The Budget and the Family

It is clear from the 2000 budget that the Liberal government has written in stone its policy that the tax system must be used to drive women into the marketplace and to discourage them from remaining in the home. This unfortunate decision was made in spite of intense pressure to recognize the work of women at home raising their children.

Typically, the February budget gave no recognition at all to the financial sacrifices made by Canada's single-income families. According to budget documents, a typical two-earner family of four with a total income of $50,000 will pay $2,836 in federal tax in 2001. A typical one-earner family of four with the same total income of $50,000 will pay twice as much in federal taxes - $5,685.

Moreover, as pointed out in the brief, which a REAL Women associate member, Charles Van Wagner, presented to the Finance Committee on November 19, 1999, any couple who chooses the breadwinner/homemaker lifestyle during their child-rearing years will pay for that decision for the rest of their lives. Even if the homemaker works after the children have grown, she will wind up with either a reduced private pension or none at all.

Such couples are not only on reduced private pensions as a result of the earlier sacrifice, but what little they do have is exposed to the full force of the income-difference or "homemaker" tax penalty. In fact, because the homemaker's Old Age Security (OAS) neatly offsets the spousal deduction, the breadwinner is taxed just as if he were single.

The present huge single-income penalty is largely due to the major tax revision of 1988. The rules of the income-tax game were suddenly changed at a stage in life when many retired couples were powerless to react. Suddenly, a failure to retire with two more or less equal pensions was far more serious than anyone could have predicted in earlier decades. Senior couples were simply forgotten. (Ms. Fry of the Status of Women, why didn't you ever mention this?)

Mr. Van Wagner pointed this out in his brief as follows:

There are three special provisions for seniors: the age deduction, the pension credit, and OAS, all of which have mechanisms that work against single-pension senior couples. The equal-pension couple will benefit most from the age deduction, while any double-pension couple will receive two pension income deductions compared with only one for the single-pension couple. The mechanism of OAS claw back likewise favours couples with equal incomes over those with only one. The full 'homemaker' penalty thus actually increases after retirement. Even the CPP-splitting scheme has a flaw; splitting is only allowed for that portion of the credits earned while a couple was living together. Any couple that married late in life is out of luck.

Positive Benefits in Budget

The positive side of the 2000 budget is that it increased the Canada Child Tax Benefit (CCTB) in July 2000 by $70 per child. By July 2001, the CCTB will be $2,265 on the way to reach a target in 2004 of $2,400. This CCTB increase, coupled with tax deductions, will supposedly reduce income taxes of families with children by an average of 21% by 2004, compared with 15% on average for all taxpayers.

Also, pregnancy leave has been extended from 6 months to 1 year, for a child born or adopted after December 31, 2000. Unfortunately, the financial benefits will not increase and will remain at $413 per week maximum - not sufficient for many families who rely on the mother's income to survive. Entrance requirements to qualify for pregnancy leaves have been lowered, however, from 700 to 600 insurable hours.

Feminist Demands and the Budget

The radical feminists in Canada have been fighting for a "National Children's Agenda" which was supposed to include early childhood development centers (formerly known as day care centers). Also, the Liberal government was being pressured by others to provide drop-in centers for parents and head-start programs for needy children. This was supposed to be the hottest social policy issue. Together, this was to have provided a multi-billion dollar family policy that would, in a matter of years, rival old age security and employment insurance as the government's biggest ticket item in social planning.

Apparently, until relatively late in the budget process, Finance Minister Paul Martin had considered setting aside money to kick start this program. The cash, however, would have been contingent on the successful outcome of talks between Ottawa and the provinces, which have jurisdiction in these areas.

The talks turned out to be difficult and complex, however, and they were not helped by Ottawa's lead negotiator, the beleaguered, confused and unhelpful Minister of Human Resources and Development, Jane Stewart. Budget officials were concerned that if the budget included $500 million or so as an incentive for the provinces to sign on, the provinces would have scoffed at it as too little, and, more importantly, it would have opened up Ms. Stewart to more criticism and acute cynicism from the public who have good reason to trust neither her administrative nor her negotiating skills.

The best case scenario from the government's standpoint now, is for Ms. Stewart to begin negotiations with her provincial counterparts as early as April and to have her reach an agreement on early childhood education (day care) in time for the 2001 budget. By then, Liberal officials hope that the negative publicity over the HRDC job creation funds will have died down, and the government can then use the so-called "children's" agenda as a lynch pin in their 2001 federal election campaign platform - which seems to be taking a decidedly left-leaning lurch.

Liberals Turning to the Left

In this connection, it is noted that Prime Minister Chrétien, in his major address to the National Liberal Party Convention in March, made it clear that his party will run left in the next election, against the Canadian Alliance's right. He said, "Canadians don't want a party that threatens a woman's right to choose," or is opposed to gun control or think "spending on the disabled is wasting money." Count on his including an expensive children's agenda, including child care - oops - early childhood education centers in his campaign platform.

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