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Paul Martin has delivered a conservative budget, paying down debt instead of meeting urgent social needs.

The Throne Speech may have been written for Jack Layton but the budget is written for Stephen Harper,” says CUPE National President Paul Moist.

This budget doesn’t cut waiting times for surgery by a single day – and it does nothing to stop the creeping privatization of our health care system.”

National Secretary-Treasurer Claude Généreux says Martin “is deliberately starving public health care because he wants to create a crisis and then offer his corporate cronies as the solution to growing waiting lists.”

Given public concern about accountability, the budget didn’t make much direct mention of privatization but it’s clear that Paul Martin remains committed to pushing public private partnerships (P3s).

For example, the budget speeds up the trickle of federal funding for infrastructure, but continues to tie these investments in transit, water treatment and highways to P3s – which is like giving the corporations a license to print money.

While welcoming the GST exemption for cities, Moist wonders why the exemption wasn’t extended to schools, hospitals, universities, social services and public utilities. And he asks what happened to the promises from the Throne Speech for patients, parents, students, Aboriginal Canadians and others.

This is the ninth Martin budget and each time it gets worse,” says Moist. “There’s no reason to fixate on the debt – Canada’s is among the lowest of any major economy. Instead we need to tackle the social deficit – and the way to do that isn’t by padding the profits of big business and giving them a slice of every public service.”

It’s clear the Martin government has failed to act on Canadians’ most pressing priorities. CUPE members will want to be very active in the coming election to send Martin a message he can’t ignore.

Analysis by sector

Health Care

What we needed

Canadians were looking for the federal government to show its commitment to a publicly funded and delivered health care system. We needed:

  • An increase in federal funding over three years to 25 per cent of provincial health expenditures to ensure sustainability of Medicare in line with the recommendations of the Romanow Report.
  • A National Drug Agency to create a national pharmacare plan, propose changes to drug patent legislation and develop a catastrophic drug plan
  • An amendment to the Canada Health Act to incorporate diagnostic services, a national home care program, and long term and palliative care within the Act.
  • A mandate for the Canada Health Council to conduct a national review of long term care in Canada

What we got

  • The federal government took a status quo approach to health care funding, with the exception of some short-term money to deal with public health emergencies.
  • A re-announcement from January 2004 of $2 billion for a one-time transfer to the provinces for health care was the best that Finance Minister Goodale could muster.
  • No increase in base level funding in the Canada Health Transfer means that provinces are unable to engage in long-range planning. With federal funding hovering around 16 per cent of provincial expenditures, this budget will do nothing to deter Alberta, BC and Quebec from challenging the Canada Health Act through wholesale contracting out and P3s.
  • Health care is the number one priority for Canadians and Goodale specifically says “sustainability must be our focus.” But this budget does nothing to ensure that publicly funded and delivered health care is sustainable.
  • SARS, West Nile Virus, and avian flu have forced the government to recognize the need to devote funds to public health emergencies. $665 million dollars in new money has been allocated as follows:

    • $165 million over two years for a Canada Public Health Agency (another $400 million for the agency will be transferred from Health Canada’s current budget.)
    • $300 million over three years for provinces and territories to improve immunization programs
    • $100 million over three years for provinces to improve public health systems
    • $100 million for Canada Health Infoway to assist in the identification of infectious disease outbreaks.

In sum, Paul Martin and the federal Liberals have elected not to strengthen Medicare, hoping that in the upcoming election Canadians will overlook the failure of this budget to address the need for improved quality public health care.


Public infrastructure

What we needed

  • Major new investment to address the approximately $60 billion infrastructure deficit identified by the Federation of Canadian Municipalities (FCM). This infrastructure deficit grows at a rate of some $2 billion per year.
  • A rejection of P3s and other privatization of public infrastructure.
  • A new Canadian Infrastructure Financing Authority (CIFA) – to raise up to $5 billion per year in federally-guaranteed new credit, to be used to finance 50/50 cost-shared public infrastructure projects.
  • A dedicated and specific share of the federal gasoline tax to help municipalities fund infrastructure and road improvements. The FCM has asked for five cents per litre of the federal fuel tax for local government.
  • A transfer to the municipalities of a portion of the income tax revenue collected by federal and provincial governments.
  • The promised GST rebate for municipalities (worth $7 billion over 10 years)

What we got


  • P3s and privatization. The budget text tried to hide this government’s fondness for P3s, but Paul Martin and P3 Parliamentary Secretary John McKay are campaigning nationally and internationally for P3s. Underfunding of infrastructure puts additional pressure on cities and communities to turn to P3s.
  • From last year’s budget, the $1 billion in infrastructure for municipalities will now be paid over 5 years instead of 10, a minor adjustment.
  • Canada’s municipalities received not a penny of the federal fuel tax – only a vague commitment to “work with provinces” on the issue.
  • The GST rebate to municipalities will provide $580 million for 2004/2005. This represents less than 1.25 per cent of total municipal budgets in Canada (calculated on 2002 figures).
  • There is no discussion of local governments receiving a share of income tax revenue.

In short, there is very little in this budget that will help rebuild strong communities. Instead, the Martin government is ignoring Canada’s huge public infrastructure needs in the hope that municipalities will turn to P3s and privatization.


Child care

What we needed


  • a publicly funded, pan-Canadian child care system (for children from birth to twelve years of age) that is fully inclusive and meets the needs of every child – regardless of a family’s income and employment status, where they live, their ability, language, or culture.
  • The government has said it will spend $300 million for early childhood education and care programs by 2006/07. This needs to be increased to $3.8 billion by 2006/07. As a minimum first step spending in 2004/05 ought to have tripled to $225 million.

What we got

Previous commitments included $75 million in 2004/05, $150 in 2005/06, $300 million in 06/07 and $350 million in 07/08.

This budget announced an acceleration in 2004/05 and 2005/06 of $75 million each year. However, the budget allocation for 2006/07 is the same as in the original agreement. This is a far cry from what is needed to build a pan-Canadian child care program.

Women in Canada have a record high labour force participation rate of 71 per cent. Canada is not supporting women who are working – unlike governments in many other industrialized countries. There are licensed spaces for just 12 per cent of children under age twelve in Canada.

Post-secondary education

What we needed

  • A separate accounting of cash transfers and tax expenditures for post-secondary education so Canadians can understand clearly how much the federal government is or isn’t contributing.
  • Restoration of the billions of dollars that have been cut from federal transfers for post-secondary education since 1993.
  • $3.6 billion ($214 per square metre) for accumulated deferred maintenance at Canadian universities.
  • Funding to reduce tuition fees and measures to prevent student debt.
  • A national system of grants based solely on need, with federal funding of $750 million per year over the next three years.
  • A federal Post-secondary Education Act that will prohibit the establishment of private, for-profit educational institutions and discourage P3s at Canadian universities and colleges.
  • An end to research funding contingent upon private sector donations.

What we got

  • Canada Learning Bond: Up to $2,000 contribution over 18 years to a Registered Education Savings Plan for each child born into a low income families after 2003. This will cost $85 million in 2004-05 and $85 million in 2005-06. Low income children born before 2003 will not be eligible.
  • $20 million for funds to increase the “matching rate” for family contributions to the Canada Education Savings Grant, beginning 2005 and increasing to $80 million next year.
  • New grants of up to $3,000 for first year students from low-income families to cover one half of tuition, beginning August 2005, and costing $45 million.
  • An annual grant of up to $2,000 for students with disabilities.
  • New debt for students through an increase in the weekly loan ceiling from $165 to $210. The level of parental contributions expected from middle-income families will be reduced, thereby encouraging students to carry more debt.
  • A minor increase in interest-relief and debt-forgiveness for low-income students, but nothing to reduce skyrocketing tuition fees.
  • Tax relief for workers who “pursue career-related studies”. In effect, this is a subsidy to employers for training purposes.
  • Funds for the commercialization of research, including $10 million per year in new money to bring research into the market through a competitive fund managed by Industry Canada.
  • $20 million annually to support the indirect costs of research by universities and research hospitals. This is a far cry from what is needed to cover accumulated deferred maintenance and serves to push universities and colleges towards further privatization.


Income security

What we needed

  • a Canada Social Transfer separate from the post-secondary transfer that would increase to $9.4 billion for social assistance programs and $3.8 billion for child care by 2006/07
  • a Canada Social Transfer with national standards agreed to by the provinces to ensure increases in federal transfers result in real increases in provincial spending on social assistance and social services.

What we got

The budget defines the social economy as “enterprises that are run like businesses, producing goods and services for the market economy, but they manage their operations and redirect their surpluses in pursuit of social and community goals.”

The budget provided:

  • $6 million over the next two years to advance a Voluntary Sector Initiative
  • access for social economy enterprises to small business funding programs.

The social economy or the ‘third sector’ is not what we want as a model for community social services. We have undergone considerable downsizing and a loss of support for social assistance and social services. There has been a shift from universality to a safety net full of holes.

This is a cut to social programs using a cheap wage strategy and a reliance on volunteers instead of a sound community infrastructure for these valuable social services. We aren’t against voluntarism but voluntarism can’t be used to replace programs for which the government has responsibility.


Social Housing

What we needed

  • Program spending for social housing increased from $2.1 billion in 2003/04 to $3.1 billion per year.

What we got

There is no new spending for social housing. Homelessness is a national crisis that even Paul Martin has acknowledged. Two years after the federal/provincial Affordable Housing Framework agreement was signed only 9 per cent of the funding has been delivered.


Unemployment Insurance and Training

What we needed


  • All of the revenue from the Employment Insurance fund used to provide income support to unemployed workers, reducing the number of qualifying hours to 360 per year. (Currently qualifying hours range from 420 to 910 depending on the region.)
  • Improved benefits, an expanded compassionate care leave and a national public training strategy.

What we got

A three-year Training Centre Infrastructure Fund pilot project with funding of $5 million in 2004-05 and $10 million in 2005-06. The pilot project will match employer and union investments in new machinery and equipment for selected training centres. This is nowhere near the comprehensive national training strategy that is needed. We have been promised only ‘discussions’ towards a Workplace Skills Strategy.

The education tax credit (for the non-tuition costs of post-secondary education and training) will now be extended to adult learners who are receiving training related to their current employment that is not reimbursed by employers. This will cost the government $5 million in 2004/05 and $10 million every year thereafter. This, however, does not provide an incentive for a national training strategy funded by employers and governments and shifts training costs to the individual worker.

The budget boosts the amount for language training for immigrants to $15 million per year from the previous $5 million per year.

The budget provides $30 million annually for a federal-provincial-territorial agreement that supports better workplace integration for persons with disabilities. This is a positive move and provides some small amount of relief in this area.