Looking for prosperity in all the wrong places

Clipart of somebody getting his pocket picked

PROSPERITY  FOR ALL CONTINUES TO ELUDE US. Income inequality just grows and grows. The report from the Liberal government’s Advisory Council on Economic Growth won’t change that. More’s the pity.

For more than a decade, Canadian workers and their families have been losing the battle against income inequality. Actually its been more of a slow, grinding retreat than a battle. We have been badly served by the current economic system, and by the business and political elites who rule over us.

We allowed ourselves to hope, when the Trudeau government was elected, that things would be different. The Liberals did claim, after all, that they would be champions of the middle class. Yet, when we look at the report from their Advisory Council on Economic Growth, it really is hard to see any difference. The Liberals do  propose a massive reskilling of the Canadian workforce. Otherwise their approach  
is indistinguishable from the one offered by the government they replaced.

The Council claims the root of our economic problems is that we are “unproductive” and “uncompetitive. They are wrong. Our root problem is that we simply do not get to keep enough of the wealth that our work creates. We need a compassionate solution to growing inequality: not simply having Canadians work harder, or faster, or longer.

Same old, same old

There are some good ideas in the Advisory Council report, but they are neither new nor revolutionary. Its recommendations to improve the prospects for under-represented segments of our labour force are tepid and underwhelming. One example is how the report ignores the fact we have made far too many promises and delivered far too little to Indigenous people and their communities, and to young people.

It’s time for some concrete action if we are serious about changing the status quo. Maybe the government could start by providing clean water, decent schools and mental health supports so that Indigenous youth get a fair chance to get to the labour market. Or by delivering appropriate child welfare services to 163,000 children on reserves, rather than defying two Human Rights Tribunal compliance orders to do so.

Instead of being wishy-washy about a national childcare program, the Council should be demanding one. Instead of merely proposing that young people be given more choices in higher education, it should be recommending bold, status quo-breaking measures—like free university tuition for any young or old Canadian who qualifies and who makes a commitment to stay and work in Canada after graduation.

Instead of timidly recommending that more low-income Canadians be permitted to earn a few extra dollars in minimum-wage jobs on top of their social assistance payments, the Council should have taken a big-picture approach.  The system and the rules of the game need to be re-engineered to give working Canadians and middle class families a bigger share of the economic pie. After all, we’re the ones baking it.

We would have expected more from the army of researchers and support that the government or the Advisory Council had to develop their long-range promissory notes to Canadians about their future job prospects. If we are really serious about creating a modern economy in Canada, one that delivers not just low-paying jobs but a higher standard of living, we need to tackle some of the income inequality issues head on, sooner rather than later.

Living wage, tax reform needed now

Josie Rudderham and Nicole Miller of Cake and Loaf Bakery
Josie Rudderham and Nicole Miller of Cake and Loaf Bakery. The bakery is among 30 organizations in Hamilton that have recognized the importance of paying a living wage. Photo by Tamara Kate Photography

To that end, there are two things that the Liberals can do right away in their up-coming budget. One is to increase the federal minimum wage to a living wage of $15 an hour. The second is to move quickly on taxation reform.

On its own, increasing the federal minimum wage would only raise the wages of about 100,000 low-income Canadian families. But it would send a signal to employers and to provincial jurisdictions that they should start thinking about doing the same. It’s not just symbolic; it’s a concrete first step, a move in the right direction.

Taxation reform is a bigger issue, but it has the capacity to start moving the gauge on income inequality right away. The so-called “middle class tax cut” that the Liberals are implementing is not good enough. What we need is a systemic and systematic tax reform that shifts the burden of paying for our roads and schools and hospitals from working families onto those who can well afford to pay a little more.

Two specific measures that would work are corporate tax reform and abolishing tax loopholes.

Part of the massive transfer of wealth away from the Canadian middle class has been due to twenty years of lowering corporate taxes. If Canada’s corporate tax rate were the same today as it was in 2000, we’d be collecting an extra $20 billion a year in taxes—enough to pay for a national child care program and free post-secondary education.

Tax loopholes cost the Canadian treasury over $10 billion dollars a year. And most of those tax breaks go to people who don’t need the tax break in the first place. One easy loophole to get rid of is the stock option deduction. It was originally designed to help start-up companies, but now it’s just another tool for corporate bigwigs to take home millions of extra dollars in tax-free income. Closing that single loophole could generate a billion dollars, which could be used to pay for any one of a number of ideas to reskill or retrain Canadians for the jobs and the economy of the future.

We need to create a path to prosperity for everyone in Canada, not just for possible investors or the people who already have most of the money. Companies and corporations may create jobs, but they do not create wealth. Wealth comes from our abundant natural resources, and from the ingenuity and labour and drive of Canadian workers. It’s long past time for all of us  to start receiving our fair share of the wealth and prosperity that we create.

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