Behind the Numbers

It’s Time for an Equality Premier

January 29th, 2013 Trish Hennessy · 2 Comments · Income Inequality, Ontario

Imagine if Ontario’s incoming Premier – lauded for breaking the inequality barrier on two counts – decided to parlay her victory into a post-austerity focus on solutions to income inequality.

Now that would be truly groundbreaking. And it couldn’t come at a better time.

Brand new data from Statistics Canada shows Ontario holds the dubious distinction of having the second worst level of income inequality between the richest 1% and the rest of us – second only to oil-blessed Alberta.

Between 1982 and 2010, the top 1% of tax filers in Ontario saw their average income climb from $280,000 to $478,000 – that’s a 71% increase (inflation adjusted).
In stark contrast, the bottom 90% of tax filers in Ontario saw their average income inch up from $28,700 to $30,000 for an increase of only $1,300 – a 5% increase (inflation adjusted), slightly less than the national average.

The richest 1% in Ontario now makes, on average, 16 times more than the bottom 90%. Thirty years ago, that ratio was only 10 times more.

The even bigger story is what’s happening in Canada’s three largest cities – Vancouver, Montreal, and Toronto – where income inequality is the worst. In Toronto, the city’s bottom 90% of tax filers make an average of $1,900 less than they did 30 years ago, while the top 1% enjoy substantial pay increases.

Toronto’s richest 1% made an average of $653,000 each in 2010, up $356,000 (or two-thirds) from what they made in 1982 (inflation adjusted). The richest 1% now make, on average, 23 times more than 90% of the city’s taxpayers.

That means the richest 1% can earn in about three years what 90% of Toronto’s tax filers make in their entire lifetime.

It’s a trend that’s getting increasingly hard to swallow. The Occupy movement tried to puncture through the income inequality bubble last year by calling attention to the 99%, but Queen’s Park remained silent on this issue, perhaps hoping it would just go away.

Meanwhile, the provincial government hired a former Bay Street bank economist to map out an austerity agenda that reflects the priorities of the 1% but is failing the rest of us.

The austerity storyline in Ontario is that the deficit is too big; so big that we’re all going to have to sacrifice. Starting with the people who teach our kids and clean our schools. Never mind the $1.4 billion in unpaid corporate taxes the province has written off.

Austerity measures did nothing to unify the minority government at Queen’s Park. And they haven’t made life better for 90% of income earners in Ontario.

Austerity’s impact in Ontario can be seen in other places as well. There is the stark image of about 20,000 protesters outside of Maple Leaf Gardens while about 2,000 Liberal delegates were inside choosing the next Premier.

Growing social unrest goes along with growing income inequality, which makes it harder to ignore. Austerity only adds fuel to the fire.

Meanwhile, we’ve turned the clock back on the province’s social assistance review recommendations and stalled the province’s commitment to reduce child poverty by 25 per cent by the end of 2013. And the austerity agenda has failed to revive job recovery post-recession.

Quite simply, Ontario cannot afford another destabilizing year like the past one.

The political cover is there to start talking about a post-austerity Ontario.

The International Monetary Fund is now saying it was wrong about austerity and that public sector cuts in Europe are too severe.

There is a growing international consensus to put economic growth ahead of deficit reduction.

Something is shifting – internationally, and in Ontario. And it’s not just our perception of identity politics.

The World Economic Forum names income inequality as the biggest threat to the global economy in 2013.

Pivoting from austerity to income inequality solutions could be the ideal way to address social unease in this province while helping to grow the economy.

Fiscally, there is more room to move than the current Finance Minister will concede. The deficit is already $2.9 billion lower than the Finance Minister’s last forecast and you can bet it’ll be even lower by budget day.

Ontario is on the road to balanced budget. There is no need for Austerity 2.0.

With Ontario’s richest 1% feeling no pain, perhaps it’s time for our political leadership to create an agenda that reflects the needs of the rest of Ontarians. That includes a conversation about the ongoing revenue shortfall created by Harris-era tax cuts.

The CCPA-Ontario estimates the province loses a cumulative of $17 billion in revenues each year to Harris-era tax cuts that have never been restored.

In the same way people were surprised that an openly out woman could become Premier without any major political histrionics, we may discover there is great willingness to facilitate a discussion about more optimal tax rates to preserve public services and redress some of the most destabilizing aspects of income inequality.

Not long ago, an interesting Environics poll asked Canadians an open-ended question: What makes you feel like a good citizen? The number one answer was volunteering. Second was kindness – doing nice things for people makes us feel good. The third answer? Pay taxes. [See page 8 of this report.]

A more unifying political discourse. The dismantling of an austerity agenda that does nothing but pull us apart. A renewed focus on the positive role government should be playing in our lives. Income inequality solutions.

That’s the kind of truly groundbreaking transformation an equality Premier could achieve, post-austerity. And it’s a far more rewarding political agenda for Ontario – or for any Canadian province, for that matter.

Trish Hennessy is the director of CCPA-Ontario. This piece is also posted on Huffington Post Canada.

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2 Comments so far older updates

  • S Haegedorn

    Now on to drawing parallels in BC.

    With the Koch Brothers leading the way at the Fraser Institute – just for one documented instance – we’re also in big trouble in this approaching election (May 2013). Education, awareness raising and shutting off /reducing Hollywood and large Corporate Sporting focus might be an initial step for the electorate to find avenues to become informed. These distractions lead to the wrong end result!

    Great article. Thanks.

    S H

  • Johnd908

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