The Right pushes more austerity, despite surplus

Last week, Germany completed its plan to provide free university tuition to all its students. It's an idea that no doubt would excite the hopes and dreams of young people in Canada -- which explains the need to snuff it out before it catches on.

Certainly, it's the kind of big idea that powerful interests here are keen to keep off the radar as Ottawa finds itself flush with surplus cash -- $6 billion next year, with bigger surpluses expected in future years.

Accordingly, a phalanx of right-wing think-tanks is gearing up to ensure that, after years of cutbacks and austerity, ordinary Canadians don't get any wild ideas about spending that surplus money on national programs that would greatly improve their lives -- programs that could, for instance, provide them with affordable access to universities, child care, home care, public transit, adequate pension benefits, a pharmacare plan, unemployment insurance benefits that are actually available to people who are unemployed, etc …

Suppressing such aspirations in Canadians has long been the stock-in-trade of right-wing think-tanks and the corporate interests that fund them. And they've been hugely successful in keeping these sorts of generous public services and benefits -- which are the norm in most northern European countries -- well off the agenda here.

Doing that is always easy when Ottawa runs big deficits -- harder when there's a surplus. The trick is to make surpluses disappear quickly by doling them out in tax cuts -- before there's time for a serious national debate about what the electorate actually wants to do with their money.

So when Ottawa started generating big surpluses in the late 1990s, it quickly began slashing taxes -- particularly on corporations and high-income earners. As a result, Ottawa now collects about $50 billion less in taxes per year than it would have if it hadn't done all that tax-cutting, according to labour economist Toby Sanger. That has deprived governments of the revenue they'd need to provide the kind of enhanced public programs many Canadians probably would like.

Tax-slashing has been the pattern in Canada for decades. It has left Ottawa, in recent years, collecting less in tax revenue as a percentage of GDP than it has at any point since 1940. No wonder we can't afford European-style social programs. Public revenue has been vanishing into the pockets of corporations and the very rich.

Right-wing think-tanks don't want this to get around, of course. They want us to believe that Ottawa's spending has been growing fast in recent years and it's time to put the brakes on -- as C.D. Howe Institute president William Robson argued in an opinion piece this week.

Robson sucks all the oxygen out of the issue by portraying it as a dull squabble between the federal and provincial governments, never acknowledging what's really at stake -- the chance for Canadians to begin building the kind of public programs that have been placed out of bounds by years of deep tax-cutting. Concepts like affordable tuition or national child care never pass his lips.

Robson portrays the provinces as greedy pests with their "hands out" who keep harassing Ottawa for more money even though Ottawa's transfers to the provinces have gone "way, way up."

But the claim that federal transfers are "way, way up" is only true if you select 1997-98 as the base year of comparison -- as Robson does. If we look at the broader picture, it's clear that federal transfers to the provinces have actually declined significantly over time. Robson notes that they rose from 2.3 per cent of GDP in 1997-98 to 3.2 per cent today. But back in 1983-84, federal transfers were 4.1 per cent of GDP.

Ottawa's transfer cuts have left the provinces responsible for providing key programs and services with less and less federal support.

When medicare was established in the late 1960s, Ottawa covered 50 per cent of the costs. Today, Ottawa contributes just 20 per cent -- and this will fall to a mere 12 per cent over the next few decades under the new health-care funding formula unilaterally imposed on the provinces by the Harper government in 2011.

Yet Robson rules out spending any of Ottawa's surplus on increasing transfers to the provinces. Just say no, he advises the Harper government.

So what should be done with the surplus? Tax cuts, says Robson. (Who would have guessed?)

This is, of course, exactly what the Harper government is planning to do. It has promised to introduce income-splitting -- a costly and deeply unfair tax cut which would see almost all of the benefits go to well-heeled families with stay-at-home mothers.

And so, a privileged group has been placed at the front of the line, well ahead of other Canadians with different priorities for the surplus.

The hopes and dreams of young people will just have to wait.

Winner of a National Newspaper Award, Linda McQuaig has been a reporter for the Globe and Mail, a columnist for the National Post and the Toronto Star and author of seven bestsellers, including Shooting the Hippo: Death by Deficit and other Canadian Myths and It's the Crude, Dude: War, Big Oil and the Fight for the Planet. Her most recent book (co-written with Neil Brooks) is The Trouble with Billionaires: How the Super-Rich Hijacked the World, and How We Can Take It Back.

This article is reprinted with permission from iPolitics

Photo: Jeremy Schultz/flickr

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