There was much waving of the economic growth flag last week in Jim Flaherty’s budget. But, alas, no investments that would actually generate prosperity, particularly here in the GTA, where unemployment is stuck at 8 per cent, 17 per cent for youth.
That’s not to say large sums weren’t promised for infrastructure – which immediately led TTC chair Karen Stintz and Mayor Rob Ford to say new money should be earmarked for subways. Never mind that the TTC needs $200 million above what it currently spends just for repairs in the foreseeable future.
But the main point is that, in fact, there is little new money on offer. A careful look at the budget reveals the amount transferred to cities in 2014-15 has actually been cut.
And of the $47 billion allotted for infrastructure, about $30 bil is simply the re-announcement of gas tax revenues and other transfers to cities, albeit with new inflation adjustments.
Of the remaining amount, 75 per cent will be spent after the start of the year 2020. It’s of little help to cities today, though it’s great for Tories desperate to improve their dismal record of deficit budgets.
Of this money, the usual funding formulas would mean Toronto stands to get around $100 million a year, which at current costs would build about 800 metres of subway track annually, with nothing left for stations or new subway cars.
It’s a nice example of playing with figures, combining a number of previous programs and expressing a decade of funding in one number.
Indeed, using only this program to fund subway construction would mean it would take 30 to 35 years to build the full Downtown Relief Line, allowing for inflation.
So while every cent helps, this is a far cry from the National Transit Strategy advocated by mayors of Canada’s major cities and pushed by Olivia Chow. It’s sad, because well-planned infrastructure usually pays off one-to-10 when it comes to public and private dollars, meaning that for every $1 of public money put in, job and wealth creation opportunities (and tax revenue) increase by $10.
Investment in education also yields high returns, and while the budget puts some new cash in training programs, this again is mostly a reorganization of current funding.
Imagine instead, multi-billions of federal dollars going to colleges and universities for apprenticeship programs preparing people for the hundreds of thousands of jobs that go unfilled every year.
The key problem is that the government is trying to balance the budget with cuts only, and has considered only minor revenue options. One alternative the feds have avoided is a small tax increase for those who can most afford it, like the increase Ontario brought in last year when the Liberals agreed to an NDP demand for a new income tax bracket for those making over $500,000. That change will bring in a projected $400 million, and if implemented nationally would net upwards of $800 million to $1 billion a year while affecting less than 0.001 per cent of the population.
Another area the feds have ignored is corporate taxes. Because Canadian companies are sitting on upwards of $500 billion in cash, there is lots of room to raise taxes without affecting investment decisions, especially if we use the money to fund infrastructure and education, which helps business productivity.
Since the Conservatives came to power, corporate tax rates (down from 29.12 per cent in 2000 to 15 per cent in 2013, well below the average for the U.S. and Europe) have cost taxpayers about $120 billion. A 1 to 2 per cent increase, or further closing of tax loopholes, would, if properly invested, go a long way toward making Canada more competitive.
Unfortunately, this budget is bad news for the country’s largest city, the key to Canada’s economic future.
news@nowtoronto.com | @adam_giambrone
