Tuesday, January 6, 2009

Spend billions to boost economy: Canadian Centre for Policy Alternatives

The Canadian Centre for Policy Alternatives has jumped the gun on Ottawa and released its annual Alternative Federal Budget.

The centre suggests the federal government should spend $32.9 billion, or 2.1 per cent of GDP, in 2009 to stimulate the Canadian economy. It says the economy would get a three per cent boost and 407,000 jobs would be created.

The CCPA is an Ottawa-based research institute that calls itself one of Canada's leading progressive voices in public policy debates.

If the centre actually had access to Ottawa's coffers, it would first spend $14.7 billion to strengthen and build municipal infrastructure, affordable housing, child care, and post-secondary education.

That would suit the Association of Universities and Colleges of Canada. On Monday, it called on Ottawa to invest in post-secondary education in the Jan. 27 budget. It says Canada's schools need at least $5 billion in maintenance and renewal work.

The Canadian Centre for Policy Alternatives also says Canada's employment insurance program needs fixing. It would spend $3.4 bil­lion to increase benefits to cover 60 per cent of insured earnings and extend benefits to 50 weeks.

Another $9 billion would be used to help reduce poverty and increase income for seniors, children, and the working poor.

The alternative budget would spend $5.8 billion to invest in training and education as well as energy retrofits. And it would take advantage of the sagging housing market by buying up ground floor condominiums in major cities to create more affordable rental housing.

But don't bother looking for tax cuts in the alternative budget.

"Government spending provides more stimulus than tax cuts because it creates more jobs," said David MacDonald, the co-ordinator of the Alternative Federal Budget. "People who have jobs spend. People who lose them do not."

However, the federal finance minister has strongly suggested tax cuts are on the way.

"There are a couple of ways to stimulate the economy," Jim Flaherty said last week. "One is spending on the infrastructure side and other ways, and tax reductions — leaving more money in people's pockets — is also stimulus to the economy."

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