Speaking at the Broadbent Institute’s Progress Summit on March 28, Armine Yalnizyan said that the countries that are moving forward in the world are investing in their people through social programs such as childcare, municipal infrastructure and education. Canada is falling behind.

PUBLISHED March 28, 2015, THE HILL TIMES

Canada is falling behind in the global economy because it is not investing in its people, says economist Armine Yalnizyan.

Speaking at the Broadbent Institute’s Progress Summit on March 28, Ms. Yalnizyan said that the countries that are moving forward in the world are investing in their people through social programs such as childcare, municipal infrastructure and education.

“We cannot afford an aging population. We have the same dependency ratio as when I was a kid, except the people that weren’t working were kids, and the people that were working spent a fortune on building hospitals, schools, universities for growth. We are now the 11th largest economy in the world. We grew our capacity, human as well as what’s in the ground. That’s how we became the 11th largest economy in the world. In fact just a couple years ago, just before the recession, we were the eighth largest economy,” she said during a debate on whether spending or austerity is necessary in today’s economy. “We are falling rapidly because the countries that are gaining are investing in their people. Where is the investment in our people?”

Ms. Yalnizyan, an economist with the Canadian Centre for Policy Alternatives, was debating on a panel with former Cabinet minister Monte Solberg, former chief economic analyst at Statistics Canada Philip Cross and NDP candidate and author Linda McQuaig. The debate was moderated by Global’s West Block host Tom Clark.

Mr. Cross, a senior fellow at the Macdonald-Laurier Institute, said that investments in the country must be prioritized. “We have to set priorities. I agree infrastructure is needed, it helps job creation, businesses become more competitive, no argument there, but you can’t have that plus the daycare, plus everything else that’s been thrown out here. At some point, you’ve got to say, ‘Okay we’re going to focus on this and that,’” he said.

In response, Ms. Yalnizyan said the federal government does have to prioritize investments, and it should prioritize its people rather than business and trade in order to build a better quality of life for Canadians. She said consciously reallocating funding such as the Universal Child Care benefit, paying parents with children under six years old $160 and a new $60 payment for children six to 17, is an example. She noted that the measure is not actually a benefit because it does not offer childcare and said that repackaging the funds available now toward people and programs that serve Canadians’ interests would go a long way.

“Infrastructure money is being spent by the federal government, on building prisons, building bridges, building ports, on doing everything for trade because do you know what the hallmark of this government is? This government loves to say, ‘It’s not my job, it’s the provinces’ job.’ When it comes to municipal infrastructure, it’s the municipality’s job. When it comes to rebuilding the economy, it’s the private sector’s job. Oh wait, the private sector isn’t going to do it, it’s exports’ jobs. It’s anybody’s job but theirs and frankly they’re writing themselves out of a job description while they’re bringing themselves deeper and deeper into our lives,” she said. “It is a god-awful combination.”

Mr. Solberg said there is a role for governments in society, even conservative ones, but that the government should not be telling Canadians what they should be doing with their money. It’s why he’s in favour of tax breaks and giving money back to families that can use it toward things such as mortgage payments, groceries and gas for their car.

“I like the idea of limiting government. Government understands that there are limits to its competence in investing in some areas and that the private sector is better at doing some of these things than government bureaucrats in some cases for individuals or families. There’s no question in my mind that that’s true,” he said. “If you don’t think it is, I would say do you like sending money to Stephen Harper government or Justin Trudeau government perhaps, as opposed to keeping it and giving it yourself to the Broadbent Institute?”

Ms. Yalnizyan responded passionately that Canadians’ overall quality of life is more important than $160 a month.

“We could actually do three things. We could actually reallocate spending as the Harper government has done, taking existing spending and putting it in their priorities which do not serve the public interest. We could tax more, or and we can borrow more at a time when there are record low interest rates,” she said.

“If we do not take advantage of this huge bargain that’s out there, to fix $173-billion in municipal deficit with the feds at the table driving the best price for tax payers across the country on interest rates, we would be idiotic. This would be the most stupid thing, penny wise pound foolish, to say I’ll give you your tax money back instead of actually borrowing at bargain basement prices to make your quality of life better. When someone says to you I’m giving your money back, they’re saying to you, I don’t want to make your quality of life better, go shopping.”

Ms. McQuaig, author of The Trouble With Billionaires, agreed, saying that it’s up to the government to invest in its people because the private sector is not doing it. “There’s been no pick up in private sector investment, there’s low interest rates, it’s a perfect storm, we need government investment,” she said in response to Mr. Solberg. “We can do this. You’ve created a situation where we think if we don’t give this money back, people have nothing to live. If you provide programs that basically support key things in their life and they don’t have to pay $20,000 a year to put their kid in child care, they might have a little bit left to live on.”

Mr. Clark asked in the final minutes of the debate if each panelist were Finance Minister Joe Oliver (Eglinton-Lawrence, Ont.) and responsible for the federal budget, what would they do? “I want to transform you all into Joe Oliver. So you’re sitting there, you’re finishing the budget, or maybe just beginning to write the budget, I don’t know what he’s doing,” Mr. Clark joked about the delayed federal budget. “What is the single most important thing that Joe Oliver has to do from your point of view … somebody just said ‘resign.’ I think that was Jason Kenney.”

Mr. Cross said he would focus on Canada’s aging population.

“I can’t emphasize it enough, the tyranny of arithmetic of an ageing society is colossally negative. You’re talking about a sharp increase in government spending just because of that. We have to start getting ready for that,” he said.

Mr. Clark asked whether Mr. Cross would put the budget in balance, surplus or deficit in order to focus on the aging population.

Mr. Cross responded that there are two options. “Either you reform, you get ready by reforming how we deliver health care in particular in this country, or you start setting money aside because if we’re going to continue with health care as it currently is, it’s going to be a fiscal disaster,” he said.

Ms. McQuaig took aim at the Conservative government’s income-splitting plan to allow families with children to split up to $50,000 of income for tax purposes, which would cost the federal government $2-billion. She said she would reallocate it to benefit the 15 per cent poorest Canadians, rather than the top 15 per cent richest. When asked whether she would put the budget in surplus, balance or deficit to do so, Ms. McQuaig said she didn’t care which one.

“You should always aim for balanced budgets, but not at the expense of sensible programs and you can have balanced budgets by raising taxes as much as you can,” she said. “This notion that balanced budgets is the same as cutting spending, that’s a very convenient sleight of hand on the part of the right. The simple truth is a budget can be just as balanced through higher taxes as it can be through spending cuts.”

Mr. Solberg said he would be prudent and look at how spending could have a better impact on Canadians’ lives. It’s all about return on investment, he said, and it’s important to balance budgets.

“I think it’s important to the public. I think the public and the business community that invests here want to see a balanced budget, which is why Canada, Germany, and the UK have led growth compared to anybody else because they continue to run balanced budgets and I’d be prudent about these things,” Mr. Solberg said. “I would find taxes that inhibit more investment in the country. If they’re too high, I would trim those. I would certainly pay down debt if I thought I was concerned about a spike in interest rates that could be coming.”

Ms. Yalnizyan said that she would start with a mission for Canada to be one of the top 10 economies in the world in the next 10 years, which will need more capital and people to make happen. “We’re going to need to be a place where people that can go to any country in the world will choose Canada. How do we make Canada the number one place for money and people to come to in the next 10 years so that we don’t slide out of that top 10?” she said.

“I have that plan, which would be a 10-year infrastructure plan—infrastructure in the sense of laying the foundation for the next period of growth, dealing with the $173-billion of deficit at the municipal infrastructure level, dealing with a lack a childcare for people that are working, dealing with the fact that we’re going to need all hands on deck and everybody that can get educated get educated. For these three principles in a 10-year plan, I would borrow for the hard stuff, I would tax for the other stuff, and I would say if balanced budgets are your number one concern, Canadians, pay for the world you want.”