Perhaps the government’s new mantra for the budget and the throne speech is telling in its ordering. First priority is low tax, and then if jobs and growth also happen, well that’s a happy coincidence.
It was interesting to hear the throne speech acknowledging that government spending like that in the stimulus program can create jobs and drive growth. That is to say that the Harper government knows how to create jobs and a reliable way to do that is to hire Canadians to build infrastructure.
For a government that repeats “jobs” so much, it is hard to miss the fact that there was no mention of unemployment in the throne speech. For most Canadians, declining unemployment IS the measure of job creation. But presumably it is not for this government. Perhaps the shaky link between low corporate taxes and job creation is good enough…the facts be damned.
The facts are that demand for goods & services drives job creation, not tax cuts. So while corporation are happy to take the money, they are simply saving it and will continue to do so in an uncertain economic environment. Low taxes themselves are not going to create jobs at this point, government spending is.
It bears repeating that despite the Harper government's recognition that stimulus works, unemployment remains near 8% far above the 6% that it was before the 2008 crisis began. The jobs that have come back are part time, not full time as before the recession. While Harper admits that government spending can and does create jobs, clearly jobs are no longer the priority. The “economic action plan” has now become a “deficit reduction plan” irrespective of job creation. High unemployment was a good reason for government intervention in 2008 under Harper, however the same prescription for today's high unemployment is somehow not relevant.
In fact, the changing nature of the stimulus plan from job creation to balanced books was further reinforced with the firm commitment to balance the books one year early. The likely means will be through the cutting of 80,000 positions in the public service over the next 4 years, about half of which will have to come through layoffs. The fact that there are no particularly good reasons for balancing the books one year early is beside the point. The throne speech trots out the specter of high debt levels of “other nations”. Presumably, Canadians are to assume that job losses are worth it otherwise we’ll end up like Ireland or Iceland in that extra year. The fact remains that Canada has the lowest debt burden in the G8 by a long shot.
The throne speech reveals that the Harper government knows what Canadians want to see, action to create jobs and economic growth and so repeats that message. It also reveals that the government knows how to make it happen, through government spending. However, the government has no intention of taking any action despite high unemployment. In fact, job destruction through public service cuts will likely be the order of the day.
So while jobs are the rhetoric, taking practical and proven steps to job creation is a distant second to low corporate taxes and reduced public services. Welcome to the next four years.