Federal Budget Fails the World’s Poor and Urgent Need to Address Climate Change
Finance Minister James Flaherty’s 2010 budget states that there will be no further increases to foreign aid following a previously promised 8% rise in 2010. This cutback comes at a time when developing countries are struggling to overcome the combined effects of global financial, food and climate crises. The reduction in projected aid spending is being justified as a necessary measure to bring federal budget deficits down to $1.8 billion by 2015. In fact, the foreign aid cuts constitute fully one quarter of the $17.6 billion in spending constraints over the years 2011-2015 announced in the budget.
The budget also fails to offer any financing for the costs developing countries face as they struggle to mitigate and adapt to the effects of climate change. Developed countries that endorsed the controversial Copenhagen Accord at last December’s UN conference on climate change are expected to provide US$30 billion in “new and additional” financing for adaptation and mitigation measures over the years 2010 to 2012. While this amount is inadequate to what is needed, Canada’s fair share would amount to 3% to 4% of this promised funding or about $300 to $400 million a year. Although Canada has endorsed the Copenhagen Accord, the budget contains no commitment to any climate finance for the global South.
An important financing initiative that the Canadian government should support is the growing movement in support of a global Financial Transactions Tax. A FTT is a tiny tax on financial market transactions including equity, bond, derivative and foreign exchange trades. A global FTT could raise between US$286 billion to US$917 billion a year depending on a tax rate ranging from 0.01% to 0.1%. It has the support of leaders from France, Britain, Germany and Japan who see it as an ideal way to recoup the costs of financial bailouts, fund initiatives to fight global poverty and the costs developing countries face due to climate change.
The budget plan shows how $800 million of the previously announced $1 billion Clean Energy Fund is being spent on Carbon Capture and Storage projects while only $146 million is being invested in renewable energy projects. The only new spending on renewable energy announced in the budget involves $100 million for a Next Generation Renewable Power Initiative in the forestry sector. There is an additional allocation of $80 million to the ecoENERGY Retrofit program for homes to finance 60,000 added retrofits, but there is no renewed funding for the successful ecoENERGY for Renewable Power program, whose funding elapsed in January of 2010.
The budget also fails to introduce a price on carbon emissions, long seen as one of the most urgently needed policy measures to address climate change. Rather, the budget actually announces renewed efforts to streamline the regulatory review process for large energy projects such as investments in the tar sands. Responsibility for environmental assessments will be delegated from the Canadian Environmental Assessment Agency to the National Energy Board.
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