Lifting the neo-con fog

>> The 1998 Alternative Budget works magic

by JACQUIE CHARLTON

A federal budget was unveiled this week, one touted as a budget for people rather than corporations, and filled with targets to reduce unemployment to five per cent by 2001, restore the safety net to pre-cutback glory, and reduce income inequality and taxes for those earning less than $60,000--all while eliminating the deficit and shrinking the debt.

Now in its fourth year, the Alternative Federal Budget calls for an economic strategy of lower interest rates and a slightly higher inflation rate to stimulate economic growth, bring money back into government coffers and get Canadians back to work.

Bruce Campbell, economist with the Canadian Centre for Policy Alternatives in Ottawa, says lower interest rates will stimulate the economy and build on the modest growth of 1997. "Last year, we finally had some moderate economic growth--about four-per-cent growth overall, and about 400,000 new jobs," Campbell says. "We need that for at least four years to get unemployment down as far as possible."

Corporate interests and the more moneyed components of the economy are in favour of tight anti-inflationary policies, because they keep wages low and buying power high. But, according to the Alternative Budget's creators, the anti-inflationary policies used by the Bank of Canada in the early '90s nearly propelled the economy into a depression. "It's easy to keep inflation low," Campbell says in criticism of the Bank of Canada. "You just raise interest rates until they're so high no one wants to borrow money, and you choke the economy." Interest rates were finally lowered before disaster could strike, however, which paved the way for the country's present economic growth and the sooner-than-expected fiscal dividend, Finance Minister Paul Martin is congratulating himself for. Canada's 1.5-per-cent inflation rate at the end of 1997 was among the lowest of all the industrialized nations and significantly below the U.S.'s 2.1-per-cent rate.

The alternative budget calls for a host of generous social reinvestment and policy initiatives. Among them:

* A three-year investment plan in environmental and social infrastructure and not-for-profit housing, creating over 150,000 additional jobs.

* A capital investment fund that would provide low-interest loans to Canadian companies.

* A redistribution of work time to cut down on overtime and provide work for unemployed Canadians.

* A loosening of restrictions on employment insurance so that 70 per cent of unemployed Canadians would be eligible instead of the current 50 per cent.

* The creation of a National Income Support Fund which would guarantee adequate income support without residency requirements or workfare.

* The creation of a National Housing Investment Fund and a National Child Care Fund to improve those services for low-income Canadians.

* Restoration of health funding to 1995 levels, with restrictions on privatization in that sector.

* The creation of a fund guaranteeing all Canadians a right to post-secondary education, including a student assistance program which does not leave students burdened with debt.

* Increased funding for employment programs for the disabled.

* The creation of a foundation that would provide stable funding for organizations working to give marginalized Canadians a voice.

* Increased funding for aboriginal peoples.

The budget's creators foresee paying for it all not only with the planned boost to the economy, but also through increased taxes on corporations and wealthier Canadians. Capital gains taxes would be raised to the rate of taxes on earned income and heredity taxes, corporate minimum taxes, and a one-time surtax on banks would be introduced. It also calls for a reduction of RRSP maximums, and an abolition of the surtax low-income Canadians must now pay.

The Alternative Federal Budget is the brainchild of more than 40 national and local community, environmental, labour and other organizations, all coordinated by the Canadian Centre for Policy Alternatives and CHOICES: A Coalition for Social Justice. Last year's alternative budget was endorsed by 164 academic political economists across the country.

Anyone interested in attending workshops on the Alternative Federal Budget should contact the Montreal Alternative Budget Group at 282-9631.