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Top 10 Reasons Why Ontario's Austerity Budget is Misguided

1. Austerity budgets don't work.

  • An austerity budget is premised on the idea that government deficits can be eliminated by cutting spending, reducing benefits, and limiting public services. 
  • Many leading economists argue that austerity measures actually have the opposite effect. That's been the experience in countries including Britain, Italy and Spain.

"The notion that instead of increasing government spending to fight recessions, you should slash spending instead... represents a stunning failure of policy." - Economist Paul Krugman, Nobel Prize winner.

 

2. Ontario is not in a 'fiscal crisis'

 

According to the Canadian Centre for Policy Alternative's (CCPA) latest report, "Ontario's Fiscal Reality- Cup Half Empty or Half Full', Ontario is not in a fiscal crisis:

  • The province is slowly recovering from the worst recession since the 1930s.
  • Ontario's forecasts have consistently overestimated the deficit.
  • Five pessimistic assumptions by the Drummond Commission have turned a $6.4 billion projected deficit in 2017-2018 into a $30.1 billion 'catastrophe'.
  • That projection has set the stage for massive cuts to public services, without debate or public consultation.

 3. Ontario has a revenue problem, not a spending problem.

  • Ontario actually spends less per capita overall than any other province.
  • Ontario has lost $15 billion a year because of deep tax cuts for corporations.
  • The top 1% of earners in Canada now pay a smaller share of their incomes in taxes than the 10% with the lowest income. (Canadian Centre for Policy Alternatives- website)

"Spending is neither out of control nor wildly excessive. Ontario runs one of the lowest-cost provincial governments in Canada relative to its GDP and has done so for decades" - Drummond Commission

 

4. Investment in public infrastructure has always put us on the road to economic recovery.

  • Investment in communities and public services like heath care, education, family services, transportation, and clean water and air is what has always helped put us on the road to economic recovery.
  • These investments create jobs, provide people with disposable income to pay taxes and support local economies.
  • They create more jobs than corporate tax cuts or personal income tax cuts.

"Governments shouldn't be aggressively cutting spending when the economy is gasping for air...That's certainly the wrong prescription." - Douglas Porter- Chief Economist BMO/Nesbitt Burns

 

5. Public services didn't create Ontario's budget deficit.

  • Public sector wages have steadily declined as a share of provincial spending since 1981.
  • The deficit was caused by financial sector speculation, the global recession, and the subsequent bail-outs of companies.
  • The failure to reverse the tax cuts of the Harris era is costing the province $16 billion each year in lost revenues.  ('Ontario's Fiscal Reality', CCPA, 2012)

 6. Ontarians didn't vote for an austerity budget.

  • In numerous polls, Ontarians have consistently said they are willing to pay more taxes for better public services.

"Ontarians voted for a deficit reduction timetable in which program spending would be controlled at an annual rate below 2%, and in which the deficit is eliminated slowly but gradually. They expressed no support...that the province should take harsher measures."  CAW economist Jim Stanford.

 

7. Austerity is tearing the social fabric of what makes Ontario a great place to live.

  • Austerity measures depend on cutting public spending, and limiting public services.
  • From roads to transit, health and education, clean water and air, hydro, and services for families and children, public services build a good quality of life.
  • On average, Canadians receive over $17,000 per capita from public services, according to the CCPA. With any cuts, those benefits start to disappear.

8. The budget targets the poor and vulnerable.

  • Freezing social assistance rates and delaying increases in the Ontario child benefit are really cuts, given that inflation is running at about 2%.
  • People, especially the poor and vulnerable, depend on public services like health care and home care, elder care and child care.

9. Austerity plans will take a toll on women.

  • About eight in 10 financial, administrative, and secretarial workers employed in education, health care, and other public services are women. Any shrinking of the public service is going to have an adverse impact on them.
  • The government's intent to freeze salaries and reduce benefits will affect a larger percentage of women. This is particularly so in professions like teaching, health care, home care and child care where a majority of workers are women.

 10. Ontario needs a strong middle class for a strong economy.

  • By stripping wages and benefits of public sector workers, the government will further erode good jobs in the province.
  • Along with 450,000 manufacturing jobs lost in the last decade, private sector wages and benefits have shrunk. Thousands of good jobs have been contracted out and turned into part-time and itinerant work.
We need to champion good wages, benefits and pensions for ALL Ontarians, so that they can raise a family, retire in dignity and contribute to the provincial economy.