An independent research institute that pushes for social justice is calling on the Nova Scotia government to cancel its $84 million energy rebate program. The Canadian Centre for Policy Alternatives says the money should be used instead to help 75,000 Nova Scotians who live in poverty. The suggestion is one of many contained in the CCPA’s 10th annual Alternative Budget released today at the Nova Scotia legislature.
“We were surprised at the amount of money that has actually gone into the energy rebate program,” says Christine Saulnier, the CCPA’s Nova Scotia director. “When the NDP introduced it, they said it would cost $15 million in the first year and $30 million in the second. The second year actually cost $84 million.”
The energy rebate program is designed to offset the rising costs of home heating and electricity, but Saulnier says the money should be re-directed to those who need it most, welfare recipients who live well below the poverty line.
“We really think people who are turning to the government for assistance should not be living below the poverty line,” she says. “It’s shameful that the government, when people are coming to them, is giving them less than the bare minimum to make ends meet.”
The CCPA estimates it would cost just over $65 million this year to start a five-year program to raise welfare rates gradually to the poverty line. Its Alternative Budget calls on the government to spend an additional $8 million to fund basic telephone service for welfare recipients and $19 million to allow them to keep more of their income if they find work. Under present rules, 70 percent of such earnings are deducted from welfare cheques. The Alternative Budget says $5,000 in annual income should be exempt from the claw-back and welfare recipients should be able to keep 30 percent of their remaining earnings.
As for the energy rebate program, Saulnier says it sends the wrong message. "We need to be encouraging people to be using less electricity,” she says. “We need to be relying less on carbon and oil and thinking about climate change more. To have an energy rebate program does the opposite."
Fixing income tax brackets
The Alternative Budget also calls on the provincial government to adjust income tax brackets so that well-off Nova Scotians pay the same percentage of their incomes in taxes as poorer ones do. Retired economics professor Michael Bradfield points out that over the last 20 years, Nova Scotia’s economy has grown by about 70 percent, yet conventional wisdom says that in these tough times, we can no longer afford to keep spending on government programs.
“If we’re 70 percent richer, why can’t we afford the programs we could afford when we were poorer?” he asks adding that most of the newly generated wealth has gone to the top 10 percent of income earners. Over the same period, federal and provincial governments have cut taxes on higher incomes partly by lowering tax brackets. As a result, the richest one percent pay 30 percent of their incomes in taxes while less well-off Canadians pay 31 percent.
“Can we afford high tax rates on the rich?” Bradfield asks. “Well, they will tell you no, but reality tells you, yes we can afford it because first of all, they’re not paying as high taxes as the rest of us.”
The CCPA Alternative Budget calls on the province to adjust tax brackets so that the top 10 percent of earners pay an additional $321 million in taxes. It recommends reducing corporate tax breaks and direct business subsidies to raise another $45 million. Other proposals include higher gasoline taxes, increased registration fees for new passenger vehicles with an average highway fuel consumption of more than eight litres per 100 kilometres, increased royalties for natural resources and additional levies on the multi-billion dollar cruise ship industry.
Provincial minister cool to CCPA budget
The CCPA Alternative Budget was released one week before Finance Minister Graham Steele is set to deliver his budget to the legislature. A couple of hours after the CCPA news conference, Steele appeared before the Halifax Chamber of Commerce to announce that for the second year in a row, he would cut small business taxes by half a percent, bringing the rate down to four percent. Steele also confirmed that his budget would show that Nova Scotia actually ran a surplus of more than $97 million in the last year instead of the $222 million deficit he originally forecast. However, he warned that next year’s deficit is still likely to be close to $370 million.
Later, when asked about the CCPA Alternative Budget, Steele said he met with members of the research group three times in his pre-budget consultations. He added that while he’s sympathetic to the CCPA’s goal to end poverty, he wishes the group had presented its Alternative Budget sooner, before his went to the printer.
“I don’t understand why once again, they’re releasing the Alternative Budget at a time when I told them it can’t have any possible impact,” Steele said. “I just don’t know why they’re doing this because by doing it this way, they’re guaranteeing having no influence.”
However, Christine Saulnier sounded frustrated when told of Steele’s comments. She says her group presented their main ideas when they met with Steele in December. “We talked to him about the poverty gap. We talked to him about income tax reform,” she says. "We did a power point and we presented the core ideas that are in our budget.” Besides, she adds, many of the same ideas have been in previous Alternative Budgets and the government could have adopted them if it wanted to.