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The Progressive Economics Forum: Bank of Canada, Exports, and LMI

Much has been made about Stephen Poloz’s decision to abandon ‘forward guidance’ in Bank of Canada rate setting announcements for the time being. Critics bemoan the loss of direction from the Bank. But Poloz’s comments yesterday were chock full of guidance on how the Bank sees Canada’s economic situation.

Having been disappointed by the failure of Canada’s export sector to resume investment or show any signs of life, researchers at the Bank investigated the performance of 2,000 product categories, and found that about 500 of those had very nearly been wiped out following the 2008 – 2009 recession. Further investigation (Read more…)

The Progressive Economics Forum: Corporate Cash Stash Surpasses National Debt

Today’s National Balance Sheet Accounts indicate that the amount of cash held by private non-financial corporations in Canada soared from $591 billion in the third quarter of 2013 to $626 billion in the fourth quarter of 2013. Corporate Canada’s accumulated stock of cash now exceeds the federal government’s accumulated deficit, which was $612 billion at the end of 2013.

Corporate Canada’s cash stash had been on track to exceed $600 billion at the start of 2013, but Statistics Canada narrowed its definition of “total currency and deposits.” Even under the new definition, this hoard of dead money surpassed (Read more…)

The Canadian Progressive: Alternative Federal Budget would lift 855,000 Canadians out of poverty: Think Tank

by: Canadian Centre for Policy Alternatives | Press Release

CCPA Alternative Budget 2014

OTTAWA — The Canadian Centre for Policy Alternatives (CCPA) warns a so-called “do-nothing” federal budget is anything but, and is likely to worsen Canada’s slowing economy.

The CCPA’s 2014 Alternative Federal Budget (AFB) shows what the federal government could do if it decided to seriously address Canadians’ largest social, economic, and environmental concerns. It delivers a plan that would lift 855,000 Canadians out of poverty, reduce income inequality, boost the economy, lower unemployment to 5.4%—and still balance the budget one year later than the federal government (Read more…)

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The Progressive Economics Forum: Income Splitting Déjà Vu

This blog’s unofficial slogan has been “Tomorrow’s conventional wisdom, today.” After this week’s Conservative backpedaling on income splitting, we may need to change it to “Today’s conventional wisdom, seven years ago.” Or we could just stick with “You read it here first.”

My first-ever blog post, Income Splitting Redux, argued that this tax policy “would benefit an affluent minority at the expense of important public programs and create a disincentive for women to engage in paid employment.” I made the same case in an opinion editorial published in The Ottawa Citizen seven years ago this month (Read more…)

Political Eh-conomy: Another (budget) day, another dollar (cut): Canada’s slow-motion austerity

Yesterday’s federal budget was a non-event. Indeed, the no-surprises budget was itself no surprise: the Conservatives have long done their fiscal policy dirty work in omnibus bills and other dark corners scattered throughout the legislature, Crown corporations and federal agencies. This leaves the media circus of budget day a very stereotypically Canadian mix of polite and boring. Canada’s is a slow-motion austerity and the current budget is a continuation.

To be sure, there were big-ticket announcements: a few bridges for cities, some internet for rural areas, internships for the young, factories for auto makers… The government, after all, still does (Read more…)

The Progressive Economics Forum: Young Workers Needed So Much More from Budget 2014

Recessions are always harder on young workers, but we are nearly five years out from the end of the last recession and there is still no recovery in sight for young workers.

Between October 2008 and January 2014, there was an increase of 100,000 unemployed young workers (15-29), so that there are now 540,000 unemployed young workers. Even more startling, over 350,000 young workers left the labour force over that period. It has been estimated that between 150,000 and 300,000 young workers participate in unpaid internships each year in Canada.

The paid internships announced in this budget (some of which (Read more…)

The Progressive Economics Forum: Missing In Action: Federal Budget 2014

Here’s the first section of the budget summary and analysis I’ve prepared for CUPE.

The full version is on-line on CUPE’s website at http://cupe.ca/economics/missing-action-federal-budget-2014 together with CUPE’s press release at: http://cupe.ca/economics/federal-budget-2014-help-hurt-canadian

Missing In Action: Federal Budget 2014 CUPE Federal Budget 2014 Summary and Response

Conservatives ignore pressing economic needs with a Do-little budget

Using more of their doublespeak, the Harper government calls the 2014 federal budget “The Road to Balance: Creating Jobs and Opportunities.” Little could be further from the truth. Instead it’s a budget that glosses over the problems facing Canadian workers and continues to (Read more…)

The Progressive Economics Forum: Economists Against Austerity

Statement by 70 Canadian Economists Against Austerity

We, the undersigned, strongly urge the federal government to stop implementing fiscal austerity measures just to achieve its political goal of budgetary balance by 2015.

Since the mid-1990s, we have witnessed an era during which, under the influence of the same economists who had also advised the deregulation of the financial sector in the US, Canada, and other G20 countries, government policies brought the international economy to the edge of economic meltdown in 2008. After initially implementing a series of necessary fiscal stimulus measures to prevent the Canadian economy from slumping into depression, (Read more…)

The Progressive Economics Forum: The IMF and Canadian Fiscal Policy

This is quite interesting. If you read the short section from the recent IMF Staff Report on Canada under point 16, it is quite clear that the IMF Staff think that, with growth significantly under potential, the federal Budget should be brought back to balance more slowly than is now the plan. It strikes me as unusual that they flag up a difference of view with Department of Finance officials.

http://www.imf.org/external/pubs/ft/scr/2014/cr1427.pdf

The staff report goes a bit further than the resulting IMF recommendation that expansionary fiscal policy be used if the economic situation should significantly deteriorate.

 

The Progressive Economics Forum: Flaherty’s Funny Math with the EI Surplus

The Parliamentary Budget Office has come out with a report, suggesting that the Conservatives will likely balance the budget ahead of schedule. But, and it’s a big but, if there were no EI surplus, there would be no balanced budget in 2016. And the annual surplus in the EI Operating Account is no small potatoes – it’s forecast to be at least $3.5 Billion in 2014. But this forecast is based on an EI coverage rate of 41%, and recently it’s been more like 38%, meaning the 2014 EI surplus will probably end up being over $4 Billion.

(Read more…)

The Progressive Economics Forum: How Harper can avoid turning a Budget Implementation Bill into a Duffy budget bill

On November 25th, I made the following submission to the House of Commons Standing Committee on Finance regarding Bill C-4, Economic Action Plan 2013 Act No. 2, on behalf of the Canadian Centre for Policy Alternatives.

1. Introduction and Context

Thank you for the invitation to appear before the Committee, as Members of Parliament review the second budget implementation bill for the budget of 2013.

It is a particular honour to appear as a witness, since this committee will only hear eight hours of testimony from witnesses — including one hour from the Finance Minister — over (Read more…)

The Progressive Economics Forum: Canada’s (not so incredible) shrinking federal government

Buried in the federal government’s recent Update of Economic and Fiscal Projections are figures showing the Harper government is set to squeeze federal government’s role to the smallest it has been in seventy years. (Bill Curry at the Globe also just wrote about this, but without figures further back than 1958).

Total federal government spending as a share of the economy is projected to drop to a 14% share of the economy by 2018/19. This would be the lowest since at least 1948. Because the government has tied the federal public service up in knots, actual spending will likely (Read more…)

The Progressive Economics Forum: EI Premium Freeze Leaves Unemployed Canadians in the Cold

Today, finance minister Jim Flaherty announced a three-year freeze on Employment Insurance (EI) premiums, ostensibly because a stronger job market has alleviated the need for additional premium revenue.

Under the current policy, employee premiums were rising each year by 5 cents per $100 earned. Flaherty had announced this policy on September 30, 2010, when 1.5 million Canadians were officially unemployed. Since then, that figure has edged down to 1.4 million, hardly a breathtaking reduction in unemployment.

The number of Canadians receiving regular EI benefits has declined more sharply, from 709,990 to 512,280 between September 2010 and June (Read more…)

The Progressive Economics Forum: P3 or No Federal Funding: A Third Option for Regina Wastewater?

The Queen City’s water debate has boiled over since I last blogged about it. City Council decided to build a new wastewater-treatment facility as a public-private partnership (P3), but a group of concerned citizens gathered 24,000 signatures to force a referendum on whether to “publicly finance, operate and maintain the new wastewater treatment plant for Regina.”

There has been much debate about the City’s anti-democratic tactics as well as the substance of the P3 proposal. The City Clerk overstepped Saskatchewan’s Cities Act in a desperate attempt to invalidate the petition. Since Council conceded that it would hold a referendum, (Read more…)

The Progressive Economics Forum: What’s a Point of Corporate Tax Worth?

Tom Mulcair’s recently reiterated unwillingness to raise personal tax rates puts the spotlight on corporate taxes. But how much revenue is at stake?

Three and a half years ago, I posted a fiscal breakdown of Harper’s corporate tax cuts and how much revenue could be retained by stopping or reversing them. These figures, based on Budget 2009 projections, suggested that a point of general corporate tax would be worth between $1.9 billion and $2 billion today.

Budget 2009 envisioned a sharp, V-shaped recovery balancing the federal books in the current fiscal year (2013-14). Obviously, the economy, corporate profits and (Read more…)

The Progressive Economics Forum: Regina Hosed by P3 Waste Water

Regina City Council has voted to proceed with a 30-year public-private partnership (P3) in which a private company would design, build, finance, operate and maintain the city’s new waste water treatment facility.

The municipal administration’s rationale has been that, although a P3 will be more expensive than traditional public financing, it is required to access federal money from the P3 Canada Fund.

However, Hugh Mackenzie’s recent analysis concludes that the additional costs of a P3 would actually exceed the full value of the federal grant. As my dad noted with the following letter in Saturday’s Regina Leader-Post, that means (Read more…)

The Canadian Progressive: Federal Court dismisses former PBO Kevin Page’s application

By: Obert Madondo | The Canadian Progressive: The Federal Court of Canada has dismissed a request by former Parliamentary Budget Officer, Kevin Page, to clarify the office’s mandate. In his application, Page had also sought ”judgment affirming he has the jurisdiction to seek the information” relating to the $5.2 billion in fiscal savings outlined in [...]

The post Federal Court dismisses former PBO Kevin Page’s application appeared first on The Canadian Progressive.

The Progressive Economics Forum: Austerity through infrastructure Cuts: Budget 2013

One the most amazing things about this budget is that one of its three focuses will actually be the opposite of what it’s touting. You’ll likely hear that $14 billion will be spent on infrastructure over the next 10 years (actually you may hear much bigger numbers but they just re-announce existing programs like the gas tax transfer). What you won’t hear is that 75% of that money is going to spent on or after 2020. In fact, there will be an affective $1 billion cut to infrastructure transfers to the cities in 2014-15.

The Building Infrastructure

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The Progressive Economics Forum: Budget 2013: Time for a real action plan, not another ad campaign

It’s hard to get excited about Thursday’s federal budget. All signs point to an “austerity” budget, even though that approach has failed so spectacularly wherever it has been tried. Austerity is one of those zombie ideas that cannot be killed, roaming rampantly across the pages and screens of the mainstream media. The 2012 federal budget already took a big step down the path of austerity with major public sector cuts, largely focused on direct federal program spending with cuts around 7% (transfers to provinces and individuals, a large part of the federal budget, have largely been spared). About 19,000 federal

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The Progressive Economics Forum: The Alternative Federal Budget 2013 – Doing Better, Together

These are the remarks by David MacDonald and I prepared for the press conference marking the release of the AFB 2013 in Ottawa, March 12, 2013.

Time flies and our Alternative Federal Budget is now in its 19th year. Year after year it has shown that we can have a Canada where we all do better together.

This year the AFB is more inclusive than ever with 27 chapters written by over 90 contributors each laying out progressive policy ideas ready for implementation. All policy proposals are fully costed and put within a realistic macro-economic framework to determine

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The Canadian Progressive: Aagh, Harper Conservatives Nuked Democratic NDP Motion On Role Of PBO

By Obert Madondo | The Canadian Progressive, Feb. 14, 2013: Showing their burgeoning disdain for accountability, transparency, financial oversight and the independence of federal watchdogs, the Harper Conservatives earlier this week nuked a progressive NDP motion on the role of the Parliamentary Budget Office (PBO). The motion, tabled by the Official Opposition’s Finance critic, Peggy Nash, sought to extend the mandate READ MORE

Canadian ProgressiveCanadian Progressive: First Nation: Bill C-45 allows tar sands industry to destroy vital waterways and treaty rights

by Athabasca Chipewyan First Nation Today the conservative government tabled a new version of Bill C-45, a 443-page bill, to implement its federal budget. The Athabasca Chipewyan First Nation (ACFN) was taken aback by the proposed amendments stating they are indicative of the further erosion of Treaty rights in Canada. ACFN leadership is particularly worried about [...]

Canadian Progressive: Radicals for our coast: New Democrat MPs and community reps (VIDEO)

A must-watch video on the ongoing fight against Enbridge’s cursed pipeline. The following New Democrat MPs visit Terrace, Kitimat and Kitamaat, British Columbia, and discuss the energy giant’s proposed Northern Gateway Pipeline: Deputy Leader and Environment critic, Megan Leslie (Halifax); House Leader, Nathan Cullen (Skeena-Bulkley Valley); Public Safety & LGBTT critic, Randall Garrison (Esquimalt–Juan de Fuca); Western Economic Diversification Canada & Deputy Fisheries critic, Fin Donnelly (New Westminster—Coquitlam); and Alex Atamanenko (BC Southern Interior). RELATED: Wanted: “Radicals” Against Enbridge’s Northern Gateway Pipeline

The Progressive Economics Forum: GDP: Austerity Bites

Canada’s economy grew by half a percent in the first quarter of 2012, staying on pace for unimpressive annual growth of two percent.

The good news is that business investment was strong, at least on a seasonally-adjusted basis. (As usually happens in the first quarter, the actual dollar value of business investment actually decreased.)

Unfortunately, the other major components of GDP weakened. Government spending on goods and services fell by 0.4%, its largest quarterly decline since 1997. Fiscal austerity is starting to take a bite out of Canadian economic growth.

Consumer spending grew by an anaemic 0.2%,

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The Progressive Economics Forum: Energy McCarthyism 2: Hoback Attack

Saskatchewan conservatives are getting cranky. At last night’s Finance Committee meeting on the omnibus bill, MP Randy Hoback exposed me as being a New Democrat who writes “garbage” (as this blog’s readers already know).

Full video of the meeting is available here, with my presentation starting two hours in.