Federal budget drags Canada into unnecessary austerity

March 29, 2012

2-minute read

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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