The Green Party of Canada makes public Elizabeth May’s federal budget recommendations sent to Finance Minister Jim Flaherty as part of his Department’s pre-budgetary consultations. Mr. Flaherty solicits input from all MPs in the run up to the preparation of the federal budget.
The Hon. Minister James Flaherty
House of Commons
Room 435S,
Centre Block Ottawa, ON
K1A 0A6
Dear Mr. Minister,
As ever, I appreciate the opportunity to submit budgetary suggestions to the Department of Finance and the Privy Council. However, I have to register my disappointment with the tone of your letter (undated, but received in my office in December).
The “I will not entertain” and “I will reject any proposal” hectoring is not suggestive of a real consultation.
The letter is also insulting. I hope this was not your intent. Attacking the opposition parties in a letter ostensibly seeking consultation is very strange indeed. In my case, it is also uncalled for.
Perhaps other parties have made submissions without costing the proposals or finding places to cut, but that is not the case with the Green Party. I am attaching for your consideration the letter I submitted on behalf of the Green Party last year in which we set out the ways our proposal would assist you in combating the debt and deficit and building a healthy economy. While my party and I personally (along with the OECD, IMF, World Bank and International Energy Agency) support the need for carbon pricing, through a revenue neutral carbon charge or other mechanism, I have not urged those on you. I know the political imperative of your administration is not attuned to meaningful action on the climate crisis.
Nevertheless, your letter mentions a carbon tax as though other parties had urged this upon you. (“I will reject any proposal to impose new taxes on Canadians as recently suggested by the opposition – from increased business taxes to taxes on carbon.”)
Can you send me details of any proposals from opposition parties that have asked you to consider a carbon tax? I am unaware of any party other than the Green Party that supports a carbon tax. We are committed to ensuring we create a level playing field for the full range of renewable energy options by internalizing what is currently an externality -- carbon pollution. Pollution is a sign of market failure and should be remedied by government action. It would be good news indeed to learn of any other party making submissions to you in favour of a carbon tax.
Your letter asserts that we need to stay focused on “what matters to Canadians -- jobs and the economy.”
Canadians actually favour a “sustainable economy,” something that embraces a broader group of policy tools and goals than those contemplated in the budgets since 2006.
A focus on jobs should consider how current policies are failing. Unemployment remains persistent. The level of youth unemployment – at 14% -- is double the national average. Ignoring the plight of unemployed youth, particularly those who have left university with huge debt loads, is unacceptable. We question the reliance on the Temporary Foreign Workers Programme. Canadian youth and Canadian workers in general should have access to jobs, even if at a better wage level, before employers are allowed to opt for foreign workers. The system needs to be tightened up.
To create strong programmes, we need to examine whether current policies are working. Your administration has cut the corporate tax rate very deeply. Canada now has lower corporate taxes than any other country in the OECD. Former Governor of the Bank of Canada Mark Carney pointed out that the result of corporate tax cuts has been for corporate Canada to hoard funds. He called the billions of dollars held by corporations “dead money.” At the time, you agreed with him that it was time for corporations to do more and invest those monies in productive economic activity. In the Toronto Star August 28, 2012, you were quoted as saying, “at a certain point, it’s not up to government to stimulate the economy, it’s up to the private sector, and they have lots of capital.”
The current estimate is that approximately $600 billion is being held as “dead money.” This represents an astonishing 32% of Canada’s GDP. For purposes of comparison, the comparable amount of surplus cash held by US corporations is 9% of US GDP. Economists rightly point out that corporations are entitled to ensure healthy cash reserves, nevertheless, the cash reserves of Canadian corporations are excessive.
I urge you to re-consider the deep cuts in the corporate tax rate. We need to put that dead money to work. Surely, setting the Canadian corporate tax rate at the mid-range of OECD countries will keep us competitive while improving the tax revenue to the Government of Canada. We propose the 2009 level of 19%. That rate would make only a slight dent in the dead money of somewhere under $5 billion/year – leaving $595 billion in corporate cash reserves.
You have asked for ways to “eliminate ineffective spending.” In seeking ways to cut costs, I urge you to discontinue the practice of buying network TV time to broadcast government advertisements that are thinly veiled ads for your party. While final figures for spending in 2013 are unavailable, it is clear that spending was well above $100 million. This is a glaring example of wasteful spending.
Another place to cut is to reduce the use of external contractors for work that can be completed more cost-effectively by employees in the public service. In the last four years, there has been a nearly 28% increase in outside contracts by the federal government. You have a golden opportunity to reduce ineffective spending by clamping down on the $10 billion a year spent by your Cabinet colleagues on such things as IT assistance, management consulting and engineering. As well, as your administration has been laying-off key scientific capacity, the category of worker described as “information officers” has increased by 15%. Returning to the pre-2006 level of information officers should save funds.
As urged in our previous submissions, we urge cuts to the Prime Minister’s Office budget. A 50% cut would be a good start, leaving the PMO $5 million in unaccountable partisan spending and saving taxpayers $5 million/year. We urge you to end subsidies to the biotechnology industry, nuclear energy and asbestos. ($256 million). The Prime Minister pledged to end subsidies to fossil fuels at the G20 summit in 2009. The promise is unfulfilled, but will yield at least $1 billion/year in savings to the taxpayer.
While I know you have no appetite for large spending on stimulus programmes, relatively small amounts of money will make a big difference for victims of crime and their families. The funding of a DNA data bank (“Lindsay’s Law”) is widely supported and would be well-received.
Similarly, providing a tax incentive for purpose-built apartment rental units will be a positive move for the residential construction industry and will ease the crisis of access to affordable housing. Removing the deemed GST when newly constructed condominium units are rented for the short- term prior to sale will assist the housing industry, while creating more accessible housing in the rental market. Currently, developers have to hold condo units empty when the market is soft. To rent is to be treated as a “deemed” sale with a GST impact. This change would assist the economy at little cost to the bottom line of the Government of Canada.
To assist the trades and construction industry, as well as to reduce the carrying costs of homes while improving energy efficiency, we urge you to re-start the Eco-Efficiency tax rebates for homeowners.
Despite the fact that I would wish to bring forward a larger number of critical programmes, I am mindful of your injunction that you do not want “laundry lists.” The few spending proposals I have included are well justified, even when I constrain myself to those areas your administration’s talking points have signaled are important to you.
My best wishes to you for a happy New Year,
Elizabeth May, O.C.,
M.P. Saanich-Gulf Islands
Leader of the Green Party of Canada
