This will be of special interest to Canadians.  For others, it illustrates
the active role that Labour takes on social justice, health, and well-being
issues in Canada.

Andrew Jackson, [ [log in to unmask] ] who sent this to me, is senior
economist at the Canadian Labour Congress and contributed the chapter "The
Unhealthy Canadian Workplace" in my upcoming book, "Social Determinants of
Health:  Canadian Perspectives."
Visit the CLC website at
http://www.clc-ctc.ca/web/menu/english/en_index.htm for lots of great
stuff.

dr
--------------------------------------------
Canadian Labour Congress
2004 Federal Budget Analysis

Introduction

In our pre-budget submission, the Canadian Labour Congress (CLC)
emphasized the need for the federal government to make real commitments
to the modernization of the Employment Insurance program, to training
for workers, to the renewal of public infrastructure in our cities, to a
national early childhood education plan, to the maintenance and
improvement of our national public medicare system, and to helping
people in the developing world achieve their full potential.

We called for investment of the full federal fiscal surplus in programs
to create a fairer society and more productive economy, and to create
jobs in an economy now struggling with slow growth and rising
unemployment.  And we called for a real federal commitment to help the
provinces deal with the rising costs of health, education and social
programs.  (All provinces but Alberta will run deficits this year.)

Instead of major new investments, we got a budget which is focussed
obsessively on fiscal "prudence".  A number of small announcements ?
some of which are marginally positive ? conceal the real priority of
debt reduction and balancing the books at all costs.

Despite phoney projections, the surplus for this fiscal year (2003-04)
comes in at $5.5 billion (and may yet be higher), of which $1.9 billion
will be applied to debt.

Next year and the year after, there will be planned surpluses of $4
billion to be used for debt repayment (a $3 billion contingency reserve
plus $1 billion of "prudence' in revenue forecasts.)  These are probably
low-ball estimates.  There will be a real surplus of up to $10 billion
in 2004-05 according to the Conference Board of Canada.

The federal government will protect the federal surplus by its continued
refusal to enter into long-term, cost-driven federal-provincial
agreements in areas of critical importance to Canadians.

Most strikingly, for the first time, the federal government has set a
formal target of reducing the federal debt as a proportion of GDP ? from
42% to 25% within ten years.  Even if budgets were simply balanced (or
even if there were small deficits), the debt would continue to fall as a
share of GDP because of economic growth.  This new target will require
continued surpluses of $4 billion over each of the next two years, and
about the same afterwards.

Canada already has the lowest debt to GDP ratio of any large industrial
country.  Surpluses could and should have been used to invest in
programs which benefit our children, rather than used to slightly
speed-up the reduction of debt.  The payoff from real investments would
far outweigh simply paying off the bondholders.

This Budget promises future cuts.  There will be a "reallocation" of $1
billion per year from current programs to new priorities, rising to $3
billion per year within four years.  This is a significant amount given
that more than half of all federal spending is 'locked in' to income
supports and transfers to other levels of government.

Tax revenues will continue to fall slightly as share of the economy as
the already promised corporate and personal income tax cuts from Mr.
Martin's days as Finance Minister are phased in (together with some
minor new tax breaks for business.)

Program spending will actually shrink slightly as a share of the economy
? from 11.8% of GDP this year, to 11.7% in 2004-05 and 2005-06.  The
Liberal promise to re-invest one half of surpluses in programs was
broken before.  Now it has been completely abandoned.

The Budget does nothing to stimulate a slowing economy and create jobs.
Economic growth is forecast to be just 2.7% in 2004, and the national
unemployment rate is forecast to average 7.5%.

In sum, the Budget is not "prudent".  It goes beyond timidity to be
almost recklessly conservative.


Health

The CLC wanted the government to implement the Romanow vision for
sustaining Medicare into the future.  This would require additional
federal funding to raise the federal share to 25% of provincial health
care spending within three years in order to maintain a healthy public
system and to block privatization.  It would require expanding the
public system to include pharmacare and home care; primary care reform;
and the implementation of prescription drug reforms to limit the growth
of costs.

The Budget contains no increase in the planned level of federal cash
transfers to the provinces for health, beyond the one-time $2 billion
transfer from this year's surplus which was promised in last year's
Budget.  It leaves the provinces alone to contemplate expanding the
public system, with no permanent cost-sharing formula.  Talk of a new
deal with the provinces has come to nothing.

Federal silence on key issues facing our public health care system is
stunning and deeply troubling.  To protect Medicare from market forces,
we need a federal government with a stated commitment to expanding the
public system; to enforcing the Canada Health Act; to increasing the
federal share of health insurance funding on a long-term, sustainable
basis, and to standing up to provincial governments who threaten to
destroy Medicare through the development of a for-profit tier of care.
Rather than the kind of leadership needed to secure the future of
Medicare, Canadians are given the kind of leadership which paves the way
for privatization through federal support of Public Private Partnership
sponsorship programs.

The Budget does provide some new funds for public health initiatives,
including support for the new public health agency, funding to the
provinces for a national immunization strategy and public health
surveillance systems ($500 million is allocated from this year's
surplus).


Social Programs

The CLC has strongly supported the development of a national child
care/early childhood development program to give all children an equal
start in life, to support working families, to create good jobs in a
not-for-profit, quality care system; and, to eliminate a major barrier
to employment for single parents living in poverty.  After last year
budget's seed of $25 million, working people expected more.  But all
this Budget does is modestly accelerate the timing of the very modest
funds promised last year.  There will be a $150 million increase in
funding for ECE in 2004-05 beyond the already budgeted level.

There will be no increase to child tax benefits beyond those promised
last year, and thus no further action to deal with child poverty.

The CLC has called for improved EI benefits to protect part-time and
precariously employed workers.  More than 60% of unemployed workers do
not qualify.  The Budget does nothing on the benefit side, but promises
to balance the EI fund in 2004 and 2005 through further premium cuts.


Education, Training, Skills and the New Economy

To build a high wage/ high productivity economy, workers need fair
access to education and training.  Two decades ago, federal spending for
training and employment programs was $ 2.4 billion a year.  If that
funding had kept pace with growth in the labour force and inflation, it
would be today at over $6 billion a year.  The CLC called for a move
towards a real lifelong learning strategy through a training benefit
under EI; through further development of joint labour/employer training
infrastructure and initiatives; and though closer linkage of workplace
training and public educational institutions.

Despite the rhetoric on the need for lifelong learning, this Budget
disappoints.  There will be an education tax credit to cover costs of
books and materials for employed workers taking training which is
employment relevant.  And $15 million will be provided over two years
from a Training Centre Infrastructure Fund to match funds for new
machinery and equipment spent by union training centres.  While
worthwhile, only a small number of workers who want to upgrade their
skills will benefit.  There will be pilot projects of $15 million over
each of the next two years for language training for new immigrants and
$5 million to promote recognition of foreign credentials by Sector
Councils.

New funding for training is much smaller than increased support for
research and development initiatives, suggesting that this government
still does not really see skilled workers as a critical part of a
knowledge based economy.  The Budget provides $285 million in new
funding over the next two years to support university research, with a
focus upon the commercialization of research findings.

The CLC has called for a separate, significant transfer to the provinces
for Post-Secondary Education, tied to a national framework agreement to
secure broader access via lower tuition fees.  The Budget marginally
raises support to students from lower and middle income families, but
does nothing to ensure that the benefits will not simply be offset by
higher tuition fees.

There will be higher limits (from $165 to $210 per week) and broader
eligibility for Canada Student Loans, such that students from families
with incomes in the $60,000 to $100,000 income range will get some
support.  There will be grants of up to $3,000 for first-year students
from low income families (family income of less than $35,000 or so) plus
"Canada Learning Bonds" of up to total of $2,000 (paid in installments
to age 16) for children from low income families.  Children will have to
be consistently poor to get the full amount.  There will be bigger top
ups for RESP contributions by low and middle income families.  But in a
context of average debt of almost $20,000 for graduating university
students, all of this amounts to little more than a token nod to
equality of opportunity for children of working families trying to
access higher education.  Much of the modest benefit could be offset by
higher tuition fees if there is no overall federal-provincial agreement
on broadening access.

The Budget does a bit better for persons with disabilities.  There is a
small amount for provincial employment support programs for persons with
disabilities ($30 million per year); improvements to tax treatment of
disability expenses for persons with disabilities and caregivers to a
total of $50 million this year and $58 million next year; and grants of
up to $2,000 for students with disabilities.


Infrastructure Investment

The CLC called for major new funding for municipal and environmental
infrastructure; and no public-private partnerships for operation of
public facilities.  Now that the federal government has moved to accrual
accounting, the cost of infrastructure investment can, as should be the
case, be spread over future fiscal years.  Infrastructure investment
creates jobs, raises productivity in the private sector and improves the
quality of life.

Again, the Budget is disappointing.  It confirms that municipalities
will get full GST rebates, but delivers none of the promised share of
gas tax revenues.  (Further talks are promised.)  It slightly speeds up
the pay-out of last year's $1 billion infrastructure fund, but over five
years this will hardly address the huge, accumulated public
infrastructure deficit.  There is no additional federal support for
affordable housing, or mass transit, or for environmental infrastructure
(though there is some funding for environmental clean-ups of federal
sites, and commercialization of new environmental technologies).


Taxes

We called for a fair tax package ? a large inheritance tax and new top
income tax rate ? if needed to fund higher child tax benefits and social
investment.

On top of the phasing-in of cuts to corporate tax rates and the
phasing-out of the federal capital tax on large corporations, the budget
provides for faster write offs of new investments in computers and
telecommunications equipment.

We recognize the importance of new investment, but question the ongoing
cut to corporate tax rates.  Investment incentives would be even more
effective if rates were not being cut.

Defence and ODA

The CLC called for ramping-up promised increases in international
assistance; funding for AIDS in Africa; cancellation of developing
country debt; and a refocus of defence spending on peacekeeping.  There
is a small ($250 million) increase in overseas development assistance in
2005-06, earmarked to reconstruction in Iraq and Afghanistan, and small
additional amounts budgeted for peacekeeping operations.

Conclusion

The only real priority, the only real choice made in this Budget, was to
balance the books and pay down debt.  Large problems and investment gaps
have been responded to, if at all, through measures so modest as to be
little more than symbolic.  Nothing in the last Budget has been
significantly added to, which means that it will be up to future budgets
to really deal with health, education and training, and to invest in our
future.


CW:AJ:CH*opeiu-25?March 23, 2004

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