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Election promises unlikely to be affected by drop in oil prices

By Deborah Gyapong
Canadian Catholic News

02/04/2015

OTTAWA — A drop in oil prices has raised doubts whether the federal government can balance the budget, but observers say election promises are unlikely to be affected.

Because of the uncertain economy, the federal government has postponed introducing its budget until April, but Cardus’ work and economics director Brian Dijkema says the Tories’ announcement last October regarding income splitting, an increase in the Universal Child Care Benefit and other supports for families will likely remain in place.

“The package is something they have put their stake in the ground on,” he said.

Income splitting would result in equalizing the level of income taxes two families earning the same overall income will pay. Previously, a two-earner family might pay as much as $3,000 a year less tax than a one-earner family. Dijkema said the question is how government relates to family structure and whether “it’s going to prioritize one over another” and whether the incentives and disincentives put forward are “just.”

Last October Prime Minister Stephen Harper announced income splitting up to $50,000 for families with children that would go into effect when they file their 2014 tax return. He also announced an increase in the Universal Child Care Benefit from $100 to $160 a month and a new benefit of $60 a month per child age seven to 17 beginning in 2015. But this was based on predictions the budget was going to be balanced.

Nor does Dijkema think a worsening economy is likely to affect the New Democratic Party’s recently announced election promise of a $15 a day national daycare program. The plight of the oil patch will affect the NDP’s ability to afford the promised one million daycare spaces, but not its commitment to it, he said.

The likelihood of a budget deficit should not deflect government from helping the poorest and most vulnerable Canadians, said Citizens for Public Justice (CPJ) executive director Joe Gunn.

“We do have to focus on the social deficit in Canada,” he said. That means addressing the growing gap between rich and poor and on child poverty. “CPJ is always going to call for those kinds of policies and community responses that would enhance equity and would enhance those people that are on the bottom of society.”

While Dijkema agrees governments do have to support the neediest Canadians, budgets — and election platforms — often have a range of different packages and programs targeting different things.

“Tax policy is part economics, part electoral politics. It always is, as it always will be,” he said.

“What we’re seeing here is various visions on how the government will engage with families,” said Dijkema. “Here’s where it’s interesting: the NDP’s policy is saying they are going to engage with families by enabling daycare which assumes certain things about the way families are structured and it provides certain incentives for families to structure themselves.”

The NDP policy favours families with two working parents, while the Conservative policy is “agnostic” on family structure, he said.

“What they’re saying is we’re not trying to provide incentives for one type of family structure over the other; we’re simply trying to remove disincentives.”

Liberal Leader Justin Trudeau has been less specific about policies except to say the Liberals will help the middle class.

“We do know they are opposed to income splitting,” said Dijkema. “We do know they used to favour a daycare program very similar to that put forward by the NDP but what we don’t have is knowledge of what they’re actually going to do.”

The Liberals have provided hints “based on the way they’ve criticized the government,” he said. They describe income splitting as “regressive” and that it “helps the rich.”

But Dijkema pointed out the NDP’s national daycare policy shares the same regressive quality in that it helps richer families more than poor families for whom the $15 a day would be a much larger proportion of their income.

Gunn agreed that universally applied programs do have regressive features. But programs “that allow the single mom to work and have the kids taken care of are really important.”

As necessary as subsidized daycare spaces are, they cannot be the only element, because low income and vulnerable persons “have special needs and those have to be addressed,” he said.

People have criticized the government by pointing out the tax relief and child care benefit increases and other tax credits do not fully pay for child care “and they’re right,” Dijkema said. “When you are talking about tax policy it becomes political very quickly.”

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