At a time when post-partisan politics is being touted as the way ahead, Stephen Harper is going in the opposite direction. He has become hyper-partisan, as his supposed package for the victims of manufacturing job loss shows.
In advance of his dinner meeting with the premiers last Friday, Harper announced that a budget item of one billion dollars was being assigned to meet the costs of economic hardship for one-industry towns, and laid-off workers. But, the money would only be available if the House of Commons passed his government’s budget, expected in six to eight weeks.
In other words any additional assistance to workers who have lost their jobs would depend on the opposition parties playing along with the prime minister’s economic agenda of tax cuts for the banks, and oil companies.
The Canadian Labour Congress estimates manufacturing job loss to have doubled from 59,000 in 2006, to 132,000 in 2008. Overall some 50,000 private sector jobs were lost in December 2007 alone.
With a recession in the U.S. likely to produce more layoffs here, manufacturing job loss has already reached crisis proportions with the disappearance of 181,000 manufacturing jobs in the sector over two years. Most of the impact is centred in Ontario and Quebec, while parallel crisis in forestry affects all of Canada.
The twenty year strategy of allowing foreign owners a free hand, and counting on the U.S. market has failed: workers and their communities are suffering, and, rightly, fearful of more bad news.
Instead of developing a federal industrial strategy, the Conservative government response is to allocate $10 million to each province, and then hand over the remainder of the one billion dollar pot to the provinces on a per capita basis.
The loss of 181,000 jobs represents substantial lost family income. Assuming an average manufacturing salary of $55,000 a year, the loss of 181,000 manufacturing jobs represents about $10 billion in lost salary income. Of this 25 per cent or $2.5 billion would have been turned over to all levels of government in various taxes paid.
When you realize that in dollar terms the Harper plan more or less amounts to replacing provincial income tax lost due to lay-offs, the one billion in federal transfers to the provinces suddenly does not seem like very much. When it is set against the federal payment of $10 billion towards debt reduction, the $350 million for Ontario, and $220 million for Quebec shrink even more.
For those workers who qualify there will be E.I. payments, to a maximum of about $20,000 a year, perhaps as much as $2 billion overall this year, paid by workers and employers through E.I. premiums. Despite not putting in a cent of its own money into E.I., the federal government has accumulated a cumulative surplus in the E.I. fund approaching $60 billion, which makes those $435 maximum weekly E.I cheques seem even smaller.
Suppose the federal government, instead of pretending to be generous to embarrass the opposition parties, had chosen to act differently, and really do something to reverse manufacturing job loss, what could it have done?
By far the most creative way to deal with the manufacturing sector is through the creation of a public sector investment bank, with, say, one billion dollars in start-up capital, and a federal guarantee for borrowing up to nine billion more.
Such a instrument is indispensable for moving ahead with an industrial strategy agenda. The European Union has the European Investment Bank. It disbursed about $50 billion (CDN) in new money last year, and has a capital base of close to $500 billion (CDN).
Without money to put on the table, governments have no leverage over corporations. The array of job training, tax rebates, grants, etc. all amount too little when you want to build a new company, or turn around an industry.
The coming slow-down is an ideal time for an entrepreneurial government to move into investment banking. Think of it as the democratic take-over of the corporate economy.
The silliness of the last 25 years of waiting for anonymous market forces to bring prosperity must end. The post-partisan agenda suggests that politicians need to respond to their constituents first.
Stephen Harper, by being hyper-partisan, has just given us a lesson on how not to deal with a serious problem, the loss of livelihood for 181,000 Canadians, and the diminished prospects for hundreds of thousands more.