The Canadian Centre for Policy Alternatives (CCPA) recently released its “Alternative Federal Budget 2011 – Rethink, Rebuild and Renew – A Post Recession Recovery Plan”[1].  Releasing this document just one week before the Minister of Finance clearly indicates that the CCPA does not expect that  the Minister of Finance will include any of its recommendations in his 2011 Budget.  At this time, all of the decisions with respect to the 2011 Budget have been made - the Budget for all purposes has been “put to bed”.   Furthermore, CCPA did not provide any new status quo economic or fiscal projections.  Instead, they used, as their baseline for their policy agenda, the October 2010 Update of Economic and Fiscal Projections. Clearly, it is not, like the C. D. Howe Institute’s or the Fraser Institute’s reports[2], an alternative Federal Budget for 2011.

But this does not mean it is not important and should not be taken seriously. Quite the opposite; in fact, it should be taken more seriously than the reports of the C.D. Howe and Fraser Institutes because it represents alternative to the Harper Government on  the role of the federal government in the economy, something that is clearly lacking right now.  It calls for a significantly more active federal government in the day-to-day lives of Canadians.  This is in sharp contrast to the Harper Government’s philosophy of a much smaller federal government, with little or no intrusion in those roles and responsibilities assigned to the provinces in the Constitution. The Harper government’s views are clearly laid out in a number of documents issued by the Government since 2006.  “Clarity of roles and responsibilities is essential to ensuring that Canadians can hold governments accountable for their actions.  First and foremost, this requires ongoing respect for local autonomy and diversity and for the roles and responsibilities that other orders of government are best placed to perform, whether by virtue of their exclusive constitutional jurisdiction or because they have a comparative advantage in the delivery of programs and policies in particular areas”[3].

Although not a budget, the CCPA Report serves a very useful purpose, especially with a potential election on the horizon.  It recommends a number of policy initiatives, which it believes the federal government should actively pursue.  These recommendations are fully costed and funded through the imposition of new taxes (financial activities tax, high-income legacy tax, and carbon tax) and increase in the general corporate income tax rate to 21 per cent, eliminate of certain boutique tax credits and reductions in program expenses (defense among others).

We do not agree with many of the various proposals in the CCPA Report, nor do we provide any assessment on their proposals and their costs.  However, we do applaud the CCPA for putting out a very comprehensive document, detailing all of their proposed initiatives and their costs.  We also applaud them for identifying and detailing sources of funds for their policy initiatives. This is a pleasant change from the very general and not well thought out recommendations made by some other “think-tanks” in their pre-budget submissions. 

We do not, however, agree that the second round impacts, or multiplier effects, of their proposals be included as offsets.  Such analysis is open to interpretation and could be used to underestimate the net budgetary impacts.  As a result, their proposals increase the deficit by over $5 billion in 2013-14.

We would hope that in the upcoming election, whenever that may be, all of the political parties will be as careful in costing and sourcing their policy proposals as the CCPA This will allow for a much more informed debate on the role and responsibilities of the federal government. 

[1] Canadian Centre for Policy Alternatives www.policyalternatives.ca

[2] C.C. Howe Institute Commentary “A Faster Track to Fiscal Balance – The 2011 Shadow Budget”  and the Fraser Institute “Budget Blueprint: How Lessons from Canada’s 1995 Budget Can Be Applied Today”

[3] Restoring Fiscal Balance in Canada , Turning a New Leaf – Budget 2006 May 2, 2006