By Mick Sweetman
A recent report published by the Canadian Centre for Policy Alternatives, written by economists Trish Hennessy and Jim Stanford, slams the Ontario government’s austerity budgets and breaks down how far from solving the province’s economic woes—budget cuts actually exacerbate them.
The report, aptly titled More harm than good: Austerity’s impact in Ontario, deconstructs how the much-touted Drummond report manufactured a projected $30 billion deficit out of what even the Liberal government now says is a much smaller $11.9 billion shortfall.
The report isn’t shy in its conclusions. It reads, “the Drummond report converted a modest, manageable deficit into an impending fiscal trainwreck. In short, the deficit hysteria that has dominated Ontario fiscal debates since the last election is utterly unwarranted.”
The report instead argues that the best way to improve the health of government coffers is to get more people in Ontario back to work in secure full-time jobs that pay a decent wage.
It’s a proposition that makes a lot of sense; the more people working in Ontario, the more people are paying taxes and buying goods, which creating more jobs, instead of relying on government services.
The report takes a hard look at Ontario’s employment rate since the 2008 recession and, using Statistics Canada data, comes to the conclusion that Ontario is still short a staggering 250,000 jobs.
Not surprisingly, young workers are getting the worst of Ontario’s terrible labour market with a youth unemployment rate at 17.1% in December—double Ontario’s overall rate.
The report states, “high student summer unemployment is undermining youth’s efforts to gain experience in the work force and earn money to pay for tuition.”
Astonishingly, this is the backdrop for the government canceling one of its long-standing youth employment programs. The popular work-study program was downloaded to universities and colleges last year in the 2012 budget.
Instead the Liberals are now touting a program inherited from the Mike Harris era, the Summer Jobs Program, which provides a $2-an-hour wage subsidy to employers.
That’s right, in the middle of one of the worst recessions in recent memory the Ontario Liberals are cutting youth employment programs with one hand and patting themselves on the back with the other for a Tory program that’s subsidized profitable private employers for over 15 years.
What sleight of hand the Liberals have up their sleeves in the upcoming provincial budget remains to be seen, no doubt they will have some sort of youth employment gambit on the table, but the question will be if it actually creates new meaningful jobs or just subsidies a dead-end, low-wage service sector.
On post-secondary education, the authors project that the fees for university education will to rise to $9,000 a year by 2015.
Hennessy and Stanford caution, “for a government talking about transforming postsecondary education, its core challenge will be to address the problem it helped create.”
Part of that challenge will be for political parties, including the NDP, to find the courage to reverse the tax cuts that have damaged Ontario’s fiscals since the mid-90s. The report is damning in its illustration of how cuts to corporate and high-income personal tax rates have created a loss that now totals $17 billion a year.
The report recommends a number of ideas to overcome the stagnation of Ontario’s economy. The first is to increase public capital spending to create jobs and “rebuild aging infrastructure before disaster strikes.”
It also recommends increasing Ontario’s minimum wage and indexing it to inflation; updating the Employment Standards Act and banning recruitment fees for temporary migrant workers; and crucially targeting industrial development in key sectors, including manufacturing, tourism and biotech noting that is how Germany and Korea have expanded exports in a tough global market.
As long as the drum beating against the deficit drowns out alternative solutions the economy in Ontario is going to get worse before it gets better.
It’s time to march to the beat of a different drummer.