PRISONS OR POVERTY? THE CHOICE IS CLEAR

Slash or spend? Cut or conserve? The federal government will bring
down its budget on March 22. What should be in it? We ask five
prominent Canadian thinktanks to offer their fiscal fix for the coming
year.

The Harper Government (formerly known as the Government of Canada) has
made clear its intent to tighten spending in the 2011-12 federal
budget. Its goal is to vanquish the deficit, pegged at $55.6 billion
in 2010.

But is this objective achievable? The Parliamentary Budget Officer,
Kevin Page, has argued that several successive tax cuts have created a
structural deficit -one which won't be eliminated by slashing spending.

How has this happened? Since 2006, the Harper Government has drained
its own coffers. After taking office, it cut the GST by two percentage
points, creating an annual revenue loss of $12-billion. It trimmed
corporate taxes, from 18 to 16.5%, effective 2011. It made other
smaller tax cuts, including allowing pension income splitting for
wealthy seniors, which taken together deprive it of a significant
amount of revenue.

Yet the government somehow manages to find money for its favourite
expenditures: War and crime. Significant amendments to the Criminal
Code will cost Canadians an estimated $1billion annually over five
years. This, despite evidence that building massive prisons has
already proven ineffective and breathtakingly expensive in the United
States, because every dollar spent on prison is a dollar not spent on
the factors that contribute to criminal behaviour.

Instead of focusing on the consequences of crime, the Harper
government should tackle the causes. These include the problems of
persistent poverty and growing inequality. At last count in 2008, one
in ten Canadian children (610,000) and their families lived in
poverty. The picture is worse for First Nations communities, where the
number is one in four. Meanwhile, over the past quarter-century,
average incomes of wealthy Canadians increased by 16%, while those of
the poor dropped by 21%.

Ottawa can play a vital role in reducing poverty and inequality.
First, it should raise the Canada Child Tax Benefit from its current
maximum $3,436 to $5,000 per child. The CCTB is a geared-to-income
benefit that delivers the same amount to all families with the same
income, regardless of the sources of that income, location or family
type. Such an increase would raise the cost of the program from
$13billion to $17-billion a year. To make up this difference, we
recommend abolishing the flawed Universal Child Care Benefit and
non-refundable child tax credit.

Second, Ottawa should enhance the Working Income Tax Benefit for
low-and modest-income earners. The maximum annual payment in 2011 is
$944 for a single worker and $1,714 for a family. In recent years, the
Caledon Institute called for increased benefits and expanded
eligibility, and Ottawa improved the program. But many working poor
still do not qualify under the current design, so further improvements
are needed.

Third, the government must modernize Canada's social security system
to meet the demands of a changing economy and society -starting with
support for the unemployed. Currently, half of unemployed workers are
not receiving Employment Insurance (EI). Maximum weekly benefits
should rise to the pre-recession level of $570, representing 70% of
insurable earnings, up from the current 5 %. Uniform work requirements
would help restore the insurance base of the program. Ottawa should
also create a new program that pays temporary benefits to jobless
workers with low incomes who cannot qualify for EI, including the
selfemployed.

Fourth, the government should ensure that being disabled does not
equal being poor. Our current disability income system leaves more
than a halfmillion Canadians with severe disabilities on welfare -and
in deep poverty. A Basic Income Plan should replace welfare for most
working-age persons with severe disabilities, while
provincial/territorial savings should be reinvested in disability supports.

Caregivers to the disabled need support too: an estimated five million
Canadians provide care for family members suffering from physical,
cognitive or mental health conditions. To ease the financial burden on
caregivers, the government should reform disability income, enhance
work-related leave and provide additional compensation for disability
supports.

Finally, the government needs to overhaul Canada's retirement income
system. A two-fold reform is needed: Increasing the Guaranteed Income
Supplement for poor seniors and strengthening the Canada Pension Plan,
by raising the CPP earnings replacement rate by 1.5 times, from 25% of
maximum pensionable earnings to 37.5%. The earnings base used in that
calculation should also increase, by 50%. This CPP reform would mean a
real difference of around $4,500 a year to the average Canadian senior.

Poor literacy proficiency and low educational attainment are other
pressing problems. Ottawa should make good on its pledge to work with
First Nations leaders to improve education on reserve and bolster
high-school completion rates.

The Harper Government should use the 2011-12 budget to tackle Canada's
real challenges related to poverty and inequality, literacy and
educational attainment. Any new federal spending should invest in
people, not prisons.