Budgets, austerity and demanding better

Lana Payne
Send to a friend

Send this article to a friend.

Finance Minister Jim Flaherty has a lot of egg on his face — messy, runny-yolk egg.

Last week, the country’s finance minister blamed global economic conditions for a nearly $7-billion-higher-than-forecasted annual deficit. That is quite a hefty mistake and all since March, when Mr. Flaherty predicted a $18-billion deficit. Fast-forward seven months (or about $1 billion a month) and the federal deficit is projected to be $25 billion.

The European Union’s ongoing economic troubles, China’s reduced growth and the U.S. fiscal cliff are all very real and are all a worry for the world’s economy and its citizens, including Canadians.

But these are not the sole reasons for the Harper’s government budget problems or higher deficit.

In fact, the higher-than-forecasted deficit can be partly (some might say entirely) blamed on domestic decisions.

What we won’t hear about from the Conservatives is how their failed economic, labour market and tax policies have contributed to the higher deficit. It’s much easier to blame world economic conditions for all our woes.

But it doesn’t take a brilliant mathematician to deduct that a government that slashes taxes for super-wealthy corporations may end up taking in less revenues as a result. It also doesn’t take a genius to understand the link between policies and programs that suppress the wages and incomes of Canadians and how this just might impact on the amount of taxes they pay.

Billions of dollars in annual tax cuts to some of Canada’s biggest and most profitable corporations, including banks, oil and mining companies have certainly contributed to the deficit. And it doesn’t take a parliamentary budget officer to figure out that we all pay for these tax cuts to wealthy corporations.

We pay through additional borrowing costs and we pay with reduced services, like in the areas of marine search and rescue, and food inspection.

Supporting a low-wage strategy through changes to the temporary foreign worker program, employment insurance, pensions and an attack on collective bargaining results in a downward pressure on wages. Lower or depressed wages and a growing reliance on temporary labour means lower tax revenues.

In this case, the Harper government is its own worst enemy.

It needs to carry some, if not all of the blame. But don’t expect acceptance any time soon. Rather we should expect to sooner or later see the Harper government take ruthless advantage of their bad and disingenuous forecasts.

In typical Harper style, the higher deficit will be seized as an opportunity to cut more public services and programs.

David MacDonald, economist with the Canadian Centre for Policy Alternatives (CCPA), noted last week that Europe’s austerity cycle, where government cuts lead to slower growth which leads to more government cuts, could start to play out in Canada.

“We don’t have the fiscal problems that European governments have, but we may have a political impetus, getting to surplus, that stands in for real fiscal problems. The result may be even more cutbacks to regulatory agencies, benefits for low-income Canadians … if these deficit projections remain intact.”

The higher deficit will also likely be used as an excuse to continue to dismantle the progressive state, as Alex Himelfarb of the Glendon School of Public and International Affairs has written about.

In an article for The Philanthropist, Mr. Himelfarb, Canada’s former top civil servant, concludes that the budget cuts are not so much about fiscal prudence as they are about dismantling Canada as we know it, including eroding democracy.

What is the alternative, he asks? More democracy, more transparency, not less. More public education and information, not misinformation and deception. More citizen engagement, not voter suppression.

“Above all it means a renewal of our sense of the common good and our capacity for collective management of the future rather than retreating to our private interests and fears and surrendering our future to the vagaries of the market,” he writes.

And then the big ask. That we become more than the sum of our parts.

In many respects, Mr. Himelfarb says, this choice — more democracy rather than more markets — is a far more demanding path. “It is much easier to say ‘let the market do its magic’ or leave things to each community than to come up with policies that help shape our future. It is a hard sell to get people to believe that we can act together to achieve something better, that government can be a positive force if it is balanced by engaged citizens and a vibrant, independent civil society.”

This path is possible.

Yes the higher deficit is partly if not fully manufactured. It is a pretty good bet to assume the Harper government will gleefully use the new higher deficit as an excuse to cut deeper, to dismantle more.

These actions will feed the already growing cynicism with politics and governments, a form of voter suppression.

But it can also feed something positive: a more engaged citizenry demanding something better.


Lana Payne is president of the

Newfoundland and Labrador Federation of Labour. She can be reached by email at


Her column returns Dec. 1.

Organizations: European Union, Conservatives, Canadian Centre Glendon School of Public and International Affairs The Philanthropist Newfoundland and Labrador Federation of Labour

Geographic location: Canada, China, U.S. Europe

  • 1
  • 2
  • 3
  • 4
  • 5

Thanks for voting!

Top of page



Recent comments

  • Please read JASE's comment and PURPLE LIBRARY GUY's reply.
    November 20, 2012 - 10:14

    TO: PURPLE LIBRARY GUY Congratulations you have written a piece of prose that explains very well that the economic mode we are orbiting in with the "free trade movement" is completely wrong and will get us nowhere economically. We have to get back to the old template that guided the United States, Canada and the other developed economies of the World into what they became in the 20th Century. I am going to promote the launch of Greg Malone's book "Don't Tell Newfoundlanders". It is a must read with information right from the horse's mouth, in particular the information that has been released over the past few years and archived in Ottawa. It will open your eyes on the skulduggery that went on regarding Newfoundland and Labrador's entry into Canada.

  • Purple Library Guy
    November 19, 2012 - 15:34

    Boiling down JASE's point, the claim is that high wage places with things like environmental regulations cannot compete head-to-head with low wage places that don't have such regulation. Perhaps true. His solution: Sell energy. Problem is, even if we could sell enough energy that its sale value in dollars was equal to all the products we stop producing (which is unlikely especially in the longer term), the number of jobs associated would be few. You can't run a country like that, especially a right wing country. Almost everyone on welfare, but there's no welfare. Of course then I suppose everyone would get so poor that owners would start switching their operations from China to Canada to take advantage of low wages. The advantages of such competitiveness to Canadians would seem less than compelling. So, what then? Time to admit that free markets aren't solving anything. The point of competition is supposed to be to increase productivity, but productivity is not our main problem any more. Productivity is high enough that we *could* make our own stuff and give everyone a good livelihood. So there's no point in competing with China, Indonesia et al. We should stop trying and just compete with ourselves, where everyone operates by the same rules. Trade barriers, import substitution and industrial policy are the way every modern economy in the world was built, from the US itself back in its early days to South Korea. Basically, free trade is killing us. The answer? Quit treating it as sacred and ditch it; the argument against some protectionism was always a theoretical one based on failed theories, mainly spun by and for really rich people. The only people who've made out like gangbusters from all this is the people who owned the factories and got to move them, and the people who owned the finance and got to globalize it. Time to do things for the sake of people instead of bankers.

  • Kim Leaman Moncton
    November 17, 2012 - 19:45

    Flaherty will get you Nowhere! Martin Up Jim!

  • JASE I would like you to explain where the jobs will come from in the type of economy you are proposing.
    November 17, 2012 - 18:05

    JASE you have written a nice piece of prose but I am trying to understand the orientation on what you are saying in regard to asking the question you presented that being, what would we compete with if we shut down our natural resource industry? Are you suggesting that we produce the Muskrat Falls energy at an exorbitant cost and then sell it to mining corporations and provinces for 80 per cent less than it cost to produce it; and then demand that the rate payers or the consumers of the hydro electricity and the tax payers of the province, who are one and the same, to be left holding the burden of paying off the mortgage on the Muskrat Falls Contract? Also according to some the minerals that will be produced as a result of the Mining companies getting cheap energy will be sent off shore in the raw state. Jase where are the jobs coming from in that sort of economy and how long will it be with that type of economic mentality before all of our natural resources are mined out of the Earth and the Ocean and then we have nothing left to be produced in the natural resource department. It appears to me JASE that you and your ilk, who appear to be the Corporates and the politicians will be the few who will be prospering from the benefit of the people's natural resources, while the rest of us will be up the creek without a paddle with no jobs. JASE I would like you to explain what you said a little more simply so that I can understand where the biggest part of the population will be gainfully employed with the type of economy you are suggesting we develop. To be succint I am wondering where the jobs will be coming from in an economy where we will send off our natural resources in the raw state and producing energy at an exorbitant rate that will be sold at 80 per cent of the cost to produce and then the mortgage will have to be paid off by those who own the natural resources but will not be gainfully employed because there will be no jobs for them to work at .

  • Larry R from CRUSH
    November 17, 2012 - 14:40

    All the tax cuts that Harper has given to big corporations are sitting in their cash accounts. Corporations are sitting on over $525 BILLION in cash that is not being spent or invested. If this money was spent it wouLd be a huge injection for the economy and would result in increased tax revenues. Unfortunately Harper has proven to be a total disaster in the area of fiscal management.

  • Jase
    November 17, 2012 - 13:41

    I cannot believe how stupid my fellow Canadians can be. I am a businessman and investor. I have traveled to China, India, Vietnam and all over North American and Europe. The Americans have not woken up to the fact that they can no longer compete with these new emerging economies. China's infrastructure is modernized and far superior to ours. Their factories are automated and equipped with some of the most advanced robots and automation systems I have ever seen. They are efficient. The workers they do have are highly educated. We can no longer compete in manufacturing against them. The unions here in Canada and the USA are slow to allow Companies to automate. Robots work 24/7, never get sick, never go on strike, and never complain or ask for pay raises. Not only that, the workers they do have are not obese and constantly sick like Canadian and USA workers. Their teachers are paid $200 a month and are required to be at the school 12 hours a day, 6 days a week to monitor the students. The students get reprimanded if they score low on Math or Science tests. They are disciplined and embarrassed in front of their peers if they fail to score good grades. These skilled workers get paid $3 a day and our Canadian workers get $30 an hour. There is no health insurance in China, no paid retirement...NOTHING. The cost of living in China is cheap, so they do not require the high salaries of the West. Also, the electricity, gas, oil etc. needed to run the factories is subsidized by the government. It is dirt cheap. Not like it is here in Ontario. Canadians can bitch and complain all they want. Reality is reality. I have seen the automotive factories overseas. Believe me...it is only a matter of time before all the North American automobile assembly jobs are relocated to China, Mexico and India. I have been told this by people who know. They have cheap labour and amazing technology. Can we compete? The answer is NO. But we have something they need...Energy. So we have to do what every country throughout the history of time has done. Use our assets to our advantage. Do you think the Germans would be building solar panels if they struck oil tomorrow? The answer is NO. Europe used up all it's natural resources fighting wars. The Germans can no longer even compete in the solar panel business. The Chinese do what they do best. Steal other countries technology, reverse engineer it, mass produce it for half the price and then flood the markets. How do we compete with fully automated state of the art ports in these emerging countries? Go to a Port in Montreal. It is a joke. Antiquated and run by a mafia run unions. Canadians need to travel. See what is really going on and then you won't be so negative about the energy sector that Harper is trying to build. If you want to elect Justin Trudeau or Thomas Mulcair...then you will be eating government cheese down by the river. That is a fact. And unless you have actually traveled to all these emerging markets...you know nothing. All you environmentalists yapping about how China and India are using solar and wind. Please...that is a farce. They set up solar panes and wind turbines as an illusion to appease the west. Give us the impression they are "Green". They have NO environmental protection laws. All their pollution is "Straight Pipe" in to the air. They throw all there toxic chemicals in to the rivers and let it leech in to the ground. I have seen it. All those solar panels and Turbines the environmentalist love so much...go see them being made. They produce some of the most toxic chemicals in the world. I talked to Chinese business men. They told me to my face that they want the Carbon credits. Do you know why? Because it will cost Europeans and North American's businesses and would drive more corporations to relocate overseas. China does not play by the rules. They just make up numbers. So the carbon credit scheme will do nothing to protect the environment and only cost us jobs. We are better off trying to keep jobs here and at least attempt to keep pollution in check. People have to wake up. Quit believing what you read in the papers. Go to China, India and Vietnam. See for yourselves. Corporations own the media. They feed you lies. Tell you that all these emerging countries are environmentally friendly etc. All propaganda. People in North America have to understand that it is the "red tape", the constant addition of regulations that are driving our jobs overseas. Obama will destroy the US with all his regulations. The only reason Canada has a heartbeat is because Harper has deregulated and lowered corporate taxes. This is where Obama is wrong. He thinks he can increase taxes and make "the rich" pay more. Harper gets it. He would rather have 15% of something rather than 40% of nothing. Obama thinks that because taxes were high in the "Clinton" years and things were prosperous, if he does the same...he will get the same results. Wrong!!! Presidents like Reagan and Clinton did not have competition. China, India and Vietnam had no infrastructure for businesses to relocated. Clinton enjoyed the birth of the internet. That is what created jobs...not Clinton. Back then, developing countries had uneducated work forces, no hotels, no ports and electricity that would go out every 30 minutes. It was impossible to outsource back then. The world has changed. We have competition now and we need to realise that. Quit living in the past. The world is changing. We need to get off our butts. I don't like what is happening...but it is what it is. We use to fly in fish for these third world countries. Now we have taught them how to fish. There is a massive transfer of wealth that is going on. Canada had better wake up. Would some liberal environmentalist Canadian please tell me what industry we could compete in if we were to shut down our natural resource economy? The answer is NOTHING. Unless we work for $3 an hour.

    • Northcott
      November 17, 2012 - 14:17

      Such is the danger of forging one-sided trade agreements with emerging economic powers who don't place value on the health, welfare, or status of their own people. Your post seems to imply that we should lower ourselves to that level. That's madness. Rather, we should be more protective of what will allow us to maintain a reasonable state of living. Kowtowing to corporate interests just so they won't leave is folly. We are both a market and a resource. As Danny Williams -- a true conservative, not one of the neo-cons we currently have in Ottawa -- proved, by drawing a firm line in the sand and looking out for the interests of the public, a politician with foresight and a grasp of fiscal responsibility can turn things around. The Harper government has proven neither. The impending trade deal with China is disastrous, as is the wholesale pandering of our energy market, and the willful surrender of our way of life. Things must change, certainly -- and the rampant consumerism that has spread from the USA to here is perhaps first on that list -- but it makes no sense to throw the baby out with the bathwater.

    • John L.
      November 17, 2012 - 14:45

      Jase, one question, once Harper and the Chinese government have reduced labour to below poverty income, eliminated 90% of middle management by use of robots, dried up willing investors and reduced upper management bonuses to food stamps, who is going to purchase all these wonderful manufactured goods.

    • Sojourner Soo
      November 17, 2012 - 19:01

      Your advice to Canadians to survive on tarsands energy is bad advice. Google Rossi Hot Cat. Do some in-depth reading. You'll soon understand why your advice is useless.

    • Really?
      November 18, 2012 - 06:11

      You are clearly a Conservative/Communist. OK. I am guessing you are a perfect weight, have never been sick, never take a holiday, and even as we speak work around the clock, and clearly you are a genius compared to the rest of us. In your perfect world there would be no unions, and well only mechanized factories. OK. So your answer to our "salvation" is to go through with the controversial trade agreement with China and sell our natural resources to China. With the changed rules to migrant workers, I don't see how Canada would make any money from this plan. China would bring in it's own workers, no jobs would be created for Canadians, less people would be working for a decent wage, which would mean less tax revenues for our government to run, since you don't want the rich, or the corporate to be taxed. No one will be able to afford the products China will be producing. Since you are way smarter than your fellow Canadians, your solution is to lower our standard of living. If we get off our butts and do as you say, we will also have no health care, paid retirement and we will be lucky if employers can pay $3 dollars an hour. There isn't an environmentalist alive who believes that China uses solar, or wind power. Why do you believe on your factory tours that you are being shown exactly how it is either? China will be able to sue the Canadian government for just about anything under the trade agreement, and we will end up paying them. Got any other ideas, or should the middle and lower classes just line up to jump off the Peace Tower. You business men/investors would be better off without us. Have you thought about bringing back slavery?

  • Chuck
    November 17, 2012 - 12:46

    Tax cuts for Corps. absorbed by taxpayer contributions - coupled with lowered returns on (taxpayers) retired savings/pension plans - sounds like Corps. win again. Shocking! Tax cuts for Corps should only be allowed when there is documented proof that each "WELFARE" dollar went towards creating a job, instead of the current redirection of the welfare funds to offshore shell companies and bank accounts. Create a job - redeem your tax cut.

  • Jack Doucette
    November 17, 2012 - 10:56

    Mike, if you think that, "reducing tax to corporations is actually helping all of us by decreasing double taxation", you are an expert on stupidomics. I have a bridge to sell you.

  • Mike
    November 17, 2012 - 09:44

    Your reference to super wealthy corporations is a little strange since publicly traded corporations like the ones mentioned in your article are owned by all of us in our retirement savings and pension plans. So reducing tax to corporations is actually helping all of us by decreasing double taxation that occurs in our own savings, effectively reducing tax to all of us. Maybe you should have a basic understanding of finance and taxation before blathering on in your socialist rants.

    • Plutacrat
      November 17, 2012 - 10:57

      lets see how much is left off your pension when inflation takes hold because of all time record low interest rates. Reducing tax by bringing in the HST and the in sourcing of temp workers that is a big tax saver. LOL we pay ten percent of there wages and they take all that money back to god knows where to spend it. never being spent in Canada 500 000 temp workers $10.00 an hour all being sent back to there home country. There not spending it here! all that money will never be taxed

    • panidatec
      November 17, 2012 - 11:18

      Taxes for corporations has gone down substantially since the Harper government has taken power yet it has done nothing but gotten worse when it comes to return on investment for the common shareholder. Maybe you should have a better understanding of the greed that controls upper managements bottom line decisions.

    • Genevieve Harrison
      November 17, 2012 - 11:44

      Mike, you are splitting hairs and trying to deflect from the main point of the article. It does not matter who "owns" corporations. If you think for a second that the savings from tax reductions is passed on to anyone, you must get scared reading fairy tales. If there is profit, it goes to CEO and executive compensation before it goes to shareholders. And given the nature of taxation policy in Canada, the taxes not paid by one entity - the corporation would never equate to the amount distributed amongst thousands of shareholders. In other words, $1,000 in taxes not paid by a corporation would maybe mean less than a $0.05 in income for the shareholder (depending on the number of shareholders) - a blip that wouldn't make a difference on their taxes. Oh right, and not all corporations are publicly traded and not all Canadians have the benefit of a retirement plan or pension, but who cares? Why not bash those who can't take care of themselves - I mean that's at the heart of what you do. Care about your perspective and none others. That's why you insult those who don't agree with you, right? But go ahead, you keep believing in conservative greed. That is after all what it is all about. Between them, Harper and Flaherty couldn't manage a child's bank account, but you keep believing, Amazing.

    • Chuck
      November 17, 2012 - 12:38

      Tax cuts for Corps. absorbed by taxpayer contributions - coupled with lowered returns on (taxpayers) retired savings/pension plans - sounds like Corps. win again. Shocking! Tax cuts for Corps should only be allowed when there is documented proof that each "WELFARE" dollar went towards creating a job, instead of the current redirection of the welfare funds to offshore shell companies and bank accounts. Create a job - redeem your tax cut.

    • Jovis
      November 17, 2012 - 13:27

      @Mike..if anyone needs a basic understanding of finance and taxation it's you. Were you not paying attention to what happened in the states with the Bush tax cuts??

    • Purple Library Guy
      November 19, 2012 - 16:30

      Maybe you should. In fact ordinary people own a very small proportion of publicly traded corporations. As of 2010, the bottom 90% owned less than 20% of stocks and mutual funds. So more than 80% of any tax on corporations would be taken from the top 10% incomes. You're dead wrong.

  • hanfar
    November 17, 2012 - 09:04

    Mr Harper, cutting services from the citizens is the dumbest, easiest path you chose to follow, but doesn't take you too far.

    • a business man
      November 17, 2012 - 11:38

      Actually, I voted for Harper BECAUSE I want him to cut services and eliminate public sector jobs.

  • Tara
    November 17, 2012 - 08:32

    Thank you for this fabulous and well summized article.

  • Craig
    November 17, 2012 - 08:12

    To rebute a couple of misconceptions promoted in this article: 1) lower corporate taxes do not guarantee lower gov't revenue; in fact, the opposite is generally accepted as likely due to an increase in investment and the expansion of the private sector; and 2) governmental adjustments to EI and pensions save governments money, particularly at a national scale. Further, the mention of an "attack on collective bargaining" is rather dramatic, and undermines the point that associated wage reduction would negatively affect total taxes collected. This undermining is born of a fact that is menitioned in the article: businesses pay the majority of the tax revenue collected by the government. So, if the gov't can encourage business growth and profitability, it is more likely to increase associated revenues. If the true goal of this article is to encourage means of increased gov't revenues while minimizing its expenses, a better understanding of cause and effect would be of benefit. Alas, I doubt this to be the case. This article is fraught with misinformation and obvious bias - which is not surprising, given the position held by the author.

    • GWWH
      November 17, 2012 - 11:11

      To 'CRAIG' and 'MIKE' ... while you do raise some excellent posts to the contrary - I would challenge you to show where the incresed investment and expansion is evident from the big corporations? Honestly would love to see the facts and figures backing these claims. Insofaras the Corporations owned by shareholders and pension funds etc., I think that is quite possibly a stretch to say that ALL large corporations are using the savings to enhance the profit of your pension funds. Just saying .... I work for a large corporation that is simply sitting on the extra profit, some of which is being returned to the sharholders .... and we constantly look for ways to reduce our 'regular' floor staff and use temp agencies and commit to a 70% part time labour force by 2014. Funny how that erodes the middle class and that tax paid by those people. Employment contracts are wonderful as we don't have to pay benefits, OT, or holiday pay - great way to get around those pesky labour laws .... my point is that the Harper regime might just be using a blind model of economics that does not balance the scales. IMHO

    • panidatec
      November 17, 2012 - 11:37

      Actually your comment is "fraught with misinformation and obvious bias". Years of study and analysis has proven that trickle down economics does not work. Greed at the upper management level will always dictate corporate decisions. Such decisions will then result in very little (or at most mediocre) benefits for shareholders and employees.

    • Duke
      November 17, 2012 - 11:40

      That math CAN be used as a convenience to baffle the masses, is not to say that it SHOULD be. And as the case may be, "facts" become less relevant as they are manipulated for political gain. At the end of the day, when you look in the mirror, you still have to ask yourself what you you stand for. And you, sir, stand for B.S.!

    • Norman
      November 17, 2012 - 12:43

      Point 1 refers to trickle down economics. A Reagan era theory. It's have been a long time since it was touted as a solution. If trickle down actually worked there should be no unemployment by now.

    • John
      November 17, 2012 - 12:53

      Not sure where you get your information Craig but the majority of tax revenue has been coming from working people for some time now and was every only very briefly the bulk of the revenue collected by government.

    • Purple Library Guy
      November 19, 2012 - 15:44

      This comment is fraught with misinformation and obvious bias. The evidence has been in for a while: Lower corporate taxes do not cause increases in investment except in odd corner cases (e.g. reductions from 100% taxation might). If anything, this whole idea is based on a misconception. Corporate taxes are on profits, not income. Capital investment is not treated as a part of profits, but subtracted from them. So if your corporate taxes are high, capital investment becomes if anything a tax shelter. High taxes on profits encourage plowing the money back into capital investment rather than losing it; corporations orient towards growth rather than maximizing money. Now that taxes on profits are very low, corporations very often just sit on the cash and play the financial markets with it instead of reinvesting. Meanwhile, businesses pay in the area of 10% of the tax revenue collected by the government. In our most prosperous, high growth era they paid 50%.

  • Ed Birmingham
    November 17, 2012 - 08:12

    There are always those who think gov should be a bigger nanny than it already is. They refuse to accept the fact that this country was built by individual initiative and hard work, not by paracites and their handouts from 'nanny'. It is the overly generous handouts from gov already that is slowing us down. We have too many gov employees and too few private employees now to keep afloat for much longer.

    • John
      November 17, 2012 - 13:00

      Wrong Ed, this country has largely been built by government initiative be it the transcontinental railway, petrocanada, grain board or the national highway system. Business always rides on the coattails of government when convenient and blames government for its problems when that suits its needs. If a corporation is a person under the law then it should pay the same tax as a person.

    • Northcott
      November 17, 2012 - 14:08

      If that were true, sir, then we would not be seeing the massive deficit state we are now, while having squandered a surplus of several billion dollars. Any government that can manage to cut an astounding number of public sector jobs *and* dismantle services (which seem to be targeted toward reducing information and accountability), yet increase overall spending by 5%, is one that has failed fiscally. While I agree that the nanny state is deplorable, and that fiscal prudence is required, we have a government that has both increased our spending while slashing social services, and expanded the nanny state concept by eroding the rights of its citizenry (Vic Toews' Internet Spying Bill is being tossed around by the Conservative cabinet again).

  • dana
    November 17, 2012 - 08:02

    And it all started with the dismantling of Income Trusts.