Behind the Numbers

Federal budget drags Canada into unnecessary austerity

March 29th, 2012 David Macdonald · 11 Comments · Employment and Labour, Federal Budget

In contrast to this year’s AFB 2012, today’s federal budget is decidedly not a budget for the rest of us. 

In fact, regular Canadians won’t see themselves at all in this budget. 

Instead, the country will be dragged into austerity, not only now but in the future.  And none of it is necessary. 

The deficit balance date has moved forward one year purely due to economic growth, and with just slightly better growth, it will be two years.  The federal cuts weren’t $4 billion or $8 billion, but more than $5 billion—for this round anyway.

While the budget’s title says growth, it will be hard for the federal government to paddle against the obvious fact that they are cutting back. This is a budget of cuts: 10% for the CBC, for food inspectors and for those who help low-income Canadians access services.  The impact will be felt on services, but it will also be felt on employment.  For the first time since elected in 2006, the federal government is starting to project job losses.  It estimates that the latest wave of cuts will result in 19,000 lost positions.

However, as with other aspects of this budget, this is a game of hide-and-seek.  This figure does not include the impact of previous cutting exercises that themselves will reduce employment over the next 3 years, including the 2007-2010 strategic reviews and the 2010 budget freeze.  That initial 19,000 is just the start.  There are another 6,300 positions from the 2007 to 2010 strategic reviews and another 9,000 positions from the budget freeze.  In total, the reduction from 2011 to 2014-15 will be 34,000 positions.  That is only in the public service.

The federal government also supports employment at crown corporations, not-for-profits, professional services etc.  For all three waves of cuts we are now at 37,000 positions by 2014-15.  Put this all together and you’ve got a job cuts impact of over 70,000 positions, half public and half private.  At this pace, the national unemployment rate may now be affected potentially to close to 0.4%.  So the federal unemployment rate, currently 7.4%, could go up to 7.8% if all those cuts happened tomorrow.

All of this is before OAS gets cut for 65- and 66-year-olds.  Again, a second round of unnecessary austerity,  but this isn’t right now, it’s 10 years from now.  The likely result will be a doubling of seniors living in poverty in this group from 50,000 to 120,000.  Again, though this program was already sustainable, the government went ahead with cuts anyway.

The long game here is in no way being driven by any fiscal necessity.  This is purely political calculation.  The goal isn’t growth or jobs — it is to create a surplus, one in the range of $8 billion, if not more by the next election.  Then those savings from cutting services will be put towards income splitting for wealthy families.

So what is the net result? More income inequality, a lost generation of youth, continued infrastructure deficits and transferring the private sector pension crisis into public pension programs.  There are major issues facing Canada as we go forward, but this budget not only doesn’t address them, it makes them worse.

So, if you’re wealthy and healthy, this budget’s for you.  For the rest of us, welcome to the 1930s—with ever lower taxes on the wealthy, corporations and fewer supports for the middle class.

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11 Comments so far older updates

  • Len

    FYI
    Your (and Marc Lee’s ) facebook ‘Recommend’ link is failing for me…I wonder how many others as well….

  • Frank

    United we stand, Divided we FALL!

  • Frank

    If we look around us right now we can see what is happening and it is not a nice pic. The rich get richer and the poor get poorer, so what kind of a life is that? We need to express ourselves until someone finally listens and makes every effort to do that. Mr. Mulcair is one of those. Let us support him!
    Frank

  • someone

    one thing you guys don’t understand is that The government has to give a certain amount of tax breaks for corporations, sure it could be a bit lower but they have to in order to promote Foreign Direct Investment. If they raise corporate taxes the corporations leave Canada because its no longer benefical for the company to stay. This means Canada loses Billions of dollars in Tax revenue making us worse off than before. Sure i wouldn’t mind corporations being taxed more but its risky for government to do that. And I’m afraid that Mr Muclair will turn into Mr. Harper and fight against the individuals in politics not the party. Mr Jack Layton stood out because of his commitment to making Canada better and not get caught up in the fighting. Mr. Mulcair will destroy the NDP party by being like Mr Harper. Until a Party surfaces that is realistic and respectable I will not vote.

  • VoxFox

    A budget by & for the party of greed & selfishness.

  • Larry Kazdan

    Letter to Editor:
    Keep people working

    Re: Why public service cuts may not be all bad news for Ottawa’s economy, March 23.

    Job cuts that are small in comparison to the overall economy may not hurt much – just as banging your thumb with a hammer will not be overly painful if it’s just a small tap.

    But why hit yourself at all, and why fire public servants?

    At a time when Statistics Canada is reporting an increase in unemployment insurance recipients, how does sending more people out to look for jobs that don’t exist help the economy?

    When the private sector does not deliver jobs, it is the responsibility of government to keep people working by providing public services and by funding public infrastructure renewal.

    Austerity at a time of a weakening labour market is an ideological aberration.

    Larry Kazdan, Vancouver
    © Copyright (c) The Ottawa Citizen

    Read more: http://www.ottawacitizen.com/business/Keep+people+working/6376438/story.html#ixzz1qZEf9U1v

  • LTJ

    Clearly there’s a mistake here: “So the federal unemployment rate, currently 7.4%, could go up to 0.8% if all those cuts happened tomorrow.”

    Should this say “could go up to 8%”, or should it be “could go up up to 0.8%”?

  • Larry Mutter

    The key words here are the references to the 30s and the “surplus”,that’s what its all about.Crush the middle class ,impoverish the working class and create cheap disciplined labor.Meanwhile we can eat iffy meat washed down by iffy water as we breathe iffy air.

  • Emily Turk

    Thanks for your comment! It should be 7.8%, not 0.8%. We’ve made the correction.

  • Emily Turk

    Thanks for the heads-up, Len. We’ve tested the link, and it seems to be working now. We’ll keep an eye on it:)

  • Steve

    I don’t think the new budget will give our economy the boost it needs. For example in the area of immigration policies it will only hinder progress and create more chaos. It’s mainly the government’s controversial move designed to enable immigrants whose skills are in greater current demand to enter the country faster. I don’t subscribe to this theory since it will definitely lower the chances of acceptance for those immigrants who have been in the backlog for a longer period of time and their qualification may not be sufficient after several years of waiting. If we want the successful immigration system to remain among Canada’s tops the measures in this particular area shouldn’t discriminate against any of the groups of people coming to live in the country.

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