Wednesday, January 28, 2009

Ideological Reluctance plus Political Expediency Equals Missed Opportunity

The January 2009 federal budget is about the same size that I was asking for (i.e. big enough to stimulate the economy and be consistent with other G-8 and OECD countries). And, I suppose that as a middle-class Assistant Professor and prospective first time home-buyer I should be delighted that I get to stay in the same tax bracket when my income pokes above $81,000, and that I can look forward to a little extra help when buying or renovating a home.

Nevertheless, I feel distinctly dissatisfied and uneasy about this budget. The $12 billion on infrastructure spending is called for, as is the $13 billion to free up credit, but what about human capital? There is a $1.2 billion shortfall in post-secondary funding compared to 15 years ago, but there wasn't a dime in this budget for that. There is no clear, targetted vision vision for re-tooling the economy for the 21st century economy and ecology, only a bunch of scatter-gun spending aimed at certain vote-rich constituencies. Can you imagine the withering sarcasm that conservatives would heap on an NDP budget that contained a DREE-sounding "Southern Ontario Development Agency" (SODA) dispensing a billion dollars over 5 years?

The $500 million spent on digitizing health care services, $225 million spent on broadband access, the $50 million for Quantum Computing and $35 million to promote graduate study are great, but one gets the feeling that those are just a few political targets among many, and not the focus of a future oriented strategy. Representatives of the Medical Research Community at CIHR and Genome Canada have pointed out that this budget provides money for buildings but not for research--a telling oversight. Is there anything here to relieve the staggering $13 billion in accumulated student loan debt in Canada? Expanding EI eligibility? Enhancing Early Childhood Education/childcare?

If a major reason that Canada lacks a surplus at the onset of this recession is the $12 billion in GST cuts that Harper has given us, and tax cuts are not the most effective stimulus, should more middle-class tax cuts be the answer?

Drop the SODA in favour of specific, targetted green and human capital infrastructure. Help home renovation that improves energy efficiency and reduces greenhouse gases, but skip the extra money for home buyers, cruise ships, and slaughterhouse expansion and put $2 billion dollars into post-secondary education: at least $1 billion of that for student debt relief and bursaries. Do as much as our American neighbours are for basic science and for alternative and green energy. And restructure and expand EI: the EI surplus is probably big enough to fund expanded EI eligibility. (A recent economic study showed that EI had the highest multiplier, of 1.61 for every dollar spent. Infrastructure spending came a close second at 1.59 but had two additional disadvantages: it was far slower to implement, and has its most concentrated effect in sectors that are not the hardest hit).

The General Lesson: A crisis is a terrible thing to waste. Invest more in people, and in the future.

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