Harper’s budget: Money for war, nothing for E.I. or jobs

Socialist Worker issue 503 l 11 February 2009
by P.R. WRIGHT

The minority Harper government has accepted the reality of deficit financing, and is trumpeting its so-called stimulus package.

But even the most generous reading of the package suggests it is woefully inadequate—a mere 1.1 per cent of GDP, and just over half of the two per cent recommended by the International Monetary Fund.

It is also clear that any new spending that might benefit ordinary workers and their families will have to be forcibly pried from the Conservatives’ clamped fists. And not surprisingly, the federal Liberals have resumed their role in propping up the Tories and their Budget.

The 2009 Federal Budget introduced more broad-based tax cuts costing $2 billion per year and permanently reducing the future capacity of the federal government. According to the Canadian Centre for Policy Alternatives, “while those who recently lost their jobs get no support, the tax cuts announced in the budget are a windfall for the wealthy.”

Households with incomes over $150,000 per year will receive $900 in tax breaks. By contrast, low-income Canadians will receive a maximum of $33.

Even the much-touted home renovation tax credit will only accrue to homeowners wealthy enough to take advantage of it, since households must spend more than $10,000 on the project to actually receive the maximum $1,350 credit, and the project must be undertaken between January 27, 2009 and February 1, 2010.

And Harper made no effort to tie the tax credits to green initiatives to make homes more energy efficient. The $7 billion earmarked for infrastructure spending over the next two years is predicated on matching funds provided by provincial governments and the private sector.

For instance, the $4 billion Infrastructure Stimulus Fund must be matched by provincial governments before it can flow.
The $2 billion allocated for college and university infrastructure will only flow if the colleges and universities can match it dollar-for-dollar with funding from other sources.

Given the constraints on provincial coffers as unemployment rises, and given the profitability crisis in the private sector, it is doubtful whether the matching funding will materialize.

If this is the case, then the federal government will be absolved of any meaningful contribution to infrastructure spending.
On the environment, there is precious little. The biggest sums of money—$300 million and $250 million—were allocated to support nuclear energy and unproven carbon capture technology, respectively.

An additional $10 million was allocated to bio-fuel research. The development of bio-fuel has already threatened food production globally, and it produces as many harmful emissions in its production as combustion engines.

Nothing was allocated to wind power, which could both stimulate manufacturing and create jobs, while reducing dependence on carbon-emitting fuel.

And despite the hype, the Budget clearly included real dollar cuts. The Equalization program was reduced by about $7 billion (about the same amount as “allocated” to infrastructure spending).

In response, Conservative Newfoundland and Labrador Premier Danny Williams denounced the projected $1.5 billion loss to his province and demanded that Liberal Members of Parliament from Newfoundland and Labrador vote against the Budget, splitting the federal Liberals on Leader Michael Ignatieff’s first parliamentary vote under his leadership.

Finally, the Budget continues a freeze on public-sector workers and weakens pay equity claims.

Meanwhile Harper’s military budget remains untouched.

The nearly $500 billion allocated for military spending over the next 20 years won’t be affected by the economic crisis. The war in Afghanistan, which a majority of Canadians oppose, is already projected to cost $10 billion more than expected.

Harper and his Liberal backers have shown they expect workers to take the short end of the stick in this crisis. But there is an appetite across the country for a fight.

Expand Employment Insurance provisions, not the war: this is where the fight must now go.