Mr. Speaker, I am very pleased to rise today to stand up for New Democrats’ ideals when it comes to the economy. With Bill C-13, the Conservatives have supported the NDP motion calling for immediate economic action. Unfortunately, however, this bill is very simply not enough.
A lot more has to be done to respond to the legitimate concerns that Canadian families have about the economy. The Canadian public wants to see real action taken to stimulate the economy, create jobs and combat the social inequalities we are facing. And today I would like to stress that last point, because, in my opinion, it is crucial to understand the economic benefits that are produced by a more equal society.
Income inequality is an important indicator of fairness in an economy and has repercussions on other areas, such as crime and social exclusion. A study done by the Conference Board of Canada shows that Canada ranks 12th out of 17 comparable countries when it comes to inequality. In other words, the income gap is wider in Canada than in 11 comparable countries. Although Canada’s wealth is distributed more equitably than in the United States, Canada’s 12th place ranking suggests that it is doing a mediocre job of guaranteeing income equality, according to the Conference Board.
A significant widening of the income gap occurred in Canada between 2000 and 2006. Canada is the only country in the Conference Board study whose relative score fell between the mid-1990s and the middle of the next decade because of its significant increase in income inequality. Statistics Canada recently released some income figures. Incomes from the 2006 census show an increase in inequality. That study was based on full-time workers’ median earnings between 1980 and 2005. The figures show that earnings grew by 16.4% for people with the top incomes, while they stagnated for people in the middle income group and fell by 20.6% for people in the bottom income group.
To summarize, from 1980 to 2005, earnings for the top group rose by 16.4%, while middle-income Canadians saw their incomes stagnate and earnings for the bottom group declined sharply. In the richest group of Canadians, the big winners were the super-rich, the top 1%. That increase is not attributable solely to wise investments; it also stems from the base salaries paid to bank presidents and corporate CEOs, which have exploded in recent years. So we should not be surprised to see that in recent weeks, income inequality has been in the media spotlight.
The Occupy Wall Street movement, for example, and the movements that followed it are a signal that the public is rejecting the income gap between the richest 1% and the other 99%. There is a widespread fear now being felt around the world that the rich are getting richer and the poor are getting poorer. And that fear certainly does not seem to be unfounded. For example, a recent study by a professor at Berkeley found that income inequality in the United States is at an all-time high, even exceeding the levels observed during the Great Depression. The example he gives is that the top 10% of earners in 2007 accounted for nearly 50% of total income in the United States.
In contrast, Denmark and Sweden, which have the lowest levels of poverty among children and the working age population, are also undisputed leaders in terms of income equality. The relationship between social spending and poverty rates has become clearer over time. Thus, it is not surprising that these countries have strong traditions of redistributing wealth. They have been able to keep poverty rates down thanks to a universal welfare policy that has been effectively combined with job creation strategies that support gender equality and accessibility. That is the example the NDP would like to follow, because it appears that the model that this government insists on copying is producing extremely disappointing results.
According to the Conference Board, one reason for the growing inequality in Canada is globalization, which rewards highly qualified workers while leaving everyone else behind. This situation is also largely the result of the interaction between family factors and economic factors. The gap is widening considerably between families with two highly educated spouses and those that have only one breadwinner or those with no one who can work.
In addition, government transfer programs meant to address some of these inequalities are not as effective as they were 20 years ago. For instance, fewer workers are receiving employment insurance benefits, and social assistance rates do not always mimic the cost of living. To date, many of the tax breaks granted by this government have disproportionately benefited the wealthy, because they have not been applied based on income. They have instead centred mainly around lowering the GST and around tax credit programs.
Speaking of inequality, we must also address the issue of poverty in Canada. Once again according to the Conference Board of Canada, more than 12% of adult Canadians live in relative poverty. That is twice as high as the rates found in Denmark and Sweden. Canada ranks 15th out of 17 peer countries in terms of the working age poverty rate. Canada's working-age poverty rate increased from 9.4% in the mid-1990s to 12.2% in the mid-2000s.
While the NDP has been asking this government to rethink its plan to promote employment, a recent OECD report states that poverty rates are directly dependent on the ability of household members to be gainfully employed. The OECD concludes that the failure to tackle the poverty and exclusion facing millions of families and their children is not only socially reprehensible, but it will also weigh heavily on countries’ capacity to sustain economic growth in years to come.
The relationship between social spending and poverty rates is striking. Among working-age adults, the relative poverty rate is lower in countries with higher social spending.
Why so much talk about income inequality and poverty? Because there are direct links between inequality and a country's economic growth. It is reasonable for there to be a compromise between equality and effectiveness so that wealth redistribution does not impede productivity. A recent OECD study on income inequality notes:
A society in which income was distributed perfectly equally would not be a desirable place either. People who work harder, or are more talented than others, should have more income. What matters, in fact, is equality of opportunity, not equality of outcomes.
However, the idea that income inequality reduces the potential for growth is real. Income inequality undermines social cohesion, leading to social conflicts. A study done by Michael Forster highlights new research showing that a society should be concerned about income inequality. He says that a number of authors have produced evidence that poor income distribution could ultimately have a negative effect on economic growth through education, health and access to the labour market.
In a letter published in Le Devoir, Paul Bernard, a professor at the Université de Montréal, showed that social investment is a key to economic development. To support his position, he cited numerous studies that show that social spending does not operate to slow growth. In fact, it actually operates to provide everyone with the prerequisites that enable them to participate in the labour market in large numbers and on the best terms. This strong participation helps to increase the productivity of the economy and means that the taxes needed for maintaining those services can be raised intelligently.
In other words, economic development can be achieved through social investment, with the bonus of a healthy additional dose of social justice. So we have to look at combating income inequality not just as a matter of principle, but also as a practical contribution, what social development can and must do for economic development. Providing all Canadians with access to adequate health care services, a quality education and social and family services appropriate to their situation is what will ensure the long-term development of our economy. In other words, we have to redistribute wealth in order to create wealth.
So it seems there is an alternative to this government’s economic plan, which is an attempt to stimulate the economy by cutting social programs and the services provided to the public under the false pretext of contributing to economic growth and helping Canadians find jobs.
This plan does not do enough for the Canadian economy. We need a government that demonstrates leadership, today even more than in previous years. Canada is not immune to a new recession. That is why we cannot stop there. We have to be proactive and redistribute wealth in order to create wealth.
