Thank you, Chair.
The Broadbent Institute is an independent, non-partisan organization that promotes progressive change based upon social democratic values and ideas. We've advocated for strong action by the federal government to counter growing economic and social inequality, and for a planned transition to a more innovative economy and sustainable environment.
The government plans to introduce some progressive social spending measures that we support, including the proposed Canada child benefit, which will deliver high benefits to all but the most affluent families with children, and increases to the guaranteed income supplement to deal with rising rates of seniors poverty. However, these proposed changes to the GIS exclude couples, and would leave 634,000 seniors living in poverty. A recent study released yesterday underlines the importance of both expanding the CPP and increasing the GIS.
We think that the government's agenda is inadequate or insufficiently ambitious when it comes to such important areas as child care, EI reform, and funding for first nations communities. In our view, there's a contradiction between furthering a progressive social agenda and the new government's promised fiscal plan to continue to reduce public debt as a share of GDP. This will significantly constrain new spending, especially at a time of very sluggish economic growth.
While welcoming the new tax rate for the top 1% and the elimination of family income splitting, the key problem is that the government does not propose to increase overall federal fiscal capacity. Indeed, the so-called middle-class tax cut will cost $3 billion per year, while primarily benefiting higher income earners and providing only very limited economic stimulus.
Sustainable increases to social spending and public services require new sources of revenue. We urge the government to consider modest increases to the corporate income tax and to close tax loopholes for the top 1%, such as excessively favourable treatment of stock options. The government should modify or reverse the ill-advised tax cut for the so-called middle class. Targeted programs are much more effective than tax breaks for the wealthy in building a more innovative and productive economy. Influential economist Mariana Mazzucato argues that strategic government leadership, public investments and research well in advance of immediate commercial opportunities, and direct support for strategic corporate investments are critical to building innovative economies.
We believe that there's also a vital federal government leadership role in building a more environmentally sustainable economy. A recent joint report with the Mowat Centre called for a green Bank of Canada and concrete measures to promote greater energy efficiency and greater use of renewable energy.
We support the government's proposal to increase investments in physical and environmental infrastructure, such as public transit and basic transportation. This will give a badly needed short-term boost to growth and job creation, and it will help to raise long-term business investment and productivity.
An independent study commissioned by the Broadbent Institute last year by the well-respected Centre For Spatial Economics shows that there are overall benefits to Canadians from investments in basic infrastructure in the order of $2.46 to $3.83 per dollar spent. The study further found that the long-term impact on government finances would be, at worst, marginally negative, or even positive, due to increased revenues from a larger and more productive economy.
The economic outlook for 2016 is dismal, with growth expected to fall well below 2%, and unemployment expected to remain above 7%, but growth and job creation could be significantly boosted by a well-designed public investment stimulus twinned with major increases in income transfers to lower income Canadians, such as through enhanced unemployment benefits.
We hope that the government will consider more progressive tax changes to fund a larger and more sustainable increase to social programs.
Thank you.