A visionary stimulus package

It seems there is only one sure thing in Ottawa: whichever government survives in 2009 will spend into deficit to help Canadians weather the economic downturn.

During the election only seven weeks ago, every political party denounced the very intention of deficit spending. After their victory the Conservative government went to Washington for the meeting of the G20 countries. Ottawa then promised to join the largest economies of the world in spending our way out of the financial crisis – offering at least 3% of Canada’s wealth as economic stimulus. Worldwide, some $7.6 trillion has already been directed to this end.

Politicians speak of cutting corporate tax rates, bailing out the automotive and other industries, and propping up the financial giants. Are these the best, or only, options?
How can government best invest in order to help Canadians now, while creating the basis for a greener, more secure and just future?

A visionary stimulus package should be designed to limit unemployment and strengthen the stability of families, create a more ecologically sensitive infrastructure, and construct a fairer, thus more secure, global economy.

A federal poverty reduction strategy

Parliament unanimously agreed to eliminate child poverty in Canada by the year 2000. Yet, the poverty rate has only dropped 0.5% since this 1989 promise was made. One in every nine kids in our wealthy country still lives in poverty. While four provinces either have or are developing poverty reduction strategies, the federal government did not even include the word “poverty” in the November 19th Speech from the Throne. Without federal commitment, the goal of reducing child and family poverty will not be achieved.

A poverty reduction strategy could include an enhanced Child Tax Benefit, restoration and expansion of Employment Insurance, an increase in federal work tax credits, federal minimum wages of at least $10 an hour, a national “green” and affordable housing strategy, early childhood care and education, as well as special attention to the needs of Aboriginal, single parent and newcomer families. This type of spending would deliver a stronger fiscal stimulus than more tax cuts, since low income people tend to spend (not save) their money, and spend in local communities.

A Global Green New Deal

The economic crisis of 2008 is partially due to speculation and lack of regulation of financial markets. But the United Nations’ Environmental Program has identified “a wider market failure, triggering even deeper losses of natural capital and nature-based assets, coupled with an over reliance on finite, often subsidized, fossil fuels.” If governments only invest in “yesterday’s economy” of dirty, extractive industries, without improving the infrastructure of the modern, “green” future, the pattern of boom and bust will be repeated.

Government should direct investment towards climate change related infrastructure, whether in the automotive industry (accelerated development of new low emission vehicles), manufacturing (energy efficient appliances), housing renewal (energy efficiency retrofits), or visionary public transit (urban or inter-city rail). Investing in green technology can position Canada’s energy and manufacturing sectors towards the “first mover advantage” as the world moves to a low carbon future.

International Development

Spare a thought for what things are like for families living in the Global South: 923 million people are going hungry, and over 1.2 billion persons live in extreme poverty. Talk about a crisis!

Yet the issue seems unimportant to decision makers. Ottawa’s aid spending, promised to reach 0.7% of GDP by 2015, has fallen from 0.33% in 2005 to 0.28% in 2007. Is the problem that, in this economic downturn, we lack resources? Remember: the UK, the US and Canada will be spending US$150 billion this year on wars in Afghanistan and Iraq, almost double all budgeted aid from all donors in 2006.

The last economic downturn saw the Canadian poverty rate and global inequality rise. CPJ believes that Canada should avoid that from happening in 2009 by investing in income transfer programs to protect the most vulnerable, promoting green economic futures, and enhancing fairer international development.

This article in its original form appeared in the Western Catholic Reporter and the Prairie Messenger.