Alternative Federal Budget 2004

Rebuilding the foundations
March 1, 2004

Paul Martin is hailed as a fiscal magician by turning endless deficits into endless surpluses. But the cupboard is always miraculously bare when it comes to addressing the things Canadians say are their priorities.

For ten years the Liberals have promised to address - then ignored - these priorities, then raided the cupboard to pay off the debt. The real magic of Paul Martin has been his ability, year after year, to hide the surplus then make it disappear.

For 10 years the Alternative Federal Budget has proven that the cupboard is far from bare. Using government numbers, and most of their assumptions, the AFB has consistently estimated the size of the surplus with greater accuracy than the Department of Finance.

Again this year the AFB is saying the surplus is bigger than the official forecasts. That means we don't need to raise taxes or go into deficit to fund the world we want. Our elected leaders just have to choose to use it, not squirrel it away for debt payment.

As we like to say, it's not just the size of the surplus that matters; it's what you do with it.

This is what the AFB would do: use the total $56.5 billion surplus ($8.3 billion this year plus $48.2 billion over the next three years) to rebuild our communities, providing badly needed repairs and expansion of the social and physical infrastructure that has been neglected and eroded for the past decade.

But this year we are also going to the heart of the political storm in Ottawa: the sponsorship scandal, phony contracts, and corrupt deals.

Last week, the papers characterized the sponsorship scandal as the perfect excuse to do what the Paul Martin Liberals were already most pre-disposed to do: tighten spending.

But Paul Martin has already served us up ten years of constraints. They did not protect us from corporate cronyism. And they did not prevent the sponsorship scandal.

His solution to prevent future misuse of funds--like the billions of new dollars about to flow to rebuild infrastructure--is to rely more heavily on private sector investors and service providers.

That's not a solution. That's a guarantee that we will have less public scrutiny over how our tax dollars are being used. And that means more, not less, scandal in the future.

The Alternative Budget says now is the time to protect ourselves from money laundering and corruption.

After a decade of passing the buck--but not the bucks--to the lowest level of government, it is time for a real new deal with cities everywhere.

Our plan would launch an investment strategy in hard and soft infrastructure, making sure that the basics all Canadians need are reliable and adequate-- things like roads and highways, water treatment and sewage systems, housing and transit, health care and child care.

Our plan would help Canadians to maintain and improve our standard of living, with a major initiative to train and upgrade students and workers and effectively deal with the upcoming wave of retirement that is about to wash over the labour market.

Following Romanow's lead, we would restore the historically fair federal share of money in public health care, and attach strings and conditions to that money so that it buys real change, not just lower budgetary deficits for the provinces. If more money is going to improve access, we need clear steps to get more health workers into the system, better integrate care, and control drug costs.

Paul Martin and his crew think the billions that targeted to rebuild Canada should flow through more public-private partnerships, P3s--in health care, and elsewhere.

We say make sure public investments stay where they are visible: on the public books. That's the only way the Office of the Auditor General can tell us where our tax dollars are going, and what we are getting for it. There is no Auditor General in the private sector.

But it's not just lack of transparency we should be wary of. It's the costs of these deals.

After putting off repairs and expansion of infrastructure for so long, these investments are going to happen, one way or another - publicly or privately.

Going public is cheaper, for two reasons. The government is the lowest risk borrower in the market, because it will never go bankrupt, it will always make its payments. Lowest risks yield lowest interest rates. Plus governments don't need down-payments, or equity capital, to borrow; everyone else does. With interest rates at 45 year lows, there is no better time than now to borrow. That's a rock solid case for why public-private partnerships are a waste of our hard-earned tax dollars.

It's time to slam the door shut on that kind of waste. This country needs to rebuild its infrastructure, it needs to rebuild Medicare. Those improvements are going to cost money. Let's get real: there is no free source of money. But there are real choices, and each choice has costs.

The AFB has always been about real choice, real accountability, real alternatives. It will be real magic if Paul Martin comes up with an alternative to his long-standing trick of hiding the surplus then making it disappear. We're hoping he will. The time to rebuild is now.

Armine Yalnizyan is a Toronto-based economist, and a Research Fellow at the Canadian Centre for Policy Alternatives.