Thank you, and good morning.
I would like to focus my remarks this morning on how we might rethink the current macroeconomic policy framework to facilitate the greater economic security of all women in Canada.
Macroeconomic policies are important because they impact how the whole economy works by shaping the availability and distribution of resources, including the level of demand, growth, employment, rates of taxation, and interest rates.
Macroeconomic policies, as currently practised, however, are not gender-neutral but rather gender-blind. They fail to recognize, first of all, that women's contributions to the economy are systematically underestimated, and, second, that there's an unpaid care economy, which falls largely on women's shoulders. Conventional macroeconomic households are assumed not to produce but to consume and to save. Household work is not costed since it does not earn income.
Bringing a gender perspective into macroeconomics therefore involves us seeing national output, that is, the creation of wealth, as the interaction of four sectors: the private, the public, the domestic, and the voluntary. Therefore an important dimension of gender-equitable macroeconomics is to integrate unpaid work into the formulation and evaluation of macroeconomic policies, recognizing it as using scarce resources such as time, and therefore regarding it as productive work that is necessary for other economic activities to take place.
This means that the full picture of the economy requires us to collect data that includes time spent on unpaid work, and also to measure what might signal shifts in women's entry into and exit from labour markets, and resulting changes to women's income due to time spent on care.
Doing this would also allow us to identify what economists call a false economy, which is often the result of prevailing macroeconomic policies that focus on reductions in government spending. False economies offer short-term savings through cuts in social services, for example, that may yield increased costs to society and the economy down the road in terms of greater need for families to rely on social benefits, which end up costing the government more to fund. In other words, short-term budgetary savings may end up creating larger budgetary expenditures.
With these preliminary remarks, let me now turn to the role of the public sector in eliminating gender bias, and I'll briefly just cover two areas: government spending and tax policy.
In terms of government expenditure, a problem in the conventional macroeconomic model is that only certain kinds of investment are viewed as productive, whereas others, such as salaries for doctors, nurses, and teachers, are seen as current expenditures or means of boosting consumption.
A recent seven-country report cited by the World Economic Forum, which used two separate modelling exercises, found that government expenditure or government investment in social infrastructure, including education, health, and care work, will produce more bang for the buck than will physical infrastructure projects like bridges and highways. For example, in the U.S., research has shown that an investment of 2% of GDP in social infrastructure raises employment by about 3.4%, compared to 1.2% for similar investments in physical infrastructure. The economic logic behind these findings is that social infrastructure is much more labour intensive than is physical infrastructure. Care jobs are much more likely than construction jobs to employ women.
A gender-equitable macroeconomic policy needs to look at fiscal stimulus from those vantage points and determine the appropriate fiscal sustainability level of public investment, taking into account medium- and long-term benefits of such spending.
I know you've already heard from other witnesses about tax policy, so let me just end with some observations on maximizing fiscal space.
Fiscal space is defined by economists as the room in a government's budget that allows it to provide resources for a desired purpose without jeopardizing the sustainability of its financial position or the sustainability of the economy.
The current trend in tax policy that favours wealthier men, through increased consumption taxes, decreased rates for corporations and higher-income individuals, and comparatively low taxes on wealth and property, shrinks the fiscal space available for social investment.
For example, some preliminary research with my colleague from Osgoode Law School, Lisa Philipps, who is a tax expert, in which we used Statistics Canada LAD data on tax expenditures, shows that high-end tax expenditures, such as the stock option deduction, exacerbate gender inequality, since women form the majority of filers in the first seven deciles of the tax bracket, while men form the majority of high-income earners in deciles eight and above.
In order to actually know the impact of tax policy decisions not just on income deciles but on various groups of women and men, we need gender-responsive budgeting to guide fiscal policy decisions and to monitor public spending and taxation.
Budget 2017 was a start, but the gender statement had virtually nothing to say about taxation. We need a gender-based analysis of taxation as part of the government's continued review of tax policy. I believe this would significantly enhance a gender-equitable macroeconomic framework.
Thank you.