The Economy

Canadians don't have to accept that endlessly rising unemployment and poverty is natural and inevitable. There are 1.5 million unemployed today because of failed policies that can be changed. Canada can reverse current priorities and aim for sustainable full employment.

Sustainable Full Employment

We are committed to the goal of sustainable full employment - and to full employability.

By "full employment", we mean an economy that can provide a good job to everyone willing and able to work.

By "sustainable" full employment, we mean an economy that can provide for the whole population within the carrying capacity of the environment.

"Sustainable full employment" also means full employment that is economically sustainable - built on the basis of a strong, innovative, high- skill, high-wage, high value-added economy.

And "sustainable full employment" means full employment that is fiscally sustainable - built on the basis of a real improvement in our economy, not a spike in temporary employment financed by debt.

"Full employability" is the necessary companion of full employment in the high-wage, high-skill, value-added economy we want to build. Government, employers and working people share a common responsibility to ensure that Canadians have fair, equal and continuous access to skills training and development.

Key Points:

  • Full employment and full employability should be the main objectives of our economic policy.
  • We are aiming for sustainable full employment; environmentally, economically and fiscally.

Creating Jobs

We are committed to an active, targeted and determined federal policy designed to create jobs, with the ultimate goal of building, brick-by- brick and step-by-step, a more egalitarian, prosperous and just economy - parallel to, and eventually supplanting, the current system. For example:

Setting goals, and working to meet them.

• The federal government should set clear employment goals, and work to meet them as its top priority.

Increasing investment in real jobs.

  • Direct federal action to expand access to venture capital for innovative new enterprises and co-ops.

  • Re-crafting rules governing pension funds, so that they make a greater contribution to job creation.

  • A greater emphasis on co-ops.

  • Reinvigorated crown enterprise in key targeted industries, like transportation.

Support for research and development:

• A strong federal commitment to expanding research and development in Canada - a key weakness of our current economy.

Returning to a balanced monetary policy:

  • The Bank of Canada should return to a balanced monetary policy, including a reduction in real interest rates.

  • Canada's ability to pursue an independent monetary policy will increase as dependence on foreign borrowing decreases

Investing in community economic development:

  • Communities know what kind of economic development is best for them. Particularly in Atlantic, rural and northern Canada, governments should provide resources through investment capital, community bond guarantees, and other instruments - and let local communities work together to create their own jobs.

Reducing overtime and hours of work:

• Federal and provincial labour standards rules should limit mandatory overtime and work towards a reduction in work hours.

Action on youth employment:

  • Youth employment is an issue requiring urgent attention.

  • Fully accessible education and training; school-to-work bridging; and opportunities to create work through co-ops and entrepreneurship should figure among our solutions.

Key Point:

We favour an active, targeted and determined federal job creation strategy.

Debts and Deficits

A new economic policy with full employment as its first priority is the only realistic way to sustainably reduce the federal deficit and accumulated debt.

Like other democratic socialist and social democratic parties, New Democrats hold that citizens share goals they can only achieve through tools they own and control in common - public institutions. And as we have maintained since the Regina Manifesto, excessive reliance on debt works against that common interest, for a number of reasons.

  • Excessive public debt leads to regressive transfers. In the words of the Regina Manifesto, from working taxpayers to "the interest-earning class".

  • Excessive public debt erodes democracy, transferring power from citizens to bond dealers.

  • Excessive public debt erodes the effectiveness of public institutions. Resources are diverted from services to interest payments. Decades of deficits inoculate the economy from any stimulative benefit. Public support for common goals and values is eroded as less and less value is received from tax contributions - building the constituency of the populist right.

We can see this at work today: The carefree fiscal irresponsibility of the old right is proving to be of major political benefit for the new right.

Medicare, pensions, unemployment insurance, post-secondary education, research and development, transportation, agriculture - all are being dismantled or privatized by the current Liberal government in Ottawa, in flagrant disregard of that party's election commitment to change the Mulroney government's economic policy.

The Canadian public would never accept these measures on their own merits - the right can only pursue this agenda by tying it to the need to address the federal debt and deficit.

What is to be done? Our basic goals: get the bond dealers off our country's back; take away the political right's only effective political argument; and ensure the sustainability of the public sector - by committing to rebalance federal finances , away from dependence on bond markets, back to fair taxes contributed by a democratic electorate, to fund common endeavours they support.

How to achieve this goal? Not by dismantlement and privatization - that is the real agenda of the right. A better plan:

Progress towards sustainable full employment. Every additional job provides a direct double benefit to public finances - one more taxpayer, one fewer citizen in need of income support.

Lower real interest rates, promoting job creation, reducing interest costs, and helping to break the cycle of compounding debt that is feeding the federal deficit.

Fair taxes. Working people pay their fair share of taxes. Wealthy Canadians and corporations should too.

Canada in 1995 can't afford a Senate. Canada in 1995 can't afford wasteful spending on tax expenditures that favour the wealthy. Our plan should include a hard look at federal spending like

this, with an eye towards reallocating funds to services.

A full employment strategy can achieve what has evaded Liberal and Tory governments for more than twenty years : steady progress towards stabilizing the federal deficit at a low level, or eliminating it altogether. For the best democratic socialist reasons, and as a consequence flowing from a full employment policy, that should be our goal.

Key Point:

Full employment policies will stabilize the federal deficit at a low level, or eliminate it altogether. That should be our goal.

The Tax System

The tax system should collect revenue on the basis of ability to pay.

We are very far away from this ideal today. Unearned wealth is not taxed in Canada - which is very unusual in an industrialized democracy. The income tax system has lost much of its progressivity during successful conservative tax "reforms". The corporate tax system is designed for the 1950s. Canadian consumption taxes are unnecessarily regressive.

We favour fair tax reform that ensures that everyone pulls their weight.

A fair tax system should include four elements.

  • A fair, progressive income tax, designed with an absolute minimum of complexity. That means income tax with few or no loopholes, exceptions or deductions, treating every dollar of income as "a buck is a buck".

  • Fair wealth taxes on large net worths (in excess of $1 million, for example) to access inherited or otherwise unearned wealth and capital. Wealth taxes are a feature of almost every modern tax system, including the current (otherwise highly regressive) American system.

  • Fair corporate taxes. Corporate taxes need to be periodically reviewed to take account of new realities in the marketplace. The new reality in the 1990s is the vast increase in capital transfers - much of it speculative. A 1 per cent levy on large capital movements could help channel some of this capital away from "Nintendo investments" and back into real, job- creating investments. It could also provide part of an alternative to the current horrendously complex and easily circumvented corporate tax system.

Another important corporate tax reform: tax giveaways (loopholes, credits, extraordinary deductions) are a highly inefficient and frequently inequitable way to direct tax revenue for economic development purposes. A better approach: a simple, even playing field for all businesses. Where tax revenue is needed and appropriate to finance job creation, it should be injected in the form of equity investment, to the benefit of both the recipient firm and the taxpayer.

Fair consumption taxes, zero-rated on essentials like food; the current rate for most items; and a high-rate on luxuries like luxury cars - and with a generous consumption tax rebate for low-income earners.

Our overall goal in reforming the tax system is a steady rebalancing - away from regressive taxes and tax regimes that are easy for those with means to circumvent; towards a fair, simple, sustainable, transparent and progressive tax system.

Key Point:

We favour a simple, transparent, and fair tax system, rebalanced away from regressive and avoidable taxes, towards progressive taxes.

Labour Standards & Trade Union Law

Our goal is a high-wage, high-skill, value-added economy whose benefits are widely shared. That means working towards full employment. That also means ensuring that working people can bargain with employers on an even playing field.

We therefore favour updating federal trade union legislation to ensure working people have free and fair access to collective bargaining - particularly in key service industries like banking, which are currently unorganized. Federal labour legislation should ban replacement workers.

We favour a national dialogue with employers and workers about labour standards. The time is ripe for a fresh look at retirement age, overtime hours, and work hours in general.

Priorities: a lower retirement age, shorter work hours, and a legislated reduction in overtime hours - all contributing to a fairer distribution of work within our economy.

We also favour a review of federal occupational health and safety legislation, to ensure it is leading to the highest possible workplace safety standards.

We are committed to the equality of every person regardless of race, colour, religion, ethnicity, disability, or sexual orientation, and fully support all effective measures to promote equal opportunity and citizenship for all, including anti-discrimination legislation, and sound, effective employment equity.

Key Point:

Federal trade union, labour standards, and occupational health and safety legislation should take its place as leading legislation in Canada.

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