Canada Balancing Budget on Backs of World’s Poorest

This piece originally appeared as a guest post on the McLeod Group’s blog:

The latest foreign aid numbers were released on April 8. Globally, aid remains at near record high levels (US$135 billion). This is good news for the global fight against poverty. The numbers tell a rather depressing story, however, if you are Canadian. In the past two years, Canada’s aid to the world’s poorer countries has declined by over US$1 billion, a more than 20% decrease since 2012. This sharp decline is among the largest of all the wealthy donor countries and comes in a year when Canada’s government had already committed in its 2014 budget to hold its aid commitments steady.

Broken budget promises are not new, but in further cutting Canadian foreign aid, the Harper government is literally looking to balance the budget on the backs of the world’s poorest. Lapsed spending in previous years, combined with two years cuts of more than 10%, means that Canada’s real dollar aid spending is at its lowest levels since 2005. These declines are explained by the OECD as being: “due to the timing of certain contributions to international organizations and planned cuts in aid as budget saving measures.”

It is these “budget saving measures” that are enabling the Harper government to shirk Canada’s international responsibilities to fight poverty in order to balance the newly released 2015 budget and fund Conservative party election promises, such as the controversial income-splitting tax policy. With an estimated cost of $2.2 billion, the income-splitting program is expected to benefit only 15% of Canadian households and disproportionately aid middle- and high-income earners. In this respect, nearly half the cost of Harper’s income-splitting policy can be seen to be funded by cuts to Canada’s foreign aid.

Some will respond to this assessment by saying that it does not matter how much aid we spend as long as we spend it well. Indeed, Bill Gates’ whirlwind visit to Ottawa in February saw Canada lauded for its leadership of recent global efforts to promote maternal and child health through its aid program. Canada and the Prime Minister personally have garnered recent acclaim for these efforts, but at the same time Canada should be called out for its flagging overall commitment to international development.

Canada has never seriously pursued the UN’s aid target of 0.7% of gross national income. The fact that 2014 tally indicates Canada spent only 0.24% of GNI on aid is testament to this failing. Further, Canada continues to fall short of the secondary target of providing 0.15% of GNI to the world’s poorest countries (Least-Developed Countries). Many would argue that committing to arbitrary global targets such as these, especially in lean economic times, makes little sense. Yet, the United Kingdom has done exactly that. In an era of British austerity, the Cameron government committed to sharp increases in UK aid spending and indeed recently passed legislation making it mandatory for future governments to spend to at least 0.7% of GNI on aid. This is what political will to support global development looks like. In Canada, we instead see paper thin political will intended to score easy points by championing one global development challenge at the same time as drastically cutting our already miserly aid commitments.

The new Federal budget, released on April 21, paid little attention to aid levels. Instead, much is being made by the Harper government of its shrewd economic management to arrive at a balanced budget and to deliver on election promises like income splitting.

Canadians should have no illusions about how we will have arrived at that point: The budget has been balanced, at least in part, on the backs of the world’s poorest. Balanced budgets and boutique tax-cuts like income splitting might help win votes for the Conservative party and put money in the pockets of some of Canada’s wealthier households, but at a steep price when it comes to Canada’s foreign aid commitments and reputation. We should all ask if this is a price we are willing to keep paying: Is a balanced budget at the expense of Canada doing its part in addressing key global challenges in our longer-term self-interest? Surely not. Canadians deserve generous and visionary commitment to global development that safeguards these interests. Instead, we get penny-pinching and shortsighted political opportunism at the expense of continued global poverty and inequality.