step in rebuild-
divorce, and loss of property values, and ing Canadas broader national capacity for
ripple effects through communities affect- sector development planning, including
ing small businesses and other functions. skills training and workforce development.
A just transition is meant to mitigate or Each council will come up with a medium-
avoid these adverse consequences through range plan for developing its sector, including
a variety of measures, including labour mar- the commitment to a low-carbon economy
ket impact assessments, retraining, skills and just transition, with a list of actionable
upgrading, income support, relocation as- items and targets. The sector development
sistance, pension bridging, and employment council system will be supported with an
insurance flexibility, among others. When annual operating budget of $50 million to
developing a just transition strategy there is support the councils work, commission
no one-size-fits-all approach to all sectors. research, and perform other infrastructur-
al tasks. Actionable policy initiatives that
arise from their recommendations would

132 Canadian Centre for Policy Alternatives

be financed through other policy vehicles, ments balance sheet, hence the banks in-
including those listed below. itial capitalization of $2 billion will be re-
corded as an investment by government,
not a current expense. With interest rates on
Establish a Green
very-long-run government bonds at record
Development Bank (GDB)
lows, this is an excellent moment to estab-
To finance sector development strategies, lish the GDB. The stockpile of idle cash held
including proposals developed by sector by Canadian corporations on their balance
development councils, the federal govern- sheet is approaching $500 billion.2 GDB in-
ment will capitalize a new publicly owned vestments will help address the continuing
Green Development Bank (GDB). The bank failure of private enterprise to reinvest their
will have the power to create credit and al- surplus cash flow in job-creating Canadian
locate it to innovative projects in targeted projects, and provide credit at more afford-
sectors of the economy. It will also be au- able rates or fund projects that otherwise
thorized to take equity stakes in firms or wont get private sector financing.
projects with strategic value. The goal of
the GDB is different from that of the infra-
Enhance investment, job creation,
structure bank envisioned in the AFB Pub-
and output, and lower carbon
lic Services chapter, which is to reduce bor-
emission, in strategic sectors
rowing costs and increase funding for cities
that require loans for infrastructure projects. The sector development councils will begin
The use of publicly owned develop- the medium-term task of developing com-
ment banks has proven effective in sector prehensive strategies for strategic sectors.
development initiatives elsewhere. Can- In some sectors immediate measures can
adas GDB will be modelled on the public- be taken. The councils will also work to
ly owned German bank KfW (Kreditanstalt insure that historically underrepresented
fr Wiederaufbau), which was founded in groups (women, Indigenous people, racial-
1948 and has been hailed by financial pro- ized people, etc.) are provided opportunities
fessionals as one of the safest banks in the in these sectors. Measures will be funded
world. The GDB would evaluate and fund through a $450-million annual budget al-
potential projects on the basis of broader lotment supporting sector development in-
criteria (e.g., an integrated social cost-bene- itiatives (as well as through debt and equity
fit and environmental analysis) than would investments funded through the GDB). Sev-
normally be considered by private investors. eral immediate initiatives will be pursued
The GDB would have the mandate to in the following sectors.
cover its cost of capital on a net break-even
basis (across its portfolio of investments). National automotive strategy
The fair value of those investments will be The federal government has already estab-
reflected on the asset side of the govern- lished a $500-million five-year allotment

High Stakes, Clear Choices: Alternative Federal Budget 2017 133

to support investments in strategic auto- tor, and consolidated funding for Canadian
motive manufacturing facilities. However, space and satellite programs. Government
this money is not being spent because of will need to work more strategically and
restrictive terms and the lack of an appro- in active partnership with Canadian aero-
priate encompassing policy framework (in- space producers to identify and develop
cluding supportive trade and procurement the key products and innovations neces-
policies). In our plan, the government will sary to support high-skilled workers and a
work with industry, provincial governments, low-carbon future.
and Canadas scientific and innovation
stakeholders to implement a comprehen- Public transit equipment
sive and consistent auto strategy, includ- Overdue investments in public transportation
ing co-investments for major new projects systems are boosting the demand for buses,
in auto assembly and auto parts. The focus subway cars, and other specialty transporta-
of the strategy will be to foster an auto in- tion equipment. An integrated federal-prov-
dustry geared toward electric vehicles (EV) incial strategy will be developed to maxi-
and other high-fuel-economy technologies, mize the potential for new transit projects
including by supporting innovation and (partly funded through federal programs)
associated EV infrastructure. This will en- to utilize Canadian-made low-carbon trans-
tail co-operation and synchronization with portation equipment. This will require the
trades schools and labour unions to culti- preservation of domestic procurement au-
vate a new generation of skilled workers. thority in international trade agreements.
It will also involve co-ordination with the In the railway industry, booming traffic and
broader infrastructure transfer outlined in strengthened safety standards will motiv-
the AFB chapter on Cities and Communities. ate enormous investments in the next gen-
eration of accident-resistant rolling stock
Aerospace in coming years. The federal government,
Canadas aerospace industry is a leading through its regulatory powers in transporta-
spender on research and development and tion, can elicit commitments from railways
more than carries its weight in terms of inter- for strong Canadian content in those new
national trade, high-tech innovation (in- capital purchases.
cluding more fuel-efficient airplanes and
micro-robotics with neurosurgical applica- Oil and gas
tions), and high-quality employment. Con- It would seem a contradiction to intention-
tinued Canadian production and innovation ally develop an industry responsible for one-
must be fostered and encouraged through quarter of Canadas carbon emissions while
strategic support for new technology and simultaneously trying to reduce emissions.
product programs, procurement and offset However, there does not need to be a linear
provisions relating to large government pur- relationship between oil and gas employ-
chases in the aerospace and defense sec- ment and GDP, on the one hand, and oil and

134 Canadian Centre for Policy Alternatives

gasassociated emissions, on the other. As bound as the Canadian dollar returns to
part of a comprehensive climate strategy, historic levels and as the U.S. economy re-
public investment in the power grid of ma- covers. Support for the industrys sustain-
jor energy-producing provinces such as Al- able recovery will be provided through a
berta, Saskatchewan, and Newfoundland continuation and expansion of the Forest
and Labrador will facilitate the shift away Industry Transformation Program. For ex-
from coal-generated electricity in favour of ample, measures will be taken to enhance
hydropower. By increasing the connectivity technology upgrades, encourage the pro-
of Canadas east-west grid for non-emitting duction of value-added forestry, wood, and
power sources the emissions associated with paper products, pursue more energy con-
oil and gas extraction, transformation, and servation, cogeneration and other sustain-
transportation will be significantly reduced. able practices, and foster the new skills re-
Targeted investments in new technologies quired for sustainable forestry and forestry
to detect and monitor fugitive emissions products production.
(at wellhead, at processing facilities, and
in pipelines), and in newly mandated flar-
Establish a just transition program
ing techniques, will significantly reduce the
methane emissions associated with oil and Just transition is an approach to environ-
natural gas development. mental policy-making developed by the
labour movement that aims to minimize the
Green energy manufacturing impact of environmental policies on workers
Current initiatives in energy policy hold great in affected industries and communities, and
potential to stimulate the Canadian manu- to involve workers in decisions about their
facture of components for solar, wind, and livelihoods. Underlying the concept of just
other green energy systems. Federal policy transition is the principle that the costs of
can complement and support these initia- environmental adjustments should be shared
tives with a refundable investment tax credit across society rather than shouldered alone
for new capital and tooling in green energy by those most impacted by them.
manufacturing, and support for skills de- The resource sector includes both renew-
velopment for new green collar jobs. able resources like forestry and non-renew-
able ones like mining and natural gas. There
Forestry are key differences between these sectors,
The forestry and wood/paper industries suf- and we should be careful not to use one-
fered immense damage in recent years, due size-fits-all policy approaches. But in gen-
partly to the effects of an overvalued curren- eral a just transition is framed by the fol-
cy, the pine beetle infestation, and the se- lowing broad parameters.
vere downturn in U.S. residential construc-
tion that followed the 2008 financial crisis.
The industry is poised for a significant re-

High Stakes, Clear Choices: Alternative Federal Budget 2017 135

Just transition fund Income security
A standalone fund in support of the meas- Workers transitioning from one workplace
ures listed here will be created from rev- to another will require a secure source of in-
enue from the forestry, mining, and oil and come for a certain period of time, whether
gas industries and/or an enhanced carbon during unemployment or training. The Can-
tax. Changes to royalty regimes for non-re- adian Labour Congress supports the call to
newable resources could be an important protect income from one to four years, with
source of finance as well. continued qualification for employment in-
surance and the Canada Pension Plan/Que-
Advanced skills training programs bec Pension Plan (CPP/QPP), where employ-
A process for long-range, collaborative plan- ment income is less than what it was in the
ning for labour market adjustment must lost job or where there is no alternative work.
meet both economic and environmental/ In addition, further improvements are need-
climate needs. The financial responsibility ed to CPP to ensure that older workers can
for training and the up-skilling of current retire with dignity and retire earlier with no
workers should be shared between govern- significant loss of benefits (see Seniors and
ment, labour, and employers. Stronger gov- Retirement Security chapter).
ernment involvement in funding training
programs, leading to a recognized creden- Worker and family support
tial, is needed. A just transition strategy will need to look
beyond narrow skills development to include
Investing in apprenticeships things like counselling services. Since many
Many industrialized countries have incor- families depend on dual incomes, just tran-
porated some variation of a training levy sition should take into account the challen-
coupled with an exemption for those em- ges faced when one person loses their job
ployers who make a commitment to train- but the other does not.
ing. Quebec is a notable example in the
Canadian context, with a 1% training levy
on payroll tax for companies who do not Notes
train employees at a level equal to 1% of 1 ILO. 2015. Guidelines for a Just Transition Towards En-
their payroll. vironmentally Sustainable Economies and Societies for
All. Geneva: International Labour Organization.

2 CANSIM 378-0121.

136 Canadian Centre for Policy Alternatives

Seniors and
Retirement Security

Only 38% of workers belonged to a pension plan in 2015, Expand the Canada Pension Plan replacement rate

down from 46% in 1977. In other words, 11.7 million working to 50%.
Canadians had no workplace pension plan.
Just one in four private sector workers has a pension plan. Boost annual incomes for the poorest senior
singles and couples by $1,000 a year while extending
In 2004, 71% of private sector pension plan holders had a the income exemption.
defined benefit plan, the most dependable kind; in 2015,
only 45% of pension holders were so lucky. Index OAS benefits to the average wage and
Seniors poverty rates tripled between 1995 and 2014, salary.
from 3.9% to 12.5%.
Old age security (OAS) benefits are indexed to inflation,
not wage growth (which rises faster), meaning they become
relatively smaller over time.


Background younger families fell. Since 1995, however,

this gap has widened as income growth for
Though opinions differ on the well-being of
senior families slowed. Government trans-
todays seniors, there is considerable agree-
fers have grown only slightly in this period
ment that, after decades of improvement
and market income (employment earnings
in retirement security in Canada, growing
and private retirement income) has become
financial insecurity looms on the horizon.
the main source of income gains for senior
From 1976 to 1995, the median after-tax in-
families. The percentage of persons aged
come of senior families grew steadily as
65 and over with family income lower than
transfers from the Canada Pension Plan
half the adjusted median household income
(CPP), old age security (OAS), and the guar-
climbed from a historic low of 3.9% in 1995
anteed income supplement (GIS) increased.1
to 12.5% in 2014.2
During this period, seniors began to close
While too many seniors today struggle
the gap with non-senior families, main-
to make ends meet, retirement insecurity
ly because the median after-tax income of
is likely to worsen in the future. The per-

High Stakes, Clear Choices: Alternative Federal Budget 2017 137

centage of paid workers in Canada with a fit some 900,000 vulnerable seniors across
registered pension plan at work has fallen Canada.8
from 46% in 1977 to below 38% at the be- Last years budget also cancelled planned
ginning of 2015. The increase in temporary,
increases in the eligibility age for OAS, GIS,
casual, and contract jobs with no benefits and allowance benefits, all imposed by the
means that a growing number of workers previous Conservative government. These
cannot expect to have a pension at work in programs are the foundation of Canadas re-
the future. For many Canadians without a tirement income system, providing a secure
workplace pension plan, private retirement annual income to 95% of Canadian seniors
savings are insufficient to prevent a sharp aged 65 and older.9 OAS and GIS benefits de-
decline in living standards in retirement.4 pend on residency and income, rather than
There is nearly $1 trillion worth of unused participation in paid employment, and are
contribution room in registered retirement particularly important to women and low-in-
savings plans (RRSPs), about $40,000 for come seniors. In fiscal year 2015-16, transfer
each Canadian not currently maxing out payments through the OAS program totaled
their contributions. Unused tax-free sav- $45.5 billion, an amount nearly equal to the
ings account (TFSA) contribution room is Canada Health Transfer and Canada Social
also growing. 5
Transfer combined.10
Among the minority of workers covered The increase in OAS and GIS eligibility
by a workplace pension plan the number be- from 65 to 67 would have negatively impact-
longing to secure, predictable defined-bene- ed low-income seniors, especially women,
fit (DB) plans has been in near continual de- who rely disproportionately on these bene-
cline since 2005. Prolonged, exceptionally
fits. Cancelling the increase in the eligi-
low interest rates, uneven investment re- bility age for OAS will add about 1 million
turns, and increasing longevity have raised more beneficiaries to the program by 2030,
the cost and risk of such plans for employ- and about 185,000 more GIS and allowance
ers, many of which, especially global firms, beneficiaries that same year. Both changes
no longer sponsor them for employees. As a will increase total OAS program spending
result of falling pension plan coverage and by $11.6 billion in 2030, a modest increase
other forces, as many as half of middle-in- equal to 0.33% of GDP.11
come baby-boomer households can expect Old age security is indexed to inflation,
a significant drop in living standards in re- which means the benefits it pays out will like-
tirement. Still, several positive pension re-
ly lag behind earned incomes, as real wages
forms were achieved in 2016. The 2016 fed- generally grow faster over time. OAS bene-
eral budget increased the GIS top-up, paid fits are projected to fall from about 19% of
to the lowest-income single seniors, by $947 the average wage in 1966 to as little as 7.5%
per year, representing a 10% increase in the in 2076.12 The Liberal governments prom-
total GIS maximum benefit. This will bene- ise to index OAS benefits to a seniors index
based on a basket of seniors consumption

138 Canadian Centre for Policy Alternatives

goods, instead of the Consumer Price In- workers contributing at the increased rate
dex, will not prevent this relative decline. for even a few years before retiring will see
Canadas compulsory earnings-based a slight improvement in their CPP benefits
pension, the Canada Pension Plan (CPP), (see Figure 16).
remains stably funded. The Chief Actuary Canadians with above-average employ-
of Canada projects the combined employer- ment earnings will also benefit from the fact
employee contribution rate of 9.9% is suffi- additional CPP contributions will be tax-de-
cient to fund the plan at least through the ductible. Low-income earners will be able
year 2090. Virtually all workers in Canada
to take advantage of an enhanced Working
participate in the CPP (or Quebec Pension Income Tax Benefit (WITB). The WITB is a
Plan in that province): it is fully portable, refundable tax credit aimed at boosting the
inexpensive, and delivers a secure, predict- earnings of low-income workers. In order
able monthly benefit in retirement, protect- to reduce the impact of higher CPP contri-
ed against inflation, for the remainder of butions on low-earners, the WITB phase-
a retired workers life. The CPP is publicly in rate will increase slightly, the maximum
administered on a not-for-profit basis, with benefit will rise, and the reduction rate will
average annual costs that are a fraction of be reduced marginally so the benefit phas-
the average cost of saving for retirement es out completely at a higher income. For
through mutual funds (RRSPs, tax-free sav- workers with earnings under $20,000 a year
ings accounts, and registered retirement in- the WITB enhancement will fully offset the
come funds). 14
additional CPP contributions.16
In June 2016, the federal finance min- In a significant drawback, the govern-
ister and all provinces with the exception ments legislation expanding the CPP did
of Quebec reached agreement on a modest not extend the child-rearing and disabil-
enhancement of the Canada Pension Plan. ity dropout provisions contained in the ex-
The CPP retirement benefit rate, frozen at isting CPP benefit to the enhanced benefit.
25% of average lifetime pensionable earn- In 1977, the Liberal government of Pierre
ings throughout the 50-year history of the Trudeau allowed parents (predominant-
plan, will gradually rise to 33.3% in 2023, ly women) leaving paid work to raise chil-
beginning in 2019. In addition, over a two-
dren under the age of seven to drop out
year period beginning in 2024, the range of months of little or no income from the cal-
earnings to which the new 33.3% benefit rate culation of their retirement benefit. At the
will apply will rise by 14% (from $55,300 to same time, one could exclude years of CPP
$63,000 in 2017 dollars). This enhancement disability benefits from the existing calcula-
will have a noticeable albeit modest impact tion of overall CPP benefits. These dropouts
on the CPP retirement benefit of workers were not included in the enhanced benefit,
and the self-employed. Higher-income earn- which means, for instance, that the gap be-
ers and workers aged 25 or younger in 2025 tween mens and womens average retirement
will see the greatest benefit, although older

High Stakes, Clear Choices: Alternative Federal Budget 2017 139

Figure 16Additional CPP Benefit by Age and Income of Contributor (2016 Dollars)


$20,000 $40,000 $60,000 $80,000






25 Years Old in 2025 30 Years Old in 2025 40 Years Old in 2025 50 Years Old in 2025 60 Years Old in 2025
(40 Years Contributions) (35 Years Contributions) (25 Years Contributions) (15 Years Contributions) (5 Years Contributions)

SourceAuthors calculations

benefits will persist longer into the future, income for couples. Many provincial in-
and could conceivably increase. come top-ups and benefits and even muni-
A second serious concern is that the GIS cipal seniors support programs are geared
clawback will significantly reduce the in- to GIS eligibility, raising the spectre of fur-
come gains of higher CPP benefits for low- ther losses if higher CPP income results in
income workers. Currently, as income from disentitlement to GIS.
CPP and other sources grows, the GIS claw- The federal and provincial finance minis-
back imposes severe reductions in the GIS ters have committed to review the GIS claw-
benefits of low- and modest-income seniors. back on CPP survivor benefits, a monthly
From the first dollar of monthly income, benefit paid to the surviving spouse or com-
the maximum GIS benefit is reduced by 50 mon-law partner and dependent children
cents for every dollar of income from CPP, of a deceased contributor. Like all CPP in-
private pensions, employment insurance, come, survivor benefits are included as in-
rental income, and employment and self- come when calculating GIS benefits.
employment income above $3,500. This is In 1997, the CPP death benefit amount-
in addition to any reduction to the GIS top- ed to six months of retirement benefits, to
up, which is reduced by 25 cents for every a maximum of $3,850, adjusted upward an-
dollar of income in excess of $2,000 for GIS nually in line with wage growth. That year
single recipients, and $4,000 of combined the death benefit was reduced by over 30%

140 Canadian Centre for Policy Alternatives

to $2,500 and frozen so that its real value Eliminate pension income splitting, the
would diminish over time. benefits of which go overwhelmingly to
In October 2016, the Liberal government the top 10% of income earners (savings
also introduced legislation creating a frame- to government: $1.3 billion a year).17
work for single-employer target-benefit (TB)
pension plans in the federal private sector
Re-indexing old age security
and for Crown corporations. As a sponsor
of a DB plan an employer is legally obligat-
Index OAS to the average industrial wage
ed to fund the benefits so that pensions can
and salary instead of the CPI all-items
be paid in retirement. Already-earned pen-
index to ensure the flat retirement bene-
sions from past service are legally protected
fit keeps up with earned incomes (cost:
and cannot be retroactively reduced. Under a
$60 million in 2017-18, $65 million in
TB plan arrangement the legal obligation on
2018-19, and $70 million in 2019-20).18
employers is removed, and past and future
service benefits can be reduced, including
retirees pensions. The Liberal governments Increasing the GIS top-up
new legislation would also allow the conver-
sion of DB benefits to contingent TB bene- Increase the incomes of the lowest-in-
fits, including past service. This effectively come single seniors by $1,000 and sen-
allows employers to renege on past pension ior couples by $1,000 a year by boost-
promises and shifts pension risksfor both ing the GIS top-up.
past and future serviceentirely onto plan
Extend the GIS top-up income exemp-
members both active and retired.
tion by an additional $3,000 for single
seniors and $3,000 for senior couples.

AFB Actions Exempt CPP survivor benefits from the

calculation of income for the purposes
Revenue-enhancing measures
of determining GIS eligibility, and sub-
sequently review the GIS clawback in
Cancel legislation permitting retroactive
order to moderate or eliminate the im-
conversion of accrued DB pension bene-
pact of the clawback on other sources
fits to target-benefit pension benefits.
of income (total cost for all three meas-
Cap RRSP contributions, which dispro- ures: $1.99 billion a year).
portionately benefit high-income earn-
ers (at a federal cost of $16 billion), at
Enhancing the Canada Pension Plan
$20,000, a level that will affect only those
making $110,000 or more a year (sav-
Convene discussions with provincial and
ings to government: $1.0 billion a year).
federal ministers aimed at increasing

High Stakes, Clear Choices: Alternative Federal Budget 2017 141

Public Policy study No. 17. Also see Richard Shilling-
the CPP replacement rate from 33.3% to
ton. (2016). An Analysis of the Economic Circumstances
50% of earnings up to 114% of the years of Canadian Seniors. Broadbent Institute.
maximum pensionable earnings.
8 Government of Canada. (2016). Budget 2016: Growing
the Middle Class. Ottawa: Queens Printer.
Extend the child-rearing and disabil-
9 Statistics Canada, CANSIM table 111-0035.
ity dropouts to this enhanced retire-
ment benefit. 10 Receiver General for Canada. (2016). Public Accounts
of Canada, 2016: Volume 2. Ottawa: Minister of Public
Restore the CPP death benefit to the Services and Procurement.

level it would have reached in 2017 had 11 Office of the Chief Actuary. (2016). Actuarial Report
(13th) Supplementing the Actuarial Report on the Old Age
it not been reduced and frozen in 1997,
Security Program as at 31 December 2012. Ottawa: Office
and re-index the benefit to growth in of the Superintendent of Financial Institutions Canada.
average wages.
12Vettese, op.cit.

13 Office of the Chief Actuary. (2016). Actuarial Report

(27th) on the Canada Pension Plan as at 31 December
Notes 2015. Ottawa: Office of the Superintendent of Financial
Institutions Canada.
1 Statistics Canada. (2016). Seniors income from 1976 to
2014: Four decades, two stories. Canadian Megatrends. 14 Keith Ambachtsheer. (2015). Yes, Public Pensions
are Cheaper. Benefits Canada.
2 Statistics Canada, CANSIM table 206-0041.
15 Department of Finance. (2016). Backgrounder: Can-
3 Statistics Canada, Pension Plans in Canada Survey. ada Pension Plan (CPP) Enhancement.
4 Richard Shillington. (2016). An Analysis of the Economic 16 Department of Finance analysis.
Circumstances of Canadian Seniors. Broadbent Institute.
17 Department of Finance. (2016). Report on Federal
5 Statistics Canada, CANSIM table 111-0040; Jonathan Tax Expenditures: Concepts, Estimates, and Evalua-
Rhys Kesselman. (2015). Tax-Free Savings Accounts: tions. Ottawa: Department of Finance Canada; Macdon-
Expanding, Restricting, or Refining? Canadian Tax ald, David. (2016). Out of the Shadows: Shining a light
Journal. 63:4. on Canadas unequal distribution of federal tax expendi-
6 Statistics Canada, CANSIM table 280-0008. tures. Ottawa: Canadian Centre for Policy Alternatives.

7 Michael C. Wolfson. (2011). Projecting the Adequacy 18 Wage data from Statistics Canada CANSIM table 281-
of Canadians Retirement Incomes: Current Prospects 0063 and CPI from CANSIM 326-0020.
and Possible Reform Options. Institute for Research on

142 Canadian Centre for Policy Alternatives

Trade: International
Trade and Investment
Canadas current model of trade and investment Establish a new trade mandate grounded in the

liberalization has contributed to slow growth, rising inequality, principles of social, economic, and climate justice.
and overdependence on the volatile resource sector.
Reform the trade negotiation process so the public
New trade and investment agreements under consideration interest is represented at every stage of negotiations.
notably with the European Union and, through the
Trans-Pacific Partnership, with Asia-Pacific nations would Reject the investorstate dispute settlement model that
heighten these structural problems and offer very few new provides special rights to foreign investors to challenge
economic opportunities for Canadian exporters. government regulations.
Successful investorstate dispute settlement claims against
Canada related to resource management and environmental
policy continue to highlight the absurdity of giving foreign
corporations extra-legal rights to challenge public interest
decisions before unaccountable private tribunals.


Background Despite these apparently impressive

numbers, the post-NAFTA era of trade and
In 2015, exports of goods and services (pri-
investment liberalization has been character-
marily to the United States) made up 31% of
ized by slower economic growth, increased
Canadas GDP, and in total Canadas trade
wealth and income inequality, greater corpor-
flows are valued at more than $1 trillion.1
ate concentration, and the entrenchment of
Canadas dependence on trade is no acci-
Canadas environmentally destructive fossil
dent. For decadesand especially since
fuel sector at the expense of manufacturing
the 1990sthe federal government has
and other industries.3 Canada now imports
promoted international economic integra-
more than it exports and sends more money
tion through free trade agreements (FTAs)
overseas than it receives in foreign invest-
and foreign investor protection agreements
ment. Canadas current account deficit was
(FIPAs) that are ostensibly intended to en-
$65.7 billion in 2015. Put another way, trade
courage cross-border commerce for the bene-
and investment flows are actually acting as
fit of Canadians.2

High Stakes, Clear Choices: Alternative Federal Budget 2017 143

a drag on the Canadian economy on the or- dissatisfaction with international agree-
der of 3% of GDP. ments perceived to have benefited foreign
To make matters worse, among Canadas corporations and investors at the expense
main exports are crude oil, metal ores, and of workers. Economists and journalists con-
other raw or semi-processed commodities, fronted the reality that free trade has, in
while Canadas main imports are electron- fact, made many people worse off.5 Even
ics and other value-added manufactured Prime Minister Trudeau, in a recent about-
goods. Instead of leveraging our natural face, acknowledged globalization doesnt
resource wealth to sustainable, inclusive seem to be working for the middle class,
economic development, Canada remains for ordinary people.6 In spite of this rhet-
stubbornly entrenched in a resource-based oric, at the policy level Canada is ignoring
economic model that does not protect good the warning signs and is holding the course
jobs or create many new ones. Simultan- on free trade.
eously, our deep dependence on fossil fuel President Trump has vowed to renegoti-
exports and related investment undermines ate or withdraw from NAFTA, but the prac-
Canadas ability to meet our international tical outcome is unlikely to be a good one
climate change commitments (see the En- for Canada or for workers in any of the three
vironment chapter). countries. Congressional Republicans may
Beyond these standard economic indi- seize the opportunity to push for the same
cators, Canadas trade agenda undermines harmful provisions contained in the way-
the goal of shared prosperity in at least four ward Trans-Pacific Partnership. Despite
ways. First, international economic nego-
these risks, the Trudeau government has al-
tiations are conducted in secret but with ready telegraphed its openness to a NAFTA
close involvement from industry lobbyists. renegotiation, a move decried by opposition
Second, trade and investment agreements politicians on both sides.7
increasingly spill into regulatory areas only
loosely related to trade, such as intellectual
Canada-European Union
property rights and government procure-
Comprehensive Economic
ment. Third, these agreements typically
and Trade Agreement
give extraordinary rights to foreign corpora-
tions to sue governments for public interest After a decade of contentious negotiations,
regulations that hurt private investments. and in the face of huge public protests, Can-
Fourth, these agreements lack meaningful ada and the European Union signed the
protections for workers, the environment, Comprehensive Economic and Trade Agree-
or Indigenous rights. ment (CETA) on October 30, 2016. The final
Global faith in the contemporary free 1,598-page text, which was first released in
trade model waned noticeably in 2016. The February 2016, was supplemented by a Can-
U.K. Brexit vote and the election of Donald adaEU joint interpretive declaration, re-
Trump in the U.S. highlighted widespread leased in mid-October, that clarified some

144 Canadian Centre for Policy Alternatives

of the deals most contentious provisions One important element of CETA that
without actually changing the terms of the will not be applied on a provisional basis
agreement itself. 8
is its Investment Court System (ICS), which
Bill C-30, implementing legislation for includes some procedural reforms to trad-
CETA in Canada, was, at the time of writing, itional investorstate dispute settlement
being debated in the Senate. The European (ISDS) as found in NAFTA and other Can-
Parliament voted to ratify CETA at a plen- adian agreements. Under NAFTAs ISDS
ary session in February. All 28 EU member system, Canada has been sued more times
states must also ratify CETA in their nation- than either Mexico or the U.S. and has paid
al parliaments before the full agreement can out hundreds of millions of dollars in com-
come into forcewhich could take another pensation and legal fees. Canada recently
two to five years, even if significant political lost two disturbing cases involving an en-
opposition is overcome. In the meantime, vironmental assessment that turned down
most of the agreement will enter into force a massive quarry in the ecologically sensi-
on a provisional basis once it is passed in tive Bay of Fundy (the Bilcon case), and a
the Canadian and European Parliaments. moratorium on offshore wind farms on the
Among other issues, CETA precludes Great Lakes (the Windstream case).
the use of local preferences (i.e., buy lo- Though the ICS envisioned in CETA im-
cal rules) in government procurement con- poses stricter conflict-of-interest rules on
tracts, including at the provincial and mu- arbitrators and provides for the future in-
nicipal level. CETAs so-called ratchet and clusion of an appeals process, the EU agree-
standstill clauses for services and investment ments investment chapter still affordsand
threaten to lock in liberalization, including even expandsfundamentally unbalanced
privatization, in all sectors that have not rights to foreign investors, exposing a broad
been explicitly carved out by negotiators. range of public interest measures to chal-
CETA also extends pharmaceutical patent lenge and potential fines.11
terms, which will delay the availability of
generic drugs in Canada at significant ex-
The Trans-Pacific Partnership
pense to consumers and the public health
care system.9 The U.S.-led Trans-Pacific Partnership was
These costs are unlikely to be offset by signed on February 4, 2016 and each of the
newfound economic opportunities. New re- 12 participating countries has until Febru-
search from the Global Development and ary 2018 to ratify the deal. However, U.S.
Environment Institute at Tufts University President Donald Trump has withdrawn the
projects that CETA will put downward pres- U.S. from the TPP. Since the TPPs coming
sure on wages, leading to reduced average into force is ultimately contingent on the
incomes, increased unemployment, and United States, other parties to the agree-
greater socioeconomic inequality in Can- ment, including Canada, have little incen-
ada and the EU. 10

High Stakes, Clear Choices: Alternative Federal Budget 2017 145

tive to push ahead. The TPP, in its current at all, as it contains no provisions for the
form, appears to be dead. movement of goods. Instead, it is aimed at
Canadians are better off without the radically deeper services liberalization and
TPP. The deal would deepen and widen deregulation among the 23 governments (in-
Canadas exposure to investorstate dis- cluding the EU) negotiating the deal.
pute settlement cases, extend and entrench Based on leaked drafts, TISA could go
intellectual property rights that reduce ac- deeper than previous deals in areas such
cess to medicines, restrict Internet freedom, as regulatory co-operation, a euphem-
and stifle technological innovation in Can- ism for imposing corporate-friendly regu-
ada. The TPP would create new challenges latory models on member countries.14 The
for key Canadian industries, especially the secrecy, and undue corporate influence,
automotive and dairy sectors, where tens surrounding the development of such bind-
of thousands of jobs are put directly at risk. ing regulatory templates is a major concern
Contractions in those sectors would be felt for public interest regulators. Under TISA,
in related areas, such as the steel industry, Canadian governments may face additional
which employs 22,000 people in Canada pressures to deregulate and liberalize sensi-
and receives a third of its demand from the tive sectors such as energy, environmental,
Canadian auto industry. Furthermore, the and financial services.
agreement would expand corporate rights TISA negotiators missed a December
to import migrant workers in a largely de- deadline to conclude the talks, in part be-
regulated manner while failing to introduce cause of uncertainty related to the new U.S.
strong, enforceable labour rights. 12
administration. If and when the text is com-
Like CETA, the supposed economic bene- pleted it must be signed by each of the 23
fits of TPP ratification are meagre and un- negotiating parties before it can proceed
likely to be shared with most Canadians. to domestic ratification. The entire process
At least one study predicts net job losses could take several more years.
and reduced incomes in Canada as a result
of the deal.13 In Canada, a House of Com-
mons trade committee has been studying AFB Actions
the TPP for more than a year but has yet to
Action: Establish a new trade and invest-
make any recommendations to Parliament.
ment mandate for Global Affairs Canada
based on the principles of social, econom-
Trade in Services Agreement ic, and climate justice.
Result: Trade policy will strive to stimulate
Although less well known than CETA or the
inclusive economic growth and the creation
TPP, the Trade in Services Agreement (TISA)
of good jobs while safeguarding govern-
will likely be the next global battleground
ments ability to regulate for environment-
for trade and investment policy. Technic-
al and consumer protection, among other
ally, TISA is not a free trade agreement

146 Canadian Centre for Policy Alternatives

public priorities. Trade agreements will raise Notes
environmental and social standards to the 1 See Global Affairs Canada. Canadas State of Trade:
highest common denominator and be com- Trade and Investment Update2016. Minister of Public
Works and Government Services Canada, 2016.
patible with Canadas international climate
change commitments. 2 Global Affairs Canada. Foreign Investment Promo-
tion and Protection Agreements (FIPAs). Government
Action: Global Affairs Canada will develop of Canada. Last modified June 9, 2016.

a new approach and process for negotiating 3 Jordan Brennan. Ascent of Giants: NAFTA, Corporate
Power and the Growing Income Gap, Canadian Centre
international trade and investment treaties
for Policy Alternatives. February 2015.
based on the principles of transparency, in-
4 These patterns are explored in more detail in the 2016
clusivity, and accountability.
edition of the CCPA Alternative Federal Budget. For a
Result: The input of corporate lobbyists and deeper critique of the global neoliberal trade and invest-
other private sector actors will no longer ment framework, see Stephen Gill and A. Claire Cutler,
eds. New Constitutionalism and World Order. Cambridge
be valued above that from labour unions,
University Press, 2014.
environmental organizations, Indigenous
5 David H. Autor, David Dorn and Gordon H. Hanson.
groups, and other public interest actors in The China Shock: Learning from Labor Market Adjust-
the determination of trade policy priorities. ment to Large Changes in Trade. National Bureau of Eco-
nomic Research Working Paper No. 21906, January 2016.
Parliament and the Canadian public will be
able to review draft texts and openly debate 6 Ashifa Kassam and Laurence Mathieu-Lger. Jus-
tin Trudeau: Globalisation isnt working for ordinary
the merits of potential new agreements be-
people. The Guardian, December 15, 2016.
fore they are signed, ensuring a more bal-
7 Andrea Hopkins. Canada opposition scorns PM
anced outcome. move to negotiate trade with Trump. Reuters, Nov-
ember 16, 2016.
Action: Remove investorstate dispute settle-
8 Scott Sinclair. Flimsy CETA declaration leaves public
ment mechanisms from existing trade and
services, water policy vulnerable in Canada-EU deal.
investment treaties, including NAFTA, and Behind the Numbers, October 14, 2016.
cease negotiating this provision, which inter- 9 For a complete breakdown of CETAs potential im-
feres with governments right to regulate in plications, see Scott Sinclair, Stuart Trew, and Hadrian
Mertins-Kirkwood, eds. Making Sense of the CETA: An
the public interest, in all future trade deals.
analysis of the final text of the CanadaEuropean Union
Result: Foreign investors will no longer have Comprehensive Economic and Trade Agreement. Can-
special rightsbeyond those granted to adian Centre for Policy Alternatives, September 2014.

individuals under Canadian lawto chal- 10 Pierre Kohler and Servaas Storm. CETA Without
lenge public interest policies, regulations, Blinders: How Cutting Trade Costs and More Will Cause
Unemployment, Inequality and Welfare Losses. Global
or other decisions that undermine their in-
Development and Environment Institute Working Paper
vestments in Canada. Canadian energy and 16-03. Tufts University, September 2016.
mining firms will likewise lose the ability to 11 Pia Eberhardt. The zombie ISDS: Rebranded as ICS,
bully or punish foreign governments when rights for corporations to sue states refuse to die. Corpor-
ate Europe Observatory, March 2016.
controversial or environmentally dangerous
extractive projects are rejected. 12 For a thorough investigation of these and other con-
cerns in the TPP, see Scott Sinclair and Stuart Trew, eds.

High Stakes, Clear Choices: Alternative Federal Budget 2017 147

The Trans-Pacific Partnership: A Citizens Guide. James ment. Global Development and Environment Institute
Lorimer & Company Ltd., 2016. Working Paper 16-01. Tufts University, January 2016.

13 Jeronim Capaldo, Alex Izurieta, and Jomo Kwame 14 Global Justice Now & Attac Norway. A blueprint for
Sundaram. Trading Down: Unemployment, Inequality global privatisation: Why we need to stop the Trade in
and Other Risks of the Trans-Pacific Partnership Agree- Services Agreement. August 2016.

148 Canadian Centre for Policy Alternatives


There were 158 drinking water advisories in Strengthen water and wastewater

First Nation communities in fall 2016. infrastructure in municipalities and First
99% of lakes and rivers in Canada are not Nations.
protected by the Navigation Protection Act Fund robust environmental assessments
from potentially harmful activities. and strong water science and research.
The proposed Energy East pipeline alone, Safeguard the Great Lakes, groundwater,
of several new pipeline projects under and other freshwater sources.
consideration, puts 2,963 waterways at risk. Create a National Public Water and
205 billion litres of raw sewage was flushed Wastewater Fund to replace poor
into waterways in Canada in 2015. infrastructure.

Background munities reasonable use, and to make pri-

vate use subservient to community rights.
Canada needs to put water protection and
Beginning in 2010, the United Nations
water justice at the heart of all policies and
passed several resolutions recognizing the
practices affecting water sources and servi-
human right to water and sanitation. These
ces. The government could take a step in that
intentions were asserted again in the 2015
direction by recognizing water as a human
Sustainable Development Goals. The UN
right, a shared commons, and a public trust.
Human Rights Council has called on gov-
The notion of the commons asserts that
ernments to develop comprehensive plans
water is a common heritage to be shared,
and strategies for water management, as-
protected, managed, and enjoyed by all.
sess the implementation of these plans of
A commons framework requires a shift in
action, ensure affordable water services for
water governance to prioritize the human
everyone, and create accountability mech-
right to water, Indigenous water rights, and
anisms and legal remedies.
public participation in the decision-making
The Canadian government recognized
process. Public trust principles require gov-
the human right to water and sanitation at
ernments to protect water sources for com-
the 2012 UN Conference on Sustainable De-

High Stakes, Clear Choices: Alternative Federal Budget 2017 149

velopment, but it has yet to take action to of drinking water infrastructure is in fair to
make these rights meaningful. If Canada very poor condition.3 The total replacement
is back on the international stage, as the value of water, wastewater, and stormwater
Prime Minister has stated, now is the time assets is $575 billion, according to the same
to implement the human rights to water and report. The Federation of Canadian Munici-
sanitation with federal legislation and ad- palities (FCM) estimates the cost of replacing
equate funding. systems graded poor or very poor to be
about $61 billion.4 The Liberal government
committed $2 billion over four years for its
Current Issues new Clean Water and Wastewater Fund.
Over 205 billion litres of raw sewage was
Drinking Water in
flushed into waterways in Canada in 2015.5
Indigenous Communities
The federal government has introduced
Prime Minister Trudeau promised during the stricter wastewater standards, but again
2015 election campaign to end boil water ad- these did not come with adequate funds for
visories on First Nations within five years of municipalities. The FCM calculates that the
forming a Liberal government. There were regulations will cost at least $20 billion for
158 drinking water advisories on 111 First Na- plant upgrades alone. The federal govern-
tions in fall 2016. There are routinely over
ment should be working with provincial
100 water advisories in effect, with some governments to harmonize reporting re-
communities having lived under advisories quirements, with the goal of reducing the
for nearly 20 years. The Safe Drinking Water
cost of administering regulations.
for First Nations Act sets high standards for
water quality but fails to allocate enough
Sustaining Water Sources through
funding to meet them. In 2011, a government
Science, Research and Regulation
study estimated that $889 million is needed
every year for First Nations water and waste- The previous Conservative government
water facilities including projected operat- clawed back much-needed legislation and
ing and maintenance. (For further details funding for water and environmental pro-
see the First Nations chapter.) tection during its nine years in power. For
example, as a result of reforms to the Navig-
able Waters Protection Act (now the Naviga-
Public Water and Wastewater
tion Protection Act), 99% of lakes and rivers
are unprotected from activities that restrict
According to the 2016 Canadian Infrastruc- their navigability. The Fisheries Act was also
ture Report Card, one-third of Canadas mu- gutted by the previous government in such
nicipal infrastructure is at risk of rapid de- a way that it no longer protects fish and
terioration, 36% of wastewater infrastructure fish habitat. The Canadian Environmental
is rated in fair to poor condition, and 29% Assessment Act (CEAA) was weakened to

150 Canadian Centre for Policy Alternatives

the point that 3,000 environmental assess- Protecting Watersheds From
ments were cancelled in 2012, and many oil Extreme Energy Projects
and gas and other projects no longer trigger
Extreme energy projects are defined as such
environmental assessments.
because they require more water, energy,
Last summer, six federal ministers whose
and effort to realize, and are more destruc-
mandates include water announced they
tive to watersheds, the environment, and
would review legislation that was substan-
surrounding communities, than conven-
tially weakened by the Conservative govern-
tional energy development.6 The extrac-
ment. The reviews focused on the National
tion of extreme energy, such as fracked gas
Energy Board, the CEAA, the Fisheries Act
and tar sands oil, and their transportation
and the Navigation Protection Act (NPA).
via pipeline, rail and ships, leave munici-
The government created two expert panels
palities and Indigenous communities vul-
to examine how the National Energy Board
nerable to potentially high clean-up and
and the federal environmental assessment
health care costs.
process approve projects, an effort that in-
For fracking, these costs include drink-
cluded public consultations on the CEAA.
ing water contamination, poor air quality,
Two standing committeeson transport,
earthquakes, health risks, and increased
infrastructure and communities, and on
greenhouse gas emissions. Atlantic prov-
fisheries and oceansreviewed the NPA
inces have placed moratoria on fracking, but
and the Fisheries Act respectively. The expert
governments in Western Canada continue
panels and standing committees planned to
to endorse the risky practice. There are up
table their recommendations to the federal
to 20 proposals to build liquefied fracked
government in early 2017.
gas (LFG) plants along the coast of British
Starting in 2016-17, the federal govern-
Columbia, which would see supertankers
ment allocated $14.2 million over four years
transport fracked gas for export.
to the Canadian Environmental Assessment
The Conservative governments legisla-
Agency, and $197.1 million over five years to
tive changes to the NPA and CEAA eliminated
Fisheries and Oceans Canada to increase
and/or scaled back reviews of major pipeline
ocean and freshwater science, monitoring,
projects such as TransCanadas Energy East
and research activities. This money includ-
pipeline, Kinder Morgans Trans Mountain
ed $1.7 million over two years for the Experi-
expansion in B.C., and Enbridges Line 9 re-
mental Lakes Area. However, department-
versal in Ontario and Quebec. These pipe-
al reports on plans and priorities show the
lines would transport tar sands bitumen or
trend set by the Conservative government of
fracked oil, exacerbating climate change and
gutting funding for water programs at En-
putting water, food, and public health at
vironment and Climate Change Canada and
risk. The Energy East pipeline crosses 2,963
at Fisheries and Oceans Canada, as well as
waterways, but Transport Canada will not
for Transport Canadas Navigation Protection
Program, will continue in 2017 and beyond.

High Stakes, Clear Choices: Alternative Federal Budget 2017 151

assess its impacts on navigable waterways Water Withdrawals, Bulk Water
because the current NPA exempts pipelines. Exports and Trade Agreements
Despite promising to protect freshwater
Although Canada holds nearly 20% of the
and oceans, the Liberal government has ap-
worlds freshwater, only 1% of it is renewable
proved extreme energy projects like the Site
in that the water is replenished by rain or
C dam in B.C., the Pacific NorthWest LFG
snowfall. Each year Canada exports 59.9 Bm3
terminal, the NOVA Gas Transmission Ltd.
of virtual water (the amount of water used
fracked gas pipeline (owned by TransCan-
to produce or process a good or a service).
ada) and the Trans Mountain pipeline, sig-
That amount would fill the Rogers Centre
naling little change from the previous gov-
in Toronto to the brim approximately 37.5
ernments extractivist policies.
thousand times. Canada is the second high-
There is a significant lack of independ-
est net virtual water exporter in the world.8
ent scientific data on the consequences of
Bottled water companies such as Nestl
diluted bitumen spills in water, including
directly withdraw from freshwater supplies,
how the oil reacts in waterways and the chal-
including groundwater aquifers, which are
lenges involved in cleaning it up. The gov-
the main drinking water source for one-third
ernment must fulfil its commitment to ban
of Canadian communities. A 2015 study
tankers on B.C.s north coast as well as LFG
published in Nature Geoscience found that
tankers on the Pacific coast. Extreme energy
only 6% of groundwater around the world
projects like the Alberta Clipper pipeline,
is renewable.9 Recent droughts in Ontario,
owned by Enbridge, and unconventional oil
British Columbia, and Alberta have finan-
shipments in the Great LakesSt. Lawrence
cial impacts on farmers and the fishing in-
River Basin must also be banned.7
dustry and provide strong incentive to pro-
It is a myth that communities need
tect local watersheds.
to choose between water protection and
In the past, right-wing think tanks in
jobswe can have both. Mining, oil and
the United States and Canada have made
gas, and logging sectors made up only 1.6%
proposals to export bulk water from Mani-
of jobs in Canada in 2015. Creating one mil-
toba and Quebec. The federal government
lion sustainable climate jobs and ensuring
must ban all bulk water and bottled water
a just transition for workers currently em-
exports, as these projects are tremendously
ployed in the extractive sectors would not
costly, require vast amounts of energy, and
only protect waterways, but also grow Can-
pose serious threats to watersheds.
adas economy in sustainable way for future
Water in its natural state is excluded from
Canadas existing trade agreements. How-
ever, when water is commodifiedwhen
it is turned into a tradeable good or ser-
vicethese agreements kick in, providing
companies and individual investors with

152 Canadian Centre for Policy Alternatives

strong tools to undermine policy affecting AFB Actions
private water-related projects (e.g., waste-
Strengthen public and community
water treatment or bottled water plants).
water and wastewater infrastructure
For example, Lone Pine Resources is suing
Canada, under the investorstate dispute Create a National Public Water and Waste-
process in NAFTA, in response to Quebecs water Fund to replace poor infrastructure
moratorium on fracking in the St. Law- (cost: $6.5 billion a year for six years, $2.5
rence Rivera decision made, in part, to billion a year in year seven and beyond).
protect water.
Implement the Wastewater Systems Ef-
In 2011, Canada settled another NAFTA
fluent Regulation (cost: $1 billion a year
claim with AbitibiBowater (now Resolute
over 20 years).
Forest Products) in which the company a
claimed proprietary right to the water used Commit $100 million annually for water
at its former paper mill in Newfoundland infrastructure in small municipalities.
and Labrador. Provincial law only granted
Commit $75 million annually for ongoing
water-taking rights to the company on the
water operator training, public sector cer-
condition they were used to operate the mill.
tification, and conservation programs.
When AbitibiBowater shut down the mill,
those rights should have expired. In settling
the NAFTA claim, however, the Canadian Support and fund environmental
government may have implicitly recognized impact assessments
the companys private right to water.
Conduct assessments of all energy and
By excluding water from trade agree-
mining projects; include community con-
ments, and eliminating this lopsided in-
sultations and seek free, prior and in-
vestment protection system (see the AFB
formed consent of Indigenous commun-
Trade chapter), the government could avert
ities in the process (cost: $50 million).
threats to water sources in Canada and avoid
costly NAFTA challenges. The government Conduct an in-depth and independent
must also protect the rights of municipal- study of the effects of tar sands develop-
ities, provinces, and territories to regulate ment on the environment and health
water takings, and create new public mon- (cost: $30 million).
opolies for the delivery of water services and
Reinstate federal funding for water pro-
sanitation, without having to worry about
grams at the departments of Environ-
trade and investment challenges.10
ment and Climate Change Canada, Fish-
eries and Oceans, and Transport Canada
(cost: $50 million).

High Stakes, Clear Choices: Alternative Federal Budget 2017 153

Ensure the safety and sustainability Notes
of freshwater in Canada 1 Health Canada. Drinking Water and Wastewater.
Ottawa. Online at
Implement a comprehensive action plan promotion/public-publique/water-eau-eng.php#adv;
to protect the Great Lakes (cost: $500 First Nations Health Authority. Drinking Water Ad-
visories. Online at
million in year one and $950 million a
year in each of the following four years).
2 Health Canada. First Nations and Inuit Health:
Establish water quality and quantity Drinking Water and Waste Water. Ottawa Online at
monitoring frameworks; increase the
number of monitoring stations, train
3 Informing the Future: 2016 Canadian Infrastructure
staff in water monitoring, and create a Report Card. Canadian Infrastructure. http://www.
new water minister position (cost: $327.5

million over three years). 4Ibid.

5 Elizabeth Thompson. Billions of litres of raw sew-

Commit $3 million toward a groundwater
age, untreated waste water pouring into Canadian water-
protection plan and $1 million to com- ways, CBC, December 12, 2016.
plete a review of virtual water exports
6 Informing the Future: 2016 Canadian Infrastructure
from Canada. Report Card

7 Carol Linnitt. Why is Trudeau Backtracking On B.C.s

Oil Tanker Ban? These 86 Meetings with Enbridge Might
Help Explain. DeSmog Canada, October 20, 2016.

8 Nabeela Rahman, Maude Barlow, and Meera Karunan-

anthan. (2011). Leaky Exports: A Portrait of the Virtual
Water Trade in Canada. Ottawa: Council of Canadians.

9 Emily Chung. Most groundwater is effectively a non-

renewable resource, study finds. CBC News, Novem-
ber 15, 2015.

10 Scott Sinclair. (2015). NAFTA Chapter 11 Investor-

State Disputes to January 1, 2015. Ottawa: Canadian
Centre for Policy Alternatives.

154 Canadian Centre for Policy Alternatives


There are now more Canadians aged Create a Youth Labour Market

5564 than those aged 1524. Planning Board.
The youth (aged 1524)
unemployment rate in December 2016 Ensure that federally funded public
was 12.6%. works projects hire young workers.
Unpaid internships not associated with
degree completion are illegal in many parts Enforce federal regulations restricting
of Canada, yet an estimated 100,000 to unpaid internships and create 20,000
300,000 young people are working at six-month paid internship positions with
internships for no pay across the country. not-for-profit organizations.

Background The economy and labour market young

Canadians encounter when they begin look-
Canadas population is rapidly aging, with
ing for work is one that demands flexibil-
the median age rising markedly from 27.1
ity on the part of workers andbecause it
years in 1974 to 40.2 years in 2013.2 There
relies increasingly on part-time, short-term,
are more than seven million Canadians be-
and even unpaid labouroffers workers lit-
tween the ages of 15 and 29.3 In contrast, over
tle long-term security in return.44 This shift-
9.5 million Canadians are 55 or oldera
ing political economy of work in Canada is
quarter of the population. Our social and
an explicit choice made by government. It
economic policy often fails to address the
has affected young peoples ability to make
complex needs, desires, and challenges of
a living and engage in full civic participa-
young people. In light of the ongoing shift in
tion. This is having profound effects on our
demographics, especially with the boomer
social fabric.
cohort retiring, now is the time to focus on
Labour market regulation and policy
youth employment and, most importantly,
have not been updated to reflect the rise of
income and economic security.
precarious work targeting youth (i.e., con-
tract jobs, unpaid internships, etc.), the

High Stakes, Clear Choices: Alternative Federal Budget 2017 155

erosion of employment security, or the re- cial, financial, political, and cultural capital
trenchment of the social welfare system. to overcome barriers to employment, civic
Social policy is also lagging. Family and participation, economic security, family and
child care policy, for example, does not re- personal stability, and tertiary education.
flect the changing lives and livelihoods of This diversity demands either a litany of
young Canadians and their families, which targeted programs or one overarching and
are increasingly characterized by delayed very inclusive policy approach. The AFBs
transitions and reliance on two earners. recommendations lean toward the latter.
Many of those earners hold multiple jobs Too often, policy decisions are not taken
and service student debts while also pay- with any recognition of how a policys im-
ing for child care and housing. 5
pact will play out across the age spectrum.
With the average house costing $481,944 There is a lack of intergenerational equity
in Canada in 2016, young adults are also
in Canadian public policy right now, and a
squeezed by dramatic increases in home degree of intergenerational fracturing ap-
prices. They earn lower wages and have pears to be taking hold within the nation-
higher debts than their parents did at the al discourse and official politics. The AFB
same age, despite having more education. sees intergenerational equity as a necessary
Yet government spending on supports for lens for analyzing policy decisions. This
young families is a fraction of that on sup- approach presents an opportunity to craft
ports for older Canadians. Most young Can-
innovative solutions to pressing problems
adians are unable to set aside an adequate such as housing, health care, and child care.
portion of their earnings for retirement, The AFB takes the position that the most
periods of unemployment, and other fu- pressing policy issue for young Canadians
ture costs, but the policy that shapes pen- in 2017 is the ongoing erosion of income
sions and social assistance fails to reflect and employment security arising from the
these difficulties.
growth of precarious work, uncertain eco-
Further complicating the issue is the di- nomic conditions, and poor labour market
versity of young peoples pathways, needs, prospects for young workers. This is a broad
and challenges. Canadian society includes issue that encompasses the many more con-
young people from rural areas and low-in- crete challenges that dominate policy dis-
come families, those who leave school ear- cussionsprimarily debt, unemployment,
ly, Aboriginal youth, newcomer youths, underemployment, and non-participation
young people with disabilities, young par- in the formal economy or labour market.
ents, LGBTQ youth, racialized youth, home- Single young adults, couples, and young
less youth, and unemployed youth. In our families alike are dealing with an untenable
current economic structure, each of these mix of rising costs of living and decreasing
groups faces different barriers to secure, or volatile long-term earnings. This combin-
stable, and meaningful lives. Disproportion- ation impedes their ability to save money,
ately marginalized, they often lack the so- participate fully in civic life, socially repro-

156 Canadian Centre for Policy Alternatives

duce, find work in rewarding vocations, and Canada Employment Centres.11 While a
care for others. Youth Employment Strategy with a similar
Precarity in the labour market is much basic structure has survived, no significant
more than an issue of young peoples abil- adjustments have been made to respond to
ity to make ends meet; it is a strain on the the current rate of youth unemployment,
social fabric that casts a direct burden on the rise of precarious work, and the effects
our communities and government. Precar- of these shifts on young peoples security
ious work has been linked to anger, anxiety, and wellbeing. Also lacking are national
alienation, openness to antisocial currents, strategies focused on young workers from
and a rise in mental health issues among marginalized and equity-seeking groups.
youth. The policies recommended here are
One continuing threat to young peoples
intended to increase income and employ- economic security is the substantial rise
ment security, fighting precarious and un- and spread of unpaid internships. Unpaid
paid work by addressing the mismatch be- internships have been appearing in federal-
tween the current Employment Insurance ly-regulated employers with alarming regu-
(EI) program structure, active labour market larity and are often not connected to any fu-
programs, and the lives of young workers. ture paid work with the same employer or
Young Canadians are over-represented tertiary education program.12 Unpaid intern-
in jobs lacking permanence, benefits, ships that are not associated with degree
and stability. Moreover, recent declines completion are illegal in many parts of Can-
in the youth unemployment rate have ada, as these jobs violate minimum-wage
been traced to young people dropping rates and employment standards. The legal-
out of the labour market rather than ity of unpaid internships notwithstanding,
finding employment. This trend is espe-
the morality of expanding opportunities for
cially problematic given the fact that many unpaid work while actual paid opportun-
critical and expensive moments in the life ities dwindle is questionable. Unpaid in-
coursesuch as forming relationships, terns are still not adequately covered under
starting a family, tertiary education, and the Canada Labour Code, which covers fed-
home-buyingall typically occur in the erally-regulated employers, and often they
early stages adulthood. do not receive the same benefits and secur-
In the 1980s, during another high ity afforded to paid employees. The current
point in youth unemployment (when it government has not taken any action to ad-
surpassed 20%), the federal government equately protect interns under the Canada
introduced several measures under the Labour Code or enact proper enforcement
umbrella of a youth employment in- strategies since coming in to power.
itiative. These included wage subsidies
for employment-disadvantaged young
people, funding for community projects
with a youth focus, and youth units at

High Stakes, Clear Choices: Alternative Federal Budget 2017 157

AFB Actions the difference into the national fund for the
Young Workers Initiative.
The AFB will introduce a Young Workers In-
Result: Businesses that invest in train-
itiative. To acknowledge the protraction of
ing their employees will be more likely to re-
the so-called transition to adulthood, youth
tain those employees on a full-time, perma-
will be defined as people aged 1534. The
nent basis.
Young Workers Initiative will include the
following actions. Action: Create public works projects for
young workers. All federally funded infra-
Action: Create a Youth Labour Market
structure projects will reserve, at minimum,
(YLM) Planning Board. Working with rel-
one-quarter of the jobs they create for young
evant sectoral development councils (see
workers. A minimum of one-tenth of the
the Sectoral Development chapter), the YLM
jobs these projects create will be reserved
Planning Board will ensure that jobs have
for young workers from historically margin-
people and people have jobs, and that em-
alized and equity-seeking groups.
ployers take on more of the responsibility
for training employees. It will coordinate Action: Renew federal-funded intern-
via Statistics Canada and/or directly gather ships. The federal government will provide
quantitative data on job openings, labour funding to not-for-profit organizations for
market characteristics, unpaid internships, 20,000 six-month paid internships on an
and placement rates of universities, and annual basis. (Cost: $300 million.)
qualitative data on the labour market ex-
Action: Direct Statistics Canada to begin
periences of young people. A key compon-
collecting data related to unpaid intern-
ent of this activity will be providing addi-
ships, unpaid labour, and volunteerism.
tional federal funding to Statistics Canada
(Cost: $1 million.)
so that it can monitor unpaid internships on
Result: Provide the government with a
a monthly basis via additional questions in
more accurate picture of how much unpaid
the Labour Force Survey.
labour is being provided within the econ-
Result: With the causes identified, ap-
omy and labour market.
propriate responses to wage-suppression and
precariousness in the Canadian labour mar- Action: Direct Statistics Canada to begin
ket will be developed. (Cost: $30 million.) collecting data on the number of people
not in education, employment, or training
Action: Introduce a 1% training tax
(NEET). (Cost: $1 million.)
where all businesses with payrolls greater
Result: The NEET category is of serious
than $250,000 will be required to invest the
concern and needs additional study. Monthly
equivalent of 1% of their payroll in training
tracking will provide the government with
for young employees.13. Those who fail to
data about the size, composition, and length
meet that amount will be required to pay
of stay in the NEET category.

158 Canadian Centre for Policy Alternatives

Action: Implement reforms to the Can- an amended Canada Labour Code. It will
ada Labour Code to protect young workers also establish regional units within the
in precarious employment, including the Labour Program dedicated to proactive
following (Cost: $10 million): inspections and enforcement of the Can-
ada Labour Code.
Employment standards protections for
students, trainees, and interns: the 2015
amendments related to unpaid intern-
ships under Part III of the Canada Labour
1 Sagan, Aleksandra. (2013). Unpaid Internships Exploit
Code passed by the previous government
Vulnerable Generation. CBC News. July 02, 2013. Online
must be immediately undone. The Can- at:
ada Labour Code should be amended to exploit-vulnerable-generation-1.1332839

specifically prohibit unpaid internships 2CANSIM Table 051-0001: Estimates Of Population, By

and unpaid trainees, and to cover in- Age Group and Sex, Canada, Provinces and Territories,
Annual. Ottawa: Statistics Canada.
terns, trainees, and students under all
3CANSIM Table 051-0042: Estimates Of Population,
provisions granting protections related
By Marital Status or Legal Marital Status, Age, and Sex
to labour standards under Part III of the for July 1, Canada, provinces and territories Ottawa:
Canada Labour Code; Statistics Canada.

4 Vosko, Leah F. (2009). Managing the Margins: Gender,

Workers compensation coverage for stu-
Citizenship, and the International Regulation of Pre-
dents, trainees, and interns: Amend sec- carious Employment. Oxford: Oxford University Press.
tion 239.1 of the Canada Labour Code 5 Beaujot, Roderic. (2004). Delayed Life Transitions:
so that federally regulated employers Trends and Implications. Ottawa: Vanier Institute of
the Family; Clark, Wayne (2007). Delayed Transitions of
must provide students, interns, train-
Young Adults. Ottawa: Statistics Canada; See also the
ees, or learners who are absent from Generation Squeeze campaign at
work due to work-related illness or in- for many fact sheets detailing the rising costs and de-
clining incomes of young Canadians.
jury with wage replacement, payable at
an equivalent rate to that provided for 6 National Average Price Map. Ottawa: Canadian Real
Estate Association.
under the applicable workers compensa-
7 Carrick, Rob. 2012 vs. 1984: Young adults really do
tion legislation in the workers province
have it harder today. The Globe and Mail. May 7, 2012.
of permanent residence. The equivalent See also:
rate would be no less than the hourly
8 80 Per Cent of Young Canadians Concerned About
average industrial wage. Their Ability to Save for Retirement. BMO Financial
Group, 2013.
Proactive enforcement: The federal gov-
9 Standing, Guy (2012). The Precariat. New York: Blooms-
ernment, in partnership with its provin- bury Press.
cial counterparts, will develop proactive
10 Standing, 2012. Cf. Latouche, Serge. (2014). Farewell
enforcement plans to identify employ- to Growth. London: Polity Press; Klein, Naomi (2014).
ers that use unpaid interns and penal- This Changes Everything: Capitalism Vs. The Climate.
Toronto: Random House.
ize any practices that are illegal under

High Stakes, Clear Choices: Alternative Federal Budget 2017 159

11 On historical trends in youth unemployment, see evaluation/2007/sp_ah_211_05_04e/page01.shtml. On
Youth unemployment high, but lower than in most economic transformations in Canada and globally since
of 1990s. Labour Force Survey: 2011 Year-End Review. 1980, see Vosko, 2009.
Ottawa: Statistics Canada. For the Youth Employment
12 Tomlinson, Kathy. (2013). Bell accused of break-
Strategy (YES), see
ing labour law with unpaid interns. CBC News. June
enhancing-youth-employment-strategy. For an evalu-
24, 2013. Online at
ation of the YES program from 19972002, see Human
Resources and Skills Development Canada. (2004).
Youth Employment Strategy (YES) 19972002: Sum-
mary of Recent Summative Evaluation Results. Online 13 See Zizys, Tom. (2014). Better Work: The Path to Good
at Jobs is Through Employers. Toronto: Metcalf Foundation.

160 Canadian Centre for Policy Alternatives


The AFB starts from a set of social justice Lynell Anderson (Child Care Advocacy As-
valueshuman dignity and freedom, fair- sociation of Canada), Bilan Arte (Canadian
ness, equality, environmental sustainability Federation of Students), Morna Ballantyne
and the public goodembraced by repre- (Child Care Advocacy Association of Canada),
sentatives of a broad spectrum of civil so- Gary R.S. Barron (Westman Centre for Real
ciety organizations: labour, environment, Estate Studies, University of Calgary), Kirs-
anti-poverty, legal clinics, faith-based, stu- ten Bernas (Canadian Community Economic
dents, teachers, education and health care, Development Network), Michle Biss (Can-
arts, cultural, social development, child ada Without Poverty), Joe Boughner (As-
development, international development, sociation of Canadian Financial Officers),
women, disability, Indigenous. Lesley Bramhill (Canadian Arts Coalition),
The AFB would like to acknowledge the Jordan Brennan (Unifor), Michael Butler
very valuable financial assistance provided (Council of Canadians), Ryan Campbell
by the Canadian Labour Congress, Unifor, (Professional Institute of the Public Service
the Canadian Union of Public Employees, of Canada), Amy Casipullai (Ontario Coun-
the National Union of Provincial and Gen- cil of Agencies Serving Immigrants), Dan-
eral Employees, and the Public Service Al- iel Cayley-Daoust (Council of Canadians),
liance of Canada. Gavin Charles (Canadian Council for Inter-
This document was prepared thanks national Co-operation), Gerald Chipeur
to the generous volunteer contributions of (Miller Thomson), Tony Clarke (The Polaris
many people. Those contributions may or Institute), Eve-Lyne Couturier (lInstitut de
may not reflect the views of their organiza- recherche et dinformations socio-conom-
tions. They include: iques), Graham Cox (Canadian Union of Pub-

High Stakes, Clear Choices: Alternative Federal Budget 2017 161

lic Employees), Katie-Sue Derejko (Katrime Sarah McCue (Canadian Federation of Stu-
Integrated Health), Roxanne Dubois (Com- dents), Bob McGahey (Canadian Teachers
munication, Energy and Paperworkers Union Federation), Hilary Moore (National Farm-
of Canada), Judy Duncan (Acorn Canada), ers Union), Anil Naidoo (Canadian Nurses
Jackie Esmonde (Income Security Advo- Union), Michael Nicin (Canadian Associ-
cacy Centre), Nick Falvo (Calgary Home- ation of Retired Persons), Emily Norgang
less Foundation), Leilani Farha (Canada (Canadian Labour Congress), Tahnee Prior
Without Poverty), Sid Frankel (Campaign Robert Ramsay (Canadian Union of Pub-
2000: End Child and Family Poverty in Can- lic Employees), Fraser Reilly-King (Can-
ada), Martha Friendly (Childcare Resource adian Council for International Co-oper-
and Research Unit), Colleen Fuller (Phar- ation), Chris Roberts (Canadian Labour
maWatch), Avvy Go (Metro Toronto Chi- Congress), Bill Robinson (Rideau Institute),
nese & Southeast Asian Legal Clinic), Tam David Robinson (Canadian Association of
Goossen (Urban Alliance on Race Relations), University Teachers), Madeline Rodriguez
Joe Gunn (Citizens for Public Justice), Liyu (Association of Canadian Financial Officers),
Guo (Campaign 2000: End Child and Family Toby Sanger (Canadian Union of Public
Poverty in Canada), Joel Harden (Canadian Employees), Paul Shaker (Civicplan), Jim
Federation of Students), Guillaume Hbert Stanford (Unifor), Steven Staples (Public
(lInstitut de recherche et dinformations Response), John Sylvestre (Centre for Re-
socio-conomiques), James Hicks (Coun- search on Educational and Community Ser-
cil of Canadians with Disabilities), Cathy vices, University of Ottawa), Kaylie Tiessen
Holtslander (National Farmers Union), (Unifor), Erin Tomkins (Assembly of First
Megan Hooft (Canada Without Poverty), Nations), Brian Tomlinson (AidWatch Can-
Dennis Howlett (Canadians for Tax Fair- ada), Pat Van Horne (United Steelwork-
ness), Blanche Israel (Proscenium Transla- ers), Andrew Van Iterson (Green Budget
tion), Andrew Jackson (Broadbent Institute), Coalition), Mariaye Vickery (Art Gallery of
Shaker Jamal (United Steelworkers), Karin Greater Victoria), Howie West (Public Ser-
Jordan (Canadian Union of Public Employ- vice Alliance of Canada), Dan Wilson (As-
ees), Anita Khanna (Campaign 2000: End sembly of First Nations).
Child and Family Poverty in Canada), Eliza-
beth Kwan (Canadian Labour Congress), The dedicated staff, volunteers, and research
Jennefer Laidley (Income Security Advo- associates at the Canadian Centre for Policy
cacy Centre), Andrew Langille (Youth and Alternatives, as always, pull the AFB pro-
Work), Keith Lowe (CCPA Manitoba), Mike ject together with no deficit of enthusiasm,
Luff (Canadian Labour Congress), Emma generosity and good humour: Peter Bleyer,
Lui (Council of Canadians), Angella Mac- Simon Enoch, Lynne Fernandez, Kerri-Anne
Ewen (Canadian Labour Congress), Peggy Finn, Alex Hemingway, Trish Hennessy, Ig-
Mason (The Rideau Institute), Jessica Mc- lika Ivanova, Kaley Kennedy, Seth Klein,
Cormick (Canadian Federation of Students), Marc Lee, Katie Loftus, Molly McCracken,

162 Canadian Centre for Policy Alternatives

David Macdonald, Mackenzie Macleod, Kate Special thanks to this years fall intern
McInturff, Hadrian Mertins-Kirkwood, Tim Robin Shaban.
Scarth, Erika Shaker, Scott Sinclair, Stuart
Trew, Emily Turk, and Armine Yalnizyan.

High Stakes, Clear Choices: Alternative Federal Budget 2017 163