Income inequality harmful to Canadian economy
Recent national polls have found more than three-quarters of Canadians believe income inequality is a problem in Canada.
I introduced a private members motion (M-315) in Parliament this spring, which asks the Finance Committee to undertake a study on income inequality in the country. I believe income inequality and growing inequality of opportunity have become important economic issues for Canada that represent significant threats to Canada’s economy and society.
June 13 this motion passed by a vote of 161-138, with the support of MPs from all parties.
This isn’t a right or left wing issue. Mark Cameron, a Conservative and former director of policy for Prime Minister Harper, said income inequality should concern not only social democrats or liberals, but also conservatives who are concerned about maintaining public support for free markets and limited government.
American Nobel Prize winning economist Joe Stiglitz said “Growing inequality is the flip side of something else: shrinking opportunity.”
Inequality is growing faster in Canada than in the United States.
Several Canadian economic voices including the Conference Board of Canada, Rotman School of Business Dean, Roger Martin and the Bank of Canada Governor Carney, have warned inequality could limit our economic growth and threaten sustainable prosperity in Canada.
While inequality can be very bad for society, it can also be bad for business as it has a great economic cost. The real threat to the economy and to society is when income inequality becomes so great it starts to threaten equality of opportunity.
All Canadians benefit from good public education and good public health care, and those essential foundation blocks of equality of opportunity are key to why we are doing better in Canada than in other countries.
There are several areas where public policy can help.
• We can reform Canada’s tax and transfer system to reduce the burden on low income Canadians and help boost people over the welfare wall.
• The federal government could work more closely with the provinces on a national learning agenda.
• Improved access to early learning and childcare could help all children regardless of family income get a good start.
• Canadians need more support for lifelong learning with an increased focus on trades to help them adapt and train to qualify for the jobs of today and tomorrow.
• Finally, Aboriginal and First Nations communities have the fastest growing and youngest population in Canada. They are also Canada’s most economically disadvantaged and socially disenfranchised.
If that issue is not tackled today, then it will become a demographic and economic time bomb. We have a responsibility and a vested interest to narrow and eliminate the gap between aboriginal and non-aboriginal Canadians.
The motion I introduced simply asked the House of Commons direct the Finance Committee to study income inequality, an issue considered important by an overwhelming majority of Canadians, and develop solutions to this growing problem.
Finance committee can use this mandate to engage the business community that is dealing with issues like retirement security. We can engage the NGO community, and everyone from food banks to faith-based groups who are helping low income Canadians.
July 1 is a day of celebration across the country, as Canada Day parties take over backyards and city parks. This date corresponds with the creation of the Canadian confederation through the British North America Act, which took effect on July 1, 1867. It is a moment in time stamped with the values we hold dear.
We often hear that Canadians believe strongly in the importance of defending their values on the international scene. But what are Canadian values, exactly?
We can examine what the provinces are doing. We can look at what some governments in other countries may be doing better.
The reality is we can learn from this study.
I am not naive enough to believe a study is going to fix the problem. But as a start we need to understand it, and then move toward building public policy that will address income inequality.
A year ago we lost the great Canadian business leader and philanthropist, Wallace McCain.
I believe Wallace McCain would want Parliament to address income inequality because he would want Canada to continue to be a place where you can grow up in Florenceville, New Brunswick, get some education, work hard and you can go on to conquer the world.
And then – when you succeed – you can give back.
Canada should be a country where you have the hope of a better life for your family, for your children, your grandchildren and your neighbours’ children and grandchildren.
Looking out for the other guy isn’t just good for the soul. It’s good for business.
The long-term social costs of inequality and loss of opportunity are far more costly than the measures to address it.
Finally, business should be concerned the public could lose faith in a market based economy if they no longer have hope for economic and social success. When people lose faith in the system, they can be drawn to class warfare, and to politicians offering economically dangerous, anti-market policies.
Now, that could be really bad for business.