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Taxing the rich, helping the poor

Nova Scotia's Alternative Budget, Part I

by Bruce Wark

The Nova Scotia Alternative Budget advances a simple idea: The best way out of the current economic recession is increasing government spending to make everyone better off in the long run. The budget, released this week by the Canadian Centre for Policy Alternatives, advocates spending nearly $436 million in the coming year on a variety of social and environmental programs and projects --- everything from strengthening education and child care to upgrading rail lines. It also calls for big increases in welfare payments, abolition of tuition fees for community college students and a sharp reduction in university tuition fees.

"We believe this recession is giving us an opportunity to send the province on a different and fairer path," says Mathieu Dufour, the Dalhousie University economist who helped draft the Alternative Budget's spending priorities. He contrasts this budget with the one the Nova Scotia government brought down on Monday. "So, whereas the government is focused on repairing roads for example, we're more focused on having a greener economy and spending money on social programs."

Christine Saulnier, who chaired the Alternative Budget working group, says CCPA Nova Scotia has been publishing such budgets for the last nine years. They're designed to suggest other ways of looking at the provincial economy. This year participants tried to come up with an economic stimulus plan that would promote social and economic justice along with a healthier environment.

"When you look at the government's stimulus plan, you're looking at a billion dollars in highways," she says. "While there might be some need for improvements to highways and roads, we'd certainly like to see a better balance."

More help for the poor

The Alternative Budget allocates $136 million this year to reduce poverty. It calls for a big boost in welfare payments including a 30 per cent increase in both personal allowances and shelter rates as well as $30 a month for basic phone service. (At present, the province does not see phone service as essential and caseworkers determine whether it will be covered as a "special need.") The budget also includes a provision to allow welfare recipients to keep substantially more of the money they earn when they work. (The government allows recipients to keep only 30 per cent of their earnings.)

Christine Saulnier says the budget's drafters were conscious of the fact that Nova Scotia welfare rates are among the lowest in Canada. "All of the people on social assistance are far below the poverty line," she says adding that the government needs to view welfare programs in a more positive light.

"Social assistance should be something that actually helps people to be more self-sufficient in a way that gives them dignity and confidence. If people aren't trying to just put food on their table every day, spending hours going to food banks and getting quite unhealthy food, then they're able to focus on other issues, including employment if that's a possibility."

The Alternative Budget recommends that $47 million be spent this year (and a total of about $200 million over three years) for the construction of not-for-profit public housing. This would provide affordable housing for all 4,000 families on the current waiting list.

Millions for public schools and child care

The Alternative Budget allocates nearly $45 million for improvements in grades primary to twelve in public schools including money to cap class sizes and provide more specialist teachers. It also commits $62 million this year and a total of $2.16 billion over 15 years to provide 50,000 new full-time child care spaces and 40,000 new part-time ones. Saulnier points out that only 10 per cent of children who need day care in Nova Scotia actually have access to it.

The budget calls on the government to require early childhood educators to earn a two-year post-secondary diploma by 2021 while increasing their annual, entry-level pay to $36,000 within five years. (The average hourly wage for early childhood educators in Halifax is only $10.80.)

More support for college and university students

The Alternative Budget commits $36 million in the coming year to abolish tuition fees at the Nova Scotia Community College and to allow for a $1,100 reduction in tuition fees at provincial universities. The budget recommends that the province spend a total of $64 million over three years to finance further tuition fee reductions. It also allocates $9.2 million in new funding to increase the grant portion of student loans.

Kaley Kennedy, the Nova Scotia representative on the national executive of the Canadian Federation of Students, says the budget's measures would bring university tuition fees in Nova Scotia more in line with the national average. Kennedy, who helped draft the Alternative Budget, argues that Nova Scotia's high tuition fees are driving students out of the province.

"Students are flocking to Newfoundland," she says. "Tuition fees in Newfoundland are half of what they are in Nova Scotia." Kennedy adds this student exodus hurts the provincial economy and contributes to declining university enrollments. "Universities alone represent over a billion dollars in direct and indirect money in the economy and they are also a great way for Nova Scotia to attract people from outside the province."

According to the Alternative Budget, the average university student in the province graduates with a debt of $28,000, an increase of $7,000 in the past five years. It adds that about one quarter of students in the Maritimes graduate with more than $40,000 of debt after their first degree. Kennedy says high student debts discourage graduates from staying here to raise families or start their own businesses. Instead, she says, many are forced to seek higher-paying jobs outside the province.

Taxing the rich

To help pay for its stimulus plan, the Alternative Budget proposes a hefty tax increase on the top one per cent of Nova Scotia income earners. The 30 per cent provincial surtax would affect anyone earning more than $150,000 a year and would generate additional revenue of $200 million. Dal economist Mathieu Dufour says it's only fair to tax the highest income earners because their incomes have been rising while wages for middle and low income earners have been stagnating or declining.

"What we're saying is that the top one per cent benefited a lot from economic expansion over the last eight to nine years. But in times of need, like right now, it's only fitting that they would give back some of that benefit that they earned...They would be contributing their fair share to get the province going again."

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